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More radical action needed to ensure NHS financial sustainability

The NHS Confederation has today welcomed a report by the independent regulator Monitor which echoes our concerns about the financial challenges facing the NHS.

Responding to findings in Monitor's annual review of foundation trusts, NHS Confederation deputy chief executive David Stout said that radical change would be necessary for the long term, even though most foundation trusts are managing immediate financial challenges.

Published today (22 August), the review of NHS foundation trusts' (FTs) annual plans show the sector continues to face challenges in meeting greater demand and more stretching healthcare targets.


The review, based on FTs' three-year plans for how to meet the needs of local patients and service users, found that:

  • trusts are forecasting a more challenging 2012/13, with the aggregate financial risk rating (FRR) declining from 3.4 to 3.2, reflecting increased risk
  • 43 trusts (30 per of the sector) are forecasting a lower FRR in 2012/13 than they achieved in 2011/12 and only ten trusts (7 per cent of the sector) are forecasting a higher FRR in 2012/13 than they achieved in 2011/12
  • the pattern of risk is spread unevenly across the sector:
    • of the 20 small acute trusts, six are in significant breach
    • of the 41 mental health foundation trusts, 14 are regarded as low risk (FRR 4/5)
  • FTs are forecasting cost improvement plans (CIPs) to remain greater than 4.1 per cent of operating costs each year from 2012/13 (peaking at 4.3 per cent in 2013/14)
  • income forecast to increase by only 1 per cent in 2012/13 and then decline by 1 per cent per year thereafter
  • There is a small planned improvement in governance risk ratings (GRRs) in 2012/13 compared to actual performance in quarter 4 2011/12. Also 77 per cent of FTs are forecasting green or amber-green GRRs throughout 2012/13.


Responding to the figures, David Stout said: "The figures in this report accurately reflect what we have been saying on behalf of our members for some time.

"NHS leaders are expressing some confidence in meeting the immediate financial challenge. But pressures are continuing to grow across the NHS, with increasing numbers of NHS organisations starting to experience significant financial pressures. To maintain quality in light of these pressures, the report rightly highlights the need for significant changes in the way services are delivered.

Radical action

"NHS leaders know the real challenge is to tackle a flat budget while managing the increased costs of treating an ageing population, advanced technology and the growing rates of lifestyle diseases such as obesity. And they know that doing this will require more radical action. It will require further integration of services and expanding community-based care.

"This is necessary to avoid the financial pressures harming patient care, and to ensure the NHS keeps up with the needs of local populations.

Making case for change with public 

"To tackle these challenges successfully, NHS leaders need to get the public on board with some very difficult decisions. They need to persuade people that we need to change services to improve the quality of patient care and make the most of the resources we have.

"We need to get communities fully involved in discussions about how we shape services.

Change in patients' best interest

"Local NHS organisations, with political support, need to be clear that it is possible to change the way staff work and where services are offered so patients get better care and the public gets value for money.

"No change is not in the best interests of patients." 

Impact of financial pressures on quality of care

The results of our recent survey of NHS leaders highlighted growing fears about the impact of financial pressures on the quality of care.

Speaking in June, NHS Confederation chief executive Mike Farrar said: “Our survey shows that many NHS leaders see finances getting worse and that this is already having a growing impact on their patients. In response, they are cutting costs in the short-term but they know that much more radical solutions are the only answer in the long run.

See the survey findings in full.

Read a summary.

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