Financial sustainability of adult hospices in England

Only now are the Department and NHS England developing a Modern Service Framework for palliative and end-of-life care, but so far the details are unclear. There has not been a new national strategy for improving palliative and end-of-life care in England since 2008. The Health and Care Act 2022 set out a legal duty for ICBs to commission palliative care services that meet the needs of the local population, but this has not yet delivered equal access to quality services. Hospices are central to achieving government’s objectives of providing more care in the community and reducing hospital use, but national oversight of the palliative and end-of-life care system has not kept pace with this policy shift. Hospices have diverged 3 from the NHS in some ways, for example, clinicians in hospices are often paid less than their NHS counterparts. The Modern Service Framework that the Department and NHS England are developing aims to bring together disparate elements of the system, including facilitating ICBs to improve their commissioning of care services from hospices, but its details at present are vague, and its delivery will require clear plans and sustained investment to fix the long-standing problems within the sector. recommendation DHSC and NHS England should work with and take on board the views of the hospice sector to develop and publish a fully costed delivery plan alongside the framework.

NHS England has been too slow to enforce a commissioning approach for the provision of palliative care that focuses on the quality of outcomes for patients. ICBs continue to fund hospices largely through grants and block contracts, despite the NHS widely using payment schemes that align payments with incentives and fund on the basis of activity and outcomes. The Department and NHS England cannot show whether the quality of life for patients receiving palliative care is improving, whether they receive care in the right setting, or that unnecessary hospital stays are being avoided. New tariffs, payment mechanisms and incentives are being developed to align funding with need, and the Strategic Commissioning Development Programme for ICBs is planned to launch in April 2026 alongside guidance through a strategic framework. However, there is concern in the sector that multi-year commissioning models are not being implemented quickly enough given the financial pressures hospices are facing. NHS England is relying on ICBs to address financial problems and drive change in their areas, but NHS England must itself lead the adoption of improved commissioning approaches given the problems are system-wide and very variable, and particularly while ICBs are undergoing significant restructuring. recommendation NHS England should set out its plan for supporting all ICBs to adopt a consistent commissioning approach for the provision of palliative and end-of-life care that focuses on high-quality care outcomes for patients.

Too many patients spend their last days receiving palliative care in acute hospitals, which does not always achieve the best outcomes for patients nor represent value for money. Patients are frequently receiving palliative care and reaching the end of their lives in settings they would prefer not to be—in hospitals rather than at home or in a hospice—and which are more expensive. Around one in four adults cared for in acute 4 hospitals are in the last year of their life, accounting for about 10 million bed days each year, when many could be in other settings that are better suited to supporting their needs. Hospices annually support around 20,000 people to die in community settings rather than in hospital, saving the NHS approximately 1.5 million bed days and around £800 million. NHS England use a dashboard to track patients at the end of their lives across all ICBs, which highlights the significant number of people who need not be in hospitals and would rather be at home. recommendation NHS England should explain, in detail, how it will move more palliative and end-of-life care out of acute settings and into the community, and the savings it expects this will deliver.

The Department and NHS England are not responding to the growing financial crisis in the adult hospice sector with the seriousness and urgency needed. The independent hospice sector is facing a serious financial situation that is already affecting patient care. Demand for hospice care is rising, but most hospices are reporting growing deficits, while several have announced cuts to services within the coming months if additional funding is not found. The Department recently provided funding of £125 million to hospices, but this was non-recurrent capital funding that does not directly fund service delivery or solve the continuing financial problems facing the sector. NHS England expects ICBs to undertake quality impact assessments if a hospice signals reductions in service that the NHS could not cope with. We welcome that, following the session, NHS England wrote to all ICBs requesting immediate, up-to-date assessments of the financial stability of hospices within their footprints and action to mitigate risks. The Modern Service Framework is expected to contain the details and plans for how NHS England will improve how ICBs commission and pay for services from hospices. However, with the framework not set to be completed until Autumn 2026, and then time needed to implement it, including the development of new payment mechanisms, we are concerned that the pace of change does not match the urgency of the situation. recommendation NHS England should work with ICBs to: • establish which hospices are forecasting imminent service reductions and confirm that for each of these, the ICB has undertaken a quality impact assessment; and • develop an individual plan for each such hospice, setting out how the ICB will support the hospice to maintain its services, or how the ICB will otherwise compensate for the service reductions. 5

