Revealed: the 24 CCGs forecasting deficits in their first year

A report due to be released by NHS England today shows that of the 16 CCGs forecasting unplanned deficits for 2013-14, three are in the South of England, two in the North and one in London. The majority, however, are in the Midlands and East region, including four in the Staffordshire health economy.

They join eight CCGs in London and the South with planned deficits, to give a total of 24 commissioning groups expecting to overspend in their first year - more than 10 per cent of the 211 groups in England.

The proportion and geographical spread of CCGs forecasting deficit are now both significantly greater than was the case in recent years for their predecessor primary care trusts. However, a well placed NHS England source told HSJ they did not think this indicated “a deterioration in a real sense”.

The source said all of the CCGs forecasting deficits were in areas where predecessor PCTs had not been achieving the 1 per cent surplus required of them and “in many cases the balance they did achieve was reliant on non-recurrent measures”.

“This year we have a much more transparent process resulting in increased visibility of CCGs with underlying financial difficulties, so together we can develop trajectories to reach recurrent sustainable positions going forward,” the source added.

CCGs forecasting unplanned deficits blamed their worsened financial position on factors including historical underfunding, unexpected rises in demand and the transfer of part of their allocation to NHS England for the commissioning of specialised services.

These transfers are the outcome of months of work and negotiations to correct errors made in the original allocations for this financial year, in which funds that should have been allocated to specialised commissioning were wrongly allocated to CCGs. HSJ understands this process has resulted in NHS England’s £12bn specialised commissioning budget increasing by a net £580m, although not all of this sum has come from CCG allocations.

Cambridgeshire and Peterborough CCG, which is forecasting the largest unplanned deficit at £8.6m, is among those attributing its situation to the outcome of the “specialist services rebasing exercise”, its latest finance report shows.

A spokeswoman for South East Staffordshire and Seisdon Peninsula CCG said its unplanned £2.4m deficit was “entirely caused by the specialised commissioning allocation”. She added: “We have had £5m more taken off us than we have had activity removed.”

In theory, allocation transfers to specialised commissioning should not affect a CCG’s bottom line, because they should be matched by a corresponding reduction in anticipated costs.

The NHS England source acknowledged, however, that “there may be a few examples where a CCG could experience an adverse impact if their 2013-14 financial position included some of the resource transferring to specialised services, or if they are still anticipating costs in their position that will eventually be charged to specialised services”.

Despite the transfer of additional resources to specialised commissioning, NHS England is forecasting a £217m deficit on the specialised commissioning budget and expects this area to be in recurrent deficit at the end of 2013-14.

All of the 10 area teams responsible for specialised commissioning are forecasting overspends on this budget, including two − Wessex and Surrey and Sussex − that are forecasting overspends of 9.9 per cent and 9.5 per cent respectively.

It is understood that a desire to ensure all CCGs got real terms growth in their first year left NHS England unable to allocate more than 2 per cent growth to specialised commissioning, excluding one-off costs, despite recognising that costs and activity were growing faster in specialist services.

Specialist services activity has historically grown at about 5 per cent, compared with 2.1 per cent growth for general acute care.

Speaking at an NHS England board meeting this month, the body’s chief financial officer Paul Baumann said the position in specialised commissioning “gives us a real challenge as we move into 2014-15… because we need to address the ongoing growth momentum in specialised commissioning and also correct the structural deficit which is emerging in the picture we exit the year with”.

Despite the increased number of CCGs forecasting deficits, the CCG sector overall is expected to finish 2013-14 broadly on plan.