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Recovery Plan Version th March 2013

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Presentation on theme: "Recovery Plan Version th March 2013"— Presentation transcript:

1 Recovery Plan Version 6.0 18th March 2013

2 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

3 Executive Summary Context The Recovery Plan - Objectives
As at February 2013, The Rotherham NHS Foundation Trust (“TRFT”) is facing a number of significant challenges. These were highlighted in the Monitor letter dated 15th Feb 2013: A challenged financial position resulting from a failure historically to deliver savings plans – TRFT has made a net loss in each of the past 3 financial years. Given reducing top-line income in future years, unless action is taken this position will worsen. Clearly, this trend is not sustainable; A poorly executed IT implementation – the implementation of a new electronic patient record (“EPR”) system in FY 2013 has not gone well. As a result, the accuracy of information around clinical activities has declined, there is clear evidence of decreased clinical productivity and increased pressure on front line staff. In addition, the ability to recover income for activity performed has been hampered. A significant amount of work is required to rectify the position; and A weak governance environment – outdated Board governance arrangements and management structures have resulted in a lack of clear accountability and weak links into front line staff, resulting in a repeated failure to deliver plans. This Recovery Plan outlines a proposed path forward. The Recovery Plan - Objectives This High Level Recovery Plan (“the Plan”) has been compiled in February and March It aims to address the key concerns raised in the Monitor letter, specifically: To outline a path to sustainable Financial Recovery – this Plan forecasts at a detailed level the result for FY 2014, together with the savings plans in progress/ to be taken to reduce operating costs by £13m in that year. In order to mitigate risk to patient quality, initial actions are focused on “corporate overhead” and other areas deemed “lower risk” to patient care. For future years (FY2015/2016), savings plans are at a higher level. The detail will be worked up for the strategic plan due 30 September 2013; To outline the current EPR position with the steps required to rectify this – this plan provides an update on EPR together with the key issues faced and the timetable to develop a plan to resolve these issues; and To start the process of remedying governance issues – one of the key factors behind the failure to deliver previous plans is likely to have been the lack of clear accountability in the management structure. Through steps already initiated, the structure has been slimmed down and new clear lines of reporting introduced. However, further work is required. It aims to do this in a logical and sequenced manner while at all times preserving the high quality of patient care.

4 The Plan - Overview 12 months Phase 1 – 4 Months
“Stabilisation and Control” Phase 2 – 4 months “Operational Excellence” Phase 3 – 4 months “Strategic Initiatives” Phase 1 - Key Activities Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: Corporate overhead of £21.9m. Target reduction of £5m in Year 1; Tactical control areas. Target reduction of £4m in Year 1; and CSU and divisional plans of £4m in Year 1. Establish underlying EPR position and options. Develop plan for rectification with costings. Build infrastructure to drive clinical productivity. Phase 2 - Key Activities Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. Work on synthesizing community and acute services and review divisional linkages. Review and initiate larger scale opportunities (e.g. outsourcing). Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). Prepare and submit detailed 3 year plan to Monitor. Review longer term strategic opportunities for the Trust. Recruitment of permanent CEO.

5 The Plan – Initial Financial Projections
Key messages The forecast outturn for the current financial year (FY 2013) is a deficit of £6.5m after restructuring costs of £4m. The recovery plan starts from this point. The Recovery Plan targets savings of £13m in FY 2014, underpinned by Phase 1 activities focused on “lower risk” savings targets. These are: A significant reduction in corporate overhead (£5m); Tactical controls around pay / non-pay expenditure (£4m); and CIPs schemes put forward by CSUs of £4m (£2.5m against current run rates). On current planning assumptions, savings at this level will ensure that the Trust breaks even (prior to restructuring costs) in FY This forecast assumes further EPR costs of £350k (should the final EPR report show a materially higher amount, then the Plan will need to be updated). The Plan also incorporates increased spending (Francis report) and other identified cost pressures. Savings in FY 2015 are based on delivering an additional £13m of efficiencies - The critical piece of work in driving this will be the strategic planning process, which will need to include all key constituents such as Governors, Board, execs, CDs, consultants, specialist, matrons, CCG Board and GPs, and LA’s.

