Deficits in the NHS 2016

Comments: 14
Unaudited figures indicate that NHS commissioners (clinical commissioning groups and NHS England) and providers in aggregate ended 2015/16 in deficit for the second year running.

This briefing draws on data from our quarterly monitoring reports, secondary research and interviews with health care leaders to consider commissioner and provider finances in the round and to provide an overview of the factors that have led to the NHS going into deficit. It goes on to outline some of the strategies being employed to restore financial balance, before drawing together our thoughts on the implications of these strategies for the NHS this year and in the longer term.

Deficits in the NHS 2016 | by Phoebe Dunn, Helen McKenna, Richard Murray

No. of pages: 36

Key messages

  • NHS providers and commissioners ended 2015/16 with a deficit of £1.85 billion – the largest aggregate deficit in NHS history.
  • Evidence suggests that, in recent years, mental health and community services providers have delivered relatively strong financial performance, which may have come at the expense of cuts in staff and risks to patient care.
  • Over the past two years the financial position of local commissioners has deteriorated sharply.
  • The scale of the deficit signifies a system buckling under the strain of huge financial and operational pressures.
  • The principal cause of the deficit is that funding has not kept pace with the increasing demand for services.
  • It is touch and go whether the Department of Health has managed to stay within the budget voted by parliament in 2015/16.
  • There are significant opportunities for the NHS to deliver better value care, but these cannot be achieved at the pace or scale needed to deliver £22 billion of efficiency savings by 2020/21.
  • Programmes to implement new models of care and transform services offer significant opportunities to improve care, but these will not deliver savings in the short term.
  • The political and economic uncertainty following the UK’s vote to leave the EU adds to the risks facing the NHS.
  • The government must review its priorities for the NHS to ensure these can be delivered within the resources available.

Keep up to date

Subscribe to our email newsletters and follow @TheKingsFund on Twitter to see our latest news and content.

Comments

#547822 Michael Glowala
Ophthalmology Theatre Manager
York NHS Trust

I have worked in the NHS for nearly 36 years and have been a Theatre Manager for the past seven.
I write with regard to the expenditure and debt in the NHS.
Last year's deficit was £2.54 billion and it is constantly growing.
Cost effectiveness and better budget control is the best way forward.
The problem stems from who runs the hospitals. Invariably, it comes down to the Consultants rather than the management. It is the Consultants who appear to have the final say on the equipment that is purchased for their use rather than the committees that are put in place to manage the budget.
There is equipment that is in place - in all hospitals - that does the job and is adequate for the procedures it is required for. New equipment may come onto the market and at the whim of a surgeon, a need for it suddenly appears. It may shorten a procedure slightly, but it is not cost effective when it comes to renewal when you take into account - for example - a new three year contract with a different supplier which may cost hundreds of thousands of pounds.
To me, it is money down the drain.
Any new Consultant at a hospital should be informed that 'this is what we have' and 'this is what we use' with regard to the equipment in a particular speciality - a common sense approach.
Over the years, certain Trusts have merged. I also see this as an area for attention.
It boils down to different expenditure and practice in hospitals prior to the mergers. There is a recalcitrance to accept new Trust operating procedures in the amalgamated hospitals and old practices remain in place with respect to spending.
It would make sense, for the higher management in these Trusts to communicate and tighten the purse strings to bring budgetary constraints more effectively into place across all their hospitals.
The NHS as a whole is held to ransom by its suppliers. There is never a reduction in their prices and even the cost of delivery on some items is exorbitant. It needs the Purchasing hubs to pare down alternative products and streamline what we buy from where - there are price differentials across the whole country.
I love my job and the challenges that come my way. I am concerned for the future and hope that my suggestions may in some small way help the NHS to continue its excellent provision of patient care.

#547824 Jane Twelvetree
community midwife
NCUH

At last someone acknowledges we need more funding and better management. The elephant in the room is PFI agreements and how much money is wasted on these scandalous contracts. We also need to discuss how we fund the NHS preferably through direct tyaxation and not health insurance. The USA is a prime example of how this doesn't work with huge profits going to shareholders whilst the sick and dying end in bankruptcy courts.

