Since the last QMR we have had a Budget, new planning guidance for 2018/19 and most (but not all) of winter. Here we consider these factors together with our latest survey of trust finance directors and CCG finance leads and national data sources to summarise the current position and outlook for finance and performance. There are important implications for NHS waiting times standards and we draw these out at the end of this section.
We have discussed the impact of the Budget on NHS spending in detail elsewhere. Suffice to say the funding outlook for 2018/19 is a repeat of recent years – low growth, insufficient to keep pace with demand and insufficient to provide headroom for rapid transformation.
For the current year, there have been two surprises. First, in the Budget the Chancellor injected £337 million in revenue and more than £500 million in capital. The revenue was badged as extra winter money even if in reality, as NHS Improvement noted, it has ‘helped offset some of the costs of winter already incurred by providers’. In other words, some of it was used to reduce overspends already incurred rather than to buy extra capacity. The second surprise was to see (little more than two months after the Budget) HM Treasury hand over another £267 million to offset cost pressures in the Department of Health and Social Care budget. Two top-ups in such quick succession suggest some nervousness in Whitehall over the 2017/18 financial position. News of the deteriorating financial situation from the NHS can provide some explanation for this anxiety.
For commissioners, both our survey and the latest quarterly update from NHS England point in the same direction: increasing financial difficulties in clinical commissioning groups (CCGs) with a significant jump in the proportion of CCGs (more than one-third) forecasting an end-of-year deficit. This means the 0.5 per cent risk reserve held back to manage system-wide deficits is needed by many CCGs to balance their own position. Fortunately for the NHS as a whole, NHS England forecasts sufficient underspends in its own central budgets to mean that the commissioning sector as a whole can hit their overall financial targets for this year. However, there is a clear warning that some of these central underspends are non-recurrent – ie, will not help in 2018/19 – and that CCGs are starting 2018/19 with an underlying deficit of around £400–500 million. The days when commissioner underspends could offset provider overspends seem to be ending. In this context, the NHS planning guidance that dropped the risk reserve and introduced the £400 million Commissioner Sustainability Fund makes good sense.
On the provider side, the forecast end-of-year deficit once Sustainability and Transformation Fund funding is included has reached £931 million. Our survey and NHS Improvement both indicate that around half of NHS trust finance directors are forecasting a deficit, broadly the same proportion that did so at the same time last year, a year when the trust deficit reached £791 million. The reason that 2017/18 is looking worse than 2016/17 seems to be because of the sheer depth of difficulties being experienced in a limited number of organisations. It was already apparent last year that while the Sustainability and Transformation Fund had reduced the size of the provider sector deficit it did not even out results across organisations. Far from it. In our latest survey, the net trust position hides dramatic variations between individual organisations and it is especially noticeable that when organisations’ forecasts go wrong, some go very wrong indeed. This makes the end-of-year result hard to predict but also raises two important issues. First, how were control totals agreed at the outset? The dramatic deteriorations we see in a limited number of organisations raise questions about both the original control total and how organisations’ forecasts can move by tens of millions in-year. Second, it remains the case that many organisations can never credibly repay the loans they have been given by the Department as their debts accumulate. The longer these debts pile up the greater the challenge facing the NHS when it tries to put local finances back on a sustainable footing.
Last year – just like this year – the Department (with NHS England and NHS Improvement) was trying to (largely) offset provider deficits by commissioner underspends and use remaining Departmental budgets to mop up any remaining imbalance. In 2016/17 this worked by the narrowest of margins, delivering an underspend of £55 million against a budget measured in the billions. This year commissioners were tasked to deliver a £560 million risk reserve which they are (just) on course to deliver, courtesy of NHS England central underspends. With NHS provider deficits now forecast to reach £931 million then the gap that the Department must cover is growing and may explain HM Treasury’s late-in-the-day top-ups.
