The Royal Wolverhampton NHS Trust

Transcription

1 The Royal Wolverhampton NHS Trust Finance and Performance Committee Report Meeting Date: Wednesday 21st May 2017 Title: Executive Summary: Finance and Performance Committee Supplementary Finance report To update the Finance and Performance Committee on the Month 2 financial position. Action Requested: Report of: Author: Contact Details: The Committee is requested to note this report. Kevin Stringer, Chief Financial Officer Helen Troalen Deputy Chief Financial Officer helen.troalen@nhs.net Resource Implications: Public or Private: (with reasons if private) References: (e.g. from/to other committees) N/A Appendices/ References/ Background Reading NHS Constitution: (How it impacts on any decisionmaking) Background Details In determining this matter, the Committee should have regard to the Core principles contained in the Constitution of: Equality of treatment and access to services High standards of excellence and professionalism Service user preferences Cross community working Best Value Accountability through local influence and scrutiny

2 Executive Summary The Trust plan is to deliver a surplus of 11.6m, in line with the control total target set by NHSI. This includes 10.0m of Sustainability and Transformation Funding (STF) income. The Trust is held to account by NHS Improvement to deliver this planned surplus. The phased delivery of the surplus in the NHSI plan is different to the Trust s internal plan which is in part due to the timing of when each plan was finalised and partly due to the internal plan being more ambitious in terms of the phasing of CIP delivery. The below table shows the year to date variance against the NHSI plan and the Trust s internal plan: Planned year to date surplus/(deficit) 000 Actual year to date surplus/(deficit) 000 '000 NHSI plan (2,455) (2,397) 58 Internal plan (790) (2,397) (1,607) 1.3 The key issues are: A lower than planned level of elective activity, predominately in Division 1 which has led to income being 1.4m below plan. More work is being undertaken to understand whether this is a phasing issue, meaning the activity will catch up as the year goes on, or whether the activity plan for the whole year is too high. The current view is that the holiday periods in April and May were not sufficiently factored into the plan and the activity will catch up as the year goes on. The CIP is significantly behind plan with only 23% of the YTD plan achieved. The level of delivery needs to be materially improved and the unidentified gap must be eliminated by identifying additional schemes. Page 2

3 2 Overview 2.1 The following chart shows the NHSI plan and the Trust s internal plan for the year as well as the actual surplus or deficit achievement in the month. 2.2 There are elements of the financial plan that are key to the achievement of the planned surplus. STF m of income will be received if the Trust achieves all of its financial and performance targets. The criteria are achievement of the NHSI financial plan each quarter and achieving the agreed performance trajectory of the A&E 4 hour target. The STF achievement is split against finance and performance elements, with finance being 70%, and the performance element, 30%, being entirely reliant on A&E performance. The Trust is currently achieving all of its STF, achieving its financial performance against the NHSI plan and achieving the agreed A&E performance trajectory. CIP at month 2, the Trust has achieved 293k of CIP savings, compared to a plan of 1.3m which is an achievement of 23% of the year to date target. The CIP requirement for the year is 26.9m. The Financial Recovery Board received a report on 14 th June to set out that 9.7m of potential CIP opportunity has been identified and that the PMO is forecasting delivery of 6.8m of that opportunity. At this stage, 1.9m of that amount has been removed from budgets, which is an overall achievement of 7% of the annual target. The Trust has profiled its CIP internally to achieve 7% in Q1, 22% in Q2, 33% in Q3 and 38% in Q4. This requires achievement of CIP to be significantly increased from Q2 onwards. Agency the Trust is also monitored on agency spend and has been given an agency cap for the year of 10.21m. The Trust has applied for this to be reviewed and has been notified of an increase of 719k, which will be actioned in Month 3. To date the Trust has incurred agency costs of 2.32m. The average monthly cost in 16/17 was 1.33m and in month 2 the Trust spent 1m on agency staff, which was a reduction of 300k compared to month 1 and the previous 12 month average. Page 3

