This report examines the state of the NHS provider sector – the 233 hospital, mental health, community and ambulance trusts in England. It examines how they are performing, the challenges they face, how they are responding and the support they need to consistently deliver outstanding patient care. It combines our own analysis and commentary, published data and the views of 158 chairs and chief executives from 125 NHS trusts that responded to our survey in in April 2017. The responses cover more than half (54%) of all trusts with all regions and trust types well represented.

As with our first report from this series, published in November 2016, the report covers four key issues:

  • quality and patient access
  • finance
  • workforce
  • transformation.

However, the centrepiece of this latest report is a survey of NHS mental health provision. Our aim is to ascertain how commitments from government to address long-standing inequalities in care for people with mental health needs are actually translating into action on the frontline. Our mental health analysis is informed by the views of all trust leaders that responded to the survey with particular emphasis on the 43 chairs and chief executives from 37 mental health trusts that responded. This represents almost two thirds (62%) of the foundation trusts and trusts that provide mental health services.

Figure 0.1

The provider challenge

Rapidly rising demand, constrained funding and a set of increasing workforce challenges are leading to mounting pressures across all NHS services. The following summarises the key findings from our report, starting with our analysis of the state of mental health services.

1  Mental health 

There is a welcome commitment at the very top of government and from NHS system leaders to address long-standing inequalities in care for people with mental health needs. This has been accompanied by increased funding which, in turn, is starting to enable better service provision in the targeted areas. However, the clear view of trust leaders that responded to our survey is that there is an increasing divergence between this top-level commitment and the deteriorating state of core mental health service delivery on the ground.

Seven key areas of concern have emerged from our analysis:

Rising demand outstripping capacity 

Rapidly rising demand is overwhelming core mental health services and outstripping their capacity to provide effective care. There are two underlying reasons for these increases: increasing public focus on mental health uncovering unmet demand, and broader societal pressures, such as rising unemployment, leading to a greater need for services. Demand for mental health services is rising at a rate that matches and in many cases exceeds the available capacity. This is the case for services for adults, as well as children and young people. Bed occupancy rates for inpatient units are now regularly exceeding 100% in many trusts. This not only means negative experience for service users, but also creates consequential pressures on emergency services provided by acute hospital and ambulance services. Of particular concern is the growth in the numbers of children attending A&E departments for psychiatric reasons and the growth in referrals for child and adolescent mental health services (CAMHS). These have increased by 44% over the last three years.

This reported growth in demand is borne out by our survey. The majority of mental health trust chairs and chief executives – over 70% – expect demand for services to ‘increase’ or ‘substantially increase’ this year. Other providers beyond mental health trusts also noted the rise in mental health demand, with two-thirds of respondents indicating that they have seen an increase in demand for mental health services for patients seen within their trusts.

Funding not getting through to the frontline 

The publication of the Five year forward view for mental health and its delivery plan set out the scale of collective ambition for mental health services. These have been translated into a set of provisions in the Department of Health’s NHS Mandate. New funding has been allocated to a range of specific areas and this is starting to drive improved services in these areas. However, as with physical health, and indeed social care, the level of financial investment in core mental health services – against a backdrop of rising demand and costs – is failing to keep up with rapidly rising demand.

This is compounded by mental health trusts largely having to operate on block contracts which, unlike the acute sector, do not account for rising demand. At the same time, these trusts are having to make very significant annual cost improvement plan (CIP) savings often in the range of 4-6% per year. This is putting huge pressure on core frontline services.

There is also a lack of transparency in how funding is allocated from clinical commissioning groups (CCGs) to NHS mental health trusts, with CCGs also facing inevitable pressure to use any ‘new’ funding to prop up core services whose funding has been cut or is static.

Our survey indicates that the extra money intended for mental health at a national level is still not getting through to NHS mental health trusts operating frontline services. Eight in 10 respondents from mental health trusts are ‘worried’ or ‘very worried’ about whether the national commitment to increase investment in mental health and transparency on CCG spending will result in adequate investment in their trust to meet the ambitions set out in the NHS Mandate for 2017/18. In addition, the majority (54%) of respondents from trusts not delivering mental health services felt that access to mental health services in their local area would not improve - they felt it would only stay the same - despite national commitments to increase investment.