Was the NHS better prepared than ever before for this winter? Well, the planning started earlier and appeared more robust. However, these plans faced a fundamental problem: by autumn 2017, the NHS’s plans were based on 7.3 per cent fewer acute beds than in 2010 while facing emergency admissions 14.5 per cent higher. All the planning in the world cannot overcome the basic maths of rising demand and falling capacity. While meeting the challenge was made easier because much of the recent growth has been in very short-stay admissions, it has also been made harder as long-term trends in reducing longer lengths of stay appear to be slowing down. Emergency admissions to the NHS jumped by 6.8 per cent in January 2018 compared to January 2017. Maintaining performance not far off winter 2016/17 levels in the face of this demand is indeed a testament to the plans, but also to the hard work of NHS staff.
In the face of staff shortages, did the controls on the use of expensive agency staff damage performance? Two-thirds of finance directors stated that these controls had little or no impact. However, their comments make clear that this was not because they could easily source the staff they needed at cheaper rates. On the contrary, it was because hospitals simply set them aside and brought in agency and bank staff anyway. However, with workforce shortages – particularly in nursing – so widespread in the NHS, even turning to expensive agency staff could not stop the slide in performance.
This partly explains why the extra money provided by the Chancellor in the Autumn Budget did not impress finance directors: 55 per cent said it made little or no difference. Within this group, by far the most common reason given for the lack of impact (stated by 40 per cent) was the inability to find more staff – in short, most trusts did not wait for the nod from the Treasury (or NHS Improvement) to search for more staff and so by the time the money arrived, it helped to lower deficits rather than create more capacity.
With all eyes (and resources) on A&E, we must now wait to see what, if any, collateral damage may have been inflicted on the rest of the NHS. Already in December 2017 – before the NHS announced the widespread suspension of elective activity – performance against the 18-week standard dropped by 1.3 percentage points compared to November. This is the second highest ever month-on-month decline since the standard was introduced and by far the highest since the current definition of 'still waiting' became the single measure of the standard.
The decline is apparent in other areas too. The near-removal of mixed-sex accommodation in the NHS was one of the achievements of the coalition government after 2010. It is an achievement fast unravelling as the number of breaches of this requirement nearly doubled in December and January compared to the same period last year (Figure 1).
With the NHS short of money and staff, squeezing the balloon in one place (A&E) risks unpleasant side effects somewhere else.
Waiting times: making the sickest wait longest
Media attention over the winter has focused on ambulances queuing at the doors of A&E, patients waiting on trolleys and worsening performance against the four-hour A&E waiting time standard and for good reason. However, beyond the simple fact that the NHS has not met the A&E standard since August 2014, there are growing signs of a deeper problem with the way the standard works, and this problem now risks spreading to the 18-week referral-to-treatment waiting time standard.
Though it may seem obvious, both standards were designed to be met and were indeed met for a long time. The question we must ask is how do these standards work when they are not met, and not met on a continuing basis and by an increasing margin?
Looking first at A&E, people may remember that the despite the difficult news stories, performance against the four-hour target improved slightly between December and January, rising from 85.1 per cent to 85.3 per cent (Figure 2). Yet between those two months, the longest waits in A&E rose sharply: trolley waits of more than 12 hours more than doubled to 1,043 in January and 4- to 12-hour waits rose by just under 20 per cent to more than 81,000.
How does one measure of A&E waiting times improve and others fall? Part of the answer lies in the fact that the overall measure is the average of two increasingly divergent numbers. The first is the declining performance in type 1 departments, which are A&E units attached to hospitals (sometimes called major A&E departments). It is these that account for the vast majority (more than 98 per cent) of emergency admissions from A&E, and performance here deteriorated between December and January. The other is performance in type 3 departments, which are minor injury and other similar units that usually do not admit patients (so ambulances do not take patients to these units). Performance in these units was more than 99 per cent against the four-hour standard and has shown virtually no change since 2010. The average of these two performance measures is an increasingly misleading statistic: it reflects neither the still excellent performance in minor injury units and walk-in centres nor the increasingly long waits patients are experiencing for a bed in hospital. Unfortunately, of course, it is this latter group who are most in need of treatment.
