FDs believe financial targets will be missed

In its Quarterly monitoring report, the fund analyses performance data and the results of a survey of NHS finance directors. Its latest review – the first since the five-year financial settlement was implemented – suggested that trusts faced significant financial pressure despite the additional funding.

Finance directors told the fund that:

• 27% expect their trust to report a 2019/20 year-end deficit – this would be an improved position on 2018/19 and would be close to the aim of halving the number of trusts in deficit in 2019/20. But even trusts expecting to at least break even were cautious, partly because their plans were dependent on central support, such as the provider sustainability fund, and achieving stretching cost improvements

• 81% believe the provider sector will not achieve balance in 2020/21 – a target set in the NHS long-term plan. Finance directors were pessimistic because they believe long-term sustainability will be achieved only by developing new models of care and because the funding settlement alone is not enough to deliver balance

• 79% expect the NHS will miss the long-term plan target of deficits being eliminated in all organisations by 2023/24.

The fund said the survey suggested money earmarked to improve services may be needed to cover deficits. Potentially, this put the long-term plan vision for service transformation at risk.

Finance directors also said that underinvestment in areas outside the five-year funding deal – education, capital, public health and social care – could undermine the commitment to improve operational and financial improvement.

Bed occupancy was finance directors’ chief concern (48%), followed closely by staff morale (44%). The forthcoming spending should prioritise adult social care, investment in the NHS workforce, capital funding and public health. Finance directors said underinvestment in capital for IT, equipment and facilities was adversely affecting operational performance, efficiency and morale.

Looking at performance in 2018/19, the report highlighted the provider sector £519m deficit against a deficit plan of £394m. And clinical commissioning groups failed to achieve the original plan of breakeven by the end of 2018/19. Overall balance in the provider and commissioning sectors was achieved thanks to underspending in NHS England budgets.

The report said: ‘Achieving financial balance at the overall NHS level is nothing to be sniffed at, but when that financial balance continues to be based on one-off actions, and when it comes at the cost of investment in transforming services, it becomes harder to determine whether financial balance is really worth the cost.’

With no central contingencies being held in the current financial year, the report questioned whether the NHS can reach its agreed financial position at year-end.

And it added that the overall surplus masked some striking variances to financial plans in 2018/19. The report argued that the addition of sustainability funding over the last few years had amplified rather than dampened volatility in provider finances, with receipt of the funds largely based on meeting control totals.

Some operational commitments were met in 2018/19 – such as halving the number of patients waiting for planned care to around 1,000. But the fund said this was 1,000 people too many. The NHS also missed its target of at least holding steady on the overall waiting list numbers – this grew by 5% to more than 4 million people.

While 50% of finance directors were ‘somewhat confident’ outpatient visits would be reduced by a third over the next five years, 40% had little confidence and 10% no confidence. The concern was due to lack of capital funding, the belief that costs will not necessarily reduce and would require the unwinding of decades of clinical practice and financial incentives.

And, with the long-term plan pointing to a future of system working, only 9% of finance directors said system finances were more important than that of their organisation. In contrast 31% said organisation finances were more important, while 60% said system and organisation finances were equally important.

Siva Anandaciva (pictured), the fund’s chief analyst and lead author of the report, said: ‘Our latest quarterly monitoring report provides a reality check as the NHS enters the first year of its new five-year funding deal. Despite the funding boost, unrelenting financial and operational pressures suggest that patients are not going to see improvements in care for some time yet.  

‘Thanks to the hard work of staff, the NHS is treating more patients than ever before. But without a concerted effort to address staff shortages and more investment, ambitions to improve patient care will remain more aspirational than realistic.’

Derek Bell, president of the Royal College of Physicians of Edinburgh, said the fund’s analysis was concerning because it suggested that money slated for investment and improving patient outcomes could be spent on reducing existing budget deficits instead.

‘Equally of concern is that key waiting time targets are still not being met,’ he said.

‘While we acknowledge the significant funding challenges that the NHS faces, we believe that by rethinking the approach to focus on long-term and sustainable solutions, we can achieve a world-class workforce delivering the best possible patient care safely.’