HSJ’s weekly email briefing on NHS finances, savings and efforts to get the health service back in the black
Just as one NHS trust’s deficit goes back into the realm of bottom line acceptability, another one comes out.
Two South East providers in severe financial difficulties have made dramatic revisions to their in-year forecasts in the last fortnight, each going in the opposite direction.
First there was Brighton and Sussex University Hospitals Trust, which has fessed up to an unrealistic initial financial plan for 2016-17.
Its original “control total” plan was for an underlying deficit of £30m (stripping out sustainability and transformation funding), but this is now forecast to more than double to £63m by the end of the year. The trust has been placed in financial special measures as a result.
The language in the trust’s statement hinted at some of the concerns that have been raised this year over the pressures placed on local leaders, and might have made for uncomfortable reading for regulators.
The statement said the trust “had to agree” its original control total, but has now “made it clear” to NHS Improvement that to continue working to meet the plan is “no longer credible”.
Echoing repeated warnings around trusts’ finances this year, interim chief executive Gillian Fairfield said: “We felt it was important to be open and honest about our finances now to ensure the situation did not deteriorate further.”
There also appeared to be a veiled warning over special measures and the potential impact on the trust’s quality and safety improvement plan.
So it will be interesting to see what results from the new oversight regime – it doesn’t sound as though the trust will be pressured into setting another unachievable plan.
Kicking the problem
Judging by the revised plan for nearby Maidstone and Tunbridge Wells Trust, financial special measures appears to result in a sudden rush of additional revenue to provide a quick fix.
The troubled Kent provider has been in the regime since July, and has now revealed a plan that assumes a £37m improvement by the end of the year.
This sounds fantastic, but a closer look at the numbers shows that just a fraction of this has so far been identified through actual cost cutting measures.
Instead, more than half of the expected improvement will come from additional income and one-off technical accounting measures, including a capital to revenue transfer. Around £9m is still to be identified.
It’s not clear where all the new income is coming from, but West Kent Clinical Commissioning Group is likely to take some of the hit due to various contractual fines not being levied.
The commissioner’s own mid-year finance report forecasts a £10.8m overspend on its contract with the trust by the end of March, and perhaps worryingly, this is partly offset by a predicted £5m underspend against primary care budgets. Again, it’s not clear whether these numbers include the full impact of the trust’s recovery plan, and the CCG has been asked to clarify.
Either way, I’m not sure it reflects brilliantly on special measures, which seems to be focused on short term benefits to the revenue position that simply kick the problem further down the road, or into commissioners’ back yard.
There’s an argument that this is the best option for the time being – with the prime minister and chancellor more likely to look favourably on the NHS in the autumn statement if the service can demonstrate a significant improvement to the finances.
While this might be the political reality, it seems a sad state of affairs that deep rooted problems can continue being shoved aside for others to deal with.
Finance directors are under unprecedented pressure to deliver their financial plans for 2016-17, but there has so far been no official acknowledgement of the extra temptation this brings to bend the numbers.
So this recent warning from Sarah Harkness, non-executive director at NHS Improvement, is welcome recognition of the issues at play, and highlights the need for tough scrutiny from trust NEDs.
She wrote in a blog for the Healthcare Financial Management Association: “Be sensitive to the pressure that management feels it is under. Think laterally about the behaviours this can cause and what it can do to risk appetites.
“Hiding bad numbers, mishandling invoices, suppressing bad performance news might be deliberate fraud, but it might also be wishful thinking, or organisational double-think.
“If the finances are holding up in a surprising way, then spend extra time looking at the quality and safety indicators. We are all very conscious of how thin the corporate elastic can get as it is pulled in so many different directions.”
STP begging bowls
There will be two main reasons for NHS England seeking to tightly control the communications of sustainability and transformation plans.
The need to drip feed information about service reconfigurations is the obvious one (imagine the sense of crisis if dozens of centralisation plans were published at once), but the other is around capital funding.
Because what NHS England and the Treasury do not want is a huge list of 44 huge requests for capital, because there is no prospect of them being met.
The region’s leaders acknowledge there is next to no possibility of getting this amount, so any investment will need to focus on “schemes that provide the most beneficial impact”.
But this of course raises serious doubt over the achieveability of the plan, which is to close a revenue gap of more than £900m by 2021.
There is an easy and in many cases justifiable get out clause here for local leaders, and we could be heading for a stand-off situation in many cases.
National leaders will try to resolve this by encouraging local land sales, though this is unlikely to happen consistently or quickly throughout the country.
- BRIGHTON AND SUSSEX UNIVERSITY HOSPITALS NHS TRUST
- Department of Health and Social Care (DHSC)
- Finance and efficiency
- Five year forward view
- Government/DH policy
- MAIDSTONE AND TUNBRIDGE WELLS NHS TRUST
- NHS Brighton and Hove CCG
- NHS England (Commissioning Board)
- NHS Improvement
- NHS West Kent CCG
- North West
- Patient safety