Deficit of small hospitals in England more than doubles in a year, EY research finds

picture of small hospital

The combined year end deficit of small hospitals in England has more than doubled from £114.6m in 2014/15 to £301.3 in 2015/16, an increase of 161% (£186.7m), according to analysis published by EY today. Only one trust has seen an improvement in its finances since last year and has broken even with a small surplus of £0.02m.

  • 95% of hospitals with a turnover of less than £200m running a deficit in 15/16
  •  Small hospitals now account for 12% of the overall NHS deficit

According to EY’s analysis, the average small hospital deficit is £15.1m or 10.1% of its revenue. The majority of small hospitals (70%) has seen an increase in their deficit of between 0.1 and 10% a year. However, four small hospitals (20%) have increased their deficit by as much as 31%. Small hospitals now account for 12% of the overall NHS forecast deficit of £2.4bn, down from 14% last year.

EY’s analysis is based on a study of all 20 small acute hospital trusts across England, which had a turnover of less than £200m, using publicly available information from the relevant Trust’s websites. The most recent in year deficit / forecast position has been used where Trusts do not publish their 2015/16 surplus / deficit forecast.

Gill Cooksley, Executive Director in EY’s Healthcare team, said: “Never before has there been as much focus on alleviating the NHS deficit. 2015/16 year-end figures show that the majority of NHS trusts are in the red and running at a combined deficit of £2.45bn. This is £461m worse than planned.

“While other provider’s deficits are increasing at a faster rate, small hospitals are still over represented in their share of the overall NHS deficit and are bearing the brunt of unsustainable finances.

The south continues to outperform the rest of England

The research examined deficits in seven small hospitals in the North, nine in the Midlands & East and four in the South. Looking at the year as a whole, the total deficit for small hospitals in the North grew by 176% (£53.6m), while in the Midlands & East by 170% (£113.3m), and in the South by 114% (£19.7m).

Since the end of the last quarter, small hospitals in the North have fared the worst with their deficit increasing by 31%, followed by Midlands & East at 26%. Small hospitals in the South continue to perform better with an increase of their deficit of only 4%, according to EY’s research.

Gill Cooksley, added: “Small hospitals play an integral role within local communities and if they fail and the services they provide are put into question, the consequences will be more acutely felt by the local patient population.

“Beyond the numbers, small hospitals often provide services to population groups that can be disadvantaged or isolated.  It is not just the financial, but also the societal impact that needs to be considered, if services are removed in an un-planned way and not replaced.”

Small hospitals analysed:

Milton Keynes Hospital NHS FT
The Princess Alexandra Hospital NHS Trust
Hinchingbrooke Health Care NHS Trust
Burton Hospitals NHS FT
Wye Valley NHS Trust
George Eliot Hospital NHS Trust
Bedford Hospital NHS Trust
The Queen Elizabeth Hospital King’s Lynn NHS FT
James Paget University Hospitals NHS FT
Tameside Hospital NHS FT
Barnsley Hospital NHS FT
Southport and Ormskirk Hospital NHS Trust
East Cheshire NHS Trust
Mid Cheshire Hospitals NHS FT
Airedale NHS FT
Harrogate and District NHS FT
Yeovil District Hospital NHS FT
Weston Area Health NHS Trust
Isle of Wight NHS Trust
Dorset County Hospital NHS FT

 

Comment

A not unexpected result bearing in mind that economies of scale exist in the NHS as elsewhere. As a former hospital service planner I recall planning district general hospitals to serve populations as low as 100,000 in the late 1960s and 1970s. In those early days of hospital planning we did not fully appreciate the impact of economies of scale; and more importantly we did not understand at all the impact of proficiencies of scale. So the NHS is left with a legacy of small inefficient hospitals which are also possibly not providing the highest quality of care across the board.

Paul Walker, June 2016

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