4 2.3 Below are tables showing a high level summary of the Trust s financial position at Month 2 and a summary by division: High level summary: Income/Expenditure Plan 000 Actual Income 87,854 86,503 (1,351) Pay (53,799) (54,003) (203) Non-pay (22,090) (21,570) 520 Drugs (9,117) (9,023) 94 Reserves/ CIP (578) Technical (4,255) (4,341) (85) NHSI adjustments (2) Suplus/(deficit) (790) (2,397) (1,607) Divisional summary: Net Annual budget 000's Budget to date 000's Actual to date 000's 000's Division 1 17,286 1,285 (149) (1,434) Division 2 29,454 3,267 3,083 (184) Estates & Facilities (34,312) (6,014) (5,691) 323 Corporate & Trustwide (42,377) (3,645) (3,586) 59 Other income 80,955 8,151 8, Reserves:- Income Contingency (2,400) Other Contingency (1,250) Other Reserves (9,055) (383) Trust position 38,301 3,427 1,908 (1,519) Technical (27,030) (4,255) (4,341) (86) Net surplus/ (deficit) 11,271 (828) (2,433) (1,605) NHSI adjustments (2) Adjusted surplus/ (deficit) 11,600 (790) (2,397) (1,607) 2.4 Other Financial Performance Measures The balance sheet and cash flow performance is provided in relation to the NHSI 2017/18 plan. The cash balance as at 31 st May 2017 is 12.2m which is 1.9m above the plan at Month 2. Although the April opening balance was 5.5m greater than plan; current receivables have increased by 3.0m and provisions have reduced by 0.6m therefore giving a circa 2.0m reduction in cash rather than the 1.6m increase planned. This is, however, due to a significant receivable for STF income related to 2016/17, including the bonus STF of 4.3m. Full details of the variances in working capital balances to plan are detailed in the Month 2 Trust Board report, with the provision of the statement of financial activities, balance sheet, and cashflow. Page 4

5 3 3.1 Contract Income The speciality analysis and commissioner contract performance is included within the Trust Board report. At Month 2 the cumulative income position is an adverse variance of ( 1.7m) with an in month adverse variance of ( 0.65m). The cumulative position against the plan submitted to NHSI is an adverse variance of ( 1.9m) with an in month adverse variance of ( 337k). 3.2 Income by Point of Delivery (POD) (Appendix 1) The Month 2 position is showing an improvement against almost all PODs. With activity underperforming against plan by (5,151) activities and ( 1.739m) income. The full table showing planned and actual activity can be found at Appendix 1. Point of Delivery Activity To Date % Activity to Date Price To Date % Price to date 000 % Non Elective % (145) -0.85% Non Elective Excess Bed Days (789) % (205) % Day Case Activity (85) -1.03% (96) -1.53% Elective (184) % (586) % Elective Excess Bed Days (20) -7.83% (4) -6.59% Outpatient First Appointments % % Outpatient Follow Up Appointments 2, % % Outpatient Procedures (1,578) -6.66% (109) -3.54% Outpatient Diagnostic Imaging % % Accident and Emergency 1, % % Clinical Decisions Unit (214) % (83) % Non PbR Other (incl Trust Wide Income) 2, % (344) % Critical Care (429) % (305) % Direct Access - Pathology & Radiology 2, % % Renal (562) -4.34% (47) -3.14% Maternity Pathway % % Chemotherapy (468) % (34) -6.27% Radiotherapy (414) -7.17% (72) -7.96% Block Contracts (8,327) % (15) -0.37% Drugs & Devices (255) % % CQUIN % (83) -5.94% Community Follow Up Contacts (2,874) -3.85% (116) -3.95% Community Occupied Bed Days (244) -7.06% (129) % Community Initial Contacts % (20) -3.06% Community Other Contacts % % Community Walk In Centre % % Grand Total (5,151) -1.10% (1,739) -2.31% The largest activity variance is within the outpatient procedure POD at (1,578) appointments. This is an improvement on Month 1; Ophthalmology continues to underperform but has Page 5

6 improved following an investigation of the month 1 position. The day case and elective PODs combined give the largest monetary under performance of ( 686k) which is predominantly related to the Month 1 performance of Division 1. The Month 2 variance was an under performance of ( 268k) across the Trust. Non Elective underperformance is at ( 351k) which includes a net reduction of ( 166k) for the Non Elective Marginal Rate. 3.3 Income by Division The variance by division is shown below and reasons and mitigating actions are described within the relevant division at section 3 of the report. The trust wide income variance is described in section 2.3 below. Directorate Month 2 YTD to Plan 000's In Month Movement to Plan 000's DIVISION 1 (870) 245 DIVISION 2 (226) (125) Estates & Facilities (20) (12) Nursing Directorate (1) (1) Trust Wide (623) (759) OVERALL Patient Income Total (1,739) (652) 3.4 Trust Wide Income The Trust Wide income is showing a cumulative adverse variance of ( 0.62m) year to date with an in month variance of ( 0.76m) as described below. Description Month 2 YTD to Plan 000's In Month Movement to Plan 000's Readmissions (124) (62) Fines (61) (30) CQUIN (83) (42) Data Reconciliation and Commissioner Queries (320) (320) Maternity Pathway and Non Contract Activity (36) 19 Activity Growth (395) (198) Other 396 (126) OVERALL Patient Income Total (623) (759) Readmissions The assumptions made at Month 1 continue into Month 2. A deduction has been made in relation to Readmissions of ( 242k) at Month 2. The contingency for Readmissions at Month 2 is 118k resulting in a net reduction of ( 124k). The position does not currently include any return of readmissions to the Trust from Commissioners. The Trust has successfully negotiated a return of readmissions in previous years and will aim to do so again in 2017/18 which would Page 6

