As the health service barrels towards the end of the toughest financial year yet in its toughest decade ever, efforts to save the Department of Health from blowing its budget are looking ever more desperate.
The latest such move is eye-catching. Earlier this month, a letter went out from NHS England, Monitor and the NHS Trust Development Authority advising that all fines imposed on providers for missed performance targets must be used to prop up the department’s bottom line.
It is hard to interpret these moves as anything other than a trade-off of finance against quality
Using fines to punish poor performance has always been controversial – if a hospital is struggling to hit targets, critics argue, depriving it of income is unlikely to help. For this reason, official guidance has long been that commissioners should seek to use fines income to address the causes of poor performance. Dictating that the money should instead go unspent, in order to reduce provider deficits or increase commissioner underspends, breaks that link completely.
It is hard to interpret it as anything other than a direct trade-off of finance against quality.
What impact this will in fact have on finances or performance is hard to guess – providers have often complained that the way fines are reinvested is less than transparent.
What is more worrying is the message it sends to the system about the priority now being accorded to very short-term financial performance.
This intervention came just days after another letter – issued by Monitor and the TDA on a Friday evening – warning that the regulators would be meeting challenged providers in January to agree urgent actions “including headcount reduction” to improve financial positions. The message came with a list of last-minute moves trusts might like to take to support the 2015-16 position, ranging from further delays to capital investment, to shaking the balance sheet for every last pound of income that could be reported this year within the bounds of reason. Few of these tricks will do anything to improve the underlying financial health of providers.
For trusts, all of this effort is focussed on getting the provider side deficit for 2015-16 down to a reported figure of £1.8bn. The underlying gap will be significantly bigger. As NHS Improvement chief executive Jim Mackey told the public accounts committee last week, the sector’s deficit “looks like it is heading towards £2.5bn or perhaps even north of that” but capital-to-revenue transfers and “accounting adjustments” will kick in before April to bring the number down.
These measures won’t change the scale of the underlying financial problems the NHS carries into next year.
Added to the Friday evening missive was a parallel push to get providers quickly signed up to financial targets that would deliver overall balance for the sector in 2016-17. Providers were given until 8 February to agree next year’s “control totals” in order to secure their share of NHS England’s £1.8bn deficit support fund. The push for such a commitment – at a stage when 2016-17 plans are still in draft and local negotiations at an early stage – has raised provider and commissioner concerns.
Overspending has seen many NHS organisations stripped of autonomy, a similar process is unfolding in Whitehall
This level of arm-twisting sits uneasily with recent promises from the centre that providers will see a new focus on support and improvement from central bodies in 2016-17 – as does the recent DH announcement that trusts could see their “entire board suspended” if they fail to “balance their books without compromising patient care”.
It appears what we’re seeing is a tension between the desire, sincerely felt by many in central bodies, to give providers a “realistic ask” in 2016-17, and the new Treasury influence on NHS affairs in the wake of the spending review. As King’s Fund policy director Richard Murray wrote on hsj.co.uk last week, Treasury controls built into the DH’s settlement could be interpreted as a kind of “special measures”. Just as overspending has seen many NHS organisations stripped of treasured autonomy, a similar process is now unfolding in Whitehall.