latest health care news

25.08.16

Provider deficits decline in Q1, but may mask ‘a more troubling’ picture

The first financial figures for NHS providers this year show they have exceeded stringent efficiency targets in some areas, but ongoing concerns about its finances remain.

New figures from NHS Improvement show that in the first quarter of 2016-17, NHS providers’ total deficit was at £461m against a £466m target.

At the same point last year, the deficit was £930m and 190 trusts were in deficit, which has now fallen to 153.

Jim Mackey, chief executive of NHS Improvement, said: “This is a crucial year for the NHS. Today’s results have demonstrated that providers are up for the challenge and are starting to get a grip on their finances.

“It’s early days – and there is still much work to be done – but today’s figures demonstrate that providers are meeting some of the ambitious plans that trusts boards have signed up to and this is a promising start to the year.”

Concern remains about trusts’ abilities to meet financial targets

NHS England needs to deliver £22bn of efficiency savings by 2020, which a recent Health Select Committee report said it is not on track to do.

In order to meet the target, NHS England recently announced that money from the £1.8bn sustainability and transformation fund (STF) will only be granted to trusts which are able to meet specific financial controls.

As of last month, 214 out of 238 trusts have now accepted their individual control totals, of which 185 have now met their targets and received their STF funding. Regional finance teams have contacted the trusts reporting increased deficits to determine corrective actions.

Stephen Dalton, chief executive of NHS Confederation, said: “These early figures are encouraging, although it is clearly too soon to determine whether extra money this year will genuinely help providers become more financially stable.

“As the NHS moves on from a terrible financial year, we must use this critical opportunity to get the NHS back on track so that we can set the foundations for vital transformation plans to make progress.”

However, NHS Providers also published a survey today, showing that 38% of trust finance directors are not confident of meeting their targets.

Chris Hopson, chief executive of NHS Providers, said: “These findings show the strain NHS trusts are operating under. There is now a clear and widening gap between what the NHS is required to deliver and the funding available. This will only get worse as overall funding increases drop from next year. In reality, we have only just kept our heads above water because we have transferred the investment intended to fund long-term transformation into reducing the deficit that the majority of NHS trusts face.”

Sally Gainsbury, senior policy analyst at the Nuffield Trust, said the figures could “give a rose-tinted view of a more troubling underlying picture”.

She warned the NHS to “be ready for the possibility of a nasty surprise towards the end of the year”, especially if trusts that do not receive the STF funding are unable to keep staff employed.

Overspend on supply prices

NHS Improvement said there were a number of outstanding areas of concern, particularly spending on drugs and clinical supplies, which overspent against target by £44m (60% of the non-staffing costs overspend.)

The regulator is now developing a Purchasing Price Index Benchmarking Tool designed to increase transparency on purchasing costs, as recommended in the Carter review. Providers have already shared information about £6.5bn worth of purchases.

There was also a £45m shortfall on the cost improvement plan. NHS Improvement has now written to all trusts asking them to address this by tackling excess pay bill growth, taking forward Lord Carter’s recommendations on back office and pathology consolidation, and consolidating unsustainable services that rely on locum and agency staff.

In July, NHS Improvement and NHS England announced new financial measures to try to tackle the deficit, which the Royal College of Physicians called “slash-and-burn savings tactics”. It is too early to tell what impact these measures will have on the trusts’ finances.

Paul Briddock, director of policy at the Healthcare Financial Management Association, welcomed the figures, saying: “We must move forward with caution, but it is clear that finance directors are tackling the challenge head on and setting good foundations for the coming year.”

Providers’ aggregated paybill for agency costs was also £9.8m better than planned, after a cap on agency spending was introduced last year to try to get it under control.

Health secretary Jeremy Hunt said earlier this year that the NHS is “turning the tide” on its agency spending, although the number of unfilled shifts has increased since the cap was introduced, whilst three-quarters of shifts worked in the 10 weeks after the cap was introduced did not comply with it.

A&E waiting times still below target

The report also includes performance figures for NHS providers, which Mackey said were “more disappointing”.

These show that 89.31% of patients at NHS trusts and FTs were seen, treated or discharged within four hours. It said this performance “showed signs of recovery”, although it is below the 95% target.

A&E attendance in this period was at a record high with 5.34 million patients, 6.3% more than at the same time last year. The waiting list for elective care was also at a record high, at 3.45 million patients.

Across NHS England as a whole, 90.26% of patients were seen within four hours. The figure has been consistently below target.

Mackey said NHS Improvement would support the providers who are “letting the side down” to help them “up their game”.

But Hopson warned: “It’s hard to see how we can maintain high levels of A&E performance for patients within the funding we have available.”

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