Persistent gaps in the mental health workforce 

The ambition to improve mental health service services will only be met if we have the right workforce with the right skills in the right place. However, as with other parts of the NHS, our survey shows that mental health trusts are struggling to find enough staff with the right skills to deliver existing services to the right quality, let alone being able to find new staff to extend services to new users or create new services. Across all staff roles in all specialties, less than a third of chairs and chief executives were ‘very confident’ or ‘confident’ that national workforce planning will deliver appropriate numbers of staff. Respondents generally had higher levels of confidence for recruiting psychologists and therapists and other allied health professionals than for mental health nurses and psychiatrists.

If the government’s mental health ambitions are to be realised, these shortfalls will need to be addressed rapidly and effectively. However, given the lag to recruit and train new staff, there is an argument that the timescale for delivering the ambition already now looks far too optimistic.

Deteriorating access to and quality of some mental health services

The speed at which service users are able to access treatments, and the quality of their experience once using them, is being hampered by rapidly rising levels of demand and the capacity of mental health trusts to meet this demand. Resourcing pressures are resulting in higher thresholds for referrals into mental health services from GPs, and there is also a direct correlation between timely treatment and outcomes, particularly for conditions such as psychosis or those related to drug and alcohol misuse.

Our survey reveals wide discrepancies in the services where trusts feel they are effectively able to manage demand. Two-thirds of mental health trust chairs and chief executives believe they are managing demand for perinatal, elderly care specialist support and police and crime services effectively. However, this drops significantly for CAMHS and A&E services, with over half of chairs and chief executives from providers of mental health services saying they were not able to meet demand for these services.

Insufficient support for liaison between mental health and other NHS services 

One of the key issues in mental health care is the need for effective liaison between mental health and other NHS services, particularly acute care. Liaison psychiatry features heavily in the Five year forward view for mental health, which states that “by 2020/21 no acute hospital should be without all-age mental health liaison services in emergency departments and inpatient wards, and at least 50% of acute hospitals should be meeting the ‘core 24’ service standard as a minimum”. We wanted to use the survey to test the extent of provision in this area. Three-quarters of chairs and chief executives from providers of mental health services noted that they deliver 24/7 liaison services for A&E, but only just over 40% of respondents from other providers indicated that they have 24/7 liaison services in place for urgent care. The most prevalent provision of 24/7 liaison psychiatry is for urgent care in A&E and for police and crime services, but this drops for CAMHS and perinatal liaison psychiatry.

Lack of priority for mental health in sustainability and transformation partnerships 

The NHS is changing and moving to new ways of providing care. It is using sustainability and transformation partnerships (STPs) – a key part of the new NHS landscape – to plan for this transformation. If mental health services are to flourish and we are to realise the new ambition, then it is vital that mental health is at the centre of the STP process.

However, feedback from mental health trust leaders strongly suggests that mental health services are not being given enough priority in STPs up and down the country, with only 11% of respondents confident that their local STP will lead to improvements in access and quality of services. Almost half of respondents (45%) were either 'worried' or 'very worried' that STPs will not improve capacity to enable more timely access to mental health services for people in their local areas. Another 45% were neutral on the issue. Respondents from other parts of the NHS were also concerned about the priority given to mental health in the STPs, with only 8% confident that STPs will result in improvements in capacity to provide more timely access to services.

Fractured commissioning leading to uncoordinated care for service users 

The challenges facing mental health services are being compounded by the fractured nature of commissioning arrangements in mental health, with the 2012 Health and Social Care Act resulting in a split between NHS England (for specialist commissioning), local CCGs and councils which in turn leads to uncoordinated care. This means patients are often treated in expensive, inappropriate care settings, or it means that patients are unable to access a service at all. In particular, a number of those wider services supporting mental health service users, such as substance misuse or public health more generally, are now commissioned by local authorities which has introduced delays and inefficiencies into the coordination of care. It’s also meant lower levels of investment as local authority funding pressures have increased.

