Health care surveys

This quarter’s report is based on an online survey of the following groups.

93 NHS trust finance directors
40 clinical commissioning group (CCG) finance leads

This report details the results of an online survey of NHS trust finance directors carried out between 26 February 2015 and 12 March 2015. We contacted 257 NHS trust finance directors to take part and 93 responded (36 per cent response rate). The sample included 53 acute trusts; 27 community and mental health trusts; 4 specialist trusts; 4 ambulance trust and 5 unknown.

In addition, we contacted 187 clinical commissioning group (CCG) finance leads and 40 responded (21 per cent response rate). Between them these finance leads covered 41 CCGs (22 per cent of CCGs).

Respondents were asked about their organisation’s financial situation and the financial outlook for their local health economy over the past financial year; the state of patient care in their area; the productivity challenge set out as part of the NHS five year forward view; the financial situation looking ahead to 2015/16; the key organisational challenges facing trusts and CCGs; and provider/CCG plans for elective and non-elective activity in the coming financial year (2015/16).

1. Projected end-of-year financial balance: 2014/15

Nationally, NHS trusts reported a deficit of £467 million by 31 December 2014, and 35 per cent were forecasting a deficit for 2014/15 (NHS Trust Development Authority 2015). For foundation trusts, at the end of quarter 3, Monitor reported deficits at 78 trusts (52 per cent of all foundation trusts) amounting to £321 million (Monitor 2015). Nationally, at month 10 (2014/15) NHS England reported 18 CCGs in deficit with an overspend of £18 million, but in aggregate CCGs forecast a surplus of £135 million (NHS England 2015). The overall surplus may be higher depending on the final spending position on other central commissioning budgets.

Our latest survey shows a similar position across trusts and foundation trusts combined, with around 40 per cent forecasting a deficit for the end of year (2014/15) (Figure 1). On the other hand, only around 10 per cent of CCGs forecast an overspend by the end of 2014/15 (Figure 2).

NHS Trusts
Figure 1: Trends: What is your organisation's forecast end-of-year financial situation?

Respondent comments

  • “'My trust will have a deficit this year for the first time ever.'”

    Acute trust
  • “(Surplus) 'Dependent on contractual penalties being reinvested by CCGs - no confirmation as yet. Otherwise we will be in deficit.'”

    Ambulance trust
  • “(Deficit) 'Following the decision announced in month 8 to reduce transitional Project Diamond funding by 50 per cent.'”

    Specialist trust

QMR 1-4 based on a panel of 50 trust finance directors

CCG Leads
Figure 2: Trends: What is your organisation's forecast end-of-year financial situation?

Respondent comments

  • “'In surplus but with an in-year deficit of £2 million.'”

  • “'Mainly legacy surplus, break even in year.'”

40 CCG finance leads answered this question for the 41 CCGs they cover collectively.
CCGs only surveyed since their establishment in April 2013.

2. In-year financial support

In 2014/15, nearly 60 per cent of finance directors reported that they relied on additional financial support, either loans and additional finance such as additions to their Public Dividend Capital (PDC) from the Department of Health, or drawing on their own reserves (Figure 3).

NHS Trusts
Figure 3: What does your forecast end-of-year outturn depend on?
13 Additional financial support (eg, additional Public Dividend Capital support, financing facility loans, etc)
41 Use of trust reserves
3 Both
43 Neither

Respondent comments

  • “'Using all available reserves and still reporting a deficit.'”

    Acute and community foundation trust
  • “'Seeking resources from CCG.'”

    Acute NHS trust
  • “'In addition to the charitable funding, the trust has utilised reserves set aside for investment/service development to support the financial position; this situation is not sustainable.'”

    Acute specialist NHS foundation trust

Only foundation trusts are allowed to draw down on trust reserves.

