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
responses to responses to responses
survey
survey
% org
responses
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
2014/15 year-end forecast position compared with 2013/14 year-end
and the planned year-end position for 2014/15
80%
%age of finance directors
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 of Increase in programme Increase in prescribing Decrease in allocation
QIPP
costs on acute
costs
contracts
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 of
CIPs
Increase in non-pay
costs
Decrease in revenue
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
bank, agency
quality
and locum staff concerns
(including
Keogh and
Francis
reviews)
Staff turnover
CQC reports
Local market
forces factors
Redesign of
jobs
The main cost pressures are around staff costs,
increasing demand and continuing healthcare
What are your main cost pressures in 2014/15?
%age of finance directors
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Area team
CCG
Trust
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?
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Area team
CCG
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
cost savings
Estates
Reducing
Redesigning
Redesigning
rationalisation clinical variation care pathways jobs to reduce
the cost of
headcount
Providers and commissioners concerns about the
financial health of their local economy are broadly
similar
What are the main concerns about the financial health of your health
economy?
90%
%age of finance directors
80%
70%
60%
50%
40%
30%
20%
10%
0%
CCG
overspends
QIPP not
CIPs
Better Care
System
QIPP lacks
delivered unachievable
Fund
management
detail
Commissioner - June
*Not asked in June survey
Commissioner - December
Trust - June
Cost of
Francis/
Keogh*
Trust - December
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
Which aspects of service quality are most vulnerable as a result of the
current financial challenges?
%age of finance directors
80%
70%
60%
50%
40%
30%
20%
10%
0%
Commissioner
Trust
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)?
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 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
Which organisations provide the main system leadership in your area?
100%
%age of finance directors
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
View of area team DOFs
View of CCG CFOs
View of trust DOFs
CCG
Area team
Trusts
Local authority/ Health and Wellbeing Board
Regulators (Monitor, TDA, CQC)
NHS England (regional+national)
None
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?
100%
%age of finance directors
90%
80%
70%
60%
50%
40%
30%
20%
10%
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?
100%
%age of finance directors
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
100%
%age of finance directors
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
%age of finance directors
What are the main mechanisms you are planing to use to meet the
financial challenges ahead?
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
England
Northern Ireland
Scotland
Wales
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%
90%
%age of finance directors
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