Hospital Dr News

Radical change needed as finances deteriorate

The financial health of NHS bodies has deteriorated the last two years and radical change is needed to meet growing demand, says an all party group of MPs.

The overall net surplus achieved by NHS bodies in 2012–13 of £2.1 billion fell to £722 million in 2013–14, and the percentage of NHS trusts and foundation trusts in deficit increased from 10% in 2012–13 to 26% in 2013–14.

Financial regulator Monitor found that 80% of foundation trusts that provide acute hospital services were reporting a deficit by the second quarter of 2014–15.

The Public Accounts Committee said that while NHS England, Monitor and the NHS Trust Development Authority recognise that radical change is needed to the way services are provided, it is going to require further upfront investment.

The NHS has typically achieved efficiency savings of 1%–2% against a target of 4% set by Monitor and NHS England, and these have been largely delivered through unsustainable wage freezes.

Committee chair Margaret Hodge MP warned that present incentives to reduce A&E attendance and increase community based care services have not had the impact expected.

She said: “The current system of paying for emergency admissions hinders, rather than helps, secure the financial sustainability of NHS bodies. To discourage unnecessary admissions acute trusts are only paid 30% of normal prices for all emergency admissions above 2008–09 levels, and the remaining 70% is invested in improving patient care outside hospital and reducing inappropriate hospital admissions.

“However, the number of emergency admissions has increased by 48% over the last 15 years and these tariff arrangements do not cover the cost of admitting emergency patients, therefore intensifying the already difficult financial challenges the acute hospital sector faces. New incentives and strong relationships are needed to promote the more effective collaboration necessary for delivering new models of care.”

She added that the money required for systemic change is diminishing as organisational deficits increase. The committee warns that national oversight bodies also lack the detailed and accurate cost data from local NHS bodies needed to monitor and identify cost savings achieved and whether they are sustainable in the longer term.

Other recommendations by the committee include:

– NHS England and Monitor should collect consistent and detailed cost data across the NHS to use to set efficiency savings targets for NHS bodies and to assess whether changes to service provision, including new models of care, are achieving measurable and sustainable savings in practice.

– NHS England, Monitor and the NHS Trust Development Authority should require all local health economies to submit integrated strategic and operational plans that outline how they will implement locally the proposed new models of care. Healthcare payments should be changed to incentivise the integration of services between local organisations by 2015–16.

– NHS bodies should use agency staff within a national framework contract unless they can demonstrate clear value for money benefits from local negotiation, and benchmark the cost of agency staff within and outside the national framework.

– the government should support the evaluation of alternative financing or operating options for costly private finance initiative schemes where there is a clear opportunity for improving value for money.

– the NHS must accelerate the disposal of surplus capital assets to release cash for upfront investment in new models of care.

– The NHS Trust Development Authority should set out how, and by when, it will put forward to Monitor each of the remaining 93 NHS trusts for assessment for foundation trust status.

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One Response to “Radical change needed as finances deteriorate”

  1. Radman says:

    ‘NHS England, Monitor and the NHS Trust Development Authority should require all local health economies to submit integrated strategic and operational plans that outline how they will implement locally the proposed new models of care. Healthcare payments should be changed to incentivise the integration of services between local organisations by 2015–16’.
    Interesting proposals in the light of the sustained attempts by governments to introduce a market into the NHS and which if enacted would surely risk infringing EU and the newer WTO competition law?

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