Sheffield hospitals are facing shock cuts of more than £40m – with bosses admitting they will struggle to balance the books.
Health chiefs admitted the cuts – over £10m more than had been expected – were ‘extremely worrying’.
Hospitals finance boss Neil Priestley said: “We are exploring how we might manage this situation with the least impact on patient care and staff.”
Sheffield Teaching Hospitals NHS Foundation Trust – which runs the Royal Hallamshire, Northern General, Weston Park and Charles Clifford Dental Hospital – has revealed it is anticipating losing at least £41.6m of income in the next financial year due to changes in how services are funded.
Last month, bosses said they expected to have to make efficiency savings of around £30m.
The trust said it had managed to make efficiency savings in recent years without cutting services or making compulsory redundancies.
But a report to the trust’s board by director of finance Neil Priestley said more savings than previously expected are now likely to be required next year.
He said the situation was ‘extremely worrying’ and it was ‘unlikely’ the trust will be able to balance its books next year.
Mr Priestley said changes to tariff payments for different elements of NHS are due to be finalised by the end of this month.
“As currently described, the position is extremely worrying with several developments which will adversely impact on the trust’s income and make financial balance unlikely,” he said.
The trust is expecting to save around £25m through its annual 3.8 per cent efficiency target – a cut it was already anticipating.
But it has identified other losses of income equating to £16.6m – only £2m of which was ‘expected’.
Mr Priestley’s report also warned city hospitals could face further funding cuts due to the planned introduction of more financial penalties for missing performance targets and ‘potential further contracting losses’.
But he said the trust is challenging the planned cuts.
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“Of particular concern is the apparent national policy of targeting the major teaching centres for the most significant income reductions. This is being challenged given the potentially serious financial and service implications.”
The report also revealed Sheffield Clinical Commissioning Group, which oversees the work of the trust, is to receive ‘no additional funding’ beyond some money for additional winter support from the extra £1.95bn for the NHS announced by Chancellor George Osborne in the Autumn Statement.
Plans by different departments within the trust on how cuts can be achieved will be delivered later this month.
Mr Priestley said the trust had sent a ‘very strong response’ back to the consultation on the changes because of concerns about its impact on Sheffield services.
He said: “We have achieved break even or a small surplus for the last 13 years and we expect to record a small surplus again during this financial year, albeit we are in a much more challenging financial climate.
“We have achieved this by focusing on improving how we deliver services and looking at ways to be more efficient whilst keeping the quality of care as the top priority.
“We plan to do the same in the forthcoming year, and with the support of our staff, we are making good progress.
“However the difference in 2015/16 is that the prices we will get paid for a number of our procedures is reducing significantly, along with other changes, which means we will get paid less. This could equate to circa £40m for us as an organisation.
“We have given a very strong response to the national consultation about these changes and explained the impact it has for a trust of our size.”