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NHS set to miss target deficit cuts by over £300m

NHS providers ‘experiencing one of the toughest winters on record’ with record demand

Louise Prime

Tuesday, 21 February 2017

NHS providers are experiencing one of the toughest winters on record, with record demand causing both higher than expected spending and reduced income from elective work, leaving them with a third-quarter year-end deficit of £886 million against a target deficit of £580 million. They warned this morning that we cannot expect to keep getting away with “running NHS finances on wafer thin margins year after year”, and also called on clinical commissioning groups (CCGs) to “support trusts where necessary”.

NHS Improvement said in its latest report this morning, covering the third quarter of 2016-7, that this winter there have been exceptionally high A&E attendances, including record daily attendances of more than 60,000 on 5th and 27th December. This has meant acute providers having to open 2,600 escalation beds per day without extra funding to cope with the record level of emergency demand, and having to displace or cancel elective work, resulting in them losing elective income as well as affecting patient treatment. Reflecting these challenges, NHS Improvement reported that providers’ initial forecast at Q3 2016/17 was a full-year deficit of £973 million, over £300 million worse than the forecast outturn at Q2; although this has since been revised down to a deficit of £873 million.

BMA Council chair Dr Mark Porter said: “From these figures it cannot be clearer that the health service was, and remains, under enormous pressure with a huge overspend and without the proper resource for its purpose ... we cannot ignore the fact that the health service is also now failing more than ever before.

“Our hospitals are in the red, GPs are unable to keep up with the number of patients coming through the surgery door, patients are suffering and staff are working under impossible conditions. We urgently need the government to act now and put together a long-term plan to help solve the ever growing issues around staffing and funding the health and social care system as a whole.”

A separate survey was conducted by NHS Providers this month of finance directors from 99 hospital, mental health, community and ambulance trusts (over 40% of the NHS provider sector). The results, released this morning, revealed that although most trusts were on or ahead of plan, just over a quarter reported deteriorating finances against their plans – largely down to the 3.5% annual increases in A&E attendances and hospital admissions, when most had planned for 2% increases. They said these increases had caused significant lost income from elective operations as trusts freed up bed capacity and faced extra, unplanned, spending on staff and more beds to cope with the record emergency demand.

Two-thirds of finance directors predicted that their trusts will only be able to meet challenging financial targets this year by means of one-off savings “that may not be achievable next year and beyond” and that could account for as much as £1 billion of the savings they are expecting to make this year.

NHS Providers chief executive Chris Hopson said their own survey results and NHS Improvement’s figures demonstrated the danger of planning with no margin for unexpected extra demand, and warned: “We can’t expect to run NHS finances on wafer thin margins year after year and keep getting away with it.”

He pointed out that trusts have made “considerable progress” this year to cut last year’s record £2.45 billion deficit, with an estimated year-end deficit somewhere between –£750 million and –£900 million. But he added: “However, this will still need CCGs to support trusts where necessary, such as using the money saved from cancelled operations.”

He went on: “The NHS’ underlying financial position is not sustainable. Two thirds of finance directors we surveyed say a significant amount of the savings their trusts have made are one-offs that cannot be relied upon in future. The National Audit Office has recently warned of the dangers of such an unsustainable approach but the NHS continues to rely on it … [and] the NAO has warned NHS system leaders not to set providers unrealistic savings targets, but we are still persisting with this approach as well.”

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