NHS trusts cut overall deficit but remain at “breaking point,” leaders warn

BMJ 2016; 354 doi: (Published 25 August 2016) Cite this as: BMJ 2016;354:i4670
  1. Gareth Iacobucci
  1. The BMJ

NHS trusts in England improved their financial position at the end of the first quarter of this year but remain under huge pressure from unprecedented demand, new figures have shown.

The figures, published on 25 August by the regulator NHS Improvement,1 showed that the NHS provider sector recorded a combined deficit of £461m (€540m; $610m) in the first three months of 2016-17, £5m ahead of plan. This compared with a £930m deficit in the same quarter of last year.

But the figures also showed a further sharp increase in demand, particularly at hospital emergency departments, which saw a 6.3% year on year rise in attendances and a 6.4% year on year rise in admissions in the first three months of 2016-17.

The improvement in trusts’ financial position came after concerted effort by NHS England and NHS Improvement to reduce trusts’ combined deficit, which reached a record £2.45bn at the end of 2015-16.2

To help reduce the deficit, NHS England has invested an extra £1.8bn in a “sustainability and transformation fund” this year, which trusts can access quarterly, depending on their financial performance. This formed part of an overall NHS funding uplift of £3.8bn in 2016-17 that followed the government’s commitment to frontload £8.4bn extra investment for the NHS by 2020-21.

NHS Providers, the body representing NHS provider trusts, said that the financial results were positive but warned that trusts may be posting “very optimistic” forecasts to ensure that they gain access to the extra funding.

In a survey of 84 finance directors from NHS acute care, mental health, community and ambulance trusts carried out by NHS Providers, almost half (47%) of trusts said that they were ahead of their 2016-17 financial target at the end of the first quarter, and a third (32%) reported being on target.3 A fifth of trusts (21%) were below target.

But finance directors were less confident that they would be on target at the end of 2016-17. Almost four in 10 (38%) said that they were not confident of meeting so called “control totals” set by regulators, with 32% “unsure” and only 30% “fairly confident.”

Chris Hopson, the chief executive of NHS Providers, said that although the NHS had managed to “slow the runaway train” of the increasing deficit, the first quarter figures may mask the true picture.

“If you miss out on quarter one numbers, you don’t get access to sustainability and transformation funding. Eight per cent [of trusts] are relying on this funding to make their numbers. It wouldn’t surprise me if people are taking a very optimistic view,” he said.

The major concerns highlighted by finance directors in the NHS Providers survey were not being able to reduce agency staff costs, lack of bed capacity, not being able to manage increases in attendance and admissions to emergency departments, and the effects on the NHS of cuts to social care.

“Trust leaders are coming under increasing pressure because of demand increases. We are reaching breaking point,” Hopson warned.

Hopson said that senior political leaders needed to acknowledge the funding gap and spell out how to fill it, whether through cutting staff numbers, rationing services, allowing waiting times to grow, or allowing deficits to increase.

“We have reached the point where we cannot do everything. Either we put more money in or we have to make a conscious decision about where we allow things to slide,” he said.

He added that pressure would intensify when the overall uplift in NHS funding drops from £3.8bn this year to £1.5bn in 2017-18 and £0.5bn in 2018-19.

Jim Mackey, chief executive of NHS Improvement, acknowledged that 2016-17 was “a crucial year for the NHS.”

He said, “It’s early days—and there is still much work to be done—but today’s figures demonstrate that providers are meeting some of the ambitious plans that trusts boards have signed up to, and this is a promising start to the year.”


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