6 Key Risks and Mitigations
Ensuring that Savings Initiatives do not Risk the Quality or Safety of Patient Care – this initial Recovery Plan has been specifically designed to drive a rapid improvement in financial position while minimising risk to patient care. Specifically: The Plan has deferred any closure of wards or removal of outpatients capacity, until EPR is functioning more effectively and until more reliance can be placed on performance statistics. Ward closures were previously planned for December 2012 and outpatients capacity was also scheduled to be removed – these actions have been delayed and will only be progressed once it is demonstrably safe to do so; The Plan initially focuses on “non-patient” facing areas (e.g. corporate overhead) where cost can be removed without a direct impact on patient care. Given stresses on front line operations and the impact of EPR, further detailed review will be undertaken before implementing changes in front line services; There is clinical and front line representation into all tactical controls – actions will only be taken in conjunction with the front line staff in each area. In many cases, the tactical controls simply represent application of suitable financial controls (e.g. negotiating down supplier rates, ensuring that basic reconciliation processes are followed); The Plan specifically assumes that all wards and other clinical areas are recruited to establishment. This was not the case at the end of the last financial year when a significant number of vacancies had been allowed to build up. In addition, an investment of £1m is provided in the Plan for additional investment in nursing staff as a result of the Francis Report; and The only CSU schemes included in this Recovery Plan have been QIA’d at the end of 2012 and have been put forward by the clinical leads in each area. This has been confirmed with the Executive Directors of Nursing and Medicine. Governance and Management Arrangements - The Trust has historically suffered from ineffective governance and consequently poor delivery of major projects in recent years (e.g. EPR, staff consultation, delivery of savings). As a starting point, a simplified Executive structure with enhanced representation of Clinicians and other staff groups is in the process of being implemented. There will need to be significant ongoing work on re-engaging and listening to staff, simplifying management structures, improving information reporting and board governance over the coming year to ensure a more effective Governance environment is established. Specifically, a cohesive management team and Board relationship must be established. EPR – issues with EPR in FY 2013 have resulted in lost activity and income as well as creating a barrier to implementing operational efficiency improvements. The precise approach, timing and costs to fix EPR are yet to be finalised. An EPR expert has now been engaged by the Trust specifically to identify the major issues faced, to outline the potential solutions and to provide a plan of rectification with timings and costings. The current plan includes estimated “rectification” expenditure on EPR of £350k. Should the final EPR report require a significantly higher investment, the Plan will need to be updated. Cash and Capex – there is no immediate risk to cash and liquidity at TRFT. However, in the strategic plan, there will need to be a consideration of the longer term financial position of the Trust and funding of appropriate investment in the longer term. This will be covered in the strategic plan.

7 Monitor Letter (15tH February 2013) - Next Steps
Ref Requirement Actions (x Ref) 6.1 “The Trust is required to report regularly on progress toward delivery of its turnaround plan, the specific milestones set out in Appendix 2 and described below and to meet with Monitor on a monthly basis until we are assured that the Trust is returning to full and sustainable compliance with its terms of Authorisation” Peter Lee (“PL”), TRFT Chair, is in regular dialogue with Monitor (PL) Turnaround (“Recovery”) Plan to be provided to Monitor 18th March 2013 (TB) Monthly meetings to be set up with Monitor (KR) 6.2 “Monitor will agree with TRFT a programme of assurance to ensure that the Recovery Plan is both feasible and likely to deliver sustainable turnaround without compromising on patient safety. The Trust’s Recovery Plan should detail clear deliverables and accountabilities with defined timescales so progress can be tracked on a timely basis by the Trust including the Trust’s board and kept under review by Monitor ” External review of Recovery Plan to be scoped, commissioned and copied to Monitor (TB) Overall plan timings (included) Key deliverables timings (included) 6.3 “The Trust is required to resolve outstanding issues relating to EPR, including undertaking a diagnostic review of the EPR system and the related issues and necessary solutions. The diagnostic and related action plan to be shared with Monitor (with clear deliverables and accountabilities…” External review of EPR initiated (PB/ LB) Report due April (PB/LB) Report to Monitor 30 April (PB/LB) 6.4 “Monitor has residual concerns relating to Board Governance. We are aware that the Trust has undertaken a review of the Board and Management Reporting structures. You are required to send us details of and timescales of the actions from this work and provide Monitor with the assurance that the capacity and capability of the management team has been strengthened such that it can deliver its turnaround plan. We will expect further updates on progress at subsequent progress review meetings.” Evidence of initial actions taken in this Recovery Plan (MM/TB) Residual risks identified (MM/TB) Updates to be provided (MM/TB)

8 Monitor Milestones 2013 – Control Schedule (Appendix 2) – high level timetable
Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1. Financial underperformance leading to concerns over financial viability Monthly Financial Reporting (incl. CIPS Reporting) Recovery plan 18th March External Assurance Review April Strategic Plan 30th Sept 2. Deteriorating liquidity Weekly 13 week / 26 week cash flow shared with Monitor 3. EPR Implementation Issues (Identification and Resolution) Regular reporting of Progress Appointment of CIO or equivalent Initial Diagnostic Report 4. Weakness in Board Governance Develop plan to implement TD recommendations External Assurance over Effectiveness of new Structure and effective clinical engagement + Peer Support for Chair

9 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

10 Overview of TRFT TRFT Clinical Services Elective Care Urgent Care
Provider of Acute and Community Services from one main site: ~450 beds across 20 wards Revenue of ~ £230m Loss making for last 3 years 85% of clinical revenue from local commissioner (Rotherham) ~3,600 WTE staff including ~150 consultants Clinical Services Elective Care Revenue of ~£82m ~1,000 WTE staff CSUs: (i) Anaesthetics & Theatres (ii) General Surgery (iii) Obs & Gynae (iv) Orthopaedics (v) Specialist Surgery (vi) Urology (vii) Ophthamology Urgent Care Revenue of ~£67m ~1,000 WTE staff CSUs: (i) Radiology (ii) Lab Medicine (iii) Pharmacy (iv) Therapies (v) Photopheresis (vi) Specialist Medicine (vii) Integrated Medicine (viii) A&E (ix) Medicine (x) Specialist Medicine Community Services Revenue of ~£53m ~900 WTE staff CSUs: (i) Adults LTC/ Urgent Care/ Re-Ablement (ii) Adults – planned care (iii) Adults – Staying Healthy (iv) Children & Young People Facilities & Estates Infrastructure Net cost base of £15m (£18m gross cost base offset by £3m revenue) ~ 250 WTE staff Corporate Infrastructure Net cost base of £22m (£24m gross cost base offset by £2m revenue) ~ 400 WTE staff including Finance (49), HR (63), Medical (55), Nursing (18), IT (34), Corporate Affairs (31), Patient Services (110) and Business Information (25)

