HFMA NHS Financial Temperature Check Finance directors views

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 CCGs CFO Org % CFO % org responses to survey 51 64 30% English provider trusts 119 49% of which: - NHS trusts 45 45 46% of which: - FTs 74 74 50% Area teams 8 8 32% Scotland 6 6 40% Wales 3 3 33% Northern Ireland 6 6 100%

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 £ 254 m deficit at 30 September 2014, compared with a planned net deficit of £ 59 m • NHS trusts reported a £ 376 m deficit as at 30 September 2014, compared with a planned net deficit of £ 317 m • 26 NHS trusts (27%) are forecasting a year-end deficit, 24 are acute trusts • CCGs forecast a year-end overspend of £ 21 m. 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 2014/15 year-end forecast position compared with 2013/14 year-end and the planned year-end position for 2014/15 %age of finance directors 80% 70% 60% 50% 40% 30% 20% 10% 0% Commissioner Trust Commissioner 14/15 forecast compared with 13/14 Better Same Trust 14/15 forecast compared with 14/15 plan Worse

The main drivers of commissioners’ year-end forecasts are increased acute care costs and unachievable savings What are the main drivers for the change in the forecast 2014/15 year-end financial position in commissioners? 45% %age of finance directors 40% 35% 30% 25% 20% 15% 10% 5% 0% Under-achievement Increase in of QIPP programme costs on acute contracts Increase in prescribing costs Decrease in allocation

The main drivers of trusts’ year-end forecasts are increased costs and unachievable savings What are the main drivers for the change in the forecast 2014/15 year-end financial position in trusts? 45% %age of finance directors 40% 35% 30% 25% 20% 15% 10% 5% 0% Increase in pay costs Under-achievement Increase in non-pay Decrease in revenue of CIPs costs

Responses shows trusts’ pay costs are driven by high agency staff costs and increasing numbers of nursing and medical staff What are the main drivers of pay costs in trusts? %age of finance directors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Reliance on Response to Staff turnover CQC reports Local market Redesign of bank, agency quality forces factors jobs and locum concerns staff (including Keogh and Francis reviews)

The main cost pressures are around staff costs, increasing demand continuing healthcare What are your main cost pressures in 2014/15? %age of finance directors 90% 80% 70% 60% 50% 40% 30% 20% 10% Trust st af f Ag en cy st rs nu In cr ea s in g co m ed Sp e ci al is C CCG in g io is s m ju s ad od in g El Area team ni ng ts tm ca ec tiv e m de cr ea si ng en re d an re ca In en cy er g Em in g in u on t C Sl ip pa ge he on Q al th ca IP P re 0%

Commissioners plan to use a range of mechanisms to deal with financial challenges %age of finance directors What are the main mechanisms commissioners are planning to use to meet the financial challenges ahead? ni n io C oc om m is s co nt rv ic e se aj or m of gn si CCG g . . ra fu n re ca te r Be t ed e R Area team c. d ay s hw pa t ed R In v es es ig n tm in g en ti ac n ut e pr im al in ic cl in g ed uc R re ar va y ria hw pa t ng ig ni es re d n/ tio In te gr a ca ay s es ic rv se ity un m m co in g es tin In v tio n 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Providers intend to use a mixture of mechanisms to reduce costs and change the way services are provided What are the main mechanisms trusts are planning to use to meet the financial challenges ahead? 100% %age of finance directors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Reducing agency staff costs Procurement Estates cost savings rationalisation Reducing clinical variation Redesigning care pathways jobs to reduce the cost of headcount

Providers and commissioners concerns about the financial health of their local economy are broadly similar eo gh ta C os to Q f. F IP P ra nc la ck s is /K de m ge an a m st em Sy * il en t nd Fu ar e r. C tte Be un ac hi C IP s no td P IP Q ev ab ed el iv er sp e ov er G C C le 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% nd s %age of finance directors What are the main concerns about the financial health of your health economy? Commissioner - June Commissioner - December Trust - June Trust - December *Not asked in June survey

Quality of services

What changes do you anticipate in the quality of patient services provided by your organisation? 2014/15 44% 51% 6% 45% 42% 13% Quality of services 2015/16

Access to services and waiting times are considered most vulnerable aspects of quality 80% 70% 60% 50% 40% 30% 20% 10% m co m y/ ar Pr im Trust tie Pa O ut nt s co m af et y es ho ic e tc ie n Pa t M of ity Pa r Commissioner . a cu te un ity w H ex nt of vs ith pe se rie ac ut e nc e s rv i ce er fa ce in t ng Pa tie ci H S/ so R at io ni al c ge an W ar e of s g ai tin N R es tim ic rv se to ss ce Ac er vi ce s 0% es %age of finance directors Which aspects of service quality are most vulnerable as a result of the current financial challenges?

