FINANCIAL PERFORMANCE TO MONTH 5 (AUGUST 2015)

Transcription

1 BOARD MEETING 21 OCTOBER 2015 AGENDA ITEM 4.1a FINANCIAL PERFORMANCE TO MONTH 5 (AUGUST 2015) Report of Paper prepared by Purpose of Paper Director of Finance Director of Finance The purpose of this report is to inform the Board of the financial performance of the Powys Teaching Health Board (thb) for 2015/16 Action/Decision required The Board is asked to note the financial performance of the thb. Link to Health and Care Standards This paper supports: Theme 7 : Staff and Resources Link to Health Board s Annual Plan Acronyms and abbreviations Making Every Pound Count ABHB Aneurin Bevan Health Board CEO Chief Executive Officer CHC Continuing Health Care CRL Capital Resource Limit CRT Crisis Resolution Team DGH District General Hospital DTOC Delayed Transfer of Care FNC Funded Nursing Care GMS General Medical Services HR (WOD) Human Resources (Workforce and Organisational Development) LTA Long Term Agreement MMR Measles Mumps Rubella PSPP Public Sector Payment Policy RRL Revenue Resource Limit SATH Shrewsbury and Telford Hospital NHS Trust WAST Wales Ambulance Services Trust WG Welsh Government WHSSC Welsh Health Specialist Services Committee YTD Year to Date Page 1 of 15

2 FINANCIAL PERFORMANCE TO MONTH 5 (AUGUST 2015) 1. Background The Board approved a balanced Financial Plan at its meeting held on 19 th March The thb received ministerial approval of the plan on 2 nd June As at Month 5 there is no movement to the overall agreed Financial Plan. To date the health board has been reflecting a balanced position against the year to date and forecast position. Month 5 presents essentially the same picture as month 4 and there continue to be a number of financial risks which are being actively managed by the health board in respect of Use of agency Continuing NHS Healthcare Prescribing Primary care costs associated with the management of a medical practice Performance within English NHS Trusts Delivery of savings The following paper presents the performance of the health board agents the plan approved by the board and the management of risks facing the organisation to achieve financial balance against that plan. 2. Update on Annual Financial Plan The main source of funding is received from the Welsh Government based on the annual resource allocation letter adjusted for any anticipated allocations. In summary, the Revenue Resource Limits reflects the following levels of allocations: Page 2 of 15

3 Table 1 Revenue Resource Limit Allocations Received Recurring Non Recurring Allocations Anticipated Recurring Non Recurring Total Hospital and Health Services (HCHS) Initial Allocation 205, ,187 Additional Allocations (in year) 17,145 4,826 (9) 5,298 27,260 General Medical Services (GMS) Initial Allocation 30,028 30,028 Additional Allocations (in year) Dental Initial Allocation 5,347 5,347 Additional Allocations (in year) Pharmacy Initial Allocation 4,615 4,615 Additional Allocations (in year) TOTAL 262,384 5,013 (9) 5, ,686 The non recurring allocations have been received in respect of the following areas of expenditure. Non Recurring Allocations Pay Award 542 EMRTS Funding 124 CHC April Sept ,916 ARRP 178 Clinical excellence Qtr 1 11 Carers Measure 40 I2S Repayment VERS (50) PC Development Funding 1,111 Invest to save 954 Dental (uplift/trainees) 187 Total Non Recurring Allocations 5,013 Page 3 of 15

