SUBJECT: FINANCE REPORT FOR THE PERIOD ENDED 31 DECEMBER 2015

Transcription

1 Meeting of Lanarkshire NHS Lanarkshire NHS Board Kirklands 27 th January 2016 Fallside Road Bothwell G71 8BB Telephone: SUBJECT: FINANCE REPORT FOR THE PERIOD ENDED 31 DECEMBER PURPOSE This paper is coming to the Board: For approval For endorsement To note 2. ROUTE TO THE BOARD As agreed, this report comes straight to the Board from the Director of Finance. The Operating Management Committees receive financial reports for their own area. 3. SUMMARY OF KEY ISSUES At the end of December 2015 the Board is reporting an under spend of 0.086m which is 0.123m below our year to date trajectory. This is an improvement on the 0.186m below trajectory on the previous month despite the Acute Division overspend increasing to 4.412m from 3.854m during December. The improvement has come from additional income and efficiency including areas of slippage and minor reserves not likely to be required having been recognised and reflected through the year to date figures. Alongside tighter control in all other areas means it is more likely we will be able to deliver the agreed year end position. The risk of relying on property sales to fund 15/16 capital expenditure has been mitigated through an agreement with SGHSCD around additional funding in 2015/16 combined with planning for some of the expenditure in early 2016/ STRATEGIC CONTEXT This paper links to the following: Corporate objectives LDP Government policy Government directive Statutory requirement AHF/local policy Urgent operational issue Other 5. CONTRIBUTION TO QUALITY This paper aligns to the following elements of safety and quality improvement: Three Quality Ambitions: Safe Effective Person Centred 1

2 Six Quality Outcomes: Everyone has the best start in life and is able to live longer healthier lives; (Effective) People are able to live well at home or in the community; (Person Centred) Everyone has a positive experience of healthcare; (Person Centred) Staff feel supported and engaged; (Effective) Healthcare is safe for every person, every time; (Safe) Best use is made of available resources. (Effective) 6. MEASURES FOR IMPROVEMENT Achievement of LDP agreed position for revenue resource limit, capital resource limit and efficiency target. 7. FINANCIAL IMPLICATIONS As set out in the paper. 8. RISK ASSESSMENT/MANAGEMENT IMPLICATIONS As set out in the paper. 9. FIT WITH BEST VALUE CRITERIA This paper aligns to the following best value criteria: Vision and leadership Effective partnerships Governance and accountability Use of resources Performance Equality management Sustainability 10. EQUALITY AND DIVERSITY IMPACT ASSESSMENT An E&D Impact Assessment has not been completed Yes No This is a factual position report prepared from information in the financial ledger. It contains no proposals with an equality and diversity impact. 11. CONSULTATION AND ENGAGEMENT This is a factual position report prepared from information in the financial ledger. It contains no proposals on which to consult. 2

3 12. ACTIONS FOR THE BOARD The Board is asked to note the contents of the report. Approval Endorsement Identify further actions Note Accept the risk identified Ask for a further report 13. FURTHER INFORMATION For further information about any aspect of this paper, please contact Laura Ace, Director of Finance Telephone: Laura Ace Director of Finance 3

4 Meeting of Lanarkshire Lanarkshire NHS Board NHS Board Kirklands 27 th January 2016 Fallside Road Bothwell G71 8BB Telephone Fax SUBJECT: FINANCE REPORT FOR THE PERIOD ENDED 31 DECEMBER PURPOSE The attached report provides the Board with the review of financial performance for the 9 months to December CONTENT/SUMMARY OF KEY ISSUES The Board is expected to live within its Revenue Resource limit (RRL) with authority to use 0.117m of its 0.396m brought forward surplus, retaining 0.279m for carry forward. At the end of December 2015 the Board is reporting an under spend of 0.086m which is 0.123m short of the target position agreed through the LDP process. The Acute Division overspend now stands at 4.412m. The average monthly overspend in the first 6 months was 0.432m. In the last 3 months it has been 0.608m so a year end forecast of 6.2m over budget looks most likely. In October (the latest available month for GP prescribing) the average price per item rose again from to Growth in the volume of items slowed slightly from 1.65% at cumulative to September to 1.60% to the end of October. The yearend forecast remains in the 4.6m to 4.9m range. The Partnership s community underspend is partially offsetting the prescribing overspend, with the corporate and out of area underspends have been building up on a steady trend. Gains from the concluded property sales have been recognised against the revenue overspend as has any slippage, additional income and reserves. Taken together these allow us to predict a balanced year end position. To maintain recurring financial balance and to deliver its 3% efficient government target it needs to identify in total m of efficiency savings. At the time of submitting the LDP the Board had identified proposals for all but 6.324m of this total. Throughout the year we have been working to identify and quantify examples of increased efficiency or productivity throughout the organisation and have now closed the opening gap. Confirmation from SGHSCD of 1.7m additional in year funding to manage the risk previously attached to the reliance on property sales alongside deferring elements of the capital plan into early 16/17 means we are now on track to deliver the revised capital programme. 4

