NHS hospitals, mental health, community and ambulance trusts received a funding increase of £0.8bn while their costs rose by £2.4bn ©PA Images
NHS hospitals, mental health, community and ambulance trusts received a funding increase of £0.8bn while their costs rose by £2.4bn ©PA Images

Strained NHS turns to outsourcing

29 March 2017

Almost half of the £2bn of additional funding the NHS received between 2015 and 2016 was spent on outsourcing care to external contractors.

A Health Foundation report found that outsourced providers are delivering an increasing share of non-emergency care in the health service. For example, the amount of inpatient and outpatient services bought from outside the NHS rose by 7% last year.

The report concluded that this is a symptom of stress on the system. NHS hospitals, mental health, community and ambulance trusts received just £0.8bn more operating income, while their costs rose by £2.4bn. Meanwhile, NHS hospitals must devote more resources to meeting rising demand for emergency care, for which they receive a lower financial return.

Anita Charlesworth, director of research and economics at the Health Foundation, said: “Rising demand for emergency care meant that NHS providers haven’t had the capacity to deliver planned care and patients had to be diverted outside the NHS. NHS hospitals were left squeezed by sharply rising drug and staff costs with little additional funding. The result was big deficits that had to be covered by raids on investment budgets.”

She called on the NHS to urgently look at ways of ensuring that additional funds reach NHS providers. She also said that the service needs to plan better for emergency demand and get the best possible price for outsourced care.

The report found other systemic problems in the NHS. These include falling productivity; failing to make the most of its highly skilled workforce; and not getting the most out of its consultant workforce. Consultant productivity across 150 NHS acute hospitals fell by an average of 2.3% a year between 2009-10 and 2015-16.

However, it also found that hospitals where nursing and support staff formed a larger percentage of employees made more efficient use of consultants.

“This suggests that a more coherent workforce strategy which invests in a balanced increase in staff would improve productivity,” the report said.

“Getting more NHS funding flowing to NHS hospitals is necessary but not sufficient to turn round the health service's finances. The NHS has got to use the skills and talents of its workforce much better,” Charlesworth said.

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