4 The non recurring anticipated allocations are split as follows: Anticipated Allocations (Non Recurring) Primary care Funding 150 Intermediate Care Fund 800 Implementing Delivery 400 Technology Funding 160 Substance Misuse 506 Clinical Excellence 33 ERP 800 DEL Depreciation 303 AME Donated assets 193 Donated Capital Assets (130) AME Impairments 192 Impairment Indexation (696) Working together 285 CAMHS/ED Funding 14 Comm Health Councils Funding 1,916 ESR Recharge (58) Dementia (FNI) 43 Dementia (Adult MH) 82 CAMHS (New Funding) 296 CAMHS (YOTS/SecureEstate) 9 Total Anticipated Allocations 5, Summary of Performance to Month 5 (August) The thb is reporting a month end breakeven position as at Month 5, and is forecasting a breakeven position at year end. A summary of the performance against the plan is set out in Tables 2a (by Area of spend) and 2b (by Locality/Directorate) below: Table 2a Summary of Year to date position by area of spend Locality/Directorate Annual Budget Budget to date Variance to date Variance Variance (Previous Month) change in month Services provided within Powys 68,896 28, Primary Care Services 57,754 24, Continuing Healthcare/Funded Nursing Care 13,378 5,574 (411) (327) (84) Services commissioned from Welsh HBs 70,586 29,411 (32) (3) (29) Services commissioned from Non Welsh providers 48,704 20,374 (40) (28) (12) Services commissioned from private/independent sector 3,693 1,539 (3) 6 (9) Other costs 2,489 1, Hosted Organisations 3,832 1,565 (0) (0) 0 Non Allocated Contingency 4, Revenue Resource limit (272,686) (111,918) Recovery of Overheads (MH) (1,000) (417) Total 0 (0) 0 (0) 0 (Brackets within the variance column denote overspend) Page 4 of 15

5 Table 2b - Summary of Year to date position by Locality / Directorate Exec Lead -Locality/Directorate Annual Budget Budget to date Variance to date Variance Variance (Previous Month) change in month Primary and Community Care Primary & Community (932) (392) (314) (251) (62) Mid Locality 35,306 14, North Locality 77,704 32,427 (149) (27) (122) South Locality 58,959 24, Womens & Children 13,354 5,564 (89) (64) (25) Learning Disabilities 3,741 1, Primary Care Management (6) Community Dental Services 1, General Dental Services 5,628 2, Estates 1, (65) (85) 19 Facilities & Transport 1, (66) (108) 42 Primary and Community Care - Sub Total 199,744 83,251 (14) 31 (45) Nursing Directorate 3,751 1,563 (42) (36) (6) Mental Health 20,102 8,376 (52) (24) (28) Medical (38) Corporate Services 1, (13) (2) (11) Planning & Performance 32,305 13, Therapies & Health Sciences (7) 7 Workforce & Operational Development 1, (1) Public Health (2) (2) (0) Finance & IT Finance 1, (8) Information Tecnology 1, Commissioning (19) (18) (1) Unallocated Contingecies 4, Other Financial Transactions 1, (108) (153) 46 Community Health Councils 3,832 1, (0) Revenue Resource Limit (272,686) (111,918) Total (0) 0 Services provided within Powys (Brackets within the variance column denote overspend) As at Month 5 the thb is reporting an under spend on services provided within Powys of 0.464M. This mainly relates to pay, 0.342M as a result of vacancies over and above the planned savings targets. The thb continues to review the vacancies to assess the implications for achievement of the planned level of savings. A summary of the pay variance to Month 5 is shown below Page 5 of 15