7 fully mitigate this deduction. Fines The Trust has signed up to the STF funding arrangements meaning the national fines for some areas of performance are included within the STF payments (A&E Waiting, RTT and Cancer). The local fines and a number of national fines are however levied upon the Trust and the fines have been estimated at ( 61k) in Month 2. This value is based on the total fines applied in 2016/17. The actual Month 1 fines will be known by the month 3 reports which may change the current assumptions. As with readmissions the Trust have negotiated a return of fines from Commissioners in previous years and aim to do so again. There is nothing included within the Month 2 position for a return of fines. If the Trust negotiated the same level of return as in 2016/17 the Fines deduction would be halved. CQUIN The rules for CQUIN have been changed for 2017/18 with the 2.5% of CQUIN being split as follows: % made available to support engagement with STPs % linked to a risk reserve dependent upon delivering the 2016/17 control total % for Clinical quality and transformational indicators (CQUIN Schemes) The Month 2 position assumes 100% achievement of steps 1 and 2 above. Step 2 has been achieved and as such the payment is due. The adverse variance of ( 83k) at Month 2 is due to an estimated achievement of 90% against the CQUIN schemes. This risk will be mitigated for achievement levels above 90% with a full programme of work on going to achieve the maximum levels of achievement. Data Reconciliation and Commissioner Queries The activity data is being scrutinised by commissioners via the large Commissioning Support Unit (CSU) hubs. There are currently 87 standard queries being applied to the CCG contracts resulting in 2m of data being in query every month through this route. There are also a number of queries applied to the NHSE contracts resulting in an average of 300k per month. On top of the standard queries received there are ad hoc data queries looking at trends of activity, changes to HRGs, trends of clinical coding, drugs recharges etc. A deduction has been made at Month 2 of 320k based on the queries applied in 2016/17 as a percentage of the total contract income. The reconciliation process with commissioners will challenge the level and type of query and mitigate some of the risk. The value of queries deducted may also be mitigated through any year end settlement negotiations as in previous years. Maternity Pathway and Non Contract Activity The provider to provider recharges made for Maternity pathway activity are often queried for a number of reasons. The main 2 reasons are the provider has not received a pathway payment for that person or the wrong provider has been invoiced. As such a provision is made against the charges raised. There has been a lot of work under taken with local providers which will mitigate some of this risk as local rules have been agreed. Non Contract Activity charges made to commissioners outside of the local area often result in queries. A large proportion of queries are from the Welsh Health Boards who will not pay for any planned activity that has not received prior approval. Work is on-going to ensure that Page 7

8 approval is sought prior to treatment and the Trust has proactively engaged with the POWYS Health Board with a meeting to be held on 14 th June to try and set up a contract for 2017/18 which will mitigate some of the risk. Activity Growth The Trust has agreed a contract with commissioners that includes 2.4m of income that is over and above the levels of activity the Trust can deliver. At Month 2 this value is ( 395k). This income is mitigated by a 2.4m income reserve that is currently held centrally within reserves. Other This section includes any other adjustments made to patient income. The large favourable year to date variance reflects a release of income provision relating to Maternity Pathway Provider to Provider invoicing. The adverse in month variance relates to a cap on a screening programme and some anticipated income within the internal plan of the Trust. Cannock Hospital Transitional Support The income plan assumes 6m of transitional support relating to Cannock Hospital. The Month 2 position includes 1m which is a risk as confirmation of funding has not yet been received. Care Closer to Home Transitional Support The Wolverhampton CCG care closer to home QIPP scheme is planned to save 3.69m of income by reducing the number of non-elective admissions at the Trust. Due to the large planned reduction of contract income it was agreed that the CCG would cover the risk to RWT of not being able to realise the full cost saving. As such 30% of the planned income loss is to be repaid non-recurrently over 2 years. The agreement of when the payment will be triggered is under discussion. The Month 2 position assumes 2/12 th of the payment at 184k. Page 8

