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NHS providers report 'unprecedented' financial problems

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NHS providers have suffered “unprecedented” financial problems in the first few months of this year, new official figures suggest.

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Monitor, which regulates foundation trusts, said they overall had the worst start to a financial year in their history – recording double the level of deficit they had planned in the first quarter. It said the scale of the underperformance against plan was “unprecedented”.

The sector reported a total net deficit of £167m for the first three months of 2014-15 against a planned deficit of £80m, according to papers for its board meeting next week.

The NHS Trust Development Authority, which oversees the 98 NHS providers which are not foundation trusts, also reported new figures today.

It said they recorded a deficit of £300m for the first four months of the year against a planned deficit of £224m.

Acute trusts were driving the deficits in both foundation and non-foundation trust sectors, while mental health and community providers reported net surpluses.

Monitor’s performance board paper predicted the FT sector would be in deficit at the end of 2014-15. It said: “Historically, trusts tend to improve their financial performance as the year progresses. However, the rate of improvement observed at Q4 2013-14 compared to Q1 2013-14 was marginal.

“Given the current level of cost pressures faced by NHSFTs, it is likely that the FT sector will end the current financial year with an overall deficit.”

LGC’s sister title Health Service Journal revealed last month that NHS acute trusts were overall forecasting a net deficit in excess of £750m for 2014-15. The fact they are fell short of plan at the end of the first quarter suggests the end of year position may be even worse. The net deficit at the end of 2013-14 was £421m.

Staffing costs and an increased focus on quality of services were highlighted by Monitor as major factors driving the financial underperformance amongst acute providers.  

The regulator said pay costs for acute FTs in the first quarter had been 1.6 per cent higher than plan. The figure was 1.1 per cent at non-acute FTs. It said 40 per cent of savings on staff vacancies had been spent on temporary staffing.

Monitor’s paper said: “This level of spend on temporary staff cannot be sustained in the medium to long term.

“Urgent action is needed by foundation trusts to develop a more sustainable workforce response to demand and cost pressures in the interest of patient care.”

In the acute sector the poor financial performance was accompanied by a failure to meet flagship performance targets, including the four hour accident and emergency target and the 18 week wait target for admitted patients.

In a press statement Monitor also highlighted high activity levels. It said 18,200 patients were referred to FTs for cancer treatment in the first quarter of 2014-15 compared to 16,900 in the same period last year.

A TDA board paper noted that the aggregate forecast deficit for the non-foundation trust sector was less than 1.4 per cent of total revenue, and that trusts were forecasting a “wide span” of different financial positions.

These range from a surplus of £11.5m at Oxford University Hospitals Trust, equivalent to 1.3 per cent of turnover, to a deficit of £49m at Leeds Teaching Hospitals Trust, 4.8 per cent of turnover.

Monitor chief executive David Bennett said foundation trusts could make further progress by “improving their planning, aggressively implementing best operational practices and working more effectively across local systems”.

He added: “In particular, getting a greater grip on their staffing costs, especially for agency staff, will help trusts increase their financial resilience. But many trusts also need strong support from their staff to identify and urgently deliver cost savings, with ideas for redesigning operations being implemented at maximum pace.”

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