- Several trusts revised their year-end forecast internally by up to £20m
- New protocol meant numbers published by NHS Improvement suggested providers were on course to meet their target
- Trusts forecasting significant deterioration include Staffordshire and Stoke on Trent Partnership, King’s College Hospital and University Hospitals North Midlands
- NHSI says forecasting protocol designed to ensure a stronger and more consistent reporting
A number of NHS trusts that were said to be on track with their financial plans midway through 2016-17 have actually produced forecasts suggesting significant deterioration.
HSJ has identified several trusts which had internally revised down their year-end forecast by up to £20m, but where official figures published by NHS Improvement suggested they were on course to meet their target (see box below).
This was due to a new forecasting protocol introduced by the regulator in October, as trusts were submitting their mid-year performance figures.
Our analysis also found cases where portions of the “sustainability and transformation fund” appear to have been double counted due to planned appeals against missed payments.
The official forecast for the provider sector at the end of September suggested a year-end deficit of £670m, which includes the benefit of the £1.8bn STF.
This is worse than the planned deficit of £580m, but is within the £800m commissioners have been forced to hold back as a “risk reserve” to balance provider deficits.
Experts have warned the outturn could be significantly worse, however, due to the number of trusts which have heavily back-loaded risky savings plans.
NHSI warned trusts to expect “considerable scrutiny” of their financial forecasts this year, as well as stressing the importance of providing confidence to the Treasury about the sector’s attempted financial recovery.
The new forecasting protocol meant some trusts that had revised their mid-year forecast were required to complete additional assurance stages before NHSI would accept their new forecast, which was not possible in time for the regulator’s mid-year report.
Elizabeth O’Mahoney, NHSI’s finance director, told HSJ the protocol was designed to ensure a stronger and more consistent reporting process, not to hide underlying issues.
She said there were also “unreported upsides” in the first six months, and the regulator’s report was “an accurate reflection of where we are”.
Disparities between trust and NHSI year-end forecasts
Staffordshire and Stoke on Trent Partnership Trust
At the end of September (month six), the trust told HSJ it was forecasting a “best case scenario” year-end deficit of £18.5m. However, NHSI’s month six report said the trust’s forecast was an £8.9m deficit. According to the trust’s month seven board paper, the forecast has worsened to a deficit of between £21m and £27m. The trust did not answer questions about the difference between its own numbers and those reported by NHSI.
Avon and Wiltshire Mental Health Partnership Trust
In the NHSI report, the trust was said to be on course to meet its £1.2m surplus plan, but the trust’s month six board paper had said the “most likely year-end forecast is now £6.1m off plan”. A spokesman said the figure used by NHSI is the “original control total” and the trust would “apply to NHS Improvement” to make a revision.
King’s College Hospital Foundation Trust
The month six board paper said the London FT was forecasting a year-end deficit of £50m, compared to £31.6m reported by NHSI (both figures exclude any STF). The trust told HSJ its projected deficit is now £49m and added: “There is a process to change our projection from the original plan, which we will be going through shortly.”
University Hospitals North Midlands Trust
According to the month five board report at the end of August, UHNM was forecasting a deficit of £36.8m excluding STF payments. NHSI’s report for the six months to September said the trust was on track to report a £15.5m deficit excluding STF. The trust’s month six report said the position had been “discussed with NHSI and variance to plan will be formally reported in the trust’s Q3 monitoring return”.
Hillingdon Hospitals FT
Board papers refer to a meeting with NHSI where the trust “signalled its intention to formally revise its forecast”, noting that “under a new NHSI protocol, this can next be done at the submission of the Q3 figures”. NHSI’s report said the trust was on track to deliver a £5m surplus excluding STF, but the trust has since said in its month seven report that it is forecasting a £1.6m deficit.
University Hospitals Birmingham FT and United Lincolnshire Hospitals Trust
Both trusts’ month six board papers said they were on track to meet their plans, but assumed that STF payments missed in the first half of the year (due to missed performance targets) would be recouped on appeal. However, NHSI’s mid-year report listed the trusts as meeting their control totals without full receipt of the STF, with the missed payments included in the “STF allocated to providers not achieved” total, which has then been added back into the reported position. This equates to £4m in total, and it is not known how many other trusts where this has happened. NHSI said specific validation questions have been introduced from mid-year to reduce the risk of double counting.
Analysis by HSJ last month, which was based on forecasts collected directly from trusts and numbers published in board papers, had suggested the sector was forecasting a deficit in the region of £850m. Jim Mackey, chief executive of NHSI, explained that the new forecasting protocol was likely to have been a factor in the difference with the official numbers.
NHS Improvement said it is “absolutely committed” to meeting the £580m deficit target for the sector, adding: “We know that there is still a lot of risk we need to deal with.
“We’re doing things like using a new forecasting protocol which will not only promote better financial reporting by providers but also encourage their boards to properly engage with their organisation’s finances.
“We encourage trusts to keep in regular contact with us around any risks to them delivering their financial plans as we have a range of support to help them get back on track.”
Sally Gainsbury, senior policy analyst at the Nuffield Trust, said: “This [analysis] again suggests that the finances of the trust sector are likely to be significantly worse that what the official numbers are saying.
“Although the new forecasting protocol might be intended to strengthen the financial reporting process, it seems it has also masked some significant deteriorations at some trusts.”
- AVON AND WILTSHIRE MH PARTNERSHIP NHS TRUST
- Finance and efficiency
- KING'S COLLEGE HOSPITAL NHS FT
- NHS Improvement
- Staffordshire and Stoke-on-Trent Partnership NHS Trust
- THE HILLINGDON HOSPITALS NHS FOUNDATION TRUST
- UNITED LINCOLNSHIRE HOSPITALS NHS TRUST
- UNIVERSITY HOSPITALS BIRMINGHAM NHS FOUNDATION TRUST
- UNIVERSITY HOSPITALS OF NORTH MIDLANDS NHS TRUST
NHS Improvement tells trusts not to hide financial risks
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Analysis: Trusts 'on track' with finances forecast major deterioration