Governing Body Meeting 27 November 2014 Agenda Item 17 Title of paper What the Committee is being asked to decide or approve Great Yarmouth & Waveney Clinical Commissioning Group Finance & QIPP Report October 2014 (1) To note the month end (October 2014) financial position for 2014/15 (2) To note the month end position against the 2014/15 QIPP plan EXECUTIVE SUMMARY: The 2014/15 year to date (YTD) revenue position for GYW CCG is 1,565k surplus which is to plan. The CCG is currently forecasting to achieve a year end surplus of 3.1m The 2014/15 QIPP plan is 12.6m and includes a 1.3m increase to offset the impact of the reduced brought forward surplus. QIPP savings as at October 2014 total 2.39m which is 1.20m under the planned YTD target of 3.59m. There is still a high risk that the planned QIPP target will not be achieved at year end and, as such, a risk adjusted surplus of 230k has been reported to NHS England. This is outside of the forecast outturn surplus reflected in the ledger at month 7. The main pressures in the local health system for 2014/15 that may impact on financial targets are high cost packages of care, acute activity, prescribing and continuing healthcare activity. Risks attached to this proposal/initiative: Finance and performance: High financial risk if QIPP target not achieved. High financial risk if demand management QIPP initiatives are unsuccessful in reduction of secondary care activity and if QIPP proves to be non-recurrent in 2014/15. Demand activity pressures within the health system are not managed effectively through implementation of QIPP alongside any changes in care pathways thus increasing financial risk going forward. High financial risk if the basis of the NHS Property Services estates recharge in 2014/15 does not revert to actuals. Reputation: High risk if statutory duty is breached by the CCG not remaining within the 2014/15 financial year revenue limits. If financial risks are not managed in 2014/15 then the credibility of CCG going forward may be compromised alongside its financial viability for the future. 1
Resource implications : None Sponsor Zoe Pietrzak Report Author Lisa Bell Job Title Senior Financial Accountant Date 18 November 2014 2
1. EXECUTIVE SUMMARY 1.1. The current financial position for the CCG of a YTD surplus of 1,565k is to plan and the CCG is currently forecasting to achieve a year end surplus of 3.1m, which represents 1% of the initial revenue allocation, in line with national guidance. 1.2. A more detailed analysis of the 2014/15 revenue outturn position for October 2014 is shown at Appendix 1. 1.3. The CCG Quality Innovation Productivity & Prevention (QIPP) savings for 2014/15 have been embedded within budgets. However, in order to mitigate the impact of the reduced brought forward surplus, the QIPP savings target has been increased by 1.3m. Action is in hand to identify additional schemes to meet this increased target. 1.4. As at the end of October 2014 the QIPP savings delivered total 2.39m. 2. FINANCIAL TARGETS 2.1. The CCG has a statutory duty to maintain expenditure within the revenue resource limit (RRL) and capital resource limit (CRL) set by the Department of Health (DH) and a duty to remain within its allocated Maximum Cash Drawdown (MCD) for the year. 3. REVENUE RESOURCE LIMIT 3.1. The CCG received additional operational resilience funding in October as follows: 2014/15 Revenue Resource Limit (September 2014) 306,031 Operational Resilience Funding 2,369 2014/15 Revenue Resource Limit (October 2014) 308,400 4. CASH LIMIT 4.1. The CCG has received notification of its 2014/15 MCD. This represents the cash available for the CCG to spend in this financial year. The MCD is 305m and is reflected in the cashflow forecast shown in Appendix 2. The CCG will have the opportunity to submit revised cash forecasts later in the year. 5. CAPITAL 5.1. The CCG has been notified of a reduced capital allocation from 1,150k to 625k. The reduction was agreed with the Local Area Team as the funding set aside for fixtures and fittings at Reydon Healthy Living Centre and Kirkley Mill is no longer required in full. The capital schemes and allocated funding is shown in the table below: Scheme 000 Reydon Healthy Living Centre - Fixtures, Fittings and IT 75 Kirkley Rise Phase One - Fixtures, Fittings and IT 50 Community Services IT Capital Grant 500 6. STATEMENT OF FINANCIAL POSITION 6.1. Appendix 3 shows the Statement of Financial Position (SOFP) for the CCG reflecting its assets and liabilities as at: 31 October 2014 (actual outturn position) 31 March 2015 (2014/15 forecast outturn position) 3
