Analysis from NHS Improvement into providers’ financial performance has found that the sector has made £2.9 billion in efficiency savings – £316 million less than planned.
The Quarter 4 sector performance report also found that between April 2015 and March 2016, providers paid £751 million in fines and readmission penalties to commissioners.
Analysis from NHS Improvement into providers’ financial performance has found that the sector has made £2.9 billion in efficiency savings – £316 million less than planned.
The Quarter 4 sector performance report also found that between April 2015 and March 2016, providers paid £751 million in fines and readmission penalties to commissioners.
While £253 million was re-invested in improving patient services, the report says “these sanctions nevertheless further exacerbated financial stress” on providers.
Overall, the NHS provider sector reported a £2.45 billion deficit, which is £461 million greater than expected.
However, Sally Gainsbury, the Nuffield Trust’s senior policy analyst, said the reality of these deficit numbers is even worse.
She said: “The real, underlying figure is even more dramatic – over £3.2 billion. These figures are being flattered by £670 million worth of accountancy measures that improve the surface picture, but without changing the reality of costs. Investment spending has been pushed down by more than a quarter compared to initial plans.
“This shortfall is much more than can be accounted for by often discussed issues with agency staffing – extra spending linked to this accounts for only £760 million.
“These gaps result from several years during which the amount paid for treatments has been cut faster than trusts can cut their costs. Our ongoing analysis suggests that this problem will remain for several years, and I worry that it will take funding and attention away from addressing the deeper changes the NHS needs to achieve.”
Of the 240 providers questioned for the report, 65% reported ending the year in a deficit.
Richard Murray, The King’s Fund’s director of policy, said this is “unprecedented”.
He said: “Despite additional funding and a huge effort to reduce deficits, record numbers of NHS trusts overspent their budgets last year and the overall deficit is about three times higher than in 2014/15.
“Overspending on this scale is not down to mismanagement or inefficiency in individual trusts – it shows a health system buckling under huge financial and operational pressures. At the same time, performance against key targets is deteriorating and concerns about quality of care are increasingly widespread.”
He added that the overspend also has “worrying implications for NHS trusts this financial year, as they will be starting 2016/17 with a collective deficit of around £1 billion more than planned, eating into the funding needed to maintain services and provide patient care”.
Nevertheless, the analysis showed that many providers are using the recently introduced financial control measures effectively.
For example, the report estimates that the sector spent £3.64 billion on agency and contract staff.
Although this was £1.4 billion more than was budgeted for, prior to control measures implemented in October 2015, agency staff cost the NHS £4 billion.
