Hospitals across the country have been advised to go back to the drawing board and reassess their financial plans for next year amid fears that their current forecasts are unrealistically rosy.
In a letter to hospital trusts the health regulator Monitor said that the projections that had been submitted to it so far for 2015/16 appeared “somewhat optimistic”.
In particular Monitor is concerned that many trusts are overestimating the extent of the savings they will make through efficiency gains without robust evidence to back up their claims.
Under current government plans, around £4bn of money currently spent by the NHS will be transferred next year to local councils to spend on social care.
Officials hope the move will reduce demand on the NHS by providing funding for more preventive treatments and home care. But health experts fear that some hospitals will not be able to cope with the reduced funding.
In the letter to the finance directors of foundation trusts, which was sent out last month, Monitor warned: “It is vital that individual boards, Monitor and fellow regulators have a realistic view of the scale of the financial challenge faced over the next few years.”
The letter went on to say that over the years, trusts had tended to have an overly optimistic approach to financial planning over the medium term, and that the regulator was concerned that this was happening again.
“To this end, we are inviting trusts to consider if their projections for 2015/16 need to be revisited, and to encourage them to be realistic.”
John Appleby, the chief economist at the health think-tank the King’s Fund, said its private discussions with hospital trusts suggested that many were deeply pessimistic about the future. “More are saying to us that they are having to make a trade-off between overspending or not employing enough nurses to satisfy Care Quality Commission inspections.”
A Department of Health spokesman said: “Delivering high-quality services and balancing the books must go hand in hand.”