Small hospitals deficit more than doubles in a year
A report from analysts at EY finds 95% of small hospitals, with a turnover below £200m ran a deficit in 2015/16.
The deficit of small hospitals in England has more than doubled in the last year, from £114.6m in 2014/15 to £301.3, according to analysis published by EY today.
Only one trust has seen some improvement in its finances since last year, and is now breaking even with a small surplus of £0.02m.
Former Minister of State for Health, Norman Lamb MP, commented on the report:
“The state of NHS finances is becoming a national crisis, and the dramatic rise in small hospitals deficits shows that no part of the NHS is escaping the funding squeeze,” said the Liberal Democrat MP.
“Some small hospitals are managing to weather the storm better than others, but we should be worried by what appears to be a north/south divide in trusts’ financial performance. If some services are forced to close under the strain, there is a real risk that regional health inequalities could be further entrenched.”
According to EY’s analysis, the average small hospital deficit is £15.1m or 10.1% of their revenue. The majority of small hospitals (70%) is seeing an increase in their deficit of between 0.1 and 10%. Small hospitals now account for 12% of the overall NHs forecast deficit of £2.4bn, down from 14% last year.
“These figures should set alarm bells ringing for the Government,” Lamb went on, “and further reinforces the need for an independent, cross-party commission to come up with a new long-term settlement for the NHS and social care.”
The Department of Health also responded to the report’s findings:
“We recognise parts of the NHS are under pressure as demand rises partly due to our ageing population, but this government is committed to the values of the NHS which is why we are investing £10bn in its own plan for the future - including almost £4bn this year,” said spokesperson.
“We continue to provide intensive support to improve performance and boost efficiency, but the NHS as a whole must now show tight financial grip and reduce the reliance on expensive agency staff.”
EY conducted an analysis of all 20 small acute hospital trusts across England that had a turnover of less than £200m using publicly available information from the relevant Trust’s websites. The most recent in year deficit/forecast position has been used where Trusts do not publish their 2015/16 surplus/deficit forecast.
Gill Cooksley, Director at EY Healthcare, said: “Never before has there been as much focus on alleviating the NHS deficit. 2015/16 year-end figures show that the majority of NHS trusts are in the red and running at a combined deficit of £2.45bn. This is £461m worse than planned.
“While other provider’s deficits are increasing at a faster rate, small hospitals are still overrepresented in their share of the deficit bearing the brunt of unsustainable finances.
The South continued to outperform the rest of England
The research examined deficits in seven small hospitals in the North, nine in the Midlands & East and four in the South. The total deficit for small hospitals in the North has grown by 176% (£53.6m), while in the Midlands & East by 170% (£113.3m), and in the South by 114% (£19.7m).
Since the end of the last quarter, small hospitals in the North have fared the worst with their deficit increasing by 31%, followed by Midlands & East at 26%. Small hospitals in the South continue to perform better with an increase of their deficit of only 4%.
“Small hospitals play an integral role within local communities and if they fail and the services they provide are put into question, the consequences will be more acutely felt by the local patient population,” Cooksley added.
“Beyond the numbers, small hospitals often provide services to population groups that can be disadvantaged or isolated. If services are removed in an unplanned way and not sufficiently re-provided, it is not just the financial but also the societal impact that needs to be considered.”
PoliticsHome Newsletters
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.