These seven key issues point to a growing gap between the government’s welcome ambition for the care of people with mental health needs and the reality of the core services these service users are receiving on the frontline. In some cases, the reality is that core mental health service provision by mental health trusts is actually getting worse, not improving. Unless action is taken to address these areas of concern, then the government’s overall ambitions for transforming mental health care will not be met.

The challenges facing mental health services, including from rapidly rising demand, constrained funding, an increasingly scarce workforce and barriers to delivering transformation, are mirrored in the wider health service. Our survey and report shows, for the wider NHS:

  • continuing pressure on quality, waiting times and access
  • an approach to NHS finances that remains unsustainable
  • a rapidly rising set of workforce challenges
  • a transformation process that, while it is gathering pace, remains too slow.

2  Access and quality

NHS trusts are experiencing record levels of demand for their services. At the same time, patients have higher and more complex needs. These increases in demand are a long way beyond the levels predicted in the NHS Five year forward view. Many trusts are now running at capacity levels beyond the recommended norm and levels in other advanced western health systems. This is contributing to local health systems being less resilient and some being unable to cope with surges in demand. This was exemplified by NHS performance levels last winter, with performance against waiting time targets dropping sharply despite the best efforts of staff operating under intense pressure.

Other performance targets across the system are under similar pressure. For the first time, the NHS is now missing all four of its key targets: 75% ambulance response, 95% A&E four hour, 92% 18-week elective surgery and 85% seen within 62 days of GP referral for cancer.

The evidence on quality is mixed. While patient satisfaction with the NHS remains high and some trusts, despite the unprecedented pressures, are improving, the NHS faces serious challenges in maintaining standards of care. Responses to our survey reinforce this mixed picture, 31% of chairs and chief executives saying they are confident their trusts are currently able to provide high-quality care (this was 64% when we last surveyed them for our report in November 2016).

3  Finances 

The NHS is in the middle of the longest and deepest funding squeeze in its history. While the extra funding promised in the Conservative manifesto is welcome, spending on health will still significantly fall as a percentage of our national wealth until 2022/23.

NHS trusts made significant progress in reducing the provider sector deficit in 2016/17 as a result of a clear plan, financial support and a lot of hard work from trusts on the frontline. The provider sector ended 2016/17 with a -£790m deficit, just under 70% less than the -£2.45bn deficit recorded in 2015/16. One of the key areas of success has been reducing spending on agency and temporary staff: in 2016/17 trusts reduced these costs by more than £770m (20%). The stronger performance seen in 2016/17 is reflected in our survey of chairs and chief executives. When asked how they expect their trust’s finances to develop over the next six months, a quarter predicted they would improve while most (41%) expect their finances to stay the same. A third expects their trust’s finances to deteriorate.

However, although trusts delivered a good financial result in 2016/17, the underlying financial position remains unsustainable. Trusts remain heavily dependent on one-off and non-recurrent savings, such as land sales to deliver their year end targets. We estimate these account for at least £1bn of 2016/17’s savings. Given the significantly lower funding increases the NHS is due to receive this year, and for the next three years, this suggests trusts will struggle to eradicate the provider sector deficit. The National Audit Office is right to argue the NHS still does not have a clear, credible plan to match what is required of the NHS to the funding available.

4  Workforce 

Workforce is a top concern for trusts up and down the country, and the workforce challenge is now equal in scale to the NHS financial challenge. Although different trusts face different pressures, the sector as a whole is finding it increasingly difficult to recruit and retain sufficient staff with the skills and experience needed to meet the rising demand for services. Trusts are also struggling to match the staffing levels they require with the finances available. Even if money were not a constraining factor, insufficient staff have been trained within the UK to meet current and projected demand. These shortages impact directly on the safe and sustainable delivery of high-quality care, with trusts finding they are increasingly having to close or suspend services for short periods of time or altogether.

