Ruli Pennington has been senior healthcare writer at Healthcare Innovation Monitor since 2013. She is an occasional contributor to Information Daily and Public Sector Digital. She is passionate about better public services and women's football.


NHS finances – the dark at the end of the tunnel

Mr Cameron has begun to build the structure on which he will hang his legacy and reputation. He intends, he says, to restructure the English prison system, root and branch. But if the Prime Minister wants to be remembered as anything other than an ordinary mortal with a smooth demeanour and a talent for tinkering he needs to sort out the health service first.

The King's Fund, an independent think tank dedicated to working to improve health and care in England, produces a quarterly monitoring report (QMR) on the health of the NHS. The report aggregates and analyses publicly available NHS financial performance data and meshes it with their own research into “sentiment” amongst finance directors of NHS trusts and clinical commissioning groups (CCGs).

The latest QMR is the eighteenth, and the branding includes a number 18 in a circle. At first glance it looks as though the report has been given an “adult” viewing rating by some “board of home truths reporting”. Perhaps forbidding anyone other than adults from looking at the report was intentional. There are no “scenes of a sexual nature”, no “bloody violence from the outset” and no bad language. Nevertheless it makes a terrifying read. You have been warned.

There is, says the report, widespread pessimism among those surveyed about the state of NHS finances and performance.

76 per cent of all NHS provider organisations (those dishing out the care) are overspent. This includes 95 per cent of all acute trusts. With an average overspend across all providers running at around £9 million a day, forecasts suggest an end-of-year overspend of around £2.2 billion

Commissioners’ (those organisations including CCGs that purchase clinical and other care services on behalf of local populations) ‘finances have been and remain less seriously challenged than providers’ says QMR18. But eighteen per cent of CCGs predict an overspend by the end of the year and this double the number identified in the June 2015 QMR

There will be extra money next financial year following the Spending Review settlement but, wait for it, “more than half of the increase will be allocated to trusts to sort out deficits” says the report. This is deficit financing and as Mr Micawber observed deficit financing causes nothing but misery.*

Eighty-nine per cent of finance directors of acute trusts expect to be overspent at the end of the financial year in March. Planning guidance and the basis of the NHS England Five Year Forward View (5YFV) set a target to contain overspending at £1.8 billion, QMR18 results suggests an overall deficit, across all providers, of around £2.3 billion by March this year.

Over the past four years, notes QMR18, there has been a broadly increasing trend in the proportion of finance directors reporting worries about meeting their cost improvement programme (CIP) targets.

‘The proportion of trust directors who say they are very or fairly concerned about meeting their savings target is 53 per cent – with the number very concerned (38 per cent) at its highest level since QMR surveys began.

Both CCG and trust finance directors remain sceptical of the ability of the NHS as a whole to meet the efficiency targets set out by the 5YFV over the years to 2020/21. Around two-thirds thought there was a high or very high risk of failing to meet the 2 to 3 per cent annual efficiency target.

While financial issues dominate the agenda for all NHS organisations, other worries persist. Asked whether patient care had improved, stayed the same or got worse over the past year in their local area, a majority – 53 per cent – of trust finance directors felt it had got worse. The highest proportion since QMR surveys began.

Trust finance directors identified the four-hour waiting time target in A&E, delayed transfers of care and staff morale as the three most worrying concerns outside of the strictly financial arena.

The latest monthly statistics show a continuing increase of patients waiting more than four hours in A&E. The target is 5 per cent. The reality is more than 9 per cent. The target has now been missed every month (apart from one) since August 2014 says QMR18

‘It is doubtful’, says QMR18 ‘whether providers are able to meet the £1.8 billion deficit target. Additional funding of £205 million and a transfer of £950 million from capital to revenue budgets within the year will help to ameliorate provider overspending (HM Treasury 2016). There is, however, a serious possibility that the Department of Health’s expenditure limit will be breached this year. In any case, supporting overspends in one part of the system with capital transfers is at best a very short-term solution to the funding problem the NHS faces. (our emphasis)

It simply cannot be that the people running the frontline NHS organisations are all wicked, stupid or lazy. These problems, long standing and getting worse, are structural and fundamental and clearly come from the top.

Mr Cameron has begun to build the structure on which he will hang his legacy and reputation. He intends, he says, to restructure the English prison system, root and branch. We should wish him well with that. But if he aspires to being a giant pair of shoulders on which future policy makers will stand rather than just an ordinary mortal with a smooth demeanour and a talent for tinkering he needs to sort out the health service first.

*Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery. 

Mr Micawber. David Copperfield by Charles Dickens

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