1. Health care surveys

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

74 NHS trust finance directors
47 clinical commissioning group (CCG) finance leads

This report details the results of an online survey of NHS trust finance directors carried out between 24 February 2013 and 10 March 2014. We contacted 230 NHS trust finance directors to take part and 74 responded (32 per cent response rate).

In addition, we contacted 195 clinical commissioning group (CCG) finance leads and 47 responded (24 per cent response rate). Between them these finance leads covered 58 CCGs.

Respondents were asked about the financial situation of their organisation and local health economies over the past financial year; the state of patient care in their area; the £20 billion productivity challenge set for 2014/15 and beyond; the likely achievement of a 15 per cent reduction in emergency admissions as part of the Better Care Fund costing; and their assessment of the key current concerns for their organisation.

2. End-of-year financial situation and cost improvement/quality, innovation, productivity and prevention programmes

Projected end-of-year financial balance: 2013/14

One in eight trusts forecast ending 2013/14 in deficit. This improvement on the one in five forecasting this position in December is to be expected as organisations take action to minimise or reverse deficits by cutting spending in the last few months of the year (figure 1).

One in ten trusts reporting either breakeven or surplus noted that their position was helped by one-off asset sales or otherwise non-recurring financial actions.

As Monitor and the NHS Trust Development Authority note, 2013/14 may be the first year since 2006/7 that the provider side of the NHS will end up in a net deficit position (Monitor 2014; NHS Trust Development Authority 2014).

While NHS England reported a net overspend of £366 million in the first nine months of the year for specialised commissioning (NHS England 2014), one in eight CCG finance leads forecast a deficit for the year as a whole (figure 2).

NHS Trusts
Figure 1: What is your organisation’s likely end-of-year (2013/14) financial situation?
52 In surplus
13 Breaking even (+/-0.25% of turnover)
9 In deficit

Respondent comments

  • “'Our surplus is heavily underpinned by asset sales; otherwise it would be around 1 per cent of turnover.'”

    Ambulance trust
  • “'Whilst we will deliver our target financial performance, this has been achieved through non-recurrent means.'”

    Acute trust

Note: The area of the bubble in the survey charts represents the value shown. The sizes of the bubbles are comparable between the charts.

CCG Leads
Figure 2: What is your organisation’s likely end-of-year (2013/14) financial situation?
45 In surplus
6 Breaking even (+/-0.25% of turnover)
7 In deficit

Respondent comments

  • “'Achieving this [a surplus] required CCGs in our patch to implement risk sharing arrangements.'”

Note: 47 CCG finance leads answered this question for the 58 CCGs they cover collectively.

NHS Trusts
Figure 3: Trends: What is your organisation’s likely end-of-year financial situation?
CCG Leads
Figure 4: Trends: What is your organisation’s likely end-of-year (2013/14) financial situation?

Cost improvement and quality, innovation, productivity and prevention programmes

The average cost improvement programme (CIP) target for trusts this financial year is again 4.8 per cent, representing between 3 per cent and 8 per cent of turnover (figure 5).

The average quality, innovation, productivity and prevention (QIPP) target for CCGs for this financial year is 2.8 per cent, ranging from 0.5 per cent to 7 per cent of allocation (figure 5).

Since the beginning of this financial year there has been a general increase in certainty as to the achievement (or not) of planned CIPs.

However, nearly four in ten NHS trust finance directors remain concerned about achieving their CIP plans (figure 6).

Generally, concern about savings plans appears more marked in 2013/14 than in the previous two years (figure 8).

NHS TrustsCCG Leads
Figure 5: What is your organisation’s CIP/QIPP target for this financial year (2013/14) as a percentage of turnover/allocation? NHS trust finance directors/CCG finance leads

Note: 47 CCG finance leads answered this question for the 58 CCGs they cover collectively.

NHS Trusts
Figure 6: How confident are you of achieving your CIP target in 2013/14?
19 Very confident
22 Fairly confident
5 Uncertain
12 Fairly concerned
16 Very concerned

Respondent comments

  • “'Taking costs out of clinical frontline services whilst addressing Francis and other quality issues is proving an impossible task.'”

    Very concerned – acute trust
  • “'We will be within about a £1m of the £29m target. The real issue is that this is about the fifth year of delivering 4-5 per cent CIP levels and it is becoming difficult to see how we will sustain this over the next couple of years, let alone the next 5 years. Possible solutions will involve cross-system working, which the current legal/competitive/regulatory environment does not support.'”

    Fairly confident – acute trust
  • “'It's starting to get very tricky... as a result of tariff deflator, 'CIP' is straying into 'service reduction' territory.'”

