The King’s Fund published its first quarterly monitoring report in April 2011 as part of its work to track, analyse and comment on the changes and challenges the health and care system is facing. This is the 23rd report and aims to take stock of what has happened over the past quarter and to assess the state of the health and care system. It provides an update on how the NHS is coping as it continues to grapple with productivity and reform challenges under continued financial pressure.
The quarterly monitoring report combines publicly available data on selected NHS performance measures with views from NHS trust finance directors and clinical commissioning group (CCG) finance leads.
See the box below for further details of our methodology.
Survey of NHS trust finance directors and CCG finance leads
This report details the results of an online survey of NHS trust finance directors carried out between 13 April and 4 May 2017. We contacted 256 NHS trust finance directors to take part, and 84 responded (33 per cent response rate). The sample included 41 acute trusts; 34 community and mental health trusts; 3 specialist trusts; 2 ambulance trusts and 4 unknown. In addition, we contacted 160 clinical commissioning group (CCG) finance leads, and 42 responded (26 per cent response rate). Between them these finance leads covered 50 CCGs (24 per cent of all 209 CCGs).
General practice monitoring
This report includes results from our monitoring of general practice. This is based on data from a sample of 202 practices (around 2.7 per cent of all practices in England) held by ResearchOne, a database created using records from TPP’s SystmOne, one of the main clinical information systems used in general practice in England. In addition, we surveyed a panel of GP partners and practice managers in England and received 68 responses, which provides a snapshot of opinion in the GP community. This is not designed to be a representative sample of general practice, but instead to provide a qualitative assessment of the priorities and challenges in general practice and how these change over time.
Managing NHS finances in 2017/18
In 2016/17 NHS Improvement and NHS England introduced a new approach to NHS finances, designed to reduce the significant deficits that had grown over previous years. NHS planning guidance made clear that many features of this new approach would be retained in 2017/18 and 2018/19 along with a small number of changes. The key elements of this approach are set out below.
The Sustainability and Transformation Fund
In 2017/18 and in 2018/19, the NHS will again place £1.8 billion into the Sustainability and Transformation Fund. This will be paid out to mainly acute trusts as long as they meet targets on finance and A&E. Payments from this Fund reduce an organisation’s reported deficit.
Control totals are the financial targets for each organisation – they set the maximum deficit (or minimum surplus) an organisation is allowed to run. Each organisation has its own control total, which is agreed with NHS Improvement depending on its financial strength. The financial position reported by individual NHS trusts includes any Sustainability and Transformation Fund money they have received.
Meeting finance and performance targets
If providers fail to meet the finance and performance requirements that underpin their control totals, access to all or some of their planned payments from the Sustainability and Transformation Fund can be withheld. While withholding funding will increase deficits reported by individual providers, it will not alter the position across the provider sector as a whole as the Sustainability and Transformation Fund will be underspent by the equivalent amount and NHS Improvement counts this underspend against the overall position. If a provider cannot pay its bills – such as salaries for its staff – without Sustainability and Transformation Fund support, it may need to turn instead to the Department of Health for additional cash support, usually provided as a loan. The ambition at the outset of the planning round in the autumn was that NHS providers as a whole would be in net financial balance in 2017/18.
CCGs also have financial targets. In 2017/18, 1 per cent of the total commissioning budget (worth around £830 million) has been set aside to offset risks to overall financial balance in the NHS. Unlike in 2016/17, when CCGs were required to set aside the full 1 per cent from their budgets, this year CCGs have been asked to hold only half of their share (£360 million) uncommitted at the start of the year to which NHS England has added £200 million from its own resources. The remaining £270 million will come from Commissioning for Quality and Innovation (CQUIN), which makes a proportion of NHS providers’ income conditional on demonstrating improvements in quality and innovation in specified areas of patient care.
Sustainability and transformation partnerships (STPs)
In 2016, the NHS developed new sustainability and transformation plans covering the years to 2020. To do this, England was divided into 44 geographical areas – the 'footprints' for the STPs. The detailed operational plans for each organisation in 2017/18 and 2018/19 are intended to be consistent with these more strategic STPs. In addition, NHS Improvement and NHS England have introduced system control totals: for each STP area (now renamed sustainability and transformation partnerships), these represent the sum of control totals of the organisations contained within the STP’s geography. STPs can apply to NHS Improvement and NHS England to alter organisations’ control totals, as long as they do not alter the system control total and are consistent with net financial balance in both providers and commissioners.
