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Nine CCGs planning overspends in first year

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Nine clinical commissioning groups are forecasting multimillion pound deficits in their first year, LGC’s sister title Health Service Journal has learned.

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The number of new commissioners planning to overspend in 2013-14 is at least triple the number of primary care trusts that planned or recorded deficits in any of the three years up until the government’s NHS reforms took effect this April.

Between them, the nine CCGs are forecasting a combined deficit of £86.7m (see table, below), which is also significantly higher than the gross deficits planned or recorded by primary care trusts in the past three years.

The four CCGs planning overspends of more than £10m − Barnet, Croydon, Hillingdon and Harrow − are all in outer London, in health economies with well-known historical financial problems. However others, such as Blackpool, Coastal West Sussex and North Hampshire, do not have predecessor PCTs with a recent history of overspending.

An NHS England spokesman told HSJ that because there were “many more” CCGs than there had been PCTs, 211 compared with 151, it was “inevitable that there will be a proportionate increase in those that are reporting financial issues”.

He also suggested the abolition of strategic health authorities under the reforms meant there was less scope this year for the NHS to move money around to plug financial gaps.

He said: “NHS England’s commitment to transparency and the abolition of the intermediate tier means that there is likely to be less risk pooling than under the previous commissioning system and therefore there will be increased visibility of financial issues, particularly where these relate to the wider local health economy.”

Clinical commissioning groups planning deficits for 2013-14

CCGPlanned deficit
Barnet£20.9m
Croydon£19.9m
Hillingdon£12.3m
Harrow£10.4m
Eastbourne, Hailsham and Seaford£6.1m
Blackpool£5.2m
Coastal West Sussex£5m
East Surrey£4.9m
North Hampshire£2m
Total£86.7m

However, it is clear that the complexity involved in dividing up PCTs’ budgets among the new commissioners has also contributed to the number of CCGs planning deficits.

Adjustments to the specialised commissioning budget have caused particular issues. Responsibility for specialised commissioning transferred to NHS England under the reforms.

Blackpool CCG chief financial officer Gary Raphael told HSJ the group’s original plan did not show a deficit. However, it was then notified of a further proposed transfer from its allocation to specialised commissioners, which was around £5m more than it had anticipated.

Mr Raphael said: “As we speak we are in the middle of agreeing with the specialised commissioning team further adjustments that should help the CCG get back into balance and hopefully achieve the surplus we are required to achieve.”

Barnet is forecasting the largest deficit of any CCG this year, at £20.9m. Its financial recovery plan states that without planned savings and other moves to improve its position the forecast deficit this year would be £46m.

It goes on to say that this position is “more challenging” than its predecessor PCT’s “exit rate deficit position of £26m, primarily due to the loss of revenue allocation and increased costs totalling [around] £13m incurred in the transition from PCT to CCG”.

The plan added: “£9m is due to allocation differences, which the CCG believes NHS England should resolve, and £3.8m is due to additional estates costs increase.”

Under the plan, it will take the CCG three years to break even and at least five years to clear legacy deficits.

A Barnet CCG spokesman added: “Many of the problems we face are historical in that too much care has taken place in hospitals, community services have suffered underinvestment, and estates costs are high.”

A spokeswoman for Croydon CCG, which has the second highest planned deficit, said its “significant financial challenge” resulted from factors including “increasing use of hospital based services”, population growth and increased levels of deprivation, and “recovery from overspend in Croydon PCT in 2010-11”.

She continued: “We have worked closely with NHS England to understand the opportunities available to us to make savings through efficiencies without compromising patient care. It is clear from our modelling that, based on the opportunities identified by independent benchmarking, this would be insufficient in itself to reach breakeven by 2015-16 or later.”

She said the CCG’s governing body “will consider a five year plan that includes further initiatives and levers to achieve recurrent balance” in September.

Additional reporting by Fabienne Verrall.

Financial holes uncovered – the CCGs planning 2013-14 overspends speak

East Surrey CCG is planning for a £4.9m deficit this year, and working towards financial balance in 2014-15. The CCG’s chief officer Mark Bounds told HSJ East Surrey sat “in the local health economy focussed on Surrey and Sussex Healthcare NHS Trust, and succeeds Surrey Primary Care Trust which faced significant financial difficulties during its lifetime”.

He added: “In order to address the underlying financial challenges and legacy we have had to be realistic and plan for the longer term, setting out a three year plan to reach financial sustainability.

“There is enough money in the local health economy, however, it is vital is that we work closely with our GP members, neighbouring CCGs, acute trust and social care to transform the way healthcare is provided in order to achieve best outcomes for our patients and best value for taxpayers’ money.”

Nearby Coastal West Sussex CCG said its local health economy had “faced an underlying financial challenge for many years and our membership demands that we are open and transparent about what this means”. It added: “That’s why we have worked with NHS England to declare a deficit of £5m for this year.”

Eastbourne, Hailsham and Seaford CCG said its planned £6.1m overspend was part of a “three year plan to return the local health economy to financial balance”. Accountable officer Amanda Philpott said that if the CCG was to commission clinically safe, high quality and financially sustainable services it was “vital we address the significant historic legacy of financial imbalance in the East Sussex health economy”. She added that the plan had been spread over three years to “minimise the impact on local services”.

However, some CCGs believe it will take even longer to move their health economies back into the black. A spokeswoman for Croydon CCG said: “Based on benchmarking against similar CCGs, we have a challenging three year quality-led plan to improve our financial position by £30m, covering all areas of CCG expenditure…

 “We have worked closely with NHS England to understand the opportunities available to us to make savings through efficiencies without compromising patient care.  We have submitted our financial plan to NHS England, London which shows a deficit of £19.9m for 2013-14.  It is clear from our modelling that, based on the opportunities identified by independent benchmarking, this would be insufficient in itself to reach breakeven by 2015-16 or later.” 

She added: “In September, the governing body will consider a five year plan that includes further initiatives and levers to achieve recurrent balance, including implementing outcomes based commissioning for older people (over 65), reducing dependency on mental health beds, maximising opportunities through integration of health services with social care, and reducing variation in primary care.

“We continue to work with our membership and NHS England to further develop our plans to achieve recurrent balance over five years.”

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