5 3. FURTHER INFORMATION For further information or clarification of any issues in this paper, please contact: Laura Ace (Director of Finance)

6 NHS LANARKSHIRE FINANCE REPORT FOR THE PERIOD ENDED 31 DECEMBER Introduction 1.1. This report provides the Board with a summary of revenue and capital financial performance for the first nine months of 2015/ Overview 2.1. The 3 year Financial Plan 2015/ /18 was approved by the NHS Board and signed off by the Scottish Government in March This planned an in year deficit of 0.117m and when added to the predicted cumulative surplus of 0.396m at 31 March 2015, this left NHS Lanarkshire with 0.279m of accumulated funds for use in 2016/17 and beyond. The financial position to the end of December 2015 shows an under spend of 0.086m, as detailed in Table 1. This however is 0.123m below our year to date trajectory The position has improved and is closer to trajectory mainly due to additional income including efficiency, areas of slippage and minor reserves not likely to be required having been recognised and reflected through the year to date figures. The Acute overspend now stands at 4.412m, 2.964m of which lies within medical budgets with increased locum costs as a result of sickness and national difficulties in filling posts worsening in the nine months of 2015/ The latest GP prescribing data (October 2015) shows a higher average price per item than predicted and projecting this to month 9 gives a 3m overspend. Table 1 - Summary Financial Position 2015/16 YTD YTD YTD Budget Actual Variance M M M Acute Operating Division (4.412) North Lanarkshire Health & Social Care Partnership South Lanarkshire Health & Social Care Partnership Primary Care Other Services (2.956) Headquarters / Corporate Functions Service Level Agreements / Other Healthcare Providers NHSL - wide Net operating costs

7 3. Revenue Resources 3.1. At the end of December 2015 confirmed allocations bring the Core Revenue Resource Limit to 1, m and the Non Core Revenue Resource Limit to m. Annex A provides further detail The December 2015 Core Revenue Resource Limit includes a further 2.281m funding transferred to the National Services Division m which relates to the national risk sharing of specialist services and 0.433m transferred for Bone Marrow transplants. These are in line with expectations The December 2015 Core Revenue Resource Limit also includes a further 0.400m for the local unscheduled care action plan (LUCAP), 0.217m for distinction awards paid to NHS Consultants, 0.080m for the National Ophthalmology Work stream and 0.650m for the national outpatient waiting times contract with Medinet which is being administered by NHS Lanarkshire. There is also a correction to the Pharmacy pre-registration training previously adjusted in November There are still some smaller allocations to be notified. It will be January 2016 before Boards know of their final share of the new medicines fund. Although at the time of forming the plan it had been assumed that there was a further 10m to hand out of which NHS Lanarkshire would receive 1.214m, this may only reach 5m nationally leaving the Board with 0.6m less than had been anticipated. Other allocations still to be issued are mostly of a non recurring nature. 4. Acute Division 4.1. The Acute Division is reporting an overspend of 4.412m for the period to the end of December 2015, as detailed in Table 2, an increase of 0.558m from the previous month. The first six month s overspend averaged 0.432m per month with the last 3 months averaging 0.615m. If this continues the yearend overspend would be 6.236m. Table 2 - Acute Division 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Pay (3.694) Non Pay (0.682) Healthcare Purchases (0.036) Gross operating costs (4.412) Less: miscellaneous income (21.989) (21.989) Net operating cost (4.412) 7

8 4.2. The main driver of this is an overspend against the medical budget of 2.964m to date which in turn reflects increased locum and agency costs. The majority of areas are experiencing medical staffing cost pressures. Hotspots at month 9 include General Surgery ( 0.714m), A&E ( 0.693m), Orthopaedics ( 0.502m), Renal, Medical and Respiratory at Monklands ( 0.727m) and Ophthalmology at Hairmyres ( 0.268m). Monitoring and controls have been enhanced within the acute division. However national shortages alongside the various gaps in the rotas from 1 August 2015 when the new allocation of doctors in training was made, mean this problem is not forecast to be resolved in the immediate future Although expenditure on nursing continues to grow over time, in 2015/16 the expenditure had been successfully contained within budget up to month 7. For the second month running however the monthly expenditure has exceeded the budget and this unexpected deterioration ( 0.210m overspent) has contributed to the rise in the overall overspend. 8

