Commissioners and providers to contribute to balanced plan

The national bodies presented the financial picture in commissioner and provider sectors after four months of the financial year in their second joint board meeting at the end of September.

Commissioners had agreed balanced plans for the year, while providers’ quarter one report revealed a planned £519m deficit.

The national bodies said a joint programme of action has been agreed to eliminate the £519m deficit in the submitted operating plans in time for quarter two reporting.

Under the plan, the commissioning sector will deliver £265m of planned underspend at month five. NHS Improvement is currently reviewing returns from providers to confirm the level of improvement achievable by providers against a target of £254m.

The national organisations said that actions to improve the financial plans were ongoing and not reflected in the position at month four.

While commissioners forecast an aggregate deficit of £5.8m, the provider sector predicted a combined deficit of £520m, including the provider sustainability fund (PSF). The forecast provider deficit alone, not including uncommitted PSF,  stood at £1.5bn against a plan of £1.4bn. At month four, 29 clinical commissioning groups and 100 providers were reporting overspends against plan (including PSF in providers) but, according to forecasts, this will fall to zero and 63, respectively, by the year-end.

Emergency activity is affecting the financial position of commissioners and providers, the board paper said. For commissioners, higher levels of emergency activity is only partially offset by lower elective activity, creating a financial pressure. And in providers, the higher cost of providing unplanned emergency care and the knock-on effect of lower elective income is having an impact on finances.

Commissioners forecast that they would deliver £3.2bn in efficiency savings (94% of plan) by year-end, while providers said they would save £3.4bn (95% of plan).

NHS Improvement chief financial officer Elizabeth O’Mahony (pictured) told the joint board meeting that discussions at system level and with challenged trusts had delivered some progress.

But additional risks had been identified, including unexpectedly high bed occupancy levels and questions over the funding of new Agenda for Change pay scales.

More than half of the gap had been closed so far, she said. There was a determination across the service, NHS England and NHS Improvement to close the gap completely and deliver a balanced plan at year-end. ‘Most importantly, this is the platform for the long-term plan,’ said Ms O’Mahony. ‘If we end up in a position this year where we have any financial risk that needs to be carried forward, it will affect our ability to drive change.’

She continued: ‘We are broadly on plan, but there’s further work to do in terms of closing the financial gap. But we can say it’s a positive place to be at this stage of the year in respect of the fact that the board-approved plans that have come forward from all of our providers are, in aggregate, being delivered.’

Although the plans were not without risks, there was a greater clarity on the risks and they were better understood. But there was no longer a risk reserve to offset that risk.

‘Between now and the end of the year, we are going to be looking at a number of options – working with systems to ask what the trade-offs are to ensure that we don’t forfeit some of the future by making bad decisions this year,’ said Ms O’Mahony.

In the Q1 report, NHS Improvement revealed the provider sector entered the year with an underlying deficit of £4.3bn.

This deficit figure ignores the £2.45bn provider sustainability fund for the current year. Though the PSF is non-recurrent, assuming it is deployed in the provider sector the underlying deficit falls to £1.85bn.