6 Summary of pay Underspend (By Locality/Directorate) Summary of pay Underspend (By Locality/Directorate) Year to date variance Year to date variance Primary & Comm Care 1,101 Admin & Clerical 387 Planned Turnover Savings (797) Medical & Dental 165 Sub Total - PCC 304 Nursing & Midwifery 494 Nursing (7) Prof. Scientific & Technical 23 Mental Health (13) Addt Clinical Services (105) Medical 3 Allied Health Professionals 268 Corporate 13 Estates & Ancillary 53 Planning & Performance 138 Planned Turnover Savings (943) Therapies & HS 0 Workforce & OD 14 Total to Month Public Health (1) Finance 37 Planned Turnover Savings (146) Sub Total - HQ 38 Total to Month Use of Agency Whilst the provider arm of the health board has remained within budget for the first 5 months of the year, we have identified significant levels of expenditure ( 0.606M) with staff agencies. This compares to spend in the corresponding period in of 0.181M of which none related to Nursing. This spend is in response to the increasing difficultly to recruit to specific nursing posts. Active recruitment is taking place including exploration of overseas options. Given the significant increase in agency spend over recent months, the Health Board has commissioned an independent review on controls to gain assurance that proper process around approval and authorisation is in place. Continuing Healthcare The thb has set savings targets for Continuing Care budget holders of 0.550M for this financial year. As at Month 5 the assumption is that these savings targets will be achieved by year end. However, the thb is experiencing increased demand, above the planned levels, across all areas of continuing healthcare. Based on the current case numbers the year end forecast is an over spend of 0.977M. Primary Care Services Prescribing As at Month 5, based on data for one month only, the thb is reporting breakeven at both month and year end. There are indications that cost pressures are possible, before year end, from diabetes medications, Novel Anti Coagulants and Warfarin. The THB has therefore identified this as a risk (Section 6) General Medical Services The thb is reporting breakeven for both the year to date position and year end forecast. However, the thb has taken on the management of one GP practice as from August 1st. An initial assessment would indicate that there is a risk of 0.200M.(Section 6) Work is ongoing to review the latest practice accounts to prepare a final assessment. Page 6 of 15

7 Healthcare Services Provided by Other NHS Bodies The thb is currently making the assumption that the plan for commissioned service will be achieved with only a small deterioration to year end. However, early indications from Wye Valley Trust suggest a significant deviation to plan in the first few months of the year which is projected to year end suggest an overspend of up to 0.797M. The locality are currently taking assertive action in addressing this early indication of risk including Liaising with the Commissioning Support Unit Taking a pro-active approvals review of use of community hospital beds within WVT The data upon which the forecast assessment is being made at present cannot be fully relied upon and already we identified a change between straight line forecasts between recent months. For this purpose, we have continued with a close to break even forecast against commissioned services but have noted the risks to performance in the risk table. Non Healthcare Services Provided by Other NHS Bodies The thb is reporting breakeven at both month end and year end on all private and voluntary sector budget heads. Other Costs These are comprised of: The community equipment service which is led by the local authority. The annual budget reflects the outturn in 2014/15. Other Joint Financing which relates to Resettlement and Reablement schemes which are also led by the local authority. The annual budget reflects the recurrent outturn in 2014/15. Hosted Organisations Powys thb has agreed to continue hosting Community Health Councils and an additional WG allocation is anticipated to cover the 2015/16 financial year. The position at Month 5 and year end are breakeven. Non allocated contingency The thb is holding a non allocated contingency at 31 st August of 4.355M, of which 0.442M is uncommitted. The details of the non allocated contingency is shown below in Table 4. Page 7 of 15

8 Table 4 - Non allocated contingency Analysis of Non Allocated Contingency M General Fund Committed - Held for Specific Costs Primary Care Funding Intermediate Care Fund Technology Funding RTT Welsh Risk pool Working Together NICE CHC Retrospective Team Funding Terms & Conditions Savings (0.049) ESR Recharge (0.058) Dementia(FNI) Dementia (Adult MH)) CAMHS (New Funding) CAMHS (YOTS/Secure Estate) WG Allocations received (awaiting transfer to budget heads) TOTAL NON ALLOCATED CONTINGENCY Summary of year end Forecasts As at Month 5 there is no movement to the agreed Financial Plan and the forecast outturn remains in line with the Plan. However, the summary below shows the movement between months and indicates the variations being forecast. Page 8 of 15

