Exclusive: More than a third of hospitals set to end year in the red

Data collected from trusts shows 54 of the 141 non-specialist hospital trusts in England are expecting to end 2013-14 in the red.

Hospitals appear to be in a significantly worse position than they were last year. At the end of 2012-13, 22 trusts reported deficits with Monitor or the Department of Health.

The net total forecast deficit of the 141 hospital trusts for this year is £373.1m – a deterioration of nearly £700m from the net surplus recorded in the previous year.

Hospital bosses and finance experts told HSJ the difference was due to increased spending on staff in the wake of the Francis inquiry, financial penalties on trusts and the end of “transitional support” funding from strategic health authorities, the regional bodies which were abolished in April last year.

Eleven trusts predicting deficits of £20m or more make up half of the anticipated deficit pressure, with another 43 trusts forecasting smaller shortfalls. Forty of the 54 deficit trusts have a turnover of less than £400m.

HSJ collected the latest available trust forecasts in the past month. However, financial positions are still liable to change before the end of the year.

A senior DH source said the deterioration was partly due to the end of bailout funding, previously given to trusts through strategic health authorities or primary care trusts.

The source said many of the 54 trusts predicting deficit would have been in a similar position in 2012-13 without the support they had received.

One hospital chief executive told HSJ: “There is no one holding the ring now, the SHA used to keep back 1 or 2 per cent of the acute budget and give it to those that needed it. Now [clinical commissioning groups] haven’t got it, the [NHS Trust Development Authority] haven’t got it, Health Education England might have it.”

A foundation trust chief executive said the TDA seemed more willing to apply for bailouts for non-foundations than Monitor did for FTs.

Meanwhile, the chief executive of a large teaching hospital trust said his trust had seen a surge in emergency and elective activity, particularly from older patients. He said the marginal rate tariff - under which providers receive 30 per cent of the tariff price for many emergency admissions - meant the trust was unduly penalised for this.

He said increased patient acuity meant many patients who might once have been referred for elective care were instead being admitted in emergencies.

In October a Monitor review of the marginal rate tariff said that from 2014-15 the regulator and NHS England would allow the rule to be adjusted, where there had been “significant changes in the pattern of emergency admissions faced by providers”.

Monitor and NHS England also said “as a priority [they were] gathering and analysing further evidence to underpin reform of the funding for urgent and emergency care generally”.

Nuffield Trust chief economist Anita Charlesworth told HSJ a growing number of trusts were finding themselves “squeezed” into a deficit position by a reduction in tariff prices and the growing cost of drugs and staff, as they took on more nurses in response to quality concerns.

She said: “This will get much worse as the better care fund seeks to shift more funding out of the acute sector but without a clear plan for how to deal with the fixed cost of hospitals.” 

The BCF policy will require an additional £2.4bn of NHS funding to be pooled with local authorities in 2015-16, to be spent on care outside hospitals.

Foundation Trust Network chief executive Chris Hopson said: “This data confirms what our members have been telling us about the unprecedented financial challenge they are facing and how the number and scale of provider deficits is increasing.

“There needs to be a whole system solution to NHS funding, including better sharing of risk between purchasers and providers of healthcare.”

A TDA spokesman said plans were in place to turn around trusts predicting a deficit but “in some instances [this] will only be achieved in the medium term”.

He said proposals would be developed in trusts’ five-year plans, due to be submitted in the summer.