11 Elective Care Context Elective Care includes all standard DGH specialties as well as a full Maxillofacial service. In summary it employs 1,070 WTEs based at the main hospital including 75 consultants, has 11 theatres and 162 beds across 8 wards. Anaesthetics and Theatres Dedicated day surgery facility, but run together with Main Theatres to maximise usage. Centralised pre op assessment/theatre scheduling and in-house service provision of Sterile Services. 11 theatres 23 consultants 2 wards, ITU (6 beds) and HDU (8 beds) Dedicated JAG accredited Endoscopy Unit Obstetrics and Gynaecology Dedicated Outpatient facility Currently in deficit against plan, which in the main can be attributed to issues surrounding EPR particularly around volumes in outpatients and consequently in elective admissions, also had some 18ww breaches. Obstetrics includes the community midwifery services, covering around 3,000 births per annum. Midwives to births around 1 to 28 (within CNST recommended parameters). Bookings and births around 4% above last year. 1 theatre 10 consultants Gynaecology has dedicated early pregnancy/TOP facility and ward area for inpatients (14 beds) Ophthalmology Currently responding to changes in demands on their service, decreased cataract demand, increased demand in ARMD Ward facility is combined day care area and some outpatient facilities (no beds). TRFT runs the Barnsley service at the BFT site and there are 4 consultants at each site.

12 Elective Care Context (continued) Orthopaedics
85% compliance to #NOF best practice tariff, above national averages 2 wards configured between Elective and Non Elective with 60 beds 13 consultants Daily dedicated trauma lists, weekly lists extended into the evening Structure includes Orthotics, and recently integrated Podiatry services Has lost income mainly attributed to EPR implementation difficulties. Since EPR implementation waits for outpatients increased from around 4 weeks to 12 resulting in lost referrals. This has also led to some 18ww breaches General Surgery Facilities cover breast, general, colorectal and satellites clinics provided by Sheffield for vascular conditions 2 wards with 60 beds (including 6 surgical admission beds) 9 consultants Case mix issues on non-elective admissions (partly EPR related) Urology Recently completed a refurbishment, providing an integrated outpatient/inpatient (14 beds)/chemotherapy facility 1 ward with 14 beds 4 consultants Has lost income mainly attributed to issues around EPR, both in volumes and capturing the activity done i.e. Outpatient procedures Specialist Surgery (made up of ENT and OMFS & Orthodontics) Has had issues surrounding EPR particularly around volumes in outpatients in PMFS and consequently in elective admissions, also had 18ww breaches ENT Day Case and Outpatients service provision, inpatient facility at Doncaster Royal Infirmary, but care provided by RFT consultant 3 consultants OMFS & Orthodontics RFT provide inpatient facility for Doncaster Royal Infirmary Inpatients for cancer patients treated at Chesterfield by RFT consultant 5 consultants

13 Urgent Care Context The Urgent Care division employs 981 WTE staff and encompasses a diverse range of services with main emphasis on the Non Elective pathway – A & E, assessment, admissions unit and specialty beds. Direct clinical support departments such as radiology, pathology labs and pharmacy are managed within Urgent Care. In addition, relevant Elective, Outpatient and Community care pathways are provided. Urgent Care has 58 consultants and 225 beds across 12 wards. There are also 46 surge beds. Overall, the division’s financial performance is close to plan, although additional Non Elective activity has triggered 70% threshold tariff loss and additional unfunded bed costs, whilst Outpatient activity has performed under plan since EPR system go-live. Specific issues are: A & E 77,000 attendances planned. Actual trend +3% more. Spend budgets on plan, following previous investment. Integrated Medicine (General & Elderly Medicine) NEL activity 13,500 planned. Actual trend +10% more. Devolved 70% NEL Threshold loss forecast at -£1m. Outpatients 34,000 planned. Actual is -8% less (post-EPR). Cost pressures – sustained unfunded beds open & locum medics. Radiology & Medical Physics Cost pressures in sustaining access times & 7 day working Specialist Medicine Foundation Unit (Rheum, Dermatology, Haem) Outpatients 35,000 plan. Actual Follow Ups -16% down (post-EPR)

