Reality is beginning to bite for the new Integrated Care Boards (ICBs) as their promises of achieving a financial break-even by the end of 2022/23 look to be fading fast for many.
At the halfway point in the 2022/23 financial year, HSJ has found that two out of three ICS are not on track to break-even and many are likely to have to report large deficits in their first year of operation, despite them signing up to break-even plans at the start of the year.
This news comes as no surprise, as The Lowdown reported back in May almost all of those ICS for which figures were available were already projecting substantial deficits in their first year in charge. With all of their projections also likely to be undermined by the growth of inflation.
Since May inflation has escalated and the ICSs have also reported pressure due to the previous year’s Covid funding being cut by more than half, the additional funding for hospital discharges (Hospital Discharge Plan) ending, and having to spend more on agency staff due to staff shortages. The ICSs have struggled to deliver savings to reduce deficits.
Back in March 2022, HSJ reported that guidance from NHS England circulated to local leaders, set out a hard line on ICS finances:
“NHS England and NHS Improvement intend to use additional powers in the legislation to set a financial objective for each integrated care board [the local commissioning body] and its partner trusts to deliver a financially balanced system, namely a duty on break even.”
This month, Lincolnshire’s ICS has requested permission from NHS England to report a financial deficit at the end of the year, after warning its budgets will be overspent by £35m by the end of November.
Despite this, HSJ reports that the ICS is still officially forecasting that it would close the gap by the end of the year.
Indeed, most of the 21 systems which are not on track to reduce their deficits are suggesting they will recover their position by year-end, according to the HSJ article.
One target for cost-cutting will be staff numbers in the ICB, which have been formed from several CCG. Amanda Pritchard, CEO of NHS England, has said ICBs will need to “rationalise roles [and] processes” and use “economies of scale” to cut costs.”
Lancashire and South Cumbria ICB, which is struggling to contain costs, has launched a voluntary redundancy scheme for staff, in an effort to reduce its staffing bill by 20%.
There are no plans for compulsory redundancies, according to Kevin Lavery, L&SC chief executive, but he warned that if there was a low take-up of the voluntary scheme it would mean cuts to patient services.
The ICB is also reducing its offices from six to two, which is expected to save £650,000 each year.
Although the Chancellor’s additional £3.3bn per year for NHS England in both 2023-24 and 2024-25 was a better outcome than most people probably expected, the challenges for the ICS are many – more than a quarter of ICS across England have at least one in five beds occupied by patients who are fit for discharge, industrial action is on the horizon, the waiting list for elective care is over 7 million, and the backlog maintenance bill is over £10bn. Against this background it will be a major challenge for any of the ICS to even reduce their deficits, let alone break-even.
The Lowdown’s round-up of the financial situation for ICS across the country in May 2022 can he found here
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