#547839 Hilda Dent
Retired nurse manager with NHS
None

The approach to care within the NHS needs to be managed, not just within, but by government policies to ensure external factors do not induce ill health.

I refer to the emissions from vehicles, incinerators ,industry , clay calciners and coal, wood , oil and gas burning .
I refer to the lack of access to sunshine , exercise facilities and poor housing.
I refer to the indulgences of modern living.

All of these aspects are of high importance in order for the public to be initiated into self help to a healthy body, which in turn will reduce the costs to the NHS and the misery to the patient of becoming ill.

#547841 Roger Steer
Director
Healthcare Audit Consultants

Why couldn't this report wait for the publication of the DH Accounts 2015-16?.
They were due to be laid before Parliament on 11th July.
Is this because they might show that the DH as a whole broke even?
The NHS made a cumulative surplus of £4bn in recent years.
If there is one thing the NHS is good at it is living within the budget.
The Kings Fund should be spelling out the impact on quality of services from restrictions to funding not implying that the finances are out of control.
The NHS problem is that Finances are in control, its the rest of it that is failing.

#547842 Tony T
HealthCampaigner

Now, we learn that the NHS cannot cope with ever increasing demand. The services provided range from urgent lifesaving treatments to some procedures/ treatments that are often non-urgent or cosmetic.

Best practice & good housekeeping requires that politicians are honest about this and that they explain priorities in terms of increased unnecessary deaths (caused by waiting list that are far to long) and important but not imperative services that have to wait!!

#547844 Joanna S Woodger
NHS Consultant
CPFT

If this attitude was around few years ago we would not have ant laproscopic surgery ( as the scalpel was freely available). Use of new equipment and techniques is called progress. I feel that it is doctors who should lead the NHS as we are patient and safety centred, well educated, perform well under the pressure and most of all altruistic.
I find that some managers once in position of power lose the human aspect of care in drive for occasionally insane cost cuts.

#547849 William McKee
GP

Thank you for collecting all the threads of this crises into one easily accessible narrative.
However there is one glaring omission in the analysis - there is nothing said about provider structural reform; Why is it not considered or commented, even it is only to discount it on either political or organisational grounds?

#547856 Dan Legg
Procurement Specialist
GSTT

I agree that clinicians should lead the way in selecting which equipment & consumable devices are used in the treatment of patients; however this process needs to be managed by proactive procurement teams.

Cross speciality teams including clinical leads need to work together in the interest of their Trusts and patients by presenting a united front to the supply base. Only then will the suppliers take us seriously and ensure Trusts receive value for money.

Procurement teams also need to stop evaluating unit costs alone and consider while life costs and quantify the associated benefits of using products, I.e. Shorter bed stays, reduced re admission rates, better patient outcomes.

#547859 kevin riley
Solicitor - specialising in supporting front line staff in the NHS.
Self Empoyed

•The reality is that according to the OECD the UK is 13th out of the original 15 countries of the EU on the amount it spends on the NHS

.The already identified (by the Public Accounts Select Committee) dangerous shortage of front line “operational” staff in the NHS is likely to worsen and the appalling existing number of legally “preventable” deaths increase if the criminal law is not enforced as a result of the current perceived (but legally invalid) need to “save” billions of pounds from the already overstretched NHS Budget.

Legally any Government can decide to spend as much of the tax payer’s money that it receives each year as that Government wishes – it is merely a matter of determining priorities.

A perceived need to make “savings” is no defence to the crime of manslaughter caused by a failure to comply with the overriding duty of care that a Chef Executive owes to that deceased individual..

The common factor in virtually all of the negative reports of the Care Quality Commission on individual NHS Foundation Trusts since 2013 has been their identification of the Chief Executives of the now “independent” organisations (although all funded by the tax payer) not employing sufficient front line staff in all “service delivery” areas to enable proper care to be provided.

In many instances this culpable failure has directly led to “preventable” deaths – each of which amounts to the commission of a serious criminal offence by the Chief Executive and/or senior manager “in charge”..

