1. Strategic Report Hello, my name is A year in numbers About the Trust and our community... 7

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2 Contents 1. Strategic Report Hello, my name is A year in numbers About the Trust and our community Local health economy Well-Led Organisation Listening into Action Visible Leadership Well-Led Pilot Engaging with our Local Community Trust Board Trust Board Structure (as of 31 March 2015) Attendance at Board meetings Committee structure Improvements and the way ahead Our vision, objectives and priorities Our key achievements Rebuilding our Emergency Department Choosing Croydon Improving quality, effectiveness and safety Quality Improvements Patient Experience Friends and Family Test (FFT) Length of Stay (LOS) and Patient Discharge Patient Dignity and Respect Croydon Health Services Annual Report and Accounts Page 1

3 5.6. Patient Safety Workforce Development Staff Pledges Safe Staffing Staff Survey Recruitment and Retention Croydon Stars Ensuring equality Freedom to Speak Up/Whistleblowing Trade Union Engagement Information Governance and ICT Systems Keeping shared information secure HIMMS Level 6 Award CRS Millennium (Phase 2) Emergency Planning and Business Continuity EPRR Plans and Preparation Ebola Preparedness Winter Planning Handling high demand Managing Our Estate Major improvements Sustainability report Directors Report Statement of the Directors as to disclosure of information to auditors Pension Liabilities Directors interests Croydon Health Services Annual Report and Accounts Page 2

4 10.4. External auditor s remuneration Sickness absence data Cost allocation and charges for information Disclosure of personal data and related incidents Employee consultation Equality disclosures Health and Safety Fraud Financial Review /15 Financial Performance and Progress (overview and summary) Where our money comes from What we spent the money on Getting Best Value for Money Capital Investment Going Concern Better Payments Practice Code Prompt Payments Code Off-payroll engagements Remuneration report Salary and Pensions of Senior Managers Pension Benefits 2014/ Exit packages Pay Multiples Looking Forward to 2015/ Statement of the Chief Executive's Responsibilities as the Accountable Officer of the Trust Statement of Directors' Responsibilities in Respect of the Accounts Croydon Health Services Annual Report and Accounts Page 3

5 /15 Annual Governance Statement Independent auditor's report to the Directors of Croydon Health Services NHS Trust Croydon Health Services Annual Accounts Appendix A: Croydon Health Services NHS Trust Sustainability Report 2014/ Croydon Health Services Annual Report and Accounts Page 4

6 1. Strategic Report 1.1. Hello, my name is Hello, our names are John Goulston and Michael Bell and we are the Chief Executive and Chairman of Croydon Health Services NHS Trust (CHS). CHS provides hospital services for the people across Croydon as well as a full range of community services delivered in facilities across the Borough as well as in people s homes. Over the past year we have continued to improve the services that we provide for our patients and ensured that we tackle the challenges that, in common with NHS Trusts across the country, we face in delivering high quality care. Gradual improvement has been made across the Trust and noticed by patients; research agency Picker, who administered the 2014 NHS Inpatient Survey to the majority of Trusts in England found that Croydon Health Services had made the third largest improvement in the country in terms of reducing problem patient experience issues against a broader background of decline across most of the other organisations that they surveyed. These improvements would not have been possible without the wholehearted support of our staff and our community. Thanks to our embracing of the Listening into Action staff empowerment methodology, 75% of our staff feel that they can make a difference to improvements in the workplace, one of the highest recorded nationally in this year s NHS Staff Survey. CHS has become the first Trust in England to achieve the Listening into Action accreditation kitemark, and we are intending to make sure that staff empowerment becomes synonymous with working for our organisation and improving patient care and working lives. One of the many initiatives that we have implemented this year to improve this patient experience is a simple one to help break down barriers between our staff and our patients we were one of the first Trusts in the country to adopt the Hello My Name Is initiative, where we all make sure we introduce ourselves to the people that we talk to. Better engagement with our patients and community has also been central to improving our services. Sustained improvements in the performance of our complaints team has ensured that we are more responsive to concerns our patients and their families raise with us with the team now hitting the Trust s targets for timely responses to complaints. Our regular listening and feedback events to patients, stakeholders and the public have driven engagement and the information from these has been fed directly into our strategic plans, ensuring that the priorities of our community are the priorities of our organisation. These will be supported in the coming year by a new programme of Open Surgery sessions, where our patients and community can come and talk directly to our senior team and raise issues with us one-to-one. To make our improvements to quality and experience more fully coordinated, this year the Trust established the Quality, Experience & Safety Programme (QESP) to draw together the different strands of our quality improvement programmes into one place. Overseen by our new Director of Nursing, Croydon Health Services Annual Report and Accounts Page 5

7 Michael Fanning, who joined the Trust in December last year, QESP is a major driving force in improving the systems and processes that we use to ensure our patients are safe and well-cared for. Complementing our drive to improve patient engagement and experience, we have also made sure that our estate and services are fit for purpose. With the approval in March of 21.25m of funding to rebuild our Emergency Department over the next two years, we are pleased to be able to say that the renewal of the Trust s estate is well underway. This is a major new chapter not only for the Trust but for healthcare in Croydon. Ensuring high quality, effective and safe services for our community requires funding; our safe staffing audit found that our hospital services were staffed to appropriately safe levels as set down by national expert guidance. Despite a nationwide shortage of nursing and other clinical staff, we have been able to maintain a high standard of safe staffing within the services we provide. While recruiting remains challenging, we now have 150 more nurses on staff than we did at this time two years ago. Early indicators from our new Could You Be A Croydon Nurse? recruitment campaign appear positive and we are continuing the work that we began this year to improve our retention of staff, but to ensure our services are safely staffed we have had to rely more on bank and agency staff than we would like. These high staffing costs have had an ongoing impact on the Trust s financial position, which has meant that this year we have declared an operational deficit of 27.3m; this is 9.4m more than the deficit which we had originally predicted and is something that we are working closely with our commissioners and colleagues across South West London. While we will ensure that we maintain our standards of care, we have an obligation to ensure that the Trust returns to a good financial position. With the continued support of our colleagues and our community, we believe we can get there. Mike Bell Chairman John Goulston Chief Executive Croydon Health Services Annual Report and Accounts Page 6

8 1.2. A year in numbers Treated 22,935 day case and 2,629 elective (planned) in-patients 41,890 Emergency and non-elective in-patients 302,972 outpatient contacts 344,258 adult community services contacts 190,677 children s community services contacts 68,619 people were seen in the accident and emergency department at Croydon University Hospital, and an additional 46,669 at the Urgent Care Centre (provided by Virgin Care since 11 April 2012) 3,818 babies were born in the Maternity Unit and Birth Centre On any given day in Croydon, we see on average: 10 babies born in our maternity services 100 surgical operations 1,000 outpatient appointments on a weekday Up to 400 people using our urgent and emergency services 700 home visits 300 health visitor appointments (children and older people) 55 Croydon children seen in local schools 670 referrals to our community services 1.3. About the Trust and our community Croydon Health Services (CHS) is more than just a local hospital. We also provide a wide range of community services at home, in schools and clinics throughout Croydon to help keep people well, active and healthy. The Trust employs around 3,670 staff and has a dedicated team of 300 volunteers. More than a third of our staff work within our community services, alongside our partners in primary care and social services, to care for people in- and out-of-hospital. The Trust runs two hospital sites covering both the north and south of the borough: Croydon University Hospital is our main inpatient hospital with a flexible bed base of between 424 and 496 beds. Services include one of the busiest Accident & Emergency departments in south London, our transformed maternity services and specialist care for stroke, heart disease and elective (planned) surgery, including trauma and orthopaedics. Purley War Memorial Hospital, which re-opened in 2013 after an 11.15m extensive refurbishment, to offer improved access for people living in south Croydon to diagnostic and outpatient services, including ophthalmology services provided by Moorfield s Eye Hospital. The Trust also runs 16 community clinics across Croydon, including: Integrated children s diabetes services, which were rated as excellent by NHS England in 2014; Learning disability care Croydon was named as the best performing borough for the second year in a row for these services run jointly with Croydon Clinical Commissioning Group, Croydon Council and South London and Maudsley NHS Foundation Trust Croydon Health Services Annual Report and Accounts Page 7

9 Our health visiting, family services and five Baby Cafes throughout the borough have also achieved UNICEF baby friendly accreditation for the support they offer mums in Croydon to breastfeed their children Local health economy Caring for London s largest borough can be extremely challenging. Among the issues that our population faces are: Croydon s population is growing fast there are 383,000 people currently living in Croydon and the numbers of children aged under 16 in the borough is due to increase by 10% by 2021; Croydon has the highest proportions of black and minority ethnic groups in South London (44.9%); 6.3% of our community in the north of the borough are not registered with a GP this is the worst in London and over three times the national average; Croydon has the highest number of Looked After Children (800) of any London borough; Three out of 10 children aged under 5 live in the most deprived parts of the borough; Almost a quarter of Croydon s reception children are obese or overweight (2012/13); Child immunisation rates are comparatively low (86.5% of two year olds received MMR vaccination compared to 92.3% in England, 2012/13). This is significantly lower for children in care. Croydon Health Services Annual Report and Accounts Page 8

10 2. Well-Led Organisation 2.1. Listening into Action The Trust s Listening into Action (LiA) approach to change management, empowering frontline staff to identify challenges and make changes to the way that they work to deliver better patient care, has continued to deliver substantial improvements to the experiences of our patients and the working environments of our staff. April 2014 saw the launch of Wave 3 of LiA projects, building on the successes of previous waves in 2012 and Successful projects included programmes to significantly reduce the incidence of pressure ulcers (delivering a 40% reduction), to improve and streamline the outpatient s department and to help patients be discharged from hospital earlier in the day. The results of these projects were fed back directly to over 200 staff at the Pass It On event in December and through the Trust Focus briefing that is received by all staff. Additional events to engage with our patients and local community were also organised as part of Listening into Action (see below). The crowning success of imbedding the LiA methodology as the cornerstone of the Trust s improvement work was being formally accredited by the national Listening into Action team. On 16th March 2015, Croydon Health Services NHS Trust became the first NHS organisation in the UK to be awarded the Listening into Action Kite-Mark for its commitment to the engagement and empowerment of its staff. The announcement of the accreditation for 2015 is in recognition of the significant and sustained progress in how staff feel working at the Trust and the positive impact this has had on the quality and safety of care Visible Leadership A fundamental part of the Trust s drive to raise quality of care and patient experience is the conviction that all staff should lead by example and this is especially true for senior members of staff. The Visible Leadership approach at the Trust was developed at the suggestion of our staff through Listening into Action as a way to ensure that patients, visitors and staff are aware of who senior staff are and that they were openly taking responsibility for driving improvement at the Trust. Every Wednesday morning our executive team and senior managers visit services across the Trust to care for patients, engaging with and learning from frontline staff about their work, improvements that could be made to their services and the challenges they and their patients face on a day to day basis. Other aspects of the Visible Leadership programme include prominent posters in all hospital and community sites introducing members of the Trust Board; new, bright red uniforms for our matrons so that patients and staff can easily identify them as the leaders of nursing at ward level; and (in conjunction with the LiA programme) a regular schedule of well-publicised staff open surgeries, where staff can meet with the Trust s Chief Executive and Chairman and raise any issues or concerns they wish to discuss in a positive and supportive forum. Croydon Health Services Annual Report and Accounts Page 9

11 2.3. Well-Led Pilot In February 2015 the Trust was privileged to be selected as one of three national pilot sites for the wellled framework currently being developed by the NHS Trust Development Authority (NHS TDA). The pilot is the culmination of working between the NHS TDA, Monitor and the Care Quality Commission to better quantify if organisations are being led well, focusing on leadership, management and the governance of organisations to ensure the delivery of high quality care for patients, support learning and innovation whilst promoting an open and fair culture. The framework sets out a variety of organisational behaviours that well-led trusts would be expected to demonstrate, including strong organisational strategies, well-developed skills and organisational awareness at Board level, robust external engagement and clear, workable management policies. The Trust is working towards ensuring that the organisation s strength in these areas is supported, developed and clearly evidenced ahead of a self-assessment to be submitted to the NHS TDA in 2015/16, which will be followed by a thorough external assessment as part of the pilot review Engaging with our Local Community Listening to the views of our patients and local community and ensuring that these are reflected in the future plans of the Trust is recognised as being a key part of effective leadership for the organisation. In 2014/15 the Trust delivered a number of initiatives to ensure that the patient perspective was thoroughly embedded in our improvement work. A key driver of community engagement was the Listening into Action listening and feedback events. Our patient and community feedback event in November 2014 saw around 100 members of the public come to hear about the changes that had been made over the previous year by LiA, and in March 2015 the Trust held another LiA listening event for patients, attended by 52 people, and one for local stakeholder organisations attended by 28 representatives. Patient representatives also regularly play an important part in the Trust s programmes and projects, providing service user insight into the development of key initiatives. Two important programmes in 2014/15 where patient representatives played a major part were the Emergency Department rebuild project and the Health Information Group. The project board for the Emergency Department rebuild, which provided the strategic steer for the entire project, had a dedicated patient representative who was able to feed their perspective directly into the decision-making process for the project. The Health Information Group, which reviews, updates and approves all patient leaflets and similar information that the Trust produces, has two patient representatives who provide their input on the readability and relevance of the content of all new items that the Trust produces. To ensure that the individual concerns of patients are addressed effectively, in 2014/15 the Trust s complaints team have worked hard to deliver improvements to the service they provide. By March 2015 the team had managed to reach the Trust s target of 80% of final complaint responses to be sent to complainants within three weeks, following sustained improvement from September The team have also implemented robust procedures to ensure that learning from complaints investigations is properly implemented at individual, ward and Trust level. All complainants are offered face-to-face meetings with Trust staff to raise their concerns in person if they wish. Croydon Health Services Annual Report and Accounts Page 10

12 In October 2014 the Trust hosted the first Purley Health Fair at Purley War Memorial Hospital. Featuring stalls where the clinical teams and our partners who operate from the hospital could discuss their work, guided tours of the hospital, healthy eating seminars from our dietetics team and nutritious, healthy snacks prepared by the Trust s catering team, around 500 local residents came down to find out more about the work that we do on the site. Announced at the Listening into Action listening event in March by the Trust s Chief Executive, from the beginning of 2015/16 the organisation will be hosting regular open surgeries for the community. Modelled on the successful staff open surgeries, these bi-monthly sessions will ensure that any members of the public who wish to bring their concerns directly to the attention of the most senior members of Trust staff will be able to do so. Croydon Health Services Annual Report and Accounts Page 11

13 3. Trust Board 3.1. Trust Board Structure (as of 31 March 2015) 3.2. Attendance at Board meetings Voting Executive Directors Name Designation From To 2014/15 Board John Goulston Chief Executive 1-Mar-13 Present Attendance 6 of 6 Azara Mukhtar Director of Finance 18-Mar-13 (seconded until 31-Jul 13) Present 6 of 6 Steve Ebbs Medical Director 10-Sep-13 Present 5 of 6 Zoё Packman Resigned 30/11/2014 Director of Nursing & Allied Health Professionals 19-Sep-11 Present 3 of 4 Croydon Health Services Annual Report and Accounts Page 12

14 Michael Fanning Karen Breen Jayne Black Director of Nursing & Allied Health Professionals Chief Operating Officer and Deputy Chief Executive Chief Operating Officer and Deputy Chief Executive 08-Dec-14 Interim 29-Apr-13 Present 2 of 2 31-Aug of 3 01-Nov-14 Present 3 of 3 Non-Voting Executive Directors Name Designation From To 2014/15 Board Attendance * Michael Burden Director of HR & OD 1-May-13 Present 6 of 6 Lisa Chesser Director of Planning & Informatics 1-Mar-15 (seconded from 1 April 2014 to 28 Feb 2015) Present 4 of 6 Non-Executive Directors Name Designation From To 2014/15 Board Attendance * Michael Bell Chairman 2-Jan Dec-16 6 of 6 Steven Corbishley Non-Executive Director and Chair of Audit Committee 1-Apr Mar-16 5 of 6 John Thompson Godfrey Allen Dr James Gillgrass Non-Executive Director and Chair of Finance & Performance Committee 14-Jan Jul-16 6 of 6 Non-Executive Director and Chair of Quality & Clinical Governance Committee 14-Jan Jan-16 6 of 6 Non-Executive Director 1-Jan Dec-17 5 of 6 Croydon Health Services Annual Report and Accounts Page 13

15 Louise Cretton Non-Executive Director 1-Jan Dec-17 6 of 6 Mary Clarke Jamal Butt Mike Bailey Associate Non- Executive Director Associate Non- Executive Director Associate Non-Executive Director 14-Jan Aug-14 3 of 3 1-Apr-13 Present 4 of 6 1-Jul-14 Present 3 of 4 * Board Attendance denotes number of board meetings attended out of number that could have been attended 3.3. Committee structure The Trust Board discharges its responsibilities through a committee structure which has been reviewed in a consultation led by the Chairman of the Trust. Sub committees for the financial year are: Audit Committee provides assurance on the Trust s internal financial controls, and compliance with accounting and statutory standards. Remuneration Committee - determines the rates of pay and contracts of the Executive Directors against a Department of Health framework. Charitable Funds Committee - responsible for ensuring that donations given to the hospital are spent wisely and properly, in accordance with The Charities Commission and NHS regulations. Quality & Clinical Governance Committee - delegated Board authority to oversee the overarching clinical governance and risk arrangements. It provides assurance that the most efficient, effective and economic risk, control and governance processes are in place. Finance and Performance Committee - provides the Trust Board with dedicated oversight into financial strategy, financial position, investment policy, major investment decisions and the financial management of the Trust and oversee the delivery of financial targets. It also ensures that performance by all of the Trust s services is robustly monitored, potential improvements are considered and concerns are identified and addressed. The Quality and Clinical Governance Committee is supported by: Improving Patient Experience Committee The Committee is chaired by the Director of Nursing, Midwifery & Allied Health Professionals. The Committee monitors implementation of patient experience action plan and monitors action plans and learning. The Committee meets bi-monthly and monitors the performance of the following groups: Privacy & Dignity Group; Nutrition Steering Group; PLACE Committee; Health Information Group; End of Life Steering group; and Operational Dementia Group. Croydon Health Services Annual Report and Accounts Page 14

16 Patient Safety Committee - The Committee is chaired by the Medical Director. The Committee monitors the Trust response to the Central Alert System and key issues / trends arising from incidents, complaints, and claims. Further to this it monitors the implementation of actions arising from the investigation of serious incidents and monitors HSMR and other clinical outcome measures. The Committee meets bi-monthly and monitors the performance of the following groups: Resuscitation Committee; Hospital Transfusion Committee; Radiation Safety Committee; Ethical Committee; Medical Devices Group; Falls Prevention Group; Pressure Ulcer Taskforce; Thrombosis and Thromboprophylaxis Committee; FLAG; and Donation Committee. Clinical Audit and Effectiveness Committee - Ensures there is a programme of audit activity within the Trust covering a range of issues. The Clinical Audit and Effectiveness Committee monitors clinical audit activity to ensure that the overall objectives of Croydon Health Services NHS Trust are met and complies with professional good practice, current legislation, national policies and guidelines. This Committee oversees that the Trust has mechanisms in place to implement the latest guidance and recommendations from National Institute for Health and Clinical Excellence (NICE) and the relevant National Confidential Enquiries. Nursing Board and Midwifery Board - The Nursing and Midwifery Board is chaired by the Director of Nursing, Midwifery & Allied Health Professionals and reports into the Quality & Clinical Governance Committee. It meets monthly and is a forum for Trust s senior nurses and midwives to assure themselves that nursing and midwifery is fulfilling its potential and is aligned to the delivery of the Trust s corporate objectives. Health, Safety and Environmental Governance Committee - The Health, Safety and Environmental Governance Committee is a statutory committee that meets quarterly and considers all environmental and health and safety matters, including a review of the health and safety risk register. It provides assurance to the Quality & Clinical Governance Committee and Board, that taking account of best practice, there are effective structures and systems in place that support the continuous improvement of quality services and safeguard high standards of patient environment and safety and welfare at work of all employees/contractors. In addition, Directorates hold monthly meetings led by the Clinical Director and involve members of the multi-disciplinary clinical team to: Consider patient and carer feedback and ensure this is incorporated into practice and service development; Assess, populate and validate risk registers; Agree and monitor the implementation of action plans for locally managed risk; Review complaints, claims and incidents to identify trends for further analysis; Monitor patient safety metrics and action plans; Ensure that learning is disseminated across the Directorates and wider organization. Following a decision by the Trust Board in March 2013, the Trust s Board Assurance Framework has been combined with the Corporate Risk Register into one document: the Corporate Risk Assurance Framework. This has been developed under the leadership of the Director of Corporate Governance and was approved and adopted by the Board in September Further details can be found in the Annual Governance statement. Croydon Health Services Annual Report and Accounts Page 15

17 The Trust welcomes and encourages feedback on its services provided. Complaints received from or on behalf of patients in no way affect how they are treated and in dealing with both formal and informal complaints, the Trust takes into account the six Principles for Remedy as defined by the Parliamentary and Health Service Ombudsman. The Principles can be found at Croydon Health Services Annual Report and Accounts Page 16

18 4. Improvements and the way ahead 4.1. Our vision, objectives and priorities We have reviewed our vision and objectives for the year ahead and these remain fit for purpose for 2015/16 and future years. Our vision is to provide: Excellent integrated care for you and your family, when and where you need it. We have five strategic objectives which support the achievement of our vision and support us to achieve continuous improvement in patient experience, quality and performance: To deliver high quality, integrated people-centred services To ensure staff are able, empowered and responsible for the delivery of effective and compassionate care To achieve best practice performance standards To secure value for money and ensure the financial sustainability of the Trust To work with partners to improve the health and wellbeing of the people of Croydon We have developed priorities across the Trust to support us to meet our objectives in 2015/16, key amongst these include: Improving patient experience - we will deliver a Quality, Experience and Safety Programme to drive improvements in quality, safety and patient experience. This will support us to prepare and take forward actions from our CQC inspection during the week of 15 June Delivering more integrated care out of hospital and investing in prevention, working with stakeholders to deliver the Better Care Fund. Maintaining and sustaining operational performance and improving the patient journey. We will invest in improving our non-elective pathways at the Trust and will continue to increase use of Purley War Memorial Hospital. Beginning the build of the new Emergency Department. Working towards delivering the London Quality Standards and 7 day working programme to meet the quality standards required across London. Working with the Local Authority to implement the Best Start Programme for children. Recruiting and, in particular retaining, substantive staff with the right skills and motivation. Investing in IT: to support staff working in the community and the re-procurement of our clinical information system and picture and communication archiving system. Establishing a provider alliance with South London and Maudsley NHS Foundation Trust, social care and primary care in preparation for delivering Outcomes Based Commissioning, where funding for our services will be based on the outcomes we achieve for patients. Croydon Health Services Annual Report and Accounts Page 17

