Finance Assurance Report. February 2017

Transcription

1 Finance Assurance Report February

2 Executive summary Key Financial Information I&E Year to Date Full year Cash flow Year to Date Full year Budget Actual Variance Budget Plan Actual Variance Plan m m m m m m m m Income Deficit from operations Pay Depreciation Non pay Working capital Unallocataed costs / efficiencies movements EBITDA Cash from operations ITDA Capital expenditure Operating surplus Disposal proceeds Exceptionals Financing Net Deficit Increase/(decrease) in cash The overall Trust position shows an adverse variance of 0.2m in month and a 0.4m overspend year to date, this position reflects the benefits of significant non recurrent items. The Trust will receive 1.3m of distress funding in March and further distress funding will be required going forward to support the Trusts deficit. KPI s (UOR) YTD actual Ytd Plan Full year forecast- Revised Plan Indicator Detail Rating Detail Rating Detail Rating Capital service cover Liquidity (days) I&E margin (%) I&E margin variance (%) Agency Metric % Use of Resources Rating

3 Income and expenditure Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Income 000s 000s 000s 000s 000s 000s 000s 000s 000s 000s 000s 000s 000s Clinical services contracts 13,139 14,134 13,654 13,487 13,447 13,368 13,448 13,195 13,119 13,191 13,269 13,275 13,268 Other Clinical Income Other Non-Clinical Income Pass Through Income Sustainability & Transformation Fund Total Income 14,156 15,744 14,882 14,699 14,649 14,707 14,746 14,738 14,628 14,602 14,809 14,600 14,527 Pay Administrative & Clerical Staff 1,412 1,408 1,427 1,450 1,453 1,475 1,450 1,435 1,478 1,450 1,461 1,425 1,476 Medical Staff 1,138 1,369 1,282 1,296 1,265 1,314 1,358 1,371 1,431 1,311 1,332 1,220 1,220 Nursing Staff 3,900 3,860 3,985 3,920 3,995 3,934 3,927 3,903 3,864 3,914 3,847 3,839 3,813 Healthcare Assistants 1,392 1,395 1,425 1,386 1,401 1,410 1,385 1,397 1,416 1,372 1,359 1,327 1,344 Other staff pay Professions allied to medicine 1,361 1,401 1,385 1,422 1,404 1,417 1,401 1,417 1,431 1,418 1,416 1,399 1,414 Senior Managers Scientific, Therapeutic & Tech Total Pay (excl exceptional costs) 11,097 11,183 11,503 11,437 11,515 11,532 11,493 11,568 11,595 11,480 11,420 11,156 11,278 Non Pay Supplies & Servs - Clinical 1,208 1, , , Supplies & Servs - General Establishment Expenses Other Expenses Premises 1,330 1,573 1,100 1, , ,118 1, ,015 1,033 Pass Through Costs Total Non Pay 3,767 4,581 3,287 3,320 2,433 3,626 3,412 2,769 3,542 3,183 2,339 3,348 3,126 EBITDA (excl exceptional costs) (708) (20) 92 (58) 701 (451) (159) 401 (509) (61) 1, EBITDA margin (excl exceptional costs) -5.0% -0.1% 0.0% -0.4% 4.8% -3.1% -1.1% 2.7% -3.5% -0.4% 7.1% 0.7% 0.8% Interest Received PFI Interest Paid Fin Lease Paid Depreciation PDC Dividend Net surplus/(deficit) (excl exceptional costs) (1,151) (545) (413) (564) 195 (990) (679) (126) (1,014) (577) 529 (423) (373) I&E surplus/(deficit) margin 1.2% 1.2% -0.4% -3.8% 1.9% -3.1% -4.6% -2.6% -1.7% 0.0% -2.1% -2.6% -1.7% (Gains)/Loss on disposals 0 1, (46) 4 Donations Restructuring costs Net surplus/(deficit) (1,151) (1,948) (413) (139) 195 (1,213) (679) (333) (995) (530) 411 (377) (374) I&E surplus/(deficit) margin -8.1% -12.4% -2.8% -0.9% 1.3% -8.2% -4.6% -2.3% -6.8% -3.6% 2.8% -2.6% -2.6% Commentary Income has decreased by 73k in month mainly due to pass through income. Monthly pay costs have increased by 122k, but remain below the YTD average due to a reduction mainly due to lower agency and locum costs. Non Pay costs have reduced by 222k in month mainly due to pass through of 101k and the release of un-needed accruals of 94k. At Month 11, we are 1.3 m over our 4.6m annual agency cost ceiling. Current spend rate indicates we will be 1.7m over the annual ceiling at M12. 3

