Month 10 Finance Report

Transcription

1 TAUNTON & SOMERSET NHS FOUNDATION TRUST Month 10 Finance Report Report to: Trust Board on 24 February 2016 Purpose of the Report: The purpose of the report is to update the Board on the Month 10 financial position Sponsor: Author: Contact Details: Peter Lewis, Deputy Chief Executive Mark Hocking, Interim Deputy Director of Finance Indicative Timings (Mins) Financial/Resource Implications: As detailed in the report Risk Implications Link to Assurance Framework or Corporate Risk Register: Legal Implications: Link to CQC Essential Standards Freedom of Information Status: Previous Considerations: Action Required: (Please type in Bold) Linked to financial risk on the Corporate Risk Register n/a n/a Tick if one of the following apply: Data protection staff or patient detail Commercially sensitive Stakeholder management Early stage of discussion Potentially prejudicial to staff morale or partnership working Regular monthly report The Board is asked to note the report TSTA/02.16 Page 1 of 12

2 Finance In Month Year to Date Full Year Actual Variance - (Adverse)/ Favourable Actual to Date Variance - (Adverse)/ Favourable Current Forecast Forecast Variance - (Adverse)/ Favourable Income (315) Expenditure (156) (62) Net Surplus / (Deficit) (728) (6) (9,460) 29 (11.000) Income & Expenditure In Month Heading 000 Variance (Adverse)/ Favourable Income & Expenditure (136) Commentary Underspends on clinical supplies & drugs offset by underperformance on NHS clinical income CIP (96) Slippage in timing of expected savings FRP Actions 226 Savings from headcount controls exceeding plan Variance to Plan (6) Note: The in-month and year date variances compare actuals with the plan revised in September January financial performance was marginally behind the Financial Recovery Plan (FRP) forecast of 0.722m in month with an actual deficit of 0.728m, 0.006m behind plan. 1.2 The year to date actual deficit is 9.460m compared to the revised planned deficit of 9.489m, 0.029m ahead of plan. 1.3 The Trust has a revised control total of 11m deficit. The control total has been reduced (from 11.5m) following unplanned slippage in the capital programme of 0.5m which has been adjusted via a capital to revenue transfer. There is no impact of this technical adjustment. 1.4 A broad range of KPIs have been created to measure performance against the revised trajectories that are required to be achieved through the implementation of the Financial Recovery Plan (FRP). These are detailed below:- TSTA/02.16 Page 2 of 12

3 Summary of Financial Recovery KPIs In month Var to FRP Year to date Var to FRP Forecast Outturn KPI Details of Measure 000 RA 000 RA RA Commentary I&E - Pay Variance to FRP Headcount and pay controls in place. Focussed effort to reduce temporary/variable staffing costs by increased use of substantive staff. I&E Non Pay Variance to FRP 241 (439) R A Shortfall in CIP delivery (SIMS) and under achievement of some FRP actions. I&E - Income Variance to FRP (315) A 185 In month variance due to profiling. FOT in line with FRP. Cash Run Rate Actual compared to FRP n/a n/a 1,049 Cash balances at Month 10 are 1.049m higher than the FRP. Continued delivery of the FRP will enable the Trust to maintain sufficient liquidity for the remaining three months of the financial year. The year-end balance is forecast to be 3.3m FRP Savings Performance Actual v FRP Stretch targets and challenge meetings for Directorates to mitigate slippage in core FRP programme. CIP Performance Actual v FRP (96) A (634) R R Delay in expected timing of savings likely to be unresolved in 15/16. Additional mitigations have been identified including review of stock. FRP net I&E Performance Actual v FRP (6) A 29 A Minor adverse performance in month 10, however, overall year to date performance is consistent with the FRP. TSTA/02.16 Page 3 of 12

4 Deficit Actual v Plan Cumulative Deficit by Month 0.0 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 (2.0) (4.0) Forecast January performance (and the review of forecast outturn based on this position and known risks/mitigations to year end) provides assurance that the FRP forecast of a net deficit of 11m remains achievable for 15/16 overall. m (6.0) (8.0) (10.0) (12.0) Actual Forecast Original Plan CIP Programme Savings CIP Year to date the Trust has achieved 4.642m of the 8.250m cost improvement target. The current forecast delivery of the core CIP programme is 5.482m (excluding SIMS and HOPE). 12 Month Forecast Cashflow Requirement Cash and Liquidity The Trust FRP planned for the achievement of 6.225m of the core 9.900m Trust CIP target. 1.1m income from the QIPP (agreed as part of the 2015/16 contract) is offset against the QIPP target, but no further plans have been received to address the remaining 0.650m CC QIPP target. There is a high risk that certain key schemes included in the FRP will not deliver and these have been excluded from the forecast CIP figure. These (SIMS and HOPE schemes) amount to 1.05m, but there are mitigating turnaround actions in place aimed at addressing these (further information provided below). Cash deposits amounted to 2.2m at the end of month 10 which is 1.0m higher than FRP plan. The Trust is continuing to take action aimed at further improving working capital management and whilst the Trust s cash resources are tight they are expected to be sufficient for the remainder of 2015/16 on the basis of the current forecast deficit. Capital Expenditure Plan v Forecast Capital Expenditure Capital expenditure amounts to 7.8m for the year to date compared to FRP plan of 9.3m. Current forecasts are identifying that outturn spend will be 9.7m, in line with the capital to revenue transfer agreed with Monitor. TSTA/02.16 Page 4 of 12

5 Financial Sustainability Risk Rating Financial Sustainability Risk Rating Plan For Current YTD ending 31-Jan-16 Actual For Current YTD ending 31-Jan-16 Capital Service Capacity rating 2 1 Liquidity rating 2 1 I&E Margin rating 1 1 I&E Margin Variance rating 3 1 Risk Rating To the end of January, the Financial Sustainability Risk Rating is 1, which is behind the plan of 2. Weightings Capital Service Cover 25% Liquidity 25% I&E Margin 25% I&E Margin Variance 25% Overall Financial Sustainability Risk Rating Month 10 Financial Position I&E Summary 2.1 January financial performance was slightly behind the Financial Recovery Plan (FRP) forecast of 0.722m in month with an actual deficit of 0.728m, 0.006m behind plan. This was largely attributable to the profiled level of clinical income included in the FRP forecast. Income underperformance has been largely offset by continued progress in managing pay and non-pay expenditure through the recovery plan actions. 2.2 The year to date actual deficit is 9.460m compared to the revised planned deficit of 9.489m, 0.029m ahead of plan. The in-month and year to date variances against the forecast are as follows; Month 10 Year to Date Forecast Actual Variance Forecast Actual Variance Income NHS clinical income 20,169 19,598 (571) 200, , Non NHS clinical (14) 2,079 1,890 (189) Other income 1,933 2, ,338 21, Total Income 22,282 21,967 (315) 223, , Expenditure Drugs 2,312 2, ,245 23,701 (456) Clinical supplies 2,118 1, ,438 21, Non-clinical 3,560 3,565 (5) 38,694 39,049 (355) Employee benefits 13,776 13, , , Financing costs 1,238 1,298 (60) 12,342 12, Total Expenditure 23,004 22, , ,212 (156) Net 722 (728) (6) 9,489 9, Key Points: NHS clinical income in month was significantly behind plan due to the profiled level of activity. This will rectify itself in subsequent months and overall income year to date is slightly ahead of plan. The underspend on drugs and clinical supplies is driven by activity levels and is in part offset by reduced pass-through income from Commissioners. TSTA/02.16 Page 5 of 12

6 Employee benefits continue to remain within revised FRP forecasts as headcount and other controls continue to manage pay related expenditure. 2.3 Broadly, January performance was in-line with plan. A review of the forecast outturn based on this position and an assessment of emerging risks and mitigating actions provides assurance that the FRP forecast of a net deficit of 11m remains achievable for 15/16 overall. 3. Key Performance Indicators 3.1 To provide a greater level of assurance on the achievement of the revised financial plans in 2015/16 a range of KPIs have been agreed with Monitor as part of their performance oversight process. These include:- i) I&E Run rate analysis, including; Payroll analysis Non pay analysis Income analysis ii) iii) Cash Run rate analysis CIP Performance iv) FRP Variance analysis 3.2 These KPIs are set out below and will form the framework for financial reporting for the remainder of 2015/ I&E run rate analysis In-month performance: net deficit 0.728m (plan: 0.722m) Cumulative performance: net deficit 9.460m (plan: 9.489m) September October November December January February March The Trust has revised its forecast outturn deficit to 11.0m due to the agreed Capital to Revenue transfer as at 31 st January. This is not shown on the chart for ease of comparison Planned CIP Planned FRP Planned Run Rate Actual Position TSTA/02.16 Page 6 of 12

