NHS Financial Implosion

NHS Financial Implosion

8th Mar 2016

The crisis in the NHS (UK) continues with a standoff between junior doctors and the Government over new terms of employment, resisted by the profession but enforced nevertheless by the Government, and the spiralling debt of the NHS hospitals. It is to the latter matter that this article turns as it would appear that this may have a most catastrophic effect on NHS performance and the quality of care which is provided. However the two issues are linked.

Recent studies investigating NHS hospital finances have shown deterioration in all regions in England and poor finances appear to be related to low CQC scores and low staff morale although the links between these have not been fully evaluated.


NHS Debt

Statistics published by the Health Foundation, an independent charity committed to improving healthcare quality for patients in the UK, revealed that the NHS hospitals in England plunged into massive debt over the last 2 years (see below) from a previous position of relative financial prudence. 

This coloured diagram shows the dramatic decline


In 2012-2013 the NHS England, in all regions, reported a surplus and the majority (7 out of 10) reported a surplus in excess of £30 million. By 2015 only one region (the North East) had a surplus and this is less than £10 million.  The majority of regions (7 out of 10) had a deficit of greater than £50 million. 

This is a massive deterioration in financial status over a very brief time from a net surplus of £577 million in 2012/2013 to a net deficit of £841 million in 2014/2015. Investigation of the causes of the debt revealed that the use of agency, locum and temporary staff had accounted for much of it concluding that high payroll bills rather than financial mismanagement were major contributors. 

Poor finances were also linked with low quality of care, low staff morale and staff dissatisfaction. The Government's recent strategy for reducing the costs of the NHS has been austerity with low or no pay rises for staff over recent years. This has been more recently exacerbated with the junior doctor contract dispute resulting in the first medical strikes for over 30 years. The matter is still unresolved despite unilateral imposition of the contract by the Government. 

The financial implosion of the NHS has demonstrated that the system has serious troubles with the recruitment and retention of staff who have been moving out of the NHS in large numbers. This has resulted in a requirement for agency contract workers on an increasing scale. This calls into question the soundness of the Government's continued austerity policies.



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