HFMA NHS Temperature Check November 2015

1. HFMA Financial
Temperature Check
Finance directors’ views on financial
challenges facing the English NHS
November 2015

2. Introduction
• These slides summarise responses to HFMA’s fourth NHS
financial temperature check survey of finance directors working
in the English NHS
• Results were collected during October 2015 from finance
directors working in clinical commissioning groups (CCGs) and
provider trusts
• HFMA’s first financial temperature check briefing was published
in June 2014
• Full briefings and infographics are available at:
www.hfma.org.uk/nhstemperaturecheck/

3. The response rate was high, covering over
half of trusts and two fifths of CCGs
The responses split by sector for the English provider trusts:
Organisation type Total number of
organisations
Number of
responses
Proportion of
responses
CCG 209 86 41%
Trust 240 123 51%
Type of trust Proportion of
respondents
Acute 25%
Acute and specialist 17%
Acute and community 15%
Mental health 15%
Community and mental health 11%
Specialist 8%
Ambulance 4%
Community 3%
Integrated 1%
Specialist, acute and community 1%

4. Financial Performance

5. The size of the NHS deficit is unprecedented,
according to the latest figures
• There is a combined net deficit of £930m in the provider sector at the
end of the first three months of 2015/16. This is greater than the net
deficit reported for the whole of 2014/15 financial year
• NHS foundation trusts (FTs) reported a £445m deficit for the first three
months of the 2015/16 financial year, compared with a planned net
deficit of £354m. 118 of the 151 (78%) FTs reported a year-to-date
deficit
• The NHS trust sector reported an aggregate net deficit of £485m,
compared with a planned net deficit of £412m. 72 of the 90 (80%) NHS
trusts reported a deficit
• CCGs reported a combined overspend against their plans of £5m (less
than 0.1% of allocation) for the first four months of the 2015/16 financial
year.

6. The majority of trusts are forecasting a year-end
deficit for 2015/16
0%
10%
20%
30%
40%
50%
60%
70%
%offinancedirectors
Deficit Break-even Surplus

7. Acute trusts are finding it most difficult to
balance their books
Sector Deficit Break-even Surplus
Acute 100% 0% 0%
Acute and community 75% 0% 25%
Acute and specialist 85% 10% 5%
Ambulance 20% 60% 20%
Community 0% 0% 100%
Community and mental health 43% 7% 50%
Mental health 39% 6% 56%
Specialist 50% 30% 20%

8. The majority of CCGs are forecasting a year-end surplus
for 2015/16*. However, nearly half of CCG CFOs said their
2015/16 plan reduces their brought forward surplus
*CCGs work under a different financial regime to NHS trusts and their financial
performance is not comparable. CCGs are required to make a minimum surplus
of either 1% of allocation or the 2014/15 surplus, less any agreed drawdown.
0%
10%
20%
30%
40%
50%
60%
70%
%offinancedirectors
Deficit Break-even Surplus

9. The majority of finance directors are forecasting a year-end
position for 2015/16 that is worse than their 2014/15 outturn
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
CCG Trust
%offinancedirectors
Worse Same Better

10. In trusts the main drivers of the difference between plan
and outturn are an under-achievement of savings plans
and an increase in agency costs
0%
10%
20%
30%
40%
50%
60%
70%
80%
Under-achievement
of savings plans
Increase in agency
costs
Increase in fines,
challenges and
deductions
Increase in planned
clinician pay costs
Increase in planned
other pay costs
Increase in planned
non-pay costs
%offinancedirectors

11. In CCGs the main drivers of the difference between plan
and outturn are an increase in acute programme costs,
prescribing costs and an under-achievement of savings
plans
0%
10%
20%
30%
40%
50%
60%
70%
80%
Increase in planned
programme costs
on acute contracts/
services
Increase in planned
prescribing costs
Under-achievement
of savings plans
Increase in local
population
Change in morbidity
of local population
%offinancedirectors

12. Finance directors think their organisation’s 2015/16
financial plans are medium to high risk and the
proportion increases for 2016/17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
CCG Trust CCG Trust
2015/16 2016/17
%offinancedirectors
High Medium Low

13. Quality

14. The majority of finance directors expect quality to be
maintained during 2015/16 - they are less confident
about 2016/17
0%
10%
20%
30%
40%
50%
60%
70%
80%
CCG Trust CCG Trust
2015/16 2016/17
%offinancedirectors
Quality will improve Quality will stay the same
Quality will reduce Don't know

15. The outlook

16. Finance directors think they probably have sufficient levers
within their organisation to improve quality and financial
performance. However, trust finance directors are much less
confident about their ability to effect change in their local areas
0%
10%
20%
30%
40%
50%
60%
70%
80%
CCG Trust CCG Trust
in your organisation in your local area
%offinancedirectors
Yes - definitely
Yes - probably
No
Don't know

17. Do organisations in your area have sufficient financial
resources to implement the Five-year forward view
without extra support?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Yes No Don't know
%offinancedirectors
CCG
Trust

18. How confident are you that your organisation can deliver
productivity gains of 2% to 3% a year between now and
2020 to help close the expected £22bn funding gap?
0%
10%
20%
30%
40%
50%
60%
70%
Very Quite Not very Not at all Too early
to say
%offinancedirectors
CCG
Trust

19. The majority of finance directors are calling for the
£8bn additional funding promised by the government
by 2016/17
0%
10%
20%
30%
40%
50%
60%
70%
2015/16 2016/17 2017/18 2018/19 2019/20
%offinancedirectors
CCG
Trust

20. Are you confident that improvements to provider
productivity outlined in Lord Carter’s interim report can
save the NHS up to £5bn?
0%
10%
20%
30%
40%
50%
60%
Yes No Don't know
%offinancedirectors
CCG
Trust

21. Do you think the savings from the new care models will be
able to deliver the financial benefits required to meet the
estimated £17bn funding gap?
0%
10%
20%
30%
40%
50%
60%
70%
Yes No Don't know
%offinancedirectors
CCG
Trust

22. Can the NHS continue to deliver current levels of
quality* within the promised levels of increased
funding?
*Quality is defined as services that are patient-centred, safe, effective, efficient,
equitable and timely
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes Yes, but only if the
£8bn is
frontloaded
No
%offinancedirectors
CCG
Trust

23. Which actions should be used to reduce the deficit if
the NHS cannot continue to deliver the current levels of
quality within the promised levels of funding?
1.6
2.3
3.5
3.7
3.9
1. The Government needs to find more funding for health and
social care
2. The NHS should provide fewer, high quality services that
are affordable within current resources
3. The NHS should provide the same services, but at a lower
quality so that financial balance is achieved
4. The NHS should continue to provide the current level of
services, even if it means organisations continuing to report
deficits
5. The NHS should cease to provide universal care
regardless of ability to pay (e.g. Co-payments)
Average ranking (where 1 is the most preferred option, and 5 is the least)

24. Are there aspects of current service provision where the NHS
could withdraw services or change aspects that would ease
financial pressures without damaging the principles of
universal healthcare, free at the point of delivery?
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No
%offinancedirectors
CCG
Trust

25. Actions to help bring the NHS back into
financial balance
To ease financial pressures finance directors are calling for:
• An honest public debate about how the NHS funded and what services
should be provided
• Certainty about the timing and whether there will be any conditions
attached to the pledged £8bn government funding
• Realistic efficiency targets for providers and adequate funding for new
demands and cost pressures to create headroom so that the focus is
on new care models and improving efficiency, rather than short-term
firefighting
• Strong system leadership to drive and support change across an area
and consistency across the different regulatory regimes