14 Community Revenue Context
Community Services transferred to TRFT in April 2011 in response to the national Transfer of Community Services directive. Services are provided in a variety of locations including Health Centres, clinics, GP practices, Schools, Children’s Centres, Care Homes and patients’ own homes. These services are in the form of individual contacts, case management and ongoing care for patients which provide care closer to home and alternatives to a hospital admission. The division has a funded establishment of 969 WTEs (made up of 50 Medical Staff, 468 Nurses, 232 AHPs, 149 admin and clerical and 70 other). Following a programme of integration the overall Community Division now incorporates a number of Acute services, these being Children and Young People, Therapies, Dietetics, Audiology and Sexual Health. Adults-LTC/ Urgent Care and Re-ablement Mainly funded by NHSR and other PCTs which is mainly block income (estimated 96%). A number of services are jointly commissioned with the local authority RMBC, with c.£800k of income associated. 2 consultants Adults – Planned Care Includes Direct Access, Dental and Audiology plus £1m of RMBC funding. Activity contract delivery pressures in Physiotherapy both in the community and in the hospital. 1 Dental consultant Adults – Staying Healthy GUM made up of £1.3m PbR, £0.9m Non-PbR (Excluded Drugs). Out-Patient activity up 5% on plan. Children and Young People Made up of Child Health and Critical Care (Paediatrics) 14 Paediatric Critical Care Beds, 24 Ward Based Beds and 8 assessment beds. Out-patient activity down on plan linked to EPR and vacant Consultant post, but not anticipated to be an issue when vacancy filled. Still on-going issue with Medical staff Job Plans and future Clinical Service Model required going forward. 8 consultants

15 Management Structure – 1st Jan 2012
Observations TRFT has, in recent years, had an outdated Management structure with unclear accountabilities and responsibilities. It is likely that the complexity of the structure has directly impacted the ability of the organisation to deliver to its plans. Evidence: Failure to synthesize community services with the acute organisation; Failure to deliver savings plans; Failure to successfully implement EPR and then to respond to the challenges faced; and A poor consultation process around proposed redundancies. Features of the structure were numerous reporting lines into the CEO (19), a very heavy executive level (9 direct non clinical reports into the CEO) and a very fragmented approach to managing Actions have already been taken to simplify the top level structure (included later).

16 Financial Performance – Recent Years
Observations In each of the last 3 years including FY 2013, TRFT has made a net loss (i.e. spent more than it has received in revenue). In the last 2 years, the loss has been in excess of £6m. In FY 2012, TRFT significantly expanded its size through the acquisition of Community Services (remunerated on a “block” basis of ~£29m). One of the key challenges facing TRFT is assessing the scope of community services that it currently provides and the relationship of these services to acute. Operating expenditure has been stable over the past 2 years at ~£218m (comprising £152m of pay costs and £66m of non-pay costs). While costs have not increased (which would have been expected given inflation and incremental drift), no significant progress has been made on cost reduction or improvement of clinical productivity. Impairments in FY 2014 mainly relate to EPR, the Mental Health Unit together with other items such as the Mortuary.

17 Financial Performance – Current Year
Observations In the current financial year (FY 2013), as at month 10, TRFT had lost £4.9m vs a planned loss of £0.9m (i.e. £4m worse than planned). The following observations can be made: The poor financial performance is a cost issue – operating expenditure is £6.4m higher than planned with £2.9m restructuring costs on top. This partly reflects the failure of the organisation to deliver its cost saving plans. Costs in total are £9.3m higher; and Commissioners have been supportive – revenue is £4.9m higher than plan, and while this has included significant non-recurrent support (as PbR income has fallen short), indications are that commissioners are attempting to support RTFT through a difficult period.

18 Income analysis (Month 10 YTD)
Observations The mix of income / activity is in-line with a typical DGH with a concentration around large specialties such as Medicine, T&O, and General Surgery. There does not appear to be any reason why such a mix of business could not be delivered on an economically viable basis from a one-site acute provider, without PFI commitments. There are a few specialties which do appear to be larger than average for a Trust this size. These include: Ophthalmology; and Rheumatology. In Phase 2 of the Recovery Plan, detailed service by service reviews (based on SLR) will be conducted to assess the productivity and quality improvement initiatives potentially available in each specialty. It will also be necessary to review in detail the community services provided to understand their linkage with acute services and to understand the best manner in which to manage patient pathways.

19 Activity analysis (Month 10 YTD)
Observations In respect of activity levels, clearly the “non-elective excess beddays” is a major operational issue for the Trust (as identified by PwC). In Phase 2 of the Recovery, a major target will be ensuring an appropriate bed base is established for the Trust so that elective activity does not continue to be “crowded out” by non-elective activity. In addition, as specialty by specialty reviews are conducted and as EPR is stabilised, outpatient attendances and capacity will need to be reviewed (again identified by PwC).

20 Consolidating analysis (Month 10 YTD)

21 Balance sheet (Month 10 FY 2013)
Observations The Recovery Plan is based on the balance sheet as presented (i.e. it assumes no significant further provisions / write-offs are required in relation to fixed assets, stocks or debtors / accrued income); Fixed assets currently includes £12.6m relating to EPR; Trade and other debtors / accrued income have significant accruals in relation to other NHS bodies including a outstanding £0.4m owed by Doncaster and Bassetlaw; Trade and other creditors / accruals includes £1.6m owed to Doncaster and Bassetlaw of which £0.3m is in dispute. Other than Doncaster and Bassetlaw there are no significant arrears of any creditors; FTFF loans are being paid over 10 and 20 years ending in 2019 (EPR £20m) and 2029 (general estates £10m) - no arrears at present; Provisions are mainly restructuring of £2.6m.

