£2bn acute deficit may mean ‘real trouble’ for frontline services

HSJ analysis of finance reports from May and June for 142 acute trusts, including specialist trusts, provides the most comprehensive picture to date of the financial challenge facing the sector.

Eighty per cent of the trusts have forecast they will end 2015-16 in the red.

In quarter one of 2015-16 the overall forecast deficit for the year was £2.1bn, steeply higher than was forecast at this point last year. For the 137 trusts for whichHSJ was able to obtain last year’s forecasts, the projection at this point in 2014-15 was a £654.4m deficit. This year the same group is forecasting a deficit of £1.9bn.  

In 2014-15 the provider sector overall delivered a £822m deficit.

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Trusts in the Midlands together predict the largest year-end deficit of £724.4m, whereas trusts in the South predict the smallest shortfall at £272.7m.

Northern trusts face a deficit of £543.6m, while those in London expect to be £545.1m in the red.

A quarter of the London deficit forecast comes from Barts Health Trust, which has seen the steepest decline of any trust between quarter one in 2014-15 and quarter one in 2015-16. It predicted a £45m loss for 2014-15 and has a £135m deficit forecast for this year.

Interim chief executive, Alwen Williams, said the trust faces “significant challenges” but is receiving “targeted support” as part of the special measures regime.

She added: “Delivering safe, well organised care for the people we serve is actually more cost efficient. We are entirely focused on doing exactly that.”

Health Foundation chief economist Anita Charlesworth said trusts’ financial problems could start to affect frontline services such as planned care.

She said: “I think if people get in real trouble then there is the whole question about what happens to planned care and whether we start to see waiting times push out from that.”

She added that this would be a “double-edged sword” from a provider perspective because elective treatment can be more profitable than emergency care.

Ms Charlesworth said she was “particularly worried” about the impact on funding for mental health and community services as commissioners tried to sustain quality and safety in the acute sector.

“One of the things that is really important we keep an eye on [is] that the way this is managed is by not cutting other services whose quality is less visible, and I’m particularly worried about mental health services,” she said.

Ms Charlesworth said investing in mental health and community services was “essential” and warned against letting “the urgent crowd out the important”. 

King’s Fund policy director Richard Murray warned that pressure on staffing budgets was likely to lead to more delays in accident and emergency wards, and for patients waiting for planned treatment. Quality of care would also deteriorate if staffing levels reduce, he said.

Mr Murray added: “These numbers are very big, and with no more money being offered this year, you wonder how trusts are going to bring these deficits down without a significant deterioration in quality and performance.

“The planned reductions in agency and management consultancy costs will presumably dent the numbers a bit, but it’s quite hard to see this making any real difference.

“No one was really talking about this in the run-up to the election, so I don’t think the public or a lot of NHS staff have recognised what will happen if no more money arrives. It’s going to be a bumpy road.”

A Department of Health spokesman said: “We know the provider sector is under financial pressure. Over the last two weeks, ministers and Lord Carter have set out a range of ways trusts can exert tighter financial control and our expectation is that trusts act on these immediately.”