Public Trust Board Agenda item: 9 (ii) Date of Meeting:
Transcription
Public Trust Board Agenda item: 9 (ii) Date of Meeting:
Agenda item: Public Trust Board Public Trust Board Date of Meeting: 14 December 2011 Title of Report: Status: Board Sponsor: Author: Appendices Finance report Discussion Catherine Phillips, Director of Finance Lisa Thomas, Deputy Director of Finance None 1. 9 (ii) Purpose of Report (Including link to objectives) The purpose of this report is to set out the Trust‟s financial performance for the period to 30th November 2011, including: Income and expenditure; Savings plans; Capital expenditure; This report is linked to the Trust‟s priority objective for 2011/12 of improving value for money and the key standard of delivering financial balance. 2. Summary of Key Issues for Discussion This report details the current and forecast performance against each of the Trust‟s main financial duties and the key risks and assumptions in the delivery of those financial targets, and includes recommendations where further action is required. 3. Recommendations (Note, Approve, Discuss etc.) The Board should note the Trust‟s financial forecasts including the planned surplus (see section 2). Action: All The Board should note the Trust‟s income for November 2011 is based on the agreed contract quantum. The over performance against plan is based on actual activity information for April to November and an estimate for penalty risks. Action: All The Board should note that the adverse variances on Pay and Non Pay as at the end of November are primarily due to unachieved savings (see section 2 and 4). Action All Savings plans need to be fully identified and implemented (5). Action – Divisions/Director of Operations Author: Sarah Elsey, Interim Head of Financial Management Document Approved by: Catherine Phillips, Director of Finance Date: 19 December 2011 Version:1.0 Agenda Item: 9 ii Page 1 of 14 The Board should note the revised forecast for capital expenditure for which additional loan funding from the DH has been approved. Action – All To understand the key risks and the actions being taken to mitigate them. Action – All. 4. Care Quality Commission Regulations (which apply) Care Quality Commission Regulation 13: Financial position „People can be confident that the provider has the financial resources needed to provide safe and appropriate services.‟ 5. Legal / Regulatory Implications (NHSLA / Value for money conclusion) Not achieving financial duties will impact on the ability and sustainability to achieve the Value for money conclusion. 6. NHS Constitution Not applicable 7. Risk (Threats or opportunities link to risk on register etc.) As captured in board assurance framework 8. Resources Implications (Financial / staffing) Not applicable 9. Equality and Diversity Not applicable 10. Communication Not applicable 11. References to previous reports Standing item 12. Freedom of Information Public Page 2 Author: Sarah Elsey, Interim Head of Financial Management Document Approved by: Catherine Phillips, Director of Finance Date: 19 December 2011 Version:1.0 Agenda Item: 9 ii Page 2 of 14 Financial Performance to 30th November 2011 (Month 8) Page ref In Month Year to Date Outturn Position Risks to forecast £0.1m F £4.5m A £6.2mF YTD (CYE) Forecast (CYE) FYE 2011/12 Key risks £4.9m shortfall Shortfall £5.8m Shortfall £4.6m Income and Expenditure Main issues in month are unachieved savings, off set through over performance against income Main issues are shortfall against saving target £7.5m offset with overperformance Income £5m. There is significant risk against the delivery of the year end target of £6.2m surplus Risks to achieving Demand Management Capacity reductions and full year CIP plans 4 5 6 6 Cost Improvement Programme YTD £6.4m achieved against target of £11.3m £11.6m identified against £17.3m target £12.7m identified against full £17.3m target Divisions fail to identify the full savings required 9 9 9 9 Statement of Financial Position ( Formerly the Balance Sheet) No material movements in month Year to Date Full Year forecast In month movement