The financial position of the most challenged acute providers is falling further behind that of their peers, the first NHS-wide financial reports for 2011-12 reveal.
At the end of June six acute NHS trusts – all of them in London and the South East – forecast they would finish the year in the red, three times the number forecasting a deficit in June 2010, according to the NHS’s quarterly report.
Foundation trust regulator Monitor’s first quarter report, also released last week, showed the number of foundation trusts in the highest category of financial risk doubled from three to six in the first three months of 2011-12.
Barking, Havering and Redbridge University Hospitals deficit / South London Healthcare Trust deficit
Losses forecast at the six NHS trusts totalled £170m – only £61m less than the total surplus forecast by the rest of England’s trusts. South London Healthcare was forecasting losses of £65m, compared with actual 2010-11 losses of £41m; and Barking, Havering and Redbridge Hospitals forecast £40m, compared with £33m actual losses last year.
NHS deputy chief executive David Flory told HSJ it was a “serious concern” that longstanding problems at those trusts were “getting worse, not better” in the early months of 2011-12.
“There are a small number of big-number problems in there, and that’s having a huge impact on the net position of the trust sector as a whole,” he said.
He added that he “had to accept” those trusts would be in deficit this year, because cutting their expenditure sufficiently to break even would have “consequences on service that we just simply couldn’t accept”.
Mr Flory’s latest report also shows three primary care trusts – Haringey, Enfield and Barnet – predicted full-year overspends, totalling £56m, on 30 June. In 2010-11 no commissioners forecast overspends at that point, although two finished the year in deficit. In total, seven NHS trusts recorded gross deficits totalling £103m that year, compared with £55m losses forecast by two trusts at the end of June.
Asked if he expected the number of deficits this year to be higher than currently projected, Mr Flory said his “thoughts at the moment” were “in line with the quarter one forecasts”, but he would not be “shocked” if a few additional problems emerged late in the year.
Overall, PCTs are seeking £5.9bn of savings this year, which would put the service slightly ahead of schedule for its target of £20bn saved by 2015, the report states.
But when asked by HSJ how much of that had been saved so far, Mr Flory said he did not “recognise the question”.
PCTs and strategic health authorities were forecasting surpluses of £1.2bn, compared with NHS trusts’ net forecast of £61m.
Nuffield Trust chief economist Anita Charlesworth said: “The NHS trust sector has a much smaller buffer than PCTs or FTs, and there’s clearly a risk that a relatively small deterioration against its forecast position could put the trust sector into deficit.”
Monitor’s report showed a similar gap emerging in the acute foundation trust sector.
Fifteen of the 79 acute foundation trusts received financial risk ratings of 1 or 2 at the end of June, up from 10 at 31 March. These are the highest of five possible risk ratings given by the regulator, meaning the organisations are considered at “significant” or high risk of breaching their terms of authorisation.
Three foundations – Tameside, Peterborough and Stamford and the Royal National Hospital for Rheumatic Diseases – saw their position worsen to the highest-risk category of 1, with Peterborough deteriorating sharply from a neutral rating of 3 in the previous quarter. Another seven trusts moved from healthy ratings of 3 or 4 down to 2.
A director at one of the trusts told HSJ: “Clearly those trusts that were already in trouble are slipping into deeper water. Most have and long standing problems and this makes them particularly ill equipped to cope with tariff deflation and commissioners who are determined to move activity out of the acute sector and pay for as little as possible for what does come through the door. They are like patients already weakened by a chronic illness-vulnerable to fresh insults to their system.
“What is more interesting is that there appears to be the growing number of new trusts rapidly slipping towards deficit. The NHS does it damndest to disguise this with murky accounting practices but it’s a growing reality.”
However, Monitor’s data showed financial performance for the FT sector as a whole was slightly ahead of plan.
Monitor chief operating officer Stephen Hay said: “It’s encouraging that the sector is in overall surplus and ahead of plan for the first quarter – although surpluses are lower than last year due to the economic environment. But there are a number of foundation trusts that are beginning to struggle and we are looking closely at these.”
A senior source at one trust said: “The gap is widening. The fact that so many of the trusts concerned are looking at structural change indicates that there is a problem. What we don’t yet know is what kind of resource is being held back for people who are slipping.”
He predicted September figures would show for the first time whether problems were being caused by trusts making insufficient savings or commissioners failing to control activity.