News

20.02.17

NHSI admits system is unsustainable as Q3 deficit soars over £800m

NHS trusts have been hit hard by record winter demand as quarter three figures released by NHS Improvement (NHSI) today found that the total deficit for providers sits at £873m – which is £300m worse than the target of £580m set for the end of this financial year.

The findings of the NHSI report admit that the most recent forecast is “significantly higher than planned” and that going forward, the financial situation the NHS is in is “both unaffordable and unsustainable”.

It also said that 74 providers are forecasting that they will overspend against their plan by £492m, and that £280m of unplanned forecast spend could be attributable to just 13 providers.

A number of measures are also alluded to in the NHSI report, such as that the regulator will be launching a third wave of ‘finance special measures’ for the worst financially performing trusts. It also said that effective management of surplus NHS assets was key to improving the health system’s current financial state.

“Demand pressures are unlikely to ease completely in Q4, but we are fully committed to helping providers to mitigate any delivery risks, stabilise and improve their financial positions,” the report stated. “We will continue to monitor individual providers’ progress, and provide necessary assistance as they strive to further tighten their financial grip.

“At the same time, NHSI is working with providers to realise a number of land and property transactions and some commercially sensitive initiatives.

“When all the follow-up actions are taken into account, the sector forecast deficit has the potential to be in the range of £750 million - £850 million at the year end.”

A separate survey conducted by NHS Providers, also released today, showed that despite most trusts being on or ahead of their financial plan, a quarter of trusts reported deteriorating finances against their plans.

The organisation also pointed to high numbers of A&E attendances, operation cancellations and hospital admissions as the key drivers of the pressure, as care providers struggle to cope with an ageing population with less funding and a lack of hospital beds to cope with high levels of demand.

Other impressing findings from its 2016-17 included the fact that two-thirds (66%) of trusts are predicting they will only be able to meet their financial targets this year as a result of one-off savings that may not necessarily be achievable next year and beyond. These included non-recurrent savings, capital to revenue transfers and balance sheet and accounting adjustments.

Many of the trusts currently behind their target have also shown “substantial deterioration” in their financial position, the study found – primarily due to winter pressures and cancelled operations due to bed shortages.

Even the trusts that said they were on target still said that maintaining their position into the final quarter of this financial year will be a significant challenge.

The survey was filled out by 99 hospital, mental health, community and ambulance trusts – accounting for around 40% of the NHS provider sector.

Commenting on the findings, NHS Providers CEO Chris Hopson said: “Despite doing everything they possibly can, NHS trusts are £300 million behind the target of reducing the provider sector deficit to -£580 million by the end of March.

This is largely because of winter pressures. Trusts spent more than they planned and they lost income from cancelled operations – both were needed to create the extra bed capacity to meet record emergency winter demand.”

Hopson also emphasised that the NHS could not carry on running on “wafer thin” budgets and also deliver quality care.

He went on to say that though the figures do show considerable progress, the current situation is totally unsustainable for the UK’s health service.

“Despite everyone’s hard work, it’s no surprise that some trusts fall short. Again, the National Audit Office has warned NHS system leaders not to set providers unrealistic savings targets, but we are still persisting with this approach as well,” he added.

“We should also not forget the overall financial context. The NHS is once again struggling to balance its books despite a 2016-17 NHS England funding increase of 3.6%. This is by far the biggest annual funding increase the NHS will receive this Parliament and begs the question of what will happen when funding increases drop to 1.3% and 0.4% over the next two years.

“We will clearly have to do something different in 2017-18 and 2018-19. It’s simply not sustainable to require NHS trusts to make up the shortfall between what is being asked of the NHS and the funding available.”

Reaction

Nuffield Trust senior policy analyst Sally Gainsbury said the figures show providers on track to overshoot their target of a £580m deficit for the year by over half a billion (£1.1bn), even after receiving an extra £1.8bn in emergency funding.

 “This massive deficit comes even though NHS trusts have delivered very high levels of cost cutting: £2.9bn in the first 9 months of this financial year alone,” she added.