.In every other environment where such preventable deaths occur the Police routinely investigate and the Director of Public Prosecutions prosecute the individual Chief Executive/Senior manager in charge of the organisation where these preventable deaths have occurred.

For what must be political reasons not one Chief Executive in the NHS has been charged for committing exactly the same offence.
It would only require one Chief executive running one NHS Foundation trust to be charged with exactly the same offence for it to result in more dramatic improvements in patient outcomes and indeed ensure the change in culture that,according to Jeremy Hunt, the NHS needs than any of the improvements currently being suggested.

THE REALITY THAT THE UK IS RANKED ONE FROM THE BOTTOM IN THE AMOUNT IT SPENDS EACH YEAR ON THE NHS AS COMPARED TO THE OTHER 15 ORIGINAL MEMBERS OF THE EU. AND BREXIT WILL NOT HAVE ANY EFFECT ON THE AMOUNT OF MONEY AVAILABLE TO THE NHS - UNLESS THE GOVERNMENT ALLOWS IT TO FOR PURELY "POLITICAL" REASONS.

THERE IS ALSO AN ENORMOUS DISPARITY IN THE NHS AS A WHOLE AS TO THE AMOUNT OF TAX PAYERS MONEY THE NHS SPENDS ON “MANAGERS” FROM THE EXTREMELY HIGHLY PAID (BUT SEEMINGLY UNACCOUNTABLE FOR FAILURES IN SERVICE DELIVERY) CHIEF EXECUTIVES DOWNWARDS AND THE MONEY IT SPENDS ON EMPLOYING NURSES, DOCTORS AND OTHER FRONT LINE DELIVERY STAFF.

WITH OVER 60% BEING SPENT ON THE FORMER.

A DISPARITY THAT WOULD NEVER BE TOLERATED IN ANY OTHER SERVICE DELIVERY ENVIRONMENT .

IT IS ALSO A LEGAL REALITY THAT THE GOVERNMENT HAS A CHOICE EACH YEAR AS TO HOW MUCH IT WISHES TO ALLOCATE FROM THE TAXES IT RECEIVES TO EACH GOVERNMENT DEPARTMENT INCLUDING THE NHS

EACH YEAR THE GOVERNMENT DECIDES ON THE AMOUNT OF TAX PAYERS MONEY IT WANTS TO SPEND ON EACH "SERVICE"
WITH AN EVER INCREASING POPULATION AND AN EVER INCREASING PERCENTAGE OF WHICH BEING ELDERLY THE DEMAND ON THE FRONT LINE SERVICES IN THE NHS IS BOUND TO INCREASE AND THE NUMBER OF “FRONT LINE STAFF” NEEDED TO MEET THAT DEMAND MUST INEVITABLE GROW.

GIVEN THE REALITY OF THE ABOVE THE GOVERNMENT CAN EASILY DECIDE TO SPEND MORE MONEY ON THE NHS EITHER BY REDUCING THE AMOUNT ALLOCATED TO ANOTHER SERVICE AREA OR BY INCREASING THE AMOUNT OF TAX IT COLLECTS.

THE REALITY IS THAT THE MAJORITY OF TAX PAYERS WOULD BE PREPARED TO PAY MORE IN INCOME TAX IF THEY WERE ASSURED THAT THE EXTRA MONEY WOULD BE SPENT ON THE FRONT LINE OF SERVICE DELIVERY AND NOT ON EMPLOYING EVEN MORE MANAGERS AND INCREASING EVEN MORE THE ALREADY OBSCENE AMOUNTS OF TAX PAYERS MONEY THESE INDEPENDENT NHS FOUNDATION TRUSTS ALREADY PAY THEIR CHIEF EXECUTIVES AND OTHER MANAGERS..

