The National Health Service looks set to have left its times of financial deficit well and truly behind, and is on target to achieving a surplus of £983 million at the end of 2007/8, according to figures released by the Department of Health last week.

Furthermore, the DH claims, the NHS has continued to deliver improvements to patient care during the first quarter of the year, ensuring that: the time a patient with suspected cancer has to wait for a first outpatient appointment is within two weeks after referral; the time lag between cancer diagnosis and treatment is under 31 days; and keeping A&E waiting times to under four hours. In addition, it says, 75% of Category A ambulance calls were responded to within eight minutes of the details being recorded.

The impressive financial performance targeted for the year is a far cry from the shortfall of £547 million reported at the end of 2005/6, and marks a substantial improvement from the £510 million surplus booked in 2006/7. And, according to Health Secretary Alan Johnson, the forecasts “show the NHS is now on a sustainable financial footing.”

He claims that the NHS is “becoming more efficient freeing up resources” that can be directed towards tackling major patient concerns, such as “hospital bugs and improving access to local doctors,” and insists that “any changes to NHS services are driven by the need to save lives, not money.”

David Nicholson, Chief Executive of the NHS, was equally positive about the Service’s performance, and praised staff for having “successfully turned the position around from one of overall deficit to a forecast surplus, created through increased efficiency and productivity and through greater financial discipline and rigour in the system.”

Patient benefits

"This is good management, but more importantly it's good for patients. A surplus allows flexibility and headroom for organisations to plan for the long term, invest in new services before closing existing ones, and respond to unexpected in-year pressures such as new drugs,” he said.

On paper, the figures are certainly very encouraging, but concern is bubbling over just how these financial improvements were achieved. Last year, aggressive cuts were imposed to regain a cash balance, with some reports in the media even suggesting that operations were being postponed to stop them eating into the year’s profit.

Dr Hamish Meldrum, Chairman of Council at the British Medical Association, has clearly voiced his scepticism over the figures. Whilst conceding: “It’s obviously better for the NHS to be in surplus than in deficit,” he went on question “what trusts have done to get out of the red.”

Pointing back to last year’s “thinly disguised forms of rationing,” he went on to claim: “there are still hospitals that are threatening to lay off hundreds of staff in order to break even. Budgets that used to be set aside for the training of doctors and nurses have been raided, with long-term consequences for the future NHS workforce. Funding for healthcare education has been shifted away from the university sector, and academic medicine is suffering as a result.”

Although the DH maintains that surplus funds will be diverted into improving patient care, Meldrum has called for “crucial budgets to be restored, and longer-term, cost-effective policies to be adopted,” and warned: “In future, it’s important that we don’t go through a further turmoil of boom and bust.”

Radical change

But Andy Cowper, editor of the British Journal of Healthcare Management, maintains that the surplus is good news for the NHS and a success story for its managers.

“The financial climate of the NHS has changed, radically and (hopefully) irreversibly. The old system, whereby deficits in one part of the system meant taking money from other parts who have been able to balance the books, was unfair and perverse,” he told PharmaTimes World News.

“Achieving this small surplus has not been easy, but with financial growth likely to be at or just above inflation from 2008, it has involved vital lessons for the NHS on where its costs are and on the need to focus relentlessly on care that is cost-effective as well as clinically effective.”