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Sir John Bourn, head of the National Audit Office, today reported to Parliament on the worsening financial performance of the NHS in Wales and the rising cost of clinical negligence claims.

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On the financial performance of the NHS in Wales:

  • the underlying cumulative deficit of the NHS in Wales rose by £21.8 million in 1998-99 to £53.9 million;
  • fourteen NHS trusts incurred deficits during 1998-99, and in four cases these deficits exceeded £1.5 million for the year. The appendices to his report consider the financial health of each of the five health authority areas in Wales, and the recovery actions being taken by health authorities in conjunction with their local trusts;
  • 25 of the 26 NHS trusts failed to meet one or more of their three key financial objectives; and
  • overall, the financial position of the NHS in Wales is expected to worsen during 1999-2000, with two of the five health authorities and 10 of the 16 NHS trusts forecasting deficits. The net forecast aggregate deficit for 1999-2000 is £26.2 million, which would increase the accumulated deficit to £80.1 million at 31 March 2000. The financial health of the NHS in Wales was examined by the ‘Stocktake Review’ in 1999 and the National Assembly for Wales is addressing the issues raised.

On recent developments in accounting, management and internal control:

  • during 1998-99, the total forecast maximum cost to the NHS in Wales of known clinical negligence cases rose sharply, from £145 million to £214 million. Assembly officials consider that this increase is due in part to a July 1998 House of Lords judgement that has impacted on the levels of damages awarded by the courts;
  • due to resource constraints, the Assembly has not yet agreed on a central body for the detection and prevention of fraud within the NHS in Wales, equivalent to the ‘Fraud Tsar’ appointed in England. Sir John notes that whilst prescription charge fraud in England has been estimated to total £95 million annually, no comparative assessment has been made for Wales; and
  • Sir John notes the co-ordinated approach to the management of risk being adopted by some health authorities and recommends that this is also developed within NHS trusts.

On asset management and the cost of primary care drugs:

  • the report notes that the NHS estate in Wales totals 1,100 hectares and is valued at around £1.1 billion. Of this, 260 hectares with an open market value of £42 million are considered surplus to existing NHS requirements. A disposal programme is underway, and is expected to yield some £23 million by 2003; and
  • the NHS in Wales spent £296 million during 1998-99 on primary care drugs. The annual cost of prescribed drugs is increasing faster than inflation, and the Assembly Secretary for Health and Social Services has set up a ‘Task and Finish’ Group to consider the scope for improving the efficiency and effectiveness of prescribing in Wales. Sir John notes that this group is due to report in June 2000.

"I remain seriously concerned at the worsening deficits being incurred within the NHS in Wales. The NHS Directorate of the National Assembly for Wales must urgently address this by ensuring that robust recovery plans are in place".

Sir John


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