The NHS is at risk of losing the huge value it gains from independent hospices beyond the provision of statutory palliative and end-of-life care. Independent hospices provide enhanced care compared with the NHS, such as complementary therapies, funded from charitable donations. As well as patient care, they provide expert advice and training on palliative and end-of-life care to the NHS. Their independence enables a degree of innovation in care delivery methods that the NHS cannot easily replicate, and they are leading the move to provide more palliative care in community settings. NHS England acknowledges that hospices are a key part of the delivery of neighbourhood care, for example through their provision of 24/7 palliative care advice lines that support communities and help reduce hospital admissions. Hospices are increasingly supporting wider community services, such as care homes and general practice. The financial situation of the hospice sector puts the Department and NHS England at risk of losing this value and having to dedicate resources to replace the lost expertise. recommendation The Department and NHS England should ensure the Modern Service Framework will thoroughly examine: • the full range of wider benefits that independent hospices provide and that the NHS gains from; and • how the Department will protect and support the provision of these benefits in the future.

Hospice collaboratives have the potential to deliver efficiencies and further raise the quality of care, but their development is lacking central support from the Department and NHS England. Some hospices are working together to form collaboratives within ICB regions, offering opportunities for coordinated planning, shared functions, reduced costs through economies of scale and shared management of financial risk. The NAO reported that seven collaboratives are well established across England, with five at an early stage of development. We received submissions from three collaboratives that described how working in partnership across a region reduced needless duplication, minimised unwarranted variation in care, enabled smarter workforce planning and presented a united voice to the ICB. Collaboratives can help ICBs to more readily assess their areas’ overall provision of palliative care and commission services more effectively. NHS England considers the collaborative model to be right for the hospice sector and key to improving care provision. 6 recommendation The Department and NHS England should set out what it can do to support hospices to develop existing collaborative operating models to derive as much financial benefit and service improvement as possible, and to implement collaboration in all areas where it is feasible. 7 1 National oversight and commissioning of palliative and end-of-life care services Introduction

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department of Health and Social Care (the Department) and NHS England on the provision of palliative and end-of-life care, and the funding of England’s independent adult hospices.1 We also took evidence from Baroness Ilora Finlay of Llandaff, Professor Fliss Murtagh and Hospice UK.

The NAO reported that the mix of funding mechanisms varies between ICB areas, largely comprising a mix of historic grants and block contracts with few examples of activity-based contracts used in a strategic commissioning approach.11 Progress in moving towards strategic commissioning has been slow. NHS England explained that it is a long, complicated process of unravelling how the money is currently connected to services.12 The continued reliance on the current funding arrangements has meant there is little clarity over what ICBs are paying for or the volume of these services.13 Hospice UK highlighted the current financial pressures on the independent hospice sector and informed us that hospices raise and spend £1.2 billion a year on care, but only receive approximately £400 million in statutory funding.14

NHS England told us that although it does collect patient-level activity data, it needs to start collecting more. It currently does not collect activity data from all hospices and therefore cannot determine how much care ICBs are buying from hospices, the quality of the services being delivered, outcomes for patients, or how hospice provision could be changing over time.15 Hospice UK pointed out an over-reliance on charitable giving to fund hospice services that is ultimately inequitable and unsustainable.16 7 Professor Fliss Murtagh (AHE0020) 8 Professor Fliss Murtagh (AHE0020) 9 C&AG’s report, para 2.4 10 Qq 56-57 11 C&AG’s report, para 1.14 12 Qq 42 and 80 13 Qq 20 and 39-42 14 Q 9 15 Qq 40-42 16 Q 18 10 The Modern Service Framework

There has not been a renewal of the government’s approach to delivering and improving palliative and end-of-life care in England since the first national strategy was published in 2008. The Health and Care Act 2022 introduced a legal duty for ICBs to commission palliative and end-of-life care services that meet the needs of their local populations. However, we heard from the hospice sector that this has yet to result in universal access to quality services.17

