Trusts missed 2010-11’s efficiency targets by nearly 10 per cent before even tougher demands came into force this year, an HSJ analysis reveals.
Figures from England’s acute sector show 26 trusts made less than 80 per cent of their Cost Improvement Programme savings target. Meanwhile, 23 trusts made more than a quarter of their savings non-recurrently, raising fears for the sustainability of the measures taken.
Five trusts fell into both categories: Dudley Group Foundation Trust, Lewisham Hospital Trust, Guy’s and St Thomas’ Foundation Trust, Imperial College Healthcare Trust and Bedford Hospital Trust.
All five told HSJ in April that they were planning CIP targets of between six and eight per cent for 2011-12.
Guy’s said its 2010-11 target represented an attempt to achieve a £5m surplus, which it had agreed with Monitor.
Imperial said its savings gap last year would be carried over to 2011-12 and Lewisham said its integration with community services would result in greater recurrent efficiencies.
Dudley chief executive Paula Clark said an eight per cent rise in emergency activity had forced it to abandon a CIP plan to close bed capacity.
In April NHS chief executive David Nicholson warned: “It is not credible to close gaps with unrealistic balancing figures for cost improvement programmes.”
The news comes after Monitor’s letter to trusts raising the expected level of savings trusts would have to make over the next five years.
Trusts with large gaps in their CIPs will have had to cover the difference with reserves, increasing activity or support from another source.
The figures show the acute sector made £2bn in CIPs in 10-11, but with a quarter of a billion coming from non-recurrent schemes.
A finance director at a foundation trust told HSJ non-recurrent savings often represented the “low-hanging fruit” before trusts tried to tackle the tougher issue of job cuts and pay freezes.
He said: “The classic way to get these savings is to leave posts vacant as long as possible or start a project that you’ve budgeted for and then delay it, so that’s money you’re not spending against plan.”
The data submitted to HSJ showed five trusts made half or more of their savings in 2010-11 non-recurrently.
John Appleby, chief economist at the King’s Fund, said: “The savings targets for 11-12 are already bigger than last year’s and a number of trusts didn’t manage to hit those, so hitting even higher targets is going to be difficult for many.
“There are huge problems measuring savings and whether something is a paper saving or not. Some trusts might have counted increasing their income as a saving when it is actually just that, increasing income. The National Audit Office has said historically that they couldn’t verify whether all the savings the NHS claimed under Gershon [public sector efficiency review] were truly efficiency gains or simply a cut.
“But what we do know is the acute sector is where the action is in the David Nicholson £20bn efficiency challenge. That sector is under disproportionate pressure.”
Mid Staffordshire Foundation Trust had the lowest achievement against target in England, making only 26.2 per cent of its plan.
Director of finance Darren Cattell said: “These figures reflect that as a trust, we consider improving the clinical quality of our services has been more important than making savings, particularly in the light of the trust’s recent history.”
Ernst & Young, whose work includes consultancy with trusts to improve their savings plans, said organisations faced similar issues, including roadblocks around configuration and culture.
Company partner Joe Stringer said: “At the start of a great deal of our work with acutes we tend to see a relationship between finance and the rest of the trust that follows a cyclical pattern where the finance director ‘owns’ the CIP, foists a set of spurious targets upon general managers every April, which are never met, and has a track record for producing a rabbit out of the hat every March. Worst case, this cycle continues until the trust really does fall off a cliff amongst a flurry of finger-pointing and far less appetising turnaround measures.
“Trusts can also be their own worst enemies when it comes to the performance management of individuals - failing to adequately incentivise those who meet their CIP responsibilities and more importantly, a poor track record in sanctions for those who don’t.”
Trusts have submitted their accounts for the last financial year but they have not yet been audited and the information comes before the Department of Health has published The Quarter, its performance and finance report, for quarter 4 of 10-11.
Chief executive of Bedford Hospital, Joe Harrison said: “These figures refer to our performance in the last financial year, at the end of which the Trust made an operating surplus of £300,000.
“This year we are working in a different environment, with a different set of challenges. To respond to this, we are taking a different approach to how we deliver our cost improvement programmes for 2011/ 2012 and we have already made significant changes to deliver on our saving targets over the coming year.”
A spokesman for Northern Lincolnshire and Goole Hospitals Foundation Trust said: “We identified that there would be a shortfall at the mid-year point during the last financial year. In the last quarter of the financial year we put into place a series of actions which are now taking effect which we believe will re-align the Trust’s finances in line with the savings expectations last year, and make a significant contribution to our savings targets in the current financial year.”
Only five trusts chose not to or failed to provide the information volunteered by the other 137 trusts non-specialist acutes in England.
These are: East Cheshire Trust, the Royal Berkshire Foundation Trust, City Hospitals Sunderland Foundation Trust, Royal United Hospital Bath Trust and Bradford Teaching Hospitals Foundation Trust.
- BEDFORD HOSPITAL NHS TRUST
- BRADFORD TEACHING HOSPITALS NHS FOUNDATION TRUST
- CITY HOSPITALS SUNDERLAND NHS FOUNDATION TRUST
- David Nicholson
- EAST CHESHIRE NHS TRUST
- Foundation trusts
- GUY'S AND ST THOMAS' NHS FOUNDATION TRUST
- IMPERIAL COLLEGE HEALTHCARE NHS TRUST
- JAMES PAGET UNIVERSITY HOSPITALS NHS FT
- King's Fund
- LEWISHAM AND GREENWICH NHS TRUST
- MID STAFFORDSHIRE NHS FOUNDATION TRUST
- NORTHERN LINCOLNSHIRE AND GOOLE HOSPITALS NHS FOUNDATION TRUST
- ROYAL BERKSHIRE NHS FOUNDATION TRUST
- ROYAL UNITED HOSPITAL BATH NHS FOUNDATION TRUST
- THE DUDLEY GROUP NHS FOUNDATION TRUST