    Fairly confident – mental health trust
CCG Leads
Figure 7: How confident are you of achieving your QIPP target in 2013/14?
27 Very confident
12 Fairly confident
4 Uncertain
3 Fairly concerned
12 Very concerned

Respondent comments

  • “'We will hit around 90 per cent of QIPP with other underspends filling the difference (arguably defacto QIPP as demand suppressed in these areas).'”

    Uncertain
  • “'Reporting that we will deliver 96 per cent, but that is only because we negotiated a block contract for emergency activity that has mitigated QIPP under-delivery. Recurrently we have delivered circa 65 per cent.'”

    Fairly confident

Note: 47 CCG finance leads answered this question for the 58 CCGs they cover collectively.

NHS Trusts
Figure 8: How confident are you of achieving your CIP target?

Note: QMR1 and QMR5 excluded as wording of responses not compatible with other quarters’ data.

CCG Leads
Figure 9: How confident are you of achieving your QIPP target in 2013/14?

Note: 47 CCG finance leads answered this question for the 58 CCGs they cover collectively.

The £20 billion productivity challenge

Our previous reports (Appleby et al 2013, 2012) show that NHS organisations appear to have made good progress in meeting productivity targets during the first two years of the Nicholson Challenge.

However, views about the risk of failure to meet the £20 billion productivity target by the end of 2014/15 have grown, with more than eight in ten NHS trust finance directors now stating there is a high or very high risk of failure (figures 10 and 12).

On the other hand, CCG finance leads are slightly more optimistic – though most assess the risk of failure as greater than 50/50 (figure 11).

NHS Trusts
Figure 10: The NHS is now more than halfway through the so-called Nicholson Challenge. What is your estimate of the risk involved in achieving productivity gains of the value of £20 billion by 2014/15?
0 Very little risk of failure
1 Little risk of failure
12 50/50 risk of failure or success
35 High risk of failure
26 Very high risk of failure

Respondent comments

  • “'Progress to date has been underwritten by pay restraint at national level, but the reliance on deflating tariffs and providers delivering 4 per cent year after year has reached the point of unsustainability.'”

    University teaching hospital
CCG Leads
Figure 11: The NHS is now more than halfway through the so-called Nicholson Challenge. What is your estimate of the risk involved in achieving productivity gains of the value of £20 billion by 2014/15?
0 Very little risk of failure
4 Little risk of failure
20 50/50 risk of failure or success
16 High risk of failure
7 Very high risk of failure

Respondent comments

  • “'The increased focus on Francis/Keogh and staffing ratios will mean that trusts will have to reverse efficiencies previously delivered by reducing numbers/skill-mix of frontline staff.'”

    Very high risk of failure
  • “'Might be achieved, but 2015/16 and beyond will really be the test.'”

    50/50 risk of failure or success
  • “'This added to the Better Care Fund challenge means at some point providers need to work as networks and engage in a shared challenge with commissioners.'”

    50/50 risk of failure or success
NHS Trusts
Figure 12: Trends: The NHS is now more than halfway through the so-called Nicholson Challenge. What is your estimate of the risk involved in achieving productivity gains of the value of £20 billion by 2014/15?

Note: Question not asked before QMR6 or in QMR7.

CCG Leads
Figure 13: Trends: The NHS is now more than halfway through the so-called Nicholson Challenge. What is your estimate of the risk involved in achieving productivity gains of the value of £20 billion by 2014/15?

3. The state of patient care

The focus on not just maintaining the quality of services but improving them has been sharpened since the publication of major reports in 2013 such as the Francis, Keogh and Berwick reviews (Francis 2013; Keogh 2013; Berwick 2013).

Although around one in five NHS finance directors and CCG finance leads felt care in their local area had got worse over the past year, this has reduced over time, and there has been some improvement over the past year in the number thinking care had got better (figure 16).

NHS Trusts
Figure 14: 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?
22 Better
37 The same
15 Worse

Respondent comments

  • “'Rising expectations re investment in seven-day working and nursing staff have had an impact. Financially though this has proved difficult to manage and presents a challenge for the trust.'”

    Acute and community trust
  • “'Fragmented and conflicted commissioning structures [has led to worse patient care].'”

    Acute and community trust
  • “'Performance has improved as a result of increased focus although this has been at the expense of delivering the CIP.'”

    Acute trust
CCG Leads
Figure 15: 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?
18 Better
19 The same
10 Worse
NHS Trusts
Figure 16: 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?

Note: Question not asked before QMR6.

CCG Leads
Figure 17: 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?

4. Organisational challenges

The scale of the current system reform, overlaid on an unprecedentedly tough financial settlement and the associated and equally unprecedented productivity target, continue to present a challenging environment for NHS organisations.

Top of the list of current concerns for CCG finance leads continue to be waiting times targets for A&E, referral to treatment (RTT) and cancer (figure 19).

