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NHS deficit shrinks by two thirds in a year, latest performance data show

But providers still face uphill struggle over next two years, Health Foundation warns

Caroline White

Monday, 19 June 2017

The NHS deficit has shrunk by two thirds in the past year – from £2.4 billion to £791 million – the figures* on financial performance for the last quarter of 2016-17 show.

This represents an improvement of £1.7 billion, driven by savings of over £3.1 billion (3.7%), with over £700 million saved on locum and agency use during the year, says NHS Improvement.

This is against a backdrop of rising demand and a significant increase in delayed transfers of care: providers experienced a 24.5% increase in delayed days in 2016-17 compared with 2015-16, it says.

Jim Mackey, chief executive of NHS Improvement, said the NHS had achieved “the impossible” over the past year.

“No healthcare system in the developed world has managed to achieve this level of efficiency,” he said. “Sheer hard work by our staff has seen us finish the year in a far more healthy financial position than in recent times, whilst maintaining a focus on patient safety, compassion and outcomes.”

He continued: “The NHS has delivered this financial turnaround at the same time as dealing with very high levels of demand – particularly over the winter period.  In addition, there have been great efforts made in improving outcomes for patients.

“People should feel justly proud of what they’ve achieved this year, and go into next year knowing that, whilst it will be hard, the challenge certainly is not impossible.”

NHS Improvement says that work with providers previously in special measures because of financial concerns has helped generate over £100 million of savings. And the Financial Improvement Programme, run by NHS Improvement, has helped pinpoint another £100 million worth of savings.

But it acknowledges that the challenge for NHS providers next year will be to cut the current planned deficit of around £500 million – a figure based on the aggregation of provider plans.

Its delivery depends on several key assumptions around risk management, agreed activity levels and beds being freed up so that patients can leave hospital when they are ready to be discharged, says NHS Improvement.

But providers in the NHS are set to face ongoing challenges over the next two years with the end of frontloaded investment, independent charity the Health Foundation warned.

“The deficit of £791 million means that NHS trusts have missed their target of £580 million. This is a large improvement on last year’s £2.45 billion, ending a trend of rising deficits that began in 2013/14.

“However, the service still faces a continued challenge over the next two years following the end of frontloaded investment,” warned Anita Charlesworth, director of research and economics at the Health Foundation.

“Less than half of NHS trusts were in deficit last year compared to two thirds the year before. This is a big improvement, but with 44% of trusts in deficit there are clearly still substantial pressures across the system and there is more work to be done,” she said.

She added that while NHS staff had gone the extra mile to protect patients from a drop-off in quality as a result of the financial squeeze, “many are feeling increasingly undervalued and overworked.”

She went on: “There remains cause for concern over the financial situation of the NHS, and it seems certain that costs are set to continue rising faster than resources. Even the most generous sums promised by the main parties in the recent election were not enough to meet the rising pressures on the system.”

And she warned: “Without substantial investment there will be unavoidable, and hugely difficult, choices to be made about the level of service we expect from the NHS, and how we are willing to find the money to pay for it.”

* Performance of the NHS Provider Sector year ended 31 March 2017. NHS Improvement

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