Back in 2010, and indeed for some time after, the gap in performance between major A&Es and minor injury units was small and of little operational significance. However, since 2011 rising waiting times have been driven by performance in major A&Es and mainly caused by problems with hospital capacity: too few available beds for the number of patients that need them (bed-occupancy rates now rank as trust finance directors’ highest cause of concern). Even for trusts with major A&Es, their reported performance reflects a mix of very unwell patients who need admission, and the less unwell who do not. It is usually the former who face long waits, accounting for the overall decline in performance. While including all patients at these various units made sense when performance was high, as it has declined the standard has provided increasingly little protection to those most in need.
Something similar may now occur with 18-week referral-to-treatment times. In the recent planning guidance, NHS England and NHS Improvement re-set the standard in a fundamentally new way: the NHS was asked to ensure that the waiting list in March 2019 would be no greater than in March 2018 and also to halve the number of people who had waited more than 52 weeks. This emphasis on 52 weeks will provide some protection to those waiting the longest. However, the aim of the old standard was to keep waits below 18 weeks, and there is a very large gap between 18 weeks and 52 weeks. The risk now is that an NHS short of beds, capacity and money will be forced to lengthen waits for those needing admission, especially those needing a bed for a long time. It can keep the waiting list down by targeting patients (or specialties) that are generally treated through outpatient departments.
This is not an argument for waiting time standards to be abandoned. But their design and measurement are difficult: at their worst they can create perverse incentives (hitting the target and missing the point) but at a lower level of toxicity, they can also fail to protect the patients that need it most. As it is unlikely the system will return to 2014 levels of performance any time soon, it will be increasingly important to ensure that those who are not treated within the current standards do not experience excessive delays.
Looking to the future
When asked about the future, trust finance directors have remained consistently pessimistic in recent surveys. Their pessimism about the future in 2016 and 2017 has turned into the reality of sliding performance in 2018 and continuing struggles with finances. What has changed is that – perhaps as the media focus moves from deficits to performance – the public is increasingly recognising there is a problem, with net satisfaction in the NHS down significantly in 2017.
At the same time as the NHS struggles with its finances and performance, the work of sustainability and transformation partnerships and integrated care systems may provide a longer-term answer to the challenge of providing high-quality care in a changing world. However, at least for the near future, without some better news on finance and workforce, it is likely that finance directors’ pessimism will continue to be well founded.
See the box below for further details of recent measures that have been put in place to manage NHS finances and performance.
Health care surveys
- 1. Forecast end-of-year financial situation 2017/18
- 2. Cost improvement (CIP) and quality, innovation, productivity and prevention (QIPP) programmes (2017/18)
- 3. The state of patient care
- 4. Organisational challenges
- 5. General practice capacity versus demand
- 6. Waiting time standards
- 7. Winter pressures
- 8. Looking ahead...
This quarter’s report is based on an online survey of 78 NHS trust finance directors and 27 clinical commissioning group (CCG) finance leads (covering 33 CCGs).
Respondents were asked about their organisation’s forecast end-of-year financial situation for 2017/18 and the financial outlook for their local health economy over the past and forthcoming financial year; the state of patient care in their area; the financial situation for 2018/19; the key organisational challenges facing trusts and CCGs; workforce issues. We also asked respondents about the NHS’s ability to meet accident and emergency (A&E) milestones as set out in the 2017/18 Mandate.
1. Forecast end-of-year financial situation 2017/18
In our recent survey, 52 per cent of trust finance directors forecast their organisation would end 2017/18 in deficit (Figure 3) and 82 per cent reported that their forecast position for 2017/18 would depend on significant financial support (Figure 5). Furthermore, 53 per cent of providers expecting to receive Sustainability and Transformation Fund monies still forecast a deficit by the end of the year.
We also asked trusts to provide details of their agreed control totals for 2017/18. Of the 71 trusts that had agreed control totals (or that are in the process of agreeing control totals), 28 per cent forecast a worse end-of-year position against their control total. Furthermore, 32 per cent of all providers were either fairly or very concerned about meeting their agreed control totals in 2017/18 (Figure 8).
