News / NHS on target for surplus despite activity warning

The NHS in England remains on course to deliver an aggregate surplus of around £1.5bn at the end of the current financial year, but there are signs that the system is coming under increasing financial strain as primary care trusts warn of in-year pressures.

While acknowledging the pressures – which are mainly due to over-performance in the acute sector – most strategic health authorities said their month eight figures showed their patch would hit control totals set in agreement with the Department of Health.

However, a number of PCTs are reporting in-year deficits. London appears to be the hardest hit. NHS London planned for a £367m surplus in 2009/10, of which £258m relates to the fund created to write off historic deficits in the capital. 

But the overall forecast outturn position at month eight was £361m – almost £6m worse than plan.  The year to date position was a surplus of £186m, which was £61.6m worse than plan, indicating significant in-year risks. 

The SHA said the key issue was over-performance on acute contracts, which is leading to significant cost pressures for PCTs with little apparent compensation in trust bottom lines – due in part to underachievement of cost improvement plans.  

Board papers on the financial position added: ‘There is considerable uncertainty regarding the reasons for and likely full-year impact of the over-performance, and the introduction of a new tariff structure, HRG4, further complicates the challenge of providing a robust assessment of risk.  An urgent programme of work to clarify the issues and identify opportunities for corrective action at borough, sector and pan-London level has been carried out by NHS London.’

Over-performance has affected other areas. In the East of England, latest activity data shows that GP referrals are up by 12%, elective activity by 18% and emergency activity by 3%, compared with plan.

Additional hospital activity accounts for around 90% of PCT pressures, with further overspends in budgets for continuing care costs.

In the North West, PCTs reported a year-to-date deficit of £15.3m. This was an improvement of more than £3m since month seven, but the PCT forecast outturn surplus is £23.8m against a planned surplus of £31.8m.

The shortfall was partially offset by trusts’ forecast outturn surplus of £10.9m. NHS North West is offsetting the remaining system pressures and is on target to meet the £200m control total for 2009/10.

HFMA President Paul Assinder said some PCTs have struggled with increased demand and over-performance against anticipated activity levels.

He added: ‘However, it is an indication of the better financial position that the NHS has got itself into in recent years that these pressures can be managed within overall control targets.

‘As we move into a future with tighter financial settlements we need to ensure we fully understand the drivers for these increases in activity and are able to develop more cost-effective solutions.’ 

Mr Assinder continued: ‘Many acute providers have incurred significant premium rate costs to deliver this activity.  This will not be a viable response in a more financially challenged future.

‘The positive aspects of this trend is that it is forcing commissioners and providers to work jointly to develop alternative care models – and this augers well for the future.’