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Crisis as NHS trusts faced with ‘unprecedented’ deficits

NHS service providers are faced with ‘unprecedented’ deficits due to demand pressures and the need to maintain care quality, official figures have revealed.

In the first three months of the financial year, Monitor revealed that the foundation trust sector had racked up a deficit of £167m, compared to a planned deficit of £80m.

Of the 147 NHS foundation trusts, which make up two-thirds of all NHS trusts, 86 reported a deficit (of which 80% were acute trusts).

The NHS Trust Development Authority (NHS TDA), which oversees the 98 NHS providers that are not foundation trusts, also reported, for the four month period to 31 July 2014, the year-to-date aggregate financial position of the NHS trust sector was a deficit of £300m, compared to a planned year-to-date deficit of £224m.

Again, acute trusts were driving the deficits of the non-foundation trust sector, while mental health and community providers reported net surpluses.

Monitor stated that increased activity in foundation trusts, when combined with the continuing need to make cost savings and an over-reliance on expensive agency staff, is putting trusts under unprecedented pressure.

It was revealed that foundation trusts spent £391m on contract and agency staff, double the £189m they had planned.

Dr David Bennett, chief executive at Monitor, said: “NHS foundation trusts are striving to overcome the challenges they face while still meeting patients expectations for quality care. However, we believe trusts can make further progress by improving their planning, aggressively implementing best operational practices and working more effectively across local systems.

“In particular, getting a greater grip on their staffing costs, especially for agency staff, will help trusts increase their financial resilience.”

The Foundation Trust Network stated that the results from Monitor and NHS TDA confirm what its members have been telling it about the “huge, unfunded investment they are making in quality and the unceasing demand for NHS services”. 

Chris Hopson, chief executive at the Foundation Trust Network, said: “These first quarter figures show the cost of investing quality and dealing with increasing demand. They should come as no surprise as we and others, like the King’s Fund and The Health Foundation, have been predicting this for some time.

“They provide a dose of realism about the true costs of meeting rising demand and investing in greater quality. You get what you pay for.”

But a Department of Health spokesman stated: “We’ve taken tough decisions to increase the NHS budget by £12.7bn over this Parliament.

He added that the government expects trusts to show tight financial grip and ensure they live within their means. Delivering high-quality services and balancing the books must go hand in hand and we expect trusts to achieve this during the course of the financial year or there will be tough consequences, he added.

Richard Murray, director of policy at the King’s Fund, added that the figures were “significantly” worse than expected and provide yet more evidence that the “NHS is heading towards a financial crisis”.

He stated that the position in the acute sector in particular has deteriorated sharply, with around two-thirds of hospitals now either already in deficit or forecasting a deficit at the end of the financial year.

‘Unless significant extra funding is found, patients will bear the cost as staff numbers are cut, waiting times rise and quality of care deteriorates,” said Murray. “Emergency support is needed for otherwise sound organisations that are running up deficits as a result of the unprecedented pressures on their budgets.”

Dr Peter Carter, chief executive and general Secretary of the RCN, added that today’s figures highlight a “really worrying situation”, which shows how fragile NHS finances are.

Rob Webster, chief executive of the NHS Confederation, which launched its 2015 Challenge Manifesto last week, added that today’s figures provide the backdrop for the debates that “we will take into the party conferences as we consider issues like adequate, long-term funding settlements and pump priming for change”.

He said: “We have been warning for some time that NHS trusts will fall further into deficit as they try to balance rising demand for care against flat funding. These figures are more evidence of the incessant demand faced by our members this year and the impact on their finances as they strive to deliver safe care every hour of every day.”

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