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NHS trusts under rising pressure to make savings

Providers face worries in moving towards ever-greater financial collaboration within STPs

Louise Prime

Wednesday, 22 March 2017

NHS trusts are under ever-increasing pressure to make greater savings in the approaching financial year, their leaders have claimed. In a new survey by NHS Providers, trusts’ finance and commercial directors reported that they are facing an escalation of the already challenging savings required in 2016/17. They also highlighted difficulties in moving towards ever-greater financial collaboration within sustainability and transformation plans (STPs).

NHS Providers sent its survey – concerning how financial plans are progressing for the next financial year, what the financial outlook is, and how they have responded to the issues related to control totals – to directors across NHS trusts and foundation trusts in England in February 2017. It received responses from 99 providers, representing 42% of the provider sector.

The results show that NHS Improvement has asked trusts to deliver more demanding savings under the cost improvement programme (CIP); and those that fail to agree or fall short of these “control totals” will be unable to access additional funds to support transformation. NHS Providers said its findings “clearly indicate that the provider sector has been set an unprecedentedly challenging financial task for 2017/18”, with control total savings targets far larger than those outlined in the national tariff, representing a “ratcheting up of the already challenging savings required in 2016/17”; and non-recurrent savings made this year mean that those targets will be even more difficult to reach.

NHS Providers said the survey findings also clearly demonstrate some of the difficulties of moving towards ever-greater financial collaboration within sustainability and transformation plans (STPs). Many respondents said they were heavily reliant on local clinical commissioning groups (CCGs), either working with the trust to develop a joint financial recovery plan, or more simply noting the strong risk around the level of income from local commissioners meeting the trust’s expected value.

Directors also had concerns around governance and financial regulation in signing up to system control totals; in particular the issue that while they are expected to collaborate at a local health economy level, they are still held to account and regulated as standalone institutions. They told NHS Providers they were concerned that the aggregation principle behind system control totals means that while there are some potential benefits for organisations, they will always be zero sum – so someone in the STP has to lose for someone else to gain.

NHS Providers said these difficulties suggest that system control totals need to be more than just an aggregation of individual control totals to encourage providers, and indeed CCGs, to sign up. It said there instead needs to be a level of mitigation, from both a financial and governance perspective.

Its finances policy advisor, Edward Cornick, warned: “We can see that the scale of the task facing providers next year equals not a gradual change, but a dramatic one. We are entering a year when providers are being asked to make savings that are simply of a different magnitude than at any other time in the NHS’s 70-year history.

“The fact that NHS Improvement concluded that 30% of providers need to make a 6.4% cost improvement clearly demonstrates that the service is in for a very bumpy year indeed financially. Under such circumstances it is hardly surprising, from a governance perspective, that these providers felt unable to agree to control totals.”

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