Financial Management in the NHS

Financial Management in the NHS

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This joint report was prepared by the National Audit Office and the Audit Commission, and contains the findings from the NAO's audit of the NHS summarized accounts and the Audit Commission's appointed auditors' work on the 2003-04 accounts of individual NHS organizations. The report outlines the financial issues facing individual NHS organizations, with an overview of the effects of these issues at national level and how this will affect the national health economy. In 2003-04 the NHS spent a total of Ap63 billion, with expenditure costs in the NHS rising by 7.3 per cent each year. This will increase the costs to Ap76 billion for the 2005-06, and Ap93 billion for 2007-08 periods. Alongside this increasing expenditure, the Government has set out various reform plans, including the establishment of the NHS Foundation Trusts, new staffing contracts, the development of the information technology infrastructure, and the way hospitals are funded. In the Summary of the financial performance for 2003-04 period, the number of bodies failing to achieve a financial balance had increased, along with an increase in the number of bodies with significant financial deficits. In all, 106 NHS bodies failed to achieve an in-year financial balance, and 14% of the Primary Care Trusts failed to keep expenditure within their resource limit, also a small number of NHS bodies are struggling to manage large deficits. The report advocates four key themes for the improvement of financial management: the role of the Board - who should display better oversight and improve their financial acumen; forecasting - NHS bodies should continually test whether cost savings programmes are realistic, and take account more effectively for risk factors in their financial planning, as well as set realistic budgets at the beginning of the year; earlier preparation of accounts - improvements in financial reporting, and the provision of financial information throughout the year should closely reflect the standard and range of information required in the annual accounts; transparency - that boards, managers, stakeholders would benefit from clarity in the way the accounts are organized, and that the amount of financial support received by the trusts should be clearly stated. With the introduction of Payment by Results and the use of independent healthcare providers the income received by NHS Trusts is no longer certain. So overall improvements in their financial forecasting and modeling, with NHS Trusts in particular developing their commercial financial skills, would be beneficial especially if they intend to become foundation trusts.The notional surplus of the scheme is Ap1 .1 billion as at the last scheme valuation by the Government Actuary for the period 1 ... The latest assessment of the liabilities of the Scheme is contained in the Scheme Actuary report, which forms part of the ... For 2003-2004 the additional funding has been retained as a Central Budget by the Department of Health and has ... Annual pensions are normally based on 1/80th of the best of the last 3 years pensionable pay for each year of service.

Title:Financial Management in the NHS
Author:Great Britain. National Audit Office, Great Britain: NHS Executive
Publisher:The Stationery Office - 2005-01-01


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