9 4.4. Healthcare scientists pay expenditure is 2.7% over budget ( 0.336m) compared with an under spend in 2014/15. At 0.285m over budget (2.8%) Administrative staff budgets are slightly less overspent than they have been in the previous 2 years Laboratory and theatres supplies are 0.466m over budget which is 32% less than this time last year. Hotel services is 0.346m over budget (15% more than this time last year) mainly through the increased use of private taxis and Ambulance Scotland resulting from the discharge and flow of patients linked to bed management pressures. The equipment spend to the end of December 2015 is 17% more than that to December last year, resulting in a 0.283m overspend As reported previously the gap between the funding approved by the Board (which included additional investment of 5.058m) and the forecast cost of activity needed to sustain performance was 1.033m even with an additional 1.1m of non recurring financial support from Scottish Government and free cataract slots at GJNH worth 0.071m. Since then further non recurring money has been pledged which would reduce that forecast funding by 0.200m and also fund activity beyond the forecast. The financial forecasts now assume we will run with excess activity till the year end but there is no recurring source for this in 16/ The Lanarkshire hospitals drug spend in month 9 is 19% greater than last year. Although this sits below the 29% set aside in the financial plan, the detailed drug by drug forecast combined with recent information on high cost drug treatments initiated in Glasgow, gives a forecast in excess of the financial plan uplift. Glasgow has now agreed to provide information 2 months in arrears. The forecast will be monitored closely We are in discussion with NHS GG&C about funding transfers following the closure of the Victoria hospital and increased attendances at Hairmyres hospital The service level agreement charges for 15/16 to other Health Boards have been reviewed and will generate additional funding which will be used in the financial plan to help offset some of the pressures listed above. 5. Health and Social Care Partnerships 5.1. Across the Health and Social Care Partnerships, there is an overspend of 1.005m for the period to the end of December 2015, an increase of 0.481m from the previous month. The overspend is driven by GP prescribing, which based on the latest figures (October 2015) is estimated to be 3m over budget at the end of December The prescribing volume rise put at 2.5% before savings in the opening budget uplift was 1.60% up to September. The price per item however has risen from in March 2015 to in October 2015 ( in September). This wipes out any benefit from the lower volume and results in the 3m projected overspend to date. 9

10 5.3. Recruitment issues remain a problem in community nursing across both HSCP s. Backfill arrangements are in place where possible. There are over spends within some Localities of both HSCP s due to incremental drift and non funded enhancements but overall these are being contained The North Lanarkshire Health & Social Care Partnership is reporting an underspend of 1.518m for the period to the end of December 2015, as detailed in Table 4, an increase of 0.202m from the previous month. The under spend is across all units of the HSCP with the main areas being Children Services, CAMHS, Addiction Services and the centralised Immunisation Service. Table 4 - North Lanarkshire Health & Social Care Partnership 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Pay Non Pay Net operating cost The South Lanarkshire Health & Social Care Partnership is reporting an underspend of 0.433m for the period to the end of December 2015, as detailed in Table 5, an increase of 0.041m from the previous month. Both units of the HSCP reflect an under spend with the main areas being Community Dental Services and Palliative Care Services. The overspend in non pays is mainly the cost of the Out of Hours Service being set up across two locations. Table 5 - South Lanarkshire Health & Social Care Partnership 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Pay Non Pay (0.376) Net operating cost Health & Social Care Partnership Other Services are reporting an overspend of 2.956m for the period to the end of December 2015, as detailed in Table 6, an increase of 0.724m from last month. Table 6 - Health & Social Care Partnership Other Services 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Pay Non Pay (0.003) Family Health Services Prescribing (3.000) Gross operating costs (2.956) Less: Family Health Service income (7.014) (7.014) Less: Miscellaneous income (7.942) (7.942) Net operating cost (2.956) 10