19 Continuing the financial improvement programme to deliver the forecast deficit of 25.04m in 2015/16. Developing our five year plan to achieve clinical and financial sustainability, working with the South West London Acute Provider Collaborative Our key achievements As an integrated care organisation, 2014/15 has been a year of success for our services delivering care both in hospital and in the community. The main outpatients area, our fracture clinic and our elderly care wards all completed major refurbishment works this year, creating brighter and more comfortable environments for our patients. In August 2014 our children s diabetes service was rated as excellent by an NHS England National Peer Review. The team of leading experts scored our services in hospital 100%, and our community services 87%. Croydon was rated as the best performing borough for learning disability care for the second year in a row. Working with the Croydon Clinical Commissioning Group (CCG), Croydon Council and South London and Maudsley NHS Foundation Trust (SLAM) we provide full support and safeguarding to individuals with learning difficulties as well as their families when they use our services in hospital and in the community. In early 2015 the Trust was selected to be one of the pilots of the Best Start initiative, which will see increasing integration of family community services provided by the Trust and family social care services provided by Croydon Council. Our maternity service has continued to provide a service which has been overwhelmingly supported by the mothers that use it. According to the Friends and Family Test for March 2015: 97.5% of mothers who responded said they would recommend our birth services (labour ward and birth centre); 90.6% of respondents would recommend the post-natal ward; 98% of respondents would recommend our community post-natal service; and 94.5% of respondents would recommend our ante-natal services. The service has also made improvements to the way that it supports breast feeding after birth, with both the hospital and community post-natal teams gaining the UNICEF Baby Friendly Initiative stage 2 accreditation this year, and working towards stage 3 for 2015/16. This year the Trust rolled out its Text Message Reminder service in our outpatients department. After a successful pilot in autumn 2014, which saw a steady fall in people not attending appointments, 90 per cent of patients can now receive a reminder as the service has been expanded to more Trust clinics. More than 1,500 texts are now sent to patients every working day, which is helping to deliver quicker, more joined-up care to patients, while also saving the NHS money. Croydon Health Services Annual Report and Accounts Page 18

20 4.3. Rebuilding our Emergency Department At the end of March 2015, the Trust received confirmation from the NHS Trust Development Authority (NHS TDA) of approval for 21.25m of funding to rebuild the Emergency Department (often referred to as A&E ) at Croydon University Hospital. This decision was the result of a long process of design and logistical work in support of a proposed new department, led by Trust clinical staff, and a rigorous bidsubmission process to the NHS TDA. The new department, which is scheduled to begin construction in autumn 2015, reflects best practice design across the country and will enable the ED team to provide better care for patients. More effective and efficient than the current department, the new design of the department will address the quality concerns identified by the CQC in their 2013 inspection. There has been extensive engagement with patients and the community on the design, which received planning consent with no objections. The Trust will continue to provide all of its existing emergency department services while the buildings are being rebuilt and refurbished. These will be delivered on the Croydon University Hospital site in space directly adjacent to the current department, using existing buildings and some temporary structures. The department will not lose any clinical capacity during this time, and will have the same number of beds during the development for both adults and children Choosing Croydon The Trust is committed to ensuring that we provide the high quality of services that will ensure that more Croydon residents will choose our facilities to deliver their healthcare needs. To better understand the reasons that Croydon residents choose the health providers that they do, as currently less than two in three are choosing Croydon Health Services for their care, in July and August 2014 we went out and spoke to GPs and practice managers in our community to get their insight into the decisions that their patients were making. We heard that in many cases our community felt that the Trust had a poor reputation that they were not always aware of the services we provided (particularly the services available at Purley War Memorial Hospital) and that they weren t hearing about the changes and improvements that were taking place at the Trust. To address this, we have stepped up our communications to potential patients about the services we provide. In autumn 2014 we went out on the road to GP surgeries to showcase the major improvements in maternity that we had delivered over the previous year, including the 629,000 refurbishment of the birth centre in Summer 2013 and our gold standard staffing levels of 1 midwife to every 28 births, ensuring that mums-to-be get the personal attention they need before, during and after they give birth. We also rolled out a major engagement programme directly to mums-to-be, producing a series of short films where mums could find out more about the service, a brochure providing details of how we deliver our maternity care and answering their questions face-to-face at our baby cafes and through the popular online forum Netmums. Croydon Health Services Annual Report and Accounts Page 19

21 In addition to the maternity service campaign, we also worked with local free paper the Croydon Guardian, running a series of adverts about care and positive changes at the Trust. Topics that we addressed in these included the Trust s low Healthcare-Associated Infection (HAI) rate, the reduction we have delivered in the incidence of pressure ulcers at the Trust and our positive 2013 CQC inspection report. Croydon Health Services Annual Report and Accounts Page 20

22 5. Improving quality, effectiveness and safety 5.1. Quality Improvements The Quality Improvement Plan (QIP) for Croydon Health Services was adopted by the Trust board on 5th February 2014 and included the actions we were going to take to respond to the CQC Inspection report of our acute services in September The plan also encapsulated the actions that were outstanding from previous CQC reports, the Francis and Clwyd Hart reports, and the 2013 Adult Inpatient Survey. In September 2014 the QIP was reviewed by the Programme Management Office (PMO) and the 68 actions were reformatted to form 18 separate project action plans. These separate projects consisted of the 13 CQC compliance actions and recommendations, with the remaining actions organised under the 5 CQC themes of Safe, Caring, Effective, Responsive and Well-Led. 16 of these projects have now been delivered and the remaining 2 are due to be delivered within agreed timelines. Progress of the QIP CQC Compliance actions and recommendations: Arrangements between A&E and the Urgent Care Centre (UCC) have been improved. Regular performance meetings are held with staff from the UCC and new signage has helped patient flow between the two organisations. A full business case has been approved for the building of a new Emergency Department (ED), with the decant beginning in the winter of Staffing levels in elderly care wards the staffing ratio has been adjusted in line with national guidelines and we have increased the number of our Band 6 nursing staff. Patient discharge times are monitored and data showed that 87% of elderly patients were recorded as discharged by 6pm. All patients discharged via the discharge lounge are discharged by 8pm. An audit of patient attire on discharge found that a number of patients were discharged in inappropriate clothing. This has now been remedied by ensuring patients are appropriately attired, including access to a selection of spare clothing supplied by the Red Cross being stored at the Discharge Lounge and ED. We also ensure that staff respect patient choice in going home in their preferred attire. Environmental improvements have been made to main outpatients and the fracture clinic and with redecoration of the orthopaedic clinic underway. Whiteboards showing up to date clinic information are in all outpatients departments and have been very well received by patients. A text reminder service is now in use for all acute outpatients clinics and is due to be rolled out to the community clinics shortly. Adult care plans have been reviewed, updated and uploaded to the electronic patient record system. Prior to the upload to CRS Millenium we audited the use of the pre-existing paper care plans to ensure that patients were involved in discussions about their care and that they had the appropriate care plans. Staffing levels have been reviewed, a trust wide recruitment and retention strategy is being implemented and additional inpatient supervisory shifts have been implemented. Croydon Health Services Annual Report and Accounts Page 21

23 The Right Clinician, Right Time policy and Site Practitioner Early Warning System have been implemented to help to improve a patient s continuity of care if they are not in the right ward for their condition. Quality walk rounds by nursing staff and executives across the hospital and community sites are carried out regularly. These rounds have recently been reviewed and relaunched as Quality Reviews for senior management executive with a specific emphasis on key practices to ensure a safe environment for patients and staff. We have also introduced protected time for matrons to undertake Quality Rounds. As part of our drive to improve the accuracy and storage of patient records and become a paper free organisation we have uplifted our pre-2014 records to Iron Mountain for storage. Our latest performance figures show that only 1% of patients are seen in outpatients clinics without the full medical file being available. The complaints policy and procedures have been reviewed and information is clearly available across the whole Trust. The Listening into Action (LiA) methodology is fully embedded across the organisation to improve staff engagement and empowerment. The Trust was one of the first to sign up to the Sign up to Safety pledge. Patients are asked in the hourly rounds whether they have been offered pain relief and are also asked in the Quality Rounds and in A&E. Daily spot checks are carried out and there are clear posters and information to patients about pain relief. The Do Not Attempt CPR (DNACPR) policy has been implemented and the DNACPR form has been uploaded to the electronic patient record. We are monitoring this to ensure it is used appropriately and with the involvement of the patient, family and consultant. Patients with dementia are supported to choose their own meals with the assistance of new revised easy to read pictorial menus. Two versions have been created to support patients with early dementia and mid to late stage dementia. Staff on elderly care wards have been given dementia care training and the Forget Me Not scheme has been adopted to help to identify those patients with dementia symptoms. The remaining ongoing actions that were reformatted within the CQC themes of Safe, Effective, Caring, Responsive and Well-led have all been delivered. To ensure that our improvement programme continues to enhance the care we provide for our patients, we expanded its remit to become the Quality, Experience and Safety Programme (QESP). QESP sets out to drive continued improvements in quality, safety and patient experience by embedding best practice throughout the Trust. The programme will also help us prepare for the CQC s next inspection in June Patient Experience Improving patient experience remains a key priority for the Trust, and over the last year we have been working hard to make sure that our patients have a better experience when they are with us. Initial Croydon Health Services Annual Report and Accounts Page 22

24 results from the national NHS Inpatient Survey have found that the Trust has one of the greatest improvements to patient experience in the country, against a national picture of gradual decline. Results from Picker Europe, which administers the survey for the NHS for 73 NHS trusts in England, show that 80% of the Trust s patients would give it a score of 7 out of 10 or more for their experience of care, with over a third (37%) giving the Trust a score of 9 or 10 out of 10 for care. The survey also shows that the Trust has delivered the third largest reduction in its problem score over the last year. Of the 73 Trusts in England which Picker surveyed, around two-thirds (48) showed increases in their problem score as patients reported a decline in experience at these organisations; Croydon Health Services is bucking this national trend. The survey, which took place in August last year, shows that the Trust has managed to maintain or improve its scores on all of the questions in the survey, delivering significant improvement on around 10% of the questions in the survey, and not declining significantly on any question Friends and Family Test (FFT) The NHS Friends and Family Test was first implemented in the Trust in April 2013 for adult inpatients, and A&E and was rolled out in Adult Outpatients and Adult Day Cases in October The test asks one simple question Would you recommend this service to your friends and family? and the results are collated down to ward level for all NHS Trusts across the country by NHS England. Following a change by NHS England in the way this data was collected in September 2014, the Trust now reports the total number of responses, what the response was (from Extremely Likely to Extremely Unlikely ) and, for inpatient settings, the response rate as a percentage of the total number of patients. The Trust s FFT scores have demonstrated high levels of patient satisfaction with the services they receive. Since the change in methodology in September, the Trust has consistently recorded a Would Recommend score (where respondents are either Likely or Extremely Likely to recommend a service) for inpatient services of over 90% and over 90% for maternity services. The Trust s FFT score for A&E has declined moderately into the last quarter of 2014/15, with 89.1% of patients recommending the service in March 2015 having previously been above 90% since September From April 2015 the Trust will also be reporting FFT scores for our community services Length of Stay (LOS) and Patient Discharge The Trust has heavily focussed on the improvement of patient flow over the past two years, looking to reduce unnecessary stays in hospital and delivering better and more cost-effective care by ensuring that patients receive the right care at the right time. Over the past year, as a result of the work that has been delivered to ensure safe effective care for patients across the Trust, both clinically and non-clinically the organisation has delivered a 30% reduction in Length of Stay an average of around two days per patient per stay. A key aspect of this achievement has been by working hard to discharge our patients who are well enough to go home earlier in the day. By focussing on improving the hospital discharge processes for patients, we have improved our proportion of patients being discharged home by 3pm from 31% in April 2014 to an average of 47% by the end of March Croydon Health Services Annual Report and Accounts Page 23

25 With the introduction this year of Electronic Whiteboards and Realtime Bedstates, together with our new electronic nursing care plans currently being implemented, the Trust is in a strong position to make further improvements to both LoS and early discharge in 2015/ Patient Dignity and Respect Over the last year the Trust has introduced a number of initiatives to safeguard the dignity of and respect towards our patients. These include: Matrons Quality rounds The rounds make clinical leaders more visible and enable them to engage actively in improving the environment of care and the experience of our patients, concentrating on five main areas: Privacy, Dignity and Respect; Communication; Nutrition; Safety and Infection Control. The way that these have been conducted was reviewed this year, the first review since the initiative was launched in These are now underpinned by a detailed tool that provides relevant data from complaints, the NHS inpatient survey and other relevant indicators to matrons so that they can target their rounds where they are needed most. Hourly Rounds Hourly Rounds aim to put patients at the centre of care and consists of nursing staff checking on their well-being at regular intervals. The introduction of this structured approach follows concerns about failures in care highlighted by a number of recent high-profile reports including Francis and the Care Quality Commission. Ward Sisters are responsible for ensuring all trained and untrained nurses receive training in the process of Hourly Rounding on local induction to the wards. It is the responsibility of the ward manager to ensure all Hourly Rounds are undertaken throughout the patient s admission. The Matron has a responsibility to ensure that effective Hourly Rounds are undertaken in their designated areas. Monitoring of the use of Hourly Rounds is reported on the monthly matrons scorecard. Noise at Night An issue that has been regularly raised by patients is noise on wards at night, which disturbs their recuperation and can mean that patients have a poor experience of care. The Trust is currently addressing this through a number of initiatives including a review of soft-closing bins, guaranteed quiet time on each ward and ensuring that ear plugs are available to patients at all times. This issue is being closely monitored and will be kept under review into 2015/16. Discharge Date Patients have reported that they are often not aware of their expected discharge date. Since February 2015 the Implementation Group for Effective Discharge has developed a Standard Operating Procedure (SOP) for discharge management, which includes ensuring that patients are informed of when it is expected that they will be able to return home. Croydon Health Services Annual Report and Accounts Page 24

26 These improvements have been supported by the rollout of the second phase of our CRS Millennium patient information system which ensures that all relevant patient information is available to staff at the touch of a button as patients move through our hospital for treatment. Named Nurse This year the Trust implemented the Named Nurse initiative, where the name of the nurse primarily responsible for the care of a patient is displayed above their bed; this was one of the recommendations of the Francis Report and has been explicitly endorsed by the Secretary of State. For 2015/16, the Trust is looking to implement a number of additional measures to improve patient dignity including: Universal application of formal care plans Ensuring availability of menus by bedsides More information to patients on possible medication side effects 5.6. Patient Safety Patient Safety has always been, and always will be a priority for CHS and has been part of the role of our Matrons and Ward Managers. National programmes such as Safety Thermometer, and Productive Ward has made it easier to measure our successes and focus even more attention on problem areas. It is important that all health care workers understand how well they are doing in providing safe and compassionate care. The Trust has developed methods for measuring performance and the Knowing How Well we are Doing (KHWD) Scorecard was one of the key objectives for 2014.Through this system we are now able to see at a glance how well we are delivering care by measuring aspects of care and patient outcomes. Since April 2014, the multi-disciplinary work to reduce pressures throughout Croydon has led to a 41% reduction in all grades of pressure ulcers with the most significant reduction demonstrated by pressure ulcers acquired from patients homes down by 57%. Within nursing homes there has been a 55% reduction. There was a 12% reduction in grade 3 pressure ulcers reported across all locations. The Safety Thermometer process collects prevalence data on four patient harms these being: Falls, Pressure Ulcers, Catheter associated urinary tract infections (CAUTIs) and Venous Thrombus Emboli (VTE). Because of increased staff training, and closer observation of care, patients now experience less harm within Croydon Health Services than most other NHS Trusts in the UK. The Trust s percentage of harm free care is almost the best in the country at 97%. Croydon has increased the number of patients experiencing harm free care by 3% since April Croydon Health Services has also reduced the number of patients who experience sudden cardiac arrests and transfers to ITU through staff education and close monitoring of patients observations, particularly how frequently, and how concerns about patients are escalated to doctors. Several key elements of care and activity needed to prevent patients deteriorating whilst in hospital is known as a Croydon Health Services Annual Report and Accounts Page 25

27 Care Bundle. This is a useful method of ensuring safe care particularly out of hours. Cardiac arrests have reduced from 57 in the first 3 months of last year to 30 for the same period this year. Preventing Falls Reducing inpatient falls is always a challenge. The number and severity of inpatient falls is closely monitored by Heads of Nursing and our Elderly Care consultants. The Falls Prevention Group meets monthly to monitor progress against the falls prevention action plan. There has been an overall decline in falls within CHS from 944 in 2013/14 to 901 in 2014/15 and the results of the national falls audit conducted in 2014 by the Healthcare Quality Improvement Partnership found that there are fewer falls at the Trust than comparable NHS organisations. Staff training and support by practice development nurses and matrons continues and the implementation of electronic assessments and care plans provide tools for the ward staff to prevent inpatient falls where possible. Catheter-Associated Urinary Tract Infections (CAUTIs) These continue to be amongst the lowest percentage of patient harm within the country. CHS continues to monitor catheter care closely and has a teaching programme led by continence nurse specialists training staff on all aspects of safety in catheter care. Croydon Health Services Annual Report and Accounts Page 26

28 6. Workforce Development The Trust is committed to developing and enabling a working environment that promotes the health, safety and wellbeing of its staff to the benefit of patients and other service users. Everyone working at the Trust has an important role in caring for our local community safely, effectively and with the highest standards of dignity and compassion. Our approach to workforce and organisational development is strongly linked to staff engagement, ensuring effective leadership, service improvement and transforming our workforce to help us achieve higher levels of quality to improve the patient experience. Staff engagement is a key ingredient in helping the Trust to achieving this, both individually through Listening into Action and through productive working relationships with recognised trade unions. By involving staff in decisions and communicating clearly with them, we are seeking to maintain and improve staff morale to deliver better care for patients Staff Pledges The Staff Pledges were introduced in December 2014 as a direct result of staff feedback from a LiA Big Conversation where staff came to discuss customer service. The pledges are about staff commitment to making a difference every day by committing to always introduce themselves. The pledges are: Always let patients know who you are, in line with the hello my name is initiative; If someone needs help or looks lost always stop to help; If you can t help, always ensure that you refer them to someone who can; and If bad behaviour is witnessed always feel empowered to challenge it Safe Staffing The Trust began 2014/15 with the endorsement of the CQC which, in their September 2013 inspection, reported that the wards generally provided safe & effective care. In December 2014 the Trust conducted a thorough review of staffing levels and contract hours to ensure that our wards and services are staffed appropriately to ensure patient safety and a high quality of care. The review found that the majority of acute services already had levels of staffing in line with national guidance, with three ward areas needing modest increases in establishment to reach current NICE recommendations. These are validated both by the appropriate safe staffing tools where available, along with experienced and expert evaluation by senior staff. Safe staffing tools are not currently available for community services; the review did not find any areas of serious concern, but noted that caseloads for these services were high. Further evaluation of staffing levels in the community, in conjunction with wider discussions about service load with our commissioners and partners, will be taking place in 2015/16. While the Trust still has a number of vacancies for ward-level staff, which are being addressed through our ongoing recruitment campaigns, the Trust makes use of our bank of appropriately-qualified flexible Croydon Health Services Annual Report and Accounts Page 27

29 workers and, where necessary, qualified agency workers to ensure that staffing levels are maintained on a day-to-day basis. To ensure that safe staffing remains a focus for the organisation, the Trust has committed to conducting further safe staffing reviews every six months in line with national guidance and a nursing scorecard is now in use in acute services to support analysis of the impact of staffing levels on quality of care Staff Survey The Trust had encouraging results for a second year in the NHS Staff Survey 2014, which was conducted nationally in autumn 2014 and published in February 2015, with results for the majority of findings on par or better than the national average. Among the findings were that our staff feel amongst the most enfranchised of any NHS organisation, with 75% feeling that they are able to contribute to improvements at work a testimony to the organisation s efforts over the past two years to create an environment where staff feel engaged and empowered to deliver improvements to our patients Recruitment and Retention Nurse recruitment remains one of the key challenges facing the Trust. Croydon Health Services is not alone in facing this challenge and the nurse recruitment situation across London is now formally acknowledged by NHS England and Health Education South London to be extremely difficult. The NHS Qualified Nurse Supply and Demand Survey findings for 2014 show that 83% of surveyed organisations reported that they are experiencing qualified nursing workforce supply shortages. The CHS vacancy rate Key Performance Indicator (KPI) that the Trust works to is 11.5%, and the Trust is currently reporting a vacancy factor of 19.63% which equates to WTEs across all qualified nursing grades. However, to put these figures in perspective it should be noted that the Trust now employs 150 more nurses than it did in 2012/13. In recognition of this challenge, the Trust has created a time limited Nurse Recruitment and Retention Task Force who are leading on assessing the historic recruitment processes, undertaking retention insight work and providing hands-on support to senior nurses to retain existing staff at risk of leaving. The Task Force comprises a part-time project manager and a full-time senior nurse lead on secondment from a ward manager s role. The project commenced 2 February 2015 and has dedicated communications support. Early results have showed improvements to the recruiting process to reduce unsuccessful applications and drop-outs; by the end of 2014/15, 60% of applicants were successfully taken on and started at the Trust, a marked improvement from the 29% in December 2014 and 17% in January As of writing, the Trust is processing a further 50 expressions of interest and we have raised the bar of our assessment standards to ensure that we recruit highly capable, committed and compassionate staff. The Trust s new recruitment campaign, Could You Be A Croydon Nurse, is currently underway. Utilising concerted recruitment drives at graduate nursing recruitment fairs alongside a distinctive visual, online and social media presence, the campaign will be fully evaluated in early 2015/16. Early Croydon Health Services Annual Report and Accounts Page 28

