Headlines
How is the NHS performing?
- Our latest survey of finance directors reveals the highest level of pessimism about the financial position of health organisations since we began surveying in the autumn of 2011. For the first time since we began our quarterly survey, no one expressed any degree of optimism about the financial state of their local health economies over the next year.
The funding context
Last year was the fourth consecutive year of planned funding constraint. In the end, real funding increased by more than 2.5 per cent in 2013/14. Around 1 percentage point of this increase was due to lower than forecast general inflation and much of the remainder due to near eradication of underspending on both revenue and capital budgets. Despite this, around a quarter of trusts and foundation trusts ended the year in deficit and slightly fewer than one in ten commissioning groups were also in deficit (Dorsett 2014a; NHS Trust Development Authority 2014b; Baumann 2014).
Planned spending this year – based on the most up-to-date inflation forecasts – will amount to a real increase of just 0.8 per cent. Plans for 2015/16 suggest a real increase of 0.2 per cent (equivalent to around £260 million).
Real annual changes in English NHS Total Departmental Expenditure Limits (TDEL): Outturns and plans: 2010/11 to 2015/16
Data Source: Department of Health annual report and accounts 2013-14, HC14 TSO London Department of Health (2014)
- The recently published NHS five year forward view suggests that, in addition to extra funding (as yet unquantified) to enable the NHS to transform services over the next few years, real increases of just under 1.5 per cent per annum will be needed from 2015/16 to 2019/20 to cope with demographic changes. This is dependent on the NHS improving productivity by 2 per cent per annum to 2017/18 and then 3 per cent for the two years to 2019/20 (NHS England, 2014a).
Making ends meet this year and next
Given the funding context, it is perhaps of little surprise that more than one in three trust finance directors are forecasting an overspend by next March – the largest proportion since our survey began. This includes around half of all acute trusts in the survey forecasting a year-end deficit. This is also in line with the Trust Development Authority’s financial report for the first four months of this year which suggests that 34 per cent of all non-foundation trusts are forecasting an end-of-year overspend (NHS Trust Development Authority 2014b). For foundation trusts, Monitor reports a net overspend for quarter one and overspends by 86 organisations – around 60 per cent of all foundation trusts. Overall, around two-thirds of acute trusts were already in deficit in the first quarter of this year, or are forecasting a deficit position by the year-end. This suggests that financial difficulties have spread beyond those organisations with a history of problems balancing their books and is now endemic across the system.
While it is possible that the number that are overspending will reduce towards the end of the financial year as effort is put into balancing books in the second half of the year, the financial position for foundation trusts is the worst ever reported (Dorsett 2014b).
NHS Trusts
What is your organisation's forecast end-of-year financial situation?
QMR 1-4 based on a panel of 50 trust finance directors
This quarter’s survey also shows around 10 per cent of the 52 CCGs that responded are forecasting an overspend this year (similar to the 10 per cent reported by NHS England at its September board meeting (Wheeler 2014). At a national level, other budgets are also under pressure. For example, the £14 billion specialised services budget administered by NHS England ended £377 million overspent last year, and plans are being made for 2015/16 to restrict further growth in spending by reducing payments to providers and possibly restricting access to services (Calkin 2014).
Gloomy financial forecasts are in part a product of, and are reflected in, the most pessimistic outlook we have yet recorded for the prospect of cost improvement programmes (CIP) to be met. Nearly six out of ten trust finance directors are fairly or very concerned about meeting their CIP targets this year (which average around 4.6 per cent of turnover). Concern about making ends meet through CIPs grows to seven out of ten finance directors when asked about next year. This is echoed in the gloomiest view yet recorded of the financial state of local health and care economies over the next year: more than 90 per cent of finance directors are very or fairly pessimistic.
More work, longer waiting times?
The pressure on waiting times is clear. Since December 2012, there are upward trends in all three stages of the 18-week referral to treatment path – for patients admitted to a bed in hospital, for those seen in outpatients and for those yet to be seen as either outpatients or inpatients.
Figures for August show a sharp upturn in waits longer than 18 weeks for inpatients and outpatients – possibly attributable to the policy of ‘managed breach’: as longer waits for those still waiting were tackled, this would automatically increase the number of patients who would have waited for more than 18 weeks.
However, between May and August, the numbers still waiting for more than 16 weeks (the time targeted under the managed breach initiative) have not fallen as planned, but have increased by more than 71,000 to nearly 321,000 – the highest since the summer of 2011. It is possibly too early to draw conclusions on this waiting times push, but with an uptick in referrals in July (and the seasonal reduction in August), it seems that there is a risk that additional work in August has not kept pace with increases in flows onto waiting lists.
Per cent of patients still waiting/having waited more than 18 weeks (more than 6 weeks for diagnostics)
Data source: Referral-to-treatment waiting times statistics www.england.nhs.uk.
Diagnostic waiting times statistics www.england.nhs.uk.