9 4 Divisional Income & Expenditure Trust Wide Summary Attached Appendix 2 highlights the Trust Wide Summary of Income & Expenditure by Division. 4.1 Division 1 The table below summarises the financial position as at Month 2 for Division 1. TYPE Description Budget WTE Actual WTE YTD Budget YTD Actual YTD Current Month Budget Current Month Actual Current Month Pay 3, , ,010 25,595 (585) 12,506 12,739 (233) Non Pay ,355 7, ,351 4, Drugs ,270 2, ,148 1,166 (18) Income (981) (1,016) 35 (568) (582) 14 CIP (511) 0 (511) (224) (224) Total Budgets 3, , ,143 34,707 (564) 17,213 17,593 (380) Total Income (35,428) (34,558) (870) (18,293) (18,538) 245 Net (1,285) 149 (1,434) (1,080) (945) (136) 4.2 Summary: The Division has an in month net position overspend of ( 136k), with a year to date adverse net position of ( 1.43m). The position has deteriorated compared to month 1 and continues to be adverse year to date. Patient income is 245k favourable mainly due to overperformance on non-electives and outpatients. Expenditure is ( 380k) overspent due to pay. This is made up of an overperformance on contract income of 245k and an overspend on expenditure budgets of ( 380k) which includes unmet CIP of ( 224k). Against an annual CIP target of 13.5m, 448k has been achieved of which 307k is recurrent. In month the variance is 224k adverse to the financial target, largely due to schemes having not been identified. Cardiology: A favourable net in month position of 153k and 46k year to date. Contract income has shown an over performance in month in non-elective 134k and outpatients. However, planned same day (PSD) and elective are underperforming due to one cath lab being out of service due to replacement programme. Overspends on pacemakers ( 21k) and catheters ( 18k) has resulted in non-pay having an adverse position, however, increased activity in month has impacted on the directorate. There will be monitoring and reviews taking place to ensure expenditure is in line with activity. Cardiothoracic: an adverse position in month and year to date of ( 136k) and ( 277k) respectively. Within contract income there has been an over performance on non-elective cases of 100k and underperformance on elective cases of ( 150k), in activity terms there has been an over performance by 9 inpatient cases which suggests there is a case mix or coding issue, this is to be investigated by the directorate and the information department. There is also an overspend on pay ( 60k) due to a consultant vacancy being offset by WLI payments in month. A locum post is out to recruitment and WLI should reduce once appointed. Children s Services: ( 125k) under performance on contract income of which ( 55k) relates to non-elective, this is being investigated by the directorate which has already confirmed that there was a noticeable reduction in respiratory conditions presenting in May. A reduction in Neonates ITU bed days as shut down for a number of days whilst drainage work was carried out. PAU Reg clinics are now coded in outpatients which has impacted in non-elective activity. Clinic Page 9

10 codes are to be reviewed to ensure coded correctly and activity declared. Expenditure was underspent by 58k, predominantly relating to nursing and community consultant vacancies. Nursing posts are being advertised and the vacancy situation is under regular review. Non pay also underspent by 10k due to reduced activity levels. Critical Care: an adverse variance of ( 136k) in month and ( 386k) year to date. The main reason for the in month position is within pay ( 105k) due to medical staffing vacancies (8 consultants and 4 middle grades) which are being covered through agency ( 70k consultants and 19k JMS) and WLI. There is also agency spend within nursing. Medical and nursing posts are going through the recruitment process. General Surgery: a year to date ( 396k) and in month ( 131k) adverse position. The in month position is as a result of ( 35k) in contract income and ( 96k) in expenditure budgets. There has been an underperformance in emergency admissions in month but a considerable reduction in comparison to April. There is a review on the patient case mix for planned same day and electives to ensure coding is accurate. Pay is overspent by ( 74k) due to bank and agency costs to cover vacancies, sick leave and maternity leave. The bank expenditure is to be reviewed with the Matron and ward managers to provide understanding and reduce costs. Recruitment is also being progressed. Head and Neck: The 74k over performance in month has been a result of non-elective, planned same day and outpatients, however, there were two major cancer case shortfall worth 40k. The plan was to do 5 in month, 3 were discharged. The directorate will continue to review the waiting list to identify cancer cases and lists for surgery. Although on expenditure there is an in month underspend of 20k, additional hours and bank costs is to be reviewed. Obstetrics and Gynaecology: Obstetrics had an over performance of 134k partially as a result of a catch up on antenatal pathway income from April and due to the improved coding on births. Gynaecology has underperformed by ( 59k) due to one consultant being absent and two consultants not working due to retire and return. Additional Gynaecology activity to be planned to recover in future months, plans to be validated by finance. Vacancies across the directorate has resulted in an underspend in pay of 22k, ongoing recruitment to vacant posts is to be followed. Expenditure is underspent by 16k. Ophthalmology: has overspent by ( 64k) in month on expenditure budgets and underperformed by ( 91k) to result in a net adverse position of ( 145k). There have been overspends on pay ( 14k) due to WLI and additional medical hours, although it has since been identified there have been WLI overpayments which are to be recovered and duplication of medical locum hours through payroll and LMS which is been rectified from month 3 onwards. The methodology for counting activity within Ophthalmology has changed within this year s contract. Whilst plans were put in place to record this activity in the correct way, this underperformance is unexpected and possibly attributed to changes in data capture and resulted in underperformance of ( 91k) in month. The directorate, information department and finance staff to review outpatient procedures as these are currently coded to Orthoptics & Optometry in June. Orthopaedics: has a ( 69k) adverse variance in month ( 209k) overspend in expenditure budgets and 139k over performance in contract income. Pay has overspent by ( 163k) due to WLI, and agency costs for consultants and JMS. Also, nursing bank usage on ward areas has contributed to the adverse position. The directorate are in the process of recruiting to consultant posts. The directorate and finance are to review the possibility of surgical assistants to ease the JMS pressure and an in depth review of ward rota actual v vacancies and sickness etc is to be carried out. Devices income is down in month due to activity/cost information not being captured in month for Orthotics due to a member of staff being sick. The orthotic department has a plan to bring their information back up to date Pathology: An over performance of 27k in contract income. Direct access/ cytology contracts are over performing in month. Expenditure is underspent by 12k in the main due to vacancies of which recruitment is currently underway. Page 10

