Specialist West Midlands trust plans for 'unprecedented' deficit

The Birmingham based specialist trust, which has a turnover of about £80m, said having to plan for £2m deficit for 2015-16 was “unprecedented”.

According to this month’s trust board papers, it also expects to have finished 2014-15 with a deficit for the first time.

The forecast deficit for 2014-15 is £200,000, although a trust spokeswoman told HSJ the final deficit was likely to be “slightly higher”.

The papers said last year’s shortfall was the result of “cost pressures” linked to higher than planned locum and agency staffing, as well as savings being £600,000 less than planned.

These pressures were likely to continue into 2015-16, with changes to the tariff resulting in a further loss of around £1.5m.

The trust said taking the step to plan a deficit position was “unprecedented for the trust” and its £2m deficit target relied on delivering “challenging” savings of £2.8m and meeting its growth targets.

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As a specialist orthopaedic provider which has signed up to NHS England and Monitor’s enhanced tariff offer, the trust is particularly exposed to a reduction in funding for trauma and orthopaedics in the revised tariff.

In a statement the West Midlands trust said it did not expect to be “significantly affected” this year by a new rule where specialist work above 2014-15 volumes is only paid at 70 per cent of the normal tariff price.

However, it said “continuing increase in demand for these services will… mean that the 70 per cent rate may well have a material impact in future years”.

The trust added: “The key drivers of our deficit plan for 2015-16 are the significant reduction in trauma and orthopaedic tariffs, and the cost of temporary staffing to maintain service levels and safe staffing against a backdrop of national skill shortages in key staffing groups.”