SOUTHPORT & ORMSKIRK HOSPITAL NHS TRUST

Transcription

1 SOUTHPORT & ORMSKIRK HOSPITAL NHS TRUST FINANCE COMMITTEE MEETING 27 th NOVEMBER 2006 DIRECTOR OF FINANCE REPORT FOR THE PERIOD ENDING 31 st OCTOBER FINANCIAL POSITION 1.1 Overview This report is based on the operational budget of 5m in year deficit. The financial performance at the end of October has deteriorated by 243,000 in month and is now 1.2m cumulatively overspent in year. Despite this deterioration the Trust is still on target to achieve the revised year end forecast deficit of 2.5m that was reported to the November Board. October s activity performance is not yet available so there is nothing further to report in respect of SLA performance. Appendix 1A contains the high level Income & Expenditure Account. 1.2 Income Performance Oper'nal CURRENT MONTH YEAR TO DATE Budget Budget Actual Variance Budget Actual Variance 000 INCOME ,988PCT SLA 8,842 8,808 (34) 61,838 61, ,175Specialised Services income (2) 4,185 4,179 (6) 2,820Other income for patient care (55) 1,696 1, ,645Non patient care income ,748 5,720 (28) (2,060)Debt repayment (171) (171) 0 (1,201) (1,201) 0 5,391Uncovered Risk (606) 606 2,954 0 (2,954) (3)Rebasing Reserve (2) 2 (2) 2 128,956Sub-Total Income 9,668 10, ,218 72,463 (2,755) 150Interest receivable ,106Total Income 9,680 10, ,305 72,800 (2,505) A more detailed breakdown of income is provided in Appendix 1B. The uncovered risk budget has been reduced by 1,759,000. This reflects the budget realignment process that the Turnaround Director has recently implemented. A rebasing reserve has been set to hold the non recurrent savings that have been identified so far this year. The aim of this is twofold. Firstly, to assist the Trust in delivering the lowest possible overspend at the year end. Secondly, to assist the Trust in setting the budget. The offset of these adjustments are identified within the pay, non pay and income rebasing lines. These changes assist the Trust in proactively managing in year underspending budgets without impacting on the overall in year Income & Expenditure position. 1

2 PCT SLA income for seven months of the year is 62M. A summary of the main PCT lines is provided below:- Southport & Formby PCT- the value is in line with the baseline plan. I reported previously to members that an invoice had been sent to the PCT in respect of Quarter 1 overperformance ( 281,000). Discussions are ongoing with the PCT in respect of agreeing the activity and, at this stage, the extra income has not been accrued. Quarter 2 performance is currently being calculated in line with the freeze date of December 15th. West Lancashire PCT- the value is in line with the baseline plan. I reported previously to members that an invoice had been sent to the PCT in respect of Quarter 1 overperformance ( 306,000). The PCT has a new management team in place and positive discussions have taken place in respect of this invoice. Until final agreement is reached the income will not be accrued. South Sefton PCT- the value of the SLA is above plan as mentioned in October s Finance Committee. I reported previously to members that an invoice had been sent to the PCT in respect of Quarter 1 overperformance ( 38,000) and this has been brought into this months financial position. St Helens PCT and Knowsley PCT the SLA s have been signed and the value is in line with the baseline plan. Negligible variance at Quarter 1. Liverpool PCT s-the SLA has now been signed. The SLA value is 64,000 below the budget due to the treatment of critical care funding within the PbR baselining exercise. The risk table has been adjusted to reflect this. Quarter 1 performance was slightly under budget but preliminary Quarter 2 figures have improved so no adjustments have been made. Other PCT s-the adverse variance reflects the SLA shortfall notified to the committee last month. Other income from patient care has underachieved by 55,000 in month. There is a shortfall of 46,000 this month on RTA income together with private patient underperformance (this is reported later within the divisional reports). 1.3 SLA Performance Activity performance for October is not yet available so the performance to the end of September is restated overleaf:- 2