THE UNFORTUNATE REALITY IS THAT SINCE THE HEALTH AND SOCIAL CARE ACT 2012 (WHICH REMOVED THE NHS FROM DEMOCRATIC CONTROL) - ONCE THE GOVERNMENT GIVES TAX PAYERS MONEY TO THE 165 OR SO LEGALLY INDEPENDENT TRUSTS THAT NOW RUN ALL NHS HOSPITAL NEITHER JEREMY HUNT- NOR THE DEPARTMENT OF HEALTH NOR NHS ENGLAND HAS ANY CONTROL ON HOW THAT MONEY IS ACTUALLY SPENT.

THE ABOVE IS A NATIONAL DISGRACE

IN ONE HOSPITAL ALONE (IN RURAL NORFOLK) OVER TEN OF THEIR "MANAGERS" ARE PAID SIGNIFICANTLY MORE THAT THE PRIME MINISTER THE CHIEF EXECUTIVE RECEIVING MORE THAT £250,000.
THE POSITION IS FAR FAR WORSE IN LONDON AND OTHER MAJOR CITIES..

JEREMY HUNT ASKED THESE ORGANISATIONS TO EXERCISE RESTRAINT IN THE AMOUNT OF MONEY THEY WERE PAYING THEIR CHIEF EXECUTIVES AND OTHER SENIOR MANAGERS BUT THEY ALL CHOSE TO IGNORE THAT REQUEST AND THERE WAS NOTHING JEREMY HUNT OR NHS ENGLAND COULD DO ABOUT THAT REFUSAL.

#547877 Veronica Burton
neonatal intensive care/paediatric nurse
retire through ill health

The problems of the NHS, which I have experienced professionally and as a psychiatric patient, come from years of government uncommitted to the NHS as it was intended to be, free at the point of need and paid for through taxes. One way the government has avoided its commitment is through the iniquitous PFI arrangements, that are proving the ruination of some of our best hospitals. Governmental commitment is to the American model, which always comes out worst in comparisons between developed countries, as being expensive and unjustly exclusive. The great majority of people have no idea what is happening to their NHS. Cameron et al lied deliberately and disgracefully about their plans for the NHS, at the very time they were drawing up the bill they passed as the 2012 Health and Social Care Act, which did everything possible to give the advantage to private companies. The likes of Charles Branson does not create a company for the specific purpose of making money from the sick, unless he is assured it will be to his advantage. Incidentally, I note Cameron has no compunction about helping along companies that take advantage of tax havens, despite his impressive rhetoric against such arrangements.

#547881 Consultant Surgeon
Consultant Surgeon

Good luck recruiting quality surgeons with your approach.

I hope the readership appreciates that the theatre manager wants to decide on the equipment that the person actually doing the job uses...

Funnily enough this is exactly the wrong manager lead system we suffer with in most places, but being on the dark side you have been brainwashed into thinking that's the solution and it's all our fault.

Spend 15 years training as a surgeon yourself and see if you're still happy wih an annointed nurse choosing your kit.