Risks year to date Risks £6.7m spend year to date FRR2 Cash Cash above plan however risks remain with I&E position Need to monitor cash carefully, any shortfall on CIP schemes will leave a cash flow shortfall. Capital Currently behind plan but expecting to deliver forecast now additional £6m funding is confirmed Forecast to achieve capital plan in full £14.6m. Monitor Risk Ratings Minimum requirement for authorisation, risk to ratings are liquidity and surplus margin. Key: A = adverse variance; F = favourable variance Author: Sarah Elsey, Interim Head of Financial Management Document Approved by: Catherine Phillips, Director of Finance Date: 19 December 2011 Version:1.0 Agenda Item: 9 ii Page 3 of 14 10 11 12 13 Financial Performance to 30th November 2011 (Month 8) 1. position. The Trust has been working hard to ensure that since Millennium has been implemented, activity and therefore income is appropriately recorded, the improvement reflects a catch up of activity, now appropriately recorded from August to October. Statement of Comprehensive Income– In month position for November 2011 (formerly I&E Statement) Table 1 Statement of Comprehensive Income Trust Position 30 November 2011 Budget £'000 In-Month Position Actual £'000 Last Month Actual £'000 Variance £'000 SLA Performance Income Other Income (14,617) (3,054) (15,912) (3,159) (1,296) (105) (14,586) (2,805) Income Total (17,670) (19,071) (1,401) (17,391) Pay Non Pay 10,925 4,565 11,634 5,106 709 541 11,468 5,109 Expenditure Total 15,490 16,740 1,250 16,577 Operating (Surplus)/Deficit (2,181) (2,331) (151) (814) Depreciation Dividend Payment & Interest 665 463 665 466 (0) 3 663 483 Finance Charges 1,128 1,131 2 1,146 (Surplus)/Deficit (1,052) (1,201) (148) 332 0 0 Margin 0 1.1. The financial plan for November was to deliver a surplus of £1.1m. The Trust actually reported a surplus of £1.2m (£0.1m favourable against Plan). 1.2. The in- month variance is illustrated in the bridging diagram opposite; in month variance has improved significantly from previous months, this reflects the improvement in the income Trust Board – November 2011 Finance & Performance Report 1.3. The November position is a continuation of previous month‟s trends of unachieved savings combined with budget pressures of nursing pay (escalation costs) and medical and surgical equipment is causing significant concern to achieving the year end surplus target. 1.4. The SLA performance income is based on the actual activity for November which includes an estimate for un-coded spells and an assessment of risk of penalties and fines. -4– 2. Statement of Comprehensive Income– Year to date position for 30th November 2011 (formerly I&E Statement) Table 2 Statement of Comprehensive Income 30 November 2011 Year to date Budget £'000 Year to date Actual £'000 Year to date Variance £'000 2.4. Non pay spend for November has decreased by only £3k in Last Year Actual £'000 month compared to October. SLA Performance Income Other Income (116,678) (21,992) (121,754) (21,762) (5,076) 230 (123,792) (22,144) Income Total (138,670) (143,516) (4,846) (145,936) 88,030 35,678 92,655 40,368 4,625 4,690 90,263 39,431 Expenditure Total 123,709 133,023 9,315 129,694 Operating (Surplus)/Deficit (14,961) (10,493) 4,468 (16,242) Depreciation Dividend Payment & Interest 5,319 3,706 5,313 3,729 (7) 23 5,099 3,619 Finance Charges 9,025 9,042 16 8,718 (5,936) (1,452) 4,484 (7,524) 0 0 Pay Non Pay (Surplus)/Deficit Margin 2.3. Excluding the savings targets, pressures remain on the nursing budget which is now showing an adverse variance of £1.5m (5% over plan) of which £570k is agency spend. 