4 Balance sheet Balance Sheet at: 28/02/ /01/ /02/2016 m m m Fixed assets Assets held for sale Debtors Cash and bank Current assets Creditors (20.7) (21.7) (24.0) Provisions (current) (1.0) (1.0) (0.8) Current liabilities (21.7) (22.7) (24.8) Net current assets (8.0) (7.5) (4.6) Long-term liabilities (7.3) (7.3) (7.3) Net assets Capital expenditure Month Actual YTD Actual YTD Budget YTD Variance Annual Budget '000 '000 '000 '000 '000 IM&T Base IM&T Developments ,650 IM&T Contingency Estates Base ,205 Estates Developments 457 1,401 1, ,595 Estates Contingency Trade debtors 499 2,421 2, ,381 Capital and reserves PDC Income & expenditure Revaluation reserve At the end of February, the invoiced debtor position had increased by 268k to 5,358k. Overdue debts increased by 103k. Invoices issued to NHS England in respect of high value pass through drugs remain unpaid. Reasons for non payment by NHS England for high value drugs is not due to data quality but rather delays in commissioner processing payment. The total value of overdue invoices is 3,917k, with the most significant overdue balances being with NHS England ( 1,887k), and Cumbria CCG ( 1,120k). The Trusts cash balance now stands at 4,157k, a decrease of 1,145k from 31 January ( 5,302k). This is a marginal improvement on the expected cash position (forecast at the beginning of February) primarily as a result of receiving payment for a number of long overdue invoices. During the month, payment runs continued to be restricted, however, the Trust was able to settle the majority of outstanding NHS invoices from December and January. Payment runs will continue to be restricted in March, but despite taking these measures, and to maintain a cash balance of 1m, the Trust has applied to receive distress funding of 1,309k. The funding is due to be received mid March, though is not actually required until early April. The cash flow forecast chart in the Executive Summary details the flow of cash, with and without the receipt of distress funding. The capital program is expected to spend 4.8m in 16/17, major items of spend planned for March 2017 are IT licences and various estate developments where funding is contingent on completion by 31 March

5 Forecast / financial risk analysis M11 Position M Current Deficit (4.4) Non recurrent items within the above (3.0) Underlying Deficit (7.4) Full Year Forecast M Current Deficit (4.4) Forecast revenue net outturn for March (0.8) Success Regime reimbursement of Trust inputs 0.1 STF Income (subject to achievement of control total) 0.5 Negotiated position on CQUIN (a) 0.5 PFI Indexation provision 0.2 Forecast Outturn (4.0) Surplus on Land Sale (0.5) Forecast Outturn Control Total Basis (4.5) This forecast represents an improvement on the 6.0m deficit reported to NHSI in January 2017, and would enable the Trust to achieve its 4.5m control total, subject to the downside risks. The M11 NHS I return has been prepared and submitted on this basis. a) The CCG have agreed to consider a proposal to revise the CQUIN scheme. The scenarios are based on the revised scheme being approved or continuation of the existing contracted scheme. NHSI have been made aware of the negotiations with the CCG. b) A contract dispute with the supplier of the CoIN (N3 network) and disputed income for the re-imbursement of specialist drugs are also receiving escalated action at the executive level and have been fully notified to NHS I. Upside Scenario M Base Case Outturn (4.0) Dental Penalties 0.2 Annual leave and Asset Valuation Adjustments 0.4 Non-recurrent accounting measures 0.3 Upside Forecast (3.1) Downside Scenario M Base Case Outturn (4.0) STF Income (subject to achievement of control total) (0.5) Outturn for March worse than forecast (0.2) CQUIN risk (a) (0.2) CoIN and specialist drugs recharges (b) (1.6) PFI Legal Fees (0.2) Restructuring costs relating to 0-19 service (c) (0.2) Downside Forecast (6.9) c) Restructuring provisions may need to be increased due to commissioning changes to the Children & Families 0-19 services, at this stage the of provision required remains to be finalised but is a receding financial risk. Given the Trust s financial standing the Director of Finance, Strategy and Support Services has written in March to all senior budget holders regarding the need to maintain our vigilance and overall financial controls appropriately. 5

