National Health Service providers have run up a record-breaking deficit of $1.6 billion for the first six months of the financial year and are facing significant challenges on both finance and operational performance, again ringing warning bells over its sustainability.

The shortfall for the period was $358 million worse than planned, as hospitals grappled with rising demand, slow discharge rates and a greater reliance on agency staff, according to the figures, published by Monitor and the NHS Trust Development Authority.

Delayed discharges, often because of cuts to social care preventing the release of patients, are estimated to have cost NHS providers £270 million over the six-month period, while the provider sector spent £1.8 billion on contract and agency staff, almost double the planned figure.

On the operational side, 93.6% of patients visiting A&E were seen, treated and admitted or discharged within four hours, missing the 95% standard, as the effect of delayed transfers preventing providers from freeing beds in time was magnified by a rise in demand.

Improvements are also required in performance against cancer standards, Monitor said, with providers treating 82.1% of cancer patients referred by GPs within 62 days of referral, falling short of the 85% target, largely because of increasing demand for diagnostic tests. 

“The financial situation of Providers in the NHS is incredibly worrying,” noted Paul Briddock, director of policy, Healthcare Financial Management Association (HFMA). “With 79% of all providers now in deficit it is patently obvious that it is a systemic problem facing provider finances which needs urgent attention,” he said, warning: “The NHS is simply not living within its means, which has consequences”.

Funding call

The HFMA’s recent survey of NHS finance chiefs also shows that many are questioning whether the extra annual £8 billion of additional government funding will be sufficient to plug the gaping hole in finances, while 84% said they don’t have sufficient financial resources to implement the all-important Five-Year Forward View without extra financial support. 

“With just days left before the Spending Review, there are clear signs that increased funding is needed now and we need to know if it will come with further conditions attached to it,” Briddock said.

“The health and social care system simply will not be sustainable unless we fundamentally change the way that care is delivered,” said Paul Healy, senior policy advisor on Economics and Regulation at the NHS Confederation. “We urgently need at least half of the £8 billion delivered in the next two years, so that our members have the resources they need to fundamentally transform services”.

The group is calling for health and social care budgets to be ring-fenced by the Chancellor in his upcoming spending review to slow the NHS’ slide into the red and ensure that hospitals can sustain services while improving care. “HM Treasury must see the NHS, social care and public health as part of a single system and not as three separate funding streams,” Healy argues.