22 Liquidity – weekly cash flow to August

23 Short term remedial actions:
EPR Context Short term remedial actions: Postponed different module implementation within EPR until options appraised. Redirection of resources to data validation and analysis. Targeted training for end users – specifically in relation to 18 week validation. Review of Contact Centre systems and processes, new leadership and introduction of new Standard Operating Procedures. Comprehensive data quality analysis, including financial impact. Current outcomes in relation to the Contact Centre: Call times from an average of 9 minutes in December 2012, reduced to an average of 1 minute in February 2013. Duplicate entries reduced from 50 per week in November 2012, to 2 per week in February 2013 (lower than pre go-live levels). Additional clinic sessions, to reduce backlog, have positively influenced 18 week targets, cancer targets are now being met – GP referrals also reflect an increase (see page 25). Data Quality validation (see pages 26-27): Data quality benchmarking is comparable with peers, both Nationally and Regionally. Review of user error origins has resulted in focussed training, financial impact assessed and meeting with commissioners suggest some re-imbursement – to be agreed. The Trust has made a significant investment in EPR, both capital and revenue costs that are now forecast to be in the order of £40m (compared to the original forecast of £30m). The project ran late but went live on 1 July There have been difficulties with implementation leading to inaccurate coding of case mix and data recording, duplication and possibly lost activity. This has impacted financial performance through lost referral activity and income (estimated at £2.2m for YTD). Detailed financial impact analysis is incorporated on page 28. Root causes of financial and data quality impacts: Impacts – remediable in the short term Merging of data files from Choose & Book to Contact Centre, affecting patient referrals, patient call response times, clinic bookings, duplicate entries. This impacted on 18 week and cancer targets; and Data quality issues - relating to activity reduction, backlog of coding cases, cross mapping error in relation HRG assignment. Thus creating significant validation workload within specialties and the Information Team.

24

25 SUS Data Quality Dashboard for Apr-Nov Data – All data items
Rotherham compared to other SHA trusts

26 SUS Data Quality Dashboard for Apr-Nov Data – Inpatient data items

27 SUS Data Quality Dashboard for Apr-Nov Data – Outpatient data items

28 Financial Impact of EPR (in addition to planned spend)
Observations Excludes £2.16m of deferred capital invoice payments, these are planned to be paid in FY 2014. Re-validation of data impacted on both corporate teams and also CSU service managers. This equated to approximately £0.8m additional overtime and implementation costs. Due to the additional time taken to log information into the system, the number of patients in clinics had to be reduced, this led to loss of income due to the drop in activity levels. Commissioner fines were also incurred due to missing 18 week targets (£0.3m). Financial impact of data quality recording issues currently being reviewed by commissioners, it is hoped we will recover at least half of the £1.3m in lost income. Options appraisal of training needs plus additional staff resource has been estimated at £350k to cover the next six months of the Recovery Plan. Any further cost requirements will be considered as part of the April report. These figures relate to known costing – it is unlikely that we can calculate confidently all costs but we feel we have captured the vast majority.

29 EPR Medium to long term issues
Medium to long term actions, already in place include: Implementation of clinical engagement strategy, we are already seeing increased clinical engagement; Governance processes reviewed, strengthened and aligned to corporate governance structures with agreed Terms of Reference; Change control process reviewed and strengthened via weekly Change Advisory Board meetings, sign off and agreement prior to actions; Financial governance has been reviewed and strengthened – with regular budgetary reporting; Reconfiguration and integration of IT, Information teams and EPR staff into Health Informatics Directorate – to be complete by April 2013; Informatics Project Management Team aligned to chosen options, going forward – this will include provision of appropriate training resource; Implementation using a phased approach, will be piloted and fully integration tested within the clinical setting, prior to application in the live environment; System configured to acknowledge mandatory (CDS) and operational reporting needs is currently under review; and Clinical sign off of usability - for any new developments, will be made prior to going live, via the Clinical User Group (CUG). System and implementation specific root causes: Configuration of system not based on clinical user needs; Training limited, insufficiently proximate to go-live so as to ensure effective use; Testing was a unit based approach, failing to assess ‘whole system’ efficacy; Configuration and architecture overly complex, not tailored to meet mandatory reporting functions; Clinical engagement limited; Implementation was not phased in as granular fashion as might have been - thereby reducing risk; Financial governance – systems and processes – weak; Change management controls were not administered effectively; IT, Information and EPR project teams working in silos, not coordinating activities; and Purchased a development system with inherent issues, implemented based on a time frame rather than functional outcome.

30 Further medium to longer term actions / developments
Integration of the Health Informatics Directorate will provide a more stream lined and integrated services with savings of approximately £1m. Following systems options appraisal, a further financial impact will be costed (excluding the training costs already highlighted). Immediate training programmes will focus on data quality impact that also affect financial activity payments i.e. Not creating follow-up attendances accurately; Outpatient summary, day case incompletion - means activity not logged; Failing to record co-morbidity, cross mapping errors SNOWMED; and Procedures not recorded. Specific programmes of work that will bring immediate resolution to quality of data and activity will be: Single sign off process for clinicians, currently time consuming; De-construct some of the functionality, ambulatory orders to reduce the time for clinicians data entering in clinics; and Time to complete discharge summaries to be reduced. Additional options appraisal currently underway via external expert, this report will be completed by April 2013.

