Number of hospital trusts in the red more than double in just one year
More than one in 10 NHS trusts are now in the redFollows unprecedented efficiency savings drive across all hospitalsSouth London Health Care Trust is NHS organisation with highest deficit



11:05 GMT, 20 September 2012

An increasing number of NHS organisations are struggling financially with the number of debt-ridden trusts doubling in a year, a study has revealed.

According to the Audit Commission report, trusts and foundation trusts in the red rose from 13 in 2010/11 to 31 in 2011/12. This is more than one in 10 trusts in the NHS.

Thirty-nine NHS trusts reported a poorer financial position in 2011/12 than in the previous year and 18 NHS trusts and foundation trusts received financial support from the Department of Health, the report states.

However, it only gives the figures for the 10 debt-ridden NHS trusts that it audits. The other 21 organisations are Foundation Trusts which are regulated by Monitor. Monitor does not publish annual figures because it says many of these organisations intentionally run up a deficit as part of a longer-term plan. They argue that annual figures are an 'out-dated' form of monitoring.

Audit Commission analysis of audited NHS financial statements

This chart from the Audit Commission shows the size of the debt of 10 NHS Trusts in 2011/12. The other 21 debt-ridden organisations are Foundation Trusts and are regulated by Monitor

Under pressure: NHS trusts face rising patient demands and costs

Under pressure: NHS trusts face rising patient demands and costs

A Monitor spokesman said: 'Foundation trusts have more freedom to run their own affairs than NHS trusts. As the independent regulator of the sector, we assess the financial health of FTs on their performance in the medium term and do not require them to break even each year. They are therefore allowed to run a short-term deficit, and from a business perspective this can be an acceptable method of managing their finances.

'Of the 21 FTs operating a deficit in 2011-12, 13 planned to be in deficit, nine are planning to return to surplus in 2012-13, and five had deficits of less than 1m.'

It comes during an unprecedented savings drive. In 2011/12, the NHS as a whole made 1.6 billion in efficiency savings and a large number of trusts reported an improved financial position.

Andy McKeon, managing director of health at the Audit Commission, said: 'While nationally the NHS appears to be managing well financially, and preparing itself for the changes and challenges ahead, a number of PCTs (primary care trusts) and trusts are facing severe financial problems.

'The Department of Health and other relevant national authorities need to focus their attention on the minority of organisations whose financial position is deteriorating, and on their geographical distribution and service standards.'

The NHS organisation with the highest deficit is South London Health Care Trust – which was put under the care of a special administrator earlier this year for being on the brink of bankruptcy.

The trust, which provides care for patients living in the London boroughs of Bexley, Bromley and Greenwich, was the first trust to be put on an 'unsustainable providers regime' because it was losing 1 million a week.

No decisions have yet been made about how the trust will be run in the future but recently Matthew Kershaw, the special administrator appointed to put the trust back on a viable footing, invited providers of NHS care, including private companies and NHS organisations, to express whether they would be interested in running services at the trust.

The Queen Elizabeth hospital in Woolwich is one of three run by the South London Health Care Trust

The Queen Elizabeth hospital in Woolwich is one of three run by the South London Health Care Trust, which has the highest deficit in the country

NHS Confederation chief executive
Mike Farrar said: 'This is the time for the NHS Commissioning Board to
help providers, not with bailouts, 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.

is the time for big investment in community and primary care. We need
to do this to ensure hospitals can sustain local services in the long

'Fundamental changes
to the way we provide care are necessary if the NHS is to maintain
financial balance and become more responsive to patients' needs.

this will require some difficult decisions and in some cases will
require changing or closing down some services, but this can only happen
if we build up the capacity in the community and in primary care to
enable people to be treated at home.'

Dr Peter Carter, chief executive and
general secretary of the Royal College of Nursing, said: 'The NHS is
tasked with saving 20 billion in England alone, and NHS hospitals and
organisations are dealing with this reality on a daily basis.

will question why as many as 61,000 posts are at risk in the NHS when
there is an overall surplus of 1.6 billion. To date, we have not seen
evidence that this surplus is being reinvested into patient care, and a
rigorous analysis of NHS finances is now needed.

are also concerned that for those trusts who are running up huge
deficits, often due to badly negotiated PFI deals, it can appear
tempting to reduce expenditure by thoughtless reductions in staff and
services. Instead, they need to focus on keeping patients healthy.'

A Department of Health spokesman said: 'We know the NHS is facing even greater pressures, not least from rising demand and costs.

'That's why we are investing an extra 12.5 billion in the NHS, modernising it and improving efficiency while at the same time improving choice for patients to drive up the quality of patient care.'