30 indications are that the Trust s recruitment efforts, both in the UK and abroad, have made an impact, with the number of nursing new starters outnumbering the number of nursing staff leaving the organisation consistently and increasingly since October Further work to improve staff retention is scheduled for 2015/16, with the Could You Be campaign being expanded to target therapy staff as well Croydon Stars Recognition of outstanding service and commitment by our staff is an important part of ensuring that our workforce understand that their work is valued. The Croydon Stars scheme is open year-round, with patients, carers and colleagues able to nominate staff for outstanding conduct across four categories: Amazing Achievement, Incredible Customer Service, Tremendous Teamwork and Landmark Leadership. Each person or team then receives a personal acknowledgement from our Chief Executive and their nomination is put on a long list for our annual awards night. The Croydon Stars awards take place in late spring every year, where nominations from the previous 12 months are shortlisted and then reviewed by a panel of staff, where winners from each category are selected. The shortlist nominees are all invited to and acknowledged at the awards dinner, with the winners receiving certificates presented by the Chairman of the Trust. As well as those nominated for awards, the Croydon Stars event also provides the opportunity for the Trust to publicly thank members of staff who have a history of long service to the organisation, in some cases going back more than 40 years Ensuring equality The issue of discrimination at work is one that has been highlighted in previous NHS Staff Surveys and one that the Trust is committed to addressing. Over the last year there has been a concerted drive by the organisation to ensure that all of our staff undertake equality and diversity training the NHS Staff Survey 2014 found that 78% of staff reported having undertaken this training, 15% more than the national average (putting the Trust in the top 20% of NHS organisations in the country) and a substantial rise from the 48% recorded in the 2013 survey. Sadly, the percentage of staff experiencing discrimination in the workplace in the past 12 months has increased here at CHS by a small margin and further work with managers is required to ensure that they are fully aware of their responsibilities. The Trust has agreed to create a role of Equality and Inclusion Manager to ensure that the Trust is working in alignment with the NHS Workforce Race Equality Standard and its metrics. To further understand the exact nature of staff concerns around discrimination, in 2015/16 we will use the Listening into Action methodology to understand in greater detail the exact nature of these concerns. We will also review how we currently engage with staff across the nine protected characteristic groups (Age, Disability, Gender Reassignment, Marriage and Civil Partnership, Pregnancy and Maternity, Race, Religion or Belief, Sexual Orientation and Gender) to identify any gaps and how to address them. Croydon Health Services Annual Report and Accounts Page 29

31 6.7. Freedom to Speak Up/Whistleblowing On 11th February 2015, Sir Robert Francis QC published his final report following the Freedom to Speak Up review which looked at the raising concerns culture in the NHS. The report makes a number of key recommendations under five overarching themes with actions for NHS organisations and professional and system regulators to help foster a culture of safety and learning in which all staff feel safe to raise a concern. All of our staff should feel able to raise concerns if they have them, and know that they will be listened to and supported. This is crucial if we are to continue improving how well we look after our patients and staff, and for people to have confidence in their local NHS services. We have and always will take all concerns about patient safety extremely seriously as well as any allegations of bullying or a lack of support for our employees. Work is currently underway to analyse any areas of improvement that the Trust can make to ensure that the recommendations of the report are fully implemented within the organisation. Led by the Director of HR and supported by the Medical Director and Director of Nursing, the gap analysis will be used to develop an action plan for improvement. A working group has been formed that represents the Trust workforce and includes the Trade Unions, which will continue to address this issue into 2015/ Trade Union Engagement The Trust welcomes the continued commitment of recognised trade unions to working in partnership to ensure that our common objectives are achieved. During the national NHS industrial action that took place in October and November 2014, this partnership approach worked well to ensure that patient safety was not compromised. The Trust and the unions recognise their responsibility to encourage all staff to make use of appropriate channels to ensure active communications throughout the organisation. Managers and trade union representatives recognise their interdependence and agree that matters affecting their interests shall be considered jointly, both by consultation and negotiation through the Joint Staff Consultative Committee (JSCC), which acts as the overarching body of the organisation and is concerned with all employee relations issues. In addition to the JSSC a Trust-wide Medical and Dental Negotiating Group (LNC) also exists. However, it should be noted that the LNC only covers matters exclusive to Medical and Dental (M&D) employees and the JSCC deals with other employment matters which cover all staff such as general HR policies and procedures. Croydon Health Services Annual Report and Accounts Page 30

32 7. Information Governance and ICT Systems 7.1. Keeping shared information secure The Trust is committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, the Care Standards Act 2000, the Data Protection Act 1998, the Freedom of Information Act 2000, Department of Health and wider Central Government policies and guidance from the Information Commissioner s Office (ICO) and other relevant organisations. There were 108 incidents with information governance (IG) recorded during the financial year 1 April 2014 to 31 March In terms of severity, 35 were identified as no harm, 70 were classed as low and 3 as moderate. 4 incidents were reported using the IG Toolkit Incident Reporting Tool. Appropriate investigations have been undertaken and recorded, and the Information Commissioner s Office (ICO) informed in relevant cases. Last year was the first year in which the changes to how staff access and complete the mandatory IG training were in effect. These changes improved the content of the training and the experience staff had when completing the training. The Trust has robust policies and procedures in place covering Information Governance and the protection of information from accidental loss, destruction damage and unauthorised access and disclosure. These are periodically reviewed. It also maintains appropriate business continuity plans to manage the business impacts and associated risks HIMMS Level 6 Award The ambitious deployment of new clinical IT systems across the Trust was internationally recognised by HIMSS (Healthcare Information and Management Systems Society) in awarding us the first Level 6 ranking in the UK. Level 6 is the second highest level of utilisation of e-health systems, Level 7 representing effectively paperless healthcare delivery. In September 2014, the Trust accepted the award in recognition of the various ways in which these systems are being used by all grades of staff to improve the safety and quality of the care we provide. In particular, the presence of smart decision support functionality within the system, for example the Stroke Care pathway, and the way in which the system is used to safely identify patients in a way that reflects the practical realities of a busy acute hospital was recognised CRS Millennium (Phase 2) In April 2015, the Trust went live with the second phase of CRS Millennium our electronic patient records system which gives our clinicians real-time information about their patients. For phase one, we gave 1,000 of our clinicians secure access to electronic patient records to continue improving the quality and safety of our care. For phase two, we have expanded this further to include our busy maternity services and it is also scheduled for roll out in early 2015 across Day Surgery, Main Theatres and Critical Care. Croydon Health Services Annual Report and Accounts Page 31

33 In addition, our nursing staff can now tailor individual electronic care plans for all adult inpatients to make sure that our patients are involved in decisions about their care and that treatment reflects their needs. CRS Millennium makes it easier for our doctors, nurses and other healthcare professionals to share information and work together on one system. This reduces dependency on paper-based records and is helping to free-up our staff to spend more time with their patients. Croydon Health Services Annual Report and Accounts Page 32

34 8. Emergency Planning and Business Continuity As a category one emergency responder, Croydon Health Services NHS Trust is legally obliged to have Emergency Planning, Resilience and Response (EPRR) planning processes that meet the requirements of the Civil Contingencies Act 2004 and the NHS Commissioning Board EPRR Core Standards for Emergency and Business Continuity Planning. The Core Standards are designed to ensure that the Trust has an ability to respond effectively to an emergency incident within the local community or to any event that causes an interruption to the services that we provide. The Trust has comprehensive resilience arrangements which prioritise our essential services and make the optimum use of our available resources related to any challenging circumstance. Our resilience arrangements are rigorously audited annually by NHS England, whose remit is to provide strategic leadership for the capital's health system. This process provides an extensive review of our major incident and resilience arrangements EPRR Plans and Preparation Croydon Health Services now employs a full time EPRR Manager who oversees the EPRR remit as laid down by the EPRR Core Standards 2014 and the Civil Contingencies Act All plans are reviewed and updated in line with new legislation as well as being reviewed annually for updates within Croydon Health Services NHS Trust. We as a Trust declared a Major Incident on the 13 September 2014 due to a water disruption on site; a Major Incident Team was assembled. The Major incident was stood down after approximately 3 hours with a resolution of the situation. On site engineers responded to the issue and resolved the problem, we were supported by Thames Water and the London Fire Brigade during this incident. There are two EMERGO emergency planning exercises planned for 2015/16: an internal exercise in May and a Public Health England funded exercise in October. These will be used to test and reaffirm our major incident plan. Business Continuity remains a priority and is ongoing within the EPRR remit Ebola Preparedness The EPRR manager has been working closely with the Infection Control Team regarding Ebola and there is a plan in place; the preparation has also included a successful exercise within the Emergency Department. Ebola continues to remain a high priority within both teams with regular updates from NHS England (London) and liaison within all professionals involved in the planning is ongoing. The Trust also contributed to the development of the national media protocols on engaging with the media on Ebola cases with NHS England. Croydon Health Services Annual Report and Accounts Page 33

35 8.3. Winter Planning The Trust spends many months planning for potential surges in service demand during the winter and 2014/15 was no exception, with the winter planning process beginning in the summer of Moving forward into 2015/16, the Trust will ensure that a detailed whole system plan is prepared to help address surges in activity over the Christmas and New Year period Handling high demand On Tuesday January , the Trust declared an Internal Major Incident due to high levels of pressure on our services. The first weekend (3 rd 4 th January) of the New Year is recognised across the NHS as one of the peak demand periods of the year and the Trust was no exception, seeing around 360 patients per day on both days. With high numbers of patients in our hospital and with all of our bed capacity in use, Trust senior management and clinicians recognised that steps would need to be taken to ensure that patient flow was maintained and that beds were available for patients who needed them. The Trust activated its major incident protocols on the morning of the 6 th of January; this meant that all services within the Trust made patient flow a priority and all non-essential management functions were given secondary priority to our core mission of ensuring that our patients were treated quickly and appropriately. Clinical capacity from around the Trust was put to work in ensuring that our Emergency Department team were fully supported, and staff on our wards focused on making sure that patients who were well enough to go home were able to do so quickly and efficiently, making more beds available for new arrivals. Our major incident protocols were stepped down within a few hours that day, and our services were supported in the following days by a period of Trust Business Continuity, delivering a continued focus on ensuring our patients moved quickly and smoothly through their treatment paths. Thanks to the hard work of our staff at all levels, we were able to deliver good quality care throughout the day to our patients; patients were triaged effectively so that the most serious cases were seen and treated quickly; no outpatient appointments were cancelled and only five non-essential operations needed to be rescheduled. Going forward into 2015/16, the Forward Planning group will be ensuring that this whole system approach is thoroughly adopted and to that end the Clinical Commissioning Group and Local Authority have been invited to attend the Trust s regular planning meetings. This will provide a forum to agree early plans with the local systems resilience group and CCG colleagues for operational planning of identified periods of increased pressure. Croydon Health Services Annual Report and Accounts Page 34

36 9. Managing Our Estate 9.1. Major improvements This year the Trust undertook a number of major capital improvement programmes to enhance our estate and deliver a better clinical working environment for our patients and staff. The projects delivered by our Estates and Facilities team include: Interventional Radiology a new 1.2m investment in equipment and the estate to provide new and extended facilities within the Radiology Department. London Wing air conditioning chiller replacement at 706k to provide improved cooling in Main Theatres. Wandle 1 and 2 - refurbishment of wards to Dementia friendly environmental standards. Edgecombe 1 Ward refurbishment to improve environmental conditions to bathrooms and ward areas at a cost of 160k. Rationalise the community estate to improve the Estate Utilisation of Purley War Memorial Hospital services have been relocated from local community sites (Purley Clinic), which has offered up savings for investment in front line services. The procurement team have also delivered 934k of investment into new equipment to help our staff to deliver high quality clinical care. In addition to these items, the team has also renegotiated the Trust s bed contract to deliver better quality beds and associated equipment at a lower cost. The new equipment is expected to further improve patient safety by ensuring fewer pressure ulcers and shorter hospital stays and to save the Trust approximately 100k per annum Sustainability report The full sustainability report is included as Appendix A at the end of this document. Highlights include: A 35.8% reduction in energy spending in 2014/15 compared to 2013/14, due to the commissioning in July 2014 of two combined heat and power units and several other energy optimisation projects A 24% reduction in water use in 2014/15 compared to 2013/14, delivering a saving of 131,402 in cash terms and reducing our carbon impact by 44 tonnes of CO2 emitted (tco2e), through leakage repair and improved water treatment. The Trust is continuing to work towards its target of a 30% reduction in carbon emissions by 2019/20 against a 2013/14 baseline, above the national NHS 28% reduction target. Croydon Health Services Annual Report and Accounts Page 35

37 10. Directors Report Statement of the Directors as to disclosure of information to auditors The Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Trust s auditors are unaware; and each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Trust s auditors are aware of that information. This statement was approved by a duly authorised Committee of the Board of Directors on 3 rd June 2015 and signed on its behalf by John Goulston, Chief Executive Officer Pension Liabilities Past and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under these provisions can be found on the NHS Pensions website at The scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The Trust makes employer contributions of 14 per cent to the scheme. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. Please refer to Note 1.6 of the Notes to the Accounts and the Remuneration Report for more information. Croydon Health Services Annual Report and Accounts Page 36

38 10.3. Directors interests The Board of Directors has approved and signed up to the Board of Directors Code of Conduct which sets out a requirement for all Board members to declare any interests which may compromise their role. The following Directors declared these interests:- Director John Goulston, Chief Executive Azara Mukhtar, Director of Finance Karen Breen, Deputy Chief Executive & Chief Operating Officer (Resigned 31 August 2014) Sharon Jones, Acting Chief Operating Officer for the interim period from 1 August 2014 to 31 October Jayne Black, Deputy Chief Executive & Chief Operating Officer (Appointed 1 November 2014) Zoe Packman, Director of Nursing, Midwifery and AHPs (Left the Trust 24 November 2014). Michael Burden, Director of Human Resources & Organisational Development Stephen Ebbs, Medical Director Edward Adams, Director of Corporate Governance (Left the Trust 27 November 2014). Declared Interest 1. Member of the Croydon Health & Well Being Board / Member of the Croydon Local Strategic Partnership (LSP) Board and the LSP Chief Executives Group - June 2012 to present 3. Member of the Health Innovation Network Board (formerly known as the Academic Health Science Network, South London) - October 2013 to present. 4. Member of the London Cancer Alliance, Members Board - April 2013 to present 5. Member of the South West London Pathology Implementation Board (1 April 2013 to 31 March 2014) and South West London Pathology Partnership Board from April Member of the London Procurement Programme Steering Group 2014/15 and Chair from 1 April 2015 Croydon Health Services NHS Trust Board Member of South West London Pathology Partnership Board Nil Nil Nil Honorary Senior Clinical Fellow Kingston University and St George's University of London Nil Nil Nil Croydon Health Services Annual Report and Accounts Page 37

39 Lisa Chesser, Director of Planning & Informatics (Seconded from Trust Development Authority on 1 st April and permanently appointed to CHS on 1 st March 2015) Michael Bell, Chairman Godfrey Allen, Non executive director Mary Clarke CBE, Associate Non-Executive Director (Resigned 31 August 2014) John Thompson, Non executive director Steven Corbishley, Non executive director (nonpaid) Nil Director of MBARC Ltd, a research and consultancy company working with a range of public sector bodies including central and local government and various NHS organisations. MBARC are also currently managing a number of projects funded by pharmaceutical companies including Bayer, MSD and ViiV Healthcare. Nil 1. Independent Nurse member Merton CCG. 2. Director of Clarkes Consultancy Limited. 3. Specialist Advisor of Care Quality Commission. 4. Panel member of Nursing and Midwifery Council. 1. Chair Board of Trustees Richmond Carers Centre - Unpaid. 2. Chair Lay Advisory Panel, Lay Trustee and Council Member, College of Optometrists - Unpaid. 3. Joint Chair England Implementation Group of the UK Vision Strategy - Unpaid Nil Dr James Gillgrass, Non executive director Louise Cretton, Non executive director Jamal Butt, Associate Non executive director Mike Bailey, Associate Non-Executive Director (Appointed 1 May 2014) 1. Trustee Croydon Post - Graduate Medical Centre 2. Member of Croydon Opportunity and Fairness Commission 3. His daughter is a locality manager at Wandsworth CCG. Nil Head of Pharmacy, Boots UK Nil External auditor s remuneration The Trust s external auditors are Grant Thornton. During the financial year, Grant Thornton carried out work in relation to the statutory audit. The cost of these services in 2014/15 was 92,397. Croydon Health Services Annual Report and Accounts Page 38

40 Grant Thornton also carried out the work on Quality Accounts. The work on the quality accounts constitutes an audit related service. The cost of this service in 2014/15 was 10, Sickness absence data Total Days Total Staff Average Workings Days Period Lost Years Lost Per Employee 2013/ ,427 3, / ,398 3, Cost allocation and charges for information The Trust posts information about our activities and services on our public website, and this can be accessed for free. We make available recent legislation, public policy announcements, consultation documents and supporting material sufficient to understand the Trust s business. The Trust charges a small fee to cover the cost of production of certain information e.g. copies of medical records. The Trust does not charge for Freedom of Information requests where the information is readily available, or can be provided within the time limits stipulated in the Freedom of Information Act. The Trust makes no additional charge for material made available to meet the needs of particular groups of people, e.g. in Braille or other languages Disclosure of personal data and related incidents Details of incidents involving data loss or confidentiality breaches must be reported using the Information Governance Toolkit (IGT) Incident Reporting tool. This reports Information Governance Serious Incidents Requiring Investigation (IG SIRIs) to the Health and Social Care Information Centre (HSCIC), Department of Health DH), Information Commissioner s Office (ICO) and other regulators. The HSCIC Checklist Guidance for Reporting, Managing and Investigating Information Governance Serious Incidents Requiring Investigation provides more detailed information Employee consultation The Trust is committed to thorough engagement with its staff on strategic and operational issues and is the first NHS organisation in the UK to gain the LiA certification kitemark, recognising the Trust s commitment to using the LiA methodology to engage with and empower staff to drive workplace change. The Trust also has a productive relationship with staffside unions and engages with them both through the Joint Staffside Consultative Committee (JSCC) as well as individually. The Chief Executive also delivers a monthly briefing on Trust issues which all staff can attend and raise questions at, as well as hosting 1-to-1 drop-in sessions for staff in partnership with the Trust s Chairman. Finally, the Trust has, and follows, a robust Change Management policy to ensure that all staff are consulted on changes to their working environment as per NHS national policy and established employment law. The NHS Staff Survey 2014 found that the Trust was in the top 20% of the country for staff engagement (KF22). Croydon Health Services Annual Report and Accounts Page 39

41 10.9. Equality disclosures The Trust has an Access, Equality and Diversity committee which considers all equalities issues raised with the Trust and reports directly into the People and Organisational Development committee. To address issues raised in previous staff surveys relating to concerns around discrimination within the organisation, the Trust has made a concerted effort to deliver better equalities awareness training; the NHS Staff Survey found a significant increase in the numbers of staff who have received this training, increasing to 78% from a reported 40% in The Trust has a gender split between staff who identify as men and women overall of 79% women and 21% men. For Band 9 and very senior managers the split is 60% female, 40% male. For other senior managers (Band 8a-d) the split is 76% female, 24% male. For medical and dental staff, the split is 51% female and 49% male Health and Safety The Trust continues to address health and safety issues thoroughly and rigorously. In accordance with the agreed internal audit plan, a review of controls associated with health and safety was carried out by London Audit Consortium this year. The audit found that the structure set out in the Health and Safety Policy provides clear lines of accountability for health and safety and outlined the reporting arrangements. The roles and responsibilities have been clearly assigned to responsible officers and that the Trust has appointed a sufficient number of competent persons to comply with the requirements of statutory provisions. The audit also found that adequate health and safety information is available to all staff, including on the intranet, and that this was up to date. The Health, Safety & Environmental Governance Committee (HSEGC), chaired by the Director of Estates & Facilities continues to meet quarterly, receiving health and safety governance reports and communicating key findings from incident investigations along with any lessons learned. Committee meetings are aligned to the Trust Board meeting schedule. To support the work of this Committee, the Trust Board approved a revised Health and Safety Policy to take account of the requirements set out in Health & Safety Executive (HSE) and the Institute of Directors (IOD), and Trust Board members attended the Health and Safety Refresher Statutory Training in December Mandatory Health and Safety Training compliance at the Trust has improved from 80% in 2013/14 to 83% in 2014/15. The Trust Health & Safety Manager has been working closely with the Training Department Workforce Development to design and implement a Risk Assessment (Health & Safety) Assessor Training e-learning module for roll out in 2015/16. The Trust is a member of the healthcare Risk Management Group (London and the South East Group), which meets quarterly to share and promote best practice Fraud The Trust s Counter Fraud and Corruption Policy has been updated in 2014/15 to take into account the requirements of the Bribery Act. The new Anti Fraud, Bribery and Corruption Policy and Procedure document is available to all staff on the Trust intranet and sets out the Trust Board s commitment to maintaining an honest, open and well-intentioned atmosphere within the Trust. The Trust is committed Croydon Health Services Annual Report and Accounts Page 40

42 to the elimination of any fraud, bribery or corruption within the Trust, and to the rigorous investigation of any such cases. The Trusts Whistleblowing Policy encourages staff not to turn a blind eye or to remain silent, but to accept their responsibilities for the Trust s interests and to voice genuinely held concerns about fraud, bribery and corruption. The Trust encourages anyone having reasonable suspicions of fraud, bribery or corruption to report them. Therefore it is also the Trust s policy in accordance with the Public Interest Disclosure Act 1998 that no employee will suffer in any way as a result of reporting. The Trust has an accredited Local Counter Fraud Specialist (LCFS) in place. The LCFS undertakes an on-going programme of work to raise the profile of counter fraud measures and carries out ad-hoc audits and specific investigations of any reported alleged frauds. This includes the use of fraud awareness presentations and fraud awareness surveys. There is also an Internal Audit/Counter Fraud protocol which allows for the exchange of information where any risks of fraud resulting from internal audit will be reported. Croydon Health Services Annual Report and Accounts Page 41