For trusts however, staff morale remains a chief concern ahead of waiting times targets (figure 18).

NHS Trusts
Figure 18: Which aspects of your organisation's performance are giving you most cause for concern at the moment? Please select top three
6 Health care-acquired infections
14 Cancer treatment waiting time targets
16 Emergency readmission on threshold
17 Patients’ care experience
17 Level of engagement in performance issues by senior clinicians
21 A&E four-hour wait target
21 18-week RTT
23 Delayed transfers of care
23 Staff morale
CCG Leads
Figure 19: Which aspects of your organisation's performance are giving you most cause for concern at the moment? Please select top three
6 Patients’ care experience
6 Level of engagement in performance issues by senior clinicians
6 Emergency readmission on threshold
7 Health care-acquired infections
10 Delayed transfers of care
10 Staff morale
17 Cancer treatment waiting time targets
27 18-week RTT
31 A&E four-hour wait target

Respondent comments

  • “'Targets are important but if staff morale is an issue then the likely impact will be in the care experienced by patients may reduce leading to the failure to achieve the targets!'”

  • “'Financial prospects of the health and social care system locally beyond next year.'”

5. The Better Care Fund/emergency hospital admissions

While the Better Care Fund should offer an opportunity to pool resources to address immediate pressures on services and lay foundations for a more integrated system of health, there are risks too (Bennett and Humphries 2014).

As most of the £3.8 billion funding for the Better Care Fund is drawn from existing NHS budgets this necessarily represents an opportunity cost for the NHS. NHS England has suggested that part of this cost – the additional transfer of £1.9 billion in 2015/16 – in effect represents a reduction in emergency activity for hospitals of around 15 per cent (NHS England 2013).

However, when asked how likely it was that their hospital would be able to achieve such a cut, 98 per cent of NHS trust finance directors and 80 per cent of CCG finance leads felt that it was quite or very unlikely that this reduction would be achieved (figures 20 and 21).

NHS Trusts
Figure 20: How likely is it that your hospital will be able to achieve a cut in emergency admissions of 15 per cent in 2015/16 as suggested by NHS England as part of the opportunity cost of the Better Care Fund?
0 Very likely
0 Quite likely
1 Don’t know
12 Quite unlikely
29 Very unlikely

Respondent comments

  • “'We have worked well with community partners and redesign of acute pathways to reduce emergency admissions by 9 per cent this year, so concern that there is relatively little incremental improvement possible. That having been said, there are still at any time c60 beds occupied by patients who do not need acute care, so in theory, if all these patients were accommodated out of hospital this could deliver 15 per cent further improvement.'”

    Acute trust
  • “'The CCG has invested in community services and hence the trust is looking to reduce admissions by 5 per cent over the next 12 months. This will be a real challenge and a test to see if specific and targeted community investment can make real headway in terms of emergency admissions reductions.'”

    Acute and community trust
  • “'There are currently no commissioner plans to achieve any reduction in unplanned care - all QIPP is targeted at elective care. Our trust's schemes are only like to achieve a levelling of emergency activity.'”

    Acute, community and social care trust
  • “'It's a system challenge – not just a hospital challenge'”

Note: 42 respondents (for whom the question was applicable).

CCG Leads
Figure 21: How likely is it, that working with your local authority partners, you can achieve a 15 per cent reduction in emergency admissions in 2015/16 as suggested by NHS England as part of the opportunity cost of the Better Care Fund?
1 Very likely
6 Quite likely
3 Don’t know
15 Quite unlikely
22 Very unlikely

Respondent comments

  • “'Emergency admissions are rising and the demographic changes are such that they are adding to this, therefore seeing a reduction at that scale is very unlikely.'”

  • “'Feel we are doing many of the right things already and still activity is going up. Need to close beds (if they are there, they will be admitted to) but we have a fairly new private finance initiative hospital and don't have a way of forcing this to happen.'”

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

When asked how they felt about the financial state of their local health and care economy, not just their own organisations, over the next year, eight out of ten (84 per cent) NHS trust finance directors were fairly or very pessimistic (figure 22).

In general, views about the financial future have become gloomier since our survey began in 2011 (figure 23).

CCG finance leads are similarly pessimistic about the coming year (figures 24 and 25).

NHS Trusts
Figure 22: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?
0 Very optimistic
4 Fairly optimistic
8 Neutral
37 Fairly pessimistic
25 Very pessimistic

Respondent comments

  • “'The rise in emergency admissions in 2013/14 has left a financially unsustainable position with the trust. Despite considerable communication and evidence-based reports the CCGs refuse to recognise the need for change – this will lead to arbitration on the 2014/15 contract negotiations unless there is some flexibility from commissioners.'”