The terms and conditions in the independent adult hospice sector have diverged from those in the NHS, with clinicians in hospices often earning less than their NHS counterparts.18 We heard from Hospice UK and NHS England how hospice provision is central to government’s objectives of providing more care in the community, reducing hospital utilisation and aligning with patient preferences.19 However, sector representatives wrote to us to say that system-level governance and national oversight arrangements have not evolved to reflect this role.20

The Department and NHS England told us that data on patient-level activity from hospices, which ICBs need in their role as commissioners, is not strong or robust enough, because hospices are only obliged to report activity data when they are funded through a contract.21 Professor Murtagh described how activity across the hospice sector is not understood well enough, and Hospice UK referenced the NAO report that showed the variability in reporting and catching activity data.22 NHS England informed us of their Faster Data Flows programme, but noted that rollout to independent hospices has only recently begun.23

The Department and NHS England told us about the ‘Modern Service Framework’ they are currently developing, which they intend will bring together disparate elements of the system and will set out what “good” commissioning for palliative and end-of-life care looks like.24 17 C&AG’s Report, para 3; Marie Curie (AHE0018) 18 AHE0004 (AHE0004); Dr Becky Ogundele , Dr Sarah Longwell, Dr Emily Holdsworth, Dr Liam Gabb, Dr Alex Oyon , Dr Anna Grundy, Dr Iain Murphy, and Dr Alice Gray (AHE0006); Sue Ryder (AHE0015) 19 Qq 10, 34 and 69 20 Lancashire South Cumbria Hospices Together, Pendleside Hospice (AHE0008); Gianina Caballero (AHE0016) 21 Qq 39-42 22 Qq 19-20 23 Qq 7 and 40 24 Qq 31, 45 and 49 11 However, they were vague on detail of the contents of the framework, and we are concerned, as is the sector, that this may prove to be another ambition that is not delivered.25

The Department and NHS England are aiming to launch the framework later this year in the autumn. However, we are concerned that it will still take time for ICBs to change their commissioning arrangements, a concern reiterated by Sue Ryder who wrote to use after the January session.26 The sector representatives were supportive of the framework but highlighted that it would require investment to implement, and there appeared to be no new funding attached to it. They also told us that if there was no additional funding before the new financial year, some hospices will have reduced capacity and services by the time the framework launches.27 Commissioning palliative and end-of-life care

ICBs currently fund hospices largely through grants and block contracts, which do not provide clarity over what is being purchased.28 The Department and NHS England acknowledged that there must be a move away from funding hospices in this way towards a strategic commissioning approach. However, they emphasised that transitioning to activity or outcome-based commissioning is a complicated process that would require a period to build the systems and mechanisms to ensure long-term sustainability and avoidance of the current position in the future.29

NHS England told us that ICBs are required to understand the needs of their populations and their projections of future demand.30 NHS England acknowledged that it must take the lead on establishing a single commissioning approach for the provision of palliative care. To support ICBs to become better strategic commissioners, NHS England told us of a strategic commissioning development and improvement programme for ICBs that is being launched in April this year. NHS England assured us that despite ICBs reducing in size, the programme will support them to increase their capacity to understand their population data and improve outcomes for their populations.31 25 Qq 13 and 43 26 Qq 45, 76 and 78; Letter from Sue Ryder, 16 January 2026 27 Q 13 28 C&AG’s report, paras 18–19 29 Qq 32, 34-35, 42-43 and 78 30 Qq 33-34 and 57 31 Qq 34-36 12

Professor Murtagh stressed that ICBs need to commission on the basis of activity and outcomes. Professor Murtagh explained that this approach is already used elsewhere in the NHS through a blended payment model that aligns payments with incentives, and questioned why it is not being used to commission care from hospices.32 She drew attention to the loss of mechanisms that captured and reported on hospices’ activity.33 NHS England acknowledged that currently data is very poor, and told us that, over time, ICBs will have more data upon which to base their commissioning decisions.34

We are concerned that adult hospices do not benefit from multi-year funding settlements, as children’s hospices do. NHS England agreed that this was an issue, and that it is working towards providing hospices with better certainty over funding over a two- or three-year period, something it has not done for several years. But it cautioned that it would not be able to provide guaranteed levels of funding over three to five-year periods. The Department told us that its intention was that the Modern Service Framework would address multi-year funding, but cautioned that it was subject to ministerial approval and would not be introduced in the next financial year.35 32 Q 15 33 Q 20 34 Q 32 35 Qq 64-68 13 2 Delivery of palliative and end-of-life care services Where palliative care is delivered