6 Care Group and Directorate performance Care Group/ Directorate YTD* m Forecast * m Childrens (0.3) (0.4) Comm Serv Mental Health (2.5) (2.8) Specialist (0.8) (0.8) Ops Mgt * Variance in year to date spend against budget; figures in brackets indicate an overspend. Children and Families Care Group Spend is below budget in February and is expected to remain at the same level in March. The Elms LD service transferred from Specialist Services this month which accounts for the increase in budget Mental Health Care Group Actual spend continues to reduce in line with the forecast. Spend has reduced by 25k in February due to: - Recurrent reduction in agency nurses of 5k - Non recurrent HMRC refunds of 13k - Non pay costs have reduced by 6k due to credits for prior period charges The forecast is for a increase in costs for March due to the non recurrent items in month 11. Medical staffing overspend is due to locums covering vacant posts. Following recent interviews 3 staff grade posts have been appointed to, one is now in post with start dates to confirm for the other 2. From consultant interviews held in February one has been appointed due to start in 3 months. Unfunded Nursing agency has reduced from 13 WTE in October to 10 WTE from January and it s anticipated to remain at 7.6 WTE due to recruitment difficulties with vacant posts. HCA agency staff use has reduced significantly since December and is only now being used for occasional shifts saving an average of 8k per month since December. Older Adult Inpatients - Following the review of admissions and pilot of the new observation policy bank staff have reduced by 40% compared to the cost in October which is an average saving of 16k per month from November. Specialist Services Care Group Expenditure has increased this month compared to month 10, because in month 10 there was one off income. Budget and expenditure are both set to increase next month due to non-recurrent NHSE funding for equipment. Community Services Care Group The reduction in costs at month 11 is due to prior period credits. Costs going forward will remain under budget mainly due to vacancies. 6

7 Support Services Care Group/ Directorate YTD* m Forecast* m DoQN (0.2) (0.2) DoWF&OD DoFSS Med Director Corp and others * Variance in year to date spend against budget; figures in brackets indicate an overspend. Director of Finance, Strategy & Support Services Large underspends in Jun, Sept and Dec due to prior year credits being received valued at 2.6M. The underlying overspend is largely issue is due to low historic budgets which is being looked at as part of 2017/18 budget setting (rates, electric, inter NHS SLA charges). NHS Property Services invoices for 16/17 are on hold as CPFT is being charged Market Rents which CPFT is not funded for. 15/16 Charges have now been agreed along with confirmation of the funding allocated to Cumbria to cover the increased charges in 16/17. The allocation for Cumbria is insufficient and CCCG Finance are reviewing this for CPFT. IM&T Strategy: No issues across EPR, Data Centres or Network Support & Helpdesk. Presently a combined underspend of 461k across the three schemes due to slippage in planned strategy rollout. IM&T Mobile Phones : Rental charges, usage and connectivity costs higher than anticipated. Mobile phone allocation policy under review and new contract with mobile phone provider being reviewed. IM&T N3/CoIN: Due to delays in roll-out we are incurring costs for both Old and New CoIN due to the need to maintain the old CoIN sites until the end of the roll-out. Forecasting 471k overspend (non-recurrent) CoIN partners are disputing dual running charges and are withholding payment of invoices. By year end amount owing will total 800k. Director of Quality & Nursing Reduction in costs in Sept due to Board Member leaving and cost for the replacement was recorded elsewhere. October increase in costs due to a correction in relation to prior period income. A number of unfunded posts exist in this Directorate that are slowly being resolved through natural headcount turnover. The biggest budgetary issue is currently the unallocated 16/17 CIP budget reduction. Director of Workforce & Organisational Development Costs in month are on budget. The OD strategy budget is forecasted to underspend by 227k. Spend has reduced from September due to additional income from HEE in Oct & Nov and prior year credits in Dec. Spend will be above budget for march due to planned spend in relation to the OD investment strategy. There is an underlying overspend within the directorate due to unfunded posts within the ESR team. Medical Director YTD underspend of 91k driven by MPET income being higher than anticipated. 7

8 Efficiency Programme Key points: - Target for 16/17 Efficiency Schemes is 5.8m, forecast achievement is 5.9m. Within the forecast is 2.7m of non recurrent schemes. - Schemes rated red, 132.6k (2.2%) and amber, 78.6k (1.3%) total 0.2m. If these schemes don't deliver in March then the CIP achievement would be 5.7m. 8