    Acute trust
  • “'There is a lack of a collective vision across the health and social care economy about how services need to be delivered in the future which stifles progress.'”

    Mental health and community trust
  • “'The acute sector cannot continue to face cost reduction demands implied by the tariff.'”

    Acute trust
CCG Leads
Figure 23: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?
1 Very optimistic
8 Fairly optimistic
4 Neutral
26 Fairly pessimistic
8 Very pessimistic

Respondent comments

  • “'The position in CCGs is okay, but for providers, especially DGHs without specialist services, the position is dire. Cash could become a major issue for such foundation trusts in 2014/15.'”

  • “'The financial position is manageable this year, however, if we do not see real delivery of the majority of the QIPP savings in 2014/15 then we are unlikely to be able to deliver in 2015/16, especially with the impact of the Better Care Fund. The savings for social care in 2014/15 and 2015/16 are also very challenging.'”

NHS Trusts
Figure 24: Trends: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?

Note: Question not asked before QMR3.

CCG Leads
Figure 25: Trends: Overall, what do you feel about the financial state of the wider health (and care) economy in your area over the next year?

7. The outlook for 2014/15 and 2015/16

Looking ahead to 2015/16, NHS trust finance directors become increasingly pessimistic. While slightly more than a third were concerned about balancing their books in 2014/15, nearly two-thirds were very or fairly concerned about 2015/16 (figure 26).

Although more optimistic, around a quarter of CCG finance leads felt fairly to very concerned about achieving financial balance in 2014/15. This rose to 40 per cent for 2015/16 (figure 27).

NHS Trusts
Figure 26: Looking ahead, how confident are you that your organisation will achieve financial balance in 2014/15 and 2015/16?

Respondent comments

  • “'As a community services organisation, we have seen activity growth but no further investment.'”

    Community trust on 2014/15
  • “'Unless the marginal rate baseline is amended then financial balance will not be achieved.'”

    Acute trust on 2014/15
  • “'Need to undertake radical change and merger appears difficult in the current legislative environment.'”

    Specialist acute trust on 2015/16
  • “'Without a change to the tariff balance is impossible. The number of organisations failing would suggest that there has to be a change.'”

    Acute trust on 2015/16
CCG Leads
Figure 27: Looking ahead, how confident are you that your organisation will achieve financial balance in 2014/15 and 2015/16?

Respondent comments

  • “'We have built up a war chest, (which will get us through the next two years) and will be one of the last CCGs standing. I also cover another CCG who have less of a war chest!'”

    CCG finance lead on 2014/15
  • “'The big issue is the Better Care Fund. So long as plans to deliver large reductions in [emergency] admissions during 2014/15 are delivered, the Better Care Fund is possible. If not, there will be devastating failure.'”

    CCG finance lead on 2015/16

References

  • Appleby J, Humphries R, Thompson J, Galea A, Jabbal J (2013). Quarterly monitoring report, September 2013. London: The King’s Fund. Available at: www.kingsfund.org.uk (accessed in 4 April 2014).

  • Appleby J, Thompson J, Galea A (2012). Quarterly monitoring report, September 2012. London: The King’s Fund. Available at: www.kingsfund.org.uk (accessed on 1 April 2014).

  • Bennett L, Humphries R (2014). Making best use of the Better Care Fund: spending to save? London: The King’s Fund. Available at: www.kingsfund.org.uk (accessed on 2 April 2014).

  • Berwick D (2013). A promise to learn – a commitment to act: improving the safety of patients in England. London: The Stationery Office. Available at: www.gov.uk (accessed on 2 April 2014).

  • Francis R (2013). Report of the Mid Staffordshire NHS Foundation Trust Public Inquiry. Chaired by Robert Francis QC. London: The Stationery Office. Available at: www.midstaffspublicinquiry.com (accessed on 2 April 2014).

  • Keogh B (2013). Review into the quality of care and treatment provided by 14 hospital trusts in England: overview report. London: NHS England. Available at: www.nhs.uk (accessed on 2 April 2014).

  • Monitor (2014). NHS foundation trusts: review of nine months to 30 December 2013. London: Monitor. Available at: www.monitor.gov.uk (accessed on 27 March 2014).

  • NHS England (2014). NHS England Board meeting, 6 March 2014. Performance report. London: NHS England. Available at: www.england.nhs.uk (accessed on 2 April 2014).

  • NHS England (2013). Everyone counts: planning for patients 2014/15 to 2018/19. London: NHS England. Available at: www.england.nhs.uk (accessed on 2 April 2014).

  • NHS Trust Development Authority (2014). NHS Trust Development Authority board meeting, 20 March 2014. Service and financial performance of the NHS trust sector for the period ending 31 January 2014. London: NHS TDA. Available at: www.ntda.nhs.uk (accessed on 27 March 2014).