As we noted in our last QMR, although up to £650 million of extra funding from central budgets and reserves has been announced by the Department of Health and NHS England, focused in part on urgent care services and on improving performance on the 18-week referral-to-treatment waiting time targets, it remains unclear whether health services can effectively and efficiently deploy these resources at short notice. Although finance directors express a reasonable amount of confidence in meeting all the stages of the 18-week waiting times standard by this December (a key delivery date suggested by the Secretary of State), between a fifth and a quarter of directors remain fairly or very concerned.
Accident and emergency (A&E) waiting times performance remains under pressure too. With the national 5 per cent target just missed by a fraction of a per cent between July and September, this makes performance during the second quarter of this year the worst for this time of year for more than a decade. The latest weekly data for the week ending 19 October shows that 7 per cent of patients waited longer than 4 hours – 2 per cent above the target level. For major A&E departments, the target has now been missed for the past 66 weeks.
As with the extra money to tackle elective waiting times, whether the mooted additional £280 million cash (Renaud-Komiya 2014) ensures the national A&E waiting time is met over winter remains to be seen.
Pressures to spend more continue
- Part of the explanation for increasing pressures on waiting times is evident from trends in hospitals’ workloads. As the figure below shows, monthly fluctuations aside, trends in referrals have been on an increasing path over the last six years, as are attendances at outpatients, and elective and emergency admissions.
Monthly referral and admission trends: English NHS 2008/9 – 2014/15
Data source: NHS England, Monthly hospital activity data (commissioner based time series) www.england.nhs.uk
- Increasing workloads and downward pressure on budgets (as well as continued pressure on pay) also underlies a finding from the latest survey – that staff morale is chief among trust finance directors’ current concerns. As the NHS planning framework for 2014/15 to 2018/19 notes, ‘...happy, well-motivated staff deliver better care and … their patients have better outcomes’ (NHS England 2013). As a recent report from The Point of Care Foundation also notes, there is evidence to link staff satisfaction and morale not only with patients’ experience of care, but with its clinical quality and labour productivity (The Point of Care Foundation 2014).
NHS Trusts
Which aspects of your organisation's performance are giving you most cause for concern at the moment? Please select top three
Question not asked before QMR9
- It is also clear that there are continuing pressures on beds. Once again, finance directors express concerns about delayed transfers of care. Historically, official statistics (supplied by trusts) have mostly not reflected these concerns. However, trends in delayed transfers over the past six to nine months for acute care suggest an upward trend, with the number of delayed patients reaching their highest since this data was first collected in 2007.
References
Baumann P (2014). Consolidated 2013/14 Finance Report. Board paper, no 1505143. London: NHS England. Available at: www.england.nhs.uk (accessed on 7 July 2014).
Calkin S (2014). ‘Specialised commissioning plan “shifts risk to providers”’. Health Service Journal, 8 October 2014. Available at: www.hsj.co.uk (accessed on 21 October 2014).
Department of Health (2014). Department of Health annual report and accounts 2013-14. C14 TSO London. Available at: www.gov.uk (accessed on 21 October 2014).
Dorsett J (2014a). Performance of the foundation trust sector: year ended 31 March 2014. London: Monitor. Available at: www.gov.uk (accessed on 7 July 2014).
Dorsett J (2014b). Quarterly report on the performance of the NHS foundation trust sector: 3 months ended 30 Jun 2014. London: Monitor. Available at: www.gov.uk (accessed on 21 October 2014).
NHS England (2014a). Five Year Forward View. London: NHSE. Available at: www.england.nhs.uk (accessed on 26 October 2014).
NHS England (2014b). Monthly hospital activity data (commissioner based time series). London: NHSE. Available at: www.england.nhs.uk (accessed on 21 October 2014).
NHS England (2014c). Referral-to-treatment waiting times statistics. London: NHSE. Available at: www.england.nhs.uk (accessed on 21 October 2014).
NHS England (2013). Everyone counts: planning for patients 2014/15 - 2018/19. London: NHS England. Available at: www.england.nhs.uk (accessed on 13 January 2014).
NHS Trust Development Authority (2014a). NHS trust service and financial performance report for the four month period ending 31 July 2014. Paper E for Board meeting 18 September 2014. Available at: www.ntda.nhs.uk (accessed on 21 October 2014).
NHS Trust Development Authority (2014b). Service and financial outturn report for the period ending 31 March 2014. Paper F for Board meeting 15 May 2014. Available at: www.ntda.nhs.uk (accessed on 7 July 2014).
The Point of Care Foundation (2014). Staff care: How to engage staff in the NHS and why it matters. London: The Point of Care Foundation. Available at: www.pointofcarefoundation.org.uk (accessed on 21 October 2014).
Renaud-Komiya N (2014). ‘Exclusive: Government to release more A&E funding’. Health Service Journal, 15 October 2014. Available at: www.hsj.co.uk (accessed on 21 October 2014).
Wheeler K (2014). NHS performance report in the period to the end of August 2014. Paper NHSE191404 for Board meeting, 19 September 2014. Available at: www.england.nhs.uk (accessed on 21 October 2014).
Respondent comments