How the health trust cleared its debts

The NorfolkPrimary Care Trust has been going for just over a year. It inherited a debt of up to £50m. But it now appears to have reduced that debt to such an extent that it will be able to start the financial year in April with a clean slate.

The NorfolkPrimary Care Trust has been going for just over a year. It inherited a debt of up to £50m. But it now appears to have reduced that debt to such an extent that it will be able to start the financial year in April with a clean slate. Jon Welch looks at how the savings are being made and what the future holds.

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It has been a baptism of fire for Norfolk Primary Care Trust (PCT). The organisation only came into existence in October 2006, formed by the merger of five district PCTs.

But because the new PCT took on the debts of all those bodies, it has been massively in the red since day one.

At its highest, the debt totalled £50m. This was reduced to £47m at the end of the last financial year, and had fallen to £31m by the summer.

Now the PCT is in line to have cleared that debt by the end of the current financial year in March, allowing it to start 2008/09 with a clean slate.

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The debt had accumulated because of a number of pressures in the health system, including a redrawn GP contract giving family doctors a pay rise, and the increased cost of mental health placements.

It had built up over three years, yet the PCT has been able to clear it in just one year.

How? The answer lies in a series of cuts to services totalling £18.2m and some clever accountancy, along with some notable concessions from the government.

The biggest saving came from acute services. The PCT was able to cut £2.8m to its accident and emergency budget through initiatives such at the rapid response and single point of referral service based in Wymondham.

According to the PCT, this system ensures patients get the right care, at the right time and by the right professional, often avoiding the need for them to be admitted to an acute hospital.

The PCT also cut £4.8m from its elective care costs. Among the measures it implemented was reviewing the rates it had been paying for services to make sure it was getting the best NHS rate, rather than paying higher commercial prices.

The PCT saved £4.6m in primary care prescribing, largely through using generic drugs rather than branded products where possible.

It made £1.5m in management savings through merging five PCTs into one and cutting jobs, and saved £2m to mental health services by renegotiating mental health contracts.

One of the most controversial savings came through the renegotiated GPs' out-of-hours contract, saving £1.6m, but leading to criticism that coverage had deteriorated.

Savings of £900,000 were also made through what the trust describes as “consistent protocols and process” - ensuring consistent use of East of England Strategic Health Authority guidelines.

Crucially, the PCT has been allowed to dip into what is known as its “uplift” of £92.5m for 2007/08. This money came from the Department of Health, in addition to the PCT's baseline funding of £840m, and was intended to cover rising costs and the development of services.

Usually the East of England Strategic Health Authority “top-slices” some of this money and holds it in reserve as a contingency fund.

But it agreed not to do this for Norfolk PCT this year, recognising that it was more important for the organisation to clear its debts.

This gesture has saved the PCT about £14m in the short term, although it's worth noting that, barring any crisis, the PCT would have got this money back anyway.

David Stonehouse, director of finance at the PCT, praised the hard work and commitment of staff, and the support of other NHS bodies, including GPs, acute trusts and mental health providers.

“If, as forecasted, this deficit is wiped out, then the trust starts the next financial year with a slate wiped clean, and in a very strong financial position,” he said,

“This will mean that next year we will not have to have our focus so much on money saving schemes, but we can look to really invest in and develop our services.

“We will also be making great inroads towards achieving national health targets, such as the 18-week referrals times, and we have initiatives such as the Stroke Care Pathway.

“We do recognise that we need to continue to manage things robustly, and we do not intend to become complacent. Everything in the garden is not rosy as this is a tight time throughout the NHS.

“But this is a big achievement so far and we intend to continue to manage things efficiently to get the best value for the PCT and get on with planning things for next year.”

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