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 type CFO responses to survey

Org responses to survey

% CFO responses

% org responses

CCGs 51 64 30% 30%

English provider trusts 119 119 49% 49%

of which:- NHS trusts 45 45 46% 46%

of which:- FTs 74 74 50% 50%

Area teams 8 8 32% 32%

Scotland 6 6 40% 40%

Wales 3 3 33% 33%

Northern Ireland 6 6 100% 100%

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

Commissioner Trust Commissioner Trust14/15 forecast compared with 13/14 14/15 forecast compared with 14/15 plan

0%

10%

20%

30%

40%

50%

60%

70%

80%

2014/15 year-end forecast position compared with 2013/14 year-end and the planned year-end position for 2014/15

Better Same Worse

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

0%

10%

20%

30%

40%

What are the main drivers for the change in the forecast 2014/15 year-end financial position in commissioners?

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

Increase in pay costs Under-achievement of CIPs

Increase in non-pay costs

Decrease in revenue0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

What are the main drivers for the change in the forecast 2014/15 year-end financial position in trusts?

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

0%

20%

40%

60%

80%

What are the main drivers of pay costs in trusts?

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f fi

nan

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ire

cto

rs

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

Slippage on Q

IPP

Continuing healthca

re

Emergency

care

Increasin

g demand

Elective

care

Coding adjustments

Specia

lised co

mmissioning

Increasin

g nursing st

aff

Agency st

aff0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

What are your main cost pressures in 2014/15?

Area team CCG Trust

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s

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

Investi

ng in co

mmunity se

rvice

s

Integration/ r

edesigning pathways

Reducing cl

inical v

ariation

Investm

ent in prim

ary ca

re

Redesigning acu

te pathways

Better care

fund

Redesign of m

ajor servi

ce co

ntracts

Co-commiss

ioning0%

10%20%30%40%50%60%70%80%90%

100%

What are the main mechanisms commissioners are planning to use to meet the financial challenges ahead?

Area team CCG

%ag

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fina

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dire

ctor

s

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

Reducing agency

staff co

sts

Procu

rement cost

savings

Estates r

ationalisation

Reducing cli

nical v

ariation

Redesigning ca

re pathways

Redesigning jo

bs to re

duce th

e cost

of headco

unt0%

20%40%60%80%

100%

What are the main mechanisms trusts are planning to use to meet the financial challenges ahead?

%ag

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Providers and commissioners concerns about the financial health of their local economy are broadly similar

*Not asked in June survey

CCG overspends

QIPP not deliv

ered

CIPs unach

ievable

Better Care Fund

System m

anagement

QIPP lack

s detail

Cost of F

rancis/ K

eogh*0%

10%20%30%40%50%60%70%80%90%

What are the main concerns about the financial health of your health economy?

Commissioner - June Commissioner - DecemberTrust - June Trust - December

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Quality of services

What changes do you anticipate in the quality of patient services provided by your organisation?

2014/15 44% 51% 6%

Quality of services

2015/16 45% 42% 13%

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

Access

to servi

ces

Waiting times

Range of servi

ces

NHS/ so

cial c

are in

terface

Rationing of servi

ces

Patient exp

erience

Parity o

f MH w

ith acu

te

Primary/

community

vs. a

cute

Patient choice

Outcomes

Patient safety

0%10%20%30%40%50%60%70%80%

Which aspects of service quality are most vulnerable as a result of the current financial challenges?

Commissioner Trust

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Integration and the better care fund

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

Trust CCG Trust CCG Trust CCGWithin 1 year Within 1 to 3 years After 3 years

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Do you think the Better Care Fund will help to improve your organisation's services for patients and service users?

Yes No Don't know

%ag

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

Trust CCG Trust CCG Trust CCGWithin 1 year Within 1 to 3 years After 3 years

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Do you think your organisation will benefit financially from closer in-tegration of services (including the Better Care Fund)?

Yes No Don't know

%ag

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fina

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dire

ctor

s

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

Yes No Don't know0%

10%

20%

30%

40%

50%

60%

70%

80%

Are you confident that the benefits set out in your local better care fund plan will be achieved?

Area team CCG Trust

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System leadership

Finance directors have different views about who provides the system leadership

View of area team DOFs View of CCG CFOs View of trust DOFs0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Which organisations provide the main system leadership in your area?

CCG Area teamTrusts Local authority/ Health and Wellbeing BoardRegulators (Monitor, TDA, CQC) NHS England (regional+national)None

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Five year plans

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

Trust CCG Trust CCGYear 1 to 2 Year 3 to 5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

How confident are you about the accuracy of the assumptions under-pinning your five year plan?

1 - confident 2 3 4 5 - not confident

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Not all plans have been fully agreed by commissioners and providers

Fully Partially Not at all0%

10%

20%

30%

40%

50%

60%

70%

80%

Is your plan agreed by all commissioners and trusts in your health economy?

CCG Trust

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Confidence in the achievability of the five year plans is low

Very Not very Quite Not at all Too early to say0%

10%

20%

30%

40%

50%

60%

70%

How confident are you that your organisation’s five year plan is achievable?

CCG Trust

%ag

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Confidence is higher for the first 2 years of the plans

Very Not very Quite Not at all Too early to say0%

10%

20%

30%

40%

50%

60%

70%

How confident are you that the first two years of your organisation’s five year plan is achievable?

CCG Trust

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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

England Northern Ireland

Scotland Wales England Northern Ireland

Scotland Wales

2014/15 2015/16

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

For 2014/15 and 2015/16 is your organisation forecasting a year end underspend or overspend?

Deficit/ overspend Break-even Surplus/ underspend

%ag

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

England Northern Ireland

Scotland Wales England Northern Ireland

Scotland Wales

14/15 forecast compared with 13/14 14/15 forecast compared with 14/15 plan

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014/15 year-end forecast position compared with 2013/14 year-end and the planned year-end position for 2014/15

Better Same Worse

%ag

e of

fina

nce

dire

ctor

s

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

Reducing cl

inical v

ariation

Reducing headco

unt

Reducing agency

costs

Integration

Redesigning acu

te pathways

Investi

ng in co

mmunity

Telehealth/ t

elecare

Estates r

ationalisation

Procu

rement c

ost sa

vings

0%10%20%30%40%50%60%70%80%90%

100%

What are the main mechanisms you are planing to use to meet the financial challenges ahead?

England Northern Ireland Scotland Wales

%ag

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s

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

Quality will decrease Quality will stay the same Quality will improve0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

What changes do you anticipate in the quality of patient services during 2014/15?

England Northern Ireland Scotland Wales

%ag

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