Agenda Item 9.1. Meeting / Committee. Meeting Date. 25 September Board of Directors. Information. This paper is for

Transcription

1 Agenda Item 9.1 Meeting / Committee Board of Directors Meeting Date 25 September 2012 This paper is for Action/Decision Assurance X Information Title Financial position for the period ending 31 August 2012 Purpose The purpose of this report is to advise the Board of the financial position as at the end of August Summary The trust s operating performance is in surplus, but remains behind plan at the end of August, driven by non pay expenditure and continued slippage on P&E delivery. The risk rating and cash position remain satisfactory. Prepared by Finance Presented by Chris Newton Recommendation Implications The Board of Directors is asked to note and comment on the financial position. Legal Financial Safety & Quality Strategic Risk & Assurance X X X

2 Financial position for the period ending 31 August 2012 Section 1 Summary The financial position remains behind plan at the end of August,although it is now in surplus. A satisfactory risk rating has been maintainedwithout further commitment from the contingency. 1.1 Overall operating position Current Month Year to date Actual Variance Last Month Variance Actual Variance Last Month Variance Income Activity Income (0.235) (0.032) Non Activity Income (0.097) Income, Total (0.215) Operating Expenses Pay (26.047) (0.373) ( ) Drugs (2.922) (0.085) (14.606) (0.369) (0.402) Clinical supplies (5.097) (0.476) (0.443) (23.636) (0.769) (0.293) PFI operating expenses (2.203) (0.104) (0.110) (10.370) (0.378) (0.274) Other operating expenses (4.285) (0.174) (21.554) (1.231) (0.815) Operating Expenses, Total (40.554) (0.590) (0.783) ( ) (2.161) (1.571) Profit (Loss) from Operations (EBITDA) (0.805) (0.391) (1.928) (1.156) Non Operating Expenses, Total (2.729) (0.031) (13.354) Net Surplus / (Deficit) (0.799) (0.422) (1.768) (0.969) Q2 August Indicative risk rating Weighting FRR2 Plan Actual Underlying performance EBITDA Margin metric 6.20% 6.40% <5% EBITDA Margin rating 25% 3 3 Achievement of plan EBITDA % of plan achieved metric % 93.60% <70% EBITDA % of plan achieved rating 10% 5 4 Financial Efficiency Net return after Financing metric -0.50% 0.20% <3% Net return after financing rating 20% 3 3 IS Surplus margin metric -0.20% 0.20% <1% IS Surplus margin rating 20% Liquidity Liquidity days metric <15 Liquidity rating 25% 3 3 Weighted Average Rating Translating this performance into an indicative risk rating shows that the trust would be rated at 3. This is satisfactory. Financial Risk Rating 3 3 1

3 The operating position remains behind plan with eightareas now showing significant financial stress. Divisions more than 0.2 million behind plan Main reason Healthcare Governance (0.738) Central P&E Surgery (0.701) Income Cardiothoracic Services (0.627) Income Medicine Acute (0.337) Non-pay Community Services (0.329) Pay PFI (0.323) Historic variations Anaesthesia & Theatres (0.312) Non-pay Pathology (0.230) Non-pay 1.2 Out-turn projection Extrapolating the position (EBITDA) at the end of August would give an outturn which was 0.3 million behind the Monitor plan, and is within the headroom available to maintain a risk rating of 3. This would indicate an out-turn income position which was 1.3 million over recovered, which is not unrealistic: The North Yorkshire position, extrapolated to year end would give an indicative out-turn of approximately 1.6 million over trade, which is within the contract tolerance. Activity for the NSCG is up against plan and there are further opportunities to over-trade. Other contracts would need to deliver to plan by year end. The out-turn expenditure position would be 1.8 million overspent: Pay costs continue to be contained within budget. This position will need to be maintained if non-pay costs continue to overspend and/or P&E delivery remains behind plan. 2

4 3

5 Section 2 Operating performance The income position remains satisfactoryand P& E delivery has improved but non-pay spend remains a concern, showing a further deterioration. 2.1 Income Overall, income performance remains ahead of plan. NHS activity has worsened since last month and has fallen slightly behind plan: Last month This month PCT trading variance Cumulative Cumulative Tees (0.158) (0.072) North Yorkshire & York NSCG Durham (0.355) Other (1.825) (2.152) Total (0.036) Income trends by PCT and point of delivery are set out below. PCT contract variances by month Point of delivery variance by month The income position is based on actual activity data for April to July together with an assessment for August based on the number of working days. Non-activity income remains ahead of plan, but there are no individually significant items to report. 4

6 Pay Monthly pay variance by staff group Overall, pay remains underspent at the end of August. Non-pay Other pay includes unallocated P&E target, which is being offset by underspending in other heads. Agency costs (cumulative) million -... c ommunity services (medical) m -... c ommunity services (nursing) m -... a cute medicine (nursing - G52 patients) m Sickness absence remains behind plan at 4.49% against a target of 3.9%; the opportunity cost of this variance is estimated to be around million. Monthly non pay variance by expenditure group NB All graphs show adverse variance as negative eg below the zero axis. 5