3. Cost improvement and QIPP programmes (2014/15)

The average cost improvement programme (CIP) target for trusts for 2014/15 is 4.7 per cent, ranging from 2 per cent to 8 per cent of turnover. The average quality, innovation, productivity and prevention (QIPP) target for CCGs for 2014/15 is 2.6 per cent, ranging from 0.5 per cent to 5 per cent of allocation (Figure 4).

Confidence in achieving planned CIPs/QIPPs has been reducing each year since 2011. Around 50 per cent of all NHS trust finance directors now feel fairly or very concerned about achieving their CIP plans this year (Figure 5).

Similarly, around 30 per cent of all CCG finance leads were fairly or very concerned about achieving their QIPP plans this year, which represents a 5 percentage point increase in concern from the same time last year (Figure 6).

NHS TrustsCCG Leads
Figure 4: What is your organisation's CIP/QIPP target for this financial year (2014/15) as a percentage of turnover/allocation?

Respondent comments

  • “'4 per cent – it would have needed to be 6 per cent to cover the deficit, which was not possible.'”

    Mental health trust
  • “'5 per cent but this understates the pressure on services because turnover includes many other things such as research and development, hosted services, etc.'”

    Teaching hospital
  • “'Target was 5.7 per cent. We will hit 4.3 per cent – but with sizeable (50 per cent) non-recurrent.'”

    Acute medium-sized foundation trust
NHS Trusts
Figure 5: Trends: How confident are you of achieving your cost improvement programme (CIP) target?

Respondent comments

  • “'The pressures over winter have prevented a number of initiatives from commencing in the last quarter, resulting in a significant shortfall.'”

    Acute and community foundation trust
  • “'There are few low-hanging fruit therefore cost change will only come with changes to the operating model, which take time and collaboration to effect. Also every national missive focuses on investment in additional staff be that for numbers on wards or seven-day working. There is a mismatch in timing of resource out and the current clamour for staff investment.'”

    Acute trust
  • “'This is the last year in which I expect to have this level of confidence. From 2015/16 the ability to generate savings has materially diminished because of compounding effect of activity increases (which are unaffordable to commissioners) and combined pressures from the health systems we operate in.'”

    Ambulance trust
  • “'The system is "playing with the statistics" as we all know. A cost improvement programme (CIP) target beyond 2 per cent is not achievable and the system finds a way to inject income into the system non-recurrently, which is storing up a problem for the future. '”

    Acute specialist NHS foundation trust

QMR1-4 based on a panel of 50 finance directors. QMR1 and QMR5 excluded as wording of responses not compatible with other quarters' data.

CCG Leads
Figure 6: Trends: How confident are you of achieving your quality, innovation, productivity and prevention (QIPP) target?

Respondent comments

  • “'Likely outturn 60 per cent delivery of QIPP target.'”

  • “'Acute providers continue to plough on with doing more activity as it is their way of delivering their efficiency targets, ie, do more activity for the same cost.'”

  • “'Delivered through some windfall mitigation and new schemes; not all original schemes delivered.'”

40 CCG finance leads answered this question for the 41 CCGs they cover collectively.
CCGs only surveyed since their establishment in April 2013.

4. The NHS five year forward view productivity challenge

With NHS funding growing at less than 1 per cent per year in real terms on average between 2010/11 and 2014/15, but with demand growth estimated to require real increases of around 4 per cent (Appleby et al 2009; McKinsey and Company 2009), the policy response – the Nicholson Challenge – was to aim to improve productivity.

Now the NHS five year forward view (Forward View) has set out funding projections which suggest the need for additional spending of £30 billion over the five years to 2021/22. The Forward View suggests that with an additional £8 billion, the NHS could manage to close the remaining £22 billion gap through productivity improvements of between 2 to 3 per cent per year.

Previous surveys have revealed a high degree of scepticism about the achievability of the Nicholson Challenge, and this survey shows that around 75 per cent of finance directors think there is a high or very high risk of failing to achieve the productivity gains suggested by the Forward View (Figure 7).

