NHS Providers has today released an estimate that the year-end deficit for NHS trusts in 2016/17 will be between -£700 and -£750 million. Official figures will be published by NHS Improvement after the general election.

A year end figure of -£725 million (the midpoint between -£700 and -£750m) would be 70% less than the previous year’s deficit of £2.45 billion and a substantial further improvement on the third quarter forecast issued in February, which stood at -£886 million.

The chief executive of NHS Providers, Chris Hopson, said:

“In 2015/16, because of the pressure on the NHS, the provider sector deficit ballooned to -£2.45 billion. The government made it clear that rapid reduction of this deficit was a key NHS strategic priority in 2016/17. Trusts agreed a detailed plan, with the full support of NHS Improvement, to reduce this deficit to -£580m and this has been largely delivered. This is a significant achievement reflecting a huge amount of hard work by trusts to control costs, increase productivity and improve efficiency whilst continuing to provide outstanding patient care.

“Based on the third quarter trajectories, we estimate trusts will have made cost improvement gains of more than £3.3 billion - more than 4% of turnover, and £200 million (10%) more than 2015/16. Despite the challenge of seven years of stretching cost improvement programmes, trusts have managed to actually increase the cost improvement gains they are making this year. There are few, if any, other healthcare systems where providers are delivering this level of gain year in year out over such an extended period.

This is a significant achievement reflecting a huge amount of hard work by trusts to control costs, increase productivity and improve efficiency whilst continuing to provide outstanding patient care.

“Trusts also agreed they would particularly target spending on agency and temporary staff. Based on third quarter trajectories we estimate that these costs alone will have been reduced by more than £770 million (20%) this year.

“A year end performance of between -£700 and -£750 million would be a particularly good achievement given that trusts reported a £238 million deterioration in Q3, due to the immense operational and financial pressures caused by record demand over the winter period. Our estimate means that trusts have recovered more than two thirds of that deterioration in the last three months – a very good result.

“NHS Improvement and other national bodies have played an important role in devising a clear system level plan and securing dedicated funding to support delivery of this plan.

“We do, however, need to keep these figures in context. NHS England funding in 2016/17 rose by 3.6%, this year that drops to +1.3%. Two thirds of trusts told us at quarter 3 that they were very or fairly reliant on one off non recurrent savings to meet their year end figures - we estimated this accounts for about £1 billion of the estimated gain. It’s also clear that, with this 2016/17 year end result, the sector will struggle to eliminate the provider deficit in 2017/18 as originally planned. In our view, given the drop in 2017/18 funding, providers will do exceptionally well to match 2016/17’s deficit.

“However, none of this should detract from the genuine improvement reflected in these figures. They show that, when given the right national framework and the right support, NHS providers can deliver a stretching target”.

10 quick reflections on the 2016/17 year-end deficit

Chris Hopson sets 10 quick reflections on the 2016/17 year-end figures in a related blog.