Revealed: The NHS trusts falling well short of financial plans

Official forecasts published by NHS Improvement last week suggested the provider sector is broadly on track to meet its financial plans for 2017-18.

However, analysis of the data by HSJ shows some trusts have already fallen well short of their targets, while many more will face an uphill struggle to deliver the savings required to meet their plans.

Eight providers have missed their quarter one income and expenditure targets by more than £5m, while 26 providers missed by more than £1m.

Some of these trusts have formally revised their year end forecast, known as a control total, such as Lewisham and Greenwich Trust and United Lincolnshire Hospitals Trust.

NHSI has begun an investigation into financial governance at Lewisham and Greenwich following concerns about how its financial plan was produced, while United Lincolnshire has been placed in financial special measures.

However, most of the trusts that have missed their Q1 targets said they expect to recover their position and are still officially forecasting to meet their year end surplus or deficit.

This includes Barts Health Trust, which reported the largest “adverse variance” in cash terms after Q1, of £15m. It said this was largely due to the cyberattack that affected many NHS organisations in May. Thousands of appointments and operations were postponed resulting in significant income loss.

In our analysis, HSJ has excluded the impact of sustainability and transformation funding as trusts are judged on their financial performance before this non-recurrent income is accounted for.

The 10 trusts furthest behind plan at quarter one of 2017-18

Further analysis shows dozens of trusts have significantly backloaded their savings plans for 2017-18, which means they expect to make savings that will come into effect later in the year.

Generally, a backloaded savings plan implies a greater level of risk, because some of the savings may not have been identified or confirmed. It may also imply a higher proportion of non-recurrent savings or technical accounting adjustments, which do not improve the underlying position.

This year’s plans imply that trusts have backloaded their savings to an even greater extent than in 2016-17.

After the first quarter of 2016-17, trusts reported a pre-STF deficit of £911m and were forecasting a year end deficit of £2.4bn. This year the first quarter deficit is more than £1bn, with a year end forecast of £2.3bn. The plans suggest larger reductions to the run rate deficit are being planned at this stage than last year.

The actual run rate did improve in the final quarters of 2016-17 but not to the extent forecast, which resulted in the sector reporting an outturn pre-STF deficit of £2.6bn, against the planned £2.4bn.

Jim Mackey, chief executive of NHSI, said last week trusts’ first quarter finances were “encouraging” but acknowledged there are “lots of risks ahead”.

The 10 most backloaded savings plans in 2017-18 

A backloaded savings plan does not necessarily mean a trust will, or is likely to, miss its financial plan, but generally it does imply there could be greater risk. HSJ’s analysis of backloaded savings plans at this stage last year highlighted several trusts that did subsequently miss their financial plan.

This year’s analysis found that there are 65 trusts that would fall more than £10m short of their forecast outturn if their Q1 income and expenditure run rate continued for the rest of the year.

Meanwhile, the NHSI document shows 27 trusts out of 233 have rejected their control totals and therefore do not have access to STF money.