9 as at Month 5 as at Month 4 change in Month 5 Updated Plan forecast Cost Pressures Services commissioned in HBs outside Powys (0.067) (0.085) Continuing care costs (0.977) (0.980) Services commissioned from private providers (0.029) (0.029) Joint Financing Offset by Services provided within Powys Primary care services Funded Nursing Care Forecast Outturn The overall year end forecast has not changed between Month 4 and Month 5, but it can be seen from the above table that cost pressures are being forecast in respect of continuing healthcare and services commissioned from providers outside of Powys. However, current year end forecasts for services provided within Powys mitigate these cost pressures A number of risks to the achievement of this forecast position have been identified and reported to WG (see Risks and Opportunities- Section 6 below). Details of the year end forecasts are shown below by both Locality/Directorate and Area of Spend. Table 5a Year End Forecasts (by Area of Spend) Locality/Directorate Annual Budget Variance to date Year End Forecast Year End Forecast (Prev Month) Year End Forecast change in month Services provided within Powys 68, ,074 1,065 8 Primary Care Services 57, Continuing Healthcare/Funded Nursing Care 13,378 (411) (977) (980) 3 Services commissioned from Welsh HBs 70,586 (32) 9 (7) 16 Services commissioned from Non Welsh providers 48,704 (40) (76) (78) 2 Services commissioned from private/independent sector 3,693 (3) (29) 0 (29) Other costs 2, Hosted Organisations 3,832 (0) Non Allocated Contingency 4, Revenue Resource limit (272,686) Recovery of Overheads (MH) (1,000) Total (0) 1 Page 9 of 15

10 Table 5b Year End Forecasts (by Locality/Directorate) Exec Lead -Locality/Directorate Annual Budget Variance to date Year End Forecast Year End Forecast (Prev Month) Year End Forecast change in month Primary and Community Care Primary & Community (932) (314) (769) (756) (12) Mid Locality 35, (9) North Locality 77,704 (149) (249) (252) 3 South Locality 58, Womens & Children 13,354 (89) (125) (220) 96 Learning Disabilities 3, (24) Primary Care Management Community Dental Services 1, General Dental Services 5, Estates 1,912 (65) 0 39 (39) Facilities & Transport 1,344 (66) (159) 14 (173) Primary and Community Care - Sub Total 199,744 (14) (78) Nursing Directorate 3,751 (42) (26) (35) 9 Mental Health 20,102 (52) (110) (127) 17 Medical Corporate Services 1,838 (13) (4) (43) 39 Planning & Performance 32, Therapies & Health Sciences (17) 17 Workforce & Operational Development 1, (2) Public Health 77 (2) (1) (1) (0) Finance & IT Finance 1, (18) Information Tecnology 1, Commissioning 527 (19) 0 (8) 8 Unallocated Contingecies 4, Other Financial Transactions 1,283 (108) (350) (350) 0 Community Health Councils 3, Revenue Resource Limit (272,686) Total (0) 1 5. Savings Plans The Board will recall that savings targets totalling 6.688M have been built into the 2015/16 financial plan. Table 6 below summarises the annual savings plan and performance to date. Table 6 - Performance against Savings Plans Area of Spend 15/16 Annual Plan 15/16 Annual Forecast 15/16 Annual Forecast Variance Performance Variance Ms Ms Ms Ms Ms Commissioning Growth Avoidance (1.722) (1.192) (0.530) (0.627) (0.066) Commissioned Services - Non-Welsh Providers (1.076) (0.798) (0.278) (0.334) (0.035) Commissioned Services (0.277) (0.277) (0.115) Continuing Care and Funded Nursing Care (0.550) (0.693) (0.087) (0.142) Income (0.010) (0.010) (0.001) Medicine Management (0.580) (0.580) (0.242) Non Pay (0.250) (0.250) (0.098) (0.006) Pay & Employee Benefit Expenses (2.223) (2.879) (1.069) Total (6.688) (6.679) (0.009) (2.573) (0.080) As shown above (Table 6) the thb has reported the assumption that Commissioning Growth Avoidance savings plans are not being achieved. However, savings arising from provider pay and Page 10 of 15

