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Hospital finances in ‘parlous state’ as risk of NHS crisis rises

Problems spreading way beyond A&E – but most CCGs remain confident of surplus

Louise Prime

Thursday, 22 January 2015

The NHS is creaking at the seams with far wider problems than the widely reported A&E crisis, and with hospital finance in a “parlous state” the risk is increasing of an NHS crisis, reported The King’s fund this morning. But in its quarterly report it also found that most clinical commissioning groups are optimistic that they’ll be breaking even, or even in surplus, at the end of this financial year.

In today’s Quarterly monitoring report, The King’s Fund said that hospitals are stretched to the limit by increasing demand for services and an “unprecedented financial squeeze” – and waiting times for treatment, and other key performance indicators, are worsening. It found that:

  • The proportion of inpatients waiting longer than 18 weeks for treatment rose to 12.5% in November – the highest since the target’s introduction in 2008.
  • The target that no more than 5% of outpatients should wait longer than 18 weeks for treatment was breached in November, for the first time since 2008.
  • Waiting times for cancer treatment continued to worsen in the second quarter of 2014, with only 83.5% of people receiving treatment within 62 days of urgent referral by their GP – the fewest since this target was introduced.
  • The number of delayed discharges from hospital increased sharply to more than 5,000 a day in November, a nearly 20% increase since January.
  • The number of cancelled operations during November to January was up by a third on the same period in 2013.

The King’s Fund acknowledged that increased waiting times result partly from the government’s policy to allow a ‘managed breach’ of the 18-week targets while a backlog of long-waiters is cleared. However, it said: “Current performance across a range of indicators suggests the health system is creaking at the seams.”

The report’s authors found that more than 40% of trust finance directors whom they surveyed forecast that they’ll end the year in deficit. More than 60% of trusts are relying on financial support from the Department of Health (or for some foundation trusts, plan to draw down their reserves), underlining “the parlous state of hospital finances”. Yet, over three-quarters were prioritising patient care over balancing the books, by increasing over the next six months the number of permanent nursing staff they employ. Trusts said their chief concern was staff morale, as well as A&E waiting times; and more than 80% were concerned about being able to meet their target to reduce emergency admissions.

In contrast, CCGs’ confidence in their finances has slightly increased compared with the previous quarterly report, and with the same quarter the previous year. The King’s Fund said: “Repeating the pattern of previous reports, commissioners are more optimistic, with more than 90% of CCGs expecting to break even or finish the year in surplus.”

Furthermore, compared with the previous quarterly report, a higher proportion of CCG leads said they were very or fairly confident of achieving their quality, innovation, productivity and prevention (QIPP) target, and fewer said they were fairly concerned about this; though there has also been a sharp rise in the proportion who said they were very concerned about meeting the QIPP target.

The King’s Fund’s chief economist John Appleby said: “While recent attention has focused on the problems faced by A&E units, performance against waiting time targets and other indicators has continued to worsen. Taken together, the findings from this quarter’s report show that services are stretched to the limit. With financial problems also endemic among hospitals and staff morale a significant cause for concern, the situation is now critical.”

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