News / News review September

01 September 2014

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  • Summer is traditionally a quieter time for the NHS, with the UK health departments and satellite pressure groups and research bodies enjoying a seasonal lull. But this year was hectic. At the front line, anecdotal evidence suggests hospitals were busier than usual, compounding the financial squeeze, and this was amply demonstrated by a series of reports in early summer.
  •  The Nuffield Trust warned the NHS could face a funding crisis before next year’s election. Into the red said that until 2012/13 the NHS had coped well, but 2013/14 data showed emerging cracks in a system under severe pressure. A panel of 100 healthcare leaders raised concerns about NHS sustainability, with more than two-thirds saying providers would have to go into deficit to provide quality services. Half said by 2024 the NHS would no longer be comprehensively free at the point of use.
  •  The Audit Commission provided greater detail on the financial challenge. In its end-of-year report Auditing the accounts 2013/14: NHS bodies, it said 19 NHS trusts and 24 clinical commissioning groups were referred to the secretary of state during 2013/14, mainly due to issues with their financial position. The auditors raised concern about NHS trust financial resilience, with 37 qualified conclusions on value for money arrangements (26 in 2012/13). This included 10 adverse conclusions, where the auditor was not satisfied there were proper arrangements to secure economy, efficiency and effectiveness in use of resources.
  •  The King’s Fund also pointed to signs of cracks in NHS performance as a result of financial pressures and rising demand. In July the fund’s quarterly report said that while the A&E waiting times target was met overall, in aggregate major A&E departments have missed the four-hour target 51 weeks in a row. A quarter of finance directors predicted their organisation would end the year in deficit. The average cost improvement target for trusts was 4.7%, but just 40% of FDs were confident that would be met.
  •  Foundation trusts continued to show signs of strain, even though they generated an aggregate surplus of £134m in 2013/14, according to their consolidated accounts. Regulator Monitor said 41 of the 147 foundations recorded a deficit at the end of the year – 20 more than 2012/13.
     However, this was, according to the Department of Health annual report, against a background of a 2.6% increase in spending. The Department’s total department expenditure limit spending (TDEL) – the sum of revenue and capital expenditure limit spending less depreciation – was 2.6% higher in real terms in 2013/14 than in 2012/13. Revenue expenditure was £106.5bn – an underspend of £305m or 0.3% of the Department revenue control total.
  •  In Wales, the auditor general said Betsi Cadwaladr University Health Board had made progress against 24 recommendations made last year. But challenges remained, including the board’s ‘precarious financial position’, with a significant deficit being forecast for the end of the current financial year. 
  • Pressure on accident and emergency units appears to be a universal problem and the Nuffield Trust reported that in England A&E activity increased by about 8% between 2010/11 and 2012/13. But its Quality watch: focus on A&E attendances report also found that attendances at major A&E units have only increased in line with what would be expected from population growth. It offered three solutions: invest to raise capacity; renew efforts to reduce demand; and refocus on alternative performance measures.
  •  Payment for emergency activity is a burning issue for trusts and they received support in their demands for change from clinical leaders. The College of Emergency Medicine, Royal College of Paediatrics and Child Health, Royal College of Physicians and Royal College of Surgeons called for urgent change in funding mechanisms. Acute and emergency care: prescribing the remedy said the funding structure meant emergency services were loss making and as a result of poverty of resources they were reactive rather than proactive services.
  •  Payment mechanisms were uppermost in Commons health committee members’ minds. In a report, the committee said Monitor and NHS England had ‘fallen behind’ in the development of alternatives to payment by results that would incentivise care in the community for long-term conditions. Cutting acute services for these patients and not ensuring community and primary care were ready to manage their care would be ‘a recipe for disaster’. Managing the care of people with long-term conditions said the NHS could have to find an extra £4bn a year by 2016.
  •  Health Education England (HEE) said sustainability was its priority as it set out plans for changes in its management structure. It insisted change was needed to ensure smooth implementation of its strategy document and first national workforce plan for the NHS, and to deliver a 20% reduction in running costs. Under the proposed structure, four regional heads of finance will replace the 13 local education and training board heads of finance. The national director of finance post is unaffected. 
  •  NHS England has launched an open public procurement process for primary care support (PCS) services. It was one of three options for the future of PCS put before NHS England’s May board meeting – the others were an in-house option or outsourcing all PCS services to SSCL, a  joint venture between Cabinet Office and Steria.
  •  Trusts in England will receive 150% of tariff for the treatment of overseas visitors and migrants from outside the European Economic Area under measures announced by health secretary Jeremy Hunt. Commissioners will pay 75% of tariff for the treatment of these patients. The provider will then charge the patient 150% of the cost of their treatment, to be split equally between the commissioner and provider. Trusts that fail to identify and charge these patients will face sanctions.
  •  Mr Hunt shifted the focus to patients waiting longer than 18 weeks for treatment. He said that by the end of this calendar year no one should have to wait more than a year for treatment, except in exceptional circumstances, but 90% of patients should be treated within 18 weeks. Commentators said this amounted to a managed breach of the 18-week target over a short period while the focus was on long waiters.
The month in quotes

‘We have no problem with international visitors using the NHS as long as they pay for it – just as British families do through their taxes. These plans will help recoup up to £500m a year, making sure the NHS is better resourced and more sustainable at a time when doctors and nurses on the front line are working very hard’

Health secretary Jeremy Hunt explains new overseas visitor charges

‘Pilot and pioneer projects developing care planning models are encouraging, but Monitor and NHS England have fallen behind in developing proper alternatives to the payment by results tariff, which is designed for delivering individual episodes of care, not for managing long-term conditions’

Payment mechanisms must be reformed to support the care of patients with chronic illness, says the Commons health committee

‘This year auditors are reporting concerns about the financial resilience of a third of NHS trusts compared with a quarter last year. This level of reporting is worrying and reflects the increasing risks to the financial sustainability of individual NHS trusts, as they continue to face sizeable financial pressures due to a rising demand for services and the necessary focus on quality of care, whilst balancing the need for continued cost savings’

Audit Commission controller Marcine Waterman warns of the financial challenge facing providers

‘Our latest quarterly report paints a picture of a service under huge pressure, with cracks beginning to appear in NHS performance. It again underlines the need for new funding if services are to be maintained’

King’s Fund chief economist John Appleby

In the media

An article by HFMA policy director Paul Briddock on the future of NHS finances prompted much online debate in July. Published by The Guardian healthcare professionals network, Mr Briddock said the NHS was in the midst of a financial squeeze and there were fears this would lead to a deterioration in care. The HFMA financial temperature check had demonstrated the outlook was gloomy – only 12% of provider trusts were confident of meeting financial targets in 2015/16. The answer was to redesign services to ensure quality was not compromised.

He also called for an open and honest debate with politicians, the public and patients about the quality and scope of services. The focus should be on getting value from every pound available to the NHS. Online responses ranged from debating the merits of public/private funding and provision to frustration with politicians over spending decisions.

Mr Briddock developed his theme in a blog for Public Finance, also in July: every decision by a clinician affected finance, so it was vital clinicians and finance managers worked together to achieve the best possible value.

NHS finance staff reported feeling undervalued in the HFMA’s recent staff attitudes survey, underlining the importance of Future-focused finance. Greater partnership and understanding with clinicians and finance staff knowing ‘each other’s business’ would lead to sustainable healthcare, he said.