24 per cent of all CCGs forecast a surplus for 2017/18, and 36 per cent were expecting to overspend (Figure 4). Furthermore, 27 per cent of all CCGs were expecting to delay or cancel spending plans to support their finances in 2017/18 (Figure 6). The potential threat to the commissioner portion of the risk reserve (ie, the 0.5 per cent of CCG budgets that are held back and uncommitted to in-year spending) is underlined by the fact that 21 per cent of CCGs are relying on their share being returned to them rather than being used to support provider deficits (Figure 6). 32 per cent of all CCGs were fairly or very concerned about meeting their control total for 2017/18 (Figure 9).
78 per cent of CCG respondents were considering extending the number of low-value treatments and prescriptions that will not be funded, and 56 per cent were considering extending waiting lists or reducing activity for certain elective specialties (Figure 7).
Note: QMR 1-4 based on a panel of 50 finance directors.
Note: 27 CCG finance leads answered this question for the 33 CCGs they cover collectively; CCGs only surveyed since their establishment in April 2013.
Note: Only foundation trusts are allowed to retain surpluses. Respondents were allowed to select more than one form of additional financial support.
Note: 27 CCG finance leads answered this question for the 33 CCGs they cover collectively. Respondents were allowed to select more than one form of additional financial support.
Note: Respondents were allowed to select more than one option.
Note: 71 respondents (for whom this question was applicable).
Note: 26 CCG finance leads answered this question for the 32 CCGs they cover collectively.
2. Cost improvement (CIP) and quality, innovation, productivity and prevention (QIPP) programmes (2017/18)
The average cost improvement programme (CIP) target for trusts for 2017/18 is 4.7 per cent, ranging from 2.3 per cent to 9 per cent of turnover (Figure 10).
The average quality, innovation, productivity and prevention (QIPP) target for CCGs for 2017/18 is 3.5 per cent, ranging from 1 per cent to 5.1 per cent of allocation (Figure 10).
46 per cent of all NHS trust finance directors were either fairly or very concerned about achieving their CIP targets this year (Figure 11).
57 per cent of all CCG finance leads were fairly or very concerned about achieving their plans this year (Figure 12).
Note: QMR 1–4 based on a panel of 50 finance directors; QMR1 and QMR5 excluded as wording of responses not compatible with other quarters’ data.
Note: 27 CCG finance leads answered this question for the 33 CCGs they cover collectively; CCGs only surveyed since their establishment in April 2013.
3. The state of patient care
63 per cent of finance directors and CCG finance leads felt that patient care had worsened in their local area in the past year (Figures 13 and 14).
The number of trust finance directors and CCG finance leads reporting that patient care had worsened in their local area in the past year remained high throughout 2016/17, and into 2017/18 when compared to previous years.
Question not asked before QMR6.
Note: CCGs only surveyed since their establishment in April 2013.
4. Organisational challenges
For trust finance directors, bed occupancy and staff morale sit jointly as their main concerns for this QMR (Figure 15). As in the previous QMR, delayed transfers of care and A&E remain among their top concerns.
For CCG finance leads, the four-hour A&E waiting time standard continued to be their main concern for a fifth QMR in a row (Figure 16). Their second biggest concern continued to be pressures on general practice, introduced as an option in QMR23. They also continued to be concerned about delayed transfers of care and the cancer treatment waiting times standard.
Note: Respondents asked to choose their top three concerns. Figures expressed as a percentage of the total number of concerns in each survey. A new option, bed occupancy, was introduced in QMR21.
Note: Respondents asked to choose their top three concerns. Figures expressed as a percentage of the total number of concerns in each survey. New options have recently been added, implementation/delivery of The five year forward view for mental health (introduced in QMR21), and pressures on general practice (introduced in QMR23).
5. General practice capacity versus demand
- For the first time, we asked CCG finance leads how confident they felt about the ability of general practice in their local areas to meet demand. 67 per cent of CCG finance leads felt concerned or very concerned about this (Figure 17).
6. Waiting time standards
As a condition of receiving sustainability and transformation funding, trusts are expected to develop credible plans for maintaining the delivery of core standards for patients, including the A&E four-hour waiting time standard.
