Governing Body 29 th January 2016 Finance Report Agenda Item 9 Paper 4 Author: Executive Lead: Relevant Committees or forums that have already reviewed this paper: Action required: Attached: CCG Strategic objectives relevant to this paper: Risk Compliance observations: Dan Brown, Head of Finance Matthew Knight, Chief Finance Officer Finance and Performance Committee For decision Month 9 Finance Report Strategy implementation Organisational development Financial balance Core business: relevant to all / most objectives Significant risks on risk register re financial balance, QIPP and control of acute spend Finance: Subject of report Engagement : No specific issues Quality impact: The potential impact on service quality is assessed where significant changes are made to commissioned services or the commissioning / decommissioning of services. Equality impact: The potential impact on protected groups under equality and diversity legislation (and the CCG s own policies) is assessed where significant changes are made to commissioned services or the commissioning / decommissioning of services. Privacy impact: No specific issues X:\NHS Surrey Downs CCG\CCG Corporate Governance\Governing Body\Working Folder\2015-16\Meetings\13 29 Jan Governing Body\Part 1\09 Finance Report\09a Finance report cover sheet.docx
Legal: The CCG is under a statutory duty to break even. EXECUTIVE SUMMARY The purpose of this report is to summarise the CCG s financial position and to forecast the expected year end position; it also describes capital and revenue operational matters and seeks to identify financial risks and their mitigation. Key points are: The deficit position at month 9 is in line with plan, with some variances (positive and negative) within this There is no change to the forecast deficit for the year which remains at the budgeted level of 28.6m The CCG is reporting 7.2m of QIPP as having been achieved against an original target of 8.0m. The CCG is forecasting to be within its cash drawdown limit for 2015/16. There is an action plan to deal with the debtor position (> 2m) Date of paper 20 th January 2016 For further information contact: dan.brown@surreydownsccg.nhs.uk X:\NHS Surrey Downs CCG\CCG Corporate Governance\Governing Body\Working Folder\2015-16\Meetings\13 29 Jan Governing Body\Part 1\09 Finance Report\09a Finance report cover sheet.docx
Surrey Downs CCG: Finance and Activity Report M9 1. Purpose The purpose of this report is to: Present and provide commentary on the financial performance (Outturn) for the first 9 months of the 2015/16 financial year (section 2). Present and provide commentary on the forecast outturn (FOT) for 2015/16 (section 2). Report of the headline activity outturn for acute services (section 3). Report of the achievement of QIPP to date and forecast (section 4). Identify operational, contractual and financial risks (and potential mitigations) that might impact on the ability of the CCG to deliver to plan 2015/16 (section 5). Report on the working capital position of the CCG (section 6). Report and update on finance operations (section 7). 2. Outturn and FOT (A) Note SRG money 1.7m included in acute budget and actuals (B) The allocation for 2015/16 includes a 10.7m deduction to reflect 2014/15 deficit adjustment which feeds through to the reported deficit of 28.6m in 2015/16. Without this, the FOT/Budget is a deficit of 17.9m as per agreed plan. Where deficit is referred to subsequently in this report, it is the higher number (i.e. including the 10.7m allocation adjustment) which is referred to.