43 11. Financial Review /15 Financial Performance and Progress (overview and summary) The table below sets out Croydon Health Services NHS Trust s Financial Targets, and its performance against these, in the 2014/15 Financial Year: Target Performance Target met? Breakeven on revenue and operating costs Keep within the capital resource limit (CRL) of 8.350m The Trust achieved a deficit of 27.3m (27.5m after technical adjustments) The Trust remained within the CRL, and generated an underspend of 0.348m No Yes Remain within the external financing limit (EFL) of The Trust remained within its EFL, and over achieved on this by 0.038m Yes Keep within a Capital Cost Absorption Rate (CCAR) of 3.5% The Trust kept within the 3.5% CCAR. This has resulted in dividend payments of 5.185m to the Department of Health. Yes The Trust closed the financial year with a million deficit when the cumulative financial position is viewed over a 10 year period Where our money comes from Trust income has increased by circa 1.7 million between 2013/14 and 2014/15 and the total income received by the Trust during the financial year was 246 million, of which: 230 million was income for clinical services (from both other NHS and non-nhs), and 15 million related to income for non-patient care services such as training and education. Our income is classified as follows: 225.4m (92%) - NHS Clinical Income 9.7m (4%) - Education, training and research 1.6m (1%) Non-patient care services 6.2m (2%) Non NHS Clinical Income 3.4m (1%) Other Croydon Health Services Annual Report and Accounts Page 42

44 11.3. What we spent the money on The Trust spent million during the financial year, an increase of 3.7 million from the previous financial year. The largest spend was on staffing at 172.9m. The Trust also spent: 45.7m on supplies and services in relation to direct patient care; 10.2m on patient transport, education and training and administrative costs; 2.4m on consultancy costs 8.5m to the NHS Litigation Authority; 11.0m on other supplies and services; 10.5m on premises, which includes IT costs; 5.8m on dividends to the Department of Health; and finally, 6.4m on depreciation and impairment reversals of our capital assets Getting Best Value for Money The Trust has made 7.1 million of efficiency savings during the 2014/15 financial year, which equates to 3% saving against actual turnover. These savings have been reinvested in patient care. Croydon Health Services Annual Report and Accounts Page 43

45 11.5. Capital Investment During 2014/15 the Trust invested million in capital schemes. Major Trust schemes included: The interventional radiology project, 1.2m Dementia and Eye Clinic Roof, 0.4m Replacement of main chiller, 0.7m Premises works to improve the patient environment, 0.9m CRS Milennium re-procurement and CRS Milennium Phase 2 patient care system 1.8m Preliminary works on the Emergency Department refurbishment 1.1m Other IT and medical equipment, 1.9m The capital programme for 2015/16 continues with the on-going investment in patient care and well being, with substantial budgets set aside for: The refurbishment of the Croydon Heart Centre; Refurbishment of the Dental Unit; The refurbishment of the Emergency Department. Croydon Health Services Annual Report and Accounts Page 44

46 11.6. Going Concern The local health economy is severely financially challenged with one of the fastest growing populations in London as well as Croydon CCG being significantly underfunded for its historic population figures. The Trust is forecasting a deficit of, at least, 25.04m for 2015/16 and in its long term financial modelling does not expect to return to surplus until 2018/19. There has been a sustained period of investment in quality measures in order to improve patient experience and to meet CQC requirements with full year effect cost pressures from 2013/14 in the region of 2.2m; 3.6m increase in CRS Millennium and PACS renewal contracts which have moved out of national contract to local contracts in 2015/16 and 2.9m increases in costs for the CNST premium; there will be ongoing heavy reliance on agency and other temporary staffing, although the Trust spent 5m less on temporary staffing than 2013/14; and a significant QIPP challenge from the Trust s host commissioner, Croydon CCG, have all contributed to the financial position of the Trust. The Trust will learn from its experiences in 2014/15 to ensure delivery of the financial plan. Profitability alone does not ensure the Going Concern status of an organisation. The ability of the Trust to maintain sufficient cash working balances, to ensure debts are paid, is the critical factor that management have used in ascertaining the Going Concern status of Croydon Health Services NHS Trust. The Trust s Statement of Financial Position (SOFA) shows that the short term payables ( 35.4m) exceed short term receivables ( 20.2m). In 2014/15 the Trust secured 23.3m of permanent PDC funding to meet its cash shortfall. In late March 2015, the Trust secured a revolving working capital facility of 7.1m with the Department of Health to meet its cash flow requirements over the course of Quarter 1 of 2015/16. This working capital facility will be re-applied for in each successive quarter. The NHS Trust Development Authority has written to the Trust to confirm that they will make sufficient cash financing available to the organisation over the next 12 month period. The Trust has complete confidence that future working capital facility funding will be available. Any drawings will incur an interest charge of 3.5% which is paid every 6 months. The Trust is under no obligation to repay the principal loan until 2019/20 by which time the Trust expects to have already returned to financial surplus. We therefore assess that the Trust will be able to pay its debts throughout the 2015/16 financial year despite the shortfall in its net current assets demonstrated in its SOFA at 31 st March With the exception of the refurbishment of the Emergency Department (funded through a capital investment loan drawn down over the next two financial years and agreed by the Department of Health), the capital programme for the next five years assumes expenditure will be in line with internally generated resources (depreciation plus cash generated from disposals). The support of the NHS Trust Development Authority (TDA) of the Emergency Department and CRS Milennium re-procurement Full Business Cases in themselves give additional support to the going concern status. The Trust therefore has a reasonable expectation that adequate resources will be available to continue in operational existence for the foreseeable future. Croydon Health Services Annual Report and Accounts Page 45

47 11.7. Better Payments Practice Code 2014/ /14 Non-NHS Payables: Number 000 Number 000 Total Non-NHS Trade Invoices Paid in the Year 55, ,329 64,304 98,974 Total Non-NHS Trade Invoices Paid Within Target 35,399 48,932 39,286 56,318 Percentage of NHS Trade Invoices Paid Within Target 64% 48% 61% 57% NHS Payables: Total NHS Trade Invoices Paid in the Year 1,835 25,260 2,126 15,361 Total NHS Trade Invoices Paid Within Target ,170 1,539 12,536 Percentage of NHS Trade Invoices Paid Within Target 36% 60% 72% 82% Prompt Payments Code The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoices by the due date or within 30 days of receipt of goods or a valid invoice, whichever is later unless other payment terms have been agreed. The Trust has signed up to the code Off-payroll engagements Following the Review of Tax Arrangements of Public Sector Appointees published by the Chief Secretary to the Treasury on 23 May 2012, Departments and their arm s length bodies must publish information in relation to the number of off payroll engagements at a cost of over 58,200 per annum (i.e. more than 220 per day and more than six months) that are / were in place within their organisation. For all off-payroll engagements as of 31 March 2015, for more than 220 per day and that last longer than six months: Number Number of existing engagements as of 31 March Of which, the number that have existed: for less than one year at the time of reporting 31 for between one and two years at the time of reporting 15 for between 2 and 3 years at the time of reporting 6 for between 3 and 4 years at the time of reporting 2 for 4 or more years at the time of reporting 3 Croydon Health Services Annual Report and Accounts Page 46

48 All existing off-payroll engagements have at some point been subject to a risk based assessment as to whether assurance is required that the individual is paying the right amount of tax and, where necessary, that assurance has been sought. For all new off-payroll engagements between 1 April 2014 and 31 March 2015, for more than 220 per day and that last longer than six months: Number Number of new engagements, or those that reached six months in duration, between 1 April 2014 and 31 March 2015 Number of new engagements which include contractual clauses giving Croydon Health Services NHS Trust the right to request assurance in relation to income tax and National Insurance obligations Number for whom assurance has been requested 46 Of which: assurance has been received 13 assurance has not been received 16 engagements terminated as a result of assurance not being received, or ended before assurance received. 17 Number of off-payroll engagements of board members, and/or senior officers with significant financial responsibility, during the year Number of individuals that have been deemed board members, and/or senior officers with significant financial responsibility during the financial year. This figure include both off payroll and on payroll engagements. 1 8 Croydon Health Services Annual Report and Accounts Page 47

49 Remuneration report The Chairman and Non-executive Directors form the Remuneration Committee, which is a subcommittee of the Trust Board. The Committee determines the rates of pay and contracts of the Executive Directors against a Department of Health framework. During 2014/15, the committee was chaired by Non-Executive Director Louise Cretton. Members during the 2014/15 year were: Louise Cretton; (Chair of Committee) John Thompson; Godfrey Allen; Dr James Gillgrass; Steven Corbishley; Jamal Butt; Mike Bailey; Mary Clarke CBE. The committee also monitors and evaluates the performance of the Executive Directors. This approach is consistent with the overall performance management ethos of the Trust, and ensures linkage to national targets and local priorities. The committee's role is to ensure that the Executives are fairly rewarded for their contribution to the Trust, having proper regard to its circumstances and performance and to the provisions of any national arrangements for such staff where appropriate. Annual data comparisons will continue to be made with other Trusts of a similar size to ensure that Croydon Health Services continues to pay what is generally considered to be the market rate. No part of the Chief Executive's or Directors' remuneration is subject to their performance (in other words they do not attract any kind of performance bonus). None of the Voting Directors have fixed-term contracts. Their contracts can be terminated by either side giving, in the case of the Chief Executive, six months notice, and for the Executive Directors, three months. John Goulston Chief Executive Date: 3 June 2015 Croydon Health Services Annual Report and Accounts Page 48

50 Salary and Pensions of Senior Managers The information contained below in the Salary and Pension Entitlement of Senior Managers (the Remuneration Report ) has been audited by the Trust s External Auditors Name & Title (a) (b) (c) (d) (e) (f) Salary (bands of 5,000) Expense payments (taxable) to nearest 100 Performance pay and bonuses (bands of 5,000) Long term performance pay and bonuses (bands of 5,000) All pension related benefits (bands of 2,500) Total (a to e ) (bands of 5,000) John Goulston, Chief Executive Officer to 210 Azara Mukhtar, Director of Finance to 140 Karen Breen, Deputy Chief Executive & Chief Operating Officer (Resigned 31 August 2014) The salary for is part year only to 60 Croydon Health Services Annual Report and Accounts Page 49

51 Sharon Jones, Acting Chief Operating Officer for the interim period from 1 August 2014 to 31 October The salary for is part year only to 50 Jayne Black, Deputy Chief Executive & Chief Operating Officer (Appointed 1 November 2014) The salary for is part year only to 190 Zoe Packman, Director of Nursing, Midwifery and AHPs (Resigned 24 November 2014). The salary for is full year; however from 1 November 2014 to 31 March 2105, 50% of the salary has been recharged to LAS) to 120 Michael Burden, Director of Human Resources & Organisational Development to 95 Stephen Ebbs, Medical Director , ,100 1,285 to 1,290 1 Included within Stephen Ebbs salary were 2013/14 arrears of 11,335 paid in 2014/15. Croydon Health Services Annual Report and Accounts Page 50

52 Edward Adams, Director of Corporate Governance (Resigned 27 November 2014). The salary for is part year only Lisa Chesser, Director of Planning & Informatics (Seconded from Trust Development Authority on 1 st April and permanently appointed to CHS on 1 st March 2015) to 135 Michael Bell, Chairman Godfrey Allen, Non executive director Mary Clarke CBE, Associate Non-Executive Director (Resigned 31 August 2014) John Thompson, Non executive director Steven Corbishley, Non executive director- (non-paid non executive director) NA NA NA NA NA NA Dr James Gillgrass, Non-executive director Louise Cretton, Non-executive director Jamal Butt, Associate Non-executive director Mike Bailey, Associate Non-executive director (appointed 1 May 2014) The salary for 2014/15 is part year only Croydon Health Services Annual Report and Accounts Page 51

53 Name & Title (a) (b) (c) (d) (e) (f) Salary (bands of 5,000) Expense payments (taxable) to nearest 100 Performance pay and bonuses (bands of 5,000) Long term performance pay and bonuses (bands of 5,000) All pension related benefits (bands of 2,500) (restated) Total (a to e ) (bands of 5,000) (restated) John Goulston, Chief Executive Officer Azara Mukhtar, Director of Finance Karen Breen, Deputy Chief Executive & Chief Operating Officer Croydon Health Services Annual Report and Accounts Page 52

54 Sharon Jones, Acting Chief Operating Officer for the interim period from 1 August 2014 to 31 October The salary for is part year only Jayne Black, Deputy Chief Executive & Chief Operating Officer (Appointed 1 November 2014) The salary for is part year only. NA NA NA NA NA NA Zoe Packman, Director of Nursing, Midwifery and AHPs Michael Burden, Director of Human Resources & Organisational Development Stephen Ebbs, Medical Director (appointed 9 September 2013) Edward Adams, Director of Corporate Governance (Resigned 27 November 2014) Lisa Chesser, Director of Planning & Informatics (Seconded from Trust Development Authority on 1 st April and permanently appointed to CHS on 1 st March 2015) NA NA NA NA NA NA Croydon Health Services Annual Report and Accounts Page 53

55 Michael Bell, Chairman Godfrey Allen, Non executive director Mary Clarke CBE, Associate Non-Executive Director (Resigned 31 August 2014) John Thompson, Non executive director Steven Corbishley, Non-paid non executive director NA NA Dr James Gillgrass, Non executive director Louise Cretton, Non executive director Jamal Butt, Associate Non executive director Mike Bailey, Associate Non executive director (appointed 1 May 2014) The salary for 2014/15 is part year only NA NA NA NA NA NA Croydon Health Services Annual Report and Accounts Page 54

56 Pension Benefits 2014/15 Name Title Real increase / (decrease) in pension at age 60 (bands of 2,500) Real increase / (decrease) in pension lump sum at aged 60 (bands of 2,500) Total accrued pension at age 60 at 31 March 2015 (bands of 5,000) Lump sum at age 60 related to accrued pension at 31 March 2015 (bands of 5,000) Cash Equivalent Transfer Value at 1 April 2014 Cash Equivalent Transfer Value at 31 March 2015 Real increase/ (decrease) in Cash Equivalent Transfer Value John Goulston Chief Executive ,159 1, Azara Mukhtar Director of Finance Karen Breen Deputy Chief Executive and Chief Operating Officer Sharon Jones Acting Chief Operating Officer Croydon Health Services Annual Report and Accounts Page 55

57 Jayne Black Deputy Chief Executive and Chief Operating Officer Zoe Packman Director of Nursing, Midwifery and AHPs Michael Burden Director of Human Resources & Organisation Development Stephen Ebbs Medical Director ,597 2,788 1,174 Lisa Chesser Director of Planning & Informatics As Non-Executive members do not receive pensionable remuneration, there are no entries in respect of pensions for non-executive members. Edward Adams was not a member of the NHS Pension scheme. There were no employer contributions to stakeholder pension accounts in respect of any of the above. A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member s accrued benefits and any contingent spouse s pension payable from the scheme. A CETV is a payment made by a pension scheme, or arrangement to secure pension benefits in another pension scheme or Croydon Health Services Annual Report and Accounts Page 56

58 arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The CETV figures include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries. Real Increase in CETV reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or an arrangement which the individual has transferred to the NHS pension scheme) and uses common market valuation factors for the start and end of the period Exit packages Exit package cost band (including any special payment element) Number of compulsory redundancies Cost of compulsory redundancies Number of other departures agreed Cost of other departures agreed Total number of exit packages Total cost of exit packages Number of departures where special payments have been made Cost of special payment element included in exit packages Number s Number s Number s Number s Less than 10, , , Croydon Health Services Annual Report and Accounts Page 57

59 10,000-25, , , ,001-50, , , , , , , , , , , > 200, , , Totals 5 431, , Redundancy and other departure costs have been paid in accordance with the provisions of the NHS Pension Scheme. Exit costs in this note are accounted in full in the year of departure. Where the Trust has agreed early retirements, the additional costs are met by the trust and not by the NHS pension scheme. Ill health retirements costs are met by the NHS pension scheme and are not included in the table. This disclosure reports the number and value of exit packages taken by staff leaving in the year. Note: The expense associated with these departures may have been recognised in part of in full in a previous period. Croydon Health Services Annual Report and Accounts Page 58

60 Agreements Total value of agreements Number 000s Voluntary redundancies including early retirement contractual costs 0 0 Mutually agreed resignations (MARS) contractual costs 0 0 Early retirements in the efficiency of the service contractual costs Contractual payments in lieu of notice 0 0 Exit payments following Employment Tribunals or court orders 0 0 Non-contractual payments requiring HMT approval 0 0 Total Croydon Health Services Annual Report and Accounts Page 59

61 Pay Multiples Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation s workforce. The calculation is based on the full-time equivalent staff of the reporting entity at the reporting period end date on an annualised basis. This is shown in the table below: 2014/ /14 Band of Highest Paid Director s Total Remuneration 220k to 225k 180k to 185k Median Total Remuneration of all staff 27,399 27,427 Remuneration Ratio Number of employees who received remuneration in excess of the highest paid director 0 2 Remuneration for these staff ranged from: NA 191k to 204k Total remuneration includes salary, non-consolidated performance-related pay, benefits-in-kind as well as severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions Looking Forward to 2015/16 The next year is planned to be one of maintaining and building on this year s improvements and further positive change in terms of the services we provide, the experiences of our patients and our overall financial position. The rebuilding of our Emergency Department is scheduled to begin in autumn 2015, a major work programme that will last until early During this time a full emergency department service will continue to operate from the Trust s Croydon University Hospital site. Preparing the site for this work and the ED service for this transition, which will see the Trust maintain its emergency bay capacity throughout the works, will be a major task along with ensuring that our local community are kept informed of the changes to the way the service will operate. The Trust also has a number of further planned capital projects to further improve our estate and services to take place in 2015/16. These include: Haematology Life Bloods suite extension New Dental Department Continued investment in backlog maintenance and infrastructure Croydon Health Services Annual Report and Accounts Page 60

62 Continued investment in medical equipment replacement programme The Quality, Experience and Safety Programme (QESP) launched this year will continue to drive improvements at ward level across the organisation as part of a holistic approach to service improvement. The programme ensures that the Trust is fully prepared for the next scheduled Care Quality Commission inspection in June 2015 and beyond, embedding a holistic improvement process into the fabric of the Trust going forward. To broaden out the continued success of the Listening into Action programme, we are making LiA even easier to get more colleagues involved. The fundamental premise of LiA is giving staff permission to get on with it ; and that is exactly what we will be doing. The new Let s Do It campaign has a simple premise if you see something that can be improved to better patient care and working lives, then Let s Do It. Packs of information to support frontline staff make the changes that they want to see were distributed across the Trust in March 2015 and we have a team of colleagues across the hospital and community services ready to offer advice and support where needed. The best Let s Do It team every month will be awarded up to 1,000 from the Trust s charitable funds to invest in further improving patient care. One of the key service improvements that we are planning to deliver is a major overhaul of our outpatient services. Now situated in a bright and refurbished hub at Croydon University Hospital, we are working hard to ensure that the staffing and administrative systems within the service are fully fit for purpose, as well as looking to provide wider choice and convenience to our patients by offering more outpatient options based in the community and particularly at our secondary hub Purley War Memorial Hospital. The final major challenge that the Trust will be addressing will be to address its financial deficit, and in particular the high staffing costs currently being incurred through using temporary staff on our wards. A robust recruitment and retention strategy is in development for 2015/16, which will link with our plans to encourage more local people to use our services, driving up Trust income and driving down costs. Croydon Health Services Annual Report and Accounts Page 61

63 12. Statement of the Chief Executive's Responsibilities as the Accountable Officer of the Trust The Chief Executive of the NHS has designated that the Chief Executive should be the Accountable Officer to the Trust. The relevant responsibilities of Accountable Officers are set out in the Accountable Officers Memorandum issued by the Department of Health. These include ensuring that: there are effective management systems in place to safeguard public funds and assets and assist in the implementation of corporate governance; value for money is achieved from the resources available to the trust; the expenditure and income of the trust has been applied to the purposes intended by Parliament and conform to the authorities which govern them; effective and sound financial management systems are in place; and annual statutory accounts are prepared in a format directed by the Secretary of State with the approval of the Treasury to give a true and fair view of the state of affairs as at the end of the financial year and the income and expenditure, recognised gains and losses and cash flows for the year. To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an Accountable Officer. John Goulston Chief Executive Date: 3 June 2015 Croydon Health Services Annual Report and Accounts Page 62

64 13. Statement of Directors' Responsibilities in Respect of the Accounts The Directors are required under the National Health Service Act 2006 to prepare accounts for each financial year. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fair view of the state of affairs of the Trust and of the income and expenditure, recognised gains and losses and cash flows for the year. In preparing those accounts, Directors are required to: apply on a consistent basis accounting policies laid down by the Secretary of State with the approval of the Treasury; make judgements and estimates which are reasonable and prudent; state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible for safeguarding the assets of the trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts. By order of the Board John Goulston Chief Executive Date: 3 June 2015 Azara Mukhtar Director of Finance Date: 3 June 2015 Croydon Health Services Annual Report and Accounts Page 63

65 /15 Annual Governance Statement 1. Scope of responsibility The Trust Board is collectively accountable for governance at Croydon Health Services NHS Trust. As the Accountable Officer and Chief Executive of this Board, I have responsibility for maintaining a sound system of governance and internal control that supports the achievement of the organisation s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation s assets, for which I am personally responsible as set out in the Accountable Officer Memorandum. The Executive Team is collectively responsible for maintaining the systems of internal control and directors are accountable to me for ensuring effective governance arrangements in their individual areas of responsibilities. These areas of responsibility are detailed in the Trust s Scheme of Delegation. 2. Accountability In the delivery of my responsibilities and objectives, I am accountable to the Board and my performance is reviewed regularly and formally by the Chairman on behalf of the Trust. The Trust reports formally to the NHS Trust Development Authority reporting routinely on financial, operational, strategic and quality matters. 3. The purpose of the system of Internal Control and Governance Framework The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of the policies, aims and objectives of Croydon Health Services; to evaluate the likelihood of those risks being realised, and the impact should they be realised; and to manage them efficiently, effectively and economically. The system of internal control has been in place in Croydon Health Services NHS Trust for the year ended the 31 st March 2015 and up to the date of approval of the Annual Report and Accounts. 4. The Governance Framework of the Organisation The Trust Board has overall responsibility for the activity, integrity and strategy of the Trust and is accountable through its Chairman to the Trust Development Authority and the Secretary of State for Health. The Trust Board The Trust Board meets monthly and consists of a Chair, five Executive Directors (including the Chief Executive) and five Non-Executive Directors (excluding the Chair). In addition there are two nonvoting Directors and two Associate Non-Executive Directors. A Director of Governance and committee secretary provided support to the Trust Board. In November 2014 the Director of Governance retired and was replaced by an interim Head of Corporate Governance/Trust Board Secretary. Croydon Health Services Annual Report and Accounts Page 64

