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HFMA Financial Temperature Check Finance directors’ views on financial challenges facing the English NHS November 2015
Introduction
• These slides summarise responses to HFMA’s fourth NHS financial temperature check survey of finance directors working in the English NHS
• Results were collected during October 2015 from finance directors working in clinical commissioning groups (CCGs) and provider trusts
• HFMA’s first financial temperature check briefing was published in June 2014
• Full briefings and infographics are available at:
www.hfma.org.uk/nhstemperaturecheck/
The response rate was high, covering over half of trusts and two fifths of CCGs
The responses split by sector for the English provider trusts:
Organisation type Total number of organisations
Number of responses
Proportion of responses
CCG 209 86 41% Trust 240 123 51%
Type of trust Proportion of respondents
Acute 25% Acute and specialist 17% Acute and community 15% Mental health 15% Community and mental health 11% Specialist 8% Ambulance 4% Community 3% Integrated 1% Specialist, acute and community 1%
Financial Performance
The size of the NHS deficit is unprecedented, according to the latest figures
• There is a combined net deficit of £930m in the provider sector at the end of the first three months of 2015/16. This is greater than the net deficit reported for the whole of 2014/15 financial year
• NHS foundation trusts (FTs) reported a £445m deficit for the first three
months of the 2015/16 financial year, compared with a planned net deficit of £354m. 118 of the 151 (78%) FTs reported a year-to-date deficit
• The NHS trust sector reported an aggregate net deficit of £485m,
compared with a planned net deficit of £412m. 72 of the 90 (80%) NHS trusts reported a deficit
• CCGs reported a combined overspend against their plans of £5m (less
than 0.1% of allocation) for the first four months of the 2015/16 financial year.
The majority of trusts are forecasting a year-end deficit for 2015/16
0%
10%
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30%
40%
50%
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70%
%
of fi
nanc
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rect
ors
Deficit Break-even Surplus
Acute trusts are finding it most difficult to balance their books
Sector Deficit Break-even Surplus
Acute 100% 0% 0%
Acute and community 75% 0% 25%
Acute and specialist 85% 10% 5%
Ambulance 20% 60% 20%
Community 0% 0% 100%
Community and mental health 43% 7% 50%
Mental health 39% 6% 56%
Specialist 50% 30% 20%
The majority of CCGs are forecasting a year-end surplus for 2015/16*. However, nearly half of CCG CFOs said their 2015/16 plan reduces their brought forward surplus
*CCGs work under a different financial regime to NHS trusts and their financial performance is not comparable. CCGs are required to make a minimum surplus of either 1% of allocation or the 2014/15 surplus, less any agreed drawdown.
0%
10%
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70%
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rect
ors
Deficit Break-even Surplus
The majority of finance directors are forecasting a year-end position for 2015/16 that is worse than their 2014/15 outturn
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
CCG Trust
%
of fi
nanc
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ors
Worse Same Better
In trusts the main drivers of the difference between plan and outturn are an under-achievement of savings plans and an increase in agency costs
0%
10%
20%
30%
40%
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80%
Under-achievementof savings plans
Increase in agencycosts
Increase in fines,challenges and
deductions
Increase in plannedclinician pay costs
Increase in plannedother pay costs
Increase in plannednon-pay costs
% o
f fin
ance
dire
ctor
s
In CCGs the main drivers of the difference between plan and outturn are an increase in acute programme costs, prescribing costs and an under-achievement of savings plans
0%
10%
20%
30%
40%
50%
60%
70%
80%
Increase in plannedprogramme costs
on acute contracts/services
Increase in plannedprescribing costs
Under-achievementof savings plans
Increase in localpopulation
Change in morbidityof local population
% o
f fin
ance
dire
ctor
s
Finance directors think their organisation’s 2015/16 financial plans are medium to high risk and the proportion increases for 2016/17
0%10%20%30%40%50%60%70%80%90%
CCG Trust CCG Trust
2015/16 2016/17
%
of fi
nanc
e di
rect
ors
High Medium Low
Quality
The majority of finance directors expect quality to be maintained during 2015/16 - they are less confident about 2016/17
0%10%20%30%40%50%60%70%80%
CCG Trust CCG Trust
2015/16 2016/17
%
of fi
nanc
e di
rect
ors
Quality will improve Quality will stay the sameQuality will reduce Don't know
The outlook
Finance directors think they probably have sufficient levers within their organisation to improve quality and financial performance. However, trust finance directors are much less confident about their ability to effect change in their local areas
0%
10%
20%
30%
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80%
CCG Trust CCG Trust
in your organisation in your local area
%
of fi
nanc
e di
rect
ors
Yes - definitelyYes - probablyNoDon't know
Do organisations in your area have sufficient financial resources to implement the Five-year forward view without extra support?
0%10%20%30%40%50%60%70%80%90%
100%
Yes No Don't know
%
of fi
nanc
e di
rect
ors
CCGTrust
How confident are you that your organisation can deliver productivity gains of 2% to 3% a year between now and 2020 to help close the expected £22bn funding gap?
0%
10%
20%
30%
40%
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60%
70%
Very Quite Not very Not at all Too earlyto say
%
of fi
nanc
e di
rect
ors
CCGTrust
The majority of finance directors are calling for the £8bn additional funding promised by the government by 2016/17
0%
10%
20%
30%
40%
50%
60%
70%
2015/16 2016/17 2017/18 2018/19 2019/20
%
of fi
nanc
e di
rect
ors
CCGTrust
Are you confident that improvements to provider productivity outlined in Lord Carter’s interim report can save the NHS up to £5bn?
0%
10%
20%
30%
40%
50%
60%
Yes No Don't know
%
of fi
nanc
e di
rect
ors
CCGTrust
Do you think the savings from the new care models will be able to deliver the financial benefits required to meet the estimated £17bn funding gap?
0%
10%
20%
30%
40%
50%
60%
70%
Yes No Don't know
%
of fi
nanc
e di
rect
ors
CCGTrust
Can the NHS continue to deliver current levels of quality* within the promised levels of increased funding?
*Quality is defined as services that are patient-centred, safe, effective, efficient, equitable and timely
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes Yes, but only if the£8bn is
frontloaded
No
%
of fi
nanc
e di
rect
ors
CCGTrust
Which actions should be used to reduce the deficit if the NHS cannot continue to deliver the current levels of quality within the promised levels of funding?
1.6
2.3
3.5
3.7
3.9
1. The Government needs to find more funding for health andsocial care
2. The NHS should provide fewer, high quality services thatare affordable within current resources
3. The NHS should provide the same services, but at a lowerquality so that financial balance is achieved
4. The NHS should continue to provide the current level ofservices, even if it means organisations continuing to report
deficits
5. The NHS should cease to provide universal careregardless of ability to pay (e.g. Co-payments)
Average ranking (where 1 is the most preferred option, and 5 is the least)
Are there aspects of current service provision where the NHS could withdraw services or change aspects that would ease financial pressures without damaging the principles of universal healthcare, free at the point of delivery?
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No
%
of fi
nanc
e di
rect
ors
CCGTrust
Actions to help bring the NHS back into financial balance
To ease financial pressures finance directors are calling for: • An honest public debate about how the NHS funded and what services
should be provided
• Certainty about the timing and whether there will be any conditions attached to the pledged £8bn government funding
• Realistic efficiency targets for providers and adequate funding for new demands and cost pressures to create headroom so that the focus is on new care models and improving efficiency, rather than short-term firefighting
• Strong system leadership to drive and support change across an area and consistency across the different regulatory regimes