7 3.4 January financial performance was 0.006m behind the Financial Recovery Plan (FRP) forecast with an actual deficit of 0.728m in month compared to a planned deficit of 0.722m. 3.5 The year to date position is 0.029m ahead of plan, with a deficit year to date of 9.460m compared to a planned deficit of 9.489m. 3.6 The chart above illustrates the impact and importance of CIP expected to be achieved and planned FRP actions (savings) in improving an underlying I&E run rate (that would otherwise lead to a net deficit of 13.9m) to the forecast deficit of 11.0m. 3.7 Payroll Analysis In-month performance: actual spend m (plan: m) Cumulative performance: actual spend m (plan: m) 3.8 The Trust continues to attempt to reduce its reliance on temporary staffing measures (bank and agency) through the increased recruitment of substantive staff as shown in the table below: 1,000,000 Total Pay 13,500,000 Agency Bank 800,000 Locum Substantive 13,000, ,000 12,500,000 Temporary 400,000 Substantive 12,000, ,000 11,500,000 0 (200,000) April June August October December February April June August October December February April June August October December February April June August October December February 2012/ / / /16 (Forecast M11-12) 11,000,000 10,500, Spending on bank in January was 0.486m (December 0.446m) and Agency 0.444m (December 0.467m). There is a forecast increase in bank and agency spend in February and March as the requirement to staff escalation beds continues. Locum costs are also forecast to increase in the remaining two months primarily due to sickness and maternity cover Non Pay Analysis In-month performance: actual spend 8.987m (plan: 9.228m) Cumulative performance: actual spend m (plan: m) TSTA/02.16 Page 7 of 12

8 3.11 The Drugs overspend is being driven by increased activity and is largely offset by additional pass-through income from Commissioners The clinical supplies overspend in month has resulted from under performance of specific FRP actions and increased device costs which are offset by additional income Mitigating actions have been identified and stretch targets (relating to general reductions in expenditure) are being applied across Directorates aimed at ensuring overall delivery of the FRP. Purchase order controls in key non-pay areas continue to be applied and there is generally increased Trust wide scrutiny of all non-pay expenditure Income Analysis In-month performance: actual income m (plan: m) Cumulative performance: actual income m (plan: m) 3.15 As reported in previous months, the majority of the issues relating to activity reporting following the implementation of the new PAS (IMS Maxims) have now been resolved for inpatient activity. There are some issues relating to tariff grouping for A&E activity since the system build did not make investigation and treatment fields mandatory (which is necessary to group activity data to HRs). Whist outpatient activity was still estimated to produce the month 10 position; a grouped outpatient file has subsequently been received and will be incorporated into commissioner contract reports As and when actual outpatient and A&E activity data becomes available, there is likely to be some change to contract positions resulting from the difference between forecast and actuals. Where data is sourced from outside of our PAS, e.g. drugs and devices, these continue to be reported as actuals, so limits the overall downside risk of movement in income Somerset CC income is behind plan by 572,000 as at month 10, an adverse variance of 56,000 recorded in month. The shortfall reflects the year to date impact of agreed CC funding compared to original planning assumptions. It should be noted there has been a change in casemix with greater volumes of emergency and unplanned activity being undertaken and reduced elective activity compared to plan Ambulance handover penalties which are netted against income are calculated at 287,200 year to date, an increase of 38,400 in month, based on 164 chargeable delays in month The specialist commissioning contract is on plan for block activity elements. All other commissioners, including non-commissioned activity are forecast to be cumulatively 252,000 under plan, although this may be subject to change once actual activity is reported Cumulatively the Cancer Drugs Fund income is 811,000 over plan, which is an increase of 65,000 on the reported month 9 position and reflects on-going higher spend on CDF drugs Specialist commissioned drugs and devices are 1,752,000 over plan. Drugs and devices growth (excluding new NICE commissioned drugs in 2015/16), is funded at 70% of cost. Based on the month 10 position, 526,000 of the over performance will not be recovered, therefore additional income above plan is reported as 1,226,000. TSTA/02.16 Page 8 of 12