66 The Trust Board met in public on 6 occasions in 2014/15 and was noted to be quorate at all the meetings. The Trust held its Annual General Meeting on 3 rd September The Trust Board operates with the support of the following five committees; 1. The Audit Committee exists to oversee the establishment and maintenance of an effective system on internal control throughout the organisation. It ensures there are effective internal audit arrangements in place to meet mandatory NHS internal audit Standards and provides independent assurance to the Board. The Committee reviews the work and findings of External Audit and provides a conduit through which their findings can be considered by the Board. It also receives the corporate Risk Assurance Framework at every meeting. It also reviews the Trust s Annual Statutory Accounts before they are presented to the Trust Board, ensuring that the significance of figures, notes and important changes are understood. The committee maintains oversight of the Trust s Counter Fraud arrangements. 2. The Finance & Performance Committee s main responsibilities are to review the Trust s financial and operational performance against annual plans and budgets and to provide overview of the Trust s medium and long-term financial models. It also reviews in-year delivery of annual efficiency savings programmes and monitors the effectiveness of the trust s financial and operational performance reporting systems. 3. The Quality and Clinical Governance Committee is responsible for providing the Board with assurance on all aspects on the quality of all aspects of clinical care. The committee oversees the Trust s ongoing compliance with the Care Quality Commissions recommendations following its hospital inspection in September 2013.This committee also receives monthly progress reports on the work being undertaken to prepare the Trust for the forthcoming CQC inspection in June The Remuneration Committee is responsible for determining the policy on executive remuneration, approving contracts of employment for executives and agreeing arrangements for the termination of contracts. The committee ensures that appropriate performance management arrangements are in place for Executive Directors and work with the Chief Executive to relate performance judgements to pay. 5. The Charitable Funds Committee is responsible for overseeing the management, investment and disbursement of the Croydon Health Services Charitable Funds (Registered Charity No ), and to ensure compliance with statutory or other legal requirements or best practice required by the Charity Commission. This is a delegated duty carried out on behalf of Croydon Health Services NHS Trust (the Trust), which is the sole corporate trustee of the charity. The five committees of the Board meet as follows: Board Committees No. Meetings Quorate Audit 6 100% Remuneration 2 100% Finance and Performance % Quality and Clinical Governance % Charitable Funds 3 100% Croydon Health Services Annual Report and Accounts Page 65

67 The Chairs of each of the sub committees routinely present verbal reports to the Board, highlighting key issues and decisions at their meetings. Approved minutes of each committee meeting are also presented at the Public Trust Board meetings. The Trust Board met a total of 6 times in public in 2014/15 - April, June, July, October, December 2014 and February Attendance was monitored throughout the year and there were 5 authorised absences from 4 Non-Executive Directors, 1 authorised absence by the Director of Nursing, 1 authorised absence by the Medical Director and 2 authorised absences from the Director of Planning and Information during this period. In March 2015 the Board was one of four NHS Trusts to self-assess itself against the NHS Trust Development Authority s pilot on the Well Led Board Framework. This is due to report early in 2015/16 and will help the Trust to further develop its governance and leadership. In November 2014 the Fit and Proper Person Test was introduced as a statutory requirement by the Care Quality Commission. In February 2015, the Board approved the Trust s Fit and Proper Person process which was immediately implemented. The Board s Register of Interests was maintained through 2014/15 and was formally received by the Trust in February 2015 and going forward will be included as a standing agenda item at each Trust Board meeting. 5. Capacity to handle risk The Board approved the Trust s risk appetite in Quarter 3 of 2014/15. The Trust has a Risk Management Strategy that sets out the philosophy for the management of risk and individual s responsibilities and accountabilities in this regard. Operational responsibility for the implementation of risk management has been delegated to executive directors as follows: The Director of Finance has delegated authority for the risk management framework, and is executive lead, supported by the Interim Head of Corporate Governance/Trust Board Secretary and the Head of Compliance and Regulation for maintaining the Corporate Risk Assurance Framework (CRAF) and its supporting processes. The Director of Finance also has responsibility for financial governance associated financial risk. The Medical Director has responsibility for clinical governance and patient safety, including incident management and has joint responsibility with the Director of Nursing for quality. The Director of Nursing has responsibility for patient experience and the CQC regulatory requirements and has joint responsibility with the Medical Director for Quality. The Chief Operating Officer/Deputy Chief Executive and all other executive directors have responsibility for the management of strategic and operational risks within their individual portfolios. A range of risk management training is available to staff based on the nature of their role within the organisation. Risk awareness training is provided to all new staff attending corporate induction. The risk management strategy describes the roles and responsibilities of staff in relation to the identification, management and control of risk and encourages the use of risk management processes as a mechanism to highlight area they believe require improvement. Croydon Health Services Annual Report and Accounts Page 66

68 6. Risk Assessment The key aims of the Trust s risk management approach is to ensure that all risks to the Trust s achievement of strategic objectives are identified, analysed, evaluated, monitored and managed appropriately. This system of risk management is described in the Trust s Risk Management Strategy which is accessible to all staff via the Trust intranet. The Risk Management Strategy sets out an integrated approach to the management of risk across the organisation. The aim is to reduce risks that impact in patient and staff safety, and have an adverse effect on the Trust s reputation as well as its financial and operational performance. The strategy also defines how risks are linked to the strategic objectives of the organisation. Each principal risk linked to a strategic objective is assigned a risk owner and an executive director and key controls that are to be taken to reduce likelihood and impact are identified. Each directorate is responsible for maintaining its own detailed risk register in accordance with Trust policy. These risk registers are reviewed regularly by the directorate Quality Boards. The Corporate Risk Assurance Framework (CRAF) provides a structure and process that enables the Trust Board to focus on those risks that might compromise achievement of the annual objectives and to map out key controls that are in place to manage those risks. It is presented monthly to the Risk and Policy Assurance Group, and at each meeting of the Audit Committee before being received by the Trust Board. It provides a level of assurance to the Trust Board that it can meet its annual objectives. The Risk and Policy Assurance Group is chaired by the Interim Head of Corporate Governance/Trust Board Secretary and membership is drawn from all directorates. Its function is to ensure that the Trust has a robust Corporate Risk Assurance Framework (CRAF) and risk management arrangements in place and to provide advice and support on all matters relating to risk management within the Trust. It reviews the CRAF monthly and also undertakes Deep Dives into the Directorate risk registers and reports on these to the Audit Committee on the findings of these reviews. 7. The Risk Control Framework Risk Management is embedded within the organisation in a variety of ways. All staff have a duty to report incidents, hazards, complaints and near misses in accordance with relevant policies. As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure all employer obligations contained within the Scheme regulations are complied with. This includes ensuring that deductions from salary, employer s contributions and payments into the Scheme are in accordance with the Scheme rules, and that member Pension Scheme records are accurately updated in accordance with the timescales detailed in the Regulations. Control measures are in place to ensure that all the organisation s obligations under equality, diversity and human rights legislation are complied with. Control measures are in place to ensure that patients, the public and staff with physical and sensory impairments are able to access buildings on all the Trust s sites. All new estates schemes and refurbishments are assessed to ensure that they meet the requirements of the disability and discrimination Act. Issues identified through patient feedback, complaints or Patient Advice and Liaison (PALs) contacts are used to inform priorities for estates improvements. Croydon Health Services Annual Report and Accounts Page 67

69 8. Review of economy, efficiency and effectiveness of resources The Trust submitted a plan for a 17.9m deficit at the start of 2014/15. The Trust was overspent against the plan by month 6 due to a shortfall in the identification of savings schemes, slippage against identified savings schemes and shortfalls on income market share targets. The key area of expenditure savings schemes slippage was the planned conversion of agency staff to either bank or permanent staff due to lack of supply of NHS workforce in comparison with the demand. In Month 7 a revised set of best, base and worst case forecasts were worked up after analysing the position and providing a range of scenarios around stretch QIPP (expenditure reductions) and income. The Board agreed to a base case of 23.4m deficit with the NHS Trust Development Agency with a worst case scenario of 28.7m. The main reason for the adverse variance against the base case was due to further increased staffing costs as a result of national shortages in certain staff categories and the additional unplanned spend on meeting unexpectedly high acuity over the winter period. In addition non-pay overspends, in part related to the non-identification of further procurement savings failed to materialise which resulted in the Trust delivering 27.5m deficit. Within the overall year financial position, it should be noted that the Trust reduced its level of expenditure on temporary staff by 1.7m ( 28.0m as opposed to 29.7m) as a result of improved internal controls and QIPP savings. In total the Trust achieved QIPP savings of 8.6m. A full review of 2014/15 has been conducted with Lessons Learned both in terms of the overall plan and QIPP savings and this has resulted in the identification of the key root cause analysis of why the financial plans failed to deliver. The Trust has recognised the above issues and has either addressed them or put in place mitigations. A Financial Recovery Board (FRB) has been set up to ensure the development, delivery and monitoring of the financial plan and its drivers, including QIPP expenditure savings. The FRB is ultimately accountable to the Finance and Performance Committee. QIPP generation has started earlier and the Programme Management Office (PMO) has been restructured to deliver more focussed support to the FRB and directorates. Clear plans, which are formally and widely understood and owned by the directorates and executives, will be monitored by PMO to ensure that staff turnover is mitigated against loss of momentum and ownership and accountability. Clear KPIs, financial monitoring and reporting is in place and will be fully embedded in 2015/16. Key gaps in both operational and support areas will be filled on an interim basis to further ensure that there is no loss of momentum. 9. Annual Quality Report The Trust Board under the Health Act 2009 and the National Health Service (Quality Account) Regulations 2010 to prepare a Quality Account for each financial year. Guidance has been issued to Trusts on the form and content of the Quality Account which incorporates the above legal requirements and requisite external assurance arrangements. The Medical Director and the Director of Nursing lead on the Quality Accounts and for 2014/15 the Quality Account priorities were aligned with the Commissioning for Quality and Innovation (CQUIN) schemes. 10. CQC Regulatory Requirements The Quality Improvement Plan for Croydon Health Services was drawn up in February 2014, following the Trust s CQC inspection in This was monitored by the Programme Management Office (PMO) throughout 2014/15 and monthly reports were presented to the Quality and Clinical Governance Committee and the Trust Board. In July 2014, the Trust commissioned an external Croydon Health Services Annual Report and Accounts Page 68

70 review to provide assurance that the Trust was meeting the CQC recommendations and compliance actions as set out in its CQC inspection report. An action plan was drawn up and the recommendations have been addressed. In September 2014 the Trust held a Quality Summit with external stakeholders to show the progress that the Trust has made since the CQC inspection on In December 2014, the Director of Nursing became the accountable officer for the delivering the Quality Improvement Plan. The CQC informed the Trust in January 2015 that it would be subject to a Chief Inspector of Hospital s inspection in June 2015 in order that the Trust could receive a formal rating in line with national requirements. 11. Corporate Risk Assurance Framework (CRAF) The Trust s Risk Assurance Framework was reviewed by its Internal Auditors in February The Auditors found that during 2014/15 the Trust s Strategic Objectives were captured in the Trust s Corporate Risk Register (CRAF) and had been regularly reviewed within the Trust s governance structure. Following a deep dive it was agreed that a reversion to separate Corporate Risk Register and Board Assurance Framework supported by an enhanced role for the Executive Management Board in respect of risk governance was required to further strengthen risk management processes. 12. New risks identified in 2014/15: In 2014/15 there were no new significant risks identified. Some risks were realigned to fit the Trusts new strategic objectives, a Trust Board seminar was held on the risk appetite which resulted in formal approval of this in quarter 3 of 2014/ Data security breaches The Trust is committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, Care Standards Act 2000, The Data Protection Act 1998, The Freedom of Information Act 2000, Central Government policies and guidance from the Information Commissioner s Office. The Trust was visited by staff from the Information Commissioner s Office (ICO) on 10 th and 11 th March This followed a review of incidents reported to the ICO by the Trust. The ICO reviewed the Trust s practices in relation to Information Risk Management. Although no significant weaknesses in control were uncovered, the report made 18 recommendations for improvement. Action in respect of 9 of these recommendations is completed, and progress on the remaining actions is monitored and reported to the Trust s Information Governance Committee. There were 4 incidents recorded as Information Governance Serious Incidents Requiring Investigation (IG SIRI) which also meant they met the requirements for reporting to the ICO. One of these incidents concerned letters being sent to the incorrect addressees in error, and this group of complaints is the subject of further follow-up by the ICO. 14. Performance against national priorities set out on the NHS Operating Framework 2014/15 4hr access standard in Accident and Emergency Croydon Health Services Annual Report and Accounts Page 69

71 The Trust has worked extensively to deliver performance through the implementation of lessons learned from the safer, faster hospital exercise with significant service improvements being made throughout the year in the Emergency Department (ED), hospital, community services and across the whole system. Key operational issues compounded by an increase in patient acuity and a high conversion rate of presentations to admissions have been addressed to improve patient flow in the hospital from the door to the ward for all Emergency patients. This has included the introduction of a Consultant led Surgical Assessment Unit (SAU) where patients if clinically appropriate are fasttracked to be assessed by senior surgical decisions makers, improving patient experience, speedy treatment and reducing the time spent waiting in the ED. In spring 2015 the Trust will see the introduction of GP referrals directly to the SAU. Further work is being carried out to improve discharge and processes within the inpatient wards. Alongside the Emergency Care Intensive Support team, the trust will pilot the perfect ward in April. A review of the emergency pathways at the front end will build on the success of the ACE and rapid response teams and the implementation of the acute medical unit. These supportive changes provide a demonstrable improvement and consistency in ambulance handover to assessment/treatment times. These improvements have been sustained despite increasing pressures over the winter months, due to the changes being embedded by the Emergency Department Team. The Trust has continued to significantly invest in the Acute Medical Unit and has further plans in place to continue the improvements going forward into 2015/16 with the development of a Paediatric Assessment Unit (PAU) to support the delivery of the waiting standards. The strategic capital application was submitted to address the physical limitations of the Emergency Department for a re-build starting in 2015/ Weeks Referral to Treatment (RTT) Following the implementation of an RTT improvement action plan and review of demand and capacity across all services, the Trust has continued to achieve compliance in open pathways since August A number of challenges for achieving non-admitted performance remain across several specialities including Trauma & Orthopaedics and General Surgery, although these specialities continue to deliver admitted performance above the standard. Actions plans have been developed and implemented to address poor performance across those specialties that are not achieving RTT standards with a view that all services will be compliant in 2015/16. The Trust has developed and rolled-out a comprehensive Access Policy that sets out key standard operating procedures, access targets/standards and staff responsibilities in relation to RTT pathways. Cancer waits The Trust has regularly delivered a strong performance in meeting all cancer waiting time standards. However, in the last Quarter of 2014/15, performance dipped in relation to delivering the 62 day standard. Urology remains one of the most challenging pathways and investment in the department has been made to ensure robust tracking of all patients on a cancer pathway - as these patients can often receive treatment form a number of partner organisations when medically necessary. In addition the Trust is reviewing specific demand and capacity and best practice pathways. Remedial action plans are monitored regularly through the London Cancer Alliance Network and the Commissioner Clinical Quality Review Group and the Trust has make significant improvements in reported results from August meeting the standard consistently above the expected target and an improved overall year to date position of 79.29% against a standard of 85%. The Trust expects to meet the end of year targets at month 12 with continued growth and does not expect any further breaches for cancer waiting times in 2015/16. Croydon Health Services Annual Report and Accounts Page 70

72 Control of infection (C-difficile) target The Trust is on track to achieve the Clostridium difficile annual trajectory of 17 cases. During the year there has been one healthcare associated case of MRSA bacteraemia against a trajectory of zero preventable cases. This case was reattributed to the trust following a Post Infection Review. The Infection Control Team has led the way in ensuring that all cases of C. difficile and MRSA bacteraemia undergo a Post Infection Review so that any learning and areas for improvement are identified and acted on. 15. Review of effectiveness of Risk Management & Internal Controls As Accountable Officer, I have responsibility for reviewing the effectiveness of systems of internal control. My review is informed by the work of internal auditors, clinical audit and the executive and clinical directors within the Trust that have responsibility for the development and maintenance of the internal control framework. I have also relied on the content of the Quality Accounts accompanying this annual report and other performance information. This review is also informed by comments made by the external auditors in their management letter, the Head of Internal audit opinion and other reports. I have also been advised on the implications of the result of the effectiveness of the system of internal control by the Board, the Audit Committee and the Quality and Clinical Governance Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place. My review is also informed by a variety of other sources of information. These include: The views and comments of stakeholders Patient and staff surveys Internal and external audit reports Clinical benchmarking and audit reports Mortality monitoring Reports from external assessments such as CQC Quality and Risk Profile Deanery and Royal College assessments Accreditation inspections of clinical services PLACE self-assessments It should also be noted that the deployment of CRS Millennium (our main clinical information system) provides a much improved control environment for clinical risk management as the use of the system is governed by Standard Operating Procedures (SOPs - work flows). Compliance against the SOPs can be monitored by the Lights On Network. Furthermore, in 2014, the Trust was the first healthcare organisation in the UK to be awarded stage 6, HIMSS (stage 7 recognises a paperless hospital). Head of Internal Audit Opinion The Head of Internal Audit has provided me with an overall opinion of reasonable assurance that the internal controls are working effectively. This is based on an assessment of the Assurance Framework and on controls reviewed as part of the internal audit work. The internal auditors have issued reasonable or significant assurance opinion on most audits undertaken in 2014/15. Taking this into account alongside other evidence, it is reasonable for me to conclude that internal controls are working effectively within the Trust, There are, however, Croydon Health Services Annual Report and Accounts Page 71

73 improvements which will continue to be made and some of these will flow from the Trust s existing Quality Improvement Plan. However, three limited assurance reports have been received: one on the information governance tool kit, one on Cerner Implementation (the electronic patient record) and one on the Trust s ability to meet its Quality, Improvement, Productivity and Performance (QIPP) targets. During the year, the Audit Committee raised concerns with management that management s oversight of the implementation of internal audit recommendations was not satisfactory leading to a number of long standing recommendations where progress was slow. Monitoring of implementation of recommendations is carried out by the Executive Management Board (EMB) and the Audit Committee. A report of all outstanding audit recommendations is circulated to the EMB on a monthly basis and I have now personally instructed staff to ensure that recommendations are actioned in a timely manner. I have recommended that when audit recommendations are accepted that the time frame for implementation of recommendations is realistic and deliverable and that they adhere to implementation dates. In relation to the three reports with limited assurance; 1. See above with regard to the QIPP 2. Information Governance Toolkit Weaknesses were identified in the Trust s information governance arrangements during the year, which arose largely because of staff vacancies and changes in key roles. Roles and responsibilities have since been reviewed and recent staff appointments have been made and an action plan has been developed to ensure that the Trust achieves the required level of compliance. 3. Cerner Implementation Phase 1 The Trust implemented a new patient administration and clinical information system, CRS Millennium, in October 2013 overseen by the Cerner Programme Board. An audit of the Cerner implementation in June 2014 identified a number of recommendations in relation to the reporting of outstanding issues and risks including data quality. Whilst progress has been made in implementing the recommendations not all recommendations have been fully implemented as resources have focused on the successful implementation of CRS Millennium Phase 2 by 31 March 15, and on data validation to meet national targets and improvement programmes. A data quality team has since been established within the Informatics function to focus on data quality, reporting to the Trust s Informatics Executive Management Board on a monthly basis. Reporting processes and the Trust s approach to data quality will be further strengthened and embedded as a key priority in 2015/16, including identified risks being reported on the Corporate Risk Register with senior management review. 16. Significant Control Issues As identified through the Trusts risk management processes, the significant issues to report and corresponding actions taken to address key risk issues are outlined below: Never events Croydon Health Services Annual Report and Accounts Page 72

74 Conclusion There have been 2 Never events reported during this period one reported in December 2014 which related to a medication error and one reported in February 2015 which related to wrong site surgery. Serious Incidents The Trust reported 256 (as at 31/03/2015) serious incidents to the National Reporting and Learning Service (NRLS) within the year (this compares with 262 for 2013/14), 125 (as at 31/03/2015) of which were de-escalated by the Patient Safety Team at NHS London following investigation and submission of reports. All serious incidents are fully investigated using root cause analysis tools and are reviewed by the Serious Incident Review Group which is chaired by the Medical Director Reported Internal Major Incidents There has been one incident reported relating to the internal major incident that was declared in January This was as a result of insufficient in-patient capacity to meet emergency and elective care demand and a potential threat to patient safety and staff resource management. With the exception of the internal control issues that I have outlined above in this statement, my review confirms that the Trust has a generally sound system of internal controls that supports the achievement of its policies, aims and objectives and that those control issues have or are being addressed. Accountable Officer: John Goulston, Chief Executive Signature: Date: 3 June 2015 Croydon Health Services Annual Report and Accounts Page 73

75 15. Independent auditor's report to the Directors of Croydon Health Services NHS Trust We have audited the financial statements of Croydon Health Services NHS Trust for the year ended 31 March 2015 under the Audit Commission Act The financial statements comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Taxpayers Equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the accounting policies directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England. We have also audited the information in the Remuneration Report that is subject to audit, being: the table of salaries and allowances of senior managers and related narrative notes the table of pension benefits of senior managers and related narrative notes the table of pay multiples and related narrative notes This report is made solely to the Board of Directors of Croydon Health Services NHS Trust in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 44 of the Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust's directors and the Trust as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditor As explained more fully in the Statement of Directors Responsibilities in respect of the accounts, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards also require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Trust s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report which comprises the Strategic Report, Well-led Organisation, Trust Board, Improvements and the way ahead, Improving quality, effectiveness and safety, Workforce development, Information governance and ICT systems, Emergency planning and business continuity, Managing our estate, Directors reports and the Financial review to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Croydon Health Services Annual Report and Accounts Page 74