11 Patient Services: A 15k underspends on the expenditure budgets is due to vacancies within Cannock outpatient department. The outpatient department will look to recruit to the vacant posts and CIP on funeral expenses has been taken in month. Radiology: A favourable position of 110k in month and 131k year to date. Contract income over performance in month was 44k. The expenditure variance was favourable by 66k. Pay was underspent due to having 8 consultant vacancies which has been partially offset by agency and WLI spend in month. Non pay underspend is as a result of a reduction in external reporting sent off site. Regular recruitment activity however a national shortage of radiologists, therefore external reporting now being tendered which will cause increased non pay expenditure. 4.3 Urology: contract income has over performed by 36k. This is due to over performance in nonelective 53k but an underperformance in elective and day case. The expenditure position in month is a 6k underspend as the directorate have over performed on private patient income and underspent on pay due to vacancies. Division 2 The table below summarises the financial position as at Month 2 for Division 2. Appendix 4 detailed the variances by specialty. Current Month Budget Current Month Actual Current Month TYPE Description Budget WTE Actual WTE YTD Budget YTD Actual YTD Pay 2, , ,317 18, ,120 9, Non Pay ,417 3, ,745 1, Drugs ,782 6, ,653 3, Directorate Income (932) (944) 12 (471) (470) () CIP (306) (306) (109) (109) Total 2, , ,277 27, ,937 13, Contract Income (SLAM) (25,950) (25,769) (181) (13,515) (13,475) (39) Community Income (SLAM) (4,594) (4,549) (45) (2,374) (2,288) (86) Patient Income (30,544) (30,318) (226) (15,889) (15,764) (125) NET POSITION (3,267) (3,083) (184) (1,952) (1,902) (50) Summary: The Division has an in month net position overspend of ( 50k), with a year to date adverse net position of ( 184k). The position has deteriorated compared to month 1 and continues to be adverse year to date. Patient income is ( 226k) adverse mainly due to underperformance on non electives. Expenditure is 42k underspent due to non pay. Adult Community: The year to date position is a net favourable position of 66k in month, the position in month has moved 1k favourable from month 1. Patient income is ( 22k) under achieved in month mainly against Community Matrons and District Nursing. Expenditure budgets are 23k underspent in month, mainly against pay due to vacancies and non pay for reduced consumable spend within the Rapid Intervention Team; 25k. Emergency Services: The in month position is a net adverse position against plan of ( 109k), the year to date position is ( 232k) adverse. Patient income is ( 39k) under performed in month, A&E attendances are 870 above the plan resulting in 159k over performance. This is offset by an under performance against non electives in month and CDU admissions ( 191k). The directorate is looking at CDU admissions on a monthly basis to ensure it is being fully utilised. Expenditure budgets are ( 73k) overspent in month with ( 53k) due to pay overspends. Emergency Department is overspent mainly due to additional nurse practitioners ( 33k). Acute Medicine is overspent in month ( 27k) due to a Trust locum being used to cover maternity leave and agency consultant to cover other consultant gaps ( 27k). Non pay is contributing to the overspend in month mainly due to increased consumables for A&E ( 12k). Page 11

