2 December In-Year Financial Position (excludes UHMB tariff modification impact)

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1 NHS Cumbria CCG Governing Body Agenda Item 2 December Finance Report October Purpose of Report: The purpose of the report is to provide the Governing Body with an update on financial issues facing the CCG in the 2015/16 financial year. The attached report provides an update of the year-to date position and forecast out-turn along with an update on key items of risk. This issue has been discussed in detail at the November meeting of the Finance and Performance Committee. Key Issues/Considerations: In-Year Financial Position (excludes UHMB tariff modification impact) The attached report provides a reflection of the CCGs finances as at October and predicts significant financial risk to the CCG if no action is taken. Following the October Governing Body meeting the CCG has established a financial recovery group that meets weekly to identify potential mitigating actions to address financial risk. The report acknowledges a number of potential sources of addressing the shortfall as a result of this work but a number of these carry an element of risk so work continues to identify further savings. The CCG also has been involved in establishing a network for CCGs across the North of England experiencing similar financial challenges to share best practice and identify opportunities for efficiency. The first meeting of the network is on 14 December. UHMB Tariff Modification As reported at the Governing Body the CCG received formal notification from Monitor on 23 July 2015 that the national tariff prices paid to UHMB for a number of services would be modified to a new set of prices published along with the notice. The CCG has met with both NHSE and the Monitor team since and work continues to reach resolution to this issue with an expectation of a final position being agreed during December. Financial Planning Following the Comprehensive Spending review it is anticipated that CCG allocations for 2016/17 (and potentially beyond) will be published on 21 December.

2 Recommendation The Governing Body is asked to note the contents of the report. CCG Objectives: The scheme contributes to delivering the following CCG objectives: 3. Stabilise, keep safe & problem solve the current system 9. Develop a sustainable system financial plan 10. Maintain & lead a healthy CCG Lead Director Charles Welbourn, Chief Finance Officer Presented By Charles Welbourn, Chief Finance Officer Contact Details Charles.welbourn@cumbriaccg.nhs.uk Date Report Written 25 November

3 Finance Report October 2015

4 Introduction The purpose of this paper is to present the financial position of the CCG at October This information has been used to report the CCG s finances to NHS England through the Integrated Single Financial Environment (ISFE) which is a national finance ledger system that all CCGs use as a condition of authorisation. The report shows that although the CCG is forecasting delivery of the planned surplus of 5 million as per the budget approved by the Governing Body on 3 rd June this will only be achieved through significant in-year financial recovery measures. As agreed with NHSE the CCG is NOT including the potential impact of the tariff modification at UHMB in the current financial position or forecast shown in this report. The underlying issues behind this position and potential measures required are considered in more detail in this report along with the supplementary report on the financial recovery plan. Summary Position & Key Issues The financial position at October is shown at Appendix 1, and shows the CCG is in financial balance in terms of the full year position but is considerably behind the forecast year-to-date position. Appendix 1 shows this balanced position on the basis that the CCG s financial recovery plan delivers the required level of saving in the 2 nd half of the year (equating to around 1% of budget). The prescribing information to date suggests a potential pressure of around 1.2 million over and above that budgeted for 2015/16 (after accounting for the contingency). The CCG is actively reviewing the focus of work in medicines optimisation as part of the financial recovery process and is looking for opportunities such as taking advantage of rebates to mitigate the pressure and refocussing the practice work to deliver efficiencies. I. The latest information from acute and other NHS providers on variable contracts compared to contract extrapolated to the end of the financial year shows a potential pressure of around 6.3 million in total after taking all factors into account. A number of the initiatives planned but have yet to impact have been reflected in the CCG s financial recovery plan for the year, and these are also reflected in the forecast in Appendix 1. Nevertheless, with onset of winter there still remains a degree of risk to forecast. The most significant pressures continue to be in non-elective care (emergency admissions running at around 5% over plan) and PBR excluded pass-through drugs, with overall growth in the latter

5 category being 20% on the 2014/15 levels (of which the CCG budgeted for 7% compared to funding growth of less than 2%). II. III. The information shown excludes both the availability of the BCF contingency to off-set against additional activity ( 5.3 million) and the planned reduction of elective activity through unwarranted variation and reduction of procedures of limited clinical value. Nevertheless, the fundamental concern remains the underlying activity levels. It is noteworthy that there is a significant overspend on direct access pathology. Further investigation, including bench-marking, is being undertaken in this area as the CCG is a significant outlier when compared with other CCGs on its spend on direct access pathology. The CCG is therefore working with GP practices to ensure testing continues to be appropriate given the service is contracted for on a cost per test basis. The current assessment of continuing care and mental health packages suggest that the growth and contingency projections included in the budget will be fully required in-year. There is an overspend at October reflecting that prices for 2015/16 have now been agreed for the majority of care homes and also there have been a number of high cost packages recently approved. However, these pressures are to some extent offset as a result of the likely impact of risk-share arrangements in mental health that offset the cost of the packages. The current overall forecast is an overspend of around 600,000 after taking these issues into account that is unchanged from the previous forecast. The community services position reflects the likely out-turn of GPwSI activity on a continuing basis. As in 2014/15 the CCG is undertaking a review of these contracts. The CCG running costs are underspent in the year-to-date position reflecting the impact of vacancies. This is to be expected given the planned changes in the management arrangements that remove vacant posts to fund new posts. Hence, this represents a non-recurring underspend. However, as demonstrated in Table 2 the current estimate is a potential overspend of 5.6 million if no action is taken.