As we warned would happen, the NHS now appears to be locked into systematic overspending – a function of the simple fact that funding is rising significantly slower than patient numbers.”

Paul Briddock, director of policy at Healthcare Financial Management Association (HFMA), reflected that the Q3 results tell the same challenging story we’ve been seeing for a long time on the frontline of the NHS.

“Hospitals are a barometer on how the health service is coping, and given the mounting pressures over the winter, there is every indication that the NHS is failing to do so as the difficult burden of winter has taken its toll on services,” he said.

The Health Foundation’s Anita Charlesworth stated that the NHS is locked is a vicious cycle of financial deficits, cost-cutting and inefficiency.

“Despite these challenges, trusts have managed to reduce by a quarter their spending on agency staff. But the NHS cannot do it alone,” she said. “Hospitals will find it very difficult to balance their books while social care remains under such intense pressure. Days lost to social care related delayed transfers have risen sharply, which detrimentally impacts on patients, staff and budgets.”

Niall Dickson, chief executive of NHS Confederation, said: “This is a tragedy - the NHS had made huge strides to treat and care for patients promptly but the latest figures show a further deterioration - and behind those figures lie real suffering for patients and exhausted staff.

“The danger now is that efforts to transform services that government has rightly been championing are derailed because of all the effort that has to go into keeping the service going and trying to balance the books.”

Comments

Lindsey   20/02/2017 at 14:36

I think the funding is going in to the wrong places. Any increase in funding needs to go into social care, primary care and community/mh services NOT the acute trusts. No amount of additional funding in the acute sector will reduce demand from an ageing population - barn door and horse springs to mind.

John   20/02/2017 at 16:18

Public expectation about care needs to be adjusted away from a medical model of care for everyone, until that is achieved diverting funds to social care is doomed to failure. Diverting money will only work if there is a major cultural shift. We are only at the beginning of the baby boomer bulge in our demographic and acute health care will swallow as much of the GDP as it is given and still ask for more. "What matters to me?" is a far more important mantra than "what's the matter with me?" Until that is achieved we will continue to see untold miseries in our EDs and wards.

Pauline   20/02/2017 at 21:35

Social care decision makers need to be based in the acute trusts . Junior social care liaison staff cannot make the daily key decisions that can move patients out of the hospitals.

Add your comment

 

national health executive tv

more videos >

latest news

View all News

comment

Peter Kyle MP: It’s time to say thank you this Public Service Day

21/06/2019Peter Kyle MP: It’s time to say thank you this Public Service Day

Taking time to say thank you is one of the hidden pillars of a society. Bei... more >
Nurses named as least-appreciated public sector workers

13/06/2019Nurses named as least-appreciated public sector workers

Nurses have been named as the most under-appreciated public sector professi... more >

editor's comment

25/09/2017A hotbed of innovation

This edition of NHE comes hot on the heels of this year’s NHS Expo which, once again, proved to be a huge success at Manchester Central. A number of announcements were made during the event, with the health secretary naming the second wave of NHS digital pioneers, or ‘fast followers’, which follow the initial global digital exemplars who were revealed at the same show 12 months earlier.  Jeremy Hunt also stated that by the end of 2018 – the 70th birthday... read more >

last word

The NHS needs more senior women in leadership

The NHS needs more senior women in leadership

The gender pay gap in the NHS remains a hotly debated topic, especially as the final report from the Gender Pay Gap in Medicine Review approaches. Andrea Hester, deputy director of employment relati more > more last word articles >

interviews

NHS dreams come true for Teesside domestic

17/09/2019NHS dreams come true for Teesside domestic

Over 20 years ago, a Teesside hospital cleaner put down her mop and took st... more >

the scalpel's daily blog

An ageing population means hand care and injury prevention is more important than ever

23/08/2019An ageing population means hand care and injury prevention is more important than ever

Grey Giddins, member of the British Society for Surgery of the Hand, discusses how hand care and injury prevention have become increasingly important given the UK’s agei... more >
read more blog posts from 'the scalpel' >

healthcare events

events calendar

back

September 2019

forward
mon tue wed thu fri sat sun
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

featured articles

View all News