• NHS trusts will have to significantly improve “run-rates” to meet 2016-17 financial targets
  • Plans assume significant efficiency savings can be delivered in the latter half of the year
  • In many cases, those savings have not yet been identified, or there is a high level of risk that they will not be delivered
  • Full data

Dozens of NHS providers will have to significantly improve their monthly “run-rates” in order to meet their financial targets for 2016-17, according to analysis by HSJ.

Although the trust sector’s performance was in line with financial plans for the first three months of the year, those plans assume that significant efficiency savings can be delivered in the second half of the year.

In many cases, those savings have not yet been identified, or there is a high level of risk that they will not be delivered.

HSJ looked at trusts’ Q1 performance data to identify trusts that must significantly improve their monthly run-rate, which is the operating surplus/deficit in an average month.

Some of these trusts will have clearly identified, and be in the process of implementing, savings opportunities in the remainder of the year, therefore mitigating the risk.

But others, including University Hospitals of North Midlands Trust, have not yet identified significant chunks of their efficiency savings in order to meet their plans.

Trusts which require the most improvement to their monthly run-rates, in cash terms
Provider NameAverage monthly run-rate in Q1 ’000Average run-rate required to meet year-end target ’000Year-end position if Q1 run-rate continued ’000Distance from target (or control total) ’000
King’s College Hospital NHS Foundation Trust -£8,255 -£133 -£99,060 -£97,460
Royal Free London NHS Foundation Trust -£4,724 £1,292 -£56,692 -£72,192
Barts Health NHS Trust -£12,510 -£6,892 -£150,116 -£67,416
St George’s University Hospitals NHS Foundation Trust -£5,531 -£1,404 -£66,368 -£49,517
Guy’s And St Thomas’ NHS Foundation Trust -£1,930 £543 -£23,160 -£29,676
Oxford University Hospitals NHS Foundation Trust £809 £3,056 £9,712 -£26,961
Staffordshire  and Stoke on Trent Partnership  NHS Trust -£2,574 -£517 -£30,884 -£24,684
North Bristol NHS Trust -£6,045 -£4,003 -£72,544 -£24,511
University Hospitals of North Midlands NHS Trust -£1,981 £58 -£23,772 -£24,470
University Hospitals of Leicester NHS Trust -£2,690 -£692 -£32,280 -£23,980

*Actual and required run-rates assume full receipt of sustainability funding where it was accepted, in order to ensure consistent treatment. Some trusts could lose sustainability funding, but any lost funding can still be used to aid the overall sector position. North Bristol and Staffordshire and Stoke on Trent Partnership have not agreed control totals, so no sustainability funding is assumed in their actual or required run-rates.

After accounting for the full “sustainability and transformation fund”, the trust sector reported a deficit of £461m in Quarter 1 of 2016-17, or a monthly deficit run-rate of £154m.

Although this was in line with plans, this run-rate projected across the year would deliver a deficit of more than £1.8bn. The planned deficit is just £580m.

Although a large negative run-rate in Q1 has been common in recent years, it has largely been improved through significant one-off accounting measures coming later in the year.

Projected across the full year, the Q1 deficit of £930m in 2015-16 would have resulted in a deficit of £3.7bn, which was what experts at the Nuffield Trust estimated underlying performance to be.

But about £1.2m of accounting measures, including £330m of local capital-to-revenue transfers, reduced the reported outturn deficit to about £2.5bn.

This suggests further one-off measures may be needed in 2016-17, although the extent to which this is possible is far from clear.

A spokesman for NHS Improvement told HSJ the regulator does not expect further capital transfers this year.

NHSI’s latest performance report for the sector said efficiency savings of 2.4 per cent were delivered in Q1, against the planned 2.6 per cent. The average requirement over the full year is about 4 per cent.

A spokesman for University Hospitals of North Midlands Trust said that £25m of its £42m efficiency target is currently “unidentified”, with another £7m deemed “high risk”.

Barts Health Trust is currently forecasting £63m efficiency savings, against a target of £75m, but a spokeswoman said the trust is working on a “robust recovery plan that will enable us to reduce the deficit further and faster”.

The efficiency savings at King’s College Hospital FT are loaded heavily towards the end of the year. The trust did not respond to HSJ’s enquiries, but its latest finance report suggested that around £8m of its £51.5m efficiency plan was unidentified.

According to its board papers, the pressures at Staffordshire and Stoke on Trent Partnership Trust, a community and social care provider, largely relate to its local authority services. The trust is seeking a renegotiation of its main contract value with Staffordshire County Council.

University Hospital of Leicester Trust said all of its £35m efficiency savings had been identified, but £3.3m were red rated, or high risk.

North Bristol Trust said £5.8m of its efficiency plans are high risk, but only £700k is unidentified.

The other trusts in the table did not respond.

HSJ’s table lists the biggest run-rate gaps in cash terms. Smaller trusts that must significantly improve their run-rates include Stockport FT, Southport and Ormskirk Hospitals Trust and Sherwood Forest Hospitals FT.

Sally Gainsbury, senior policy analyst at the Nuffield Trust, said: “NHS providers have a huge challenge on their hands this year to find around 4 per cent efficiency savings, which translates into more than £3bn cash, compared to the £2.2bn they found last year.

“While it is a huge concern that so many have yet to even identify where these savings will come from, that is not altogether surprising given that the figure providers are being asked to find this year far exceeds the savings both Monitor and Lord Carter found were possible.

“We also need to be wary of the how many providers will have loaded the hardest of their savings plans into the last quarter of the financial year – in order to stay on target to secure the quarterly payments from the STF.”

Click here for the full data. The numbers assume full receipt of sustainability funding where it was accepted.