2.1 Outturn The CCG reported a M9 YTD deficit of 23.3m which is in line with plan. 2.1.1 Acute Outturn Acute spend to date (including SRG spend) is overspent by 0.7m ( 160.1m vs a to date budget of 159.4m). The 24 largest providers (including AQPs) 1 are reporting an overspend of 4.5m to date versus contract plans. This is based upon M8 SLAM activity data extrapolated to M9. The 4.5m overperformance is driven by: i. Epsom and St Helier: Acute and Renal and SWELEOC ( ESH ) Reported overperformance of 3.0m to date v budget. Outpatients and elective procedures are 2.4m and 1.0m overspent respectively, offset by a to date underspend in maternity and emergency procedures ( 0.4m combined). ii. Kingston Hospital ( KHT ) Reported overperformance of 1.4m to date v budget (compared to 1.1m adverse to date at month 8) which is a combination of overperformance in outpatient and emergency procedures of 0.8m and 0.6m respectively. As reported in previous month, there remains a large volume ( 1.3m) of uncoded activity in the KHT SLAM: a KHT remedial plan exists to address this. Note that uncoded activity is costed on an average basis in the absence of a specific code. The two largest providers above (ESH and KHT) account for 4.4m of the adverse budget variance of 4.5m. The remaining 0.1m adverse variance is the net of a number of smaller variances across the acute portfolio (see Appendix 3 for details). The net overspend on the top 24 providers of 4.5m is offset in part by a budget of 3.1m for planned spend above contracted values plus to date underspend on RSS ( 0.1m); to date underspend on other, smaller independent non-nhs acute providers ( 0.2m); release of a 2014/15 prior year accrual for NCAs ( 0.4m) not used. The net impact of all the above movement results in a net overspend on the acute programme to date of 0.7m. 1 See Appendix 1 for a full listing of Trusts. Includes 21 different NHS Providers of Acute Services plus three main AQPs (Epsomedical, Dorking and Ashtead Hospitals)
2.1.2 Non Acute Outturn Non Acute outturn to date is 0.7m underspent, offsetting the 0.7m on acute (above). The to-date underspends are as follows: 2.2 Forecast Outturn (FOT) There is no change to the forecast deficit for the year which remains as per budget at 28.6m. At a programme level, an adverse forecast variance of 1.0m on acute activity is offset by favourable variances of 1.0m on non-acute activity. These variances are explained in more detail below (2.2.1 and 2.2.2) 2.2.1 Acute FOT The forecast overspend in acute programme of 1.0m is driven by the extrapolated outturn overperformance at M9 for the main providers and is broken downs as follows: - 6.0m In respect of the current acute forecast it should be noted that: i. Of the total net forecast adverse variance against ESH, KHT, SASH, AQPs and other providers of 6.0m, 3.0m is being reported as attributable to non-delivery of QIPP and reflects the decrease in QIPP forecast from 12.8m to 9.8m at M5 (see further detail below, section 4);
ii. The ESH forecast is now finalised following the agreement of an agreed final cost position for 2015/16 of 99.650m (as per contract variation 17/12/16); iii. The KHT forecast is at M9 is 26.8m, an increase of 0.2m versus the FOT at M8 and 0.3m versus the FOT at M7, which reflects the increasing activity on elective and emergency care procedures; iv. The EDICS benefit of 1.3m are one off, non-recurring benefits; v. In total there is 4.0m of planned spend outside of contracted values in the 2015/16 forecast, of which 3.3m is currently forecast to be used, with the remaining 0.7m held against further increases in activity. 2.2.2 Non Acute FOT Non acute programmes are currently forecasting to be 1.0m underspent, offsetting the 1.0m overspend in acute as follows: 3. Acute Activity Both total referrals and first outpatient attendances are flat in November compared to the previous month. Both metrics remain over plan.
4. QIPP 4.1.1.Outturn To date the CCG is reporting 7.2m of QIPP as having been achieved against an original target of 8.0m. The reported position is the net of a number of smaller upsides and downsides across all QIPP schemes although the main downsides are against transactional acute spend (where AQP price review programme is 0.9m to date adverse against original budget) and transformational acute schemes where a number of outpatient reduction schemes (e.g. Cardiology and Opthomology) are tracking behind original 2015/16 plan. These downsides are largely mitigated by reported QIPP ahead of plan in the non-acute QIPP portfolio, for example, Estates (+ 0.4m), Prescribing (+ 0.3m) and CHC contracts (+ 0.3m) are all ahead of plan year to date.