Professor Murtagh told us that for a long time it has been known that around one in four adults who need palliative care do not get it, and that recent research suggests that the proportion may now be even higher.36 She went on to describe how a third of people receiving acute care in hospital are in the last year of life, accounting for about 10 million bed days each year. Many patients are not benefitting from acute care and might rather receive palliative care.37 The Department and NHS England recognised that some people are receiving care in more expensive settings than they need to be, particularly in acute hospitals.38

The Department and NHS England agreed that there are gaps in provision of palliative and end of life care and that it must meet demand where it is needed.39 They also acknowledged the importance of moving care away from costly acute settings into the community, citing a dashboard that they use to track patients who are receiving care but may not need to be in hospital.40 Professor Murtagh told us that around 500,000 people die in England each year, and of these around 42% do so in hospitals, where many people do not want or need to be and which is typically more expensive than other settings. Some 28% die at home, which is where most people would prefer to be, while 21% die in care homes and 5% in hospices.41 She also highlighted the disproportionate flow of end-of-life funding that goes to the acute sector. On average, £22,000 is spent per person in the last year of their life, with 78% going to the acute hospital sector, approximately 5% to the hospice sector, and 4% to other partners in formal healthcare, including the ambulance service and district and community nursing.42 36 Q 6 37 Qq 12 and 24 38 Q 30 39 Qq 29, 38 and 80 40 Qq 34, 39 and 49 41 Professor Fliss Murtagh (AHE0020) 42 Q 5 14

Professor Murtagh stressed the importance of having earlier conversations with patients and their families about possible deterioration and approaching death, to ascertain their wishes. Without such conversations, patients may continue to have high-cost treatment they may not benefit from.43 NHS England agreed, and acknowledged that it had more to do to ensure all patients in the last year of life have advanced care plans to support the right care being delivered in the patients’ preferred settings.44 Growing financial crisis in the adult hospice sector

Some hospices have recently reduced the volume or range of services they provide and others are planning to do so, at a time when demand for palliative and end-of-life care is rising.45 Hospice UK told us that hospices are facing a cliff edge from April, and if no new funding is injected into the sector before the new financial year, hospices would be forced to reduce services further.46 It told us of hospices that have already announced staff redundancies.47 We received submissions from several hospices telling us that they were operating deficits, including annual deficits of £780,000 for Mary Ann Evans Hospice and £1.1 million for Rotherham Hospice. Marie Curie told us it is currently running a structural operating deficit.48 The Committee referred to three hospices—Prospect hospice in Swindon, Birmingham hospice and St Giles hospice in Lichfield—which have announced redundancies or have closed in-patient beds.49

NHS England emphasised that it is aware that every hospice provider is worried about financial sustainability, but that it is unaware of any hospices facing immediate closure.50 It told us it expects ICBs to undertake quality impact assessments if a hospice signals reductions in service that would have a disproportionate impact or an impact the NHS could not cope with.51 Following our evidence session in January, NHS England wrote to tell us that it had written to all ICBs requesting immediate, up-to-date assessments of the financial stability of hospices within their footprints and the action being taken to mitigate risks.52 The Department highlighted the 43 Qq 5, 12, 16 and 27 44 Q 34 45 C&AG’s report, paras 11 and 24 46 Q 13 47 Hospice UK (AHE0017) 48 Rotherham Hospice (AHE0002); Mary Ann Evans Hospice (AHE0005); Marie Curie (AHE0018) 49 Q 75 50 Qq 71-72 51 Qq 52, 57 and 75 52 Q 75; Letter from NHS England, 16 January 2026 15 £125 million capital funding that had recently been provided to the sector, demonstrating, it said, ministerial commitment to independent hospices. However, Hospice UK told us that while the capital funding is welcome it is one-off funding that will not address the shortfalls in funding for service delivery.53