9 3.22 All commissioner and NCA activity except for Somerset CC, Specialist Commissioning and Dorset CC (which represents 16% of the Trust s clinical income) is reported on a PbR tariff basis. 4. Cash & Statement of Financial Position (SoFP) Actual cash 2.208m (plan: 1.159m) 4.1 The table below sets out the in-month Statement of Financial Position (SOFP) movement in balances, the overall movement in balances for the financial year to date and the forecast SOFP as at 31 March In Month Year to Date Forecast Prior Month Current Month Actual FRP Current Month Movement in Month Variance to FRP Opening Balance Current Month Actual Movement in Year Year End Non Current Assets Intangible Assets (30) (181) (299) 3,761 Property Plant & Equipment - Purchased 141, , ,015 (13) (835) 139, ,180 1, ,943 Property Plant & Equipment - Donated 3,853 3,814 3,900 (39) (86) 3,907 3,814 (93) 3,760 On SoFP PFI Assets 18,632 18,572 18,534 (60) 38 19,174 18,572 (602) 19,036 Investments in Joint Ventures (26) (117) (73) 165 Related Party Receivables >1yr (49) (18) 401 Non Current Assets 164, , ,761 (127) (1,230) 164, , ,066 Current Assets Inventories 2,791 2,802 2, ,894 2,802 (92) 3,650 Trade & other Receivables <1Yr 3,558 3,240 6,826 (318) (3,586) 6,099 3,240 (2,859) 5,309 Related Party Receivables <1yr 1,650 1, (64) 806 1,228 1, ,449 Prepayments 3,886 4,089 3, ,001 2,382 4,089 1,707 3,778 Accrued Income 3,766 3,602 4,154 (164) (552) 2,559 3,602 1,043 1,054 Non Current Assets Held for Sale (333) (579) 0 Cash 3,983 2,208 1,159 (1,775) 1,049 18,464 2,208 (16,256) 3,300 Total Current Assets 19,634 17,527 19,000 (2,107) (1,473) 34,205 17,527 (16,678) 18,540 Current Liabilities Trade & Other Payables <1yr (7,050) (6,729) (6,752) (9,330) (6,729) 2,601 (11,015) Capital Creditors <1yr (483) (474) (910) (761) (474) 287 (456) Current Tax Payables (3,047) (3,105) (3,353) (58) 248 (3,024) (3,105) (81) (3,100) Post Employment Benefit (2,275) (2,309) (2,142) (34) (167) (2,215) (2,309) (94) (2,325) Accruals (9,000) (8,038) (9,165) 962 1,127 (8,237) (8,038) 199 (6,900) Deferred Income (4,704) (4,437) (3,423) 267 (1,014) (6,113) (4,437) 1,676 (5,700) Borrowings & Other Liabilities (1,916) (1,916) (3,379) 0 1,463 (1,879) (1,916) (37) (1,953) Provisions <1yr (301) (294) (615) (443) (294) 149 (135) Current Liabilities (28,776) (27,302) (29,739) 1,473 2,437 (32,002) (27,302) 4,700 (31,584) Net Current Assets (9,142) (9,776) (10,739) (634) (963) 2,203 (9,776) (11,979) (13,044) Long Term Liabilities Trade and Other Payables > 1yr Capital Creditors >1yr (213) (213) (248) 0 35 (642) (213) 429 (218) Deferred Income >1yr (3,817) (3,796) (3,822) (4,011) (3,796) 215 (3,754) Loans >1yr (26,341) (26,278) (26,293) (28,074) (26,278) 1,796 (26,118) Provisions >1yr (830) (830) (1,065) (0) 235 (830) (830) (0) (857) Total Long Term Liabilities (31,201) (31,117) (31,428) (33,557) (31,117) 2,440 (30,947) Net Assets Employed 124, , ,594 (676) , ,639 (9,035) 127,075 Tax Payers Equity Public Dividend Capital 78,834 78,834 78,834 0 (0) 78,420 78, ,334 Revaluation Reserve 33,860 33,910 34, ,141 33,910 (231) 39,331 I&E Reserve 11,621 10,895 10,504 (726) (391) 20,113 10,895 (9,218) 8,410 Total Tax Payers Equity 124, , ,594 (676) , ,639 (9,035) 127,075 TSTA/02.16 Page 9 of 12

