Welsh NHS bodies break-even in 2012-13

16 Jul 2013 - 12:00am

But service delivery declines in some key areas and there are significant future financial and service challenges

NHS bodies met their statutory financial targets in 2012-13 despite a tough financial settlement but some of the actions taken to achieve break-even are not sustainable according to a report published today.

Published by the Wales Audit Office, 'Health Finances 2012-13 and beyond' also found that that service performance has declined in 2012-13 in some key areas. The report goes on to say that NHS Wales continues to face significant service and financial challenges in 2013-14 and it is likely to struggle to sustain current levels of service and performance.

Auditor General for Wales, Huw Vaughan Thomas said:

The Welsh NHS has worked hard to achieve financial break-even in 2012-13. But breaking-even is a small part of the story. NHS bodies reported around £190 million of savings in 2012-13: a significant sum despite being some £100 million less than the previous year. Some of these reported savings appear to be overstated and NHS bodies are reliant on unsustainable one-off savings to achieve break-even. Some NHS bodies reduced planned procedures to help them manage emergency service and financial pressures.

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But service delivery declines in some key areas and there are significant future financial and service challenges

NHS bodies met their statutory financial targets in 2012-13 despite a tough financial settlement but some of the actions taken to achieve break-even are not sustainable according to a report published today.

Published by the Wales Audit Office, 'Health Finances 2012-13 and beyond' also found that that service performance has declined in 2012-13 in some key areas. The report goes on to say that NHS Wales continues to face significant service and financial challenges in 2013-14 and it is likely to struggle to sustain current levels of service and performance.

Auditor General for Wales, Huw Vaughan Thomas said:

The Welsh NHS has worked hard to achieve financial break-even in 2012-13. But breaking-even is a small part of the story. NHS bodies reported around £190 million of savings in 2012-13: a significant sum despite being some £100 million less than the previous year. Some of these reported savings appear to be overstated and NHS bodies are reliant on unsustainable one-off savings to achieve break-even. Some NHS bodies reduced planned procedures to help them manage emergency service and financial pressures.

The report also recommends that planning at NHS bodies needs to improve. At the start of the year NHS bodies produced financial plans that technically showed they had sufficient income and savings to match expenditure, but these plans often had little or no detailed plans showing how they would be delivered through changes to services or the workforce. There is considerable scope to improve the integration of financial, service and workforce planning across NHS Wales.

The report considers the performance of the NHS in 2012-13 and found there has been an improvement against efficiency targets, with patients spending less time in hospital.  Shorter lengths of stay has freed up staff and beds to treat other patients or to achieve financial savings.

Huw Vaughan Thomas continued; "Service performance on some key patient-focused areas has worsened.  Waiting times for planned treatments have deteriorated over the past three years, with a growing number of patients waiting more than six months for their treatment.  Performance in emergency care has also fallen although the reasons for this are complex - emergency departments are increasingly stretched meaning patients are waiting longer to be treated or admitted than in the past three years."

Other indicators of quality of care show some improvements.  Performance in delivering some stroke services has generally improved.  Healthcare-associated infections have fallen, but there are concerns about the quality of data.

Looking forward, the NHS in Wales continues to face major financial and service challenges.  We welcome the Department's plans to move away from the annual break even target, instead requiring three-year plans which link finance, service and workforce plans.  But there remain some uncertainties and risks, particularly in terms of how to fund upfront investment in the three-year plans and ensuring that NHS bodies do not build up unsustainable deficits by the end of the three year period.

The short term financial and service pressures on the NHS are particularly acute.  NHS bodies have struggled to identify sufficient savings and started the 2013-14 financial year with a net funding gap of some £210 million.  With public spending cuts set to last for several more years, and much of the low-hanging fruit for savings having already been exploited, the position over the medium to long term looks highly challenging.  Unless there is a significant change in funding or transformation of services, the NHS in Wales is likely to struggle to live within its means and sustain the current level and quality of services.

Some progress is being made with transformation and reconfiguration of services but the pace of change is restricted by significant public and political opposition to some of the proposals.  Given the rate of progress, the scale of opposition to some proposals and the likelihood that some changes will require upfront investment, it is unlikely that reconfiguration will solve the financial pressures facing the Welsh NHS over the next three years.  However, in the longer term, reconfiguration which includes a radical transformation of services offers the best hope for putting the NHS in Wales on a sustainable footing.

Notes to Editors:

  • The Wales Audit Office's mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identifying and spreading good practice across the Welsh public sector.