3 PbR Performance to 30th September 2006 Cumulative Activity Cumulative Value POD Budget Actual Variance Budget Actual Variance Spells Spells Spells Elective Day case 3,340 3, ,434 2, Elective Inpatients 3,258 2,903 (355) 4,884 4,281 (603) Total Elective 6,598 6,371 (228) 7,319 6,816 (503) Non Elective 18,955 18,569 (386) 20,507 20, Outpatients FA 32,343 34,036 1,692 4,890 5, Outpatients FUP 82,860 90,772 7,912 6,166 6, Outpatient Procedures 1,310 3,457 2, Total Outpatients 116, ,264 11,751 11,410 12,591 1,181 A&E 43,685 43,560 (125) 3,000 3, TOTAL 185, ,764 11,012 42,235 43,258 1,022 October s figures will be available for the next committee, together with the final Quarter 2 figures. This will enable the Trust to forecast a more accurate year end income position. 1.4 Expenditure Performance Expenditure reductions continue to provide the main reason for the improved financial position. The negative rebasing reserves in the table below are offset against the uncovered risk line in the income section. Individual pay, non pay and depreciation can be interpreted in exactly the same way as in previous months. Oper'nal CURRENT MONTH YEAR TO DATE Budget Budget Actual Variance Budget Actual Variance EXPENDITURE 89,803 Pay 7,505 7, ,377 50,852 1,525 (2,040) Pay Rebasing Reserve (1,359) 0 (1,359) (1,359) 0 (1,359) 29,633 Non Pay 2,598 2, ,326 17, (103) Non Pay Rebasing Res (69) 0 (69) (69) 0 (69) 6,201 Depreciation (17) 3,617 3,736 (119) 419 Recovery Plan TOTAL 123,913 EXPENDITURE 9,262 10,274 (1,012) 71,962 71, Pay Pay budgets are underspent in month by 298,000, continuing the trend from September. Details of variances by staff group are identified at Appendix 1C and a subjective summary is provided below. Medical staff costs are under spent this month by 116,000. Medical agency costs are once again providing a favourable variance along with consultant vacancies. The in month favourable variance on nursing has reduced substantially this month to 21,000. Nurse staff levels record 52 WTE vacancies in October. This is a reduction of 15 WTE from September and reflects the reduction in the nurse budget of 3

4 308,000 that has now gone to the recovery plan for the ward closure. Now that nursing posts have been allocated to the recovery plan the in month variance will remain much lower than the first six months figures. Professionals Allied to Medicine are also under-spent, driven by vacancies. Professional & technical staff are underspent by 73,000 in month. In part a one off non recurring benefit has been incurred following the implementation of flexible working practices to meet EWTD requirements. Further Agenda for Change resources have been released following the conclusion of rota changes within pathology. Admin & clerical is underspent in month by 18,000. Once again, this is due to the vacancies that are being held across the Trust Non Pay This area is 65,000 under spent in month and details are provided at Appendix 1C. Supplies & services clinical are under spent by 64,000 in October and the majority of this relates to general medical and surgical equipment. Pathology is the main reason for this underspend as a much more robust and timely stocktake was performed generating lower expenditure for the month. Supplies & Services general is underspent due to catering provisions. Within premises and fixed plant a favourable variance has been delivered this month, mainly due to reductions in energy costs. The miscellaneous line is overspent in month and this is mainly due to increased legal charges that are now subject to a cost per case arrangement. Depreciation is overspent in month 17,000 in line with previous months performance. 1.5 Divisional Performance 1.6 Risks The revised management structure came into effect on 1 st October Therefore, this element of the report has changed to reflect the new group arrangements. Appendix 2A provides an analysis of each divisions performance in both income and expenditure. Following on from Appendix 2A are appendices from each of the groups outlining performance to date and any associated risks. Directors will present their respective divisions (refer to Appendix 2B onwards). The reported I&E position at October excludes the risks identified in the table below. If any of these risks materialise then these will further affect the monthly I&E position although they could be offset by the current over performance on services covered by PbR. The following risks have been revised since September:- 4

5 1. The EEG over performance against contract is included in the I&E position. 2. With the continued reduction in the price of gas, and the milder weather, the risk has been further reduced to 25k. 3. Electricity has been reduced to 10k for similar reasons to gas above. 4. PCT SLA income has been reduced to 0 because the Liverpool PCT SLA has now been signed and the income line reflects the lower contract value. 5. Following guidance from NHS North West the low risk concerning the Deficit Control Total Interest charge ( 200k) has been removed. 6. We have now been informed by NHS North West that our postgraduate/sift training allocation will be cut by 75,000 to assist with a national shortfall in central budgets. I have allocated a low risk rating to this until all of the training funding allocation has been reconciled to budget. Description of Significant Risks (H)igh (M)edium or (L)ow Total Level of Risk 000 s Pathology send away tests H 45 Additional elective activity required to meet targets increase in non pay H 20 Gas price rise predictions H 25 EEG/EMG referrals to Preston H 0 Electricity price rise predictions H 10 PCT SLA Income H 0 Theatre sessions not reduced wef agency M 50 Increase in demand for Cat A training M 20 Clinical Practice Placement Facilitator funding the DHA L 0 Deficit Control Total Interest Charge L 0 Ad hoc maintenance L 20 West Lancashire PCT Income loss re non-elective threshold L 0 Agenda for Change costs above estimates L 100 Recovery Plan at 5.2m will not deliver in year L 0 Central budgets-postgrad/sift L 75 The above risks need to be taken into consideration against both the current and forecast financial performance. 2. AGENDA FOR CHANGE Appendix 3 reflects the progress to date in assimilating staff onto the new Agenda for Change pay structure. Although not all posts have been banded at the budgeted band, it is still anticipated that there are sufficient funds in the reserve to cover the final 9.31% to be assimilated. 3. RECOVERY PLAN The Trust has now overachieved the in year target of 5.2m. The in year savings now total 5.6m and include the 380,000 nurse vacancy factor as well as the bulk of the recent redundancies. The full year effect of all of these schemes is 7.6m. Appendices 4A and 4B contain the details. 5