10 4.2 Cash balances as at 31 st January 2016 are 2.208m which is 1.049m higher than the FRP revised plan. The implementation of the financial recovery plan will enable the Trust to maintain sufficient liquidity for the remaining three months of the financial year. 4.3 Trade receivables less than 1 year are 3,240k which is a further reduction on last month (reduced by 318k) and year to date (reduced by 2,859k). The reductions follow considerable efforts in recent months to chase outstanding debts and obtain payment as soon as possible. 4.4 The Trust has developed detailed daily cashflow forecasts in order tightly manage cash. Balances, estimated inflows and outflows are updated daily to ensure the Trust has close oversight of actual and expected levels of cash. 4.5 The weekly cashflow forecast to the end of the financial year is shown below:- 5. CIP programme In-month performance: adverse variance ( 0.096m) Cumulative performance: adverse variance ( 0.634m) 5.1 Year to date delivery of core CIP is 4.642m versus a plan of 8.250m, which represents a 3.608m adverse variance. Following agreement with Somerset CC, identified savings achieved against the QIPP element of CIP are 0.917m year to date. For the year as a whole this will increase to 1.1m leaving a shortfall of 0.650m against plan ( 1.750m). 5.2 CIP achievement compared to Plan at the end of January is summarised below:- TSTA/02.16 Page 10 of 12

11 Variance Variance YTD YTD Plan YTD v FOT FOT v Plan Actual Plan Plan Directorate/Trust wide '000 '000 '000 '000 '000 '000 Trust wide 2,216 1, (660) 1,132 (1,084) Acute Medicine (16) Clinical Support 2,066 1, (805) 1,099 (967) Theatres & Critical Care (3) HOPE (251) 150 (549) Surgical 1, ,105 (163) Women & Children (22) 168 (67) Planning & Performance (17) 317 (152) Corporate 1, (292) 702 (402) Unidentified Plans 1,019 1,605 0 (1,605) 0 (1,019) Total 9,900 8,250 4,642 (3,608) 5,482 (4,418) QIPP 1,750 1, (542) 1,100 (650) Total 11,650 9,708 5,558 (4,150) 6,582 (5,068) 5.3 Both Procurement ( 1.500m) and the SIMS ( 0.500m) CIP plans remain reported as Trust wide schemes, as well as initial plans relating to the establishment of the new OPAL Older Persons Assessment and Liaison Unit (which have improved productivity but will now not be cash releasing). 5.4 From month 10, savings expected through delivery of schemes within the HOPE Directorate and SIMS (continued roll out of the stock and inventory management system) which amount in total to 1.05m have been removed as these schemes are at high risk of non-delivery in 2015/16 due to a number of factors including staff sickness. 5.5 The Trust has engaged interim resource to expedite the implementation of these schemes and has identified additional turnaround actions which will mitigate the failure of these schemes to deliver. The most significant action is the completion of a comprehensive stocktake over the remaining months. Although not cash releasing in the 2015/16 Financial Year it is expected that the cash benefits will occur in 2016/ Financial Recovery Programme In-month performance: ahead of plan ( 0.226m) Cumulative performance: ahead of plan ( 0.511m) 6.1 The financial recovery plan (FRP) actions submitted to Monitor in October are not reported in the CIP position, however are being regularly monitored (monthly) through the weekly Financial Recovery roup (FR) and bi-weekly Turnaround workshops. 6.2 The table below summarises progress to date in delivering these actions: TSTA/02.16 Page 11 of 12

12 KPIs - Financial Recovery Plan Plans Oct 6.3 Year to date, FRP actions have delivered cost reductions of 1.358m against the plan of 0.847m, a 0.511m positive variance. Board members will note particular ongoing success in headcount controls with more limited success in other areas. Work will continue in these areas to ensure the potential to generate savings are maximised inyear and where they are not deliverable in year will be incorporated, where appropriate, into the Trust CIP plans for 2016/17. Nov Actual Dec Headcount Controls Overtime Controls - A&C (22) CNS Post Review (16) Long Term Locums (20) A&C Interims (29) Bank controls - stop non-clinical bank (43) Computer Hardware freeze (14) Photocopiers - no additional contracts (13) Contract refuse and clinical waste review Freeze F&F (24) Reduce use of non-nhs meeting venues (18) Stationery freeze (25) Travel & Subsistence Review Minor Works controls Internal refreshments bill (6) Close restaurant at weekends (13) Reduce value of CEAs Reduce spend on publications and printing etc Demand management of high cost tests (125) Review of High Cost Blood Products (79) Review of VAC Pumps (1) Review of Bariatric Bed Hire Total 1, , Jan YTD Plan YTD Var YTD TSTA/02.16 Page 12 of 12