HFMA NHS Financial Temperature Check Finance directors’ views on financial challenges facing the NHS: December 2014

Introduction Summarises results of HFMA’s second NHS financial temperature check survey of NHS finance directors, published December 2014 Includes views of sample from all UK finance directors working in English commissioning and provider bodies (trusts, CCGs and area teams) and devolved nation NHS bodies Survey collected views from 21 October to 4 November 2014 First briefing published June 2014

Response rate was high, covering nearly half of English trusts and 1 in 3 other bodies Organisation typeCFO responses to survey Org responses to survey % CFO responses % org responses CCGs516430% English provider trusts119 49% of which:- NHS trusts45 46% of which:- FTs74 50% Area teams8832% Scotland6640% Wales3333% Northern Ireland66100%

Financial outlook

The financial position across the NHS is deteriorating, according to latest figures 55% of FTs were in deficit at quarter 2. Acute trusts represent the majority of the deficit FTs reported a £254m deficit at 30 September 2014, compared with a planned net deficit of £59m NHS trusts reported a £376m deficit as at 30 September 2014, compared with a planned net deficit of £317m 26 NHS trusts (27%) are forecasting a year-end deficit, 24 are acute trusts CCGs forecast a year-end overspend of £21m. 21 CCGs are forecasting overspends against plan as at 30 September 2014

14/15 forecast positions are worse than 13/14 for many organisations and there is slippage from plan

The main drivers of commissioners’ year-end forecasts are increased acute care costs and unachievable savings

The main drivers of trusts’ year-end forecasts are increased costs and unachievable savings

Responses shows trusts’ pay costs are driven by high agency staff costs and increasing numbers of nursing and medical staff

The main cost pressures are around staff costs, increasing demand and continuing healthcare

Commissioners plan to use a range of mechanisms to deal with financial challenges

Providers intend to use a mixture of mechanisms to reduce costs and change the way services are provided

Providers and commissioners concerns about the financial health of their local economy are broadly similar *Not asked in June survey

Quality of services

What changes do you anticipate in the quality of patient services provided by your organisation? 2014/1544%51%6% Quality of services 2015/1645%42%13%

Access to services and waiting times are considered most vulnerable aspects of quality

Integration and the better care fund

There is scepticism about the benefits of integration and the better care fund

Finance directors have doubts the better care fund will bring financial benefits

Finance directors are not confident planned benefits of better care fund will be achieved

System leadership

Finance directors have different views about who provides the system leadership

Five year plans

Finance directors are not confident about the assumptions underpinning years 3 to 5 of their five year plans.

Not all plans have been fully agreed by commissioners and providers

Confidence in the achievability of the five year plans is low

Confidence is higher for the first 2 years of the plans

What can be done to help the financial pressures?

What do finance directors think needs to change? Finance directors outlined actions to help reduce financial pressure: Faster progress on service transformation More realistic financial settlement and efficiency requirement Clear system leadership Improved national workforce planning Caution around better care fund implementation Changes to the national payment system

What are the HFMA’s views? More funding is required to enable the transformation of the NHS Faster progress on large transformation schemes is essential and requires system leadership National workforce planning and training requires improvement Rapid progress is needed on the reform of payment systems in order to support new models of care

Four nations

In common with the English NHS, NHS finances in Scotland, Wales and Northern Ireland are deteriorating

The year-end financial position will be worse in many organisations compared with 2013/14 and 2014/15 plans

Finance directors plan to use a range of mechanisms to deal with financial challenges

The majority of finance directors expect quality to stay the same, or improve