Providers ordered to take tough new measures to cut deficits

In a letter sent this afternoon, Monitor chief executive David Bennett has restated that the current financial forecasts for 2015-16 are “simply unaffordable”, and asked each foundation trust to revisit their plans.

The letter, seen by HSJ, tells trusts to “ensure vacancies are filled only where essential”, and ensure that existing safe staffing guidance has been adopted in a “proportionate and appropriate way”.

It also advises that financial impact should be considered while managing waiting lists, as well as patient experience.

Foundation trusts with large deficits have been given specific new end of year outturn figures which Monitor believes they can achieve if they make the cost cuts outlined.

Clinical commissioning groups will also be ordered by NHS England to take a number of steps to ease the pressure on providers, the letter says.

These include a suspension of all fines and penalties linked to the admitted and non-admitted elective waiting targets, backdated to the beginning of the financial year. These are the two targets which national officials announced in June would be dropped. Fines and penalties for the remaining target (the incomplete standard) will remain.

Commissioners are also being told to “be transparent… on any revenue generated by other fines linked to provider non-delivery, so that commissioner decisions on how these should be deployed can be taken in the light of the need to deliver key standards and the overall financial position”, the letter said, and to “be transparent… about any uncommitted reserves so that any potential upside in commissioner budgets is known”.

A similar letter has been sent to non-FTs by the NHS Trust Development Authority, HSJ has been told.

As previously reported, the provider sector has forecast a total deficit of more than £2bn for 2015-16.

The letter also asks FTs to take the following steps:

• implement fully the Agenda for Change 2013 agreement on pay progression;
• where there is insufficient capacity and where possible, to transfer activity to another provider that has already funded but underused capacity;
• ensure that contracts with commissioners provide for adequate levels of activity, and are agreed as soon as possible.

Mr Bennett writes: “As you know, the NHS is facing an almost unprecedented financial challenge this year. Current plans are quite simply unaffordable.

“As I have said before, if we are to do the best we can for patients we must leave no stone unturned in our collective efforts to make the money we have go as far as possible.

“We are already reviewing and challenging the plans of the 46 foundation trusts with the biggest deficits.

“However, it is clear that this process will not close the funding gap and so we need all providers - even those planning for a surplus this year - to look again at their plans to see what more can be done.”

The letter also said: “Ministers have been sighted on these options and are ready to support all providers to reduce their deficits in a managed way although, of course, all actions should be consistent with your responsibilities for safety and the delivery of constitutional standards.”

Updated 9.40am 4 August: Corrected to state that commissioner fines and penalties are not being suspended for all elective waiting targets. They will remain in place for the “incomplete standard”, and are being suspended for the admitted and non-admitted standards - the two which NHS England announced in June would be dropped.