Hospitals in England see deficits grow as wage bills rise and earning capacity falls

Authors: Nigel Hawkes 

Publication date:  27 Feb 2018

NHS hospitals in England are facing ballooning deficits as they struggle to maintain quality of care for growing numbers of patients, show the latest quarterly statistics from NHS Improvement.[1] At the end of 2017, hospitals reported a deficit of £1.28bn, £365m above the planned level.

The data cover the three months to 31 December, before the winter proper and a severe flu season that generated the highest number of flu related admissions to hospital since 2010-11. The flu peak was reached in January, so next quarter’s data, due to be published on 21 May, may bring worse news.

However, preparations for winter seem to have had some positive effect. Comparing year to year, emergency departments’ performance remained well below target but got no worse: 89.5% of patients were seen within the target of four hours, against 89.6% in the corresponding quarter last year. But December was a poor month, with only 85.1% seen within the target, one percentage point below December 2016.

Bed occupancy and delayed discharges from acute care hospitals were both lower than last year, and the number of patients waiting more than 12 hours on trolleys was almost halved, to 659. The 18 week referral to treatment target slipped slightly, with 11.8% of these patients waiting more than 18 weeks, against 10.3% in the third quarter of 2016. But the total number of patients treated within the target increased by 63 500 as demand grew. Diagnostic delays grew, particularly for endoscopy.

The biggest failure has been in controlling costs, leading to higher deficits. While at the beginning of 2017 hospitals aimed to cut the pay bill, in reality it was up by £701m, an increase that NHS Improvement attributed to greater demand, vacancies, and staff sickness and absence. Hospitals have increased their earnings by carrying out more emergency work, but this is unprofitable in comparison with elective surgery, which has in many cases had to be postponed or cancelled. The full effects of this switch are yet to be seen.

Of 136 hospitals in England’s acute care sector, 107 reported a deficit, with 20 of them more than £10m worse off than they had targeted. The end-of-year deficit is forecast to be £931m and would have been higher but for a one-off payment of £337m in emergency funding for winter pressures provided in last November’s budget.

For the first time the data include the number of staff vacancies, showing that trusts reported 9676 vacancies in doctors’ posts and 35 835 in nurses’. The medical vacancy rate was 7.9% for England as a whole, with regional variations. The Midlands and East recorded the highest rates, at 9.8%, and the South the lowest, at 5.5%. Among nursing staff London showed by far the highest rate, at 14.4%, against a national average of 10.3%.

Ian Dalton, NHS Improvement’s chief executive of, said, “Some providers appear to have managed the financial pressures better than others. We are working closely with those providers whose financial position has deteriorated seriously to ensure that they grip their problems while delivering the best possible care for their patients.”

Anita Charlesworth, director of research and economics at the think tank the Health Foundation, said, “It is clear that the huge pressures on the health service are also hitting hospital budgets, but today’s figures only go up to the end of December, so will not take into account the full impact of the very difficult winter.

“In response to these pressures, the NHS has cancelled planned operations to create extra capacity for emergency patients. This has a direct impact on patients who need care, but it also hits the bottom line in a system where hospitals are paid for every patient they treat, but at a lower rate for additional emergency care. The serious pressures on emergency care have not only affected patients and increased costs but also made it harder to deliver planned, long term efficiency savings.”

Saffron Cordery, director of policy and strategy at NHS Providers, the membership organisation for hospital trusts, said, “There is an increasing feeling among frontline trust leaders of ‘we cannot carry on like this.’ The NHS has shown extraordinary resilience in sustaining performance in the midst of an unprecedented financial squeeze. We have managed to keep the show on the road. But the warning signs are now clear and in plain sight. The time to act is now.”

NHS Improvement’s report was due to be published on Monday 19 February but did not emerge until two days later, leading to a story in the Guardian charging that it had been delayed at the request of the Department of Health and Social Care.[2] The department denied the charge, saying that it had not seen the report. NHS Improvement did not respond to a request for comment from The BMJ.


  1. NHS Improvement. Quarter 3 2017-18 performance report. 21 Feb 2018. [Link] .
  2. Campbell D. NHS deficit and staff shortage data “held up” by government. Guardian 21 Feb. [Link] .

Nigel Hawkes London

Cite this as BMJ Careers ; doi: