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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
%ag
e of
fina
nce
dire
ctor
s
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?
%ag
e of
fina
nce
dire
ctor
s
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?
%ag
e of
fina
nce
dire
ctor
s
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?
%ag
e o
f fi
nan
ce d
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
%ag
e of
fina
nce
dire
ctor
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
e of
fina
nce
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
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
e of
fina
nce
dire
ctor
s
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
e of
fina
nce
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
%ag
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
e of
fina
nce
dire
ctor
s
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
%ag
e of
fina
nce
dire
ctor
s
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
e of
fina
nce
dire
ctor
s
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
e of
fina
nce
dire
ctor
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
e of
fina
nce
dire
ctor
s