76 Opinion on financial statements In our opinion the financial statements: give a true and fair view of the financial position of Croydon Health Services NHS Trust as at 31 March 2015 and of its expenditure and income for the year then ended; and have been prepared properly in accordance with the accounting policies directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England. Opinion on other matters In our opinion: the part of the Remuneration Report subject to audit has been prepared properly in accordance with the requirements directed by the Secretary of State with the consent of the Treasury as relevant to the National Health Service in England; and the information given in the annual report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we report by exception We are required to report if we refer a matter to the Secretary of State under section 19 of the Audit Commission Act 1998 because we have a reason to believe that the Trust, or an officer of the Trust, is about to make, or has made, a decision involving unlawful expenditure, or is about to take, or has taken, unlawful action likely to cause a loss or deficiency. On 3 June 2015, we referred a matter to the Secretary of State under section 19 of the Audit Commission Act 1998 on the basis that we have reason to believe that Croydon Health Services NHS Trust will, in the financial year ending 31 March 2016, be in breach of the Trust's break-even duty for the three year period ending 31 March We also report to you if: in our opinion the governance statement does not reflect compliance with the NHS Trust Development Authority's Guidance, or we issue a report in the public interest under section 8 of the Audit Commission Act We have nothing to report in these respects. Croydon Health Services Annual Report and Accounts Page 75

77 Conclusion on the Trust s arrangements for securing economy, efficiency and effectiveness in the use of resources Respective responsibilities of the Trust and auditor The Trust is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission in October We report if significant matters have come to our attention which prevent us from concluding that the Trust has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Trust s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by the Audit Commission in October 2014, as to whether the Trust has proper arrangements for: securing financial resilience challenging how it secures economy, efficiency and effectiveness. The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Trust put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Trust had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Basis for adverse conclusion In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to securing financial resilience: The Trust recorded a deficit of 27.5m (after technical adjustments) in 2014/15 which was 9.6m worse than the original budget forecast. The Trust achieved only 8.6m (62%) of its revised 13.9m QIPP programme in 2014/15, the third consecutive year in which it has delivered less than 70% of its planned QIPP programmes. Not all of these are recurrent savings. Croydon Health Services Annual Report and Accounts Page 76

78 The Trust is setting a budget deficit of 25.0m in 2015/16. This is double the 12.6m deficit for 2015/16 that was set as part of the two year recovery plan the Trust developed twelve months ago. The Trust's agreed plans do not currently extend beyond 31 March It is yet to finalise a sustainable two year Medium Term Financial Plan. It is working to a national timescale of submission to the NHS Trust Development Authority in June The actual and planned deficits are evidence of weakness in arrangements in respect of the Trust's financial control, financial governance and strategic financial planning. In seeking to satisfy ourselves that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources, we have considered the following matters in relation to challenging how it secures economy, efficiency and effectiveness: The Trust's performance dashboard has reported a significant number of performance indicators where it has not been meeting targets throughout the year, especially in A&E, caring and well-led standards. The Trust reported two never events and an internal major incident in the year. A significant amount of work remains to be done to embed improvements, transform working practices and ensure all aspects of services are operating safely, effectively and with maximum productivity. The Trust has recently launched the Quality, Experience and Safety (QES) programme, to drive improvements in quality, safety and patient experience by encouraging, supporting and embedding good practice throughout the Trust. The Trust is reviewing its risk framework and the way in which it can use its risk registers most effectively to complement its Board Assurance Framework. The Trust also plans to heighten its focus on scrutiny of finance and quality of operational performance in 2015/16 and create a Director of Quality Assurance and Governance post in At the end of April 2015, the Trust has only fully identified and approved circa 2m of its challenging 10.5m QIPP target for 2015/16. It was still validating the financials and developing detailed implementation plans on schemes totalling 5m. A further 3.5m was unidentified. The achievement of the 24.4m deficit position in 2015/16 is, in itself, dependent on fully identifying realistic, feasible and achievable QIPP schemes, and delivering 100% of these in year. In 2014/15 and previous years, the Trust has failed to deliver similar challenging QIPP programmes. This is evidence of weakness in arrangements in prioritising resources and improving efficiency and productivity. Adverse conclusion On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2014, the matters reported in the basis for adverse conclusion paragraphs above prevent us from being satisfied that in all significant respects Croydon Health Services NHS Trust put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March Certificate Croydon Health Services Annual Report and Accounts Page 77

79 We certify that we have completed the audit of the accounts of Croydon Health Services in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission. Paul Grady for and on behalf of Grant Thornton UK LLP, Appointed Auditor Grant Thornton House Melton Street London NW1 2EP 3 June 2015 Croydon Health Services Annual Report and Accounts Page 78

80 16. Croydon Health Services Annual Accounts ABOUT CROYDON HEALTH SERVICES NHS TRUST Croydon Health Services NHS Trust (the "Trust") was established in 1993 (Statutory Instrument 1993 No. 27) and provides a range of healthcare services to a population of around 377,570 centred on the London Borough of Croydon. In 2014/15, the Trust provided services from the following sites: Croydon University Hospital, a 643 bed acute hospital in Thornton Heath; Purley Hospital, providing outpatient, urgent care and diagnostic services The Sickle Cell and Thalassaemia Centre located in Thornton Heath; A minor injuries unit in New Addington providing a nurse-led walk in clinic; Various Community Services sites. The Trust is one of the largest employers in Croydon, employing 3,217 permanent whole time equivalent staff at 31 March 2015, with a turnover of circa 246 million in 2014/15. The Trust's main source of income is from services commissioned by Croydon Clinical Commissioning Group (CCG), NHS England and London Borough of Croydon. The Trust has smaller contracts with other neighbouring CCGs. Croydon Health Services Annual Report and Accounts Page 79

81 SUMMARY OF 2014/15 FINANCIAL PERFORMANCE Key Financial Targets The table below sets out the Trust's Financial Targets, and its performance against these, in the 2014/15 Financial Year: Target Performance Target met? Breakeven on revenue and operating costs The Trust achieved a deficit of 27.3m ( 27.5m deficit after technical adjustments) X Keep within the capital resource limit (CRL) of 8.350m The Trust remained within the CRL, and generated an underspend of 0.348m Remain within the external financing limit (EFL) of m The Trust remained within its EFL, and over achieved on this by 0.038m Keep within a Capital Cost Absorption Rate (CCAR) of 3.5% The Trust kept within the 3.5% CCAR. This has resulted in dividend payments of 5.815m to the Department of Health. Further copies of these accounts can be obtained from: PA to the Director of Finance Croydon Health Services NHS Trust 2nd Floor, Nightingale House 530 London Road Croydon CR7 7YE Tel: Croydon Health Services Annual Report and Accounts Page 80

82 Statement of Comprehensive Income for year ended 31 March / /14 NOTE 000s 000s Gross employee benefits 9.1 (172,899) (177,916) Other operating costs 7 (94,859) (86,498) Revenue from patient care activities 4 231, ,115 Other operating revenue 5 14,626 14,480 Operating surplus/(deficit) (21,479) (19,819) Investment revenue Finance costs 12 (13) (23) Surplus/(deficit) for the financial year (21,471) (19,818) Public dividend capital dividends payable (5,815) (5,318) Retained surplus/(deficit) for the year (27,286) (25,136) Other Comprehensive Income 2014/ /14 000s 000s Impairments and reversals taken to the revaluation reserve 1,784 15,708 Net gain/(loss) on revaluation of property, plant & equipment 2,887 8,669 Total comprehensive income for the year (22,615) (759) Financial performance for the year Retained surplus/(deficit) for the year (27,286) (25,136) Impairments (excluding IFRIC 12 impairments) (463) 5,428 Adjustments in respect of donated gov't grant asset reserve elimination Adjusted retained surplus/(deficit) (27,532) (19,683) The notes on pages 87 to 133 form part of this account. Croydon Health Services Annual Report and Accounts Page 81

83 Statement of Financial Position as at 31 March March March 2014 NOTE 000s 000s Non-current assets: Property, plant and equipment , ,048 Intangible assets ,176 Trade and other receivables ,040 Total non-current assets 194, ,264 Current assets: Inventories 18 3,033 2,424 Trade and other receivables ,161 14,674 Cash and cash equivalents 20 1, Sub-total current assets 20,197 17,658 Total current assets 20,197 17,658 Total assets 214, ,922 Current liabilities Trade and other payables 21 (32,522) (26,278) Provisions 23 (2,894) (2,369) Total current liabilities (35,416) (28,647) Net current assets/(liabilities) (15,219) (10,989) Total assets less current liabilities 179, ,275 Non-current liabilities Provisions 23 (855) (886) Total non-current liabilities (855) (886) Total assets employed: 178, ,389 FINANCED BY: Public Dividend Capital SOCITE 114,198 89,652 Retained earnings SOCITE (9,201) 17,117 Revaluation reserve SOCITE 73,323 69,620 Total Taxpayers' Equity: 178, ,389 The notes on pages 87 to 133 form part of this account. The financial statements on pages 81 to 133 were approved by the Board on 3rd June 2015 and signed on its behalf by Chief Executive: Date: 3 June 2015 Croydon Health Services Annual Report and Accounts Page 82

84 Statement of Changes in Taxpayers' Equity for the year ending 31 March 2015 Public Retained Revaluation Dividend earnings reserve capital Total reserves 000s 000s 000s 000s Balance at 1 April ,652 17,117 69, ,389 Changes in taxpayers equity for 2014/15 Retained surplus/(deficit) for the year - (27,286) - (27,286) Net gain / (loss) on revaluation of property, plant, equipment - - 2,887 2,887 Impairments and reversals - - 1,784 1,784 Reclassification Adjustments Transfers between revaluation reserve & retained earnings in respect of assets transferred under absorption (968) - New temporary and permanent PDC received - cash 45, ,882 New temporary and permanent PDC repaid in year (21,336) - - (21,336) Net recognised revenue/(expense) for the year 24,546 (26,318) 3,703 1,931 Balance at 31 March ,198 (9,201) 73, ,320 Croydon Health Services Annual Report and Accounts Page 83

85 Balance at 1 April ,415 37,656 46, ,457 Changes in taxpayers equity for the year ended 31 March 2014 Retained surplus/(deficit) for the year - (25,136) - (25,136) Net gain / (loss) on revaluation of property, plant, equipment - - 8,669 8,669 Impairments and reversals ,708 15,708 Transfers between reserves - 1,143 (1,143) - Transfers under Modified Absorption Accounting - PCTs & SHAs - 3,454-3,454 Reclassification Adjustments New temporary and permanent PDC received - cash 40, ,920 New PDC received/(repaid) - PCTs and SHAs legacy items paid for by DH (6) - - (6) New temporary and permanent PDC repaid in year (18,677) - - (18,677) Net recognised revenue/(expense) for the year 22,237 (20,539) 23,234 24,932 Balance at 31 March ,652 17,117 69, ,389 Croydon Health Services Annual Report and Accounts Page 84

86 Statement of Cash Flows for the Year ended 31 March / /14 000s 000s Cash Flows from Operating Activities Operating surplus/(deficit) (21,479) (19,819) Depreciation and amortisation 6,894 6,007 Impairments and reversals (463) 5,428 Donated Assets received credited to revenue but noncash - (233) Dividend (paid)/refunded (6,371) (4,651) (Increase)/Decrease in Inventories (609) (11) (Increase)/Decrease in Trade and Other Receivables (1,355) (6,273) Increase/(Decrease) in Trade and Other Payables 5,313 5,441 Provisions utilised (825) (663) Increase/(Decrease) in movement in non cash provisions 1, Net Cash Inflow/(Outflow) from Operating Activities (17,589) (14,020) Cash Flows from Investing Activities Interest Received (Payments) for Property, Plant and Equipment (6,528) (18,669) (Payments) for Intangible Assets (7) (335) Net Cash Inflow/(Outflow) from Investing Activities (6,514) (18,980) Net Cash Inform / (outflow) before Financing (24,103) (33,000) Cash Flows from Financing Activities Croydon Health Services Annual Report and Accounts Page 85

87 Gross Temporary and Permanent PDC Received 45,882 40,920 Gross Temporary and Permanent PDC Repaid (21,336) (18,683) Net Cash Inflow/(Outflow) from Financing Activities 24,546 22,237 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 443 (10,763) Cash and Cash Equivalents (and Bank Overdraft) at Beginning of the Period ,323 Cash and Cash Equivalents (and Bank Overdraft) at year end 1, Croydon Health Services Annual Report and Accounts Page 86

88 NOTES TO THE ACCOUNTS 1. Accounting Policies The Secretary of State for Health has directed that the financial statements of NHS trusts shall meet the accounting requirements of the Department of Health Group Manual for Accounts, which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the DH Group Manual for Accounts issued by the Department of Health. The accounting policies contained in that manual follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to the NHS, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the Manual for Accounts permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the trust for the purpose of giving a true and fair view has been selected. The particular policies adopted by the trust are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. 1.1 Accounting convention These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities. 1.2 Acquisitions and discontinued operations Activities are considered to be acquired only if they are taken on from outside the public sector. Activities are considered to be discontinued only if they cease entirely. They are not considered to be discontinued if they transfer from one public sector body to another. 1.3 Movement of assets within the DH Group Transfers as part of reorganisation fall to be accounted for by use of absorption accounting in line with the Treasury FReM. The FReM does not require retrospective adoption, so prior year transactions (which have been accounted for under merger accounting) have not been restated. Absorption accounting requires that entities account for their transactions in the period in which they took place, with no restatement of performance required when functions transfer within the public sector. Where assets and liabilities transfer, the gain or loss resulting is recognised in the SOCNE/SOCNI, and is disclosed separately from operating costs. Other transfers of assets and liabilities within the Group are accounted for in line with IAS20 and similarly give rise to income and expenditure entries. For transfers of assets and liabilities from those NHS bodies that closed on 1 April 2013, Treasury agreed that a modified absorption approach should be applied. For these transactions and only in the prior-period, gains and losses are recognised in reserves rather than the SOCNE/SOCNI. Croydon Health Services Annual Report and Accounts Page 87

89 1.4 Critical accounting judgements and key sources of estimation uncertainty In the application of the NHS Trust s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates and the estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods Critical judgements in applying accounting policies There have been no critical judgements, apart from those involving estimations (see below), non consolidation of charity accounts and the ability of the Trust to operate on a going concern basis (see note 26 Events after the end of the reporting period) Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Revenue - Note 1.5 and Note 4 and 5 The basis of calculation for partially completed spells is detailed in note 1.5. Asset Lives Note 13.3 The reported amounts for depreciation of property, plant and equipment and amortisation of noncurrent intangible assets can be materially affected by the judgements exercised in determining their estimated economic lives. Economic lives are determined in a number of different ways such as valuations (external professional opinion) and physical asset verification exercises. The minimum and maximum estimated economic lives of each class of asset are disclosed in note 13.3, and the carrying values of property, plant and equipment and intangible assets in notes 13.1 and 14.1 respectively. Land and Buildings Valuations Notes 1.10, 13.1 and 13.3 All land and buildings are restated at fair value by way of annual professional valuations carried out by an independent external valuer. Provision for Impairment of Receivables Note 19.3 Provisions are based on the average percentage recovery rate of income received for current and prior financial years, according to each category of receivable. The Trust follows the guidance issued in the NHS Trusts' Manual for Accounts in relation to the recommended rate for Injury Cost Recovery receivables. Croydon Health Services Annual Report and Accounts Page 88

90 1.5 Revenue Revenue in respect of services provided is recognised when, and to the extent that, performance occurs, and is measured at the fair value of the consideration receivable. The main source of revenue for the trust is from commissioners for healthcare services. Revenue relating to patient care spells that are part-completed at the year end are apportioned across the financial years on the basis of length of stay at the end of the reporting period compared to expected total length of stay/costs incurred to date compared to total expected costs. Where income is received for a specific activity that is to be delivered in the following year, that income is deferred. The NHS trust receives income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid e.g. by an insurer. The NHS trust recognises the income when it receives notification from the Department of Work and Pension's Compensation Recovery Unit that the individual has lodged a compensation claim. The income is measured at the agreed tariff for the treatments provided to the injured individual, less a provision for unsuccessful compensation claims and doubtful debts. 1.6 Employee Benefits Short-term employee benefits Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees. The cost of leave earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carry forward leave into the following period. Retirement benefit costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to expenditure at the time the Trust commits itself to the retirement, regardless of the method of payment. 1.7 Other expenses Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable. Croydon Health Services Annual Report and Accounts Page 89

91 1.8 Property, plant and equipment Recognition Property, plant and equipment is capitalised if: it is held for use in delivering services or for administrative purposes; it is probable that future economic benefits will flow to, or service potential will be supplied to the Trust; it is expected to be used for more than one financial year; the cost of the item can be measured reliably; and the item has cost of at least 5,000; or Collectively, a number of items have a cost of at least 5,000 and individually have a cost of more than 250, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or Items form part of the initial equipping and setting-up cost of a new building, ward or unit, irrespective of their individual or collective cost. Where a large asset, for example a building, includes a number of components with significantly different asset lives, the components are treated as separate assets and depreciated over their own useful economic lives. Valuation All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the Trust's services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any impairment. Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows: Land and non-specialised buildings market value for existing use Specialised buildings depreciated replacement cost Croydon Health Services Annual Report and Accounts Page 90

92 HM Treasury has adopted a standard approach to depreciated replacement cost valuations based on modern equivalent assets and, where it would meet the location requirements of the service being provided, an alternative site can be valued. Properties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Cost includes professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS 23 for assets held at fair value. Assets are revalued and depreciation commences when they are brought into use. Fixtures and equipment are carried at depreciated historic cost as this is not considered to be materially different from fair value. An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment for the same asset previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive income in the Statement of Comprehensive Income. Subsequent expenditure Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is capitalised. Where subsequent expenditure restores the asset to its original specification, the expenditure is capitalised and any existing carrying value of the item replaced is written-out and charged to operating expenses. 1.9 Intangible assets Recognition Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the trust s business or which arise from contractual or other legal rights. They are recognised only when it is probable that future economic benefits will flow to, or service potential be provided to, the trust; where the cost of the asset can be measured reliably, and where the cost is at least Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, for example an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is not capitalised: it is recognised as an operating expense in the period in which it is incurred. Internallygenerated assets are recognised if, and only if, all of the following have been demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use the intention to complete the intangible asset and use it Croydon Health Services Annual Report and Accounts Page 91

93 the ability to sell or use the intangible asset how the intangible asset will generate probable future economic benefits or service potential the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use it the ability to measure reliably the expenditure attributable to the intangible asset during its development Measurement The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the criteria above are initially met. Where no internallygenerated intangible asset can be recognised, the expenditure is recognised in the period in which it is incurred. Following initial recognition, intangible assets are carried at fair value by reference to an active market, or, where no active market exists, at amortised replacement cost (modern equivalent assets basis), indexed for relevant price increases, as a proxy for fair value. Internally-developed software is held at historic cost to reflect the opposing effects of increases in development costs and technological advances Depreciation, amortisation and impairments Freehold land, properties under construction, and assets held for sale are not depreciated. Otherwise, depreciation and amortisation are charged to write off the costs or valuation of property, plant and equipment and intangible non-current assets, less any residual value, over their estimated useful lives, in a manner that reflects the consumption of economic benefits or service potential of the assets. The estimated useful life of an asset is the period over which the NHS trust expects to obtain economic benefits or service potential from the asset. This is specific to the NHS trust and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year end, with the effect of any changes recognised on a prospective basis. Assets held under finance leases are depreciated over their estimated useful lives. At each reporting period end, the NHS trust checks whether there is any indication that any of its tangible or intangible non-current assets have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are tested for impairment annually. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no Croydon Health Services Annual Report and Accounts Page 92

94 initial impairment loss. The reversal of the impairment loss is credited to expenditure to the extent of the decrease previously charged there and thereafter to the revaluation reserve. Impairments are analysed between Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME). This is necessary to comply with Treasury's budgeting guidance. DEL limits are set in the Spending Review and Departments may not exceed the limits that they have been set. AME budgets are set by the Treasury and may be reviewed with departments in the run-up to the Budget. Departments need to monitor AME closely and inform Treasury if they expect AME spending to rise above forecast. Whilst Treasury accepts that in some areas of AME inherent volatility may mean departments do not have the ability to manage the spending within budgets in that financial year, any expected increases in AME require Treasury approval Donated assets Donated non-current assets are capitalised at their fair value on receipt, with a matching credit to Income. They are valued, depreciated and impaired as described above for purchased assets. Gains and losses on revaluations, impairments and sales are as described above for purchased assets. Deferred income is recognised only where conditions attached to the donation preclude immediate recognition of the gain Government grants The value of assets received by means of a government grant are credited directly to income. Deferred income is recognised only where conditions attached to the grant preclude immediate recognition of the gain Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met when the sale is highly probable, the asset is available for immediate sale in its present condition and management is committed to the sale, which is expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Fair value is open market value including alternative uses. The profit or loss arising on disposal of an asset is the difference between the sale proceeds and the carrying amount and is recognised in the Statement of Comprehensive Income. On disposal, the balance for the asset on the revaluation reserve is transferred to retained earnings. Property, plant and equipment that is to be scrapped or demolished does not qualify for recognition as held for sale. Instead, it is retained as an operational asset and its economic life is adjusted. The asset is de-recognised when it is scrapped or demolished Leases Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. Croydon Health Services Annual Report and Accounts Page 93

95 The Trust as lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred. Where a lease is for land and buildings, the land and building components are separated and individually assessed as to whether they are operating or finance leases. The NHS trust as lessor Rental income from operating leases is recognised on a straight-line basis over the term of the lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term Inventories Inventories are valued at the lower of cost and net realisable value using the first-in first-out cost formula. This is considered to be a reasonable approximation to fair value due to the high turnover of stocks Cash and cash equivalents Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and that form an integral part of the NHS trust s cash management Provisions Provisions are recognised when the NHS trust has a present legal or constructive obligation as a result of a past event, it is probable that the NHS trust will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HM Treasury s discount rate of 1.5% (for short term provisions of between 0 to 5 years inclusive); 1.05% (for medium term provisions of between 6 to 10 years inclusive); and 2.2% (for long term provisions of over 10 years) in real terms (1.3% for employee early departure provisions). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursements will be received and the amount of the receivable can be measured reliably. Croydon Health Services Annual Report and Accounts Page 94