9 Control totals against Normalised Spend Month 10 normalised deficit restated for non-recurrent current year benefits Original normalised month 10 deficit ( 376,820) Persistent symptoms penalty charge reversed ( 139,028) N3 recharge to partners based on update from BT ( 173,000) Restated normalised month 10 ( 688,848) 9

10 Critical Actions Financial risk & actions arising Responsible director/s Due date Director s comments Efficiency Achieve the internal Control Totals against normalised spend. DoFSSS/DoO March 2017 The DoF has written to senior budget holders with a range of efficiency measures (review temporary contracts, unfunded posts and agency) for immediate implementation. Income CQUIN DoFSSS March 2017 Renegotiate position on CQUIN as some of the factors causing under performance are beyond our control (as accepted by the CCG). Cash Impact of downside cash flow risks to Trust s liquidity position. Pursue recovery of overdue debts from commissioners DoFSSS March 2017 All cash flow mitigations are being implemented, including working capital management and debt recovery. Cash reserves at minimal levels. Risk to ability to settle liabilities as due. Continue to monitor cash position and make arrangements to draw cash support as necessary. DoFSSS March 2017 Risk added to Trust risk register. Daily cash flow forecasting for 3-4 months is in place. Distress funding for March has been approved by DH. The Trust has formally drawn down distress funding for March. CoIN and Specialist Drugs DoFSSS March 2017 Continue to seek recovery and escalate to NHSI for support. 10

11 Glossary of terms Term Explanation (italicised words have their own definition) Bank Temporary staff who provide cover for planned and unplanned shortfalls in staffing BCT Better Care Together (system-wide transformation programme in N Lancs and S Cumbria) CCC Cumbria County Council CCG Clinical Commissioning Group (unless otherwise specified, Cumbria CCG) CIP Cost Improvement Programme (savings targets) CMHART Community Mental Health Access and Recovery Team CoIN Community of Interest Networks CQUIN Commissioning for Quality and Innovation (a mechanism for commissioners to link a proportion of income to the achievement of locally agreed quality improvement goals CSRR Continuity of Services Risk Rating (Monitor s rating of the Trust s financial health (liquidity and debt levels), and therefore ability to continue to deliver services) CV Contract Variation DoFSSS Director of Finance, Strategy and Support Services DoO Director of Operations DoQN Director of Quality and Nursing (and department) EBITDA Earnings Before Interest Tax Depreciation & Amortisation (a standard measure of operating surplus / deficit) FP10 Prescriptions issued for patients in community settings FSRR Financial Sustainability Risk Rating (NHS Improvement s rating of the Trust s financial health (liquidity, debt levels, surplus margin, and achievement of plan)). HCA Healthcare Assistant HV Health Visitor / Health Visiting IM&T Information Management and Technology ITDA Interest Tax Depreciation and Amortisation; non-operating costs, in the Trust s case mainly depreciation, PDC dividend and PFI interest LIFT Local Improvement Finance Trust, a public private partnership mechanism for funding estates developments Liquidity The extent to which the Trust has cash to meet immediate and short-term obligations, or assets that can be quickly converted to do this Locum Temporary replacement medical staff MD Medical Director N3 New Networks for the NHS NCUH North Cumbria University Hospitals NHS Trust NHS E NHS England NHS I NHS Improvement Ops Mgt Operations Management directorate PDC Public Dividend Capital (the Department of Health s equity interest in the assets of the Trust); the Trust pays the Dept an annual dividend of 3.5% of net assets (less cash) PFI Private Finance Initiative (private sector funding/managing of public expenditure projects) Reserves Budgets set aside for specific purposes or contingencies, and not yet allocated to a specific code SR Success Regime (system-wide transformation programme in W E and N Cumbria) STF / STP Sustainability and Transformation Fund / Sustainability and Transformation Plan TMG Trust Management Group WF&OD Workforce and Organisational Development (directorate) YTD Year to date Protected characteristics Please assess the relevance of the content of this executive paper against the 9 protected characteristics from the Equality Act 2010 and assess the relevance as: or Relevant Low / Medium / High. If not please provide a statement saying why in the explanatory notes section If low, medium or high please provide a statement in the explanatory notes section setting out what the implication could be and what action will be taken to address the implications Protected Characteristic 1.Race 2.Religion / Spirituality 3.Gender 4.Disability 5.Sexual Orientation 6.Age 7.Pregnancy / maternity 8.Gender Reassignment 9.Marriage and Civil Partnership Relevance Explanatory es The paper neither omits or reinforces any of the protected characteristics so therefore is not. 11

