News / Mackey: swift action needed to secure financial position

Mr Mackey said that, following the
agreement of control totals in all but
19 providers and the implementation of the £1.8bn sustainability and transformation fund, the aggregate planned deficit stood at around £550m.

The final rules for access to the sustainability and transformation funds were due to be published at the beginning of July.

While the planned deficit represented significant progress compared with 2015/16 (when the total provider deficit was £2.45bn), there was still work to do. In a letter to foundation and NHS trusts, co-signed by NHS Improvement chair Ed Smith, he added that the level of deficit made the management of the overall financial position risky. To address this, and ensure the service had the financial resilience to live within its means, he set out three areas where movement was expected by the end of July – pathology and back office consolidation; pay costs; and unsustainable service consolidation.

The measures on back office and pathology will see the implementation of the Carter review recommendations – overseen by NHS Improvement’s newly appointed director of operational productivity and Carter implementation lead Jeremy Marlow.

Mr Mackey said back office services had not been consolidated as they have in other sectors. He asked all sustainability and transformation plan (STP) leads to produce proposals to consolidate back office and pathology, initially across their STP area, but in the longer term over a larger footprint.

While 2016/17 plans showed the provider sector was looking to actively manage and reduce costs, some providers were planning higher levels of pay cost growth. Also, some trusts had higher pay costs growth in 2015/16 than their peers. NHS Improvement would work with the trusts to determine where planned growth could be eliminated and 2015/16 increases reversed.

Mr Mackey acknowledged this work would be complex, but added: ‘Significant inroads can be made to help bring these providers more in line with the sector as a whole and other providers with a similar general profile. We will do this work in close collaboration with CQC colleagues to ensure that any adjustments are in line with our commitment to patient safety.’

Pay growth changes and outline plans for consolidation of back office and pathology services should be agreed by the end of July.

The letter said direct savings as well as indirect savings, such as deflating the locum market, could be achieved by consolidating planned acute services that depend on temporary staff.

Mr Mackey said these services should be identified, together with how they could be consolidated, changed or transferred, and the potential operational and financial impact, by the end of July.

The renewed focus on savings came as the latest HFMA NHS financial temperature check revealed provider concerns about delivering control totals – 63% of organisations surveyed had agreed control totals at the time, but only 60% said they would meet all the conditions set.

HFMA head of policy and technical Paul Briddock said: ‘NHS Improvement is right to acknowledge the significant progress the service has made in moving from an underlying deficit of around £3bn at the end of 2015/16 to a current plan of a £550m deficit utilising the £1.8bn STP funding. However, our Temperature check shows provider finance directors believe there is high risk associated with this year’s financial plans.

‘We note the three areas for a renewed focus, including back office consolidation. The NHS must continue to examine all areas of frontline and back office activity to ensure it delivers maximum value from every pound. But there is a huge management agenda. Finance staff will play a crucial role in addressing these three areas, ensuring smooth implementation of the new Carter metrics and data requirements, facilitating service transformation and delivering day-to-day financial management.’