A record 65 percent of NHS trusts ended the year 2015/16 in the red racking up the biggest overspend in its history of some £2.45 billion, which has triggered another round of alarm bells over the impact of these financial dire straits on the quality of patient care.

Worryingly, the combined shortfall reported by NHS Improvement is nearly three times more than the £822 million deficit booked for the year before, and more than 20 times that recorded for 2013/14, and some believe that, because of certain accounting methods, the 2015/16 figure could in reality be much higher.

Health chiefs have laid the blame on surging demand on services, inadequate funding and "un-realistic" efficiency targets set by the government, which the Public Accounts Committee also recently agreed have caused "long-term damage" to trust finances.

"Overspending on this scale is not down to mismanagement or inefficiency in individual trusts - it shows a health system buckling under huge financial and operational pressures," said Richard Murray, director of policy at The King's Fund.

"At the same time, performance against key targets is deteriorating and concerns about quality of care are increasingly widespread," he noted, also warning that "the challenge facing the NHS is not limited to hospitals, general practice is also in crisis as they try to keep up with demand".

Chris Hopson, chief executive of NHS Providers, said "the combination of increasing demand and the longest and deepest financial squeeze in NHS history is maxing out the health service," and stressed that the record number of trusts in deficit with a record overall deficit "is simply not sustainable".

"We have to rapidly regain control of NHS finances otherwise we risk lengthening waiting times for patients, limiting their access to services, and other reductions in the quality of patient care".

Declining performance
Indeed, publication of the figures came just a day after The King's Fund's quarterly monitoring report showed that nearly two-thirds of NHS trust finance directors have already observed a deterioration in patient care over the past year.

Eight percent of patients, more than 1.85 million, spent longer than four hours in A&E across the year, the worst performance since 2003/4, while the number waiting for hospital treatment is thought to have climbed 17 percent to 3.7 million over the year, the data show, fuelling fears that the service is fast approaching break point.

According to the group's chief economist John Appleby, 2016/17 will be a "watershed year" for the NHS. "Eradicating deficits and improving performance is going to be a Herculean challenge," he said.

The NHS could easily reach crisis point unless national support and local planning come together "exceptionally well" in the coming years, warned Stephen Dalton, acting chief executive of the NHS Confederation.

"This will require alignment and support from national bodies, to allow local leaders to make brave decisions to build better, more sustainable services," he said, noting that "too much current governance is pulling NHS organisations in multiple directions, making planning and innovation more difficult than it should be".

Responding to the figures, Labour's Shadow Health Secretary Heidi Alexander said the government has "lost complete control of hospital finances and its patients who are paying the price", and called for "an urgent plan" to get performance back on track.