NHS Finance. Denise Lewis Deputy Director of Finance

Size: px

Start display at page:

Download "NHS Finance. Denise Lewis Deputy Director of Finance"

Barrie Davidson
5 years ago
Views:

1 NHS Finance Denise Lewis Deputy Director of Finance

2 Aims To ensure members understand: How the Trust receives its income Changes to the NHS structure Budget setting why and how Expenditure budgets by Type and Service Delivery Unit An overview of Cost Improvement Programmes (CIP s) Statutory duties what else do we have to do?

3 NHS Source of Revenue Funding Flows Parliament Tax % of total Income Tax 29% National Insurance 16% Value Added Tax 16% Corporation Tax 8% Petrol Duties 6% Tobacco Duties 2% Alcohol Duties 2% Other 22% Total 100% Department of Health SHA PCT s / CCGs NHS & FT Trusts

4 Changes to NHS Structure The West Midlands Strategic Health Authority and all Primary Care Trust s in the region are to be abolished by the end of March The role of commissioning services will pass to GPs, who will handle the 80 billion budget for commissioning that is presently managed by the PCTs. GPs are to group themselves into around 500 consortia across England to commission services. The commissioners will be free to obtain services from any willing provider and providers will compete for contracts to provide services.

5 NHS Budget Budget at launch in m equivalent to 9bn at todays value Budget for NHS England 2011/12-106bn NHS Worcestershire PCT budget 2011/12 870m Worcestershire Health and Care Trust budget 2011/12 170m NHS England employs approximately 1.4m staff Around 3m people are treated in the NHS in England every week

6 Budget Setting What type of things do we set budgets for in the NHS? Revenue (income & expenditure) Manpower (workforce) Capital Cash Why do we set budgets? Understand resource requirements Establish priorities Align resources with goals (e.g. delivery of Health Contracts) Articulate expectations Deploy resources Ensure accountability Provide planning parameters Measure programme effectiveness

7 How Budgets are set? Budget setting process starts in November Budgets are discussed and agreed with Service Delivery Units at the outset Budget setting split in to pay, non pay expenditure and income Income budgets related to Contracting Process/Developments Pay budgets based on individual staff in post Potential cost pressures are identified, funding subject to approval Final budgets are agreed and authorised by Management Team

8 Breakdown of Expenditure Budget by Type Type Value % Pay costs 121m 70% Clinical supplies ( 4m drugs) 12m 7% Establishment 10m 6% Premises 8m 5% Purchase of Healthcare 6m 3% Other 13m 9% Total 170m 100%

9 Expenditure by Service Delivery Unit Service Delivery Unit Value % Children s Services 19m 11% Community Care Services 59m 35% Learning Disabilities 5m 3% Adult Mental Health 31m 18% Specialist Primary Care 13m 8% Total Clinical Services 127m 75% Service Level Agreements 11m 6% Facilities & Estates 12m 7% Finance Regime 7m 4% Corporate Departments 13m 8% Total Corporate 43m 25% Total 170m 100%

10 Why a Cost Improvement Programme (CIP)? The decade of unprecedented growth is now over, replaced by a flat budget QIPP challenge of 15-20bn efficiencies until 2014/15 is very real for the NHS That context translates to a minimum national efficiency of 4% p.a. plus local commissioner approved QIPPs A tool to bridge the gap between income and expenditure Covers shortfalls on all inflation levels Aids re-investment in new services Delivers efficiency savings Must be identified prior to the new financial year as part of budget setting Needs involvement from managers at all levels A CIP is essential to the Trust in achieving its targets and Foundation Trust status 30 month rolling CIP to be identified (Quality Impact Assessment)

11 Cost Improvement Programmes (CIPs) The Next Four Years - Scale of the Challenge Approximation based on the LTFM and Monitors assumptions Service Delivery Units 2012/13 ' /14 ' /15 ' /16 ' /17 '000 Total '000 Adult Mental Health 1,143 1,356 1,327 1,342 1,356 6,524 Children, YP and Families ,471 Community Care* 4,247 3,057 2,991 3,025 3,057 16,377 Learning Disabilities ,259 Specialist Primary Care ,219 Total 6,959 6,273 6,138 6,208 6,272 31,850 Corporate ,892 Estates & Facilities ,023 Total 1,037 1,229 1,203 1,217 1,229 5,915 GRAND TOTAL 7,996 7,502 7,341 7,425 7,501 37,765 * Community Care includes 1.7m b/f non-recurrent CIP 2011/12

12 What else do we have to do? Minimum 1% surplus Foundation Trust requirement Fund capital programme how? Ensure we have sufficient cash 10 days worth of expenditure, cash flow important Public Sector Payment Policy (PSPP) pay creditors within 30 days Deliver Cost Improvement Programmes recurrently

Agenda Item: 4.4 Finance Report

Agenda Item: 4.4 Finance Report For the period to 31 January 213 and Forecast Outturn for 212/13 CONTENTS 1. Introduction and Background 2. Performance against statutory duties 3. Available Resources 4.