Martin Riley, Head of Finance

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Gwasanaethau Cronfa Risg Cymru yn is-adran o fewn Partneriaeth Cydwasanaethau GIG Cymru Welsh Risk Pool Services is a division of the NHS Wales Shared Services Partnership Welsh Risk Pool Committee 4

1 Gwasanaethau Cronfa Risg Cymru yn is-adran o fewn Partneriaeth Cydwasanaethau GIG Cymru Welsh Risk Pool Services is a division of the NHS Wales Shared Services Partnership Welsh Risk Pool Committee 4 CIRCULATION Directors of Finance & Welsh Government DATE 8 th May 2017 PREPARED BY Sue Saunders RESPONSIBLE HEAD OF SERVICE Martin Riley, Head of Finance TITLE OF REPORT Welsh Risk Pool Services Financial Update PURPOSE OF REPORT The purpose of this report is to confirm the outturn financial position for 2016/17 and to highlight professional influence savings made by Legal & Risk Services during 2016/ INTRODUCTION The purpose of this report is to provide an update on 16/17 outturn expenditure incurred by the Welsh Risk Pool Service, the provisions, contingent liabilities and the implications for 17/ FUNDING ARRANGEMENTS The WRPS receives two funding streams: Departmental Expenditure Limit (DEL) to meet in year costs associated with settled claims. Annually Managed Expenditure (AME) to meet the cost of accounting for the long term liabilities of claims. 3.0 DEPARTMENTAL EXPENDITURE LIMIT The WRPS utilises DEL resource through the following expenditure headings: Page 1

2 Reimbursements to members Movement on the WRPS Claims Creditor Payments in respect of a WRPS managed claim (i.e. former Health Authority claims) Payments in respect of claims settled using Periodical Payment Order 3.1 Resource utilised 2016/17 As at the end of the financial year the final position is a 73.4m. This outturn position was agreed in partnership with the Welsh Government. A breakdown is provided below. No. m Claims reimbursed to members & WRP managed expenditure: Clinical negligence Personal injury All other losses and special payments Sub-total Periodical Payments Movement on claims creditor (see note below) Expenditure 2016/ The annual accounts require disclosure of reimbursements in-year of above 300k for each Health Organisation. In total there were 45 cases where the in-year reimbursement was above 300k. The average reimbursement across all 349 claims was 160k. Number m Cases exceeding 300,000 ABMU Aneurin Bevan BCU Cardiff and Vale Cwm Taf Hywel Dda PHW Sub-total All other cases Total cases Page 2

3 Note: Movement on Creditors Payments in year including reimbursements to individuals for PPO s / Structured Settlements totalled The difference between this figure and the reported spend of m is 7.468m. The 7.468m relates to movement on the claims creditor. This is the total of all cases that have been settled / interims agreed where the Health organisation has paid out but not yet sought reimbursement from the WRPS agreement has been reached in year but no payment has yet been made. This satisfies International Accounting Standards (IAS 37). At the end of March 2016 there was m of creditors outstanding. At 31 st March 2017 this has risen to m and the increase is reflected in the 2016/17 accounts. 31/03/17 m 31/03/16 m Movement m ABMu Aneurin Bevan Betsi Cadwaldwr LHB (0.773) Cardiff & Vale (2.00) Cwm Taf Hywel Dda (2.028) Powys (0.008) PHW (0.224) WAST Velindre Total COMMENT ON LIABILITIES BELOW 25,000 Whilst this report has focussed on the resource that is required by the WRPS the risks and uncertainties outlined in this report remain equally applicable to the individual Health Boards and NHS Trusts. The number of claims received in month continues to remain high. 5 AME / PROVISIONS The closing WG WRPS provision last year, as detailed in the NHS Summarised accounts was m. This is comprised of; Page 3

4 m relating to cases identified as probable or certain and, m relating to Structured Settlements/PPO s The summary below shows that overall the provision has increased by m from m to m. Within the movement for the probable and certain cases of 145.4M, approximately 76M relates to a significant increase on existing cases for the effect of the new discount rate. Due to Lord Chancellor s decision being late in the financial year, WRPS staff have developed a model to assess the financial impact of the change using the average value of a range of claim values, to include in the 2016/17 financial statements for NHS Wales. The impact can be analysed as follows:- 61.2m modelled impact 8.4m NPV impact 6.2m quantum uplift impacts identified 75.8m total The relevant element per Heath Board or Trust has been included in their 16/17 financial statements. The probables and certains in the database have increased by 36% to 546m from 401m whilst the value of the Periodical Payment Orders have increased by 14% to 320.6m from 281.2m PROBABLE AND CERTAIN CASES 31/03/17 31/03/16 Movement Clinical Negligence 534, , ,710 Personal Injury 4,959 4, Defence Legal Fees & other costs 6,486 5,265 1,221 Sub total 546, , ,414 Periodical Payment Orders 320, ,253 39,336 Total Provision 866, , ,750 The table below reconciles the movement in PPO s. There have been ten additions in year and two cases removed. Page 4