CCG finance leads also felt fairly pessimistic, with the majority – more than two-thirds – assessing the risk of failure as fairly or very high (Figure 8).

NHS Trusts
Figure 7: The Forward View sets out a challenge to the NHS to achieve an average of 2 to 3 per cent productivity gains per year from 2015/16 to 2020/21. What is your estimate of the risk involved in achieving these productivity gains?
2 Very little risk of failure
4 Little risk of failure
18 50/50 risk of failure or success
27 High risk of failure
42 Very high risk of failure

Respondent comments

  • “'Local authority risks and cuts mean that this is outwith providers' control as new models of care are not fully resourced and need to be already delivering. '”

    Community and mental health trust
  • “'Whilst the five-year view describes the need to achieve average efficiency of 2 to 3 per cent, at local levels this nearly always seems to translate into a need for a much higher level of efficiency to meet the trust’s financial plan. I have very little confidence that the forward efficiency plan will only be to 3 per cent.'”

    Acute teaching hospital
  • “'It might be easier to pass a camel through the eye of a needle than genuinely deliver even 2 per cent recurrent cost savings, post-Francis and with rampant non-emergency growth.'”

    Acute medium sized foundation trust
  • “'The easy wins have been achieved and it is getting increasingly harder to strip out cost from services already under pressure.'”

    Acute specialist foundation trust
CCG Leads
Figure 8: The Forward View sets out a challenge to the NHS to achieve an average of 2 to 3 per cent productivity gains per year from 2015/16 to 2020/21. What is your estimate of the risk involved in achieving these productivity gains?
0 Very little risk of failure
0 Little risk of failure
13 50/50 risk of failure or success
22 High risk of failure
5 Very high risk of failure

Respondent comments

  • “'The workforce is not flexible or incentivised enough to deliver meaningful productivity gains.'”

  • “'The NHS has never achieved these levels historically, and tends to understate the impact of cost pressures (eg, seven-day working looking forward). Also difficult to see at the moment how GP services will be consolidated into this assessment.'”

  • “'We are struggling to find 2 per cent of truly deliverable schemes and as part included Better Care Fund savings it makes it doubly hard. The centre is actually using the 3 per cent as its benchmark for aspirational thermometer.'”

  • “'2-3 per cent is a stretch challenge, however 4-5 per cent is needed to balance the books.'”

5. The state of patient care

Around 45 per cent of both CCG finance leads and NHS trust finance directors felt that care in their local area had worsened over the past year (Figures 9 and 10). For finance directors, this is broadly consistent with views expressed in previous surveys. However, for CCG finance leads, the proportion stating care has got better has declined over the past year to one of its lowest points.

NHS Trusts
Figure 9: Trends: Thinking about the NHS in your local area, in the past 12 months, do you think it has got better, worse, or stayed the same in terms of patient care?

Respondent comments

  • “'Despite planning for a reduction in non-elective admissions there has again been an increase. In a system with limited capacity, being told not to plan for more makes it very difficult to maintain the right standards.'”

    Acute district general hospital trust
  • “'There seem even more fractures in pathway delivery as individual organisations increasingly talk about collaboration but act in an internal way to stay off regulators’ radars.'”

    Acute trust
  • “'We are a specialist hospital. Our service quality has been maintained or improved but at the cost of trespassing heavily on staff goodwill re extra hours well beyond contract terms as we sought to meet referral-to-treatment (RTT 18-week standard) within existing and marginal activity resources.'”

    Specialist trust

Question not asked before QMR6.

CCG Leads
Figure 10: Trends: Thinking about the NHS in your local area, in the past 12 months, do you think it has got better, worse, or stayed the same in terms of patient care?

Respondent comments

  • “'Finance and performance standards slipping and the rate of decline seems to be quickening.'”

CCGs only surveyed since their establishment in April 2013.

6. Organisational challenges

For trust finance directors, staff morale remains at the top of the list of concerns, along with the A&E four-hour waiting times target and delayed transfers of care (Figure 11).