11 6. Headquarters/Area Wide Departments 6.1. The Headquarters and Area Wide Departments are reporting an underspend of 0.583m for the period to the end of December 2015, as detailed in Table 7, an increase of 0.141m from the previous month. Table 7 - Headquarters / Corporate Functions 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Pay (0.302) Non Pay Gross operating costs Less: miscellaneous income (3.649) (3.649) Net operating cost The underspend of 0.583m is spread across Corporate Departments ( 0.192m), Property and Support Services ( 0.320m) and non Health and Social Care Partnership areas ( 0.071m) linked to a combination of income generation, vacancies and slower than expected spends. 7. Service Level Agreements/Other Healthcare Providers 7.1. Service Level Agreements and Other Healthcare Providers are reporting an underspend of 0.707m for the period to the end of December 2015, as detailed in table 8, a decrease of 0.027m from the previous month The underspend of 1.136m being reported against service level agreements is the continuing impact of Lanarkshire s lower share of costs for 2015/16 as a result of fewer Lanarkshire residents which required access to West of Scotland regional services over the three year period ending 31 st March The Independent Sector is reporting an overspend of 0.219m, a net figure which includes an over spend of 0.230m in neurodisability placements in the private sector. At this point last year the Independent Sector was reporting an underspend of 0.099m. 11

12 Table 8 - Service Agreements / Other Healthcare Providers 2015/16 Budgeted Actual Actual Operating Operating saving / Costs Costs (excess) 31/12/ /12/ /12/2015 M M M Service Level Agreements Unpacs and Oats (0.212) Resource Transfer and Bridging (0.001) Independent Sector (0.219) Mental Health Net operating cost CRES/Efficiency 8.1. Through the LDP process all Boards have been given a minimum target of achieving cash releasing efficiency savings equal to 3% of budget which equates to m for NHS Lanarkshire To balance the financial plan in 2015/16 the Board needed to release 9.452m of cash from budgets through efficiency savings (CRES) and had identified a long list of over 10.7m from which to deliver this. The Board is likely to release sufficient cash to balance the plan but instead of achieving 3m recurrently through reduced prescribing costs, the cash has come more from property sales, partnership and corporate underspends The remainder of the 3% target can be met through a wider range of efficiency and productivity gains. At the time of submitting the LDP the Board had identified proposals for all but 6.324m of this total and work continued throughout the year to identify further efficiencies, gradually narrowing the gap. This month we have been able to validate increased productivity and cost containment across a range of acute specialties using published cost book data and laboratory activity. The gap has now been eliminated though the year end forecast relies on being able to demonstrate continued relative cost containment in GP prescribing which will need to be verified for the final 6 months. The actual achievement to date is recorded in table Although no cash has been released from the GP prescribing action plan ongoing monitoring suggests Lanarkshire has at least avoided a cost increase of over 1.492m to September. 12

13 Table 9 LDP description LDP Plan Revised Plan Plan to date Actual to Date Drugs Estates and Facililies Procurement Service Productivity Shared Services Support Services Workforce Unidentified Total Previous Month Capital 9.1 The Board s capital plan had m of Scottish Government funding guaranteed and relied on generating a further 4.840m from property sales to fund its full capital programme m had been generated by September There was a risk of external factors (legal, planning etc) affecting the timescale for delivering the remaining 3.5m by 31/3/16. After discussion at the October 2015 Board a formal approach was made to SGHSCD to agree the most appropriate way to manage this risk. SGHSCD approved the plan which involved the Board slowing down 1.8m of purchases but receiving an additional 1.7m capital allocation from Scottish Government to allow the urgent schemes to proceed. The 1.7m will be deducted from property receipts achieved next year and returned to SG and the 1.8m of deferred expenditure will be scheduled for early 2016/17. Maintaining momentum in concluding the sale remains important as the supported expenditure has only been deferred for a short period. 9.2 Work is continuing on Monklands Business Continuity in respect of Flat Roof Replacement and further Fire Safety Works with expenditure of 0.477m having been incurred in the nine months to December The Monklands Single Site Pathology project is now complete and the building is now occupied and delivering services. The final account and confirmed VAT recovery will allow the final costs to be reported in January Work is progressing on the first building phase for the Theatre/ICU development, the extension to the Theatre Block to create the new ICU area of the facility which will be completed in January Expenditure in the first 9 months amounts to 4.613m. 9.5 The West of Scotland Radiography Facility Lanarkshire Beatson is now fully complete and opened to patients on 30 th November The final account for this project and anticipated VAT recovery should bring this project in on budget at 15.8m with expenditure of being incurred in 2015/16. 13

