Epsom and St Helier University Hospitals NHS Trust

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Geraldine Higgins
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1 Epsom and St Helier University Hospitals NHS Trust Minutes of the Finance and Investment Committee Held on 28th April 2016 Chair: Present: Laurence Newman, (LN) Chairman Richard Noble (RN), Non-Executive Director Steve Poulton (SP), Non-Executive Director Rakesh Patel (RP), Chief Financial Officer Ruth Charlton (RC), Deputy Chief Executive and joint Medical Director Charlotte Hall (CH), Chief Nurse & Director of Infection Prevention and Control Sue Jones (SJ), Interim Chief Operating Officer Trevor Fitzgerald (TD), Director of Estates Kevin Croft (SW), Deputy Director of HR In Attendance: Carol McLaughlin (CMcL), Deputy Director of Finance Strategy Alastair Haggart (AH), Deputy Director of Finance Operations Irving Warnett (IW) PwC Matthew Lynn (ML), Restructuring Director PwC 1. Apologies for absence Action 1.1 Apologies received from: Daniel Elkeles, Chief Executive Officer 2 Minutes of Last Meeting 2.1 The minutes were agreed as an accurate record. 3. Matters Arising 3.1 No issues were raised around the matters arising. 4 Finance Report Month RP presented the Month 12 financial position to the FIC and explained that the Trust had delivered the required deficit of 25.8m. However this included a 2.6m capital to revenue transfer and some one-off releases from the balance sheet so that the underlying deficit was 32m. LN asked if the auditors were happy with the non-recurrent adjustments. RP explained that he had taken these to the last Audit Committee and spoken to the auditors off line. Although the accounts 2

2 were not yet signed off, the auditors were happy with the adjustments and did not consider them to be material. RP said that Month 12 had been good overall, although this was made up of a good position for pay expenditure and a relatively poor position for non-pay. Overall there was increased expenditure in Quarter 4 which was consistent with last year. LN asked if this clear increase in Q4 was reflected in the Trust s plan submission and SP queried whether the monthly plan phasing reflected this. RP stated that both issues had been reflected in the plan. 5 Quality and Cost Improvement (QCIP) Report & Financial recovery Plan Month QCIP paper: RP reported that delivery of QCIP had been disappointing in 2015/16 ( 1m below target) with Surgery 40% below plan. RP felt that the Trust had lost the appropriate level of scrutiny and challenge with regard to CIP delivery in 2015/16 due to a focus on reacting to the deteriorating bottom line. RP and SJ stated that in 2016/17 they would be focussing on the deliverability of Divisional transactional CIPs; particularly risk to deliverability and the appropriate mitigations. CM said that the governance around CIP reporting was being improved, with appropriate gateways being introduced which will aid escalation. The CIP reports will be redesigned as it was felt that they were not currently giving the FIC the information it will require for monitoring and assurance purposes. 6 Cash Management 6.1 RP presented the cash management paper. The Trust had drawn down its loan to fund the deficit and finished the year with a cash balance of 2.7m. LN asked what the Trust was planning to borrow in 2016/17. RP stated that the Trust required 32m to cover the planned deficit. In addition the Trust was seeking an additional loan of 6m to fund infrastructure and was working up a Salex loan of around 3m to fund energy efficient projects. LN expressed some concern that from borrowing nothing at the beginning of 2015/16; total borrowing could reach 70m by the end of 2016/17. 3

3 RP said that the Trust was seeking to make its 2016/17 requirement a formal loan. The 26m borrowed in 2015/16 would remain a Revolving Working Capital Facility (RWCF) on a 5 year term at 3.5% interest. RP stated that he had been in a performance meeting with NHS Improvement (formerly the TDA) where it had been recognised that ESTH was one of two London Trusts where the original control total of zero was clearly wrong and could not be delivered. It was therefore possible that the Trust might receive STP funding although it wasn t currently possible to quantify this. A second funding tranche of 2 billion was still unallocated. 7 Contracts over 50k 7.1 The extension of the contract for the Trust s Patient Administration System (PAS) for three years was approved as there was no other feasible option. 8 Bridge from Outturn to Outturn 8.1 RP reported on the paper. Income had increased from 360m to 372m but activity had been relatively flat with most of the 12m increase being driven by price changes. In terms of pay, winter pressures had cost 5.5m although the Trust had only received 2.3m in additional income. There had been a significant investment in quality with 4.7m of additional posts (particularly consultants). RP stated that the financial position had reflected the Trust s decision to significantly in order to hit constitutional targets (A&E, Cancer, 18 Weeks RTT etc.). LN asked if it was possible to directly relate staffing increases to quality / constitutional targets in quantifiable terms. RP stated there was some correlation in specific areas such as ophthalmology and palliative care. CH stated staffing increases could possibly be directly linked to an overall fall in mortality Plan RP explained that there was a movement in Renal, with increased income being subject to the NHS England marginal rate on specialist activity above a given baseline in 2015/16. This marginal rate had been removed nationally in 2016/17. SP noted that private patient income was significantly down in 2015/16 and asked how this had been reflected in the 2016/17 plan. RP said that the basis of the plan was 2015/16 outturn plus an 4