7. REVENUE POSITION 7.1. The CCG financial position as at October 2014 is a 1,565k surplus which is to plan. Appendix 1 shows the actual spend against year to date budgets within the programme areas. 7.2. More detail on the key variances is shown in section 8. 8. OPERATIONAL DELIVERY 8.1. Norfolk and Norwich University Hospital (NNUH). There is a YTD overspend of 1,088k. Activity over-performance has increased from 275k in month 5 to 663k in month 6 giving a pro-rated overspend of 732k at month 7. The over-performance is primarily due to increased non elective, critical care and maternity antenatal activity and marginal rate activity currently under the threshold which has resulted in reduced savings. The remaining 356k variance is due to an underachievement of QIPP. A full year 2,324k overspend is currently forecast. 8.2. James Paget University Hospital (JPUH). There is an overspend of 1,414k as a result of underachievement of QIPP and a full year overspend of 2,428k is forecast. 8.3. Other Acute. There is a small YTD underspend of 12k due to the following areas of activity: Cambridge University Hospital Foundation Trust (CUHFT). Based on month 6 activity data, the CUHFT is underspent by 130k YTD due to under activity across all areas. Papworth Hospital Foundation Trust. Based on month 6 activity data, the Papworth Hospital is underspent by 39k YTD due to reduced activity across all areas with the exception of RIII Lung Defence where there is a overspend of 14k. Ipswich Hospital Trust. Based on month 5 activity data, the Ipswich Hospital Trust is overspent by 60k YTD due to increased elective and outpatient activity. In Vitro Fertilisation (IVF). IVF services are currently commissioned from specialist providers through a hosted arrangement with NHS East and North Hertfordshire CCG. This area is currently 94k overspent YTD due to increased activity. Non Contract Activity (NCA). Based on actual invoices received to date, non contract activity with Foundation Trusts and NHS Trusts is currently overspent by 20k. 8.4. Private Providers. The YTD overspend of 142k is due to pressures with the NNUH activity outsourced to Spire ( 59k), an overspend of 70k within non NHS non contract activity and an overspend of 13k relating to ultrasound and magnetic resonance imaging (MRI) scans. A full year overspend of 300k is forecast. 8.5. Acute Drugs. High cost drugs activity with the James Paget University Hospital (JPUH) is currently overspent by 315k. Expenditure on devices from JPUH and NNUH is also overspent by 61k YTD. These have been offset by underspends on the NNUH non tariff drugs ( 194k) and other acute drugs activity. A full year overspend of 200k is forecast. 8.6. Learning Difficulties and Other Mental Health Services. The YTD overspends are due to a known cost pressure with children s respite services ( 28k) and an increase in the number of high cost packages. A full year overspend of 700k is forecast. 8.7. Continuing Healthcare. Owing to increasing growth in the number of continuing healthcare packages over and above plan, a cost pressure of 1,050k has been recognized in month 7. This activity is being closely monitored and a robust process for the continuous review of cases is in place. A full year 1,800k overspend is forecast. 4
8.8. Ambulance Services. Based on month 6 activity data the ambulance service is 174k overspent YTD. This is due to an increasing number of 111 generated ambulance dispatches. Discussions have taken place with the 111 service provider and the impact of the new contract, effective from 1 October, should help to level out the overspend in the second half of the year. A full year overspend of 300k is currently forecast. 8.9. GP Prescribing. Based on 5 months data, a cost pressure of 534k has been identified at month 7 due to an increase in the number of items and costs of prescribed drugs. A full year overspend of 1,000k is forecast which takes into account the recent decision by the Department of Health to increase the drugs tariff within the Community Pharmacy Contractual Framework from 1 October 2014. 8.10. Activity Data. Below are activity graphs showing data for A&E, Non Elective, Outpatients and Elective activities. The data is analysed by point of delivery for JPUH and NNUH combined, showing the monthly/cumulative comparisons of: 2014/15 actual and planned activity (to September 2014) 2013/14 actual activity 2012/13 actual activity A&E YTD Activity was lower than in August but actuals matched planned activity for September. Non Elective activity is 2% over plan with YTD admissions in September up from August for both JPUH and NNUH. Individually JPUH activity is under plan. 5
Outpatient activity is 11% over plan YTD as a result of Referral to Treatment (RTT) catch up work increasing activity. Elective activity is 8% over plan YTD as a result of RTT catch up work increasing activity. 9. UNDERLYING FINANCIAL POSITION 9.1. The underlying financial position is the CCG s forecast surplus based on recurrent resources and expenditure. It eliminates the effect of non-recurrent transactions and reflects the CCG s revenue position based on its normal recurrent operating activity. 9.2. The forecast underlying surplus based on the month 6 review is 6m. This is 2% of the planned revenue resource limit. The underlying surplus has reduced by 2m from the previous month forecast due to increasing recurrent cost pressures. 10. 2014/15 QIPP PERFORMANCE Summary by Board Reporting Category Overall Forecast Full Year 2014/15 Year to Date: October Original Plan RAG Status Revised Plan Forecast Variance Plan Actual Variance Acute 8,460 8,467 5,675 (2,792) 2,009 535 (1,474) Mental Health 400 420 759 339 234 415 181 Continuing Healthcare 1,000 1,500 1,500 0 525 686 161 Other 415 408 383 (25) 238 224 (14) Prescribing 1,000 1,000 1,000 0 584 526 (58) Unidentified QIPP 760 0 (760) Overall Totals/RAG Status 11,275 12,555 9,317 (3,238) 3,590 2,386 (1,204) 10.1. The QIPP savings plan is reviewed each month for actual savings delivered on QIPP schemes identified. A summary of the progress to date against identified QIPP schemes for 2014/15 is shown in the table above and more detail on individual schemes is shown at Appendix 4. 6