We asked trust finance directors how confident they were in their organisation’s ability to deliver on the A&E four-hour waiting time standard by March 2018. Worryingly, 72 per cent of all trust finance directors (Figure 18) were either fairly or very concerned that their organisation will not be able to deliver this performance standard by March 2018. At the same time, 89 per cent of CCG finance leads felt fairly or very concerned that the organisations from which they commission services would not be able to deliver this performance standard by March 2018 (Figure 19).
Note: 46 respondents for whom the question was applicable.
7. Winter pressures
Following the announcement of additional winter funding in the Autumn Budget 2017, we asked trust finance directors, what, if any, impact this had on the operational pressures their organisations faced this winter. 55 per cent of all trust finance directors felt that the additional funding had little or no impact on the operational pressures facing their organisations (Figure 20).
We went on to ask respondents who stated that there had been no impact why this was. 40 per cent of respondents felt that it was because of the lack of available staff (including agency and locum) (Figure 21).
We also asked NHS trust finance directors what impact the caps on agency and locum staff had had on their operational performance this winter. 67 per cent of NHS trust finance directors felt that the caps had had little or no impact on winter operational pressures (Figure 22). An analysis of respondents’ free text comments reveals that this was primarily due to organisations putting caps ‘to the side’ to prioritise safe staffing levels.
Finally, with regards to winter pressures, we asked trust finance directors whether their organisations had escalated to operational pressures escalation levels (OPEL) 3 or 4 this winter. 70 per cent of all trust finance directors had escalated OPELS 3 or 4 one or more times over the winter (Figure 23).
Note: 78 respondents (for whom the question was applicable).
Note: 47 respondents (for whom the question was applicable).
Note: 76 respondents (for whom the question was applicable).
Note: 64 respondents (for whom the question was applicable).
8. Looking ahead...
When asked for their views about the financial state of their wider local health and care economy over the next 12 months, 85 per cent of trust finance directors and CCG finance leads were fairly or very pessimistic (Figures 24 and 25).
62 per cent of NHS trust finance directors were very or fairly pessimistic about balancing their books in 2018/19 (Figure 26).
48 per cent of CCG finance leads were very or fairly pessimistic about achieving financial balance in 2018/19 (Figure 27).
Note: Question not asked before QMR3; QMR 1–4 based on a panel of 50 finance directors.
Note: 27 CCG finance leads answered this question for the 33 CCGs they cover collectively.
1. Accident and emergency
- Overall performance against the four-hour A&E waiting time standard worsened in December as the expected increase in demand over winter slowed the average response time at A&E. The number of people seen within four hours of arrival in December was the equal worst it has been since this data collection began, at 85.1 per cent (Figure 28). January 2018 saw equally poor performance. The 95 per cent target has not been met since August 2015, a period of 30 consecutive months.
- Within the overall total, performance at type 1 A&Es, (major A&E units attached to hospitals) has reduced more severely, with 77.9 per cent of patients waiting longer than four hours at type 1 A&Es in December (Figure 29).
- Attendances at A&E have continued to be historically high for the time of year, with the number of attendances at A&Es of all types breaking the 2 million mark in December and January for the first time at that time of year (Figure 30).
- Admissions from A&E have also risen over the past three months, beyond the already record levels we saw in quarter two of 2017/18, to reach a seasonal and historical high of 392,227 in December (Figure 31). Until 2017/18, the average year-on-year growth in admissions from A&E was approximately 3 per cent. In 2017/18, the average year-on-year growth each month has been 5 per cent.
- The number of patients waiting more than four hours from a decision to admit until their admission on to a ward has also risen to both a seasonal and historical high (Figure 32). More than 81,000 patients waited longer than four hours for admission in January, more than at any other time in the past seven years. The number of patients waiting more than 12 hours for admission has seen an even sharper rise, going over 1000 for the first time. It should be noted that many of these 12-hour waits are occurring at a handful of hospitals, and most A&E units have no patients waiting more than 12 hours.