NHS England agreed that the hospice sector is fundamentally in financial distress and that there is a need to move quickly to resolve and fix the problems. But it stressed the need to avoid perpetuating problems, such as supporting a provider delivering substandard care.54 NHS England wrote to us after the session to reiterate that the development of the Modern Service Framework is their immediate action to address the fundamental issues in palliative and end-of-life care.55 However, we are concerned that only after the framework is published in autumn 2026 will new payment mechanisms be produced, taking more time to implement.56 Wider value of independent hospices

The NAO report describes how independent hospices offer additional services that are typically outside the remit of the NHS, for example certain complementary therapies, funded from hospices’ charitable donations. Hospices offer support to the family, friends and carers of those receiving palliative and end-of-life care, for example through counselling and bereavement support. Many hospices provide training in palliative and end-of-life care to a broad range of healthcare professionals, including to the NHS, and some hospices undertake clinical research.57

Baroness Finlay emphasised the role that hospices have as an important source of expertise in palliative and end-of-life care, available to professionals in the NHS such as district nurses and care assistants.58 NHS England told us how hospices support training NHS professionals in palliative and end-of-life care skills and how to work in community settings.59 In lots of places, hospices are the providers of 24/7 palliative care advice and support lines, offering telephone support for patients and their families that can help avoid people being taken to A&E unnecessarily.60 53 Qq 9 and 50-51 54 Q 74 55 Letter from NHS England, 16 January 2026 56 Qq 30-31, 43-44 and 66 57 C&AG’s report, para 5 58 Q 12 59 Qq 3 and 53 60 Qq 21, 35 and 69 16

The Department and NHS England stressed how hospices’ positioning within communities supports the development of neighbourhood health services that the NHS 10-year plan is promoting. Hospices are increasingly supporting wider community services, such as care homes and general practice.61 Hospices are leading the move to providing more palliative care in the community and in the settings where people want it.62 We heard from Baroness Finlay and Hospice UK how hospices’ independence enables them to develop and innovate models of care delivery in ways the NHS cannot do so readily.63 Hospice Collaborations

Collaboratives are groups of independent hospices within an ICB region, including Marie Curie, Sue Ryder and children’s hospices where they are present, which work in partnership, developing a more coordinated approach to the provision of palliative and end-of-life care across a region. The NAO reported that there are currently seven well-established collaboratives covering individual ICBs: three in the North West region, two in the North East and Yorkshire region and two in the South East region. There are another five collaboratives that have been established but are at an early stage of development, and six groups of hospices that are considering collaboratives.64

We received submissions from three collaboratives: Lancashire & South Cumbria Hospices Together, Greater Manchester Hospices Provider Collaborative, and Cheshire & Merseyside Hospice Provider Collaborative. They described how as collaboratives they can present a united voice to the ICB and are able to negotiate funding awards collectively, which in one case had resulted in ‘wins’ of a one-off boost in funding and an agreement to a longer-term review of palliative care services. They described how working in partnership enabled mutual learning, levelling up of standards, minimisation of unwarranted variation in care, avoidance of needless duplication of effort and smarter workforce planning. Collaboratives help individual hospices maintain strong clinical governance and operational resilience.65 61 Qq 47 and 69-70 62 Qq 5, 10-11, 18, 29, 34 and 37 63 Qq 16 and 23 64 C&AG’s Report, paras 3.10-3.11 65 Lancashire South Cumbria Hospices Together, Pendleside Hospice (AHE0008); Greater Manchester Hospices Provider Collaborative (AHE0009); East Cheshire Hospice, Cheshire & Merseyside Hospice Provider Collaborative (AHE0010) 17

NHS England told us about the West Yorkshire collaborative, which it considers to be the most advanced and an example for how hospices in all ICB regions could work in partnership. NHS England pointed to the economies of scale and improved commissioning that the collaborative model enabled.66 Professor Murtagh told us that the Department and NHS England should be including collaborative working within the Modern Service Framework.67 However, although NHS England told us that forming a collaborative was perhaps the most effective first stage for groups of hospices experiencing financial difficulties, it expects hospices to take this step themselves and it did not signal any intention to encourage or support the creation of collaboratives.68 66 Qq 45, 48 and 51 67 Q 17 68 Qq 48 and 51 18