4 increased Private patient income target of 500k. Expenditure budgets had been uplifted appropriately for the 500k additional activity. SJ said that the new operational policy was to ring-fence 50% of the beds on Northey Ward. A key objective of the Patient Flow project was to keep NHS patients out of private beds. Only a 12 hour trolley wait (breach) would displace a private patient. 9 PWC Baseline Analysis 9.1 IW and ML reported on their Baseline Review. This was still work in progress and they expected to conclude the work in a week to ten days. The Trust had provided PwC with easy access to the information required. PwC agreed with the Trust s view that the start point was a recurrent deficit of 31.9m. They noted that the average over the last three years of recurrent CIP delivery was 74%, and this would be important in informing deliverability of 2016/17 CIP plans. RN asked if the Trust had financial information of sufficient quality / flexibility to use as a management tool to support CIP deliverability. IW replied that such information was needed due to different overlapping transformation schemes. PwC felt the deficit would be in the range 36m to 46m before the acceleration of transformation schemes and therefore a risk in the range 4m to 14m to deliverability of the 2016/17 financial plan. IW was concerned at the profile of CIP delivery, given that 90% of CIP schemes were still at the opportunity stage and needed rapid working up. RP felt the Trust was six to eight weeks from where it needed to be. RN was similarly concerned that a very significant proportion of the recovery plan had still to be identified and was still in the conceptual phase. IW stated that a major plank needed to be in place quickly in terms of the governance of the Transformation Board. PwC would be reviewing the resourcing and structure of the PMO. The Trust needed to quickly understand gateways and potential blockages with a view to unblocking these. IW was concerned that there was only a cash contingency of 1.9m although RP explained that the Trust was not allowed to hold more than this. RN stated that the Trust would require extremely close monitoring of its financial position in view of any potential revision to the forecast 5

5 deficit. In particular early warning and/or lead indicators of CIP slippage / failure would be required. RP stated that a lot of relevant information is retrospective and that the Trust was trying to fill the gap with the Business Insight workstream over the next twelve weeks 10 PWC Theatre Perform Update 10.1 Deferred to next meeting 11 Microbiology Business Case 11.1 The novation of Microbiology contracts to a single supplier was approved in order to deliver VAT savings. It was confirmed there was no transfer of assets or people in response to a question from SP. 12 EOC Managed Service Contract 12.1 RP presented a paper on the proposed Managed Service Contract (MSC) for the Elective Orthopaedic Centre (EOC). A business case had previously gone to the Trust Board. Power tools in the EOC were already procured under an MSC and the principle was being extended to other equipment. Of this, there was an element of approximately 3.9m per annum where the Trust would make a VAT saving and a further 6.5m of equipment (largely prostheses) which would not be eligible for VAT savings but the Trust would reduce current expenditure due to more effective procurement. Action (Closed) : Updated business case taken to Trust Board on 13th May referred to break points and sanctions This would be a contract in excess of 10m for seven years so an overall contract value of 70m+. LN asked about the level of risk to the VAT savings. RP stated that the Trust was awaiting clarification from HMRC but that Homerton NHS FT had already done this. In addition, the Trust had worked closely with the supplier (GenMed) and KPMG as advisors. The Trust would prudently only accrue for VAT recovery once HMRC clarification had been received. The EOC Partnership Board had signed off on the business case with all benefits shared in proportion to the partners share of activity. SJ stated that this contract would mitigate against the risk not being able to replace outdated equipment (particularly ventilators) Action RP to report on contract break points and sanctions for nondelivery of expenditure savings 6

6 13 Any Other Business 13.1 There was no other business. 14 Date and Time of Next Meeting th May :00am - noon Board Room, Rowan House, Epsom General Hospital 7

Finance & Performance Committee

Finance & Performance Committee MINUTES of a Meeting held on 23 rd June 2014 at 10.30 in the Norwich Room, Elliot House PRESENT: Derek Allwood (Chair) Non-Executive Director DA Roy Clarke Director of Finance