12 Medical Services Group: Year to date the group is 181k favourable against plan, the movement in month is 80k favourable. Patient income is 81k over performed mainly against Diabetes for Endocrinology outpatients; 58k. The commissioners have raised a query over the coding of this activity. Gastroenterology is also over performed in month against non electives; 54k. Expenditure budgets are balanced against plan in the month, pay is underspent by 19k, this is mainly due to vacancies across the group, these underspends are offsetting the agency consultant spend in Respiratory to cover maternity leave. Oncology and Clinical Haematology Group: The in month position is a deterioration of ( 82k) adverse against plan with the total year to date net position being ( 92k) adverse. Patient income is ( 173k) under performed in month mainly against Oncology due to lower activity against fractions ( 62k) and under performance against chemo and non electives. Also under performing is Dermatology due to outpatient procedures and daycases ( 54k). Expenditure budgets are 90k underspent in month mainly against Clinical Haematology for blood products due to patient casemix in the month. Rehab and Ambulatory Group: The group is ( 322k) adverse against the plan year to date, this is an adverse movement in month of ( 12k). Patient income is 72k over performed in month, this is mainly against Care of the Elderly for non elective activity; 65k. Rheumatology have over performed in month by 10k, this has improved their year to date under performance. Expenditure budgets are ( 83k) overspent in month, mainly against pay for agency usage and waiting lists within Neurology to cover consultant vacancies. Therapy Services: the in month position is 33k favourable against the plan; the year to date position has increased to 118k favourable. Patient income is ( 52k) under performed in month mainly against physiotherapy in the acute contract. Expenditure budgets are 86k underspent in the month mainly relating to vacancies across the directorate. CIP: The Division has a CIP target of 8,832 k for 17/18. In April the Division has achieved 1,019 (11.5%) in 17/18 and 2,000k (12.5%) recurrently. The CIP achieved year to date mainly relates to the closure of Ward C17 and mobile working in Community Services. 4.4 Estates & Facilities The table below summarises the financial position as at Month 2 for Estates and Facilities. Appendix 5 details the variances by specialty. TYPE YTD budget YTD actual YTD variance Sum of Curr Mth Bud Sum of Curr Mth Act Sum of Curr Mth Var Pay 3,734 3, ,879 1, Non Pay 3,222 3, ,592 1,599 (7) Drugs (5) (10) Income (898) (1,000) 102 (471) (518) 48 CIP (79) (79) (31) (31) Grand Total 6,014 5, ,986 2, The Estates and Facilities division has an in-month underspend of 101k, with a year to date underspend of 323k. In Month 1 the division was 223k underspent. The main movements are a decrease in pay costs due to further vacancies and reduced bank usage. Non-pay costs have increased since Month 1 due to additional costs associated with the garage services and additional equipment purchases and lab equipment maintenance. CIP was over-achieved in Month 1 but has been under-achieved in Month 2. Below is a summary by directorate. Commercial Services has an underspend of 47k in month, 32k of which is due to overachievement of car parking income relating to patient car parking. This income stream has Page 12

13 over-achieved against its plan in months 1 and 2 and the trend is now being reviewed to identify whether this can be achieved as CIP. Non-pay costs are underspent by 14k in month due to waste offsite and service agreement contracts. A review of all contracts is being conducted with the Head of Commercial Services and finance to ensure that all costs are reflected in the financial position. Estates is ( 32k) over-spent in month, with a 53k underspend year to date due to an underspend on pay costs of 25k, due to a number of vacancies across difficult to recruit to areas for which plans are being discussed about changing the roles being advertised to ensure both successful recruitment and retention of staff whilst meeting the needs of the service. Nonpay is overspent by ( 12k) and is offsetting the pay underspend due to external contractors being brought in to complete certain items of work that the division has limited capacity to complete due to the vacancies. Income is under-achieved by ( 28k) in month due to shortfalls against the incinerator income and steam recharges. CIP is under-delivered in month by ( 17k). The division is reviewing projects to help achieve savings in the current financial year. Hotel Services is overspent in month by ( 25k) due to 21k of pay underspends, driven by vacancies, offset by a ( 65k) overspend against non-pay due to food provisions, teletracking licenses, transport costs and postage. The food provisions and transport overspends are offset by an over-achievement of income for these services that also results in a contribution that is being realised as CIP. The other overspends are being reviewed by the directorate and some are part of larger projects, such as a hybrid mail project that seeks to reduce the postage cost of the Trust. Some CIP schemes have delivered savings, however the directorate has underachieved against its in month CIP target by ( 25k) and against its year to date target by ( 44k). Further CIP schemes are required in order to deliver the required level of savings and the directorate is working with finance to identify schemes that will realise savings in the financial year. Medical Physics is underspent by 80k in month and 149k year to date. Pay costs are 38k underspent due to a continuing level of vacancies in hard to recruit to areas. The Head of Medical Physics is considering the actions required to help recruit and retain staff across the directorate and ensure service continuity. Non-pay is also underspent by 38k in month due to underspends against planned level of savings against lab equipment maintenance and purchase. Although underspent, this is a risk to the division in that if equipment fails and needs to be repaired urgently, often at a high cost, the cost will have to be incurred by the directorate. Income is over-achieved by 8k in month due to additional income received from external contracts. CIP is over-delivered by 6k in month, however additional schemes will need to be identified to ensure that the division achieves its target. Site services management is 32k underspent in month due to 15k of pay underspends due to vacancies across the directorate and 18k underspends against non-pay due to underspends. Opportunities for CIP will be reviewed with the service. CIP: The division has a CIP target of 2,667k, of which 323k has been achieved to date, which represents 12% of the total target. Recurrently the division has achieved 129k, which is 5% of the total target. Further schemes need to be considered and reviewed in order to realise the savings in this financial year. 4.5 Corporate Directorates The table below summaries the financial position as at Month 2 for Corporate Directorates (excludes CRN Hosting Costs). In Month 1 the division was 59k underspent. Pay costs have increased since Month 1 with an increase seen in bank costs, whilst non-pay has reduced by 27k. Income has reduced by ( 80k) since Month 1 due to LBR and VAT income reductions. Page 13

