Until last year, NUH had a strong track record of healthy finances, balancing its books every year since the Trust was formed in 2006.
And now, like most other acute trusts, NUH now finds itself in severe financial difficulty.
In line with our plan, we ended the last financial year with a £47.2m deficit, even after making our highest ever cost savings of £44.5m and generating income improvements. Our plan to reduce that deficit (called the ‘control total’) to £22m this year requires NUH to make at least £43m savings. It is also dependent on NUH receiving £24m national monies from the Sustainability and Transformation Fund (STF) which is itself conditional on hitting financial and operational targets (including 4 hour emergency care performance and cancer targets). £6m is at risk each quarter if we miss these targets. We have missed the agreed trajectories to September for the 62 day cancer standard and the 4 hour emergency access standard, which means a loss of income year to date of £1.1m.
After September (month 6) we are £0.5m behind our planned £15.5m deficit. We have achieved savings of £16.6m, in line with the target up to the end of September. The full-year forecast at the end of September shows £43m of savings plans in place (in line with the savings required by year-end), but that still means that we have to deliver £26.4m of savings between October ’16 and March ‘17.
We have saved over £120m in the last three years. We have to make some tough decisions if we are to reach our agreed year-end financial plan for the current year. Our message to staff is that we must individually and collectively do all we can to meet the financial and operational targets required of us. As unpalatable as this will be for many, the reality is if we do not manage to make the required savings ourselves, we will have them imposed on us by our regulators.
Every week we are spending £350,000 more than we can afford. We need to spend £50K less every day. That’s £2k per hour and £34 less every minute. While this may seem a daunting task, for an organisation of our size, there is always more we can do.
Pay accounts for 70% of our spend. Our agency, bank and locum bill was £41.1m last year. Thanks to the hard work and discipline of many colleagues across NUH, nursing premium and medical locum pay has reduced significantly in the first five months of the year, but there remains much more to do to reduce ‘high cost’ spend.
Further strengthening vacancy controls and scrutinising all premium pay and discretionary spend is absolutely necessary, though we are equally clear that we have to apply additional measures intelligently and thoughtfully to avoid any unintended consequences (of our decision-making) for safety, our services and our staff.Through the Nottinghamshire Sustainability and Transformation Plan (the STP), our shared task as a health system is to do all we can to close the financial gap of £500m for the NHS in Nottinghamshire over the next 5 years so that in the longer-term we have a clinically and financially-sustainable system. While we rightly focus on the immediate task in hand – in solving NUH’s financial crisis – we equally understand our part in addressing the wider system’s financial challenge.