Rolling coverage of today’s NHS financial announcements and reaction
Provider sector Q1 deficit: what you need to know
- NHS providers reported a combined deficit of £930m for first three months of 2015-16
- Foundation trusts recorded £445m deficit, while NHS trusts were £485m in the red - both worse than planned
- Monitor forecast suggests FTs will finish 2015-16 around £1bn in the red
- NHS Trust Development Authority has not released a full-year forecast for non-FTs
- HSJ analysis of trusts’ latest financial reports and revised plans suggests the acute and specialist hospital sector remains on course for a deficit of about £2bn.
- Leader: We have to talk about the money
2.37pm A commissioning sector take on today’s figures. Steve Kell, co-chair of NHS Clinical Commissioners, said: “The figures released by Monitor and TDA are extremely concerning. CCGs have been working hard with their provider colleagues to manage the increasing demand and increasing financial challenges that the whole of the NHS is facing, but it is clear that we must change the focus. Mental health, community, social and primary care are facing their own challenges and we cannot continue in the same direction without investing elsewhere as described in the Five Year Forward View.
“There is a real danger that the answer is seen as cuts in management resource and capacity, at a time when clinicians and managers need to work together and deliver new approaches to health care.
“CCGs do not have significant funds to address the issues reported today, and it is important for the system and those who fund the NHS to work together to find a sustainable solution that secures safe high quality care for patients.”
1.40pm The King’s Fund has weighed into the debate about Q1 deficit figures, warning that chancellor George Osborne will need to announce an emergency funding injection in the forthcoming spending review to avert a rapid decline in patient care.
King’s Fund policy director Richard Murray said: “These figures confirm that NHS providers are heading towards an unprecedented end-of-year deficit.
“The reported overspend of £930 million at the end of the first quarter is more than the deficit for the whole of last year. This reflects a very sharp deterioration in financial performance among all types of providers, with 96 per cent of acute trusts and more than half of mental health trusts now reporting overspends.
“On this basis, warnings of a deficit of at least £2 billion by the end of the year are well-founded. The government and NHS bodies are already taking urgent measures to reduce spending and find savings from other budgets, but it is inconceivable that an overspend of this magnitude can be covered by the end of the year.
“Overspending on this scale cannot be attributed to mismanagement or waste among individual trusts. It reflects the impossible task of delivering high-quality care for patients with inadequate funding.
“Today’s figures follow data released yesterday showing that A&E departments missed the four-hour waiting time target during August and that waiting times for hospital treatment are close to breaching the government’s preferred target measure.
“With winter approaching, the health service is facing widespread deficits, rising waiting times and deteriorating staff morale. The government must now acknowledge that the NHS cannot continue to maintain standards of care and balance the books. Unless emergency funding is announced in the forthcoming Spending Review, a rapid and serious decline in patient care is inevitable.”
11.18am On that subject, HSJ reports this morning that controversial immigration rules have scuppered Central Manchester University Hospital’s plans to recruit 275 Indian nurses befoere the start of winter this year.
11.10am Former health secretary special advisor Bill Morgan has warned against assuming that the rocketing provider sector deficit in the NHS will prompt a fresh cash injection from the Treasury.
He tweets: “HMT will say that police, schools, defence, local gov’t have all had a worse deal and seem to be able to control their budgets.” He also sounds a note of caution about hopes that the Treasury might back DH in the struggle with the Home Office over nursing visas. He writes: “Yes HMT will [back the DH], but it’s not easy: HO will be backed by [the Department for International Development and the Foreign Office] who’ll be against us raiding the developing world for staff.”
10.54am Meanwhile, HSJ editor Alastair McLellan argues in this week’s leader that the government must find a way for the NHS to access funding from outside the Treasury.
He writes: “The government must find a way for the NHS to access significant funding from outside the exchequer to rapidly accelerate investment in new facilities and technology, therefore creating the environment in which new care models can start to make an impact. It must, of course, do so while avoiding the kind of problems created by private finance initiatives.
“No easy task and little wonder Mr Hunt avoided mentioning the NHS deficit in his conference speech. But the NHS cannot wait much longer for robust answers.”
10.46am Mr Edwards’ comments are echoed by those of the Health Foundation. The think tank’s chief economist, Anita Charlesworth, said in a statement: “Despite the government’s efforts to limit cost pressures, NHS providers in England overspent by £930 million in the first three months of this financial year with more than three quarters of the trusts not being able to balance their books. This is a substantial deterioration compared to the same time last year – when hospitals were just under £400 million in the red. Deficits on this scale are unaffordable and unsustainable. Lack of financial control poses risks for both quality of care and government finances.
