The National Health Service has had mixed fortunes on the financial side for the year 2011/12, closing the period with a healthy surplus despite a leap in the number of trusts in deficit.

Primary Care Trusts, Strategic Health Authorities and NHS trusts and Foundation Trusts booked a combined underspend and surplus of £2.0 billion for the period, and this, in combination with non-recurrent spending during the year, have left the NHS with almost £4 billion in the bank.

In addition, the Audit Commission's report found that while the majority of NHS trusts reported an improved financial position in 2011/12, 32 booked a slimmer surplus compared to the prior year.

An extra seven also ended up swinging into the red, leaving the combined number of NHS trusts and FTs in deficit at 31 versus 26 in 2010/11.

"It is worrying that the number of trusts in deficit has more than doubled in the past year and a significant number of trusts are receiving financial support," commented Mike Farrar, chief executive of the NHS Confederation, and he warned that the situation "is likely to get worse unless we take radical action".

According to the Commission, the gulf between those organisations with financial difficulties and those without is widening, and its report highlights "stark differences in health finances around the country, with the majority of NHS trusts in deficit located in London and the South-East". 

The report also notes that the NHS has achieved the first tranche of the £20 billion savings targeted for 2016, but that savings programmes "have had no material affect on the numbers of front-line staff, although the number of managerial and administrative staff has fallen significantly". 

On the downside, productivity of acute and specialist trusts "does not appear to have increased", nor is there much evidence of service migration from the hospital setting into the community, which are considered to be key to the NHS' long-term financial viability, it said.

All-in-all, the NHS must keep "a tight grip on finances" to avoid significant increases in activity, the Commission stressed.

No room for complacency

"The combination of financial flexibility and savings puts the NHS in a good position to meet the challenges of spending within its limits and maintaining, and in some cases improving, service standards. But there is no room for complacency", it warns.

According to Farrar, now is the time for the NHS Commissioning Board to help providers, "not with bail outs, but by releasing money to new clinical commissioning groups so they can work with providers to help put them on a sustainable footing by changing the type and range of services they provide", and he calls for big investment in community and primary care to enable more people to be treated at home.

Also commenting on the report, Christina McAnea, head of health at union UNISON, said she is not surprised that more NHS groups are grappling with debt. 

“It is a tragedy that £4 billion is sitting in the bank when struggling hospitals are rationing patient care, closing wards, and nurses are losing their jobs," she said,  suggesting that trusts "should look at savings they can make from procurement, pharmaceuticals and proper workforce planning".