Repeated bail-outs to help the NHS cope with pressure on services and finances could become the "new normal", the National Audit Office has said.
It comes after the auditor found NHS bodies used extra funds partly intended to transform services to shore up finances during 2016-17.
The NAO said short-term funding had impeded necessary changes to the NHS.
The government said the report showed the NHS had made "significant progress towards balancing the books".
'Short-term funding boosts'
The NHS received a one-off payment of £1.8bn, known as the Sustainability and Transformation Fund, in 2016-17 to help it cope with reduced funding from 2017-18 onwards and to allow it to transform services.
The NAO said this had helped the NHS improve its financial position from a £1,848m deficit in 2015-16 to an £111m surplus in 2016-17.
But it said the NHS had struggled to manage increased activity and demand within its budget and had failed to meet performance targets.
And measures taken to rebalance NHS finances had restricted money available for the longer-term transformation needed to meet demand, drive efficiencies and improve the service, the NAO said.
It also found NHS bodies were relying on other forms of short-term funding.
The NAO said the Department of Health had transferred £1.2bn of its £5.8bn budget for capital projects – such as the building of hospitals – to fund the day-to-day activities of NHS bodies.
On top of this, many trusts have received large levels of in-year cash injections, most of which are loans from the DoH.
The auditor said this had worsened rather than improved their financial performance.
Extra cash support increased from £2.4bn in 2015-16 to £3.1bn in 2016-17, it said.
Amyas Morse, head of the National Audit Office, said: "The NHS has received extra funding, but this has mostly been used to cope with current pressures and has not provided the stable platform intended from which to transform services.
"Repeated short-term funding-boosts could turn into the new normal, when the public purse may be better served by a long-term funding settlement that provides a stable platform for sustained improvements."
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The report said clinical commissioning groups and trusts were also increasingly reliant on one-off measures to deliver savings.
This poses a "significant risk to the financial sustainability of the NHS in the future", the NAO said.
It said progress had been made in setting up 44 new partnership arrangements across health and local government, which it said provided a more "strategic approach" to meeting demand for health services.
But it said the effectiveness of such partnerships varied and their tight financial positions made it difficult for them to shift focus from short-term day-to-day pressures to the transformation of services.
NHS Providers, which represents NHS trusts, said the report showed the "growing reliance on one-off measures is not a viable long-term approach to NHS funding".
Its chief executive, Chris Hopson, said: "We need long-term decisions to be taken on the funding of health and social care no later than the autumn budget, and we urge the government to respond with urgency."
The British Medical Association said the report showed short-term funding was not meeting patients' needs and called for a cross-party agreement on a "long-term, sustainable funding plan for the NHS".
The Nuffield Trust health think tank said the report showed the NHS was in a "dire financial position" and in "desperate need of more money".
A Department of Health and Social Care spokeswoman said: "As this report recognises, the NHS has made significant progress towards balancing the books and returning to a financially stable position.
"To support this we recently gave it top priority in the Budget with an extra £2.8bn, on top of a planned £10bn a year increase in its budget by 2020-21."
Repeated bail-outs to help the NHS cope with pressure on services and finances could become the "new normal", the National Audit Office has said.
It comes after the auditor found NHS bodies used extra funds partly intended to transform services to shore up finances during 2016-17.
The NAO said short-term funding had impeded necessary changes to the NHS.
The government said the report showed the NHS had made "significant progress towards balancing the books".
'Short-term funding boosts'
The NHS received a one-off payment of £1.8bn, known as the Sustainability and Transformation Fund, in 2016-17 to help it cope with reduced funding from 2017-18 onwards and to allow it to transform services.
The NAO said this had helped the NHS improve its financial position from a £1,848m deficit in 2015-16 to an £111m surplus in 2016-17.
But it said the NHS had struggled to manage increased activity and demand within its budget and had failed to meet performance targets.
And measures taken to rebalance NHS finances had restricted money available for the longer-term transformation needed to meet demand, drive efficiencies and improve the service, the NAO said.
It also found NHS bodies were relying on other forms of short-term funding.
The NAO said the Department of Health had transferred £1.2bn of its £5.8bn budget for capital projects – such as the building of hospitals – to fund the day-to-day activities of NHS bodies.
On top of this, many trusts have received large levels of in-year cash injections, most of which are loans from the DoH.
The auditor said this had worsened rather than improved their financial performance.
Extra cash support increased from £2.4bn in 2015-16 to £3.1bn in 2016-17, it said.
Amyas Morse, head of the National Audit Office, said: "The NHS has received extra funding, but this has mostly been used to cope with current pressures and has not provided the stable platform intended from which to transform services.
"Repeated short-term funding-boosts could turn into the new normal, when the public purse may be better served by a long-term funding settlement that provides a stable platform for sustained improvements."
If you can't see the NHS Tracker, click or tap here.
The report said clinical commissioning groups and trusts were also increasingly reliant on one-off measures to deliver savings.
This poses a "significant risk to the financial sustainability of the NHS in the future", the NAO said.
It said progress had been made in setting up 44 new partnership arrangements across health and local government, which it said provided a more "strategic approach" to meeting demand for health services.
But it said the effectiveness of such partnerships varied and their tight financial positions made it difficult for them to shift focus from short-term day-to-day pressures to the transformation of services.
NHS Providers, which represents NHS trusts, said the report showed the "growing reliance on one-off measures is not a viable long-term approach to NHS funding".
Its chief executive, Chris Hopson, said: "We need long-term decisions to be taken on the funding of health and social care no later than the autumn budget, and we urge the government to respond with urgency."
The British Medical Association said the report showed short-term funding was not meeting patients' needs and called for a cross-party agreement on a "long-term, sustainable funding plan for the NHS".
The Nuffield Trust health think tank said the report showed the NHS was in a "dire financial position" and in "desperate need of more money".
A Department of Health and Social Care spokeswoman said: "As this report recognises, the NHS has made significant progress towards balancing the books and returning to a financially stable position.
"To support this we recently gave it top priority in the Budget with an extra £2.8bn, on top of a planned £10bn a year increase in its budget by 2020-21."
