HFMA NHS Financial Temperature Check Finance directors’ views on financial challenges facing the NHS: July 2015

Introduction Summarises results of HFMA’s third NHS financial temperature check survey of NHS finance directors, published July 2015 Includes views of sample from all UK finance directors working in English CCGs and provider trusts and devolved nation NHS bodies Survey collected views during May 2015 First briefing published June 2014

Response rate was high, covering nearly half of English trusts and two fifths of CCGs Organisation typeCFO responses to survey Org responses to survey % CFO responses % org responses CCGs707941%37% Combined NHS trusts/ FTs117 47% Scotland2213% Wales4444% Northern Ireland5571%

Financial Performance

The financial position across the NHS is deteriorating, according to latest figures There is a combined net deficit of £822m in the English provider sector NHS foundation trusts (FTs) reported a £349m deficit for the year-ending 31 March 2015, compared with a planned net deficit of £10m. 77 of the 152 (51%) FTs reported a deficit. The NHS trust sector reported an aggregate net deficit of £473m, compared with a planned net deficit of £408m. 40 of the 99 (40%) NHS trusts reported a deficit, with a combined gross deficit of £614m. Across the 211 CCGs, there was a small underspend of £151m (0.2% of allocation).

In the majority of CCGs the 2014/15 year-end outturn was the same or better than budget. In the majority of English trusts and Welsh bodies it was worse

In trusts the main drivers of the difference between plan and outturn were an increase in agency costs and under-achievement of savings plans

Although most CCGs achieved or improved on planned performance, CFOs considered the main drivers of variance to be programme cost increases or savings slippage

The majority of contracts remained unsigned at the time of our survey Were all contracts signed by date of survey response? Were all contracts signed by 31 March 2015? NoYes NoYes CCG 68%32% 93%7% Trust 58%42% 90%10%

In 2015/16 there is a clear trend showing trusts are forecasting a deficit and CCGs are forecasting a surplus

Analysis by sector of the forecast 2015/16 financial position in English provider trusts shows the majority of deficits are in acute trusts SectorDeficitBreak-evenSurplus Acute77%9%14% Acute and community85%0%15% Acute and specialist81%8%12% Ambulance33% Community0% 100% Community and mental health29%21%50% Mental health43%0%57% Specialist50%25%

In all sectors except the Welsh NHS, the most common response was the 2015/16 year-end forecast position is worse than the 2014/15 year-end financial position

Few respondents feel there is a low risk to achieving their financial plans for 2015/16

CCGs are planning integration, pathway redesign, investment in primary care and greater clinical standardisation to meet financial challenges

To meet financial challenges trusts are planning to make savings on agency staff costs, procurement and estates costs as well as greater integration

The vast majority of organisations’ final 2015/16 financial plans have been submitted to the regulator or relevant national body

Quality of Services

In 2015/16 respondents do not expect quality of services to deteriorate and in Wales they expect quality will improve

What is the outlook?

Respondents felt within their organisations they probably have sufficient levers to improve quality and financial performance, with the exception of Northern Ireland

There is less confidence in CCGs and trusts, however, when asked whether they have sufficient levers to effect change in their local areas

When asked if organisations in their area had sufficient resources for their long-term plans only Scottish respondents said yes

Respondents in Wales and Northern Ireland support integration of health and social care ('devo Manc' proposals). English respondents are more cautious

Opinion is split among finance directors about whether structural reconfiguration will occur in the next 12 months

Actions to help finance directors meet financial challenges Finance directors suggested: changes and improvements to the national payment system in England more realistic savings targets greater integration of services specifically more progress on the Better Care Fund in England improved joint working and collaboration honesty about services that can be provided within the financial settlement