Overview

Introduction

This report examines the state of the provider sector – the 238 hospital, mental health, community and ambulance NHS trusts in England. It examines how they are performing, the challenges they face and how they are responding. It combines our own analysis and commentary, published data and the views of 172 NHS trust chairs and chief executives from 136 providers surveyed in September and October 2016. This covers more than half of all trusts. It focuses on four key issues: quality and patient access, finance, workforce and transformation.

THE PROVIDER CHALLENGE

Leaders tell us their trusts are facing the biggest challenge in a generation: 

• The NHS is seven years into the longest and deepest financial squeeze in its history. A record two thirds of trusts were in deficit at the end of 2015/16 with deficits spreading beyond hospitals into mental health community and ambulance trusts. This financial challenge will be made tougher when NHS funding increases slow significantly from 2017/18 onwards.
• Trusts are facing large increases in demand for their services as a result of demographic factors, pressures on primary and social care and increasing patient expectations. At the same time, patients have higher and more complex needs. This increase in demand is a long way beyond the levels predicted in the Five year forward view.
• Trusts are running at capacity levels well beyond the recommended norm and levels seen in other advanced western countries. Local health services are less resilient and less able to absorb the inevitable shocks such as flu outbreaks or local care home closures. These events now risk destabilising local services causing precipitate, temporary drops in performance that impact on patient safety and experience.
• While treating more people than ever before, extra demand has led to trusts missing nearly all of their key performance targets. This is affecting the vast majority of providers, across all sectors and across the whole range of targets.
• The evidence on quality is mixed. A near complete set of CQC inspection data rates a majority of trusts as either requiring improvement or inadequate. Worryingly, the latest CQC State of Care report argues for the first time that some services are now failing to improve and there is some deterioration in quality. However, overall performance in the latest CQC patient experience survey remains high.
• Providers are struggling to meet a series of workforce challenges. These include staff shortages, rising pressure on staff, a prolonged period of pay restraint, the legacy of a difficult junior doctors’ dispute, and a workforce planning system that seems unable to match demand and supply or workforce numbers to the funding available.
• The NHS is also being asked to deliver transformation at a much faster rate than the international evidence suggests is possible. While provider leaders support the creation of local sustainability and transformation plans (STPs), producing them at a time of such high operational pressure is challenging.

THE PROVIDER RESPONSE

When given a deliverable task and the appropriate support and funding NHS providers do deliver:

• Access and quality - in 2015 trusts saw 22.9 million patients in A&E (a 7% increase since 2010); they completed 8.3 million elective admissions (a 15% increase since 2010) and ambulance providers dealt with 9 million calls (an 11% increase) 1.8 million people were in contact with mental health services in 2014/15 (a 5.1% increase on the last year). By international and historical standards the NHS continues to perform well.
  
• Finances - trusts are currently on track to deliver a £-669 million deficit by the end of 2016/17, a more than £3 billion reduction on last year’s underlying deficit. Almost three quarters (73%) of trusts have reduced their agency spending this year, and the sector as a whole is forecast to reduce the total bill by a quarter in a single year. Trusts are set to realise £3.2 billion in cost improvement plan savings this year, equivalent to nearly 4% of turnover and, importantly, £346 million (or 12%) more than last year.
  
• Workforce – trusts are working hard to address workforce shortages by recruiting from overseas, developing new roles such as nursing associates and partnering with higher education institutions to increase the supply of key roles, particularly nurses. They are using new technology to roster staff more effectively and enable staff to work more flexibly.
  
• Transformation – trusts are leading NHS transformation. They are developing new models of care ranging from accountable care systems to provider chains. They are playing a leading role in the creation of much needed local STPs. This transformation is underpinned by trusts’ investment in leadership capacity and capability.

the RISKS

There is now a clear gap between what the NHS is required to deliver and the money available. While the NHS frontline will continue to do all it can to provide the best possible service, the NHS is now running higher levels of risk. The risks include: 

• The service the NHS provides now starts to deteriorate. Waiting lists for operations are lengthening. People are waiting longer in A&E. And the CQC has said that they are “starting to see some services that are failing to improve and some deterioration in quality”. Due to financial pressures, some clinical commissioning groups (CCGs) are starting to restrict access to treatments. In our survey, less than half (46%) of chairs and chief executives said they believe their trusts will be able to provide high quality care in six months’ time. There is a danger of a long, slow decline in which the quality and access gains made between 2000 and 2010 slowly dissipate.
• Despite good progress in reducing trust deficits in the short term, there is no credible plan to ensure the long term financial sustainability of trusts. As the NAO has recently highlighted, there is no reliable, tested plan to address the imminent slow down in NHS funding increases which amount to real term funding cuts per head of population in 2018/19 and 2019/20. In our survey, only 13% of chairs and chief executives think that finances are likely to improve at their trust over the next six months, with nearly 50% believing they will deteriorate.
• Growing demand and staff shortages mean NHS roles are becoming more pressured, with staff increasingly overworked and stressed. In our survey, chairs and chief executives said they regard the workforce challenge as now being just as difficult as balancing the finances. Over half of chairs and chief executives (55%) said they are worried or very worried that their trust does not have the right numbers, quality and mix of staff to deliver high quality care. Most expect the situation to deteriorate over the next six months. This risks deterring staff from wanting to progress into leadership roles, for example at chief executive level. At the same time providers need to address wider challenges including a culture where too many staff feel bullied, and black and minority ethnic staff still experience discrimination.
  
• Current NHS system level plans assume a rate of transformation that is unlikely to be delivered. The Five year forward view assumed the NHS would be able to deliver £22 billion of demand management, efficiency and productivity gains by 2020, many of them from service transformation. Providers are at the forefront of creating new and better ways of delivering care to patients, which are delivering rapid and significant improvements in outcomes and patient experience.

However they are not at a sufficient scale or progressing at a sufficient speed to deliver the required level of gains. Over three quarters of trust leaders (79%) are worried or very worried that their local area is not transforming quickly or effectively enough to provide sustainable, integrated patient care and financial balance.

WHAT providers need

If trusts are to meet the challenges they face, they need:

• A smaller set of key priorities with a realistic trajectory for each. It would help if this priority setting was undertaken in close collaboration with those who have to deliver on the frontline.
• A clear medium term plan that sets out how we will close the gap, at both national and local levels, between what the NHS is asked to deliver and the funding available for the rest of the parliament. A plan that, as the NAO requested, is realistic, sustainable and properly tested and one that addresses the problems in primary and social care. STPs offer the opportunity to create appropriate plans.
• Support for staff: the NHS needs to invest in staff engagement, value their work, address staff shortages, ensure their roles are appropriately sized and recognise that pay restraint cannot be indefinite. Providers need to invest in leadership and management and create a culture that supports all staff at a time of increasing pressure.
• A more mature central-local relationship: providers need the arms length bodies to understand the size, difficulty and complexity of the challenge trusts face. As NHS Improvement is beginning to show, support works better than grip. Solutions work best when they are developed jointly between the arms length bodies and the frontline.
• Time to deliver: providers need NHS system leaders to recognise that complex transformation will take time, when set alongside an increasingly stretching task to deliver high-quality patient care.
• A better understanding of the 2020-2040 challenge: providers need to make decisions in the context of the significant extra demographic pressures the NHS faces after 2020. We need an officially supported analysis of the nation’s likely longer term health and care needs and how these will be met and funded so we can ensure we make the right short term decisions.

All these need to be underpinned by greater realism about what can be delivered for the funding and the management and staff capacity available.