Finance Report March 2012

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Lizbeth Richards
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1 INTRODUCTION 1. This report presents the financial results for the eleven month period to 29 th February 2012 and the projected outturn for 2011/12. FINANCIAL OUTLOOK 2011/12 2. The forecast outturn assumes that (WPCT) will deliver the revised surplus for 2011/12 of 16.7m (2.7%). 3. The risk analysis as detailed in appendix 1b reflects a most likely surplus outturn of 18.1m with a worst to best case range of 17.5m to 19.7m. It is difficult to determine to what extent the surplus would be higher than required as we move into month 12 as the range reflects continued uncertainty in; investment expenditure, activity performance, debt recovery and the treatment of accounting issues detailed below. 4. The forecast position has improved in acute, corporate services and reserves. Acute forecasts reflect the benefit of increased challenges and year end sector agreements made by the Acute Commissioning Unit (ACU) and CQUIN targets not being wholly met by key providers. Additionally, reductions have also been seen in mental health placements and continuing care and the emergency tariff top slice. 5. The analysis assumes investment of 732k from the 2% Non-Recurrent fund will be spent in 2011/12 (Tranche 4a). It is also planned, subject to approval, to release 300k from the 535k (Tranche b) investments. 6. The analysis also assumes that WPCT will contribute a gross 2.9m to the 2011/12 South West London (SWL) Cluster Challenge Trust Fund. The net contribution, which was not previously accounted for in WPCT s position prior to month 11, is 1.66m. 7. A paper recommending this support using designated funds for managing system risk (Non Elective 70% Fund and 2% Non-Recurrent funds) held by NHSL on behalf of the SWL PCTs, outlining the need for that support has been discussed at the Joint PCTs finance committee and a decision on whether to approve this, is required to be made on Wednesday 21st March. This funding will not be repaid. ACCOUNTING ISSUES 8. As we move into month 12 and the preparation of the 2011/12 accounts, the finance team will endeavour to make the most defendable and realistic assumptions in preparing the PCT s accounts. Appropriate provision will be made to support the obligations made in 2011/12, which will be payable in 2012/ It should also be noted that the forecast for many areas of spend is reliant on data sets from external NHS bodies and third party contractors and the outturn will therefore based on the most up to date information available which will undoubtedly change given the early timetable, albeit not significantly, during May and June. 10. The submission date for the draft 2011/12 annual accounts of is the 23rd April and the bank holidays within this period result in a challenging timeframe of just 13 working days. The final accounts are required to be submitted on the 11 th June. Finance Period 29 th February 2012 Page 1 of 27

2 11. Any significant movement between the month 12 FIMs return, draft and final accounts submission will be scrutinised by NHSL, DH and the PCTs External Auditors. Any accounting issues viewed by the PCTs External Auditors as misstatements that are nontrivial errors will be reported in their ISA (UK&I) 260 Report, which communicates audit matters to those charged with governance. 12. There are a number of items which are uncertain and some are subject to External Audit opinion. The finance team will take a view of the treatment of these and estimated their impact on the PCT s financial statements and financial performance. 13. We are in the process of undertaking a detailed review of our balance sheet in particular assets and debtors. Where prudent and appropriate we will write balances off to expenditure where we don t believe we have a probable success of recovery or where this would appropriately improve the PCT s future financial position. 14. In addition we are considering the need for provisions, including continuing care provisions and a provision for onerous contracts for unavoidable costs for void letting periods in relation to WBH. We are also reviewing the on-going treatment of St.Jules Thorn Court as a service concession asset on the balance sheet. KEY FINANCIAL PERFORMANCE INDICATORS 2011/ The table sets out the financial performance targets and indicators against which the PCT is monitored. Financial Performance Target/ Indicator Statutory Break Even Duties Revenue Resource Limit (RRL) Capital Resource Limit Measure Target Forecast Status Performance Improving? Stay within RRL 600.7m 600.7m Green Stay within CRL 3.679m 3.281m Red Cash Resource Limit Administration Duties Better Practice Payment Policy Stay with Cash Limit Payment of valid invoices within 30 days (by number) m 95% 524.2m Non NHS 79.5% NHS 81.5 % Other Significant Financial Targets Remain within Control Total Deliver control total 12.3m Surplus m QIPP- Quality, Delivery of 7.086m 7.308m Innovation, Programme Productivity & Savings Prevention Programme Investment Programme Running Costs (excluding Public Health) Delivery of Investment Programme Stay within running cost envelope m m To be confirmed 5.344m m Green Green Green Green Amber Amber Finance Period 29 th February 2012 Page 2 of 27

3 KEY FINANCIAL RISKS (Appendix 1c) 16. The table in Appendix 1c sets out the key financial risks the PCT Commissioner is exposed to in 2011/12 and mitigation actions necessary. 17. There is a risk that the 11/12 surplus will be higher than 16.7m. The Finance function will take mitigating action as outlined above to manage this risk as far as possible. 18. At month 10, 12.3m of the NHSW Resource Limit (income) was still anticipated. Most of this resource has now been confirmed by NHSL at month 11. CONTINGENCY RESERVES & PROVISIONS 19. The PCT s Budget Book included a number of reserves to mitigate against non delivery of the efficiency plan, manage increased activity over funded growth levels and the financial impact of unforeseen events. 20. The reserves had been reflected between those within the PCT s control and those outside of the PCT s control as there was a requirement to hold reserves to manage the overall sector financial position. All reserves are assumed to be released in the Financial Risk Analysis. CHANGES TO RESOURCE & APPLICATION (Appendix 1d/1e) 21. A detailed analysis of the PCT s Revenue Resource Limit is provided in Appendix 1d, and changes to the PCT s resources and applications are summarised in Appendix 1e. 22. The Revenue Resource Limit (RRL) has increased non-recurrently by 9.763m since last month, as explained below. 23. Funding of 6.113m has been received for Winter Pressures: Much of this is to be passed to St George s, and some the Cluster. NHSW has also received the following on behalf of St George s: 300k funding for MFF (Market Forces Factor) on R&D; 1m of Diamond Fund Transitional Support; and 463k of impact funding (for employment termination costs). 24. Earlier in the year, 2% of NHSW s recurrent RRL ( m) was deducted. The Cluster and NHSW had to submit business cases to NHSL for non-recurrent schemes, in order for the funding to be returned. All the funding has now been returned, but there is an additional 1.565m for Cluster schemes (this amount includes anticipated items). 25. An amount of 169k was deducted earlier in the year in relation to Commissioning Support Development. This was an error, and it is anticipated that the 169k will be returned. In addition, it had been anticipated that a further 50k would be deducted from the RRL for NCG (National Commissioning Group) services. It now appears that there will be no deduction. 26. Finally, NHSW has received 100k of Dental Access funding. Finance Period 29 th February 2012 Page 3 of 27

4 COMMISSIONED SERVICES Acute Services (Appendices 2a to 2c) 27. It should be noted that the actual year to date is based on January monitoring reports and has been straight line extrapolated to report at month An assessment of the likely value of key performance indicators has been included for all South West London providers based on SLAM month 10 data. 29. The ACU have held negotiations with a number of providers to agree year end settlements. To date agreement has been reached with St Georges, Kingston, West Middlesex and Epsom St. Helier (excluding EOC). 30. The overall PCT position year to month 11 is 8.9m over spent before challenges and KPI s. The gross value of the challenges/kpi is 6.9m with 2m agreed and to be prudent a risk assessed likely value of 3.5m. Most of the challenges are linked to outpatients and emergency. The year to date position after challenges is 5.4m. 31. Values before adjustment for challenges show that St Georges, Kingston, Chelsea & Westminster, Royal Marsden and Queen Mary s for 9.6m of the over performance. UCLH, GOSH, ESH and Guy s are the Trusts with the biggest under performances totalling 1.2m. 32. Analysis of all providers by service line shows that over performance after adjusting for challenges is concentrated in planned care 2.3m, outpatients 1.6m, drugs and devices 1.6m and critical care 0.8m. Unplanned care is showing an under performance of 1.1m. 33. Below is a short summary by provider of the main issues. Note that the values quoted are all before challenges unless stated. St Georges 34. NHS SWL has now agreed out-turn of 124.6m as a year-end settlement for NHS Wandsworth. The agreement was calculated based on month 8 out-turn adjusted for KPI s and challenges. Kingston Hospital 35. NHS SWL has agreed out-turn of 16.3m as a year-end settlement for NHS Wandsworth. The basis of the agreement was the position as at month 8 less KPIs and Challenges. Given that they have consistently over performed throughout the year and are likely to continue to the year end this agreement mitigates against the risk of over performance in the last 3 months. Queen Mary Roehampton (St Georges) 36. This contract is still over performing but it s broadly in line with the position reported last month. Chelsea and Westminster 37. The Chelsea & Westminster position before the SCBU transfer was offsetting the over performance against other service lines. The majority of the over performance is against planned care specifically in gynaecology, plastic surgery, paediatric medicine and T&O and outpatients. A&E is also showing an overall over performance specifically on the urgent care centre. Finance Period 29 th February 2012 Page 4 of 27