10.2. CCG QIPP leads report regularly on the progress of schemes within their areas of responsibility. Schemes are continually assessed and if required a revision to the plan is made and additional schemes added. The overall target of the revised QIPP plan will never be below the planned QIPP target for 2014/15. Owing to the 1.3m reduction in the brought forward surplus, the QIPP savings target has been increased to 12.6m. 10.3. As at October 2014 QIPP savings delivered total 2.39m which is 1.20m under the YTD planned target of 3.59m. It should be noted that 7.4m of the planned 8.5m savings in the acute area and the unidentified QIPP have been profiled in the second half of the year and there still remains a high risk that the planned target will not be achieved at year end. As such, a risk adjusted position of just over breakeven has been reported to NHS England at month 7. This is consistent with month 6. 11. NON RECURRENT RESERVE 11.1. The Non Recurrent Reserve is calculated as 2.5% of the CCG s revenue resource allocation and can be broken down into two reserves. 1% of the reserve is to fund invest to save and pump priming QIPP initiatives and non-recurrent transformational investments. The remaining 1.5% will be used to prepare the local health system for the introduction of the Better Care Fund in 2015/16. Reserve funds will not be fully committed at the beginning of the year to enable areas of financial risk to be mitigated should they arise. The opening balance of the total reserve is 7,436k. 11.2. Current commitments against the 1% transformation reserve are shown below: 000 Balance 1 April 2014 3,000 Pathology Service Transformation -461 EEAST Service Transformation -498 Rapid Admissions Avoidance Car -45 NSFT Service Transformation -250 Balance 1,746 11.3. The balance of the Non Recurrent Reserve will be used to mitigate the forecast outturn position. 12. RISKS AND BENEFITS 12.1. 2014/15 high level financial risks are summarised as : Non delivery of 2014/15 QIPP Activity demand pressures Continuing healthcare Mental Health high cost packages NHS Property Services recharges Increased prescribed drugs costs 12.2. Details of the potential risks which lie outside the current forecast position are reported as a tornado diagram at Appendix 5. 13. BETTER PAYMENT PRACTICE CODE BPPC (CREDITORS) 13.1. The CCG has a performance target of 95% to meet for payment of all creditor invoices within 30 days, both in the number and total value of invoices received. There is a further national target to pay at least 60% of invoices from small and medium size 7
enterprises (SME) within 10 working days. The CCG has locally targeted at least 80% of SME invoices to be paid within 10 days in order to support the local economy. 13.2. Performance YTD is disclosed at Appendix 6. Currently the CCG is below the target of 95% in respect of the number of invoices that should be paid within 30 days for NHS creditors. This is due to invoices being held pending validation. 13.3. In addition payments to non NHS providers are also below target for both numbers and value, however performance has been steadily improving over the last 3 months and the month 7 results are above the 80% target and 95% target in month in all areas for the first time this year. 14. AGED DEBT 14.1. Aside from the main Department of Health funding and prescribed drugs recharge income, the CCG has not budgeted to receive a significant amount of additional income. Below is an age profile of the CCG debtors over a 6 month period: 14.2. 14.3. As at October 2014 the CCG overdue debt has reduced from 349k in month 6 to 82k. 15. CONCLUSION 15.1. This year is proving to be financially challenging for the organisation and the Great Yarmouth and Waveney healthcare system. The achievement of the CCG s QIPP target is essential not only for the 2014/15 outturn position but also to reduce recurrent expenditure by providing more efficient and effective patient care for a sustainable healthcare system. 15.2. The risk adjusted position reported at month 7 is a strong indication of a reduced forecast outturn and to mitigate this, a financial recovery plan is being put in place. 8
NHS GREAT YARMOUTH & WAVENEY CCG INDEX TO FINANCE & QIPP REPORT APPENDICES OCTOBER 2014 Appendix 1 Revenue Statement 2 Cash flow Statement 3 Statement of Financial Position 4 QIPP Plan 5 Risk and Benefits - Tornado Diagram 6 Better Payment Practice Code 9