How is the NHS performing?
Spring has arrived, bringing the usual seasonal upturn in performance in A&E. As January 2017 saw the worst performance on waiting times for a decade, the upturn could not come too soon. Compared to last year it was a relatively strong recovery, and waiting times in A&E (though still a long way off the target) were better in March 2017 than they were in March 2016 (Figure 1). The NHS as a whole (including walk-in centres and minor injuries units) managed to reach 90 per cent of patients admitted, transferred or discharged within four hours (although performance in major A&E departments was lower than this at 85.1 per cent). This is important given that Next steps on the NHS five year forward view committed the NHS to the standard of more than 90 per cent by September. If the NHS can maintain its March performance then this first milestone is already in the bag. However, our survey shows many are not confident that this will happen: 49 per cent of trust finance directors and 60 per cent of CCG finance leads were fairly or very concerned about the meeting this commitment by September. For some, this concern appeared to relate to uncertainties about the state of social care and its impact on delayed transfers of care. The 90 per cent standard is still some way short of the 95 per cent standard, which Next steps commits the NHS to reaching within 2018.
On the wider set of waiting times standards, 2016/17 maintained the trend seen in recent years: a slow but steady worsening in performance across the board for the most prominent standards, as set out in Table 1. While Next steps set out a trajectory for the NHS to recover the A&E standard and also set out the measures to restore the 62-day cancer waiting time target, it gave notice that the planned levels of elective activity would not be enough to maintain the 18-week referral-to-treatment standard, effectively downgrading it temporarily. Following this announcement, a small number of commissioners are re-considering their plans for 2017/18 and may try to cut back on elective activity. The recognition that the NHS cannot do everything in the face of continued pressures on finance and workforce is requiring leaders – both national and local – to make difficult prioritisation decisions. In our survey, the percentage of CCGs stating that they cancelled or cut back spending plans to balance the 2016/17 position jumped to more than 50 per cent.
Along with emergency care and cancer, Next steps reconfirmed plans to improve primary care and mental health; however, the wider financial challenge facing the NHS along with workforce shortages will make the plans difficult to achieve. CCG finance leads rated pressures on general practice as their second highest operational concern (below A&E). This concern may be well placed; despite commitments to increase the number of GPs by 5,000 by 2020, the number of full-time equivalent GPs actually fell slightly over the past year (although the number of other staff, particularly those providing direct care, did rise). On mental health, just under two-thirds of mental health trust finance directors were fairly or very concerned about commissioners’ ability to meet the funding commitment for mental health (the mental health investment standard*) in 2017/18. CCG finance leads were much more confident about this issue (only 16 per cent were fairly or very concerned) although a substantial group (just under a third) remained uncertain, which is worrying as contracts for the year should have been signed by now.
*The mental health investment standard requires CCGs to increase mental health funding by at least the same percentage as their overall budgets increase.
Data source: A&E attendances and emergency admissions www.england.nhs.uk
Table 1: Waiting times performance since 2012/13
|Performance for the full year|
|2012/13 (%)||2013/14 (%)||2014/15 (%)||2015/16 (%)||2016/17 (%)|
|Ambulance red 1 calls (standard: 75 per cent responded to within 8 minutes)||74||76||72||73||69|
|A&E waits (standard: 95 per cent treated, admitted or discharged within four hours, all units)||96||96||94||92||89|
|Elective treatment waits (standard: 92 per cent begin treatment within 18 weeks)||94||94||93||92||91|
|Cancer waiting time (standard: 85 per cent of patients receive first treatment within 62 days following urgent referral from GP)||87||86||83||82||82|
The general election has delayed the release of the full-year financial numbers from NHS Improvement and NHS England. For the commissioning sector at the last update, covering the first 11 months of the year, NHS England forecast it would deliver the £800 million risk reserve, to be set against provider deficits. This impressive performance was slightly clouded by the evidence of imbalances between different parts of the commissioning sector with substantial CCG deficits (£550 million) being offset by underspends within NHS England’s budgets.
