The majority of NHS trusts are improving patient services without getting into the kind of financial difficulties which forced a Staffordshire hospital to announce up to 1,000 job cuts, Health Secretary Patricia Hewitt insisted yesterday.
Ms Hewitt said the Government's reforms of the NHS were bringing to light financial problems like those seen at the University Hospital of North Staffordshire in Stoke-on-Trent.
But she said they were also giving less efficient trusts the opportunity and incentive to learn from best practice at other hospitals and achieve better value for money.
Ms Hewitt said she was "proud" to have presided over significant pay rises for consultants, GPs, nurses and other health staff, which independent experts calculate have swallowed up around 40 per cent of the additional funding provided to the NHS.
"Of course, the majority of our hospitals are not only improving patient care, not only hitting the targets, but they are doing it within these very substantially increased budgets," she said.
"We are only halfway through the improvement and reform programme we have set out for the NHS.
"What the reforms are doing is revealing problems that in some cases, like Staffordshire, have been building up over many years and they are helping to solve the problems both by making sure that we get much fairer funding, much better financial discipline (and) also by giving patients more choice.
"By making sure that money follows the patients, we actually give the NHS hospitals a real incentive to improve patient care and improve value for money with it."
Ms Hewitt said that hospitals like North Staffs needed to learn from other trusts which have developed better administration and procurement regimes and adopted measures to reduce average length of stay in hospital, such as day surgery.
"Of course I am concerned about the situation," she said. "It happened because this particular hospital, one of a very small number with serious financial problems, has been taking on more work than it can actually afford.
"It's been doing more things and they have been using short-term measures to try to cover that spending and now that's run out."
Managers at the North Staffordshire Hospital have launched a consultation process on cost-cutting measures to reduce debts of more than #15 million.
Staff have been warned that around 750 redundancies could be compulsory.
Chief executive Antony Sumara said he planned to reduce workforce costs across the board through improved efficiency without cutting patient services.