NHS finance chiefs increasingly pessimistic about the future quality of patient services, alongside worrying predictions on the unlikely success of financial support measures, according to research from the Healthcare Financial Management Association
More than one in five finance directors – 21% of Clinical Commissioning Group (CCG) chief finance officers and 23% of trust finance directors – believe the quality of patient services will deteriorate in 2016/17, while a third of provider trusts anticipate quality will decline further in 2017/18.
Concern from finance directors includes waiting times (76%), access to services (69%), and enabling a range of services being offered (61%), being the most-vulnerable aspects of patient care.
The new figures come from HFMA’s latest biannual NHS Financial Temperature Check survey of around 200 finance directors in England.
For the third year in a row, the financial performance of the NHS worsened, with NHS trusts and NHS foundation trusts reporting a deficit, and for the first time CCGs also reported an overspend in 2015/16.
Over a quarter (28%) of organisations reported a worse year-end position than anticipated at the beginning of 2015/16. This was particularly the case on the provider side, as 37% of trust finance directors said their year-end position was poorer than they had planned. Of the 47% that reported a better-than-expected performance, this was largely due to non-recurrent revenue generation measures such as the revaluation of assets.
All this led to a combined trust deficit of £2.45billion at the end of the 2015/16 financial year, compared to a planned deficit of £1.99billion. The main drivers for trusts ending the year in a worse position than planned were the cost of agency staff (51%), the under-achievement of savings plans (33%), and an increase in fines, challenges and deductions (23%).
Our report confirms that while finance directors are feeling the pressures of the current financial situation, many also feel like short-term gains such as cash injections and non-recurrent savings are merely storing up more problems for the future
Finance directors were also questioning the ability of their organisations to deliver the control totals set by NHS Improvement. Over three fifths (63%) have signed up to their organisation’s control total, but of those doing so, only 60% expect their organisation to meet the conditions set.
Additionally, just 16% of finance directors are ‘very’ or ‘quite’ confident that organisations in their Sustainability and Transformation Plan (STP) footprint can deliver a connected strategic plan covering the period up to March 2021. There is some scepticism about the practicalities of collaboration, as only 35% of respondents believe the relationships between organisations in their STP footprint are strong enough to deliver the cross-organisational changes that are required.
Looking ahead, the report points to the fact that planned savings for 2016/17 are ambitious and previous research has told us that finance directors lack confidence that their organisation can deliver the 2%- 3% a year productivity gains needed to close the expected £22billion NHS funding gap.
Furthermore, two thirds (67%) of CCG and almost half (48%) of trust respondents reported a high degree of risk associated with achieving their organisation’s 2016/17 financial plans. The biggest risks to trusts achieving planned savings were identified as slippages in cost savings (78%), spending on agency staff (72%), the impact of social care financial constraints (56%) and increasing demand (52%). The key risks to achieving financial plans in CCGs were identified as increases in emergency care activity (76%), continuing healthcare (69%), increased demand for services (67%) and slippages in cost savings (65%).
Paul Briddock, director of policy at HFMA, said: “The scale of the NHS deficit continues to reach unparalleled levels and it is unlikely the provider position will be in balance at the end of 2016/17, as originally planned.
“Our report confirms that while finance directors are feeling the pressures of the current financial situation, many also feel like short-term gains such as cash injections and non-recurrent savings are merely storing up more problems for the future.
“Although the finance community fully supports positive initiatives to revert the current outlook, they lack confidence in whether they can achieve the control totals set and implement effective STPs, as acknowledged in the recent letter issued from NHS Improvement.
There is a need for NHS organisations to work together to address these financial and operational pressures by the efficient redesign of services and to put an end to the shifting of financial problems between sectors
"Fears around the impact the current financial turmoil in the NHS could have on quality are also a real cause for concern and we may start to see more of these predictions come true in the year ahead.
“To avoid this, there is a need for NHS organisations to work together to address these financial and operational pressures by the efficient redesign of services and to put an end to the shifting of financial problems between sectors.
“Although many see the STPs being key to future sustainability, finance directors highlighted that better leadership and clearer lines of accountability to drive the implementation of plans, are needed."
For 2016/17, 63% of CCG chief finance officers and 79% of trust finance directors are ‘very’ or ‘quite’ confident that their organisations' non-recurrent savings plans will be achieved. However, there is much less confidence about achieving the high levels of recurrent elements of savings plans.
The main mechanisms CCG respondents plan on using to meet the financial challenges ahead are the integration of services or redesign of care pathways (82%), reducing unnecessary clinical variation (76%), and investment in primary care (69%). To meet trusts’ financial challenges, finance directors plan to make savings on agency staff (95%), procurement costs (80%) and through estate rationalisation (60%).