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Aggressive efficiency targets added to NHS finance woes

Rising number of CCGs unable to keep their spending within budget, reports NAO

Louise Prime

Tuesday, 22 November 2016

NHS bodies’ financial performance worsened considerably in 2015-16 and this trend is unsustainable, the National Audit Office warned this morning. It said “aggressive efficiency targets” have contributed to the rising number of trusts in deficit. Doctors’ leaders said the NAO’s verdict that enormous financial pressure on the NHS is resulting in declining access to services and quality of care should ring alarm bells. The NAO also reported that a rising number of clinical commissioning groups (CCGs) are unable to keep their spending within budget, with more than one in seven now in cumulative deficit.

The NAO said NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85 billion in 2015-16, a greater than three-fold rise in the £574 million they reported in 2014-15 – and provider trusts’ overall deficit grew by 185% to £2.45 billion, up from £859 million in 2014-15. 

The number of CCGs reporting cumulative deficits almost doubled to 32 in 2015-16, up from 19 in both 2014-15 and 2013-14. Two thirds of NHS trusts (65%) and NHS foundation trusts (66%) reported deficits in 2015-16, up from 44% of NHS trusts and 51% of NHS foundation trusts in the previous financial year. 

The NAO said it had found “indications that financial stress is having an impact on access to services and quality of care”, with a worsening in trusts’ performance against important NHS access targets. It reported an association between trusts’ financial performance and their overall Care Quality Commission rating – and the 14 trusts rated ‘inadequate’ had a net deficit equal to 10.4% of their total income in 2015-16.

The NAO report also revealed:

  • £2.4 billion additional funding given to NHS trusts and NHS foundation trusts in financial difficulty as a cash injection, loan or other financial support in 2015-16
  • £1.8 billion funding for financial sustainability available for trusts in 2016-17 from the £2.14 billion sustainability and transformation fund
  • £461 million net deficit reported by NHS trusts and NHS foundation trusts in the first three months of 2016-17
  • £14.9 billion savings that NHS trusts, NHS foundation trusts and clinical commissioners need to make by 2020-21 to help close the estimated £22 billion gap between patients’ needs and resources.

NAO head Amyas Morse said: “With more than two thirds of trusts in deficit in 2015-16 and an increasing number of clinical commissioning groups unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable.

“It is fair to say aggressive efficiency targets have helped to swell the ranks of trusts in deficit over the last few years. The Department, NHS England and NHS Improvement have put considerable effort and funding toward stabilising the system, but have a way to go to demonstrate that they have balanced resources and achieved stability as a result of this effort.”

The BMA said it was especially concerned by the NAO’s findings, given there have been reports that the NHS might not receive much additional funding in this week’s autumn statement. Council chair Dr Mark Porter commented: “This report should ring alarm bells – we’ve known that the NHS has been under enormous pressure for some time, but this analysis shows that things are steadily getting worse and that financial pressure is having an impact on access to services and quality of care. ...

“The fact that measures put in to help ease the financial situation have actually made it worse for a number of trusts is particularly concerning. As the report highlights, not only have ministers robbed Peter to pay Paul and moved money designated for longer-term investment into day-to-day spending, they have also strayed into uncharted territory, with many plans to close the funding gap untested and unachievable.”

He added: “The NHS is already the most efficient health service in the world – further efficiency savings alone simply will not be enough to plug the gap.”

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