0 2.1. Our year to date position is a £1.4m surplus, but shows an adverse variance of £4.5m, against a surplus plan of £5.9m. 2.2. Slippage against savings targets accounts for £7.5m of the total £9.3m (81%) adverse variance in expenditure, this includes the PCT QIPP target. Therefore the shortfall of disinvestment savings has been in part offset through income over performance of £5m year to date. Trust Board – November 2011 Finance & Performance Report -5– 3. Total Trust Detailed Analysis . The detailed analysis provides a breakdown of performance by both income and expenditure types Income Table 3 SLA Performance PCT Banes PCT Bristol PCT Gloucestershire PCT Non Contract Activity Other South West PCT's SW Specialised Commissioning Wiltshire PCT Income Total Table 4 Income performance 30th November 2011 A&E Elective Non-Elective Outpatients Other Income Total Annual Plan £'000 YTD Plan £'000 YTD Actual £'000 YTD Variance £'000 (69,960) (809) (240) (1,819) (27,517) (4,458) (70,784) (46,463) (520) (169) (1,243) (18,321) (3,041) (46,922) (49,064) (489) (199) 635 (19,548) (3,053) (50,037) (2,602) 32 (30) 1,878 (1,226) (12) (3,115) (175,588) (116,678) (121,754) (5,076) Annual Plan £'000 YTD Plan £'000 YTD Actual £'000 YTD Variance £'000 (6,522) (33,372) (60,165) (32,533) (42,996) (4,380) (22,477) (39,168) (21,756) (28,898) (4,601) (21,458) (43,834) (23,588) (28,273) (222) 1,018 (4,666) (1,831) 625 (175,588) (116,678) (121,754) (5,076) 3.1. The tables opposite highlight the main areas of overperformance against contracts. Within the Trusts main commissioners, over performance is being driven, in the main, by the need to deliver the 18 week target and slippage of PCT QIPP targets. The over performing trend has increased in month as data quality issues associated with the implementation of millennium have been retrospectively corrected. The income position is based on the first draft of performance information for April to November. 3.2. Work remains on-going for both the Trust and the PCT‟s to recognise a realistic outturn that not only reflects current activity levels but can also be used to inform recurrent activity levels in the future and be used to enable effective capacity planning 3.3. Non-delivery of key national targets for both performance and quality remains a significant contract income risk. The most significant potential risks being: fining for non-achievement of 18week referral to treat targets; non-delivery of CQUIN and income loss due to data quality and recording issues. Robust risk monitoring remains in place to enable early warning of performance and quality issues and corrective action to be implemented where required. Pay 3.4. The table below identifies the number of staff employed (using a “worked” WTE measure) for October. The Trust plan in September was 3,210 WTE versus an actual headcount of 3369 Trust Board – November 2011 Finance & Performance Report -6– WTE (actual includes agency) i.e. an adverse variance of 159 WTE. An estimate for reduction of WTE has been included to match the unidentified savings target; this is based on the Trust‟s average salary cost. Table 6 Pay Summary Table 5 WTE Summary by Staff Group 3.7. Of the £1.5m nursing overspend; £1.2m (80%) relates to supporting the continued additional escalation beds being open. To be able to fully achieve the capacity savings associated with reductions in length of stay these beds must be closed. Plan WTE Actual WTE Admin and Clerical Allied Health Professionals Consultants Other Medical Staff Nursing Other Management Support Staff Unallocated Savings 631 575 168 290 1302 2 97 354 -209 597 542 165 280 1310 0 96 348 Total WTE 3210 3339 Locum /Agency WTE by Staff Group Variance WTE 7 2 5 8 7 30 -27 -30 2 -2 16 -2 -1 -6 209 Admin and Clerical Allied Health Professionals Consultants Other Medical Staff Nursing Other Management Support Staff Unallocated Unidentified Savings Total Pay Costs 159 3.5. Pay expenditure is above budgeted levels (the plan includes all savings targets). Excluding the year to date pay savings target of £4.1m the current overspend against plan is £0.5m. 3.6. This includes Nursing £1.5m above plan (£0.6m relates to agency spend) Medical staffing costs are £0.2m above plan. Waiting lists payments are £0.5m year to date. Admin and senior manager posts underspent against plan £0.3m Scientific & Technical staff and PAMs underspent against plan £0.5m Trust Board – November 2011 Finance & Performance Report -7– Annual YTD YTD Plan £000's Plan £000's Actual £000's YTD Locum /Agency £000's Total Variance £000's 14,973 20,902 