Monday, February 08, 2016
The biggest hospital trust in the country is set to run up a £134.9m deficit this year – by far the largest ever overspend in the history of the NHS.
Barts Health NHS Trust, which runs four hospitals in east London, employs 15,000 people and serves an area containing 2.5 million people, is on course to have failed to balance its books by that margin when the NHS financial year ends on 31 March. Its overspend is 69% bigger than the trust’s £79.6m overspend – also a record at the time – in 2014-15.
Its grim financial predicament has been revealed in a parliamentary answer by the health minister, Alistair Burt, to Sadiq Khan, Labour London mayoral hopeful.
Burt also revealed another London trust, London North West Healthcare NHS Trust, which operates four hospitals, had suffered such a sharp decline in its finances that it was due to end the year £88.3m in the red – the second biggest in NHS history and £63.4m worse than last year.
“These forecast deficits provide further evidence of the escalating financial crisis in the NHS, as well as the longstanding challenges facing London’s health system. In the case of Barts, these pressures have been exacerbated by the costs of a major PFI development,” said Prof Chris Ham, chief executive of the independent health thinktank, the King’s Fund.
Barts’s deficit may end up even bigger than £134.9m. At its board meeting last week, Chrisha Alagaratnam, the trust’s interim chief financial officer, disclosed that the deficit had already reached £115.6m by the end of November, “which represented a £24.4m adverse position against the financial plan”. That overshoot was due to it having made too few savings, received less income than expected and been fined for missing key NHS targets.
The sheer size of the deficits run up in the capital suggested that the £1.8bn of extra funding the NHS in England has been given for next year, which the health secretary, Jeremy Hunt, has earmarked to wipe out collective overspend by trusts may prove inadequate, added Ham. “The extra funding provided by the government is being used mainly to get the NHS back into financial balance but even this must be in doubt given the scale of the deficits now being reported. 2016/17 will be a make-or-break year for the NHS,” he said.
Alwen Williams, Barts’s chief executive, said that although its deficit was England’s biggest, the trust’s huge size and income meant it was no worse in relative terms than those of other trusts. Barts’s income is about £1.4bn a year, so its overspend represents about 10% of its budget.
“Since we are the biggest NHS trust in the country, it is not surprising we are forecasting the largest deficit, although as a proportion of turnover it is comparable to other acute trusts in England,” she said.
Nevertheless we are taking concerted steps to improve our financial position by improving the productivity of our four hospitals, working with commissioners to ensure that any money that might have been levied in fines and penalties is reinvested in the trust, and recruiting to permanent posts rather than using expensive agency staff.”
Reports presented at Barts’s board meeting last week showed that, of the £68m a month it spends on its workforce’s wages, £7m goes on agency staff. The trust has calculated about £30m of the £80m-a-year cost of agency staff is taken up by the premiums the staffing agencies charge.
Barts last year was fined £56m by local NHS organisations for failing to treat A&E patients within four hours and those waiting for planned care within 18 weeks. It is thought to be paying out even more in fines this year as pressure on NHS services has led to most trusts missing key targets.
London North West Healthcare recently disclosed that its problems were so serious that its projected £88.3m deficit may end up being as much as £100.9m, and that it was running so short of cash that it was having trouble paying suppliers.
Even after receiving a bailout from the NHS Trust Development Authority to improve its short-term financial position, it would still be facing “a £13m shortfall on cash required to fund the in-year deficit”, it said at its October board meeting.
King’s College Hospital Foundation Trust is due to post a deficit of £65m – up from £47.5m last year. Its takeover of Princess Royal University hospital in Kent in October 2013 had hit its balance sheet, it said. Investment in staff and better facilities there to ensure patient care was safe is “a major contributory factor to our challenged financial position”, a spokeswoman said.
It made £62m of efficiency savings in 2015-16, reduced its reliance on expensive agency staff by hiring more permanent staff, and only made savings that did not affect the quality of care patients received, she added.
In all, 18 of London’s 37 NHS Trusts are due to record a collective deficit of £582.3m, Burt disclosed. Senior NHS sources said that the fact that so many trusts cannot balance their books shows the NHS is receiving too little money to cope with rising demand, despite its budget having been ringfenced and growing in real terms.
GPs fear that hospitals will continue receiving so much extra cash to tackle their financial problems that their practices will not get the extra money – £2bn a year by 2020 – that Hunt has promised.
“The alarming size and scale of the deficits facing London’s hospital trusts means that any of the oft quoted extra money for GPs is unlikely to reach local practices or help improve access for patients. Instead, we will see commissioning bodies diverting funds from primary care to keep the lights on in the capital’s hospitals,” said Dr Michelle Drage, chief executive of Londonwide LMCs (local medical committees).
theguardian.com