11 continuing health care have mitigated this non achievement and therefore in total the thb has assumed full achievement at year end. Due to the profiling of savings plans there is a reported small underachievement at Month 5. The thb will continue to review 2015/16 performance against savings targets in order to implement the measures required to maximise achievement and/or identifying further savings for future years. However, a risk assessment has been completed and the outcome is reflected in the risk table (Section 6). 6. Risks and Opportunities Table 7 - Overview of Key Risks / Opportunities Affecting Forecast Outturn Worst Case Best Case Most likely Outurn Savings achievement risk (1,736) Services commissioned from external providers (1,877) WHSSC - possible costs above Plan (395) Retrospective CHC Phase 3 cases (300) Assumed WG funding ICF, Technology and Implementing Delivery (335) Assumed Funding for Working Together (285) Prescribing (500) Shropshire CCG (450) GP Managed Practice (200) Estates - anticipated capital funding (200) Pharmacy 300 General Dental - Reduction in contracts (15-16) 200 Possible use of general reserves 440 TOTAL (6,278) 940 Worst case Savings Achievement - There are high risk assumptions within the thb s savings programmes, particularly around External provider Growth avoidance, Continuing Health Care, pay savings and prescribing. The current assessment of worst case indicates a possible underachievement of 1.786M. Services commissioned externally - The risk relates to Page 11 of 15

12 Risks - Services commissioned from external providers WVT - overperformance based on M4 data (797) BC - Womens & Childrens baseline (428) Cwm Taf - rebasing of contract (105) SATH - possible overperformance based on M3 data (547) Total (1,877) WHSSC - The WHSSC IMTP has been agreed individually by Powys thb and collectively by the WHSSC joint Committee. Risks of up 0.147M reflect the position as reported by WHSSC at Month 4. In addition there is a risk of 0.248M arising from proposals to change both the apportionment of EASC funding across HBs in Wales and increase the contribution for WAST funding overall across Wales. Powys CHC Retrospective team are currently assessing 42 possible claims within Phase 3. Based on historic data of claims agreed and weekly rates claimed the thb has assessed a possible risk of 0.300M. The thb has assumed a range of income from Welsh Government in respect of the ICF, technology fund and implementing delivery to be allocated to the health board along with associated spend. The risk assessment completed on not receiving additional income as assumed is 0.335M. The health board has submitted a joint expression of interest to Welsh Government for further integration. The assumed share for health board is 0.425M over the first 2 years of the plan. There is a risk to the plan s assumptions if this is not approved. In this is assessed as 0.285M. The prescribing data for April indicates potential cost pressures relating to diabetes medications, Novel Anti Coagulants and Warfarin. The initial assessment is a risk of 0.500M. The thb is disputing an invoice received in 2014/15 from an English CCG relating to healthcare costs for a high cost mental health patient. If the thb are responsible for the payment in 2014/15 there could be a risk in 2015/16 of 0.450M. The thb is currently in the process of putting arrangements in place to manage a GP practice. Based on the current estimated costs there could be a risk up to 0.200M. The thb is anticipating additional capital allocations which would cover costs that will need to be borne within the Estates revenue account. If capital allocation is not received there could be a risk of approximately 0.200M Best case Activity within the new Pharmacy contract is currently showing underactivity on the take up of DMURs and MUR s. This could provide an opportunity of up to 0.300M. Dental A proposed reduction in contract activity due to previous years underperformance could generate a net under spend of up to 0.200M in this financial year. However, it is also proposed to contract for additional services on a recurrent basis in the South West area of the HB. Page 12 of 15

13 There could be general reserves available at year end. The current uncommitted reserves are 0.440M. Other Accountancy Gains An initial assessment of sums held on the Balance Sheet to cover previous year commitments indicates the likelihood of the thb being able to access some accountancy gains. 7. Capital The capital allocation is based on the Capital Resource Limit received on 5th August 2015 and is sown below in Table 7. Table 7 Summary of capital allocations Scheme Capital Resource Limit M Annual Planned Expenditure M Expenditure to 31st August 2015 M Discretionary Capital Proposed Disposals Invest to Save Capital Funding Pharmacy - Bedside Secure Storage Donated assets TOTAL APPROVED FUNDING Discretionary Capital 0.954M The discretionary capital limit for the year is set at 0.954M. From this allocation there are a number of Estates and Statutory Compliance programmes and Equipment (Medical and IT) purchases to be undertaken, which are currently being progressed, and these are planned to be undertaken throughout the financial year. An amount of 0.311M has been spent to date. Invest to Save Capital Funding 0.169M The thb has been successfully awarded the following two invest to save schemes, these are currently undergoing the formal procurement process and details of the schemes are as follows: LED Lighting M This project is to install LED Street lights and replace high watt flood lights at our 9 Hospital Sites throughout Powys Teaching Health Board. The aim of this project is to lower our electricity consumption and maintenance costs by replacing all high wattage inefficient lamps with 80% efficient LED Lamps and LED Flood Lights. As well as monetary savings this scheme will improve our Carbon Footprint by reducing our Carbon Emissions by a projected total of 182 Tonnes per annum. In addition to saving energy and reducing CO2 emissions, LED Lighting is low maintenance requiring less attention. LED are fit and forget with a lifespan of up to 15 years. The only requirement is electrical testing every 2 years. Page 13 of 15

