Provider financial position deteriorates further

Providers reported a year-to-date aggregate deficit of £1.247bn, which was £267m worse than plan. This is a deterioration of £148m from Q2 – this would have been £404m but for an exceptional adjustment of £256m for part-donated assets following the collapse of Carillion. New buildings at Sandwell and West Birmingham Hospital NHS Trust and Royal Liverpool and Broadgreen University Hospitals NHS Trust – which were to be private finance initiative hospitals – have been brought onto providers’ books.

The Q3 report also revealed that NHS Improvement has further reduced the planned year-end deficit, using incentive payments under the provider sustainability fund (PSF).

At Q1, the oversight body said it was targeting a provider sector year-end deficit of £519m, though it acknowledged this had to be reduced. It launched a financial reset in Q2 using PSF payments to incentivise trusts to improve their financial positions. This cut the planned deficit to £439m. But in its Q3 report, NHS Improvement said it had agreed a further reduction and the year-end plan is now £394m.

It said 42 providers had agreed to improve their control totals by an aggregate of £112m – most of these trusts are currently forecasting they will achieve their revised plans.

In the year-to-date position at Q3, 60 providers had adverse variances once the PSF was excluded. In 11 trusts the variances were greater than £10m. At Q2, 44 had adverse variances, of which two were of more than £10m. The key causes included difficulties achieving planned efficiency savings, operational cost pressures due to temporary staff costs, and workforce pressures. The latter included questions over whether funding for Agenda for Change pay awards was adequate and reductions in elective income due to unplanned emergency care.

NHS Improvement chief executive Ian Dalton (pictured) said: ‘Today’s figures show the NHS’s focus on treating the high numbers of patients across urgent and emergency services was one of the key reasons why the provider sector as a whole reported a year-to-date deficit of £1.2bn. This is £261m more than planned but £34m better than the same period last year.

‘We continue to work with the trusts that are in deficit to achieve their plans. The NHS long-term plan will help trusts eradicate their deficits by 2023 by providing more support to acute hospitals where most of the deficit is concentrated.’

He added that the NHS was able to reinvest £2.1bn into patient care in Q3 by becoming more efficient. This was achieved through initiatives such as reducing spending on agency staff and by using cheaper medicines that deliver the same outcomes for patients.