6 Table 1 Forecast Pressures Month 7 Prescribing 1,200 Acute Contracts (after contract penalties etc) 6,300 CHC & Other Pressures 800 Sub-total Gross Pressure 8,300 Less Known Mitigations Release from reserves (per month 6) (740) Forecast Running Cost Underspend (650) Residual Contingency (1,300) Sub-total Forecast Variance with no further action 5,610 The CCG has implemented a weekly meeting to develop, implement and performance manage the Financial Recovery Plan. The work to date has identified the following opportunities shown in Table 3 with scheme by scheme analysis shown in Appendix 2. Table 2 Summary Analysis Forecast net Cost Pressures (Table 2) 5,610 Impact of Financial savings "Low to Medium" (5,013) Impact of Financial savings " Medium to High" (811) Headroom if 100% Successful (214) Further work continues both to firm up the planned schemes and search for further opportunities given the level of risk facing the CCG. However, it is considered that around two thirds of the identified schemes (i.e. around 3.3 million) have minimal risk to delivery. Recommendation The Governing Body is asked to NOTE: The year-to-date and forecast financial position at October, and the associated risks The need to undertake further and on-going actions to address cost pressures through a financial recovery process as a matter of urgency.

7 Appendix 1: Financial Position October 2015 Original Budget YTD Budget YTD Actual YTD Variance FYE Budget FYE Actual FYE Variance Financial Position as at 31st October 2015 Recurring Allocations CCG Baseline Allocation (699,595) (699,595) (699,595) 0 Agreed Adjustments (705) (705) 0 Running Cost Allowance (11,373) (11,373) (11,373) 0 Sub-total (710,486) (711,673) (711,673) 0 Non-recurring Allocations Agreed Adjustments (3,077) (3,077) 0 Surplus carried forward (5,042) (5,042) (5,042) 0 Sub-total (5,042) (8,119) (8,119) 0 Revenue Resource Limit 2015/16 (715,528) (421,845) (421,845) 0 (719,792) (719,792) 0 Expenditure Budget 2015/16 Primary Care Prescribing & Medicines Management 91,729 54,022 54, ,729 92,929 1,200 Other Primary Care 5,012 3,741 3, ,140 6,140 0 Total Primary Care 96,741 57,763 58, ,869 99,069 1,200 Secondary Care NHS Acute Providers (North & West) 189, , ,059 1, , , NHS Acute Providers (South) 134,476 79,493 81,801 2, , ,958 2,685 Non Contract Activity & Independent Sector 6,684 3,654 4, ,264 6, Total Secondary Care 330, , ,979 4, , ,789 3,856 Mental Health & Learning Disabilities NHS Providers 63,210 36,560 36, ,817 62, Packages of Care 11,618 7,502 7,227 (275) 12,860 12,060 (800) Learning Disability Pooled Fund 4,965 2,780 2,779 (1) 4,765 4,765 0 Total Mental Health & Learning Disabilities 79,793 46,841 46,585 (256) 80,442 79,754 (688) Services Delivered in the Community Community Services 71,875 45,757 45, ,340 78,180 (160) Out of Hospital Urgent Care 36,276 20,977 20,950 (27) 36,353 36, NHS Funded Continuing Care 33,600 22,069 22, ,551 36,951 1,400 Other Care 7,563 1,480 1, ,514 2,514 0 Total Community Based Services 149,314 90,283 91, , ,068 1,309 Reserves Planned Investments 1, (615) 1, (1,325) 2% Non-recurring Investment 3, (292) (500) Planned Contingency (495) (495) Better Care Fund (including NEL contingency) 36,013 20,809 19,139 (1,670) 36,332 33,467 (2,865) Total Reserved Funds 41,919 22,211 19,139 (3,072) 39,275 34,089 (5,185) Programme & Running Costs Total Running Costs 11,208 6,541 6,313 (228) 11,209 10,797 (412) Other Specific Programmes 1, (59) 1,269 1,189 (80) Total Costs 12,388 7,307 7,020 (286) 12,478 11,986 (492) Total Expenditure Budget 710, , ,542 2, , ,755 (0) Planned Surplus (5,038) (2,938) (303) 2,635 (5,037) (5,037) (0)

8 Appendix 2: Financial Recovery Initiatives October 2015 Scheme Description Saving 2015/16 Low-Med Saving 2015/16 Med-High Non-elective Activity Non-elective: Copeland SPA* Non-elective: South Cumbria* Prescribing & Drugs Prescribing: practice actions plans* Reduction in costs re PBR exlcusions Gain share on infliximab New prescribing rebate schemes (from NECS in North East) 27 - Elective Activity Referal Management: procedures of limited clinical benefit per policy* 150 Map of Medicine Impact on referral variation* Capacity Management review 150 Correction of renal charges NCUHT to specialist commissioning 72 Pain management pathway change 50 Direct Access Pathology 100 Care Packages & Other Clinical Areas Slippage on Investments & technical adjustments 2,151 - Confirmed new External funds covering clinical services Further review of complex mental health packages Review of effective use of local mental health capacity Running Costs External funds covering existing running costs & vacancy control Total 5, * = original planned scheme in 2015/16 cost improvement programme

Approve X Ratify For Discuss For Information X

Approve X Ratify For Discuss For Information X NHS North Cumbria CCG Governing Body Agenda Item 5 April 2017 08 Financial Plan Purpose of the Report The purpose of the report is to provide the Governing Body with the CCG s Financial Plan for the next