14 Voltage Optimisation M This project is to install Voltage Optimisation at our 9 Hospital Sites throughout Powys Teaching Health Board. The aim of this project is to lower our electricity consumption by optimising the voltage which regulates and optimises the supply to all our hospitals. As well as monetary savings this scheme will improve our Carbon Footprint by reducing our Carbon Emissions by a projected total of 400 Tonnes per annum. In addition to saving energy and reducing CO2 emissions, voltage optimisation offers countless other benefits, including no maintenance, protection against voltage spikes, surges and significant reduction of harmonics, independent three phase control to provide voltage phase balancing and an intelligent interface to track product and site performance in real time. Proposed Disposals 0.430M The thb has plans to dispose of two properties within the 2015/16 financial year which are both surplus to requirements. These are Mansion House a previous administrative office building adjacent to the Bronllys site, and The Larches a base for the local Community Mental Health Team in the Ystradgynlais locality whose future base will be within Ystradgynlais Hospital. The Net Book Value proceeds from these sales will be required to be re-invested within the thb capital programme and therefore the discretionary capital programme spend has been increased to reflect this. Donated Assets 0.130M It is estimated that there will be some capital equipment donations from the thb Charity and local League of Friends during the year. This figure will be updated as and when donations are confirmed but a figure of 0.130M is included for indicative purposes at this time. It is acknowledged that for the value of all donated assets a corresponding Revenue Resource limit reduction will be anticipated to minimise any gain from these donations within the thb s financial position in line with Welsh Government guidance. 8. Monthly Cash Flow Forecast The thb is forecasting a year end cash surplus of 0.178M which would mean it would remain within its cash allocation within the year. 9. Public Sector Payment Compliance Cumulative Performance at 31 st August days 10 days Value of invoices 91.5% 85.2% Number of invoices 89.6% 71.7% The thb has not achieved the target of 95% of invoices paid during the first five months mainly due to the significant implementation of a purchase order process for continuing health care invoices that was previously subject to a concentrated manual invoice approval process within the thb and a drive within the Health Board to demonstrate improvement on its invoice on hold due to the non receipt of goods by oracle requisitioners which has impacted on previous months performance. Although a number of invoices have exceeded the 30 day target in the first few months of implementation for both of these initiatives, the new processes will ensure the relevant suppliers receive more timely payments in future months. The thb has seen an improvement on the in-month performance for August. A further initiative due to be implemented over the coming months is a no PO-no pay policy. To provide perspective non achievement of the target for each month would relate to just over 100 invoices. The thb are continuing to work with NWSSP colleagues to enhance invoice flow and targeting problem areas as they arise. Page 14 of 15

15 10. Conclusions In summary this paper identifies that: Year to date Financial performance o The Health Board has identified a breakeven position at Month 5 Year End Financial Performance o The Health Board is forecasting achievement of the financial plan but is subject to a number of significant risks to delivery. Cash Limit o The thb is on track against its cash limit Capital Resource Limit o The thb to deliver against its capital resource limit Public Sector Payment Compliance o The thb has not delivered the PSPP target but has improvement plans in place to deliver an improved performance by year end Report prepared by: Les Bence Head of Financial Planning & Management Accountancy Presented By: Rebecca Richards Director of Finance Page 15 of 15