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NHS finances in fiscal A&E as record deficits grow

THE financial health of acute hospital trusts has dramatically worsened over the past 12 months and is set to worsen further in 2015-16, according to the National Audit Office (NAO).

Deficits at NHS trusts and NHS foundation trusts – have now hit record levels – and are far worse than expected, with a combined £843m shortfall in 2014-15, sharply down from the £91m deficit in 2013-14.

Amyas Morse, head of the National Audit Office, said: “Running a deficit seems to be becoming normal practice for acute trusts. There is a risk that poor financial performance is seen as the least worst option compared with poor healthcare provision. The department, NHS England, Monitor and the NHS TDA must take a rounded view of how to improve trusts’ finances.

“The government’s commitment to give the NHS more funding, with almost half of this coming upfront, could be a significant step towards financial sustainability, if this funding can be devoted to improving the financial position of trusts rather than dealing with new costs.”

The financial position of NHS bodies worsened in 2014-15, as NHS commissioners, NHS trusts and NHS foundation trusts all moved from a surplus of £722m in 2013-14, to a deficit of £471m.

In June, the Department of Health announced limits on certain elements of trust spending in response to the worsening financial position of NHS trusts and NHS foundation trusts.

But the report warns that the response by the department, Monitor and the NHS Trust Development Authority may be too little too late to affect the financial health for 2015-16.

In November, the Healthcare Financial Management Association (HFMA), said an urgent cash injection of £8bn is needed within the next 18 months if the NHS is to meet its commitments to the nation.

The body – which represents NHS finance directors – says the vast majority of its members have lost confidence that the plan set out in the Five-Year Forward View is achievable.

Some 84% of finance directors say they lack the sufficient financial resources to implement the plan without extra support and 88% don’t have the confidence that their organisation can deliver the 2% to 3% a year ‘productivity gains’ needed to close the expected £22bn NHS funding gap.

An “unsettled planning period” has now been created due to the numerous revisions forced on trusts’ 2015-16 financial plans and could make it much harder for NHS trusts, NHS foundation trusts, the NHS TDA, and Monitor, to “meet targets, measure progress and ultimately manage resources effectively”.

Paul Briddock, director of policy at HFMA, said: “Today’s report from the NAO confirms the findings of our latest NHS Financial Temperature Check and what we’ve regularly been highlighting throughout this year. The financial problems in the NHS are systemic and across the board, with particular and immense pressure being felt on the acute provider side. The scale of deficit reported is unprecedented. The NHS is not living within its means, which has consequences. It’s time to start thinking about a Plan B in the event that the current plans don’t deliver what they set out to.

“NHS trusts reported a combined £930m deficit for the first three months of 2015/16, larger than the deficit reported for the whole of the previous year. Combined with this report and our latest research, this tells us that the much reported year-end trust deficit of £2bn for 2015/16 is very optimistic indeed – with finance directors reporting that their financial plans are at medium to high risk of not being achieved and that there is slippage against savings plans, it’s likely the actual year-end deficit will be larger.”

George Osborne, meanwhile, has vowed to make £8.4bn available to the NHS by 2020.

The NAO report found that the department’s call for trusts to slash spending on agency staff conflicted with acute trusts need to recruit more nurses to meet safe staffing guidelines.

 

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