This is Part 1 of the latest Lowdown overview of the financial state of the NHS, drawing on ICB and trust board papers and other sources. Most of the work was done in the second half of October.
Since this draft was completed, the Health Service Journal has published a hard-hitting interview with Hardev Virdee, group finance officer of Barts Health Trust, junior vice president of the Chartered Institute of Public Finance and Accountancy, and the chair of the NHS National Finance Academy.
He warns that NHS England’s “main goal” is “to produce financial plans that were acceptable to the government, rather than being sustainable or credible.
As a result, serious financial planning has become almost impossible for ICBs and Trusts where “the outcome of a plan doesn’t suit what the Treasury and Department of Health are looking for,” and finance directors are obliged to present “unrealistic” cost improvement programmes to boards in order to secure agreement from NHS England.
It is most unusual for any serving senior NHS executive to speak so openly and bluntly in criticism of the system, and Mr Virdee’s comments confirm the analysis we have made in The Lowdown over several years, in which we have argued that the role of NHS England’s role and its regional offices has been reduced to an agency for bullying on behalf of the Secretary of State and the Department of Health.
The ICBs’ role is in turn to transmit this bullying to Trust Boards, which in turn are obliged to increase the heat on middle managers and front line staff.
There is plenty of evidence of this in the Board papers of almost all of the ICBs. We already knew that 31 out of 42 systems (even after NHSE’s bullying) still have a deficit plan for the year, with a total planned overspend of £2.2bn. NHS England have said they will cover this overspend, but this will leave no scope to cover any further pressures.
However as expected many ICBs and trusts are already well off-track, and reporting significant concerns for year-end forecasts. By July nine ICSs already had deficits of over £100m. The majority of ICBs across the country were facing similar pressures in relation to CHC and prescribing costs.
From month 4 ICSs that are struggling to hit their target level of savings have come under further pressure from NHS England to develop more “actions to mitigate risk.” According to SW London ICB these actions “fall into four categories:”
- Stopping future spend
- Reducing pay spend
- Reducing non-pay spend
- Operational performance mitigations – increases in ERF, productivity and going further faster
- Income and technical
However in most cases it’s clear the pressures on Trusts, ICBs and whole systems flow substantially from objective pressures which even the severe threats from NHS England cannot prevent.
Common factors in numbers of ICSs include
- rising numbers and acuity of mental health patients requiring admission, and, given the grossly inadequate capacity of the NHS, often therefore being referred to costly private sector providers.
- additional costs also arise from the need to assign additional staff from agency or bank to provide “special” care for the most seriously ill patients.
- numbers of the most serious Type 1 A&E patients are again on the increase or at least holding steady in many areas despite decades of seeking ways to divert patients away from A&E. Emergency admissions are on the increase – but promised increases in hospital beds have not been maintained.
- There is still chronic difficulty in many areas for hospitals trying to discharge patients for lack of adequate community health, primary care or social care services to support them outside hospital
- the result is more beds tied up with patients stuck in hospital: time series statistics show that at an England-wide level the number of beds filled with 14-day plus patients has remained above 29% for the last 12 months for more than two weeks
- in many major hospitals acute bed occupancy levels pile pressure on front line staff and make any reductions in staff numbers more difficult.
- Prescribing costs too are rising, partly from the growing health needs of patients, and partly from the cost inflation of the pharmaceutical industry and the sky high cost of new drugs.
And to make matters worse for many ICBs and trusts, the pressure from the previous and current government (and therefore also from NHS England) to make more use of private providers is creating further pressure on budgets, and proving to be part of the problem, not a solution.
Staffordshire and Stoke on Trent ICB for example, beset by chronic financial problems and newly consigned to relegation zone (fourth tier of increasingly intensive NHS England intervention and control) sum up the problem by including in their plans for system recovery an attempt to extricate themselves from unnecessary expense and use NHS funds to sustain NHS capacity:
“Considering any further opportunities to repatriate patients from the Independent Sector to NHS Providers, while fully bearing in mind Patient Choice.”
Of course the private sector, for its part is keeping up the pressure on ministers to hand over more public money on a longer term basis, leaving the NHS more impoverished and pressurised.
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