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10 things you need to know about the NHS financial sustainability plan


By Natasha Wynarczyk
23 January 2019

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The annual NHS financial sustainability plan, which examines whether the NHS is on track to achieve financial viability, was recently published by the National Audit Office (NAO).

Analysing figures from 2017-18, the report found that, at present, the NHS is not economically sustainable, and there are concerns that deficits within the organisation could be threatening the long-term plan, announced by Prime Minister Theresa May on 7 January.

Here are 10 things healthcare leaders should know about the financial sustainability plan:

1. There are key areas of health spending not covered by the long-term funding settlement

The 3.4% average increase in funding applies to the budget for NHS England and not to the Department of Health & Social Care’s (DHSC) entire budget, which also covers other important areas – such as investment in buildings and equipment and funding for the training of doctors and nurses.

Spending in these areas could affect the NHS’s ability to deliver the priorities of the plan. Additionally, without a long-term funding settlement for social care there are concerns from local NHS bodies that it will be very difficult to make the NHS sustainable.

2. There are a number or potential threats to the long-term plan

The report states that the plan ‘sets out a prudent approach to achieving the priorities and tests set by the Government’, however there are a number of risks, which include growing pressures on services, staff shortages and the strength of the economy.

As highlighted in past audits, previous boosts to NHS funding appears to have been spent primarily on dealing with current pressures, rather than making essential changes required to make the NHS sustainable  – the NAO said.

3. Staff shortages mean there is a risk that the extra funding won’t be used in the best way

Difficulties in recruiting NHS staff presents a ‘real risk’ that some of the extra £20.5bn worth of funding will not be used optimally, as more expensive agency staff will be required to fill the gap, the report said.

There are also concerns that some of the money will go unspent since, even if commissioners have the resources to commission the right services, healthcare providers may not have enough staff to deliver them.

4. Patient waiting times are still increasing

The audit states that while the four-hour A&E waiting time target was met for an additional 200,000 patients in 2017-18, performance against the target that 95% of patients should be seen within four hours fell to 88% last year. The number of patients on waiting lists for non-urgent treatment has also risen, up to 4.1m from 2.5m in 2012-13.

5. Funding may not be reaching the right parts of the system

Overspends by trusts and CCGs last year was broadly offset by the underspend by NHS England. In 2017-18, the underspend included £962m from non-recurrent central programme costs, including not filling staff vacancies and not allocating around £25m of winter pressure funding to trusts, as well a £280m contribution to the risk reserve.

There is concern that the spending isn’t reaching the right parts of the system, the NAO report says.

6. It’s difficult to say how much progress has been made by local partnerships across the NHS

Local partnerships are at different stages of development, with most areas noting a ‘slow’ pace of change in transforming the way services are provided – and few have reached the stage where major service reconfiguration has taken place.

To support the NHS long-term plan, local partnerships will develop five-year plans by autumn 2019, setting out how they aim to improve service and attain financial viability.

7. It’s difficult to say how much progress has been made by local partnerships across the NHS

Local partnerships are at different stages of development, with most areas noting a ‘slow’ pace of change in transforming the way services are provided – and few have reached the stage where major service reconfiguration has taken place. To support the NHS long-term plan, local partnerships will develop five-year plans by autumn 2019, setting out how they aim to improve service and attain financial viability.

8. The financial health of some trusts appears to be getting worse 

In 2017-18, trusts reported a combined underlying deficit of £4.3bn. As there is no historical data available on the underlying deficit that takes into account elements such as short-term fixes that boost the NHS’s financial position, emergency extra cash or one-off savings, it’s unclear if the financial position of trusts is improving or worsening.

However, indicators such as the DHSC last year giving £3.2bn in loans to support trusts in difficulty – compared to £2.8bn the year before –  suggests this could be the case.

9. The number of CCGs in deficit has increased and 100 of 232 trusts are in deficit 

Between 2016-17 and 2017-18, the number of CCGs reporting overspends increased from 57 to 75. In addition, 69% of the total trust deficit was accounted for by 10 trusts – and 100 out of 232 trusts were in deficit.

Although support provided to trusts in NHS Improvement’s financial special measures programme positively impacted the position of some, the financial performance of the 10 worst-performing trusts has deteriorated significantly.

10. More progress is needed to join-up work within the NHS

The report says it is ‘important that regulators work together closely, otherwise local NHS bodies will be faced with mixed messages and competing priorities.’

NHS England and NHS Improvement have been integrating functions, for example creating a joint senior leadership team with one single chief finance officer and medical director at national level.

The two organisations have also introduced several joint regional posts, such as regional directors. However, local bodies have told auditors that they still receive mixed messages from the two organisations, especially when financial pressures emerge.

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