12 Annex 1 This Month Budget This Month Actual This Month Variance fav/(adv) 16/17 YTD Actual 16/17 YTD Variance fav/(adv) Annual Budget 16/17 YTD Budget 15/16 YTD Actual 000s Income 000s 000s 000s 000s 000s 000s 000s 160,120 Clinical services contracts 13,442 13,268 (174) 146, ,692 (1,144) 145,014 5,659 Other Clinical Income ,171 5, ,831 6,320 Other Non-Clinical Income (3) 5,792 5,632 (160) 5,426 2,244 Pass Through Income ,097 3, ,960 Sustainability & Transformation Fund (163) 1,798 1,470 (328) 0 176,303 Total Income 14,827 14,527 (300) 162, ,588 (1,105) 156,666 Pay 17,318 Administrative & Clerical Staff 1,440 1,476 (36) 15,888 15,976 (88) 14,777 14,610 Medical Staff 1,219 1,220 (1) 13,411 14,399 (988) 13,557 49,191 Nursing Staff 4,093 3, ,081 42,942 2,139 45,369 15,501 Healthcare Assistants 1,288 1,344 (56) 14,210 15,223 (1,013) 14,948 4,159 Other staff pay ,814 3, ,302 17,410 Professions allied to medicine 1,470 1, ,957 15, ,700 9,402 Senior Managers ,617 8,765 (148) 3,746 10,395 Scientific, Therapeutic & Tech (59) 9,539 9,623 (84) 9, ,986 Total Pay (excl exceptionals) 11,499 11, , , ,258 Non Pay 7,785 Supplies & Servs - Clinical (62) 7,028 8,484 (1,456) 10,525 3,733 Supplies & Servs - General (82) 3,427 3,708 (281) 3,460 5,730 Establishment Expenses (7) 5,251 5,718 (467) 5,952 3,136 Other Expenses (92) 2,876 3,422 (546) 3,760 13,083 Premises 1,067 1, ,012 9,956 2,056 13,244 2,244 Pass Through Costs ,097 3, ,711 Total Non Pay 2,917 3,126 (209) 33,691 34,385 (694) 37,336 1,038 Unallocated costs (817) Unallocated Efficiency Programme (68) 0 (68) (749) 0 (749) Total Unallocated Costs ,385 EBITDA (excl exceptionals) (270) 2,283 1,226 (1,057) (1,928) 1.4% EBITDA margin (excl exceptionals) 2.7% 0.8% -1.8% 1.4% 0.8% -0.6% -0.9% (20) Interest Received (1) (1) 0 (19) (25) (6) Interest Paid (PFI & finance leases) Fin Lease Paid (11) 0 4,015 Depreciation ,680 3, ,956 1,700 PDC Dividend ,558 1, ,467 Net surplus/(deficit) (3,875) (excl exceptional costs) (126) (373) (247) (3,453) (4,431) (978) (6,845) -2.2% I&E surplus/(deficit) margin -0.8% -2.6% -1.7% -2.1% -2.7% -0.6% -4.4% 0 (Gain)/Loss on disposal 0 4 (4) 0 (543) Restructuring costs 54 (3) (4,525) Net surplus/(deficit) (180) (374) (198) (4,049) (4,444) (395) (6,869) -2.6% I&E surplus/(deficit) margin -1.2% -2.6% -1.4% -2.5% -2.8% -0.3% -4.4% Commentary Income is under budget both in month and year to date. There are significant variances in clinical service contracts relating to CQUIN underachievement of 0.9m, 0.1m NHSE dental clawback, 0.3m relating to Q4 STF partially offset by the benefit of changed assumptions relating to the return of some specialist services funding to commissioners. Pay costs are 0.5m underspent year to date. A substantial underspend in Nursing ( 2.1m ytd) is offset by overspends elsewhere, especially HCAs ( 1m ytd) and Medical staff ( 1.0m ytd) caused by agency consultants. Non pay costs are 0.7m over budget despite 3m of non recurrent benefits. Significant pressures beyond plan include agency manged service fee 0.5m,legal costs of 0.3m mainly relating to Workington PFI, cost pressures in Supplies & Services Clinical including medical stock, clinical services received and sexual health. IM&T slippage and reversal of prior year premises accruals (both nonrecurrent) partially offset the pressures noted above. The dual running of the N3/CoIN network contract is causing a ytd pressure of 0.4m. 12