NHS financial performance worsened and unsustainable

The financial performance of NHS bodies worsened considerably in 2015-16, according to the National Audit Office (NAO).

The NAO warned that 65 per cent of NHS trusts and 64 per cent of foundation trusts in England are now in deficit, with the situation no longer sustainable. The figures are up from 44 per cent of NHS trusts and 51 per cent of NHS foundation trusts in the previous financial year.

In 2015-16, NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85 billion, a greater than three-fold in crease in the deficit position of £574 million reported in 2014-15. Provider trusts’ overall deficit grew by 185 per cent to £2.45 billion, up from £859 million in 2014-15, against total income of £75.97 billion.

The NAO also highlighted the possible link between financial stress and access to services and quality of care, with the NAO finding an association between trusts’ financial performance and their overall Care Quality Commission rating, with those that achieved lower quality ratings also reporting poorer average financial performance.

The Department of Health, NHS England and NHS Improvement estimate that they can make £6.7 billion of efficiencies by capping public sector pay, renegotiating contracts, implementing income generating activities, and reducing running costs.

Amyas Morse, head of the NAO, said: “With more than two-thirds of trusts in deficit in 2015-16 and an increasing number of clinical commissioning groups unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable. It is fair to say aggressive efficiency targets have helped to swell the ranks of trusts in deficit over the last few years.

“The Department, NHS England and NHS Improvement have put considerable effort and funding toward stabilising the system, but have a way to go to demonstrate that they have balanced resources and achieved stability as a result of this effort. Therefore, value for money from these collective actions has not yet been demonstrated.”