HSJ’s weekly email briefing on NHS finances, savings and efforts to get the health service back in the black
A letter sent out by NHS Improvement last week signalled that bad news is coming on the financial plan for the provider sector.
The regulator paved the way for some uglier performance figures than we got last time, by warning that extra strain on emergency services in recent weeks has caused “significant additional and unplanned financial pressure”.
You would of course hope that trusts had factored some cold weather and additional activity into their financial plans - but not enough, it seems.
The strain on A&E departments reached its peak in early January, however, so will not fully translate into the financial report for the third quarter of 2016-17. So whatever the forecast at Q3, the plan will take another substantial hit during Q4.
NHSI says many providers have found ways to address the pressures, but we will find out over the coming months to what extent that has been through additional income from commissioners. Extra income of course helps NHSI, but not NHS England or the Department of Health.
Back and forth on Q3
Meanwhile, I’m again hearing about lots of back and forth discussions between NHSI and trusts that revised their forecast outturn at Q3.
In its board report of 31 January, Royal Liverpool and Broadgreen Hospitals Trust said a “detailed review” of its forecast had been conducted and a “likely deficit” of £4.2m had been signalled to the regulator.
But days later, the trust told me the forecast was back on track for a £15.9m surplus (which includes £10m of sustainability and transformation funding) due largely to an increase in expected NHS income. The CCG’s next finance report could make for interesting reading, as might NHS England’s.
Meanwhile, it’s clear that various technical accounting measures are already being used by some trusts to boost their revenue – such as capital to revenue transfers (examples here and here), and property revaluations (here).
And as things get more desperate (as the provider sector threatens to overshoot the £800m risk reserve), NHSI will have to consider whether it can repeat last year’s call for widespread balance sheet adjustments.
This would draw strong criticism from parliamentary watchdogs, and it’s unclear whether finance directors will even have any wiggle room left, or how prepared they would be prepared to use it.
One small convenience is that Easter (and its two bank holidays) fall in April this year, which means it will be next year’s problem.
Hospitals do less of the profitable elective work on bank holidays, while activity in loss-making emergency department tends to sky rocket.
Last year the Easter bank holidays fell in March.
One turnaround trust which seems to have slipped under the radar is Royal Surrey County Hospital FT, which reckons it can better its £8m deficit control total by almost £5m.
The trust had conditions placed on its licence in July last year, with a new leadership team subsequently brought in.
The improvement does not appear to be income driven, as the trust’s average monthly revenue is broadly the same as last year. Meanwhile, monthly agency spend has halved since 2015-16.
Finance director Ross Dunworth said the trust had been successful in persuading a substantial number of agency nursing to move into substantive roles, as opposed to leaving shifts unfilled.
This appears to be borne out by the safe staffing data published by HSJ last month, which found the trust’s fill rates for nursing shifts have remained steady, while the national picture has declined.
The FT might not have been put on stage by NHS Improvement yet, but it sounds like they might be worth a visit for trusts struggling to reduce their agency bill.
Now you see it, now you don’t
On 24 January, providers were told by NHS Improvement that their capital spending plans for the rest of 2016-17 were unaffordable.
Then a week later – after trusts had got their formal expressions of interest in – they were suddenly told the funds were no longer available.
Unfortunately, this so often seems to be the story with central planning in the NHS. Lots of people told to prepare something very quickly and rushing to do it. Then finding out it was mostly pointless.
Cash strapped CCGs?
There have been quite a few examples of cash-strapped NHS providers seeking to delay payments to providers, and now I’m hearing that commissioners are making similar attempts.
Apparently some CCGs have been asking independent providers if they can defer payments in 2017-18, due to cash shortfalls this year. Interested to hear of any examples of this happening.
- Department of Health and Social Care (DHSC)
- Finance and efficiency
- Foundation Trust Network (NHS Providers)
- Government/DH policy
- Jim Mackey
- NHS England (Commissioning Board)
- NHS Improvement
- ROYAL LIVERPOOL AND BROADGREEN UNIVERSITY HOSPITALS NHS TRUST
- Royal Surrey County Hospital NHS Foundation Trust