96 A restructuring provision is recognised when the Trust has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with on-going activities of the entity Clinical negligence costs The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the trust pays an annual contribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged to expenditure. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liability remains with the NHS trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the trust is disclosed at note Non-clinical risk pooling The NHS trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the NHS trust pays an annual contribution to the NHS Litigation Authority and, in return, receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable in respect of particular claims are charged to operating expenses as and when they become due Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the NHS trust, or a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation or the amount of the obligation cannot be measured sufficiently reliably. A contingent liability is disclosed unless the possibility of a payment is remote. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the NHS trust. A contingent asset is disclosed where an inflow of economic benefits is probable. Where the time value of money is material, contingencies are disclosed at their present value Financial assets Financial assets are recognised when the NHS trust becomes party to the financial instrument contract or, in the case of trade receivables, when the goods or services have been delivered. Financial assets are derecognised when the contractual rights have expired or the asset has been transferred. Financial assets are classified into the following categories: financial assets at fair value through profit and loss; held to maturity investments; available for sale financial assets, and loans and Croydon Health Services Annual Report and Accounts Page 95

97 receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. After initial recognition, they are measured at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to the initial fair value of the financial asset. At the end of the reporting period, the NHS trust assesses whether any financial assets, other than those held at fair value through profit and loss are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset. For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the revised future cash flows discounted at the asset s original effective interest rate. The loss is recognised in expenditure and the carrying amount of the asset is reduced directly/through a provision for impairment of receivables. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through expenditure to the extent that the carrying amount of the receivable at the date of the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised Financial liabilities Financial liabilities are recognised on the statement of financial position when the NHS trust becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are de-recognised when the liability has been discharged, that is, the liability has been paid or has expired. Loans from the Department of Health are recognised at historical cost. Otherwise, financial liabilities are initially recognised at fair value Value Added Tax Most of the activities of the trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT. Croydon Health Services Annual Report and Accounts Page 96

98 1.24 Foreign currencies The Trust's functional currency and presentational currency is sterling. Transactions denominated in a foreign currency are translated into sterling at the exchange rate ruling on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the spot exchange rate on 31 March. Resulting exchange gains and losses for either of these are recognised in the trust s surplus/deficit in the period in which they arise Third party assets Assets belonging to third parties (such as money held on behalf of patients) would not be recognised in the accounts since the trust has no beneficial interest in them. In 2014/15 the Trust held no third party assets Public Dividend Capital (PDC) and PDC dividend Public dividend capital represents taxpayers equity in the NHS trust. At any time the Secretary of State can issue new PDC to, and require repayments of PDC from, the trust. PDC is recorded at the value received. As PDC is issued under legislation rather than under contract, it is not treated as an equity financial instrument. An annual charge, reflecting the cost of capital utilised by the trust, is payable to the Department of Health as public dividend capital dividend. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average carrying amount of all assets less liabilities (except for donated assets and cash balances with the Government Banking Service). The average carrying amount of assets is calculated as a simple average of opening and closing relevant net assets Losses and Special Payments Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the health service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different categories, which govern the way that individual cases are handled. Losses and special payments are charged to the relevant functional headings in expenditure on an accruals basis, including losses which would have been made good through insurance cover had the Trust not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure) Subsidiaries Material entities over which the NHS trust has the power to exercise control are classified as subsidiaries and are consolidated. The NHS trust has control when it is exposed to or has rights to variable returns through its power over another entity. The income and expenses; gains and losses; assets, liabilities and reserves; and cash flows of the subsidiary are consolidated in full into the appropriate financial statement lines. Appropriate adjustments are made on consolidation where the subsidiary s accounting policies are not aligned with the NHS trust or where the subsidiary s accounting date is not co-terminus. Croydon Health Services Annual Report and Accounts Page 97

99 Subsidiaries that are classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. The Croydon Health Services Charitable Fund (Registered Charity No ) is the only subsidiary of the Trust. The Trust Board is the Corporate Trustee, and the board members of the Trust are jointly responsible for the management of these charitable funds. However, the Charitable Funds have not been consolidated as it does not meet the criteria for consolidation into these accounts. This is in accordance with the requirements of IAS 27 which requires entities to be consolidated if they are material. The transactions of Croydon Health Services Charitable Funds are deemed not material in the context of the group and therefore are not consolidated Joint arrangements Material entities over which the NHS trust has joint control with one or more other entities are classified as joint arrangements. Joint control is the contractually agreed sharing of control of an arrangement. A joint arrangement is either a joint operation or a joint venture. A joint operation exists where the parties that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement. Where the NHS body is a joint operator it recognises its share of, assets, liabilities, income and expenses in its own accounts. Croydon Health Services has entered into a joint operation with St George's University Hospitals NHS Foundation Trust and Kingston Hospital NHS Foundation Trust for the provision of its Pathology Services. The joint operation is known as "South West London Pathology". The Trust shares control of the joint operation equally with its partners in the operation Research and Development Research and development expenditure is charged against income in the year in which it is incurred, except insofar as development expenditure relates to a clearly defined project and the benefits of it can reasonably be regarded as assured. Expenditure so deferred is limited to the value of future benefits expected and is amortised through the SOCNE/SOCI on a systematic basis over the period expected to benefit from the project. It should be revalued on the basis of current cost. The amortisation is calculated on the same basis as depreciation, on a quarterly basis Accounting Standards that have been issued but have not yet been adopted The Treasury FReM does not require the following Standards and Interpretations to be applied in The application of the Standards as revised would not have a material impact on the accounts for , were they applied in that year: IFRS 9 Financial Instruments - subject to consultation - subject to consultation IFRS 13 Fair Value Measurement - subject to consultation IFRS 15 Revenue from Contracts with Customers Croydon Health Services Annual Report and Accounts Page 98

100 2. Operating segments The Trust operates as a single operating segment. 3. Income generation activities The Trust undertakes income generation activities with an aim of achieving profit, which is then used in patient care. None of these activities individually exceed 1m, nor are they otherwise material. Croydon Health Services Annual Report and Accounts Page 99

101 4. Revenue from patient care activities 2014/ /14 000s 000s NHS Trusts NHS England 26,981 25,486 Clinical Commissioning Groups 193, ,569 Foundation Trusts 3, NHS Other (including Public Health England and Prop Co) Non-NHS: Local Authorities 4,955 4,687 Private patients Overseas patients (non-reciprocal) Injury costs recovery Other Total Revenue from patient care activities 231, , Other operating revenue 2014/ /14 000s 000s Recoveries in respect of employee benefits Education, training and research 9,687 9,343 Charitable and other contributions to revenue expenditure - NHS Receipt of donations for capital acquisitions - Charity Non-patient care services to other bodies 1,648 2,441 Income generation 1,522 1,392 Rental revenue from operating leases 1, Total Other Operating Revenue 14,626 14,480 Total operating revenue 246, , Overseas Visitors Disclosure 2014/ / s Income recognised during (invoiced amounts and accruals) Cash payments received in-year (re receivables at 31 March 2014) Cash payments received in-year (iro invoices issued ) Amounts added to provision for impairment of receivables (re receivables at 31 March 2014) Amounts added to provision for impairment of receivables (iro invoices issued ) Amounts written off in-year (irrespective of year of recognition) Croydon Health Services Annual Report and Accounts Page 100

102 7. Operating expenses 2014/ /14 000s 000s Trust Chair and Non-executive Directors Supplies and services - clinical 45,677 36,700 Supplies and services - general 10,384 9,007 Consultancy services 2, Establishment 6,995 5,798 Transport 1,512 1,567 Premises 10,582 11,084 Hospitality 3 10 Insurance 11 6 Legal Fees Impairments and Reversals of Receivables Inventories write down 0 3 Depreciation 6,495 5,609 Amortisation Impairments and reversals of property, plant and equipment (463) 5,428 Audit fees Clinical negligence 8,468 6,790 Education and Training 1,206 1,943 Total Operating expenses (excluding employee benefits) 94,859 86,498 Employee Benefits Employee benefits excluding Board members 171, ,736 Board members 1,205 1,180 Total Employee Benefits 172, ,916 Total Operating Expenses 267, ,414 Croydon Health Services Annual Report and Accounts Page 101

103 8. Operating Leases 8.1 Trust as lessee 2014/ /14 Land Buildings Other Total Total 000s 000s 000s 000s 000s Payments recognised as an expense Minimum lease payments 631 2,621 Total 631 2,621 Payable: No later than one year ,641 Between one and five years ,349 After five years Total 107 1, ,556 6,301 Land lease payments relate to peppercorn rent paid on Purley Hospital site. 8.2 Trust as lessor The Trust is the lessor of parts of its premises to external organisation, and for staff accommodation, for which it charges rental revenue. 2014/ / s Recognised as revenue Rental revenue 1, Total 1, Receivable: Croydon Health Services Annual Report and Accounts Page 102

104 9. Employee benefits and staff numbers 9.1 Employee benefits Employee Benefits - Gross Expenditure 2014/15 Total Permanently employed Other 000s 000s 000s Salaries and wages 148, ,904 28,135 Social security costs 10,776 10, Termination benefits Employer Contributions to NHS BSA - Pensions Division 14,548 14, Total employee benefits 173, ,952 28,411 Employee costs capitalised Gross Employee Benefits excluding capitalised costs 172, ,882 28,017 Employee Benefits - Gross Expenditure 2013/14 Total Permanently employed Other 000s 000s 000s Salaries and wages 152, ,455 30,294 Social security costs 11,733 11, Employer Contributions to NHS BSA - Pensions Division 15,382 14, Termination benefits TOTAL - including capitalised costs 179, ,545 31,393 Employee costs capitalised 2, ,660 Gross Employee Benefits excluding capitalised costs 177, ,183 29,733 In there were rows for 'other post-employment benefits' and 'other employment benefits'. These are now included within the 'Salaries and wages' row. Croydon Health Services Annual Report and Accounts Page 103

105 9.2 Staff Numbers 2014/ /14 Total Permanently employed Other Total Number Number Number Number Average Staff Numbers Medical and dental Administration and estates Healthcare assistants and other support staff Nursing, midwifery and health visiting staff , ,239 Nursing, midwifery and health visiting learners Scientific, therapeutic and technical staff TOTAL 3,669 3, ,714 Of the above - staff engaged on capital projects Croydon Health Services Annual Report and Accounts Page 104

106 9.3 Staff Sickness absence and ill health retirements 2014/ /14 Number Number Total Days Lost 23,398 22,427 Total Staff Years 3,217 3,108 Average working Days Lost / /14 Number Number Number of persons retired early on ill health grounds s 000s Total additional pensions liabilities accrued in the year Croydon Health Services Annual Report and Accounts Page 105

107 9.4 Exit Packages agreed in 2014/ / /14 *Number of Total number *Number of Number of *Number of Total number of Exit package cost band (including any other of exit other compulsory compulsory exit packages by special payment element) departures packages by departures redundancies redundancies cost band agreed cost band agreed Number Number Number Number Number Number Less than 10, ,000-25, ,001-50, , , , , , , > 200, Total number of exit packages by type (total cost Total resource cost ( s) 188, , ,391 74,070-74,070 Redundancy and other departure costs have been paid in accordance with the provisions of the NHS Terms and Conditions of Service Handbook. Exit costs in this note are accounted for in full in the year of departure. Where the Trust has agreed early retirements, the additional costs are met by the NHS Pensions Scheme. Ill-health retirement costs are met by the NHS pensions scheme and are not included in the table. This disclosure reports the number and value of exit packages agreed in the year. Note: The expense associated with these departures may have been recognised in part or in full in a previous period. *NHS Pensions Scheme is used for compulsory redundancies Croydon Health Services Annual Report and Accounts Page 106

108 9.5 Exit packages - Other Departures analysis 2014/ /14 Agreements Total value of Total value of Agreements agreements agreements Number 000s Number 000s Voluntary redundancies including early retirement contractual costs Mutually agreed resignations (MARS) contractual costs Early retirements in the efficiency of the service contractual costs Contractual payments in lieu of notice Exit payments following Employment Tribunals or court orders Non-contractual payments requiring HMT approval* Total Non-contractual payments made to individuals where the payment value was more than 12 months of their annual salary This disclosure reports the number and value of exit packages agreed in the year. Note: the expense associated with these departures may have been recognised in part or in full in a previous period. As a single exit packages can be made up of several components each of which will be counted separately in this Note, the total number above will not necessarily match the total numbers in Note 9.4 which will be the number of individuals. Croydon Health Services Annual Report and Accounts Page 107

109 9.6 Pension costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under these provisions can be found on the NHS Pensions website at The scheme is an unfunded, defined benefit scheme that covers NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. The scheme is subject to a full actuarial valuation every four years (until 2004, every five years) and an accounting valuation every year. An outline of these follows: a) Full actuarial (funding) valuation The purpose of this valuation is to assess the level of liability in respect of the benefits due under the scheme (taking into account its recent demographic experience), and to recommend the contribution rates to be paid by employers and scheme members. The last such valuation, which determined current contribution rates was undertaken as at 31 March 2004 and covered the period from 1 April 1999 to that date. The conclusion from the 2004 valuation was that the scheme had accumulated a notional deficit of 3.3 billion against the notional assets as at 31 March In order to defray the costs of benefits, employers pay contributions at 14% of pensionable pay and most employees had up to April 2008 paid 6%, with manual staff paying 5%. Following the full actuarial review by the Government Actuary undertaken as at 31 March 2004, and after consideration of changes to the NHS Pension Scheme taking effect from 1 April 2008, his Valuation report recommended that employer contributions could continue at the existing rate of 14% of pensionable pay, from 1 April 2008, following the introduction of employee contributions on a tiered scale from 5% up to 8.5% of their pensionable pay depending on total earnings. On advice from the scheme actuary, scheme contributions may be varied from time to time to reflect changes in the scheme s liabilities. b) Accounting valuation A valuation of the scheme liability is carried out annually by the scheme actuary as at the end of the reporting period by updating the results of the full actuarial valuation. Between the full actuarial valuations at a two-year midpoint, a full and detailed member data-set is provided to the scheme actuary. At this point the assumptions regarding the composition of the scheme membership are updated to allow the scheme liability to be valued. Croydon Health Services Annual Report and Accounts Page 108

110 The valuation of the scheme liability as at 31 March 2011, is based on detailed membership data as at 31 March 2008 (the latest midpoint) updated to 31 March 2011 with summary global member and accounting data. The latest assessment of the liabilities of the scheme is contained in the scheme actuary report, which forms part of the annual NHS Pension Scheme (England and Wales) Resource Account, published annually. These accounts can be viewed on the NHS Pensions website. Copies can also be obtained from The Stationery Office. c) Scheme provisions The NHS Pension Scheme provided defined benefits, which are summarised below. This list is an illustrative guide only, and is not intended to detail all the benefits provided by the Scheme or the specific conditions that must be met before these benefits can be obtained: The Scheme is a final salary scheme. Annual pensions are normally based on 1/80th for the 1995 section and of the best of the last three years pensionable pay for each year of service, and 1/60th for the 2008 section of reckonable pay per year of membership. Members who are practitioners as defined by the Scheme Regulations have their annual pensions based upon total pensionable earnings over the relevant pensionable service. With effect from 1 April 2008 members can choose to give up some of their annual pension for an additional tax free lump sum, up to a maximum amount permitted under HMRC rules. This new provision is known as pension commutation. Annual increases are applied to pension payments at rates defined by the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve months ending 30 September in the previous calendar year. Early payment of a pension, with enhancement, is available to members of the scheme who are permanently incapable of fulfilling their duties effectively through illness or infirmity. A death gratuity of twice final year s pensionable pay for death in service, and five times their annual pension for death after retirement is payable. For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to the statement of comprehensive income at the time the Trust commits itself to the retirement, regardless of the method of payment. Members can purchase additional service in the NHS Scheme and contribute to money purchase AVC s run by the Scheme s approved providers or by other Free Standing Additional Voluntary Contributions (FSAVC) providers. Croydon Health Services Annual Report and Accounts Page 109

111 10. Better Payment Practice Code 10.1 Measure of compliance 2014/ / / /14 Number 000s Number 000s Non-NHS Payables Total Non-NHS Trade Invoices Paid in the Year 55, ,329 64,304 98,974 Total Non-NHS Trade Invoices Paid Within Target 35,399 48,932 39,286 56,318 Percentage of NHS Trade Invoices Paid Within Target 63.53% 48.29% 61.09% 56.90% NHS Payables Total NHS Trade Invoices Paid in the Year 1,835 25,260 2,126 15,361 Total NHS Trade Invoices Paid Within Target ,169 1,539 12,536 Percentage of NHS Trade Invoices Paid Within Target 36.24% 60.05% 72.39% 81.61% The Better Payment Practice Code requires the NHS body to aim to pay all valid invoices by the due date or within 30 days of receipt of a valid invoice, whichever is later. 11. Investment Revenue 2014/ /14 000s 000s Interest revenue Bank interest Subtotal Total investment revenue Croydon Health Services Annual Report and Accounts Page 110

112 12. Finance Costs 2014/ /14 000s 000s Provisions - unwinding of discount Total Property, plant and equipment 2014/15 Land Buildings excluding dwellings Dwellings Assets Under Construction & payments on account Plant & Machinery Transport Equipment Information Technology Furniture & Fittings 000s 000s 000s 000s 000s 000s 000s 000s 000s Cost or valuation: At 1 April , ,926 3,172 2,596 21, ,046 1, ,029 Additions of Assets Under Construction , ,616 Additions Purchased ,381 Additions - Purchases from Cash Donations & Government Grants 18 Reclassifications - 1,955 - (4,054) 1, Upward revaluation/positive indexation 2,174 (2,475) (138) Impairments/negative indexation - (1,876) (1,876) Reversal of Impairments 17 3, ,660 At 31 March , ,396 3,549 5,158 23, ,874 1, ,690 Total Croydon Health Services Annual Report and Accounts Page 111

113 Depreciation At 1 April , , ,981 Upward revaluation/positive (2,969) (56) (3,025) - indexation Impairments Reversal of Impairments - (474) (474) Charged During the Year - 3, ,736-1, ,495 At 31 March , , ,988 Net Book Value at 31 March , ,377 3,549 5,158 12,540-6, ,702 Asset financing: Owned - Purchased 49, ,738 3,549 5,158 11,688-6, ,196 Owned - Donated - 1, ,341 Owned - Government Granted Total at 31 March , ,377 3,549 5,158 12,540-6, ,702 Croydon Health Services Annual Report and Accounts Page 112

114 Revaluation Reserve Balance for Property, plant & equipment Land Buildings Dwellings Assets Under Construction & payments on account Plant & Machinery Transport Equipment Information technology Furniture & Fittings 000s 000's 000's 000's 000's 000's 000s 000's 000s At 1 April ,652 31,673 1, ,619 Movements (due to revaluation) At 31 March ,192 1, ,704 38,844 32,772 1, ,323 Total Additions to Assets Under Construction in Assets Under Construction & payments on account 000's Buildings excl Dwellings 1,857 Plant & Machinery 4,759 Balance as at YTD 6,616 Croydon Health Services Annual Report and Accounts Page 113

115 13.2 Property, plant and equipment prior-year 2013/14 Land Buildings excluding dwellings Dwellings Assets under construction & payments on account Plant & machinery Transport equipment Information technology Furniture & fittings 000s 000s 000s 000s 000s 000s 000s 000s 000s Cost or valuation: At 1 April ,429 98,087 3,064 11,996 16, , ,730 Transfers under 1,460 1, ,437 Modified Absorption Accounting - PCTs & SHAs Additions of Assets , ,368 Under Construction Additions Purchased - 1, , ,376 Additions - Non Cash Donations (i.e. Physical Assets) Reclassifications - 11,145 - (18,768) 2,645-4, Revaluation 7,955 (10,681) (97) (2,823) Impairments/negative - (355) (355) indexation charged to reserves Reversal of 3,325 12, ,063 Impairments charged to reserves At 31 March , ,926 3,172 2,596 21, ,046 1, ,029 Total Croydon Health Services Annual Report and Accounts Page 114

116 Depreciation At 1 April , , , ,436 Revaluation - (11,390) (102) (11,492) Impairments/negative - 5, ,491 indexation charged to operating expenses Reversal of - (63) (63) Impairments charged to operating expenses Charged During the - 3, , ,609 Year At 31 March , , ,981 Net Book Value at 31 47, ,913 3,172 2,596 12,058-6, ,048 March 2014 Asset financing: Owned - Purchased 47, ,284 3,172 2,596 11,034-6, ,375 Owned - Donated - 1, ,484 Owned - Government Granted Total at 31 March , ,913 3,172 2,596 12,058-6, ,048 Croydon Health Services Annual Report and Accounts Page 115

117 13.3 Property, plant and equipment Donated assets were received from the Croydon Health Services Charitable Funds and The League of Friends The Trust's land and buildings were valued independently by the Valuation Office Agency (an executive agency of HM Revenue and Customs) as at 31 March 2014 on a Modern Equivalent Asset (MEA) bias. The valuation report was signed by Peter Ashby, MRICS an external RICS Registered Valuer who has the appropriate knowledge, skills and understanding to undertake the valuation completely, as required by the RICS Valuation - Professional Standards, 8th edition. A full valuation was carried out at Croydon University Hospital and Simpson Close properties which were internally inspected for the purposes of this exercise between 14 January and 4 February As Purley Hospital and the health centres had a full valuation in 2013/14 a desk top valuation was conducted. The MEA basis requires the valuer to review the building in use and value them on the basis of what it would cost to build a new structure capable of providing identical services. All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the Trust s services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows: Land and non-specialised buildings market value for existing use Specialised buildings depreciated replacement cost Remaining Economic Lives of Non Current Assets Min Life Max Life Intangible Assets Years Years Software Licences 1 7 IT-in house & 3 rd Party Software - 8 Property, Plant and Equipment Buildings exc Dwellings 5 87 Dwellings Plant & Machinery 1 15 Information Technology 1 9 Furniture and Fittings 1 15 Croydon Health Services Annual Report and Accounts Page 116

118 14.1 Intangible non-current assets 2014/15 IT - in-house & 3rd party software Computer Licenses 000's 000's 000's At 1 April ,959 3,973 Additions Purchased At 31 March ,966 3,980 Amortisation At 1 April ,797 2,797 Charged during the year At 31 March ,191 3,196 Net Book Value at 31 March Asset Financing: Net book value at 31 March 2015 comprises: Purchased Donated Total at 31 March Total Croydon Health Services Annual Report and Accounts Page 117

