Working relationships within the sustainability and transformation partnerships (STPs), introduced to help transform services and re-balance NHS finances, have improved significantly in the last six months according to new research released today.

In the latest NHS financial temperature check from the Healthcare Financial Management Association (HFMA), results show that half of the finance directors (FDs) and chief finance officers (CFOs) surveyed believe STP relationships are strong enough to deliver cross-organisational change. This is up from just 20% in the last NHS financial temperature check in December 2016.

The improvement in STP relationships is positive news following a year in which NHS finance professionals have faced challenges head-on and worked hard to make efficiencies.

According to HFMA's research, most provider trusts (84%) and clinical commissioning groups (CCGs) (63%) performed better in the 2016/17 financial year than they expected to.

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In part, this improved performance is due to larger than expected injections from the £1.8bn sustainability and transformation fund received by some trusts. For CCGs, meanwhile – who are expected to report a combined surplus in the region of £250m for 2016/17, compared to a £16m deficit the year before – the release of their 1% risk reserve funds has boosted their financial performance.

FDs and CFOs are targeting further financial efficiencies in the current financial year.  Through cost improvement programmes (CIPs), finance professionals in trusts are aiming to achieve savings of 4.5% in 2017/18, which would be an improvement on the 3.7% achieved in 2016/17. Similarly, through their equivalent QIPP (quality, improvement, productivity and prevention) plans, CCGs are aiming for efficiencies of 3.9% this year, compared to 2.6% in 2016/17.

Mark Orchard, President of HFMA, commented:

"The last few years have been the most financially challenging that most of us in the NHS can remember and the challenges look set to continue.

"However, there are reasons to be positive. The level of efficiency savings delivered in 2016/17 by finance staff working in collaboration with their clinical and management colleagues should be applauded.

"In many ways, though, this is just the beginning. The efficiency challenge in 2017/18 is even tougher. Collectively, everyone in the NHS needs to find ways to be more resourceful, more innovative and more collaborative to address the financial challenge in front of us."

Results from HFMA's latest NHS financial temperature check underline the scale of the challenge. While CCGs look likely to report a surplus for 2016/17, trusts reported a deficit of £791m. And although this is a better position than the £2.45bn deficit in 2015/16, many of the same issues are having an adverse impact on the overall picture.

The majority of trusts identified agency costs as a cause of negative variance and it is the main area where FDs plan to make savings. However, with Brexit on the horizon, 54% of trusts and 27% of CCGs think the UK's exit from the European Union poses a medium or high risk to their organisation's finances and may cause a rise in agency costs.

Furthermore, as savings continue to be made, many are predicting that quality of care may deteriorate. Around a quarter of trust FDs (24%) and CCG CFOs (28%) think quality may decline in the coming 12 months, with waiting times (86%) seen as the most vulnerable area.

Finally, despite the strengthened relationships within STPs, finance professionals remain apprehensive about their ability to successfully reduce the NHS funding gap. Some 89% of trust FDs and 77% of CCG CFOs remain unconvinced that STPs can close the gap before 2021 – with just 1% and 3% respectively of these groups believing there is enough capital to put STP plans into place.

To read HFMA's NHS financial temperature check in full, visit: https://www.hfma.org.uk/publications/details/nhs-financial-temperature-check-briefing-july-2017

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