14 9.6 The equipping of the Primary Care Health Centres at Kilsyth and Hunter Health Centre East Kilbride is now complete. Wishaw Health Centre The Houldsworth Centre has now opened and the works to complete the car parking to support the facilities in East Kilbride and Wishaw will continue until May Although this represents a delay to the delivery of the car parking to support the developments there is no risk of this impacting on the delivery of the board s 2015/16 CRL. 9.7 Medical Equipment expenditure of 0.459m was incurred in December taking expenditure to 1.681m in the nine months to date. 9.8 Expenditure of 0.614m has been incurred in the none months to 31 st December 2015 to advance the investment in I.M.&T. The full year planned expenditure of 2.585m is planned for delivery by 31 st March Expenditure to the value of m has been incurred in the nine months to December 2015 as detailed in Annex B. 10. Developments and Approvals 10.1 There have been no further developments approved since those reported to the November PPRC. As previously advised the Board is continuing to run with the existing capacity plan to maintain access times and the additional capacity introduced to cover the increased patient flow following the closure of the Victoria Hospital in Glasgow. 11. Risk Assessment 11.1 The overall risk assessment was described in August 2015 as amber as there are a number of areas increasing costs faster than the plan allowed, the savings plans have slipped back slightly and our capital plan relies on property sales. The risk around property sales had now been minimised though the action endorsed by the October Board and SG confirmation of an additional 1.7m capital. As we get nearer to the year end the financial impact of any unexpected events is reduced by the shorter time period over which they apply. With early action and financial planning and the remainder of our assumptions about income and costs holding however it is now likely we will deliver within target. The most significant risks are: The acute division is overspent by 4.412m in the first 9 months and the rate of overspend is not slowing; GP prescribing is overspent by an estimated 3m at month 9. Although volume rises are less than budget, the price per item continues to rise; There is still a time lag in being notified of high cost out of area drugs and the new medicine s fund final tranche has still to be notified. 14

15 11.2 These risk areas are receiving enhanced management attention in terms of refining forecasts, actions to further enhance chances of delivery and scenario planning for how balance would be achieved given the current deviations from target. 12. Conclusion The Board is asked to: Note the revenue under spend of 0.086m as at 31 December 2015, 0.123m below the year to date trajectory, and the forecast that we will be on target; Note that he 6.324m gap from the 3% efficiency and productivity target in the opening LDP ( m) has now been closed; Note the revised capital plan in line with the risk mitigation strategy endorsed at the October 2015 Board; The significant risks highlighted in section 11. LAURA ACE DIRECTOR OF FINANCE 20 January

16 ANNEX A REVENUE RESOURCE LIMIT 2015/16 Baseline Earmarked Non Recurring Recurring Recurring Total M M M M Revenue Resource Limit as at 30 November , (5.198) 1, To Support Implementation of NMC revalidation Risk Share - Specialist Services (1.848) (1.848) Risk Share - Bone Marrow (0.433) (0.433) Outpatient W.T Recovery Co-ordinated Medinet Activity NHS Disabled Graduate Scheme Improvement Fund - Bid35 Texting Young People with Diabetes Board contribution to Pre-registration Board contribution to Pre-registration (0.125) (0.125) Final Instalment Family Nurse Partnership Programme Distinction Awards for NHS Consultants SLA Roy Garscadden and Cathy Dunn 2015/ National Ophthalmology Workstream LUCAP, six essential action funding Revenue Resource Limit as at 31 December , (3.756) 1, Non Core Revenue Resource Limit as at 30 November IFRS Revenue PFI - Non Cash Donated Asset Depreciation Annually Managed Expenditure - Provisions Annually Managed Expenditure - Impairments Non Core Revenue Resource Limit as at 31 December Total Revenue Resource Limit as at 31 December , ,

17 ANNEX B NHS LANARKSHIRE CAPITAL EXPENDITURE TO 31st December /16 Forecast Actual M M M Initial Capital Formula Allocation: Capital Resource limit adjustments: West of Scotland Radiotherapy Satellite Centre Brokerage for Strathclyde Sale Boundary Transfer Allocation ADJUSTED NET ALLOCATION Disposal Programme: Property Disposals Property Disposals returned to S.G CAPITAL EXPENDITURE: Business Cases Monklands general business continuity Primary Care Hubco Projects Equipment Single Site Pathology Monklands Theatres/ICU West of Scotland Radiotherapy Satellite Centre Medical Equipment Capital Grants Other Expenditure Statutory Maintenance PSSD Equipment subtotal I.M.&T Projects TOTAL CAPITAL EXPENDITURE (OVER) / UNDER COMMITTED