SOUTHPORT & ORMSKIRK HOSPITAL NHS Trust

Transcription

1 SOUTHPORT & ORMSKIRK HOSPITAL NHS Trust FINANCE COMMITTEE MEETING 30 TH JANUARY 2006 DIRECTOR OF FINANCE REPORT FOR THE PERIOD ENDING 31st DECEMBER FINANCIAL POSITION 1.1 Overview The Trust s deficit control set by the Cheshire & Merseyside SHA remains at 14.96m. There are still a number of risks associated with achieving this target with the main one now being the anticipated profit on disposal of the land at Ormskirk hospital. If the sale goes ahead in this financial year as planned then the Trust will hit its control total. Another risk is in respect of Agenda for Change. As staff are assimilated and paid the reserve is being utilised and it is difficult at this stage to give an assurance that the reserve set will be adequate. At the end of December the cumulative deficit is 12m, of which 4m relates to 2005/06. Once again, the in month variances on pay, non pay and income are in balance and the position has only worsened due to the monthly affect of the deficit control total. 1.2 Income Oper'nal CURRENT MONTH YEAR TO DATE Budget Budget Actual Variance Budget Actual Variance INCOME 100,477PCT LDP 8,401 8, ,358 75,071 (287) 6,897Specialised Services income ,173 5, ,032Other income for patient care ,264 2,228 (36) 9,621Non patient care income 1,051 1, ,311 7, ,561Debt Repayment (880) (880) 0 (7,921) (7,921) 0 15,088Uncovered risk 1,066 (1,066) 11,275 (11,275) 125,554TOTAL INCOME 10,403 9,365 (1,038) 93,460 82,019 (11,441) A more detailed breakdown of income is provided in Appendix 1A. PCT contract income is balanced in month and the cumulative shortfall is due to the loss of arbitration highlighted to the committee previously. Activity performance is broadly in line although there are number of issues within non-elective performance that may have an impact on SLA payments. These issues are currently being discussed with the PCT s involved. Month 9 activity is currently being finalised to HRG level and I will provide more detail at the February committee. Other income for patient care has increased by 19,000 due to an increase in RTA income. This source of income does fluctuate on a monthly basis with this compensating in part for the decrease in income over the previous two months and it is still hoped that income will achieve the predicted level by the end of the financial year. Non Patient care income has improved across a number of areas including catering.

2 Uncovered risk of m represents the shortfall in income this year and equates to the deficit control total of 15m. 1.3 Expenditure Oper'nal CURRENT MONTH YEAR TO DATE Budget Budget Actual Variance Budget Actual Variance EXPENDITURE 88,565Pay 7,444 7, ,696 65, ,192Non Pay 2,352 2,490 (138) 19,741 20,473 (732) 5,326Depreciation ,995 3,994 1 (455)Recovery Plan (559) (559) 120,755TOTAL EXPENDITURE 10,275 10, ,873 89,478 (605) Pay Details of variances by staff group are identified at Appendix 1B. Overall, pay is under spent by 209,000 this month. All staff groups are under spent in month except professional and technical. Medical staff is 111,000 underspent in month within Specialist Services (mainly vacancies) and Planned Services (vacancies). Medical staff is cumulatively 281,000 under spent against a budget of 26m. Professional and technical staff is 11,000 overspent in month across all cost centres. All other groups are under spent in month due to vacancies Non Pay Details are provided at Appendix 1B. Supplies & services clinical shows an in month adverse variance of 107,000 which is medical and surgical supplies and prosthesis within theatres, A&E and the Neonatal unit. The budget is cumulatively overspent by 186,000 which represents 2% of the budget. The Trust has overperformed on joints within orthopaedics and the prostheses/med and surg cost of this overperformance is approximately 200,000 to December. There is no expenditure budget to cover this. Supplies & services general shows an in month deficit of 9,000 on linen and cleaning supplies in line with previous months. Establishment expenses show an in month deficit of 13,000 on travel expenses and taxis. Premises and fixed plant expenses show an in month deficit of 20,000 on estates day to day expenditure.