5 Royal Marsden 38. This contract continues to over perform in chemotherapy and radiotherapy. There has also been increased activity due to the interim cancer drugs fund which funds the cost of the drugs but does not cover the cost of the delivery of the drugs. This is mostly seen in regular day attenders, day cases and outpatients. Others 39. Royal Brompton has now agreed to reimburse PCT s for their share of the saving generated by moving to the new package price for cystic fibrosis as agreed with North West London ACU. For Wandsworth this is 86k. LSCG Transfers 40. There have been a number of in year transfers of services from acute contracts into specialised commissioning. The first of these transfers was SCBU and most providers had taken the budget and expenditure out of their SLA reporting. Where this is the case the expenditure has been taken out of the acute position and reported under specialised services along with their budget. 41. No transfer of renal services has happened with South West London providers but the final six months of activity on Kings and Guys has now been removed and reported under the LSCG expenditure. Non Acute Services (Appendices 2d to 2g) 42. Overall non acute commissioned services are reflecting a year to date over spend of 1.6m and a full year forecast over spend of 2.8m. Mental Health 43. A year to date over spend of 0.5m is reported and this is forecast to increase to an over spend of 0.8m by year end. The main areas reporting an over spend are: SWL & St George s Mental Health Trust Forensic Psychiatry, SLAM Specialist Services, CAMHS placements and Mental Health placements. These total 1.2m, other over spends of 0.3m are reported on a number of budget lines. These are mainly offset by an under spend of 0.6m on forensic placements and 0.1m on Children s mental health. A full year over spend of 0.4m is reported on Tier 3 and Tier 4 services, this is offset by an under spend 0.6m on the DAAT budget. The net under spend of 0.2m are the DAAT QIPP savings. Learning Disabilities (LD) 44. LD is reporting a year to date under spend of 0.5m as at Month 11 with a full year forecast under spend of 0.5m. The under spend is due to lower than anticipated placements at Jasmine Ward and low levels of special contractual placements, only four placements currently. Other Non Acute Services 45. A year to date over spend 0.2m is reported, forecast to increase to a full year over spend of 0.8m. A significant year to date over spend of 1.2m is reported on continuing care placements. Other significant year to date over spends are reported on Physical Rehab special contractual placements and the interpreting service totaling 0.4m. These are mostly offset by year to date under spends of 0.6m on DAAT, 0.6m on prison services and 0.3m on free nursing care. The full year forecast over spend is mostly due to continuing care placements, physical rehab special contractual placements and the interpreting service. Finance Period 29 th February 2012 Page 5 of 27

