07 December 2007
NHS finance directors are cautiously positive about the future for health service finances but warn that productivity must improve markedly if targets are to be met, according to a survey by the Healthcare Financial Management Association.
The survey, published at the HFMA's annual conference in London this week, found that 80% of finance directors in England predicted their organisation would break even or deliver a surplus in three years' time.
The figures for the first six months of 2007/08, published by the Department of Health last week, showed NHS England forecasting an aggregate surplus of £1.8bn at the end of this financial year.
At the end of the first three months of this year, the English NHS predicted a year-end surplus of £983m. It finished 2006/07 with a £515m surplus.
David Flory, director general for NHS finance, performance and operations, said this year's forecast surplus was 2.3% of health service spending and represented good financial planning. Only 5% of finance directors across the UK said they would report a deficit at the end of the financial year.
However, they told the HFMA that a number of factors could change this, including possible increases in the cost of meeting service targets and a drop in the momentum of savings programmes. Continuing care costs were identified as a particular pressure.
More than two-thirds (70%) of finance directors warned that the NHS would have to find 'challenging' levels of productivity savings to meet government-set targets within the funding levels outlined in the Comprehensive Spending Review. Around 12% felt the targets could not be met within the available funding.
New HFMA chair Chris Calkin warned that the forecast of a surplus should not give the impression that the NHS had overcome its financial problems.
'The reality is that we are facing huge efficiency challenges that will not be found by making marginal savings in the traditional areas, such as back-office costs and overheads,' he said.
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