31 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

32 The Plan - Overview 12 months Phase 1 – 4 Months
“Stabilisation and Control” Phase 2 – 4 months “Operational Excellence” Phase 3 – 4 months “Strategic Initiatives” Phase 1 - Key Activities Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: Corporate overhead of £21m. Target reduction of £5m in Year 1; Tactical control areas. Target reduction of £4m in Year 1; and CSU and divisional plans of £4m in Year 1. Establish underlying EPR position and options. Develop plan for rectification with costings. Build infrastructure to drive clinical productivity. Phase 2 - Key Activities Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. Work on synthesizing community and acute services and review divisional linkages. Review and initiate larger scale opportunities (e.g. outsourcing). Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). Prepare and submit detailed 3 year plan to Monitor. Review longer term strategic opportunities for the Trust. Recruitment of permanent CEO.

33 Phase 1 – Summary of savings target FY 2014

34 Phase 1 – Corporate Overhead Reduction
Overview RFT corporate overheads (excluding facilities and estates and financing costs) are currently running at £21.9 m per annum (as per the table opposite). This represents ~10% of revenue and excludes a significant amount of overhead that is included at the CSU level. A rapid and significant reduction in corporate overheads has been targeted for the following reasons: Low risk to clinical quality and patient safety - given the impact of EPR and the operational challenges currently being faced by TRFT, Management believe that there is significant operational risk attached to some of the previous CIPS schemes (e.g. ward closures, outpatient clinic capacity). By contrast a reduction in corporate overhead is seen as possible in the short term with relatively little impact on clinical quality or patient safety; Practically achievable – significant progress on reducing the corporate structure has already been made. Over the past 3 months, 6 senior executives have departed TRFT and there has been a consolidation to 5 direct reports to the CEO. The next level of corporate restructuring is well-advanced (detail next page); and Improving governance and accountability – the streamlining of corporate functions is seen as an important step in improving accountability and governance in the Trust. The absence of clear reporting lines and overlapping responsibilities is seen as a key reason for some of the failures in governance in recent years. The cost of restructuring corporate overhead is estimated at £2-2.5m. This cost is included in the £4m restructuring cost for FY 2013 and has been agreed with commissioners. Given timings, it is assumed that, on average, 10 months benefit will be obtained in FY 2014.

35 Phase 1 – Simplification of Top Level Structure
New Corporate Structure Overview Following a Board decision in February 2013, the top level executive structure is in the process of being greatly simplified. There has been a reduction in 4 senior executives (from 9 to 5) reporting directly to the CEO. Management of several corporate functions has been merged to reduce the number or executives (e.g. HR and corporate affairs; Finance and PMO). As a result of this activity, 4 executives have or are in the process of being exited with no replacement. This will bring to 6, the number of senior executives that have left the organisation since October 2012. The new Executive team have been working through the corporate budget areas in detail over February and March with a view to reducing the overall cost of this structure from £21.8m (outturn in FY2013) to £16.7m in FY This will be achieved through the following actions: Elimination of “one-off” spend incurred in FY 2013 relating to professional fees, staff in post, agency usage. This figure is estimated to be in excess of £2m (details are currently being finalised); A restructure of staff within Corporate (with proposed consultation by the end of March) which will result in additional staff leaving the organisation; and Re-negotiation and tighter control over other non-pay categories (e.g. audit fees, graphics, legal fees). The new budgets will be finalised over the coming weeks and the consultation will commence prior to 31 March 2013.

36 Phase 1 – Tactical controls - Pay
Progress on Spend on Locum and Agency (Medical)

37 Phase 1 – Tactical controls – Headcount

38 Phase 1 – Tactical controls – Non-pay
Annualised Value (£'000) % of total expenditure Future Savings secured to date (annualised basis) Further savings being pursued Interpreters 0.1% 10 25 Taxis 234 19 12 Telecoms 845 0.4% 50 35 Computer and IT consumables 7,883 4.2% 207 39 Lab equipment and consumables 2,854 1.3% - 40 Business Administration Services 4,650 2.1% 24 Procurement - orthopaedics M&S 2,865 64 19,331 10.3% 350 175

39 Non-pay tactical controls - examples
Actions Interpreting New control in place to move from face to face interpreting to telephone interpreting. Negotiated a rates reduction on both telephone and face to face interpreting. Access to online records system to reduce staff cost of managing service. Taxis New Standard operating procedure to reduce use of taxis. New agreement to move some services to alternative transport suppliers. IT expenditure New control process to monitor IT expenditure trust wide requiring executive level approval. On going program to renegotiate cost of software licences and maintenance contracts as they fall due or find alternative suppliers. Switch from colour to black and white printing as a default. Double sided printing as default wherever possible. Process underway to replace desktop printers with communal print devices. New software to manage and reduce printing outputs costs. Program of recycling existing equipment more efficiently.

