The financial ‘stretch targets’ and emergency measures imposed by NHS regulators will fail to make significant inroads into the total provider sector deficit, analysis by HSJ reveals.
- HSJ analysis shows emergency measures and new financial targets for FTs will have little impact on sector deficit
- Providers were told to revise plans to reduce forecast combined of £2.1bn
- FTs’ new plans improve financial position by 3 per cent
Providers had forecast a combined year-end deficit of £2.1bn at the start of 2015-16, which prompted Monitor and the NHS Trust Development Authority to order them to revisit their financial plans for the year in August.
Emergency measures were announced, such as a recruitment freeze for non-clinical roles, while many trusts were asked to work to new stretch targets or control totals.
Monitor has refused to reveal the stretch targets for foundation trusts, while the TDA has yet to respond to a Freedom of Information request for the non-FT figures.
HSJ contacted the 46 FTs that Monitor identified as having the “biggest deficits”, and asked them to provide their stretch targets and revised financial plans. The findings revealed that at least 13 of these organisations were not given stretch targets, while at least seven have declined to alter their plans. For three organisations, their positions deteriorated.
HSJ obtained up to date plans from 34 FTs, which produced a combined planned deficit of £636m. This compared with an original combined deficit plan for these FTs of £657m - an improvement of 3.2 per cent. HSJ calculates that if this improvement were to be replicated across the whole provider sector, it would reduce the total deficit by just £67m.
Some providers, such as Lancashire Teaching Hospitals FT, have agreed to significantly reduce their deficits (see tables,above), but the position of others, such as East Kent Hospitals University FT, has deteriorated dramatically.
Analysis of 10 financially troubled non-FTs suggested an improvement in their combined deficit of just 3.5 per cent since the regulators’ intervention.
It is understood that the Department of Health and NHS England told providers at the start of the financial year that their combined deficit at the end of 2015-16 should be no more than the £822m shortfall reported for 2014-15. However, HSJ’s analysis of the stretch targets suggests regulators may have given up on this ambition, because even if all of these were achieved, there would be little impact on the overall deficit.
Thirty-one FTs either revealed their stretch target to HSJ or said they did not receive one, producing a combined target deficit of £467m. This compared with an original forecast deficit of £549m for these organisations, equating to an improvement of 15 per cent.
If this were to be replicated across the whole provider sector, it would reduce the overall deficit by £315m.
The stretch targets revealed by the sample of non-FTs suggested a similar improvement, of about 12 per cent.
NHS Providers chief executive Chris Hopson said: “All our members are stretching every sinew to improve their financial position, but everything we’ve heard tells us that it’s going to be very difficult for the sector as a whole to do better than the £2.1bn deficit initially projected in business plans.”
HSJ revealed this month that CCGs have forecast a combined surplus of £358m for 2015-16 - less than half of that reported for 2014-15 - highlighting a severe risk that the DH will breach its revenue budget this year.
Last year the DH reported an underspend of just £1m.
Despite this outlook, health secretary Jeremy Hunt told the Commons health committee this month: “I’m confident that the NHS overall will balance the books by the end of the year.”
Asked about any new measures to curb spending this year, the DH said in a statement that it was helping trusts “manage their estates [and making] sure they exploit their vast buying power to secure lower prices for medicines and supplies”.
It is understood that some FTs outside the 46 identified by Monitor have been given stretch targets, along with all non-FTs.
- Department of Health and Social Care (DHSC)
- EAST KENT HOSPITALS UNIVERSITY NHS FOUNDATION TRUST
- Foundation Trust Network (NHS Providers)
- Foundation trusts
- GREAT WESTERN HOSPITALS NHS FOUNDATION TRUST
- LANCASHIRE TEACHING HOSPITALS NHS FT
- NHS Trust Development Authority
- South East Coast
- South West