Unfunded growth in demand: the hidden cost in the 2018/19 planning guidance

Claire Helm profile picture

10 April 2018

Claire Helm
Analysis Manager


Before each financial year NHS providers and commissioners are  set performance and financial requirements for the next twelve months. The details of what NHS England and NHS Improvement expect them to do this are set out in a document called the planning guidance.

The NHS is under substantial financial and operational pressure. So this year’s planning guidance, published in February, set out a range of measures and targets aimed at improving performance against the constitutional standards, and managing the overall NHS financial position.

For 2018/19, we were supposed to have a two year operational and financial plan for the NHS but when more funding was announced in November’s budget, a new set of planning assumptions was required. 

The shortfall between what is predicted and actual growth in activity manifests itself in a hidden financial and capacity gap.

Claire Helm    Analysis Manager

It is important to acknowledge that the planning guidance tends to be based on very optimistic assumptions about what growth in demand might look like next year for the NHS. The shortfall between what is predicted and actual growth in activity manifests itself in a hidden financial and capacity gap.

Our latest report Tough task sets out what we expect to happen to NHS performance next year, and how this measures up to the requirements in the planning guidance.

What is the performance ask for NHS trusts in the 2018/19 planning guidance?

  • A 1.1% growth in A&E attendances will be funded in 2018/19
  • A 2.3% growth in emergency admissions will be funded in 2018/19
  • A&E performance must improve to 90% by September 2018 and the target of 95% must be regained by March 2019
  • The referral to treatment waiting list can not be greater in size in March 2019 than it is in March 2018.

What do we think the level of demand will be next year based on current trends?

Broadly speaking, demand for the NHS has increased at nearly every point a patient might access services; from GP appointments to cancer services, and elective operations to A&E attendances. This is a consistent trend, as the NHS attempts to meet the needs of an ageing population. But changes in medical practice and improvements in patient flow across health and social care pathways can only do so much to close the demand-capacity gap frontline providers will face as they deal with the year on year increases in demand.

In 2018/19, it is clear that this challenge is particularly daunting. Demand for NHS services is increasing at a faster rate than the levels indicated in the planning guidance, and well above the levels provided for in this year’s finances.  

Changes in medical practice and improvements in patient flow across health and social care pathways can only do so much to close the demand-capacity gap frontline providers will face as they deal with the year on year increases in demand.

Claire Helm    Analysis manager

For example, the year-on-year change in activity for A&E attendances has sat well above 1.1% for the past four years. The increase in 2017/18 was 1.9% and activity grew by 2.6% in 2014/15. If the rate of growth remains steady there would be a 0.8% gap between what the planning guidance will fund and actual activity. 

The number of emergency admissions has also grown at a rate well above the 2.3% that will be funded for non-elective care this year. In 2014/15 the NHS saw the number of emergency admissions rise by 4% and last year we saw a growth of 3.2%. This means the gap between what is funded and actual activity is even larger for emergency admissions which are more costly.

If growth were to stay at the same levels as last year, the NHS will have an additional 190,500 A&E attendances and nearly 54,000 emergency admissions that would be unfunded.

Broadly speaking, demand for the NHS has increased at nearly every point a patient might access services; from GP appointments to cancer services, and elective operations to A&E attendances.

Claire Helm    Analysis manager

New care models have emerged with some success stories showing that some approaches can reduce the rate of growth in emergency admissions.. However, it seems unlikely that these can be rolled out at the scale required to significantly reduce the growth in demand that A&E is facing without additional capacity and funding for other parts of the health and care systems including primary care and community services.

What does this mean for trusts?

Underestimating the level of patient demand for services has two serious implications.

First, trusts might be inhibited in putting together realistic plans given the resources available to them locally, through commissioners. This will mean trusts will have to treat more patients than expected, and might not have enough capacity, both in terms of beds and staff in their local health and care system. This is what happened over the winter when patients admitted in an emergency took priority for beds that had been earmarked for people requiring planned operations, causing cancellations. This trend is likely to continue over 2018/19.

Trusts might be inhibited in putting together realistic plans given the resources available to them locally, through commissioners.

Claire Helm    Analysis manager

Secondly, any gap between the level of funded and actual demand means that, between providers and commissioners, someone has to pick up the tab for the additional patients. The extra cost is absorbed into existing savings plans and the NHS is left shortchanged.  In practice this isn’t just asking trusts to do more for less, it is effectively asking them to do it for free at the same time as asking them to absorb the costs of the additional demand. This fundamental mismatch between activity, capacity and funding must also be viewed in the light of the squeeze on resources where trusts delivered £3.1bn of savings last year and are expected to find a further £4bn of efficiency savings through cost improvement plans.  The productivity ask in light of the planning guidance seems even tougher and ultimately, unrealistic.

What needs to be done?

Performance targets shouldn’t feel impossible to meet for the majority of NHS trusts. Trusts don’t want to be in a position where they are routinely missing constitutional standards, which patients have come to expect. It is time for a new national planning framework based on realistic demand projections to address the mismatch between what the health service is actually able to do on the ground with available resources, and what the national level wants the NHS to do. 

We need to get this right for 2019/20 and beyond. Any new framework must take account of demographic trends and the state of public services. It must also allow of a degree of contingency planning against events such as flu outbreaks like the one we have seen this winter. Regulators should work with the provider sector to co-produce a new framework that sets out a realistic and fair task.

We need to get this right for 2019/20 and beyond. Any new framework must take account of demographic trends and the state of public services.

Claire Helm    Analysis manager

We all know that the NHS needs the funding and workforce to match the task in hand. Trusts need adequate resources and the capacity to respond to any increase in demand. But, importantly, they must be able to deliver high quality care and treat patients in a timely way and as a sector strive to recover performance against the NHS constitutional standards. 

Following the Prime Ministers recent comments on sustainable long term funding for the health service there are grounds for hope for the future, but they make no immediate difference to the tough task facing trusts for next year, leaving the NHS in an incredibly challenged position.

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