- NHS Improvement and NHS England looking to reduce provider deficit by £300m
- Year-to-date position suggests high risk of deterioration by year-end
- Joint paper says the central bodies will try and mitigate the impact of pay awards on providers
Health economies which are struggling financially will have to make “difficult choices and trade-offs” as national NHS chiefs seek to deliver a breakeven position in 2018-19.
Finance bosses at NHS Improvement and NHS England say they are looking to reduce the planned deficit for the provider sector by almost £300m, as well as cutting planned commissioning spending by more than £260m.
As previously reported, the provider sector has planned for a deficit of £519m this year, while commissioning budgets are forecasting a near breakeven position.
The year to date position, and the pattern of deterioration in previous years, suggests a high risk that the deficit forecast will grow throughout the year.
However, the national bodies said they have agreed plans to improve the position and “eliminate” the planned deficit over the next few months.
A joint finance paper said: “NHS England and NHS Improvement are committed to achieving a balanced plan and have agreed a joint programme of actions designed to eliminate the £519m deficit in previously submitted operating plans in time for Q2 reporting.
“As agreed, the commissioning sector will deliver £265m of planned underspend as at month five, and NHS Improvement is currently reviewing returns from providers to confirm the level of improvement achievable by providers against a target of £254m.”
This would mirror the pattern of recent years, when the provider deficit has been offset by commissioning underspends reported by NHS England.
But there is a significant level of risk in achieving the plan, as there is no funding which has been held back as a “risk reserve” as in previous years.
The paper added: “Providers and commissioners are reporting delivery risks of around £900m (before the impact of any funding shortfalls in relation to the Agenda for Change and medical pay awards), around half of which relates to concerns with efficiency delivery…
“Concerted action is required to avert a material risk of aggregate overspend.”
The paper sets out various actions being taken, including around over-the-counter medicines, deferring central programme spending, and working with the government to reduce the impact of the pay awards and centrally determined drug prices on trusts.
But it says: “These measures may not be sufficient alone to deliver an acceptable risk-profile for year-end financial delivery, meaning that any new investments will need to be carefully considered, and we will be supporting those systems operating at the highest levels of risk in making difficult choices and trade-offs as the year progresses.”
Meeting in common between NHS Improvement and NHS England