Hospital finances and productivity: In a critical condition?

April 2015

Sarah Lafond
Adam Roberts
Thumbnail

Key points

  • The financial performance of NHS providers in England has deteriorated sharply since 2013, from a net surplus of £582m in 2012/13 to a net deficit of £789m at the end of Q3 of 2014/15.
  • Despite an expected under-spend from commissioners of £197m, the NHS is projected to overspend by £626m by the end of 2014/15.
  • Staff costs are the biggest driver of rising operating costs. Spending on temporary staff grew by £1bn (27.8%) in 2013/14 and continues to rise. Acute hospitals are hardest-hit: 76% were in deficit at the end of Q3 of 2014/15, up from 19% in 2012/13. Hospitals’ crude productivity fell by almost 1% in both 2012/13 and 2013/14.
  • NHS hospitals have only improved efficiency at an average rate of 0.4% a year over this parliament. This is substantially below previous estimates and the 2-3% set out in the NHS Five year forward view.

The NHS in England faces the huge challenge of meeting rising demand in a period of sustained financial pressure. The service is projected to overspend its budget by £626m in 2014/15, despite £250m additional Treasury funding and an extra £650m from transferred planned capital investment.

In this report we examine the financial performance of NHS providers, focusing on hospitals. We identify areas of cost pressure using their financial accounts up to 2013/14 and quarterly reporting data up to December 2014 (Q3 2014/15). We also examine trends in efficiency and productivity from 2009/10 to 2013/14.

See the technical appendix for more details of the methods used for the report.

Watch an audio slideshow of the key findings

 

Further reading

Briefing

Acute hospital productivity

This analysis is an update to the April 2015 Health Foundation report, Hospital finances and productivity: in critical condit...

You might also like...

Chart

How has the productivity of UK health care changed between 1997 and 2016?

January 2019 Chart of the Month. Between 1997 and 2016, productivity across the UK NHS grew by 20%, at an average of around 1...

Blog

Taking a long-term view

How can our new programme, Shaping Health Futures, help the long-term sustainability of health and social care services?

Press release

The NHS has a new long-term plan but this is not 'job done'

The Health Foundation has responded to the publication of the NAO's annual report on the financial sustainability of the NHS.

Kjell-bubble-diagramArtboard 101

Work with us

We look for talented and passionate individuals as everyone at the Health Foundation has an important role to play.

View current vacancies
Artboard 101 copy 2

The Q Community

Q is an initiative connecting people with improvement expertise across the UK.

Find out more