NHS hospitals set to make overall loss for first time since 2006

NHS hospitals are set to make a loss of nearly £250m (€300m; $410m) by the end of this financial year, and experts have warned that budgets are coming under greater strain.

David Flory, chief executive of the NHS Trust Development Authority, has warned in papers to its board that the deficits were “very worrying” and posed a “very significant risk to the sustainability of the sector.”

In all, 26 NHS trusts of the 102 that do not have foundation status are forecast to be in the red at the end of March, posting a combined deficit of £457m. Some 76 trusts are expecting to at least break even, and their combined surplus is estimated at £210m.

This gives a projected net deficit overall of £247m. This is more than three times the £76m that was forecast last April to be the position at this financial year’s end.

Earlier this year Monitor, the body that regulates the 147 foundation trusts, reported that overall they were set to make a £135m surplus by the end of March. Taken together, the figures mean that NHS hospitals as a whole would make a net loss of £112m for 2013-14, the first such loss since 2006.

The figures reported to the NHS Trust Development Authority’s board meeting on 20 March showed wide variation in trusts’ financial positions.

The biggest projected deficit, £39.8m, is recorded at University Hospitals of Leicester NHS Trust. Nine of 22 NHS trusts in London (41%) are forecasting a deficit, compared with two of 19 trusts (11%) in the north of England.

Many acute care trusts have signalled that they face operational pressures in urgent and emergency care.

Papers presented to the board show that the authority is working closely with those trusts in deficit to ensure that each has enough cash available to pay staff and creditors on a monthly basis. The authority has made it clear that trusts must not operate a service that “compromises on sustainability or quality to meet financial balance.”

The forecasts indicate that some 20 trusts will require £141.6m in further financing in the remainder of the financial year.

All 39 community, mental health, and ambulance trusts are expecting to break even or deliver a surplus in 2013-14.

Paul Briddock, head of policy for the Healthcare Financial Management Association, said that financial pressure on hospitals was increasing. He said that factors contributing to the pressure included greater demand for emergency care, the effects of requirements for efficiency savings, and changes to improve the quality of care, such as recruiting more staff, to raise standards as recommended by Robert Francis QC’s report of the inquiry into care failings at Mid Staffordshire NHS Foundation Trust.

“Those three things coming together are really beginning to squeeze things tightly now,” Briddock said.

A Department of Health spokesperson said that overall the NHS budget—taking into account the finances of clinical commissioning groups—would end the financial year in balance. The spokesperson said that safe care did not necessarily cost more but that where “historical issues” were being corrected there was inevitably some pressure on finances.

“We recognise the scale of the financial challenge that trusts are facing and are taking action to address deficits, including putting recovery plans in place,” the spokesperson said.