2. Waiting times
The performance of the NHS against the 18-week referral-to-treatment standard has worsened significantly since September 2017, when 10.9 per cent of people waited more than 18 weeks (Figure 33). Performance recovered marginally in October and November, before the percentage waiting rose to 11.8 per cent in December, the highest since March 2009.
The proportion of patients waiting more than 6 weeks for a diagnostic test has remained at around the same level since April 2017, with 2.2 per cent of patients waiting more than 6 weeks in December 2017 (Figure 33). The 1 per cent target has been met once in the past 49 months (in February 2017).
- The total number of people waiting for a procedure fell marginally to an estimated 4 million between November and December (Figure 34) from a high of an estimated 4.1 million between August and October 2017. Growth in the number of people waiting over the course of 2017/18 has been slow compared to other years – year-on-year growth in the size of the waiting list was 12 per cent at this point in 2016/17, but in 2017/18 was 4 per cent. The average growth in the waiting list between April and December in each year between 2010/11 and 2015/16 was 6 per cent.
Cancer treatment waiting times
- The target that no more than 15 per cent of patients wait more than 62 days for cancer treatment following an urgent referral from a GP continues to be missed: quarter three 2017/18 was the 16th quarter in a row the standard has not been met (Figure 35). Performance has improved since the start of 2017/18, with 17 per cent of patients not seen within 62 days in quarter three 2017/18, down from 18.9 per cent in quarter 4 2016/17. The number of patients undergoing treatment has remained largely stable over the same period, at between 36,000 and 38,000 each quarter.
Mental health waiting times
- Once again the standard that 50 per cent of patients should get access to psychological treatment within two weeks of their first referral was met in each month in 2017, though with 73.2 per cent of patients waiting more than two weeks in December (Figure 36), performance was slightly worse than the average for the rest of 2017.
3. Delayed transfers of care
- The total number of days patients have been delayed before discharge has continued to fall over quarter three 2017/18 (Figure 37), with 145,000 total days delayed in December 2017, the lowest total since September 2015. Since the start of 2017/18, the total number of days delayed has fallen by 18 per cent.
- This reduction can be seen across delays for which both social care and the NHS are responsible, with delays for which social care is responsible falling faster since the start of 2017/18, from 68,000 days in April 2017 to 49,000 in December 2017, a reduction of 25 per cent (Figure 38). Since the start of the year, delayed days for which the NHS is responsible have fallen from 97,000 days to 84,000, a reduction of 13 per cent.
- The number of full-time equivalent (FTE) staff employed by the NHS increased across each of the main staffing groups over the period covered by the latest data (Figure 39). In particular in the scientific, therapeutic and technical staff group; the number of people working in allied health professional (AHP) and AHP support roles increased by more than 3,000 full-time equivalents between July and October 2017.
- The number of FTE nursing staff has continued to fall year on year in each month of the latest data (Figure 40). The influx of nursing students in September and October did not reverse this trend, with the number of nurses employed in the NHS in November 2017 still down on the previous year (by 0.2 per cent) at 286,921 FTEs. This was the first time that the number of nurses employed in October had not risen compared to the previous year since November 2012.
- About this edition
This report details the results of an online survey of NHS trust finance directors carried out between 8 January and 5 February 2018. We contacted 244 NHS trust finance directors to take part, and 78 responded (32 per cent response rate). The sample included 36 acute trusts; 32 community and mental health trusts; 1 specialist trust; 1 ambulance trust and 8 trusts that were not categorised. In addition, we contacted 149 clinical commissioning group (CCG) finance leads, and 27 responded. Between them these finance leads covered 33 CCGs (16 per cent of all 207 CCGs). This is a lower number of CCG responses than in previous surveys.
Ref, The state of Patient Care;- As the Kings Fund was founded on providing Health Care for the less fortunate in society I think you should focus more on patient care that's were the suffering and premature deaths are happening, instead of involving more private enterprise into the so called New NHS Model. These enterprisers prioritise profit before care so the more privatisation the more complicated the New NHS Model will get causing more distress. So speak out more for the Patients because I find this Government are treating the Patients as numbers instead of human beings and they are dragging good intentioned organisation down to their level.
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