This briefing looks at the financial and investment challenges facing mental health providers. It digests the financial and funding issues facing mental health trusts, including their current financial position, the impact of stigma on investment in mental health provision, how mental health services are commissioned, contracted and paid for, the transparency and governance of funding flows, as well as setting out a number of solutions to financial problems mental health trusts face.
Mental health services have had a substantial cash injection in recent years. Following a decade of significant campaigning from the mental health sector, the tide of political and public opinion has turned and there is widespread support for greater investment in mental health services. In recent years aspirations to improve quality and access to services has taken shape with the development of a fully costed programme for mental health delivery with The Five year forward view for mental health. The NHS long term plan published since is clear that making further progress on improving people’s mental health and wellbeing is a priority for the next decade. These are substantial and welcome steps forward by national policy makers.
Depressed funding growth overall since 2010, restricted capital investment, and funding constraints and uncertainty for key services outside of the core NHS budget, such as social care and public health, are three of the biggest issues.
In terms of progress on aspirations to improve quality and access, more people than ever are now receiving treatment and care for mental health conditions and the majority of NHS mental health services are providing good care, with 71% of core services rated as good and 10% as outstanding by Care Quality Commission. The sector has also been a trailblazer for innovation and work to deliver new integrated models of service delivery in partnership with health and care partners across systems, and mental health leaders are thinking positively about how changes to commissioning and increased system working will help them be more efficient and strategic.
There are a number of finance and funding challenges facing the whole provider sector, as set out in our report, The state of the NHS provider sector 2019. Depressed funding growth overall since 2010, restricted capital investment, and funding constraints and uncertainty for key services outside of the core NHS budget, such as social care and public health, are three of the biggest issues. Increasing demand for care, upward pressure on workforce costs and capacity pressures in primary care are other key issues contributing to funding and financial pressures for all trusts. The financial position of the provider sector has deteriorated considerably in recent years in the face of these numerous challenges.
Over the years, mental health trusts have usually ended the financial year in surplus, with trust deficits having largely concentrated in the acute sector. Indeed, the mental health sector has held an increasing surplus position since 2016/17. Mental health trusts ran a surplus of £416m in 2018/19, with 13 out of 54 mental health trusts in deficit. The latest data on the NHS provider sector’s financial performance shows the mental health sector is currently running a deficit of £20.9m. This is £43m off plan, though the sector’s overspend is largely being driven by an incomplete land and building disposal at a single trust and NHS England and Improvement still forecasts the mental health sector to exceed its plan and run a surplus of £135m by the end of the year.
Despite the greater prevalence of surplus year end positions across mental health trusts, they are still required to make substantial cost improvement savings.
Resolving trust deficits across the provider sector will take time and the current rate of cost reduction is simply unsustainable, not least because those efficiency improvements capable of generating the largest financial savings with lowest impact on service delivery will already have been made, early in trusts' efficiency programmes. Despite the greater prevalence of surplus year end positions across mental health trusts, they are still required to make substantial cost improvement savings. This can be particularly challenging as workforce is a greater proportion of a mental health trust’s budget, which means it is, arguably, particularly hard to make the required cost savings particularly alongside transforming care to deliver the aspirations of the long term plan.