Our survey showed that well over half of chairs and chief executives (57%) are 'worried' or 'very worried' about their ability to maintain the right numbers of staff – clinical and non-clinical – to deliver high-quality care. When asked what the picture would look like in six months’ time, their level of confidence decreased and 61% were 'worried' or 'very worried'.

5  Transformation 

The existing fragmented NHS pattern of service delivery is no longer fit for purpose and trusts recognise the need for transformation. Trust leaders support the idea of system-based planning and the vision outlined in the NHS Five year forward view of moving to new ways of providing care, including accountable care systems. They see the integration of health and care as a potential means of addressing the challenges of rising demand, responding to the growing number of individuals with more complex health needs and improving health outcomes. New care models are making good progress in transforming care and are gathering pace across the country, but they still only cover small areas and are limited in scope. And there is no compelling evidence that they will deliver long-term financial savings or reduced hospital activity. There is support for the concept of STPs as a means of delivering these changes but there are some key barriers to overcome. We also need transformation to move faster while also being realistic about how long it will take to deliver these changes.

Our survey reinforces these concerns by revealing there is little confidence that local transformation is happening quickly enough. Almost two thirds (62%) of chairs and chief executives are worried their local area is not transforming quickly enough. Fewer than two in 10 (17%) are confident that this is happening.

What providers need

To meet the challenges and realise the ambition for mental health, providers need:

  • realism about rising demand and what’s needed to meet it, recognising that increased focus on mental health and current societal pressures will generate more demand
  • better ways to guarantee that mental health funding reaches frontline services provided by trusts
  • a robust workforce strategy combined with support at local level to ensure the strategy actually gets delivered
    for STPs to give enhanced mental health service delivery greater priority in their plans
  • for commissioning to be overhauled to deliver more coherent pathways of care and to maintain the level of financial investment in mental health services.

More generally, NHS trusts need a smaller number of priorities, with a realistic delivery trajectory for each. The government has the opportunity, at the start of a new parliament, to review what is being asked of the NHS given the proposed spending levels. We then need a new plan which honestly sets out what can be achieved for the funding available. This needs to include a realistic plan and achievable trajectory to recover financial balance in the provider sector.

We need to ensure the NHS is appropriately resourced to manage the increased patient safety risk we will face next winter. The government’s strategy of creating NHS capacity through the extra £1bn social care funding allocated in the budget only offers a partial solution. More capacity within the NHS and the wider health and care sector are needed to manage next winter safely and we need a longer-term approach which avoids a recurrent sense of crisis each winter.

A new longer-term financial regulatory framework, to replace what was always intended to be a short term sustainability and transformation funding/control total regime, is required. Provider autonomy must sit at the heart of this framework. As part of this, we also need to decide how the £1.8bn sustainability and transformation funding will be mainstreamed in future.

The NHS needs a realistic, joined up, long-term workforce strategy which ensures trusts have the right number of staff with the right skills in the right place to deliver high-quality care within the allocated funding. This strategy needs to include a short-term plan to address immediate gaps in staffing. This plan will also need to outline how we move away from seven years of pay restraint to ensure NHS roles are appropriately rewarded and remain attractive. We also need clarity on the status of EU nationals working in the NHS and an immigration system that allows the NHS to recruit the staff it needs.

Trusts recognise the need for rapid transformation as set out in the NHS Five year forward view. To speed up the pace of change, trusts need:

  • much enhanced leadership capacity at the frontline to deliver the required transformation alongside outstanding day to day care in an increasingly unstable context where demand is rising rapidly
  • a capital plan that reflects the fact that no other sector has ever attempted transformation on this scale without proper funding
  • some risks will need to be taken, including turning the arm’s-length body model on its head – from an approach based on assurance and regulation to one that supports and enables change and transformation
  • continued funding for the vanguards given their job is only three-quarters complete. The vanguards are still creating key transformational building blocks such as new contracting and funding models; new information governance approaches to enable joined up care records and new workforce models. They need targeted funding for at least one more year to ensure the task of creating these key building blocks for others to use is completed
  • clarity on where we are headed with STPs. If they are to be our main vehicle for transformation, we need much greater clarity on their longer-term status as the current picture is confused.