News / Acute trusts feeling greatest pressure as foundation sector records first deficit

According to Monitor, the FT sector as a whole missed the national waiting times targets. But while they failed to meet the targets for A&E, routine surgery and cancer services, foundations still treated more patients in each of these areas than they did a year ago.

Foundations just missed (94.8%) the target for 95% of patients to be treated within four hours in A&E for the first time in the first quarter, as attendances increased 3.5% over the year before. Elective waiting lists climbed to an historic high of around 3 million patients, including 1.7 million for foundation trust patients, with capacity constrained by the growth in
emergency activity.

Monitor chief executive David Bennett said foundations were trying hard to overcome the challenges they face. But he added: ‘We believe trusts can make further progress by improving their planning, aggressively implementing best operational practices and working more effectively across local systems.’

While operating revenue was as planned, it was outstripped by the growth in expenses. This was linked to the decline in foundations’ ability to make cost savings – Monitor reported that foundations made £223m of cost savings, £58m less than planned in the first quarter.

The NHS trust sector also predicted it would fall short of planned savings for 2014/15, forecasting it will deliver £1.45bn in efficiency savings against a plan of almost £1.54bn.

Staffing was a particular problem, with foundations overspending on contract and agency staff and unable to deliver a planned
year-on-year reduction in agency staff in the face of increasing demand and the need to maintain safe staffing levels. Spending on contract and agency staff – £391m – was more than double the planned figure of £189m.

‘Getting a greater grip on their staffing costs, especially for agency staff, will help trusts increase their financial resilience,’ said Mr Bennett. ‘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,’ he added.

The NHS Trust Development Authority said many acute non-foundations attributed their deficits to of the financial impact of the greater focus on service quality and clinical staffing levels, as well as operational pressures in urgent and emergency care.

Acute trusts – both in the non-foundation
and foundation trust sectors – reported the greatest financial difficulties. At month 4, 53% of acute non-foundation trusts forecast year-end deficits and 80% of acute foundations reported year-to-date deficits.

At 3.4%, aggregate foundation trust EBITDA (earnings before interest, tax, depreciation and amortisation) was significantly lower than the planned 4%. Acute foundations had an average EBITDA of 2.7%, although Monitor said this was due to their greater reliance on tariff funding.

Monitor said that while the financial position at Q1 had historically been worse than the year-end position, the low EBITDA and underperformance were ‘unprecedented’.

Foundation Trust Network chief executive Chris Hopson said providers had been working ‘heroically’ in the face of rising demand and quality pressures. ‘These first quarter figures show the cost of investing in quality and dealing with increasing demand,’ he said. ‘They provide a dose of realism about the true costs of meeting rising demand and investing in greater quality. You get what you pay for.

‘We now need to work with commissioners, regulators and policy makers to establish how we can sustainably finance the access and quality standards that we all want to deliver,’ he added.