4.1.2. Forecast QIPP for year As reported at Month 5, the overall QIPP forecast for the year has decreased from a plan of 12.8m by 3.0m to 9.8m. This is driven by: i) a reduction of 2.0m across outpatient / elective reduction schemes where the original QIPP plans have been scaled back to reflect a slower trajectory to a 20% reduction in activity by the 2015/16 financial year end; ii) a reduction in the non-elective admission reduction QIPP savings of 0.6m as a result of a delay in implementing the CMT scheme; and iii) a reduction in the anticipated benefits from the AQP price reduction QIPP of 0.4m (from 1.8m to 1.4m) to reflect the CCGs current best estimate of the QIPP savings (note, no contracts have been signed with the AQPs therefore no QIPP benefits are being reported as having crystallised). As per the commentary in Section 2, above, there are adequate mitigations to offset the reduction in forecast QIPP. 4.1.3 QIPP performance measured against Re-plan ( 9.8m) Note that against the re-plan QIPP number of 9.8m (the reduced QIPP re-profiled across 2015/16), the CCG is ahead of re-plan year to date by 0.75m as a result of some of the savings (for example on Estates and Prescribing) being realised earlier than anticipated in the revised plan.
5. Risks and Mitigations to achieving budget 2015/16 5.1 Risks and Mitigations The significant risk and mitigations in achieving the full year forecast are as follows: The risk and mitigations above are as per reported to NHSE in the monthly non-isfe return at M9. Unweighted, mitigations and opportunites are currently greater than risks. 6. Working capital 6.1 Cash The CCG has a Maximum Cash Drawdown (MCD) in 2015/16 of 361.2m, which equates approximately to the resource allocation for the year ( 328.5m) plus the projected cumulative deficit ( 28.6m). To date at M9 the CCG has drawn down 266.9m (73.8%) of its MCD for 2015/16, leaving a balance of 94.3m however this includes: - 1.0m cash contribution to a national CHC risk pool in H1; and - 4-5m of overperformance invoices which related to 2014/15 but were not paid until Q1 and Q2 of 2015/16 Once these two factors are taken into account, based on an extrapolated run rate, the CCG is forecasting to be within its MCD limit for 2015/16.
6.2 Debtors The CCG is budgeting to invoice 72.3m in 2015/16, mostly for hosted services performed on behalf of other CCGs. Of the 72.3m, 65m relates to CHC healthcare services charged to the other members of the Surrey CHC collaborative. The remaining 7.3m relates to invoices to other CCGs for CHC, Medicines Management and IFR, medicines management for NHS England and Better Care Fund related costs due from Surrey County Council. The CCG currently has 2.1m of debt outstanding. The current profile / breakdown of the outstanding debt is as per the table below. The CCG has an internal action plan to chase outstanding debt, a summarised copy of which is included as an appendix. 7. Finance Operations 7.1 Resourcing A permanent member of the finance team is scheduled to start a one-year secondement with NHSE mid February. A fixed term contract replacement is activily being sought, although an interim resource might be required, should the sourcing of a fixed term contractor not prove successful. 7.2 Other i. The agreement of service specification, KPIs and a final contract between the CSU and SDCCG is still outstanding. ii. To note at M9 the CCG prepares a draft set of accounts and performs a dummy year-end close using the standard NHSE excel accounts template (due for submission 21/01/16). The M9 management and financial accounts and the estimates and provisions made at M9 form the basis of the initial external audit early testing work (scheduled w/c February 15th).
iii. To note TIAA fieldwork on the CCGS core financial systems is now complete, draft report with initial findings is pending. END
Appendices 1 M9 Outturn Detail 2 M9 QIPP Detail 3 M9 Acute Spend Detail 4 M9 Activity Detail 5 M9 Running Cost Detail 6 M9 Aged Debt Recovery Plan (summary)
Appendix 1: M9 Outturn (Detail)
Appendix 2: M9 QIPP (Detail)
Appendix 3: M9 Acute Spend (Detail)
Appendix 4: M9 Referral Activity (Detail)
Appendix 5: M9 Running Costs (Detail)
Appendix 6: Aged debt: internal action plan