Revealed: grim state of finances for health body serving St Albans

“Poor governance procedures” and “significant weaknesses” at the heart of Herts Valleys CCG operation.

An independent audit has found ‘significant weaknesses’ in the financial governance of an NHS body which has just announced a raft of cuts to health services as it strives to find £38 million in savings.

Herts Valleys Clinical Commissioning Group, which is responsible for planning and paying for NHS services in our region, announced two weeks ago that it is axing NHS-funded IVF for at least a year, stopping gluten free foods on prescription and cutting funding for female sterilisation.

Smokers and obese patients are also being forced to make bigger health improvements before surgery – unless a longer wait would be harmful.

The cuts come amid financial crisis, with Herts Valleys CCG’s finances in dire straits.

During 2016/17, the CCG itself identified a significant danger of not delivering best value and failing to ensure a financially sustainable and affordable healthcare system.

An independent audit found “evidence of significant weaknesses in proper arrangements for the financing of sustainable outcomes and informed decision-making” after it was discovered an £8.5m payment from the CCG to Herts County Council for social care was not approved by the CCG Board in 2016/17. The auditor said it displayed “poor governance procedures”.

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At the end of last year, the CCG was placed in ‘financial turnaround’ by NHS England because it faced a projected deficit of £18m for 2016/17.

The financial crisis was attributed in part to poor contract management processes at the start of 2016/17, making investments in advance of achieving savings, and challenges in both capacity and capability in contracting, finance and business intelligence.

The CCG shelled out £9m on staff salaries in 2016/17 – double what it spent in 2013/14.

Of the 186 staff, 86 were senior managers on salaries starting from £40,000, meaning one manager for every two members of staff.

The highest earner – the accountable officer responsible for the management of controlled drugs – was given a whopping £265,000-£270,000.

The CCG was forced to use its £7m surplus from 2015/16, as well as £7.5m it had agreed with NHS England to contribute to a national financial risk reserve, just to end the year with a £0.24m surplus.

An independent audit report concluded: “We have been unable to satisfy ourselves that, in all significant respects, NHS Herts Valleys CCG put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2017.”

The CCG now needs to secure £38m of savings to achieve its break-even duty for 2017/18.

St Albans MP Anne Main said: “The public are right to look at organisations that are taxpayer-funded and ask questions over the managerial make-up.

“It’s concerning there are severe criticisms of the CCG’s governance and wage structure form this report. Finding ways to deliver a good local health service in a sustainable way has to take top priority.”

Paul Regan, for Healthwatch Hertfordshire, said: “The report does present some tough figures.

“Clearly Herts Valley specifically - and the NHS as a whole - are facing some very tough financial decisions.

“Given the kind of financial savings that must be made, we are keen to see the NHS engage more and more with the people of Hertfordshire. This will help set priorities, as well as ensure people understand differences to service delivery.”

In the CCG’s annual report, chair Dr Nicolas Small and chief executive Kathryn Magson admitted the organisation’s finances had been under pressure for some time.

“Despite considerable efforts over the last 12-18 months to reduce our costs we have been unable to bring expenditure down sufficiently and this means that we are will not be in a position to deliver our financial plan this year.

“Because of this we were placed in formal ‘financial turnaround’ at the end of 2016. Essentially it has meant that we have examined all our expenditure and have started to make some difficult choices in terms of what we need to do to improve our financial position and at the same time continuing to focus on improving the health of local people.”