The overall NHS provider sector has reported a deficit of £461m for the first three months of the financial year, which was £5m better than planned.
Analysis of providers’ latest financial performance shows that NHS providers are ahead of their financial plan for the first time in over three years.
“Providers are up for the challenge and are starting to get a grip on their finances”
According to a performance report released by NHS Improvement on Thursday afternoon, the number of NHS providers showing a financial deficit fell by 20% during the first quarter of 2016-17.
NHS Improvement also highlighted that the provider pay bill – which includes agency costs – was £9.8m better than planned.
The position for the first quarter of 2016-17 compares to a deficit of around £930m at the same point during the last financial year.
However, it includes about £450m from the Department of Health’s sustainability and transformation fund, which was announced in December. Without this additional money, the year to date position would be a deficit of £911m.
“It would be a mistake to suggest the financial pressures which have engulfed the NHS have eased”
Of the 214 providers that signed up to financial targets, known as “control totals”, 185 met their financial targets in full, which has enabled them to access money from the overall £1.8bn sustainability funding pot.
Jim Mackey, chief executive of NHS Improvement, said: “Today’s results have demonstrated that providers are up for the challenge and are starting to get a grip on their finances.
“It’s early days – and there is still much work to be done – but today’s figures demonstrate that providers are meeting some of the ambitious plans that trusts boards have signed up to and this is a promising start to the year,” he said.
The financial performance data has been cautiously welcomed by NHS observers, though some experts have predicted that the situation will worsen significantly throughout the remainder of the year.
Last week, Nursing Times’ sister title Health Service Journal analysis suggested that more than three quarters of acute trusts have predicted they would meet their financial target, but the sector overall was forecasting a shortfall of around £75m at year-end.
Richard Murray, director of policy at the King’s Fund think-tank, said: “Today’s report shows that new investment and actions taken to tackle overspending have reduced deficits among NHS providers in the first quarter of the year.
Exclusive: Challenged trusts commit to recruiting nurses
“This is welcome, but it would be a mistake to suggest that the financial pressures which have engulfed the NHS have eased,” he said.
He added that, while overall NHS trusts met their financial targets in the first quarter, the think-tank’s latest survey of NHS finance directors showed only a third were confident this will be the case by the end of the year.
Nuffield Trust senior policy analyst Sally Gainsbury said: “On the face of it these figures show NHS providers more or less on track. But there is a real risk that they give a rose-tinted view of a more troubling underlying picture – because access to the special £1.8bn fund, which trusts desperately need to keep paying staff wages, is tied to them reporting the ‘right’ figures at the end of each quarter.
“So, although today’s results reflect a lot of hard work from managers and professionals, we should be ready for the possibility of a nasty surprise towards the end of the year,” she added.
Meanwhile, NHS Providers chief executive Chris Hopson said: “It is positive news that NHS trusts have managed to slow the runaway train on NHS provider sector deficits.
”Many trusts are either on target or ahead of where they planned to be at this stage of the year,” he said. “This is encouraging given that trusts are often off track in this quarter, recovering their position towards the end of the year.
“However, any sense of optimism must be tempered by what finance directors are telling us. Nearly four in 10 finance directors are saying they will be unable to sustain this level of performance and expect their trust’s position to worsen over the rest of the year,” he added.