119 14.2 Intangible non-current assets prior year 2013/14 IT - in-house & 3rd party software Computer Licenses 000s 000s 000s Cost or valuation: At 1 April ,956 3,956 Transfers under Modified Absorption Accounting - PCTs & SHAs Additions - purchased At 31 March ,959 3,973 Amortisation At 1 April ,399 2,399 Charged during the year At 31 March ,797 2,797 Net book value at 31 March ,162 1,176 Net book value at 31 March 2014 comprises: Purchased 14 1,137 1,151 Donated Government Granted - Total at 31 March ,162 1,176 Total Croydon Health Services Annual Report and Accounts Page 118

120 14.3 Intangible non-current assets As software assets are not revalued, there is no corresponding revaluation reserve for intangible assets. The Trust does not carry any internally generated intangible assets. All intangible assets are held at cost and depreciated at rates calculated to write them down to nil net book value over the estimated useful life of the asset. 15. Analysis of impairments and reversals recognised in 2014/15 Total Property Plant and Equipment 000s 000s Impairments and reversals taken to SoCI Changes in market price (463) (463) Total charged to Annually Managed Expenditure (463) (463) Total Impairments of Property, Plant and Equipment changed to SoCI (463) (463) 16. Commitments 16.1 Capital commitments Contracted capital commitments at 31 March not otherwise included in these financial statements: 31 March March s 000s Property, plant and equipment 952 2,321 Intangible assets - 49 Total 952 2,370 Croydon Health Services Annual Report and Accounts Page 119

121 16.2 Other financial commitments The trust has entered into non-cancellable contracts (which are not leases or PFI contracts or other service concession arrangements), for a wide range of services including computer maintenance and licensing; hotel and other domestic services; facilities, building, grounds and fire alarm maintenance. The payments to which the trust is committed are as follows: 31 March March s 000s Not later than one year 17,950 8,502 Later than one year and not later than five year 18,372 4,433 Later than five years 14,643 1,230 Total 50,965 14,165 Croydon Health Services Annual Report and Accounts Page 120

122 17. Intra-Government and other balances Current receivables Non-current receivables Current payables Noncurrent payables 000s 000s 000s 000s Balances with Other Central Government Bodies 920-5,225 - Balances with Local Authorities Balances with NHS bodies outside the Departmental Group Balances with NHS bodies inside the Departmental Group* 11,714-2,255 - Balances with Public Corporations and Trading Funds Balances with Bodies External to Government 2, ,042 - At 31 March , ,522 - prior period: Balances with Other Central Government Bodies * 9,245-6,293 - Balances with Local Authorities Balances with NHS bodies outside the Departmental Group Balances with NHS Trusts and FTs 751-1,439 - Balances with Public Corporations and Trading Funds Balances with Bodies External to Government 3,826 1,040 18,545 - At 31 March ,674 1,040 26,278 - * Please note new headings for In previous years items were disclosed under the headings "balances with other central government bodies" and "balances with NHS Trusts and FT". Croydon Health Services Annual Report and Accounts Page 121

123 18. Inventories Drugs Consumables Energy Total 000s 000s 000s 000s Balance at 1 April , ,424 Additions 15,183 11, ,306 Inventories recognised as an expense in the period (14,985) (10,693) (19) (25,697) Balance at 31 March , , Trade and other receivables Current Non-current 31 March March March March s 000s 000s 000s NHS receivables - revenue 11,652 8, Non-NHS receivables - revenue 1,941 1, Non-NHS prepayments and accrued income 1,348 2, PDC Dividend prepaid to DH Provision for the impairment of receivables (1,491) (1,304) - - VAT 898 1, Operating lease receivables Other receivables 1,158 1, ,040 Total 16,161 14, ,040 Total current and non current 17,069 15,714 The great majority of trade is with Clinical Commissioning Groups, as commissioners for NHS patient care services. As Clinical Commissioning Groups are funded by Government to buy NHS patient care services, no credit scoring of them is considered necessary. Croydon Health Services Annual Report and Accounts Page 122

124 19.2 Receivables past their due date but not impaired 31 March March s 000s By up to three months 2,693 1,672 By three to six months By more than six months Total 4,015 3, Provision for impairment of receivables 2014/ /14 000s 000s Balance at 1 April 2014 (1,304) (1,450) Amount written off during the year Amount recovered during the year 1 - (Increase)/decrease in receivables impaired (382) (253) Balance at 31 March 2015 (1,491) (1,304) 20. Cash and Cash Equivalents 31 March March s 000s Opening balance ,323 Net change in year 443 (10,763) Closing balance 1, Made up of Cash with Government Banking Service Cash in hand Cash and cash equivalents as in statement of financial position 1, Cash and cash equivalents as in statement of cash flows 1, Patients' money held by the Trust, not included above - 1 Croydon Health Services Annual Report and Accounts Page 123

125 21. Trade and other payables Current 31 March March s 000s NHS payables - revenue 1,779 1,768 NHS payables - capital 0 0 NHS accruals and deferred income Non-NHS payables - revenue 3,642 5,029 Non-NHS payables - capital 3,155 1,668 Non-NHS accruals and deferred income 17,930 11,275 Social security costs 1,510 1,580 Tax 1,641 1,678 Other 2,389 2,675 Total 32,522 26,278 Total payables (current and non-current) 32,522 26,278 Included above: outstanding Pension Contributions at the year end 2,074 2, Deferred revenue Current 31 March March s 000s Opening balance at 1 April Deferred revenue addition Transfer of deferred revenue (66) (14) Current deferred Income at 31 March Total deferred income (current and non-current) Croydon Health Services Annual Report and Accounts Page 124

126 23. Provisions Total Early Legal Claims Other Departure Costs 000s 000s 000s 000s Balance at 1 April , ,191 Arising during the year 2, ,623 Utilised during the year (825) (99) (36) (690) Reversed unused (1,416) - (30) (1,386) Unwinding of discount Balance at 31 March , ,740 Expected Timing of Cash Flows: No Later than One Year 2, ,617 Later than One Year and not later than Five Years Later than Five Years Amount Included in the Provisions of the NHS Litigation Authority in Respect of Clinical Negligence Liabilities: As at 31 March ,512 As at 31 March ,511 Pension provisions relate to pre-1995 early retirement. The Trust pays NHS Pensions an amount each quarter for these former employees, and the provision balance represents the estimated costs of the continuing liabilities. Legal claims are liabilities to Third Parties Scheme (LTPS) cases which are being dealt with by the NHS Litigation Authority on behalf of the Trust. Included in "other" liabilities are amounts relating to injury benefits; pay provisions for outstanding bank holidays, overtime, on call and night duty; the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme; and contract termination and compensation provisions. Croydon Health Services Annual Report and Accounts Page 125

127 24. Contingencies 31 March 31 March s 000s Contingent liabilities NHS Litigation Authority legal claims (76) (72) Employment Tribunal and other employee related litigation (25) - Other* (39) - Net value of contingent liabilities (140) (72) * Other contingent liability relates to the judgement in Fulton v Bear Scotland Ltd and Wood v Hertel (UK) Ltd which confirmed that non guaranteed overtime pay should be included in the calculation of a workers holiday pay. The calculation is an estimate based on the last three months of non guaranteed overtime worked up until 31 March The judgement is currently subject to appeal. The Trust had no contingent assets at 31 March 2015 (nil at 31 March 2014). 25. Financial Instruments 25.1 Financial risk management Financial reporting standard IFRS 7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. The continuing service provider relationship that the NHS Trust has with Clinical Commissioning Groups (CCG) and the way those CCGs are financed, the NHS Trust is not exposed to the degree of financial risk faced by business entities. Also financial instruments play a much more limited role in creating or changing risk than would be typical of listed companies, to which the financial reporting standards mainly apply. The NHS Trust has limited powers to borrow or invest surplus funds and financial assets and liabilities are generated by day-to-day operational activities rather than being held to change the risks facing the NHS Trust in undertaking its activities. The Trust's treasury management operations are carried out by the finance department, within parameters defined formally within the Trust s standing financial instructions and policies agreed by the board of directors. The Trust's treasury activity is subject to review by the Trust s internal auditors. Currency risk The Trust is principally a domestic organisation with the great majority of transactions, assets and liabilities being in the UK and sterling based. The Trust has no overseas operations. The Trust therefore has low exposure to currency rate fluctuations. Croydon Health Services Annual Report and Accounts Page 126

128 Interest rate risk The Trust borrows from government for capital expenditure, subject to affordability as confirmed by the NHS Trust Development Authority (TDA) and Department of Health. The borrowings are for 1 25 years, in line with the life of the associated assets, and interest is charged at the National Loans Fund rate, fixed for the life of the loan. The Trust therefore has low exposure to interest rate fluctuations. Credit risk The majority of the Trust s revenue comes from contracts with other public sector bodies. The Trust has low exposure to credit risk. The maximum exposures as at 31 March 2015 are in receivables from customers, as disclosed in the trade and other receivables note. Liquidity risk The Trust s operating costs are incurred under contracts with CCGs, which are financed from resources voted annually by Parliament. The Trust funds its capital expenditure from funds obtained within its prudential borrowing limit. The Trust is not, therefore, exposed to significant liquidity risks. Croydon Health Services Annual Report and Accounts Page 127

129 25.2 Financial Assets At fair value through profit and loss Loans and receivables Available for sale Total 000s 000s 000s 000s Embedded derivatives Receivables - NHS - 11,652-11,652 Receivables - non-nhs - 1,941-1,941 Cash at bank and in hand - 1,003-1,003 Other financial assets Total at 31 March ,596-14,596 Embedded derivatives Receivables - NHS - 8,621-8,621 Receivables - non-nhs - 1,932-1,932 Cash at bank and in hand Other financial assets Total at 31 March ,113-11, Financial Liabilities At fair value through profit and loss Other Total 000s 000s 000s *(restated) Embedded derivatives NHS payables - 2,255 2,255 Non-NHS payables - 3,642 3,642 Total at 31 March ,897 5,897 Embedded derivatives NHS payables - 2,373 2,373 Non-NHS payables *(restated) - 5,029 5,029 Total at 31 March ,402 7,402 Croydon Health Services Annual Report and Accounts Page 128

130 26. Events after the end of the reporting period The local health economy is severely financially challenged with one of the fastest growing populations in London as well as Croydon CCG being significantly underfunded for its historic population figures. The Trust is forecasting a deficit of, at least, 25.04m for 2015/16 and in its long term financial modelling does not expect to return to surplus until 2018/19. There has been a sustained period of investment in quality measures in order to improve patient experience and to meet CQC requirements with full year effect cost pressures from 2013/14 in the region of 2.2m; 3.6m increase in CRS Millennium and PACS renewal contracts which have moved out of national contract to local contracts in 2015/16 and 2.9m increases in costs for the CNST premium; there will be ongoing heavy reliance on agency and other temporary staffing, although the Trust spent 5m less on temporary staffing than 2013/14; and a significant QIPP challenge from the Trust s host commissioner, Croydon CCG, have all contributed to the financial position of the Trust. The Trust will learn from its experiences in 2014/15 to ensure delivery of the financial plan. Profitability alone does not ensure the Going Concern status of an organisation. The ability of the Trust to maintain sufficient cash working balances, to ensure debts are paid, is the critical factor that management have used in ascertaining the Going Concern status of Croydon Health Services NHS Trust. The Trust s Statement of Financial Position (SOFA) shows that the short term payables ( 35.4m) exceed short term receivables ( 20.2m). In 2014/15 the Trust secured 23.3m of permanent PDC funding to meet its cash shortfall. In late March 2015, the Trust secured a revolving working capital facility of 7.1m with the Department of Health to meet its cash flow requirements over the course of Quarter 1 of 2015/16. This working capital facility will be re-applied for in each successive quarter. The NHS Trust Development Authority has written to the Trust to confirm that they will make sufficient cash financing available to the organisation over the next 12 month period the Trust has complete confidence that future working capital facility funding will be available. Any drawings will incur an interest charge of 3.5% which is paid every 6 months. The Trust is under no obligation to repay the principal loan until 2019/20 by which time the Trust expects to have already returned to financial surplus. We therefore assess that the Trust will be able to pay its debts throughout the 2015/16 financial year despite the shortfall in its net current assets demonstrated in its SOFA at 31 st March With the exception of the refurbishment of the Emergency Department (funded through a capital investment loan drawn down over the next two financial years and agreed by the Department of Health), the capital programme for the next five years assumes expenditure will be in line with internally generated resources (depreciation plus cash generated from disposals). The support of the NHS Trust Development Authority (TDA) of the Emergency Department and CRS Millennium reprocurement Full Business Cases in themselves give additional support to the going concern status. The Trust therefore has a reasonable expectation that adequate resources will be available to continue in operational existence for the foreseeable future. Croydon Health Services Annual Report and Accounts Page 129

131 27. Related party transactions During the year none of the Department of Health Ministers, Trust board members or members of the key management staff, or parties related to any of them, has undertaken any material transactions with Croydon Health Services NHS Trust. The Department of Health is regarded as a related party. During the year the Trust has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. Those entities with which the Trust has had significant transactions in 2014/15 of over 1m (either revenue or expenditure) are listed below: Body Croydon CCG Bromley CCG East Surrey CCG Lambeth CCG Merton CCG Sutton CCG Health Education England NHS Litigation Authority NHS England St Georges Healthcare NHS Foundation Trust Moorfields Eye Hospital NHS Foundation Trust Epsom and St Helier NHS Trust Nature of Transactions/Relationship Revenue/expenditure for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for education and training Payments for Clinical Negligence Scheme for Trust's contributions Revenue for the provision of healthcare and other services Payments as host of South West London Pathology Joint Operation and other healthcare services Revenue/expenditure for the provision of healthcare and other services Revenue/expenditure for the provision of healthcare and other services In addition, the Trust has had a number of material transactions with other government departments and other central and local government bodies. These are listed below: Body HM Revenue & Customs National Health Service Pension Scheme Croydon London Borough Council Nature of Transactions/Relationship PAYE, National Insurance contributions and VAT refunds Employers' and employees' pension contributions Revenue/expenditure for the provision of healthcare and other services The Trust Board is the Corporate Trustee of the Croydon Health Services Charitable Fund (Registered Charity No ), and some of the members of the Trust Board are also members of the Charitable Funds Committee. The total value of the charitable contributions to the Trust was 187k in 2014/15 ( 55k in 2013/14) Croydon Health Services Annual Report and Accounts Page 130

132 28. Losses and special payments The total number of losses cases in 2014/15 and their total value was as follows: Total Value of Cases Total Number of Cases s Losses 106, Special payments 80, Total losses and special payments 187, The total number of losses cases in 2013/14 and their total value was as follows: Total Value of Cases s Total Number of Cases Losses 266, Special payments 68, Total losses and special payments 335, Croydon Health Services Annual Report and Accounts Page 131

133 29. Financial performance targets The figures given for periods prior to are on a UK GAAP basis as that is the basis on which the targets were set for those years Breakeven performance s 000s 000s 000s 000s 000s 000s 000s Turnover 177, , , , , , , ,279 Retained surplus/(deficit) for the year 5,044 2,149 1,098 4,913 4,059 9 (25,136) (27,286) Adjustments for impairments ,428 (463) Adjustments for impact of policy change re (92) donated/government grants assets Break-even in-year position 5,044 2,149 1,106 4,913 3, (19,683) (27,532) Break-even cumulative position (746) 1,403 2,509 7,422 11,389 11,588 (8,095) (35,627) Due to the introduction of International Financial Reporting Standards (IFRS) accounting in , NHS Trust s financial performance measurement needs to be aligned with the guidance issued by HM Treasury measuring Departmental expenditure. Therefore, the incremental revenue expenditure resulting from the application of IFRS to IFRIC 12 schemes (which would include PFI schemes), which has no cash impact and is not chargeable for overall budgeting purposes, is excluded when measuring Breakeven performance. Other adjustments are made in respect of accounting policy changes (impairments and the removal of the donated asset and government grant reserves) to maintain comparability year to year % % % % % % % % Materiality test (I.e. is it equal to or less than 0.5%): Break-even in-year position as a percentage of turnover (8.05) (11.18) Break-even cumulative position as a percentage of turnover (0.42) (3.31) (14.47) The amounts in the above tables in respect of financial years 2005/06 to 2008/09 inclusive have not been restated to IFRS and remain on a UK GAAP basis. Croydon Health Services Annual Report and Accounts Page 132

134 29.2 Capital cost absorption rate The dividend payable on public dividend capital is based on the actual (rather than forecast) average relevant net assets and therefore the actual capital cost absorption rate is automatically 3.5% External financing The Trust is given an External Financing Limit which it is permitted to undershoot. 2014/ /14 000s 000s External Financing Limit (EFL) 24,141 33,532 Cash flow financing 24,090 33,000 Unwinding of Discount Adjustment External financing requirement 24,103 33,023 Under/(over) spend against EFL Capital resource limit The Trust is given a capital resource limit which it is not permitted to exceed. 2014/ /14 000s 000s Gross capital expenditure 8,020 12,981 Less: donations towards the acquisition of non-current assets (18) (234) Charge against the capital resource limit 8,002 12,747 Capital resource limit 8,350 12,928 (Over)/underspend against the capital resource limit Third party assets The Trust held nil cash and cash equivalents on behalf of patients or other parties. 31 March March s 000s Third party assets held by the Trust (patient monies) - 1 Croydon Health Services Annual Report and Accounts Page 133

135 17. Appendix A: Croydon Health Services NHS Trust Sustainability Report 2014/15 Sustainability Sustainability has become increasingly important as the impact of peoples' lifestyles and business choices are changing the world in which we live. We acknowledge this responsibility to our patients, local communities and the environment by working hard to minimise our carbon footprint. As a part of the NHS, public health and social care system, it is our duty to contribute towards the level of ambition set in 2014 of reducing the carbon footprint of the NHS, public health and social care system by 34% (from a 1990 baseline) equivalent to a 28% reduction from a 2013 baseline by It is our aim to exceed this target by reducing our carbon emissions 30% by 2019/20 using 2013/14 as the baseline year. It is important to consider the hospital s environmental impact in proportion to the number of people it employs and the floor space of the Trust s buildings. Table 1 below shows that the hospital has not changed in floor space from the previous year. As the change to this value is zero all sustainability figures in this report have been compared directly to the previous year with no normalisation taken into account. Context info 2012/ / /15 Floor Space (m 2 ) 93,140 93,075 93,075 Number of Staff 3,270 3,042 3,400 Table 1: Staff and floor space Overall strategy for sustainability In order to embed sustainability within our business it is important to explain where in our process and procedures sustainability features. Table 2 shows this below. Area Travel Procurement (environmental) Procurement (social impact) Suppliers' impact Is sustainability considered? No Yes Yes Yes Table 2: Areas where sustainability is considered We are currently developing a sustainability strategy and a Sustainable Development Management Plan (SDMP). The purpose of this strategy is to embed the Trust s commitment to sustainable development in long term business objectives, and ensure long term consistency in the approach to achieve them. The scope of this strategy is focused on improving environmental sustainability including: Carbon emissions reduction Minimising usage of natural resources Preparing the Trust for extreme weather events Croydon Health Services Annual Report and Accounts Page 134

136 This strategy includes several future initiatives to allow us to achieve our goal of 30% reduction in carbon emissions, these include: Combined heat and power unit installation Lighting upgrade Green travel initiatives Staff behaviour change Renewable energy implementation Greenhouse Gas Emissions The below section looks at the Trust s overall carbon emissions and total energy spend. This provides a top line view of how the trust is performing in relation to carbon emissions. Figure 1: Carbon Emissions by year Figure 1 shows that the overall carbon emmisions from energy use decreased by 12.1% from the previous year. This is a significant step toward achieving the target of reducing carbon emissions by 30% from the 2013/14 baseline year. This reduction has been achieved through the installation of two combined heat and power units (CHP) which were commissioned mid year. Table 3 below shows more detail on how much of each energy type was used and the amount that was spent by energy type. Resource 2012/ / /15 Use Gas (kwh) 29,545,625 27,052,170 34,763,832* tco 2 e 6,038 5,739 7,294* Electricity Use (kwh) 14,570,526 10,387,845 12,360,638* tco 2 e 6,867 5,816 2,599* Total Energy CO 2 e 12,905 11,555 9,893 Total Energy Spend 2,562,898 2,296,089 1,474,624 Table 3: Carbon emissions and energy spend (* data used extrapolated from 11 months usage data [April 14 Feb 15]) From Table 3 it can be seen that the Trust spent 1,474,624 on energy last financial year. This is a decrease of 35.8% from the previous year. It can also be seen that amount of gas used has Croydon Health Services Annual Report and Accounts Page 135

137 increased by 28.5%. Both of these changes are due to the commissioning of two combined heat and power units in July 2014 and several other energy optimisation projects, including improving the efficiency of heating and ventilation systems. Last year 8,163,606 kwh of electricity were generated from the 2 CHP units. Of this electricity generated, only 415,501 kwh was sold back to National Grid meaning the majority was consumed by the site to reducing the carbon emissions associated with the use of grid electric. Waste minimisation and management The Trust recognises the importance of reducing waste and in particular waste sent to landfill. Last year 1,391 tonnes of waste were created. Figure 2 below shows the waste destinations. It can be seen that 25% was recycled and 25% was used for energy recovery. The Trust is currently investigating alternative waste disposal methods to reduce the carbon impact of its waste. Figure 2: Waste Destinations (data used extrapolated from 10 months usage data [April 14 Jan 15]) Croydon Health Services Annual Report and Accounts Page 136

138 Water Consumption The Trust recognises clean water is a finite resource and its use must be reduced and optimised. Figure 3 & Table 4 below show how much water the Trust used compared to previous years. It can be seen that the Trust used 24% less water in 14/15 than in 13/14 reducing its carbon impact by 44 tco2e. This has been achieved through reduction in leakages and improvements to water treatment regimes. Water 2012/ / /15 m 3 177, , ,807** Mains tco 2 e ** Water & Sewage Spend 307, , ,320** Table 4: Water use (** data used extrapolated from 11 months usage data [April 14 Feb 15]) Figure 3: Mains Water use by year (m 3 ) Croydon Health Services Annual Report and Accounts Page 137

139 If you would like this document in another format or language please contact the communications team by calling Croydon Health Services NHS Trust Croydon University Hospital 530 London Road Croydon CR7 7YE Croydon Health Services Annual Report and Accounts Page 138