5 MOVEMENT ON PPO's m Opening Balance New PPO s Removed from Provision Application of Discount Rates Closing Balance CONTINGENT LIABILITIES In accordance with IAS37, Trusts and Local Health Boards disclose claims made against them for alleged clinical negligence and personal injury. These claims are disputed and, until they are resolved, are the Trusts' and Local Health Boards' financial liability. No provision has been made in these accounts for these items. Contingent liabilities disclosed by Trusts and Local Health Boards are given in their annual accounts. For 16/17 the total disclosed in the draft Accounts is m.. The comparative figure in the 2015/16 accounts was m. This therefore represents an increase of 66m or 8.4% in the value of cases classified as possible. The remote cases on the LARS database recorded in the draft accounts total m. This is a decrease from the 2015/16 remote figure of m /18 The budget for 17/18 has again been set at 75m. The forecast is a resource requirement of 81m. However, the above forecast value was modelled before WRPS staff were aware of the significant financial impact from the change to the discount rate. A model was developed for year-end purposes and to inform the Welsh Government of the change in AME cover required. The principles applied in this model will be adopted to re-model the 3 year planning forecasting tool. This work will be undertaken in May. Until this work is completed the level of expenditure relating to 17/18, 18/19 and 19/20 is uncertain however, The Lord Chancellor stated that already stretched NHS budgets would not be affected by this change and that additional funding will be found. The Welsh Government are working with NWSSP and Treasury to ensure the allocation for next year reflects mitigation of the discount rate impact. Page 5

6 Cases Therefore it is anticipated that a maximum of 6M (the original pre discount rate change forecast of 81m against a 75m allocation) will be the gap for 17/18 resulting in the new risk sharing agreement being enforced. 8 Clinical negligence analysis of ongoing claims As at the end of March there were 2,621 clinical negligence claims compared to 2,607 claims at the end of 15/16. The number of new matters opened in year was 923, compared to 990 in 2015/16. Appendix 1 below sets out the movement on the number of cases during the year by Health Board. The graph below demonstrates the slowdown in the rate of increase of open claims over the last two years. Total Clinical Negligence Open Cases March ,700 2,600 2,500 2,400 2,300 2,200 2,100 2,000 1,900 1,800 1, / / / / / /17 9 Professional Impact of Legal & Risk Services During 16/17, Legal and Risk Services reported professional influence savings of 87m. The table below provides an overview of the professional influence savings recorded for 16/17 and reflects significant achievements in reducing the final settlements from that of the claimant s initial estimate Page 6

7 Savings m Claims below 100K 4 Claims above 100k 66 Savings in relation to costs 3 Repudiated Claims 7 Miscellaneous Savings 7 TOTAL 87 CONCLUSION NHS Wales is experiencing significant financial challenges arising from negligence claims. The claims settled and ongoing claims are reviewed on a monthly basis with variations and movements noted and investigated. Page 7

8 Gwasanaethau Cronfa Risg Cymru yn is-adran o fewn Partneriaeth Cydwasanaethau GIG Cymru Welsh Risk Pool Services is a division of the NHS Wales Shared Services Partnership Appendix 1 Analysis of caseload and activity for clinical negligence matters to 31 st March 2017 by Health Board with 15/16 comparative 2016/17 ABMU BCU AB C Taf HD C&V Powys WAST Velindre PHW Grand Total Opening Month Closing Movement Total opened 2016/ Total closed 2016/ /16 ABMU BCU AB C Taf HD C&V Powys WAST Velindre PHW Grand Total Opening Month Closing Movement Total opened 2015/ Page 1

9 Total closed 2015/ Page 2

Welsh Risk Pool Services. Concerns, Claims Management and Learning from Events Assessment. Powys Teaching Health Board Final Report

Welsh Risk Pool Services. Concerns, Claims Management and Learning from Events Assessment. Powys Teaching Health Board Final Report Welsh Risk Pool Services Concerns, Claims Management and Learning from Events Assessment Powys Teaching Health Board Final Report 2015/2016 CONTENTS Contents... 1 Background to the standard and scope of