CCG finance leads continue to be most concerned about A&E and 18-week referral-to-treatment (RTT) waiting time targets and delayed transfers of care (Figure 12).

NHS Trusts
Figure 11: Trends: Which aspects of your organisation's performance are giving you most cause for concern at the moment? Please select top three

Respondent comments

  • “'Local authority funding cuts impact on community nursing, social care access and support, delayed transfers of care (DTOCs), and de-stabilise the system. The problems in our patch due to local authority cuts are as big as the NHS overall provider pressures from cost improvement programmes and demand.'”

    Community and mental health trust
  • “'As a mental health trust, predominantly on block contracts, the areas of performance concerns are: a) management increasing demand and acuity of patients within fixed resources, b) recruitment and retention of clinical staff, leading to high uses of agency workers.'”

    Mental health trust
  • “'Relative high usage/reliance on agency staff.'”

    Acute and community provider
  • “'Referral-to-treatment (RTT) is ok now but is a tsunami that will hit us in three months. Staff goodwill is on a knife-edge.'”

    District general hospital
  • “'Our patient care quality depends on staff morale. Staff morale is taking a knock given the extra hours staff are putting in to meeting standards and growing fears that the "next lot in Downing Street", irrespective of promises, start re-organising the deck chairs again.'”

    Specialist trust

Respondents asked to choose their top three concerns. Figures expressed as a percentage of the total number of concerns in each survey.

CCG Leads
Figure 12: Trends: Which aspects of your organisation's performance are giving you most cause for concern at the moment? Please select top three

Respondent comments

  • “'Ability to create capacity (resources and funding) to enable transformation of services.'”

  • “'Lack of recognition that their NEL conversion rates are very high and that they need to take some ownership of that bit of the pathway (excepting that some may be linked to community-based support).'”

Respondents asked to choose their top concerns. Figures expressed as a percentage of the total number of concerns in each survey.

7. Tariff arrangements for 2015/16

Earlier this year, providers responsible for 75 per cent share of all NHS services lodged formal objections to the 2015/16 proposed tariff.

Monitor and NHS England subsequently offered providers a choice between an enhanced tariff option and a default tariff option (the latter largely based on 2014/15 prices).

When asked about their plans, around 80 per cent of all NHS trust finance directors indicated that they would opt for the enhanced tariff option (Figure 13). However, as the comments overwhelming reveal, no one was happy about the choices on offer or the way that the pricing process had been conducted.

NHS Trusts
Figure 13: Is your organisation planning to choose the enhanced tariff option, or the default tariff option for 2015/16? As proposed by NHS England and Monitor
72 Enhanced tariff option
3 Default tariff option
18 No decision yet

Respondent comments

  • “'This was only chosen as the "best worst option". Delivery of 3.5 per cent efficiency requirement is unrealistic given the previous 4 years of reductions of around 4 per cent per annum.'”

    Mental health foundation trust
  • “'The choice is between a punch in the face and a kick in the balls. We are really, really enthusiastic about being punched in the face, compared to the alternative.'”

    Mental health foundation trust
  • “'[Yes to the enhanced tariff option] under significant protest and pending legal challenge.'”

    Acute teaching hospital
  • “'We will probably opt for the enhanced tariff option but are questioning if it is legal as both options are undoable.'”

    Acute specialist NHS foundation trust
  • “'The underlying tariff has many serious issues (eg, cardiac tariff going down 7 per cent with no real justification) and the basis for a 70 per cent marginal rate applied to activity above current year contract value is hugely flawed.'”

    Teaching acute hospital providing both local and specialist services
  • “'The expertise about providers lies within providers and if that expertise is not consulted or the views are not listened to, the result is fairly inevitable.'”

    Specialist trust
  • “'We are extremely angry about the enhanced tariff and the "choice" offered!'”

    Acute/community trust

8. Elective and non-elective activity in 2015/16

Nearly two in three trusts are planning for an increase elective activity in 2015/16. However, just one in three CCGs expects an increase in elective activity in the same period (Figures 14 and 15).