“Despite warning signs that NHS costs are spiralling, as yet there is no published national plan to improve efficiency and contain costs. Hospitals cannot do this alone. There is an urgent need for action and leadership from the centre. The NHS needs a radically different approach with realistic hospital budgets, enough trained staff, and sustained practical support for hospitals to unlock potential efficiency improvements. The Health Foundation and the King’s Fund have been arguing for an NHS wide transformation programme with ring-fenced funding. This funding could come from the NHS’s capital budget. Investing in improving efficiency rather than bailouts for overspending is key to a financially sustainable, high quality service for patients and a much better use of taxpayers’ money.”
10.43am Meanwhile Nigel Edwards, chief executive of the Nuffield Trust think tank, is warning that the centre is exhibitiing an “overly leisurely” approach to the “urgent problem” of provider-side deficits.
“Today’s figures show that deficit has become the ‘new normal’ for the NHS,” he said in a statement. “With 79 per cent of trusts in the red, the outlook for breaking even by the end of this financial year is bleak.
“Financial problems on this scale cannot be explained by individual pockets of mismanagement - we are looking at a systemic problem across the health service. And as our recent survey of healthcare leaders suggests, it is becoming increasingly impossible to provide quality standards, timely access to care and financial control at the same time. As we enter the winter period, it is highly likely that patients will wait longer for care.
“There are solutions to this problem – redefining how care is delivered, reducing reliance on agency staffing, and driving down waste. But these are difficult to achieve and will take much, much longer than the impending deadline for the Department for Health to balance the books in April 2016.
“This problem has been evident for some time, so getting financial results for Quarter 1 after the end of Quarter 2 suggests an overly leisurely approach to an urgent problem. Given the scale of these deficits, there appears to be an extraordinary absence of the sort of urgency one might expect from those in charge of the NHS.”
10.40am Here’s NHS Providers chief executive Chris Hopson’s response on the Monitor/TDA Q1 figures out this morning: “These results are not a surprise – providers have been flagging their rapidly deteriorating financial position for more than two years now. NHS trusts and foundation trusts are doing everything they possibly can to avoid financial deficits, but they are experiencing a triple whammy: rapidly rising patient demand; an extra £2 billion unfunded staff cost they have been required to add; and the deepest and longest funding squeeze in NHS history, despite the NHS ring fence. The fact that more than 80 per cent of all hospitals are now in deficit and more than 50 per cent of all types of trust are projecting a year end deficit, shows that this is a system level problem, not one of poor trust performance.
“Everything we see and hear suggests it’s going to be difficult to improve on the original £2.1 billion deficit trusts were predicting at the beginning of the year. Given the very significant in year deterioration against plan during each of the last two years, even this will be challenging and requires an enormous effort throughout the system. We recognise that this size of deficit will give the Department of Health a significant problem in making its overall 2015-16 budget balance.
“Trusts also tell us there is more downside risk than upside opportunity at this point. We are six months through the year and the vast majority of realisable savings were already in, or have now been added to, 2015/16 plans. We also go into winter with a large number of members telling us they have less money than last year because of the way Clinical Commissioning Groups and System Resilience Groups have allocated the winter money they received. The only significant extra new opportunity on the horizon is the introduction of an agency staff spending cap, but this will now come very late in the year and just at the point when demand for agency staff is likely to be at its greatest as extra winter capacity comes on stream. Everyone will keep doing all they can, but we need to be realistic about what can be achieved at this point.
“The NHS needs to come together to create a realistic and deliverable financial stabilisation plan that eliminates the provider sector deficit within a reasonable period of time and enables trusts to plan for a sustainable future. This is now urgent as running a £2 billion annual provider sector deficit is patently unsustainable”.
10.30am However, broadly the figures show that financial performance was even worse than expected in Q1, and give nothing to undermine the numerous unnofficial forecasts of a £2bn plus deficit for the provider sector in 2015-16.
10.25am The Q1 report from FT regulator Monitor states that “the latest forecast is that the FT sector will end the year with a deficit of around £1bn”. The TDA is not providing a forecast outturn from NHS Trusts, on the grounds - it says - that Q1 forecasts have already been rendered outdated by the revised plans that trusts agreed to over August and September.
10.19am The figures break down to a £445m deficit for the foundation trust sector - £90m worse than planned - and a £485m deficit for the NHS trust sector.
10.17am The NHS Trust Development Authority and Monitor have released the financial performance figures for providers in the first three months of this financial year.
The sector racked up deficit of £930m in Q1 of 2015-16 - bigger than entire deficit for previous year.
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