6 4. BALANCE SHEET This report brings together all aspects of the balance sheet fixed assets, stock, debtors, cash, creditors, provisions and reserves into one detailed monthly overview report. A full balance sheet is attached as appendix 5A. 4.1 Fixed assets 4.2 Stock The Trust s asset base has decreased in month by 296k. As very little capital is currently being spent, depreciation is far out-weighing any additions and so therefore we are seeing a reducing asset base. As highlighted last month, transfers of part of the Southport General Infirmary were actioned as part of the national Spring Supply exercise. The transfer to Merseycare was valued at 1,366k and the transfer to Sefton PCT at 50k. A full stock analysis is shown in appendix 5B. This shows a slight stock reduction of 6k with drug stock reducing and medical & surgical stock increasing. Full ward stock results will be available next week and these will be built into November s accounts. Stock reductions continue to be some way short of the year end final closing target of 1.5m and further work is required in this area. 4.3 Debtors 4.4 Cash Total debtors (including road traffic accident claims > 1 year) have increased again from 6.7m in September up to 7.3m in October. The increase has been on NHS debt spinal Mersey contract payments and invoicing in advance for PCTs using Shared Business Services. The total debtor figure of 7.3m is made up of outstanding invoices, road traffic accident claims, prepayments (mainly lease and maintenance payments), recharges and accruals. Appendix 5C details the ageing profile of outstanding invoices. From the Spring Supply exercise, capital expenditure forecasts have been firmed up and profiled into the cashflow forecast. It should be noted that the forecast assumes that no loan is required and relies on there being significant capital creditors at year end. Appendix 5D contains a detailed cashflow forecast. 6

7 4.5 Creditors Creditors have increased from 11.3m in September up to 11.8m in October. This can be explained by the increase in the dividend provision. Every 6 months the Trust pay over a dividend (also known as Trust Debt Remuneration) to the Department of Health and therefore each month an accrual goes in for 1/6th of the payment due. 4.6 Provisions The Trust has 3 main provisions for future liabilities early retirement ( 964k), employer/public liability ( 64k) and agenda for change ( 463k). The majority of the movement this month has been on the agenda for change provision with almost 300k being utilised in month. 4.7 Reserves No significant movement in reserves this month. The I&E reserve continues to worsen due to the in month actual deficit of 429k. 4.8 Better Payment Practice Code The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoices by the due date or within 30 days of receipt of goods or a valid invoice, whichever is later. At the end of October 2006, 72% of non NHS invoices and 77% of NHS invoices were paid within the Trust terms. This is a worse performance than last month. The Trust has already declared that it will not meet this target at year end. 5. CAPITAL Appendix 6A contains the details of the 3 year programme which has been discussed under agenda item 4. It should be noted that only 1.8m has been spent up to the end of October. A number of these allocations have only recently been notified and schemes will need to progress quickly if the capital allocation is to be expended in this financial year. The Trust only has a flexibility to underspend the allocation up to 80,000 otherwise it will breach its CRL duty. I am working closely with the Facilities Director to ensure this target is met. Progress on each scheme is identified at Appendix 6B with details of progress to date. 6. FINANCIAL OUTLOOK The Trust has met with NHS North West and we are now working to a formal in-year budget deficit of 5m. The recovery plan has now been delivered and the main focus is the achievement of savings. These are required due to a combination of the carried forward recurrent deficit and the Gershon requirement in

8 Now that the recovery plan has been achieved and the overspend has been restricted to 1.2m at the end of October 2006 I am revising the forecast year end position to 2.5m. Appendix 7 contains the details of this forecast. All divisions have worked hard since April to identify savings for the recovery plan and to release budgets on a non recurring basis to assist the Trust in achieving the lowest possible year end deficit. It is vital that these expenditure reductions are continued into whilst the overarching recovery plan is identified and delivered in full. The national PbR tariff has been circulated to Trusts to road test. However, it seems likely that this draft tariff will be the final version and we are currently updating our financial plans to reflect this. The timeliness of the tariff notification is a significant improvement on last year and will enable the Trust to set the income side of next years budget. Work has also commenced on next years expenditure budget and a draft first cut budget will be available shortly. Colin Throp Director of Finance 8