23,885 18,340 45,429 54 6,054 7,707 429 -6,270 10,434 13,898 15,859 12,267 30,193 36 4,072 5,126 287 -4,141 10,083 13,235 15,620 11,946 31,139 36 3,747 5,024 2 326 152 313 477 552 131,503 88,030 90,832 1,823 2 -24 -512 73 157 1,498 0 -325 -100 -284 4,141 4,624 Table 7 Non Pay Category 3.8. Agency spend must be the first target for reduction, the current rate is £0.2m in the month. Non Pay 3.9. The Non Pay table overleaf shows the Trust‟s position to date, which is £4.7m adverse to plan. Of this £1.9m relates to the shortfall against the Savings target. YTD Plan £(000's) YTD Actual £(000's) YTD Variance £(000's) Clinical Supplies & Services Consultancy Services Depreciation & Impairments Establishment Expenditure General Supplies & Services Miscellaneous Premises & Fixed Plant 34,304 725 8,219 3,049 2,994 6,335 11,796 22,500 472 5,479 2,034 2,251 4,083 7,884 25,747 444 5,479 1,970 3,744 3,874 8,151 3,246 -28 0 -64 1,493 -209 268 Total Non Pay Costs 67,423 44,704 49,410 4,706 3.10. Excluding savings and QIPP the Trust is overspent against plan by £1.5m year to date. The main overspend includes Drugs £0.2m, Medical and surgical supplies £1m, Premises costs £0.2m. 3.11. Pathology remains a cost pressure £0.3m year to date; this pressure comprises of blood, HPA contract and pathology reagent contracts. 3.12. In the Medicine division Cardiology and Gastroenterology are overspent as a result of increased activity £0.3m.Radiology is overspent £0.3m including external services for MRI. 3.13. Non pay controls have been implemented to ensure division are limiting expenditure within control totals. The YTD position on Non pay is currently £0.5m higher than the same period last year. Trust Board – November 2011 Finance & Performance Report Annual Plan £(000's) -8– 4. Cost Improvement Plans (CIPs) 4.1. The Trust total savings target for 2011/12 is £17.3m. 4.2. This is a combination of internal efficiencies related to 2011/12 (£8.3m) and capacity reductions associated with Demand Management schemes (£5m). In addition the Trust had £4m unidentified CIP brought forward from 2010/11. Savings delivery 2011/12 B/F savings 2010/11 Trust efficiency requirement PCT QIPP savings (delivered through income) Annual Target £'000 Identified £'000 Gap £'000 FYE Identified £'000 FYE Gap £'000 4,010 8,300 5,000 2,422 4,142 5,000 1,588 4,158 0 2,377 5,369 5,000 1,633 2,931 0 17,310 11,564 5,746 12,746 4,564 4.4. The year to date performance is outlined in table below, £11.3m savings were profiled for delivery in the first eight months of 2011/12, of which £6.4m were achieved, this includes £2.9m of income over performance offsetting the PCT QIPP non delivery (56%). 4.5. Action plans are currently being developed in conjunction with a review of divisional performance against forecast to close the current gap; including mitigating schemes for non-recurrent savings. Table 9 Savings delivery YTD Trust savings PCT QIPP YTD Target £'000 YTD Actual £'000 YTD Variance £'000 8,341 2,917 3,450 2,917 4,891 0 11,258 6,367 4,891 5.5. It is unlikely the Trust will close the full £5.7m in year savings gap this year; the focus is to ensure that the full year gap of £4.6m is closed to ensure the Trust is in the best position next financial year. Schemes which have slipped in year are currently being reviewed to ensure maximum impact of savings for 2011/12. Any shortfall against savings is being mitigated in part through income over performance from SLA contracts in 2011/12. 4.3. The current shortfall against the savings target of £5.8m is being offset through non recurrent measures and the over performance against SLA income. At this stage this income has been assumed to be recurrent, this may be challenged by the PCT during the 2012/13 contracting round. Trust Board – November 2011 Finance & Performance Report -9– 5. Statement of Financial Position (Formerly Balance Sheet) As per 2010/11 Statement of Financial Position as at 30th November 2011 £'000 154,245 789 82 1,626 156,741 3,182 9,331 82 2,000 14,595 (12,483) 0 (7,200) (231) (1,049) (20,963) (6,367) (345) (6,500) (2,066) 0 (8,911) 141,463 (135,545) 39,237 0 (38,957) (6,198) (141,463) Non-Current Assets Property, Plant and Equipment Intangible Assets Other Financial Assets Trade and Other Receivables Total Non-Current Assets Current Assets Inventories Trade and Other Receivables Other Financial Assets Cash and Cash Equivalents Total Current Assets Current Liabilities Trade and Other Payables Other Liabilities DH Working Capital Loan Borrowings Provisions for Liabilities and Charges Total Current Liabilities Net Current Assets/(Liabilities) Non-Current Liabilities Borrowings DH Working Capital Loan Provisions for Liabilities and Charges Other Liabilities Total Non-Current Liabilities Total Assets Employed Finance by taxpayers' equity Public Dividend Capital Prior Year Retained Earnings Current Year Retained Earnings Revaluation Reserve Donated Asset Reserve Total Taxpayers' Equity Trust Board – November 2011 Finance & Performance Report Last Month balance Actual to date £'000 £'000 Movement YTD In Month £'000 £'000 155,992 839 82 1,507 158,420 156,766 839 82 1,506 159,193 2,521 50 0 (120) 2,451 774 0 0 (1) 773 2,819 10,478 82 5,877 19,256 3,019 12,354 82 5,001 20,456 (163) 3,023 (0) 3,001 5,861 200 1,876 0 (876) 1,200 (17,544) 0 (6,772) (132) (1,373) (25,821) (6,564) (18,201) 0 (6,772) (123) (1,347) (26,443) (5,987) (5,718) 0 428 108 (299) (5,481) 380 (657) 0 0 9 26 (623) 577 (345) (6,500) (2,066) (345) (6,500) (2,066) (8,911) 142,944 (8,911) 144,295 0 0 0 0 0 2,832 0 0 0 0 0 1,350 (135,545) 39,237 (251) (38,957) (7,428) (142,944) (135,545) 39,235 (1,452) (38,957) (7,575) (144,294) 0 (2) (1,452) 0 (1,377) (2,831) 0 (2) (1,201) 0 (147) (1,350) 5.1. Non-Current Assets have increased year to date by £2.5m, as a result of capital expenditure on CHP project, Millennium IM&T project, offsetting the depreciation charge. 5.2. Current Assets: year to date have increased by £5.9m, debtors have increased by £3m, mainly related to NHS income for contract over performance. The Trust is having on-going discussion with our main commissioners to resolve outstanding queries and issues around contracts. 5.3. Current Liabilities: year to date have increased by £5.5m mainly because invoices accrued, this reflects the difference between timing of receipt of invoices and payment. 5.4. Capital and Reserves: Within reserves, retained earnings have changed in line with the surplus earned for the year-todate. The Donated Asset reserve has increased by £1.4m which reflects new assets donated to the Trust to fund the NICU development and a transfer to income to reflect depreciation charges on previously donated assets. - 10 – 6. Cash Statement of cash flows YTD Plan £'000 Operating surplus/(deficit) YTD Actual £'000 YTD Variance £'000 14,961 10,493 0 202 Movements in: Inventories Receivables Payables Provisions (4,468) 0 202 (1,643) (2,903) (1,260) 2,806 5,169 2,363 299 518 (219) Reversal of accrued finance costs 0 Cashflow from operations 15,905 13,260 (2,645) Capital expenditure (9,525) (6,674) 2,851 Asset disposals Cashflow before financing Net interest paid Dividend paid Repayment of borrowings 0 6,380 0 0 6,586 206 (144) (144) (2,349) (2,636) (287) (936) (806) PDC Received 0 130 0 Net in/(out)flow 3,095 3,001 Opening cash balance 2,000 2,000 0 Closing cash balance 5,095 5,001 (94) Trust Board – November 2011 Finance & Performance Report 6.1. The current cash balance is £5.0m slightly below the planned balance of £5.1m. The cash position has deteriorated in month due to on-going issues around income for over performance in the month due, however, this is expected to improve over the next month. (94) 6.2. At this stage of the financial year we remain confident that the cash forecast will be achieved at year end; however given the risk to the I&E forecast outlined in section 3, the requirement to pay back the loan, and the options regarding capital outlined below, the cash position will need careful monitoring to ensure we can meet our cash commitments. - 11 – 7. Capital Annual Budget 2011/12 Capital Report as at 30 November 2011 Capital theme Trust YTD position Outstanding Spend Commitments under/(over) £'000 £'000 £'000 Total Donated Trust £'000 £'000 £'000 Depreciation (Purchased Assets) Loan Repayment Additional DH capital Charitable funds 7,000 (1,000) 6,000 2,600 0 0 0 2,600 7,000 (1,000) 6,000 0 Total source of Funding 14,600 2,600 12,000 6,674 1,538 3,788 Estates Five year programme IM&T Medical equipment Leased Assets Strategic capital schemes Planned (deferral)/underspend 764 1,134 1,124 53 10,780 745 0 0 505 0 2,095 0 764 1,134 619 53 8,685 745 533 540 225 52 5,324 0 177 13 1 0 1,347 0 54 581 393 1 2,014 745 Total Capital Plan 2011/12 14,600 2,600 12,000 6,674 1,538 3,788 Source of Funding Trust Board – November 2011 Finance & Performance Report 7.1. The capital plan has been through a reprioritisation process to identify where capital funds should be allocated post changes to funding in year this year‟s Capital Resource Limit (CRL) has been revised to £12m, which consists of a depreciation reserve of £7m, plus an additional £6m DH loan funding and net of historic loan repayment of £1m. The Trust also anticipates £2.6m of its capital programme to be funded from charitable funds. 7.2. The year to date capital spend is £6.7m and it is anticipated that the CRL will be spent in full. 7.3. The main schemes that have progressed to date are the CHP energy scheme £3.0m year to date £0.5m on the IM&T programme incorporating the Millennium upgrade £0.9m on the Victoria Ward upgrade scheme £0.5m on Pathology laboratories - 12 – 8. Financial Risk ratings Financial risk ratings Criteria Underlying Performance Achievement of Plan Financial Efficiency Financial Efficiency Financial Efficiency Overriding rules Overall rating Scoring Criteria Metric Weight 5 4 3 2 1 YTD Plan rating 2011/12 EBITDA Margin % 25% 11% 9% 5% 1% <1% 5 7% 3 EBITDA achieved % 10% 100% 85% 70% 50% <50% 4 68% 3 Return on assets % 20% 6% 5% 3% -2% <-2% 5 3% 3 I&E surplus margin 20% 6% 5% 3% -2% <-2% 5 0.8% 3 Liquid days ratio 25% 35 25 15 10 <10 2 4 1 Overriding rules Overall Rating YTD Score 2011/12 YTD Risk 2011/12 FRR= 2 if two financial criteria scored 2 3 2 8.1. The current monitor risk rating shows we would achieve a 2 as at the end of November. This is the below the minimum risk rating level for the Trust to be authorised as a Foundation Trust. 8.2. The Trust has a level 2 in two areas and liquidity is 4 days which is level 1 (excluding the assumed working capital facility of £15m available as FT). The Trust is not delivering a large enough surplus, year to date to achieve above of 2. This is in part driven by the lower than plan I&E surplus. 8.3. To improve this ratio for the rest of the year the Trust will need to significantly improve its income and expenditure surplus, and achieve further cost improvement plans. 8.4. The risk remains if the Trust does not deliver a year end £6.2m surplus position both it‟s I&E risk ratings and cash rating mean the Trust cannot precede to Foundation Trust authorisation. 8.5. In addition to Monitors ratings the Trust plans to achieve the key statutory duties for a Trust namely, breakeven duty, capital absorption rate and better practice payment practice code. Trust Board – November 2011 Finance & Performance Report - 13 – 9. Key and Abbreviations Throughout the report: Income, surpluses and favourable variances are expressed as negative values, denoted by figures in brackets e.g. (25). Figures expressed in £k means £1000s; so, £25k = £25,000. Expenditure and adverse variances are expressed as positive values. In simple, brackets equal good, no brackets equal bad. Capex Capital Expenditure CIP Cost Improvement Programme (see CIP below) CNST Clinical Negligence Scheme for NHS Trusts (Insurance policy) EBITDA Earnings before Interest, Tax, Depreciation and Amortisation Financing Capital Charges and Depreciation FRP Financial Recovery Plan I&E Income and Expenditure Account NESC Non Medical Education Funding PGMC Post Graduate Medical Centre CIP Cost Improvement Plan (savings target) WTE Whole time equivalent (measure for headcount) YTD Year to Date BPPC Better Practice Payment Code Trust Board – November 2011 Finance & Performance Report - 14 –