14 YTD budget YTD actual YTD variance Sum of Curr Mth Bud Sum of Curr Mth Act Sum of Curr Mth Var TYPE Pay 6,738 6, ,370 3, Non Pay 2,545 2,859 (314) 1,272 1,416 (144) Drugs Income (1,951) (2,165) 214 (982) (1,041) 59 CIP (64) (64) (21) (21) Grand Total 7,299 7, ,654 3,663 (9) The significant variances by Directorate are detailed below. Vertical Integration is ( 105k) overspent in month due to GP agency being used to cover vacancies in two of the 5 practices and lower levels of income relating to aspiration, which is based on 16/17 achievement and patient private income not being as high as budgeted. An action plan has been produced by the directorate to reduce bank and agency spend and recruitment to substantive posts is being actively pursued. Monthly performance meetings focusing on income and activity as well as expenditure have been set up from June and each practice will now provide statements to ensure all income received in the month is transferred to the Trust and reported in the financial position. Nursing Director is ( 18k) overspent in month due to overspends on non-pay relating to continence products and interpreters and an under-delivery of CIP. A review of the overspend of the continence products has been started between finance, procurement and the service to understand the drivers of the increased use and if it is expected to continue. This will be resolved by Month 3. Interpreting costs are part of a transformation project and is being pursued by the transformation team as well as being reviewed and discussed in value for money meetings. Planning and Contracting is ( 14k) overspent due to the use of a consultancy firm being used within the CIP team. The plan for this is being discussed with the relevant manager. Human Resources is ( 10k) overspent in month due to over-establishments in one of the teams and the continued use of consultancy firms for Communications. The overestablishments have been discussed with the manager and Director of HR as to how they are reduced. A plan to recruit to the communications team is being worked up to ensure best value for money of the service. Medical Director is ( 8k) overspent due to small overspends against a variety of areas for which no significant issues are present. Pay costs are overspent by ( 25k) due to noncommercial research, however this is offset by income over-recoveries. The smaller overspends are being reviewed in budget meetings with managers to ensure that the services maintain expenditure within their budgets going forward. Estates Development is 43k underspent in month due to lower non-pay costs due to lower charges from Community Health Partnerships (CHP) than previously expected and higher income due some additional leases and corresponding lease income being received. Opportunities for CIP are being reviewed in regards to the additional income and finance are liaising with the finance team at CHP to ensure the most accurate costs are available and that regular reviews of service usage takes place rather than an annual review. Finance and Information is 104k underspent in month due to levels of vacancies across finance, payroll and health records, non-pay underspends against IT and income overrecoveries in finance. Opportunities for CIP are being reviewed with the managers. CIP- The corporate division has a target of 1,921k for the year and in Month 2 122k, 6% has been achieved, with a recurrent achievement of 94k, 5% of the target. The CIP targets have been allocated to each team within a directorate and therefore all teams will be held to account for CIP achievement. The finance team are working closely with the PMO and the services to identify CIPs and ensure that PIDs are put in place to achieve recurrent savings. Page 14

