BALANCING the books in the money maze of healthcare is a major headache for the managers of Oxfordshire's acute hospital services.

As reported exclusively on This Is Oxfordshire and in yesterday's Oxford Mail, the Oxford Radcliffe Hospitals NHS Trust - which oversees the John Radcliffe and Churchill Hospitals, the Radcliffe Infirmary and The Horton, Banbury - is working on a three-year recovery plan after revealing a possible £6m debt.

Today we take a detailed look at how the long-winded financial process trickles cash through the system.

1 Government allocates lump sum to Department of Health each year.

2 Eight NHS regional offices given share of this money, with some held back for specific emergency issues, such as winter payment allowances. Special formula - the Weighted Capitation Formula - used to share regional office's money to each county health authority. Calculation considers population figures and other social factors, including numbers of elderly and homeless. 3 Health authority managers use their share to deal with variety of health issues. They direct cash to dentists, GPs, privately-run nursing homes and health improvement plans, such as anti-smoking campaigns and strategies to reduce teenage pregnancy.

4 Large share given to primary care groups - eight in the Oxfordshire Health Authority. Each PCG oversees doctors, pharmacies, opticians and dentists and pays for patient treatment in hospitals. Sometimes PCGs club together as a consortium for specialist treatments, giving them greater bargaining power and more cash to spend.

5 Hospitals grouped into trusts get money from PCGs and other sources, including private patients, facility rental and trust-owned accommodation. Some hospitals provide special services for other trusts, including blood testing and X-rays. Other health authorities also charged for sending patients for specialist treatment, and NHS regional office provides direct cash for trusts with teaching hospitals and medical research schemes. Trusts also allowed to make bids to get part of Department of Health specific issues fund.

Story date: Friday 18 February

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