Integration and the better care fund

There is scepticism about the benefits of integration and the better care fund Do you think the Better Care Fund will help to improve your organisation's services for patients and service users? 100% %age of finance directors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Trust CCG Trust Within 1 year CCG Within 1 to 3 years Yes No Don't know Trust CCG After 3 years

Finance directors have doubts the better care fund will bring financial benefits Do you think your organisation will benefit financially from closer integration of services (including the Better Care Fund)? %age of finance directors 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Trust CCG Trust Within 1 year CCG Within 1 to 3 years Yes No Don't know Trust CCG After 3 years

Finance directors are not confident planned benefits of better care fund will be achieved Are you confident that the benefits set out in your local better care fund plan will be achieved? 80% %age of finance directors 70% 60% 50% 40% 30% 20% 10% 0% Yes No Area team CCG Don't know Trust

System leadership

Finance directors have different views about who provides the system leadership %age of finance directors Which organisations provide the main system leadership in your area? 100% 80% 60% 40% 20% 0% View of area team DOFs View of CCG CFOs CCG Area team Trusts Local authority/ Health and Wellbeing Board Regulators (Monitor, TDA, CQC) NHS England (regional+national) None View of trust DOFs

Five year plans

Finance directors are not confident about the assumptions underpinning years 3 to 5 of their five year plans. How confident are you about the accuracy of the assumptions underpinning your five year plan? %age of finance directors 120% 100% 80% 60% 40% 20% 0% Trust CCG Trust Year 1 to 2 1 - confident CCG Year 3 to 5 2 3 4 5 - not confident

Not all plans have been fully agreed by commissioners and providers Is your plan agreed by all commissioners and trusts in your health economy? 80% %age of finance directors 70% 60% 50% 40% 30% 20% 10% 0% Fully Partially CCG Trust Not at all

Confidence in the achievability of the five year plans is low How confident are you that your organisation’s five year plan is achievable? 70% %age of finance directors 60% 50% 40% 30% 20% 10% 0% Very Not very Quite CCG Trust Not at all Too early to say

Confidence is higher for the first 2 years of the plans How confident are you that the first two years of your organisation’s five year plan is achievable? 70% %age of finance directors 60% 50% 40% 30% 20% 10% 0% Very Not very Quite CCG Trust Not at all Too early to say

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 For 2014/15 and 2015/16 is your organisation forecasting a year end underspend or overspend? %age of finance directors 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% England Northern Ireland Scotland Wales 2014/15 Deficit/ overspend England Northern Ireland Scotland 2015/16 Break-even Surplus/ underspend Wales

The year-end financial position will be worse in many organisations compared with 2013/14 and 2014/15 plans 2014/15 year-end forecast position compared with 2013/14 year -end and the planned year-end position for 2014/15 %age of finance directors 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% England Northern Ireland Scotland Wales 14/15 forecast compared with 13/14 Better Same England Northern Ireland Scotland Wales 14/15 forecast compared with 14/15 plan Worse

Finance directors plan to use a range of mechanisms to deal with financial challenges England Northern Ireland av in at io Wales en tc os ts lis ra tio na re m oc u Pr Scotland gs n e s ta te Es Te le he al th /t el ec ar ty m in in g st in g es ig n R ed In ve ac ut e co m pa th te g In uc ed R un i w ay ra tio n st co en cy ag in g uc ed R s t dc ou n he a va ria tio al cl in ic g in ed uc R s 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% n %age of finance directors What are the main mechanisms you are planing to use to meet the financial challenges ahead?

The majority of finance directors expect quality to stay the same, or improve What changes do you anticipate in the quality of patient services during 2014/15? 100% %age of finance directors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Quality will decrease England Quality will stay the same Northern Ireland Scotland Quality will improve Wales