Comment / A shift in balance

September’s reports on the financial performance of NHS foundation trusts and NHS trusts in the first few months of 2014/15 appear to put the NHS into very different territory. While commentators have been warning of the significant financial pressures facing the service for some time, this has not always been completely obvious from the headline figures posted by providers.

While increasing numbers of providers have been getting into financial difficulty, at the end of 2013/14 72% of FTs and 75% of trusts reported breakeven or surplus. Most providers continue to cope, was the suggestion. The Q1 figures (or month 4 in the case of trusts) suggest the balance has now tipped – perhaps sooner than many expected.

Nearly half of all providers are now in deficit or forecasting to be at the
year-end – 59% of FTs (year to date) and 34% of NHS trusts (forecast). And this increases further for acute providers to 80% of FTs and 53% of trusts.

As HFMA policy and technical director Paul Briddock points out (p3), the trend in the aggregate position shows a worrying decline. The FT sector has moved from a surplus of £491m in 2012/13 to £133m at the end of 2013/14 to its first ever aggregate deficit position of £167m now. (NHS trusts are reporting a year-to-date deficit of £300m and forecasting a net deficit of £409m by year-end.)

The HFMA has been one of several voices calling for an open debate about how the NHS meets rising demand and expectation in a sustainable way. Perhaps the silver lining of the Q1 reports is that, while such debate is now more important, it is also more likely to take place.

In the final week of the month, Labour, with one eye on next year’s general election, started talking about extra funds for the health service – a £2.5bn ‘time to care’ fund that would deliver £12.5bn over five years if the party was elected.

Following the last spending review settlement for the NHS – seen as generous, relative to other hard-hit government departments – talk of additional funding has simply been off the agenda.

Of course, there is a big difference between an opposition party’s pre-election promise of funding and new funds actually materialising. But Labour’s early decision to put the NHS at the centre of its election campaign may at least force the subject back into the open.

What is the right level of funding and what can we expect as a contribution from ‘traditional’ efficiency savings – doing the same things more efficiently? We also need to consider how much – and crucially how quickly – we can expect transformation of service delivery to contribute.

Most informed commentators acknowledge we need to transform services. Can we deliver more services, more proactively, in the community, reducing expensive inpatient episodes downstream? What level should services be provided at to maximise value in terms of quality, safety and cost-effectiveness? How can new ways of working make better use of staff numbers and skills, relieving some of the pressure that has led to a doubling in the planned spend on agency bills in FTs.

Transformation will need some transitional financial support. Two years of £2bn a year has been suggested in the 2015 challenge manifesto produced by a coalition of national bodies including the HFMA and the NHS Confederation.

The debate we need has to take in all these factors – realistic efficiency, what transformation can deliver and what services should be provided – and then consider the bigger picture about funding levels. NHS England’s five-year forward view should provide the platform for this debate.

What the Q1 figures really do is underline the urgency of making more rapid progress with this agenda.