6 PRIMARY CARE SERVICES (Appendix 2h) 46. Overall primary care services at Month 11 are showing a minor year to date over spend and a full year forecast over spend of 1.0m. 47. Prescribing is reporting a full year forecast under spend of 1.3m. The QIPP programme target was 0.7m and it is now expected to achieve 1.2m. We have used our local data for forecasting spend, the national forecast as at December 11 was showing a forecast under spend of 1.6m. 48. A year to date over spend of 0.2m is reported on Pharmacy this is forecast to increase to a full year over spend of 0.4m. Most of the over spend is due to an increase in activity. 49. General and Personal Medical Services Contracts are reporting a minor year to date over spend, they are forecast to break-even by year end. The over spend has decreased significantly from previous months owing to identification of some 2010/11 payments that have now been moved to reserves. The over spend from Month 9 has also reduced owing to quarter four list size adjustments now reflecting a slight saving from the list cleansing exercise. 50. A full year forecast under spend of 0.4m is reported on the Quality and Outcomes Framework, this arises owing to changes in the prevalence calculations, the effects of which rolled forward and impact the total QOF spend for 2011/ A full year forecast over spend of 0.3m is reported on the GP Led Health Centre owing to higher than planned levels of activity for registered patients. 52. The year to date over spend of 0.4m on enhanced services is owing to the Access LES and is expected to over spend by 0.6m this year caused by a large number of practices signing up to the scheme compared to previous years. The full year forecast is under review and will be revised in Month A minor year to date over spend is reported on Dental contracts this is forecast to increase to an over spend of 0.1m for the year. The year to date position includes an adjustment of 0.2m for Patient Charge Revenue time lag. The service also received additional access funding of 100k for one off activity carried out in February and March The full year forecast includes an adjustment of 279k in claw-backs for contract under performance in 2010/11. The over spend relates to payments made for the Salaried GP Dental Service this has reduced from what has been reported previously as NHS Wandsworth have negotiated with NHS Sutton and Merton to recharge them for the Roundshaw Clinic costs. CORPORATE SERVICES (Appendix 2i) 55. An underspend of 1,772k is reported on Wandsworth Borough Corporate costs to month 11, and we are projecting an underspend of 550k for the full year. Finance Period 29 th February 2012 Page 6 of 27

7 56. Public Health and Choosing Health year to date underspends are mainly due to vacant posts and slippage on projects. There is a full year forecast of a 967k underspend on Public Health and Choosing Health. The largest forecast underspends are on Chlamydia, Smoking Cessation (Schools), PH Development, Cancer Screening, CHD Prevention, Universal BCG and Professional & Clinical Leadership. 57. The Clinical Commissioning Group (CCG) development budget is reporting a year to date underspend of 433k and a full year forecast underspend of 181k. The YTD underspend is because of slow invoicing by GP Practices, and posts being vacant early in the year. The majority of the total full year CCG underspend is due to the low spend on organisational development. 58. is landlord to 28 properties including the QMH PFI. A 1.4m underrecovery of premises income is reported. This is due to: historic agreements made where the rental charge for properties does not equal cost, tenants vacating properties in year, likely under-recovery of income from some tenants, and issuing tenancy agreements on a sessional rather than a full room usage basis. Finance Department continues to meet with tenants to try and ensure tenants pay the full cost for the space they use. 59. Cluster recharges various corporate costs to Boroughs. It is important that these recharges are validated by Borough Finance to ensure they are accurate and not covered by existing SLAs already. Capital Position 60. The capital forecast is detailed in Appendix 6 and it is projected that the allocated capital resource will be 400k under spent. The 400k underspend is due to: Additional 200k receipt for Putney Land Sale not reflected in plan 200k capital adjustment by NHS London. This was previously thought to reduce the available capital but this is not the case. 61. The Putney Land sale was completed in M11 on 14 February 2012, and is included as a receipt in the capital forecast. 200k was brokered to RTPCT in month The capital plan includes 500k capital for IT related costs and 452k that has been allocated to the Estates Team capital spend forecast, where it is anticipated that it can be spent on backlog maintenance. There is a risk that the Strategic Asset Management (SAM) team won t be able to spend their 452k allocation, and this may cause a further capital underspend. 63. The planned IFRS spend of 2,046k relates to the cyclical replacement of assets on the Queen Mary s Hospital site as part of the PFI arrangement plus Managed Equipment Service. 64. The corrected PFI model was discussed briefly at interim audit, in February The auditors have not highlighted any concerns to date. These changes are not material to the year-end audit. Finance Period 29 th February 2012 Page 7 of 27

