Concerns that patient services will deteriorate in 2016/17

The vast majority of NHS finance directors do not have confidence that the plan set out in the Five-year forward view is achievable according to new figures from the Healthcare Financial Management Association (HFMA).

Some 84% of finance directors say they don't have sufficient financial resources to implement the plan without extra support and 88% lack confidence that their organisation can deliver the 2% to 3% a year productivity gains needed to close the expected £22bn NHS funding gap.

The new figures come from HFMA's latest biannual NHS Financial Temperature Check survey of over 200 finance directors in England.  The report reveals that whilst Finance Directors welcome the efforts of Lord Carter's £5bn NHS savings plan, there is some scepticism with most saying they are either not confident (46%) or do not know (53%) if the savings can be made. Similarly, when asked if new care models outlined within the Five-year forward view and piloted at Vanguard sites can deliver the financial benefits required to meet the estimated remaining £17bn NHS funding gap most say no (57%) or are uncertain (42%).

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Finance directors are also questioning whether the promised £8bn of additional government funding will be sufficient.  Some 43% don't think the NHS can continue to deliver the current levels of quality within the levels of increased funding currently promised and a further 56% say quality can only be maintained if the £8bn funding is frontloaded.  Almost all (94%) feel the £8bn already pledged is needed no later than the next 18 months.

These concerns come as financial projections continue to deteriorate, with 100% of acute trusts responding to the survey now predicting a year-end deficit, compared to 77% four months ago, and 66% of all trusts (including non-acute trusts) forecasting a 2015/16 deficit, up from 63% in the HFMA's last report.

Paul Briddock, Director of Policy at HFMA, commented:

"Our report confirms the financial problems in the NHS are systemic and across the board, with particular and immense pressure being felt on the acute provider side. The scale of deficit reported is unprecedented. The NHS is not living within its means, which has consequences.

"With just days left before the Spending Review, finance directors are telling us they're not confident in the current plans and need more clarity. While they're not convinced the promised £8bn in funding is sufficient to address the whole financial problem, it's clear it is needed now and many want to know if it will come with conditions attached to it.  Providers also need realistic efficiency targets with adequate funding for the new demands and cost pressures facing them. Today's report tells us it's time to think about what Plan B is, if all else fails."

When asked what any Plan B should look like, finance directors' overwhelming preference is for the Government to find additional funding for health and social care – beyond the £8bn earmarked. If this isn't possible, finance directors see providing fewer services, but maintaining high quality levels, as the next best alternative, with options that would necessitate compromising on quality, moving towards stopping providing universal free care, such as a co-payment system, and continuing to go further into deficit least attractive.

Briddock continued: "NHS trusts reported a combined £930m deficit for the first three months of 2015/16, larger than the deficit reported for the whole of the previous year. Combined with our new research, this tells us that the much reported year-end trust deficit of £2bn for 2015/16 is very optimistic indeed – with finance directors reporting that their financial plans are at medium to high risk of not being achieved and that there is slippage against savings plans, it's likely the actual year-end deficit will be larger."

While 39% of finance directors report that there is a high degree of risk to achieving their financial plans for 2015/16, this figure jumps to 71% when finance directors look at 2016/17. Only 5% of trust finance directors expect to deliver their 2015/16 savings target recurrently, placing more pressure on budgets year on year.

The biggest risks to trusts achieving planned savings were cited as slippage in cost savings (82%), agency staff costs (66%), impacts of social care financial constraints (56%), impact of delayed discharges (56%) and increasing demand (54%).

Despite widespread pessimism about the financial position this year, 88% of finance directors do not expect the quality of patient services to reduce in 2015/16. However, there are concerns that it could deteriorate next year, with the proportion believing it won't get worse in 2016/17 falling to 68%. Finance directors from all sectors felt waiting times (74%) and access to services (63%) were most vulnerable.

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