The scale of the mismatch in planning assumptions widens considerably for emergency admissions; nearly 80 per cent of trusts expect an increase in 2015/16, but 60 per cent of all commissioners plan or expect a reduction (Figures 16 and 17).

The risk is not just a mismatch of expectations, but a serious disjoint between what providers expect in terms of income for activity and what commissioners think they are likely to pay. Both cannot be right; past experience suggests emergency activity will increase rather than reduce, for example.

NHS Trusts
Figure 14: What are your plans/expectations for elective activity in 2015/16 compared with the current year (2014/15)?
41 An increase
22 Little or no change
2 A reduction

Respondent comments

  • “'Patch locally is seeing unprecedented growth and pressures, having dire impacts on elective work and as a consequence on acutes' financial positions – elective is the only way they can recover margins.'”

    Community and mental health trust
  • “'Recovery in 15/16, of shortfalls in elective delivery during 14/15 which are mostly attributable to the knock-on impact of 10 per cent higher non-elective admissions, is essential to stabilise waiting time performance and to plug at least some of the holes in next year's income.'”

    Major university teaching hospital
  • “'Referral rates from GPs incessantly up 6–7 per cent year-on-year.'”

    District general hospital
  • “'Due primarily to referral-to-treatment backlog.'”

    Acute teaching trust

65 respondents (for whom the question was applicable).

CCG Leads
Figure 15: What are your plans/expectations for elective activity in 2015/16 compared to the current year (2014/15)?
14 An increase
21 Little or no change
5 A reduction

Respondent comments

  • “'Dependent upon eliminating variation in practice across GP referral approach.'”

  • “'Additional activity commissioned for next year in order to achieve referral-to-treatment standards. In addition, projected population increase. Increase of around 2 per cent in elective year on year.'”

  • “'The national referral-to-treatment backlog clearance ought to mean that assuming capacity and demand are in equilibrium overall in years activity should reduce.'”

NHS Trusts
Figure 16: What are your plans/expectations for non-elective activity in 2015/16 compared to the current year (2014/15)?
53 An increase
10 Little or no change
5 A reduction

Respondent comments

  • “'No confidence in CCG Better Care Fund plans to do other than reduce the rate of increase.'”

    Acute foundation trust
  • “'The trust is forecasting an increase whilst the commissioners are suggesting this will be stemmed by the Better Care Fund initiatives. There is no evidence to date that they are going to make any difference as the patients that are coming into the system need acute intervention.'”

    Acute and community foundation trust
  • “'National tariff approach is out of line with reality. Activity will also grow as primary and social care are stretched and secondary care becomes a place of last resort for care and social needs.'”

    Acute trust
  • “'CCG thinks 3 per cent and we think 6 or 7 per cent at least.'”

    Acute medium-sized trust

68 respondents (for whom the question was applicable).

CCG Leads
Figure 17: What are your plans/expectations for non-elective activity in 2015/16 compared to the current year (2014/15)?
3 An increase
14 Little or no change
23 A reduction

Respondent comments

  • “'Plan a reduction but fairly sceptical it will happen.'”

  • “'Planned 3.4 per cent reduction – more or less in line with Better Care Fund requirement.'”

  • “'Linked to Better Care Fund: concern that schemes planned will be able to deliver with availability of staff to work in out of hospital services.'”

9. The financial state of local health and care economies over the next year

NHS trust finance directors are particularly pessimistic about their trusts’ financial position in 2015/16. Just over two-thirds were concerned about balancing their books (Figure 18).

Although slightly more optimistic, around 40 per cent of CCG finance leads felt fairly or very concerned about achieving financial balance in 2015/16 (Figure 19).