15 5 Stock The level of stock at Month 2 is 6.2m, which is line with the month 1 position and remains below plan of 6.7m. Of the total stock figure, 2.0m relates to Cabinet stocks, 2.0m relates to Pharmacy and 0.9m is in respect of Cardiac stocks. 6 Trade and Other Receivables Receivables at Month 2 were 36.7m against plan of 34.7m with an in month increase of 9.3m, against the revised month 1 position, detailed below. Appendix 6 provides the main detailed breakdown of receivables and also, the aged analysis of invoiced receivables. The main areas to note within Receivables in Month 2 are; NHS Accrued Income increased by 9.6m in month. At M1 3.7m of carried forward provisions from 16/17 were incorrectly coded to NHS accrued income, this has been rectified at M2. The real movement for M2 should have been 5.8m. The month 2 value of 9.7m relates to STF income of 5.3m and an accrual of 2.5m in respect of income from the Learning and Development agreement from Health Education West Midlands. NHS Prepayments of 4.3m include the Dividend prepayment of 3.7m, which was paid in March 2017 before the final Dividend calculation was calculated by the Department of Health. A further 0.325m has been prepaid in respect of the CNST premium. Non NHS Prepayments increased by 0.5m to 3.3m, which was above plan of 2.9m. Prepayments were for the learning clinic 0.18m, whilst 0.18m was pre-paid in respect of the Managed Service contract for Microbiology (Bio-Merieux) and 0.16m was prepaid with regards the Da Vinci Robot. A further 0.13m was prepaid in respect of IT lines from Virgin and 0.1m was prepaid to Trustmarque. NHS Debtors of 10.7m with a decrease of circa 1m in month. Split of which is shown below:- o 1m 0-1 month old; o 0.3m Wolverhampton CCG (10 invoices) 0.2m Dudley Group (6 invoices) 0.2m Walsall Healthcare (11 invoices) 0.2m NHS England (5 invoices) 0.1m University Hospital North Midlands (19 invoices) 6.6m 1-3 months old; Page 15

16 4.8m invoice for Wolverhampton CCG which is currently in arbitration (3 Invoices) 0.3m Walsall Healthcare Trust (38 invoices) 0.3m Department of Health (1 invoice) 0.3m NHS England (9 invoices) 0.2m Dudley CCG (4 invoices) 0.2m Birmingham Community (6 invoices) 0.1m University Hospital North Midlands (17 invoices) 0.1m Birmingham Women s and Children s (9 invoices) 0.1m Dudley Group of Hospitals (11 invoices) o 1.6m over 3 months old; 1.2m Walsall Healthcare Trust (130 invoices/credit notes) As previously reported the respective CFO s are directly in communication in this regard and arrangements are in place for settlement of debt to continue between the Trusts in June So far 0.3m was settled in M2 of which 0.1m related to debt over 3 months old. The Trust holds creditor balances of 1m against this at the end of month 2 with 0.2m credit expected for Maternity Pathways from 16/17 & prior as agreed by the CFO s as part of the settlement. 0.2m Walsall CCG (40 invoices) The majority of the remaining over 3 month debt relates to drugs charges, action is continuously being chased. Non-NHS debtors of 3.5m is made up of the following; o 1.6m 0-3 month old; 1.0m Wolverhampton City Council (14 invoices) 0.1m Janssen Cilag (2 invoices) 0.1m Boots (2 invoices) o 1.3m over 3 months old; Page 16

17 0.9m relating to private patients & overseas patients debt. This has been fully provided for within the provision for Bad debt. 0.1m Wolverhampton City Council (10 invoices). This is relating to Stepdown Nursing, which is being monitored by Contract and Performance. Destiny Wireless Ltd 38k- IT department is liaising with the company until payment is made. 7 Trade & Other Payables Payables at Month 2 were 55.1m, an in month increase of 1.0m and remaining under plan of 60.3m. NHS Accruals increased by 1.4m in month and 0.8m of this was in respect of accruals for CRN for both month 1 and 2. The Trust is dependent upon the receipt of invoices from NHS partner organisations for their CRN allocation and whilst indicative values of allocations had been distributed to be invoiced for the final values are now being finalised to hopefully reduce this accrual going forward. Within non NHS Accruals there was an increase in month of 1.8m to 19.9m, which was just below plan of 21.8m. This balance is made up of GRN s of 7.9m, Locum Management Systems (LMS) 2.2m, CRN of 2.1m, Utilities 2.0m, Pharmacy Stock 1.5m, Abbott (for the Managed Service Contract within Clinical Chemistry) 0.17m and Radiology Agency 0.16m. Appendix 7 provides details of the Month 2 Trade & Other Payables balance. 8 Recommendation The Committee is recommended to note and approve this report. Page 17

18 Page 18

19 Page 19