News / Flory: operational performance good despite tight finances

By Seamus Ward

The NHS trust sector is performing well despite operating in a tighter financial climate than ever before, NHS Trust Development Authority chief executive David Flory has said.

In the Winter report, which covers NHS trust performance between August 2013 and January2014,

Mr Flory said waiting times had improved markedly over the past few years. However, finances were challenging.

At the end of January (month 10), the NHS trust sector forecast a net deficit of £247m, while 76 trusts were forecasting they would break-even or have a surplus at year-end. They would have a combined surplus of just under £210m. But 26 trusts predicted a combined deficit of £457m, £171m more than planned but £3m less than forecast at month eight. ?

The report said the creation of clinical commissioning groups and the reduction of transitional funding for acute providers had led to a more challenging financial environment for some trusts.

Planned total operating income was £624m (2%) less in 2013/14 than a year before, due to a combination of the net price deflator, a reduction in education and training funding and a decrease in non-recurring income.

The report warned that the pressures are likely to increase over the next two years because of the cost of measures to improve quality and safety, the better care fund and the shift to seven-day operation.

Acute trusts continue to face significant financial pressure, with 40% forecasting a deficit in 2013/14 and operational pressures in urgent and emergency care.

Mr Flory said: ‘Throughout the six-month period covered by this report, NHS trusts have generally performed well against the national standards set out in the NHS Constitution. On the whole, patients are being treated quickly and receiving the high quality of care they rightly expect.

‘This is encouraging, particularly at a time when more people are needing vital services, their needs are more complex and NHS trusts are operating in a tighter financial climate than ever before.’

In exit interviews with the media, outgoing NHS England chief executive Sir David Nicholson said the service needed a change fund to transform services. The funding could be used to implement the six characteristics of a high-quality, sustainable health and care system identified by NHS England.

CCGs must demonstrate in their two- and five-year plans how they will achieve these aims – which include wider primary care, provided at scale, improved elective productivity and a modern model of integrated care.

Sir David said NHS finances were tight and would be stretched further in 2015/16, and £2bn would be taken out of the acute sector through the better care fund transfer. Speculation on the value of the change fund has ranged between £2bn and £5bn, but Healthcare Finance understands that, if implemented, the fund is likely to be closer to £2bn.

While he believes it should be new money, it would be non-recurrent. At this stage, it is just a proposal and NHS England has not put a figure on the amount required. New chief executive Simon Stevens may wish to take his own view.

Sir David told the Financial Times that finances would be tight in 2014/15 – there was even a danger that the NHS as a whole could slip into the red – while 2015/16 would be even more difficult.

 While the commissioning sector would produce a surplus between £600m and £800m in 2013/14, financial pressure in the provider sector would build. At month nine, the forecast full-year surplus for NHS England and clinical commissioning groups stood at £702m – £168m above plan.

An NHS England performance report said aggregate CCG financial performance was on track. But the overspend against plan in specialised commissioning had increased since month eight to £366m or 3.8% in the year to date or £292m (2.2%) for the full year.