40 Phase 1 – CSU cost reductions
Observations As part of the normal budgeting process, CSUs are requested to identify CIPs as a saving against prior year budget (which are then removed from the CSU budget for the following year). The items opposite are a summary of the 10s of individual savings schemes for the CSUs and are a mixture of WTE or PA reductions together with specific non-pay savings identified. These schemes have been QIA’d and signed off by the Nursing and Medical Directors. The Recovery Plan is based on current cost run rates and therefore only recognises the element of cost reduction which is incremental (i.e. no vacancy releases). As shown the second column, an assessment has been made of the truly incremental savings as opposed to cost budgets that are already underspending.

41 The Plan - Overview 12 months Phase 1 – 4 Months
“Stabilisation and Control” Phase 2 – 4 months “Operational Excellence” Phase 3 – 4 months “Strategic Initiatives” Phase 1 - Key Activities Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: Corporate overhead of £21m. Target reduction of £5m in Year 1; Tactical control areas. Target reduction of £4m in Year 1; and CSU and divisional plans of £4m in Year 1. Establish underlying EPR position and options. Develop plan for rectification with costings. Build infrastructure to drive clinical productivity. Phase 2 - Key Activities Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. Work on synthesizing community and acute services and review divisional linkages. Review and initiate larger scale opportunities (e.g. outsourcing). Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). Prepare and submit detailed 3 year plan to Monitor. Review longer term strategic opportunities for the Trust. Recruitment of permanent CEO.

42 Phase 2 Overview Issues to be reviewed
Divisional structure and linkage with community services Specialty productivity opportunities based on solid KPIs Excess bed-days, bed base Outpatient capacity Outsourcing and re-contracting opportunities Development of comprehensive strategic plan working with all key stakeholders, including: Governors Board (Execs and Non Execs) Clinical and Non Clinical Leadership (CDs, Consultants, Specialists, Matrons) Commissioners (CCG, NCB) Other key external stakeholders (Local Authorities, Social Services, etc)

43 Phase 2 – Illustrative Operational Efficiency Analysis (1)

44 Phase 2 – Illustrative Operational Efficiency Analysis (2)

45 Restructuring costs

46 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

47 Financial Performance – 3 year forecast summary
Observations The Trust plans to return to surplus over a 2 year period. Other than further non-recurrent support for restructuring of £5m in FY 2014, income reflects a gradual phasing out of non-recurrent support from NHSR. Costs are based on current underlying run rates of expenditure adjusted for cost pressures and cost reduction plans. In addition to inflationary pressures, specific cost pressures include the ongoing resource for EPR and additional nurses in light of the Francis report recommendations. Forecast includes cost reductions over the 3 years of £36m phased £13m, £13m and £10m in FY 2014 – FY Restructuring costs associated with the delivery of cost reductions are estimated to be £5m in FY 2014 in addition to the £4m in FY 2013.

48 Financial Performance – Current underlying performance
Observations The forecast outturn for FY 2013 of deficit £6.5m has been adjusted for non-recurrent items that should not occur in perpetuity and also run rate cost changes that have already implemented in FY 2013 to assess the current underlying performance of the Trust (as a basis for comparison with its future forecast). Non-recurrent income, Recovery Plan costs (e.g. Bolt Partners and PwC), Restructuring costs and the proposed EPR impairment have been removed. To the extent any of these may re-occur, they have been added back as non-recurrent income or cost pressures in FY 2014 (next page). The run rate adjustments reduce the cost base to the ongoing level of expenditure seen in Q3 and Q4 (i.e. reflecting run rate savings (CIPs) that were achieved in Q1 / Q2). No run rate adjustment has been made in relation to lost income attributed to EPR issues. This suggests that the underlying level of underperformance is currently c. £7.5m deficit.

49 Financial Plan FY 2014 Analysis of specific cost pressures included in the plan are set out on the next page.

50 Financial Performance – FY 2014
Observations The contract income adjustments are based on the 3 year framework agreement with NHSR together with non-recurrent support including £5m for Restructuring purposes and the re-investment of FY 2014 tariff deflation. Inflationary pressures have been included at 1% for pay and 2% for non-pay. Incremental drift is based on the last actual % calculated in March 2012. Specific cost pressures totalling £2.8m are set-out opposite and a further 2% contingency against current costs has been included. Other includes: An element of recovery of underperformance against contract in FY 2014 (due to EPR); A more prudent assessment of other income for FY 2014; and Reduced depreciation on a reducing NBV and (depreciation and impairment exceeding capex).

51 Financial Performance – FY 2015
Observations Contract income is in line with the 3 year framework agreement with NHSR and the remaining non-recurrent support (£5m restructuring and £1.6m tariff re-investment) is assumed to drop away. Inflationary cost pressures are assumed to be as for FY 2014 with any additional cost pressures assumed to be covered by contingency (built into FY 2014). No further restructuring costs assumed. Cost reductions of £13m assumed. Other includes removal of additional Recovery costs (e.g. EPR, Bolt Partners).

52 Financial Performance – FY 2016
Observations Income has been adjusted for growth, QIPP and tariff deflation in line with prior years. Inflationary pressures have been reflected but no significant further cost pressures are assumed (bearing in mind the rolling contingency built into prior year forecasts). Cost reductions of £10m are assumed, lower than in prior years but without the benefit of Restructuring costs or support to implement.

