The NHS Provider sector is heading for a deficit of £931m by the end of 2017/18 as opposed to the planned £496m. Widespread operational issues combined with the fact that the performance of a small number of Trusts has “diverged materially” from plans approved by the Board at the beginning of the year are cited as the reasons for the increased deficit.
Higher demand for services, a continued increase in the number of patients attending A&E, high levels of bed occupancy limiting the provider’s ability to admit patients for planned care, a significant spike related to Winter pressures (including a rate of flu-confirmed hospital admissions that is around three times higher than last year and greater than the peak of the previous seven seasons), have all contributed to the intense operational pressures.
These operational pressures led to an overspend on employee/staff costs of £701m (1.8%) and non-pay costs of £292m (1.3%). The target for a real terms reduction in the paybill was ambitious from the outset and this overspend reflects the pressure of increased demand, unfilled vacancies and staff sickness/absence. The increase in non-pay expenditure was partly due to purchasing healthcare from non-NHS bodies.
Response to these figures has called into question whether the savings being demanded are reasonable or achievable.
Richard Murray, Director of Policy for The King’s Fund says: “It is alarming that NHS providers now forecast a £931m deficit for this financial year, a deterioration of more than £300m in three months. This reflects the dramatic decline in the finances of a number of individual Trusts, and raises serious questions about how reasonable the financial targets were in the first place.
“While NHS Improvement is right to point to increases in demand for services as the reason for the financial difficulties, these are not pressures that have sprung up in the past few months and they show no sign of abating. Although the Treasury has provided more money to the Department of Health and Social Care, these pressures raise the risk the Department will breach its own budget.
‘This underlines yet again that after the biggest funding squeeze in NHS history, the service does not have enough money or staff to do everything being asked of it.”
From the Nuffield Trust, Senior Policy Analyst Sally Gainsbury says: “Despite very hard work in NHS Trusts, today’s financial figures make grim reading. As we predicted at the start of this year, reported deficits are set to be in the region of a billion pounds this year. Even this figure disguises a real underlying deficit of close to £4bn which will roll on from year to year, after one-off sources of money are taken out [1].
“NHS Improvement has shown increasing transparency and openness in setting out more data on productivity. This should help us face up to the reality that the savings being demanded are just not realistic. Trusts have been asked to save 4% of their costs for the seventh year running, twice what the Government has been advised is possible. They are on course to make a remarkable £3.3bn in savings, but even this is not enough and relies on much more one-off savings than was planned.”
Although performance overall is mixed there are some positives. Providers have succeeded in treating more patients within key operational standards and have kept A&E performance steady at a national level compared to last year. Although A&E performance remains below NHS Constitution standards, providers appear to have halted the year-on-year decline in performance seen during recent years.
Agency staff costs have also continued to decrease. In Q3 the sector spent £108m less than planned and £441m less than the comparable period in 2016/17 – that’s a dramatic fall of 20%. Spend on banked staff was higher than planned. However, the worrying trend is the high level of unfilled vacancies – around 100,000, which has a continued impact on provider performance.
It is the first time the provider sector report has included workforce data from NHS Improvement and it highlights the scale of the shortage, particularly of doctors and nurses.
Chief Executive of the Nuffield Trust, Nigel Edwards, says: “Shortages of nurses damage patient care and make working life harder for those who remain, potentially driving them away too. We have warned that current policies are completely inadequate to the scale of the problem [2], and these figures confirm that we are stuck with more than one in ten posts left vacant. There is no sign of nursing applications increasing enough. A new language test and the prospect of a Brexit migration crackdown are turning away the European nurses who were stopping the problem spiralling out of control.
“These figures also show that 8% of posts for doctors are left vacant – a marked increase on the figure the NAO found in 2014 [3]. Particularly troubling is a 12% vacancy rate for doctors in mental health services. We have known about this problem for a long time, yet despite the stated priority given to mental health it does not seem to be getting any better.
“In some ways, the lack of crucial workers in the NHS is an even bigger problem than the lack of funding. We can sign a cheque and bring back more money onstream if the will is there, but there is no button to push which will suddenly bring us tens of thousands of qualified extra staff.”
The report warns that it is critical that cost improvement targets, which have not been met, are recovered before the year end. “To achieve the current forecast saving outturn of £3.3 billion, providers must identify a further £86m of schemes in the remainder of the year.”
Is this realistic without putting patient safety at risk?
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[1] The Bottom Line, published by Nuffield Trust last year
[2] Nuffield Trust’s response to the Workforce Strategy
[3] The National Audit Office reported that in 2014 shortfalls for junior doctors were at 4.3% and consultants at 5.3%
Click here to download the report.
