Crisis within the NHS as trusts told to leave non-essential vacancies unfilled
NHS Trusts have been instructed to adopt tougher measures to save cash because current forecasts for 2015/16 are "simply unaffordable".
An internal letter from Monitor's Chief Executive David Bennett, made privy to the Health Service Journal (HSJ), reveals the reasoning behind the new guidance - to 'bring down deficits'.
The 46 trusts with the biggest deficits have been sent the letter requesting that they revisit their financial plans and identify further cost-saving initiatives, including only filling future vacancies where the role is considered "essential".
Figures published in May by Monitor revealed a steep rise in the NHS Trust deficit, from £115 million in 2013/14 to £822 million in 2014/15 - a rise that was attributed at the time in part to agency nurse spending. Around half of the 152 Foundation Trusts ended the financial year in deficit, and spent a combined £1.8 billion on contract and agency staff - more than twice the planned cost. During the same period, waiting times for operations rose by 8.3%.
The predicted Trust deficit for 2015/16 has soared to more than £2 billion, according to the HSJ.
Under the new guidelines, Foundation Trusts with the largest deficits are to be placed under the microscope, and given what Monitor describes as 'achievable' end of year financial targets. In addition, in an effort to relieve some of the pressure , NHS England is also to order a suspension of penalties, backdated to April this year, relating to waiting times and referrals.
The letter shown to the HSJ reads: "As you know, the NHS is facing an almost unprecedented financial challenge this year. Current plans are quite simply unaffordable."
"As I have said before, if we are to do the best we can for patients we must leave no stone unturned in our collective efforts to make the money we have go as far as possible."
The Department of Health said it is investing £8 billion into the NHS in England so that it can implement a five-year plan, the Five Year Forward View (5YFV).
Published in October last year, the paper was said to set out a "vision for the future of the NHS", and aims to introduce new models for NHS care provision intended to "break down barriers between GPs and hospitals, between physical and mental health and between health and social care, thereby helping promote person-centred and co-ordinated care for patients".
It is hoped these new 'models' of care will be more efficient financially, and Monitor describes the move as 'crucial' if gaps in funding are to be closed.
The letter from David Bennett also said: "Ministers have been sighted on these options and are ready to support all providers to reduce their deficits in a managed way although, of course, all actions should be consistent with your responsibilities for safety and the delivery of constitutional standards".
Shadow Health Secretary and Labour leadership hopeful Andy Burnham told the BBC that the warning "suggests that the financial crisis in the NHS is threatening to spiral out of control and hit standards of patient care. The suggestion that hospitals can ignore safe staffing guidance will alarm patients and the government must decide if it will overrule this advice."
What is Monitor's function?
Monitor is the sector regulator for health services in England, an executive non-departmental public body sponsored by the Department of Health. According to its mission statement, Monitor's job is to make the health sector work better for patients.
Monitor and NHS England took on responsibility for the NHS payment system from the Department of Health following the introduction of the Health and Social Care Act 2012 and also oversees the activities of Foundation Trusts.
What is a Foundation Trust?
According to the NHS Choices website, "Foundation Trusts, first introduced in April 2004, differ from other existing NHS trusts. They are independent legal entities and have unique governance arrangements. They are accountable to local people, who can become members and governors. Each NHS foundation trust has a duty to consult and involve a board of governors (including patients, staff, members of the public and partner organisations) in the strategic planning of the organisation."
"They have financial freedoms and can raise capital from both the public and private sectors within borrowing limits determined by projected cash flows, and are therefore based on affordability. They can retain financial surpluses to invest in the delivery of new NHS services."
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