#547969 Andrew Metcalf
Local NHS/Political activist
Labour Party

It seems to me that there is considerable truth in everyone of the comments made above - even where they conflict. The ‘facts' laid out in the summary are not substantially disputed - but as was pointed out they focus almost exclusively on finance and say almost nothing about long term strategy plans and their consequences, patient outcomes and experience in the NHS or the wider nations health (including public health, mental health and social care). Having looked at it all as dispassionately as I am able, it is my conclusion that the fundamentals remain, or have become (perhaps to some extent by design) confusing and opaque for all involved. The key issues that is most commonly confused is the definition of the decisions and control that lie within the political sphere and those that lie in the delivery organisations and how that boundary is managed. At a minimum the political sphere obviously includes: establishing the fundamental structure through which the nations health and health care will be managed; deciding the structure, philosophy and processes of the ‘delivery’ organisations; the standard of health infrastructure and ongoing care the government ‘contracts' for and the funding they agree to provide to the delivery organisations to deliver that (both long term (capital) and short term(operating); raising the money that government has agreed to contribute, monitoring delivery and patient outcomes, experience and satisfaction, high level benchmarking (internationally, regionally and st unit level to identify best practice possibilities) with constant monitoring and regular reviews to ensure the ‘politically determined’ side of things remains optimal and in line with the public wishes. The outcomes of the political process will completely define the world in which the delivery organisations operate - facing the range of possibilities from completely a completely free self organising market model with patients (or their employers or insurance) funding services through to a rigidly top down managed, state owned and funded system. The current system in the UK is a rather hybrid - the NHS being a system largely provided by government funding, free at the point of use and available to all but with a pseudo market model with relatively autonomous providers managed by a set of quango created by the government who implement government policy and manage the money they are provided with. Social care is a much more chaotic mixture of public and private funding and provision. Public Health is an even more nebulous activity. These differences create inevitable pressures as Public Health, the NHS and social care deliver two parts of single product - the nations health and care needs - where changes, improvements, deteriorations in one impact massively on the other. The most obvious examples being that improvements in public health reduce pressure on the NHS and social care, and improvements in social care mean less hospital admissions, less A&E visits and less bed blocking. The other major issue is that governments change every few years, and leaders even more often - often bringing significantly different ideologies and plans for managing the nations health. The problem with that is that health effective and efficient health provision is a long term job that requires long term planning - particularly in a state delivered and funded model. It takes decades to plan and build the right infrastructure, to create education and training capacity, attract student, educate, train, and build skills that will deliver the right numbers of staff with the right skills, in the right place at the right time. This provision of staff is itself a fourth fundamental area of the equation in the delivery of health care. It also takes decades to see the results of investments in public health flow through to big changes the nations health e.g. in reduced smoking and alcohol consumption, improved diet, increased exercise. It is no wonder that the (relatively small budgets) and (perhaps controversial) legislation required to make dramatic improvements in the long term public health (the only long term answer to our ever spiralling health care budgets) - never get made - the government of the day always has overriding demands on managing its short term budgets and short term political priorities will always win out. In my opinion there appears to be only one answer to this - so far as we can lets take public health, health and social care out of the day to day hands of the politicians. Lets set up a Royal Commission (or whatever the non royalist equivalent is) to examine the whole question about how the health services should be funded, structured and run - identify the primary options and present them to the nation in a non political way - for them to choose - perhaps in a sequence of decisions - what sort of services they want how they should be organised, managed and funded. Political parties could present their views, perhaps have a say in how the consultation and decision process works BUT once the decision is made their job will be to provide the money from the public purse that the system requires and facilitate and support the efforts of the National Health & Care Organisation. How this will be managed will have been decided by the Royal commission, perhaps the politically independant Head of the NH&SCO will be a directly elected position. In my opinion this would be THE single hardest and most important job in the country. Maybe such an approach would allow:
- much reduced short term politically driven initiatives;
- much less political spin when presenting the facts;
- long term views, strategies and plans for long term issues;
- real accountability;
- a set of focussed health organisations and professional people who understand their landscape, their brief and the resources available to them who can take a long term view and deliver the best possible result for the nation.

I could go on about the chaos and overlapping issues that threaten to overwhelm the current delivery organisations, how they are hamstrung by funding shortfalls (obvious), a half cocked clearly inappropriate 'market model', PFI and its legacy; the forever failure to establish a proper integration between clinical management functions and the responsibilities, freedoms and management of consultants; poor - terribly poor yet highly paid managers in some health organisations; staff planning, training, recruitment, management and development; language (that describes cuts as re-optimised medical pathways) etc etc but these are highly complex issues - often conflicting - that require a highly professional management with the time and resources to work out how best to resolve them.

#547970 Tony T
campaigner

Of course the Consultant is the only person equipped to choose the kit he uses. The very idea that bean counters are better able to evaluate outcomes for complicated conditions (and cancer in particular) than the trained clinician is hard to understand.

The only valid questions are:
1) Will it work?
2) Will it work well
3) Will it work well in the future

It is the consultant who has the duty of care in these matter; how can anyone make these judgments without clinical training???

Regards

#548033 Peter Hunter
senior citizen
n/a

Any hoped-for outcome that relies on the honesty of politicians is unrealistic since, with a very few notable exceptions, the term "honest politician" is a sickening oxymoron.

Add new comment