At quarter three, NHS Improvement announced the year-to-date provider overspend had hit £886 million but that it had measures in place to bring this down to £750–£850 million by the end of the year. To reduce the overspend by the end of the year providers would have had to run a surplus in the final quarter, a challenge given how difficult the winter period was. However, recent estimates of the 2016/17 provider deficit are compatible with the £750 million to £850 million range expected by NHS Improvement.
Our survey does provide some grounds for optimism that the last quarter was indeed rather better. Compared to the last QMR, trusts were more sanguine about their end-of-year position, with the percentage forecasting a surplus rising from 38 per cent in February to 54 per cent now. While there was also a similar jump in the proportion of trusts receiving support from the Sustainability and Transformation Fund (which will not alter the net provider position as NHS Improvement sets any unspent Sustainability and Transformation Fund money against the overall deficit), comments from finance directors make clear this does not explain all the improvement. While no doubt welcome when trying to manage the 2016/17 outturn for providers, it is clear that the actions – such as sale of land – reported in QMR were overwhelmingly non-recurrent; they do not reflect underlying improvements in efficiency and as such will not help the 2017/18 position. Any improvement, however welcome, must also be set against the initial ambition for the Sustainability and Transformation Fund, which was to reduce the overall provider deficit to zero.
For 2017/18, the broad objective for the provider sector was again to reduce the overall deficit to zero. Though the quarterly update on finance and performance has been postponed due to the general election, Jim Mackey, Chief Executive of NHS Improvement, said suggestions that the forecast provider deficit for 2017/18 was between £500 and £600 million (as of April) were 'not miles out'. In our survey, 43 per cent of trust finance directors were still forecasting a deficit for the end of 2017/18, although this is a slightly lower proportion than at the same point last year.
Finance leads in trusts and CCGs remain very pessimistic about the future on any of the financial indicators we collect through QMR. However, it is important to note that on a range of measures they are not quite as gloomy as they were at the same time last year. If we set aside the improvement in trust finances that followed the introduction of the Sustainability and Transformation Fund, this is the first widespread reduction in pessimism QMR has recorded (Table 2).
Table 2: Finance leads sentiment about the future
|Question||April 2016(%)||May 2017(%)|
|Productivity gains required by the NHS five year forward view: high or very high risk of failure (trust finance directors)||87.4||69.0|
|Productivity gains required by the NHS five year forward view: high or very high risk of failure (CCG finance directors)||79.0||71.4|
|Trust finance directors’ confidence over next year’s outturn: per cent very concerned||46.0||33.3|
|CCG finance directors’ confidence over next year’s outturn: per cent very concerned||31.0||24.0|
What might have caused this slight reduction in pessimism? Possibly two things. First, since the last QMR, NHS England published Next steps, thereby providing some greater certainty on the immediate priorities, and some organisations appear to be more confident that they will receive Sustainability and Transformation Fund payments. Second, with trust finance directors reporting delayed transfers of care as their top operational challenge (it ranked third highest for CCGs), the announcement in the Budget of an additional £2 billion for social care – half of which is to come in 2017/18 – may have provided some grounds for (relative) optimism. Particularly for trusts, lower delayed transfers may allow capacity to be switched to more profitable elective work. As this additional money begins to flow through the system, it will be important to see if this trend can be maintained.
Despite this improvement in outlook, NHS finance directors clearly remain very concerned about finance and their ability to make good on performance, whether in A&E, mental health or general practice. With the NHS currently facing little real-terms growth in funding in the coming years, Figure 2 underlines the challenge – the NHS continues to experience year-on-year growth in demand. Given the nature of datasets in the NHS, this view of demand is necessarily focused on the acute sector. However, in this QMR we also report on activity levels seen in a sample of general practices, which shows growth in activity over and above the growth in the population, particularly in those aged over 85. We will continue to include updates on activity and outlook in general practice in future QMRs as we continue to expand the data in this area.
General and acute clinical specialties (G&A). First finished consultant episodes (FFCE)