Intended for healthcare professionals


Turning around NHS deficits

BMJ 2006; 332 doi: (Published 19 January 2006) Cite this as: BMJ 2006;332:131

Turning around NHS deficits

Chris Ham1 believes the turnaround teams from the private sector will
find it difficult to deal with NHS deficits. The solution he describes
involves reducing spare capacity, increasing performance, and fully
engaging clinicians. These measures, aspects of the failure regime for
hospitals2, have some chance of success in provider organisations.

The position for PCTs in deficit is even more difficult. It is likely
to be even more alien to the expertise of those now being bought in from
the private sector as recovery teams. PCTs are largely commissioning
organisations and do not have direct levers to reduce acute capacity, even
when it is recognised not to be affordable. Directly provided services
form only a small proportion of PCT spend, and are needed to help reduce
hospital activity. Were local hospitals to increase their efficiency, say
by reducing length of stay, this exacerbates the problem for PCTs, unless
those freed up beds are closed rather than used to suck in more income
under payment by results. GPs are the clinicians who most need to be
engaged by PCTs, but they cherish their independent status. It takes
exceptional leadership to persuade them to act outside their direct
interests in demand management, in advance of any of the benefits promised
for them from practice based commissioning.

There is little infrastructure in PCTs to downsize. Deficits of the
size now seen in some PCTs would be dealt with by bankruptcy in the
private sector, or increased long-term borrowing, neither of which are
available to PCTs. Many chief executives believe the current difficult
financial situation is generated by government policies, rather than local
incompetence3. In these circumstances, private sector recovery teams have
an exceptional and perhaps impossible task before them3, and especially in

1. Ham C Turning round NHS deficits BMJ 2006; 332: 131-132 (21

2. Palmer K. How should we deal with hospital failure? Kings Fund

3. News story. The winter of discontent: chief execs tell their
story. HSJ 19 Jan 2006 10-11

Competing interests:
Hillingdon PCT is declaring one of the biggest projected PCT deficits for 2005/6

Competing interests: No competing interests

24 January 2006
Hilary G Pickles
Director of Public Health
Hillingdon PCT, 97 High Street, Yiewsley, UB7 7HJ