So from our latest QMR, just as a little bit of context, most of you will of course know that last year was a pretty awful year for NHS finances, particularly on the Trust side with the net overspend running around £2.5 billion. This was the year that the NHS was to get back in control of its finances, and in particular on the provider side through the use of a £1.8 billion sustainability fund that would pick up some of the deficits across NHS providers and also the introduction of what we call control totals that set the spending controls on each and every NHS provider.
With that background there’s an awful lot of focus on “Is the provider side delivering, is the SDF working of a control totals hitting”, and at quarter one this year NHS Improvement released numbers that suggested the provider deficit might still be at around £580 to £640 million, depending on how you added up the numbers and that was at the same time as our previous QMR, the one before and so we can actually now kind of compare and contrast how has it moved since that time, and the answer is, for at least for the end-of-year forecast not very much, perhaps a little bit worse. We have a few more organisations predicting a deficit, a bit of increase in the number of organisations saying that they won’t hit their control totals. But these are not, these are not seismic shifts, these are movements around the margin.
But as will become clear when I talk about commissioners as well, there is a big sting in this particular tail, and that is that nearly half of all providers we asked said that they were concerned or very concerned that they weren’t going to hit their control totals by the end of the year. So they seem to be doing, a lot of organisation are doing, is trying to hold to the forecast for as long as they can, but flagging very deep risks, deep concerns that as they move through the last two quarters of the year they won’t be able to maintain the financial performance that we’ve seen, and they’re good reasons in the way that the system works with control totals as why that might be true.
I said the focus is on providers, it almost always is these days. We think now that in fact some of the attention should be shifting onto the commission side. And why’s that? Well again if you look the core forecast that commissioners told us, a good proportion, nearly two thirds are forecasting a surplus by the end of the year. However, in order to do that CCGs were asked to take 1% of their allocation, about £800 million and effectively lock it up so that it could be used to offset deficits elsewhere in the system. And two odd things have come out from that.
Firstly, about 20% of CCGs say their forecast of a good end year position relies on getting that 1% back, that they have not in fact found 1% to be handed out to, particularly to the provider sector, and they sharply increased their savings plans to try and generate that 1%. And when you ask them, “are you going to deliver your saving plans” which is what this chart shows, look at the red, the red and the yellow. They are sharply more pessimistic that they will achieve it by the end of the year. So they’re holding to their core forecasts but they’re flagging in fact over 70% are very concerned, or concerned that they won’t reach their savings plans, and quite how that then feeds back into the end year position is a real worry.
So there’s some big risks that seem to be there, both on the provider side, but particularly on the commissioner side on finance. If we look at performance, performance in general against the targets that we can see, almost across the board is weaker than it was last year. We’ve shown here that probably the two most iconic of the targets, the 18 week target and performance in A&E against the four hour target, it’s also true across a basket of other targets that we can see.
Just to remind people, almost all the targets that work in the NHS apply to the acute sector, so if you were to ask GPs I’m sure I know what that answer would be, is that they feel at least as stressed. I won’t try and make invidious comparisons of stress across the system. Just as stressed as other people across the system.
Mental health has now got a target but we’re not really using it yet, it’s not at full operation and also in community health services, and these are largely excluded from the performance that we can see. And again very similar to that of caution and that of risk. There are a couple of other markers about how the system’s performing, things like bed occupancy, the number of cancelled operations, the number of cancelled operations that you’re then supposed to re-book, and they’re all drifting upwards, the direction you wouldn’t want them to be in. Which again strongly suggests that we’re running the system very, very hot and you wouldn’t want to run the system very, very hot as you move towards winter ‘cause that’s normally the peak time of, I would say, business. It’s the peak time of activity.
And so again, performance numbers drifting down, just to remind people, performance numbers are drifting down, they are, if you go back to 2005 these would still look mostly amazing. The reduction in waiting times we saw through that decade and this has not gone back to that era, it’s maybe going in the wrong direction but there’s still been, we’re still working off a kind of baseline, high level of performance.
Why has some of this happened? What is going on? Well sitting behind a lot of this is the almost relentless increase in demand and activity you see across the NHS. What we’ve seen since 2010 is an attempt to keep the money down so that spending in the health service doesn’t go up very much. That’s not stopped people being referred to hospital, up about 3% on last year. Being admitted to hospital as an emergency that’s up by just a shade under 4% or showing up at A&E which is over 4.5%. These increases are cumulative, they go up one year, then they go up the next year and they go up the year after that, and the more years you go by, the busier and busier and the hotter and hotter the system’s running. And these growth rates are a bit higher than the long term average as well. So something else appears to be moving in the system.
But also just to pick out delayed transfers of care, which is really moving very, very quickly. Up by nearly 100% over the best performance a couple of years ago and rising, and the acceleration in those number of days lost to delayed transfers of care is accelerating rather than calming down.
So not only are more people arriving at the front door, but the number of people that are then being held in beds because they can’t be discharged, either through problems with social care, but in fact more often problems in follow on NHS services, is rising very, very sharply.
If you took that together, in the short term this is an uncomfortable place to move in to winter. Very, very busy hospitals. Very, very full. Performance looking weak and many parts of the system flagging concerns over finance.
If you look beyond that over the years to come, it’s perhaps unsurprising then how pessimistic finance directors, both in CCGs and Trusts, are about the prospects of the future and we’ve picked out two in particular.
One is around “can you hit the efficiency targets you need to deliver the five year forward view, to transform services by 2020”. It used to be that Trusts were negative and CCGs were not quite so in a bad place, what we’ve seen over the last year is the negativity in commissioners has soared, so they’re actually more negative now than Trusts are and even more worried about the next twelve months. And by the time you’re getting 96% of Trust FDs being pessimistic about the state of your local health funding, you’re beginning to wonder did the other 4% just tick the wrong box. You’re beginning to move the kind of North Korean rates of voting.
So concerns, as I say, they’re both around the short term agenda, particularly thinking about winter, but also real worries for people as they’re trying to struggle to keep the money up and to keep performance up, but how you find the headroom to do the things we all think we need to do to get us to 2020.