NHS Trusts
Figure 18: Looking ahead, how confident are you that your organisation will achieve financial balance in 2015/16?
5 Very confident
14 Fairly confident
12 Uncertain
4 Fairly concerned
58 Very concerned

Respondent comments

  • “'I've never set a deficit budget, nor recorded a deficit in over 20 years. There is so much uncertainty at the moment over the tariff that it's impossible to predict where next year will end up. I am really concerned that the system is forcing delivery organisations deeper into deficit, which means that the important conversations about financing the NHS, system disinvestment and rationing are not happening.'”

    Acute teaching hospital
  • “'Will not happen!'”

    Acute small/medium-sized trust
  • “'We've run out of salami to slice beyond the 4 per cent. In such a labour and capital intensive industry, with heavy regulation and the need for skilled staff, the ability to pull rabbits out of hats is limited: look at what happened to agency staff this year.”

    Specialist trust
CCG Leads
Figure 19: Looking ahead, how confident are you that your organisation will achieve financial balance in 2015/16?
9 Very confident
9 Fairly confident
6 Uncertain
11 Fairly concerned
5 Very concerned

Respondent comments

  • “'CCGs can choose not to invest amounts reserved for non-recurrent purposes/transformation in order to meet their financial targets.'”

  • “'Plans feel reasonable; however, turning QIPP and Better Care Fund into reality is a huge risk.'”

  • “'All main NHS organisations planning for deficits in 15/16 – relatively small percentage but big amounts.'”

As for views about the financial state of their wider local health and care economy over the next year, just over 90 per cent of trust finance directors were fairly or very pessimistic (Figure 20). Similarly, 85 per cent of CCG finance leads felt fairly or very pessimistic (Figure 21), the highest percentage since CCGs were established in April 2013.

NHS Trusts
Figure 20: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?

Respondent comments

  • “'Both local acute providers forecasting deficit for the first time. Commissioners all citing material activity and QIPP risks. We are confident of delivering next year’s plans where these are not connected to whole-systems work... but local authority cuts are severe and definitely starting to bite. Winter 2015 will seem like the glory days!'”

    Community and mental health trust
  • “'The reduction in the tariff, the pay award, increase CNST premiums and unprecedented demand on the services is putting provider organisations at significant risk.'”

    Acute and community foundation trust
  • “'Our CCGs are trying to take £5 million out of our contracts for 2015/16. This would immediately put us into special measures as we could not agree to sign up to any performance standards. Commissioning support units are a complete and expensive waste of time – do not understand the services they are commissioning and are a barrier to discussions with CCGs.'”

    Ambulance trust

Question not asked before QMR3. QMR 1-4 based on a panel of 50 trust finance directors.

CCG Leads
Figure 21: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?

Respondent comments

  • “'Although some individual organisations, including the CCG will plan for, and possibly deliver, surpluses, others will be in deficit and these will be bigger numbers… meaning that in aggregate the system is likely to be in deficit.'”

CCGs only surveyed since their establishment in April 2013.

References

  • Appleby J, Crawford R, Emmerson C (2009). How cold will it be? Prospects for NHS funding 2011–2017. London: The King’s Fund/Institute for Fiscal Studies. Available at: www.kingsfund.org.uk (accessed on 15 April 2015).

  • McKinsey & Company (2009). Achieving world class productivity in the NHS 2009/10–2013/14: detailing the size of the opportunity. London: McKinsey & Company. Available at: www.nhshistory.net (accessed on 15 April 2015).

  • Monitor (2015). Quarterly report on the performance of the NHS foundation trust sector: 9 months ended 31 December 2014. London: Monitor. Available at: www.gov.uk (accessed on 30 March 2015).

  • NHS England (2015). Consolidated 2014/15 financial report (month 10). Paper PB.150326/13A for Board meeting, 26 March 2015. Available at: www.england.nhs.uk (accessed on 30 March 2015).

  • NHS Trust Development Authority (2015). NHS trust service and financial performance report for the six month period ending 31 December 2014. Paper D for Board meeting, 19 March 2015. Available at: www.ntda.nhs.uk (accessed on 20 March 2015).