7 6

8 Non pay overspending remains a concern with a cumulative overspend of million at the and of August ( last month), a further significant worsening in month.the main areas of cumulative overspending are: Drugs Non high cost drugs million -... s pecialty medicine(haematology & Oncology) m PFI operating costs PFI variations(review to be completed in October) million Medical and surgical equipment PbR excluded devices(offset by additional income) million Other operating costs Renal satellite units(shift of activity from main hospital) million Note other non pay includes unallocated P&E target. 7

9 2.2 Productivity and efficiency Theme Target 2012/13 Year to Date actual Year to Date variance % achieved to date Workforce Business Improvement (0.403) 78.6 Medicines Management (0.063) 91.6 Patient Flow (0.111) 0.0 Procurement (0.260) 64.4 Total (0.832) 87.9 Overall delivery has improved in month from 82.5% to 87.9%, with the workforce plan being enhanced by non-recurrent vacancy savings. The procurement savings target is currently held in the planning directorate budget whilst savings are reflected in divisions. We anticipate agreeing the allocation of this target with divisions before the next board report. The bridge chart below shows the make-up of the annual P&E target by main scheme and RAG rated for risk of delivery. Out-patients and nursing productivity remain a high risk. This is equates to 1.2 million (5.8%) of the annual planned savings. The total risk including amber rated elements is 2.8 million. 8

10 Section 3 Source and application of funds The cash position remains satisfactory There remains limited headroom available for further borrowing to support additional capital investment 3.1 Summary source and application statement Summary Source and Application of Funds Plan Actual at 31 August 2012 Opening cash balance at start of period Source of Funds: EBITDA Treasury Management and Financing Activities Total Funds Available Application of Funds Capital investment (5.221) (4.973) Treasury Management and Financing Activities (8.076) (8.101) Total Application of Funds (13.297) (13.074) Net Funds Available after application Net movement in working capital (4.496) (5.735) Closing cash balance at end of period Cash and working capital Cash in hand The cash position is satisfactory. 9

11 Aged debt Aged debt presents a low risk to the trust s financial position: >90 days million From April 2012 the bad debt provision has been excluded from the debts over 90 days category in order to show the net amounts at risk. 0.5 million relates to community services debt with Tees PCT, which is awaiting resolution but is offset by contra creditor balances. There is a further 1.8 million in relation to North Yorkshire and York PCT, which is now more than 90 days over due. We are in dialogue with NY&Y PCT to try and resolve all outstanding historic contractual issues as soon as possible. The remaining debt comprises numerous smaller amounts and is subject to an arrangement to pay or is being actively pursued through recovery action days million 0.9 million relates to NHS debt, which we anticipate receiving in full. There are no individually significant sums within the 0.2 million of Non-NHS debt. <30 days million This includes 2.7 million of NHS debt which is due for payment by the end of September. Non-NHS debt includes 0.2 million with Sainsbury s; there are no other individually significant sums. 10

12 3.3 Capital programme Actual Variance Last Month Variance Actual Variance Last Month Variance Cancer Radiotherapy Expansion (0.075) (0.026) Generic High Dependancy Unit (0.296) (0.464) Refurbishment Wards (0.010) (0.004) Endoscopic Decontamination at JCUH (0.066) (0.091) (0.051) (0.114) (0.023) Sterile Services Decontamination (0.066) (0.003) (0.088) PFI Lifecycle investment Equipment Replacement programme including associated enabling costs Approved Annual Plan 2012/13 Current Month Year to date (0.025) (0.068) (0.479) Other schemes (0.014) Capital Programme (0.248) (0.932) The capital programme is 0.2 million behind plan at the end of August 2012 ( 0.9 million last month). We continue to assume that there will be no slippage into future years or cost variations within the programme at present. 3.4 Prudential borrowing Prudential Borrowing Limit PFI Noncommercial borrowing Leases Total Opening position at start of period New borrowing Principal repayments (1.472) (0.856) (2.328) Closing position at end of period Prudential Borrowing Limit Prudential Borrowing Code Measure Plan Actual PBC ratio test: Dividend cover > Interest cover > Debt service cover > Debt service to revenue < 10.0% 3.2% 3.2% We are awaiting Monitor s confirmation of the PBL. Performance against PBC ratios is satisfactory. The Trust has agreed the drawdown of the final tranche of borrowing in relation to the oncology expansion ( 1.7 million); this will be drawn before the end of September. The headroom for borrowing remains around 0.4 million of annual principal and interest payments, which equates to around 5 million of long term borrowing (25 years) or 1.0 million of short term borrowing (5 years). This will be affected by both prevailing interest rates and underlying performance. 11