News / One in four providers now in deficit as squeeze hits acutes

By Seamus Ward

A quarter of all NHS provider trusts ended 2013/14 in deficit, according to unaudited data from Monitor and the NHS Trust Development Authority (TDA).

Board papers show NHS trusts and foundation trusts ended 2013/14 with an aggregate deficit of £108m. Monitor’s quarter four figures showed foundation trusts delivered an aggregate surplus of £133m. But the NHS trust sector reported a net deficit of £241m.

Foundations met most of the national performance standards tracked by Monitor and recruited an extra 24,000 staff  in 2013/14, predominantly nurses, healthcare assistants and other frontline carers. This was three times the planned figure and aimed to increase service quality to patients in response to the Francis report and Keogh review.

However, the surplus was less than one-third the size of the previous year’s £491m. In a sign of the increased pressure on services, more trusts failed to meet waiting times targets in the final quarter. Forty of the 147 FTs ended the year in deficit (19 had planned deficits), which was almost double the number from 2012/13 (21). Most of those in deficit were acute FTs (34).

The combined deficit of the 40 foundations was £307m, £117m more than expected, and 22 organisations subject to regulatory action or investigation by Monitor account for 70% of the overall deficit. During the year, 27 trusts (19% of foundations) were subject to enforcement action because of governance or financial concerns.

Total cash held by foundations fell for the first time, from £4.5bn at the end of 2012/13 to £4.2bn in 2013/14, primarily because of higher capital spending (23% higher than 2012/13). Borrowings increased 45% or £500m, driven by lower net cash inflows combined with the higher capital spend.

‘The majority of patients attending foundation trusts are receiving quality services in very difficult financial circumstances,’ said Jason Dorsett, the regulator’s finance and reporting director. ‘Times are tough and hard decisions will have to be made to ensure patients continue to get the services they need at an affordable cost to the taxpayer.

‘However, many trusts are taking positive steps such as increasing frontline staff to tackle the challenges they are facing.’

Foundation Trust Network chief executive Chris Hopson said providers were committed to investing to improve the quality of patient care. However, this came at a cost, with many having to pay premium rates to fill essential posts. Foundations were facing increasing financial pressure, he added. ‘We need a far better mechanism to match the funding available for the NHS with the demand for and on services.’

NHS TDA chief executive David Flory said key operational standards were met in the NHS trust sector in 2013/14. However, elective access was becoming a worry, especially the 18-week standard for admitted patients and the 62-day standard for cancer patients.

As well as the pressure to maintain and improve quality, non-foundations faced significant financial pressure. Unaudited figures for the trust sector, covering 102 trusts, show an aggregate deficit of £241m, much more than the planned £76m deficit. Trust plans showed the position is likely to deteriorate in 2014/15 as income is squeezed and cost pressures rise.

The variance from the planned 2013/14 outturn was mainly due to six trusts with unplanned deficits, according to the board finance and service performance paper. In total, 26 trusts (25 acutes plus NHS Direct) had a deficit. Five trusts that had planned deficits broke even or better, while two of the trusts with unplanned deficits became foundation trusts during the year.

The report insisted that, despite the unprecedented financial pressures, 75% of the sector (76 NHS trusts) showed good financial control and together had a surplus of £218m. All 39 community, mental health and ambulance trusts planned for a surplus or break-even and all achieved this.

However, 40% of acute trusts were in deficit at year-end, driven in part by an unplanned reduction in operating income. Operational pressures, predominantly in urgent and emergency care, affected many acute NHS trusts.