8 Cash Position 65. The cash drawn for the period to 29 February 2012 is lower that the cash budget. Differences between the amounts of parliamentary funding drawn down and the timing of receipts and payments create these cash fluctuations. Balance Sheet (Appendix 3) 66. The Statement of Financial Position shows the position as at 29 February Trade and Other Receivables are consistent with the prior month (-2.5%). Trade and Other Payables have increased significantly (+8.0%) as the PCT have received a small number of large invoices towards the end of February that have not yet been processed. 67. Cash has also fallen (-72.4%) but remains positive as Trade and Other Payables have been paid in the month and the cash drawdown in the month has been lower than budget. Additional cash is expected early in March 2012 from premises receivables receipts. The PCT endeavors to manage cash to ensure that cash is available to make timely payments. Better Practice Payment Policy (Appendix 5) 68. The PCT s performance against the Better Payment Practice Code has improved further on the position reported in previous months by the number of invoices processed. At 29 February 2012 the number of invoices paid on target was 79.5% for non-nhs and 81.5% for NHS invoices. This PCT s target is 95% for all invoices. The PCT continues to facilitate the rate at which invoices are processed and paid, by methods such as targeted s to members of staff who persistently hold large numbers of invoices in their workflow. RECOMMENDATION 69. To note the forecast financial position for 2011/12 and the assumptions contained within it. Alison Lyons Associate Director of Finance 19 th March 2012 Finance Period 29 th February 2012 Page 8 of 27

9 FINANCE REPORT - Appendix 1a NHS Wandsworth Summary 2011/12 -YTD & Outlook Finance Period 29 th February 2012 Page 9 of 27

10 FINANCE REPORT - Appendix 1a NHS Wandsworth Summary 2011/12 -YTD & Outlook continued Finance Period 29 th February 2012 Page 10 of 27

11 Risk Analysis Worst to Best Case Scenario Appendix 1b Finance Period 29 th February 2012 Page 11 of 27

12 2011/12 Key Financial Risks Appendix 1c Commissioner Risks Finance Period 29 th February 2012 Page 12 of 27

13 Appendix 1d 2011/12 Revenue Resource Limit Finance Period 29 th February 2012 Page 13 of 27

14 Appendix 1e Resource and Applications Summary Finance Period 29 th February 2012 Page 14 of 27

15 Acute Commissioning Summary Appendix 2a Finance Period 29 th February 2012 Page 15 of 27

16 Specialist Acute Commissioning Summary Appendix 2b Appendix 2c Acute Commissioning Services Non SLA Items Finance Period 29 th February 2012 Page 16 of 27

17 Appendix 2d Mental Health Commissioning Summary Finance Period 29 th February 2012 Page 17 of 27

18 Appendix 2d Mental Health Commissioning Summary, continued Appendix 2e Learning Disability Commissioning Summary Finance Period 29 th February 2012 Page 18 of 27

19 Appendix 2f Special Placements (Community and other) Finance Period 29 th February 2012 Page 19 of 27

20 Appendix 2g Community, Elderly and Children Services Non SLA Items Finance Period 29 th February 2012 Page 20 of 27

21 Appendix 2h Primary Care Finance Period 29 th February 2012 Page 21 of 27

22 Appendix 2i Corporate Services Finance Period 29 th February 2012 Page 22 of 27

23 Appendix 2i, continued Estates and Facilities Costs Finance Period 29 th February 2012 Page 23 of 27

24 Appendix 3a Balance Sheet as at 29 th February 2012 Finance Period 29 th February 2012 Page 24 of 27

70. Appendix 3b 71. Cash Position as at 29 th February 2012 72.

25 70. Appendix 3b 71. Cash Position as at 29 th February Cash Flow as at 29 th February 2012 Finance Period 29 th February 2012 Page 25 of 27

26 Appendix 3c Better Practice Payment Policy Finance Period 29 th February 2012 Page 26 of 27

27 Appendix 4 Capital Resource Limit and Programme Finance Period 29 th February 2012 Page 27 of 27

NHS Wandsworth Finance Report. For the period April 2012 November 2012 & Interim Report up to December 2012

NHS Wandsworth Finance Report. For the period April 2012 November 2012 & Interim Report up to December 2012 NHS Wandsworth Finance Report For the period April 2012 November 2012 & Interim Report up to December 2012 06/02/2013 Produced by Finance 1 Finance Scorecard up to November 2012 Financial Strategy Work