Exclusive: Specialised commissioning overspend tops £450m

The latest NHS England data, obtained by HSJ under the Freedom of Information Act, reveals that at the end of December the body was forecasting a spend of £13.2bn on specialised services.

This would put it on course for a 3.5 per cent overspend on its £12.7bn planned full-year budget for specialised services.

The scale of overspending revealed in our analysis is likely to underestimate the final figure. Sources with knowledge of specialist commissioning at NHS England predict an even higher overspend in what was the organisation’s first year of commissioning these services.

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NHS England’s specialised commissioning budget for 2014-15 has already swollen to £13.5bn and HSJ understands there are concerns within NHS England about the feasibility of identifying £800m of in-year efficiency savings.

According to papers shown to NHS England’s board earlier this year, a 4.4 per cent uplift in its specialised commissioning planned budget for 2014-15 must be accompanied by 6.6 per cent efficiency savings.

Our analysis, however, shows the 2014-15 budget uplift represents an increase on the 2013-14 outturn spend of about 2 per cent.

NHS England’s first year in charge has been dominated by concerns about its spiralling budget and confusion over which services should be categorised as specialist.

These services were previously commissioned by primary care trusts. During the year, £611m was transferred from clinical commissioning groups to NHS England as a result of activity that had been wrongly categorised as non-specialist.

Getting a grip on the issue is understood to be a priority of new NHS England chief executive Simon Stevens.

HSJ analysis of provider level data shows that the majority of the overspend has been at non-specialist acute hospitals. Despite accounting for 72 per cent of NHS England’s planned budget, almost 90 per cent of the extra spending was made in this area.

A number of NHS finance directors at trusts with overspends said the position was “predictable” due to NHS England’s unrealistic assumptions about both efficiency savings and the volume of work they would carry out in 2013-14.

“[NHS England] chose to not agree with our estimates of likely volumes and put in bottom line efficiency adjustments that were just nuts,” one said.  “It was very predictable and fairly obvious what was going to happen.”

Another told HSJ that the NHS England officers responsible for commissioning specialised services at their trust were “reluctant to use trust estimates” of activity because they were a new team.

The HSJ analysis is based on data from 10 NHS England local area teams, which administer the commissioning of 143 specialised service lines.

The data covers the 148 biggest providers of specialist services, accounting for 88 per cent of the total planned full-year spending at month nine.

Overspends were forecast at almost three quarters of the 87 acute non-specialist trusts. Overspends of more than 10 per cent were expected in eight acute trusts.

York Teaching Hospitals Foundation Trust finance director Andrew Bertram said it was “clear that [NHS England’s] initial allocations underestimated the volume of specialised activity” undertaken by the trust.

University Hospitals Bristol Foundation Trust deputy chief executive Deborah Lee told HSJ the trust’s agreed position had moved from a planned spending of £159m to £185.9m as a result of activity wrongly allocated to CCGs. Its forecast spending had also increased from £176m to £195m, equivalent to a 4.5 per cent overspend.

Asked why non-specialists made up a greater proportion of the overspend compared with specialists, a spokeswoman for NHS England offered the “hypothesis” that commissioners had a better understanding of spending at specialist hospitals. This made them “better able to set a realistic baseline for these providers”. 

Foundation Trust Network chief executive Chris Hopson said NHS providers’ efforts to help NHS England eliminate the overspends were hampered by “large requests for savings” and demands for reductions in activity “just before the beginning of the new financial year”.

Such a  pattern was repeated during the contracting round for 2014-15 and discussions needed to start earlier in future, he added.

A spokeswoman for NHS England said 2013 had seen “unprecedented change” in the commissioning of specialised services in the move to a “single approach”.  

She added: “We have improved access to specialised services where geographical access was previously variable and we have seen increases of activity in a number of areas.”