3 Miscellaneous shows an in month favourable variance of 12,000 which is the reduction in training expenditure. Services from other NHS bodies shows a deficit of 5, Clinical Service Group Performance Appendix 2 provides an analysis of each CSG s performance in both income and expenditure. In Month 9 the Planned Services CSG in month deficit reduced to 33,000 from 141,000 in month 8. Income continues to under achieve mainly due to reduced private patient income. It is thought that this type of work is reducing alongside reduced waiting times. Non Pay is 48,000 over spent, mainly due to prosthetics and medical and surgical expenditure for orthopaedic work above planned activity. Specialist & Emergency Services Group has a 61,000 benefit in month; the benefit is on medical staff vacancies and nursing pay due to vacancies being held for the future ward closure. Non pay continues to overspend by 45,000 in month due to an increase in drug expenditure 21,000 and medical and surgical supplies 16,000 along with the previously reported additional activity for EEG/EMG with Lancashire Teaching Hospital 4,000. None of the other Groups have any material movements. 2. AGENDA FOR CHANGE Details of assimilation onto the new pay scales are at Appendix 2B % of staff have been assimilated at the end of December The Agenda for Change team are now going to provide estimated bandings for the remaining staff. This will enable a costing exercise to be calculated and should be available for the next Finance Committee. 3. RECOVERY PLAN Details of performance against the recovery plan are identified in Appendix 3. Of the 2.3 million target set at the beginning of the year million has been actioned with a further 0.08 million proposed. Whilst the full year effect is greater than the target ( 2.5 million) there is slippage on some of the schemes, particularly in respect of further ward closures, which has now been removed from the further proposals, plans are in place to substitute other savings to compensate for the shortfall. 4. CASH MANAGEMENT A detailed cashflow analysis is provided in Appendix 4.

4 A request for 1.55m support has been sent to the SHA in December reflecting cash risk issues identified by the Turnaround team. There has been no response to this request as yet. There is still a risk that the Ormskirk land sales (phase 2) may not complete by 1 st March 2006 as predicted. The risk in cash terms is 4.4 million and this has been flagged to the SHA in the worst case cashflow forecast and in the spring supply commentary. Until the land sales and cash support identified above are completed, cash resources are not confirmed and this is reflected in payments to suppliers being delayed. This is shown in the better payments practice code figures below. Better Payments Practice Code The code stipulates that 95% of invoices should be paid within 30 days. At the end of December 2005, 91.88% of our invoices were paid within the timescale. 5. CAPITAL The capital programme for 2005/06 is identified in Appendix 5. As reported last month it relies heavily on a number of key land sales to provide the funds and I can update the committee as follows:- ODGH land sales (now circa 5million): Phase 1 land sales :- All Phase 1 land sales have been completed except the land on plot 3. The purchaser has now been served with a completion notice to expedite the sale. Phase 2 land sales remains on schedule to complete within this financial year (March 2006). An exchange date has been set for 3 February to allow adequate time for planning and legal issues to be resolved. RISK-LOW SGI land sales ( 3.5 million): As notified last month the sale will not take place in 2005/06. Further discussions are taking place with the PCT and future service reconfiguration as a result of the McKinsey review will inform discussions. RISK-HIGH Following revised land sales projections and cancellation of some of the schemes within the capital programme we have requested capital brokerage of 1.422m from the CMSHA. This has now been approved. I will provide a revised budget within the capital programme for the February committee. 6. MANAGEMENT COSTS The Trust target for management costs is 4% of turnover Year % 2002/ / / /

5 The forecast management cost percentage for this financial year is based on the assumption that the Trust does not receive the 15 million current budget shortfall in income. If the 15 million is received, the forecast percentage would be 3.64, which is an increase of 0.04% on previous estimates, due to 21% of staff receiving their new pay rates under Agenda for Change. 7. FINANCIAL OUTLOOK The Trust s planned deficit is 14,960,000. In order to deliver this target the Trust must contain expenditure within budgets for the last quarter of the year and deliver the recovery plan. So far this year expenditure has been contained within budgets and the forecast is relatively stable. In addition, income budgets have not been a problem except for the 258,000 loss of arbitration from 04/05 previously mentioned. However, the Recovery Plan is now 455,000 short and it is unlikely that all elements of the plan will be delivered this year. On the positive side there should be a profit on disposal of the land at the Ormskirk site (circa 1m) as it now seems likely the sale will come to fruition in this financial year. Now that the SGI site will not be sold within 2005/06 we are in discussions with both the District Valuer and our external auditors concerning how this should be treated within our accounts. This is likely to lead to a further financial pressure from capital charges that are unbudgeted but the profit on disposal at Ormskirk along with other measures will allow the control total to be achieved. I am revising the end of year forecast from 14,950,000 to 14,600,000 and this has been conveyed to the Cheshire & Merseyside SHA to assist in the achievement of their SHA wide control total. The forecast is now based on nine months actual data and a more robust understanding of other financial issues the Trust is facing and I am confident that it is achievable. Mr C. E. Throp, Director of Finance 24th January 2006