King’s Fund forecasts £2.3bn NHS deficit

18 Feb 16

The NHS is heading for a £2.3bn financial deficit for 2015/16 despite “stringent” efforts by the Department of Health to limit overspends, according to the King’s Fund.

In its quarterly monitoring report on the health service, the think-tank said the estimate, based on survey responses from 83 trusts and 61 clinical commissioning groups, showed a deepening financial crisis across the health service.

Official figures from the NHS watchdogs Monitor and the NHS Trust Development Authority revealed last November that the first six months of the financial year saw a £1.6bn deficit across the health service, £358m worse than forecast. Updates to these figures are due to be published by the watchdogs tomorrow.

According to the King’s Fund poll, two-thirds of trusts, including nine out of ten (89%) acute hospitals, are forecasting a deficit at the end of 2015/16.

This is despite what the report called “stringent financial controls” being imposed by national NHS organisations in an effort to reduce the deficit to £1.8bn by the end of the financial year. The figures indicate there is a risk that the Department of Health as a whole may overspending its budget for the financial year, it added.

Central controls include limits of agency spending, but the poll found more than half of trusts (53%) are concerned that they will not be able to meet nationally-imposed caps on their agency staff spending. A fifth (22%) added the caps could impact on their ability to recruit the staff they need to provide safe care.

King's Fund chief economist John Appleby said that, even with additional funding from the Treasury and a switch from capital to revenue spending across the sector, it is “touch and go” whether the DoH will be able to balance its books.

“At the same time, performance is deteriorating with key targets being missed with increasing regularity and increasing concerns being raised about the quality of patient care. This is shaping up to be a make or break year for the NHS,” he added.

Responding to the report, Paul Healy, the NHS Confederation’s senior policy advisor on economics and regulation said NHS leaders know the status quo isn’t sustainable.

“This survey shows up many of the challenges facing the service at this particular point in time and highlights a broader signal from leaders on the need to overcome these through a process of transformation,” he added.

“A new approach to value needs to be stitched into the fabric of the health and care system, which moves away from a technical focus on reducing the costs of current services to a coordinated attempt to get more out of resources within a defined budget. What this means in practical terms is less reliance on cutting the prices paid to hospitals, which has impacted on the bottom line of providers, and more emphasis on transformation across the system through new models of care and effective commissioning.”

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