Hospital Dr News

NHS trusts put in strong last quarter performance to cut funding deficit in England

The year-end deficit for NHS trusts in 2016/17 in England will be between £700m and £750m, according to NHS Providers.

NHS Providers released an estimate of official figures, which will be published by NHS Improvement after the General Election.

NHS Improvement had wanted to report the year-end figures for the sector this month, but were forbidden to do so by the Department of Health, which said publication was not allowed under the general election purdah rules.

A year end figure of £725m would be 70% less than the previous year’s deficit of £2.45 billion and a substantial further improvement on the third quarter forecast issued in February, which stood at -£886 million.

The chief executive of NHS Providers, Chris Hopson, said: “In 2015/16, because of the pressure on the NHS, the provider sector deficit ballooned to -£2.45 billion. The Government made it clear that rapid reduction of this deficit was a key NHS strategic priority in 2016/17.

“Trusts agreed a detailed plan, with the full support of NHS Improvement, to reduce this deficit to £-580m and this has been largely delivered. This is a significant achievement reflecting a huge amount of hard work by trusts to control costs, increase productivity and improve efficiency whilst continuing to provide outstanding patient care.”

Jim Mackey, chief executive of NHS Improvement, commented: “It’s disappointing we can’t publish our results until after the election. We’ll publish as soon as we can after purdah, and those results will show a phenomenal performance by the provider sector in quarter four.”

The sector has benefited from the £1.8bn sustainability and transformation fund in 2016-17, which was offered to trusts that achieved their financial targets. Discounting the impact of this fund, HSJ suggests the deficit would have totalled  £2.57bn.

This is slightly worse than the reported position of £2.45bn in 2015-16, which caused the Department of Health to breach its spending limit and prompted the National Audit Office to raise serious concerns about the service’s finances.

There may have been a slight improvement to the underlying position, however, because a huge amount of one-off accounting measures where used to improve the numbers in 2015-16.

However, Hopson added: “Based on the third quarter trajectories, we estimate trusts will have made cost improvement gains of more than £3.3 billion – more than 4% of turnover, and £200 million (10%) more than 2015/16.

“Despite the challenge of seven years of stretching cost improvement programmes, trusts have managed to actually increase the cost improvement gains they are making this year. There are few, if any, other healthcare systems where providers are delivering this level of gain year in year out over such an extended period.”


He warned that the pressures would continue however. NHS England funding in 2016/17 rose by 3.6%, this year that drops to 1.3%.

“Two thirds of trusts told us at quarter 3 that they were very or fairly reliant on one off non recurrent savings to meet their year end figures – we estimated this accounts for about £1 billion of the estimated gain. It’s also clear that, with this 2016/17 year end result, the sector will struggle to eliminate the provider deficit in 2017/18 as originally planned. In our view, given the drop in 2017/18 funding, providers will do exceptionally well to match 2016/17’s deficit,” he said.

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