53 Income forecast summary FY2013 – FY2016
Observations NHSR provides nearly 80% of total income via contract income, community services and non-recurrent support. From 1 April, this income will largely be from the new CCG but elements of funding will move to the NCB (e.g. Specialised services such as Photopheresis) and RMBC (e.g. GUM). NHSR income has been forecast forward on the basis of the 3 year framework agreement adjusted for latest expectations of tariff deflation and non-recurrent re-investment indicated by NHSR. Non-recurrent support of £11.2m is forecast to drop away over FY 2014 and FY 2015 (activity related £10.5m and other income, £0.7m). Together with other growth and inflation adjustments, this has the impact of reducing overall income by some £18m (8%) over the next three years. In addition to RNHS, TRFT also receives income from a number of other local PCTs and income for other activities that sit outside contract. Aside from RNHS, income is assumed to remain relatively constant throughout the forecast (both a small risk (tariff deflation) and opportunity (increased activity)). Other income comes from many sources and includes Educational Income, Recharges to third parties, R & D and Car Park income.

54 Pay forecast summary – FY 2014
Observations Pay has been forecast by reference to current run rates adjusted for inflation and other specific pressures (e.g. Capitalised EPR people coming back into I&E and extra nurses light of the Francis report recommendations) offset by savings / reductions. At January 2013, the Trust had 3,560 WTE which is lower than average for the year to date reflecting reductions already achieved in the year (and shown as a run rate reduction in the assessment of current underlying performance). To achieve the FY 2014 forecast implies a further net reduction from current WTE of 81 (based on average wages). It is expected that the majority will be from Corporate areas (and therefore not impacting on clinical delivery) through Phase 1 ‘Stabilisation and Control’. Actual reductions required may be smaller due to the mix being weighted to higher paid employees.

55 Balance sheet forecast summary
Observations Fixed assets reduce over the period with residual capex only exceeded by annual depreciation. No major projects are assumed. Working capital is assumed to remain relatively consistent throughout the period. No significant improvement in debtor collection or creditor extension is assumed. FTFF falls by £8m over the 3 years reflecting scheduled half yearly repayments. No further drawdown or repayment holiday has been assumed (although consideration is being given to both as a solution to potential medium term funding issues). Provisions for Restructuring are made in both FY 2013 and FY 2014 (funded by non-recurrent support from NHSR) to be paid during the year and early in the following year (FY 2014 and FY 2015). Cash deteriorates over the period which is due to ongoing deficits in the short term allied to financing obligations. The effect of financial restructuring funding received in FY 2013 and FY 2014 partially being paid out in early FY 2014 and FY 2015 – this is highlighted on the cash flow summary on the next page – also has an impact.

56 Cash flow forecast summary
Observations Capex includes a further £2.3m in relation to EPR in FY 2014 (full provision for the final stage payment in dispute) but capex is otherwise assumed to be kept to a minimum (although sufficient for critical requirements to maintain clinical and service standards) – see next page for further analysis. Restructuring payments in FY 2014 and FY 2015 are funded through non-recurrent support in the prior year. No FTFF draw down is assumed although the Trust plans to seek a 2 year repayment holiday to provide additional headroom. Financing payments (excluding PDC) are currently £3.8m p.a. of which £2.6m relates to existing FTFF loans. Despite the mitigating effects of the Recovery plan, the Trust is likely to continue losing cash over the next two years (effectively to £nil) and on a monthly basis (before new funding or cash management) is forecast to run into overdraft during FY2015 – see monthly chart and observations on page 58. This is largely due to the withdrawal of non-recurrent support which has been significant historically. As highlighted by the simple analysis opposite, the underlying net cash flow is actually forecast to significantly improve from a very low base.

57 Capex forecast Observations
Capex requirements will be reviewed as part of the strategic planning process. In the interim, the projections include the levels of capex in the table opposite. Other than in relation to EPR, capex has been relatively restricted in recent years and as shown by the forecast (by comparison to annual depreciation) this is expected to continue over the forecast period (in the absence of further major projects) with an uplift in FY 2016. Estates – the FY 2014 forecast covers essential schemes (£1.2m) plus a further allowance for schemes that should ideally go ahead which is assumed to continue at a similar level in FY 2015. EPR includes a further £2.3m FY 2014 (full provision for the final stage payment in dispute) but further expenditure on EPR is to be kept to a minimum. There is a long request list for medical equipment which will be assessed on a case by case basis through the normal investment committee (based on clinical need and pay back). Other is to cover the further ad-hoc requirements that are likely to arise over time.

58 Monthly cash forecast Observations
There is no immediate liquidity issue for the Trust on even the most pessimistic forecasting basis. However, clearly the Trust cannot continue to lose money. With active liquidity management and the addition of “contingency” (through a WCF and/or repayment holiday), the Trust is confident that liquidity can be managed through the planning period. The graph opposite illustrates this. There is no discernible seasonality in the cash flow in relation to working capital movements and therefore movements in cash tend to relate to large income or payments including: Non-recurrent income; Capex (EPR); Loan repayments; and PDC. EPR final instalment (in dispute) of £2.3m is assumed to be paid in December 2013. Loan repayments are half yearly, £1.1m in June and December and £0.25m in September and March for existing loans. PDC is paid in September and March each year.

59 FRR forecast Observations
Based on the forecast the Trust is expected to be FRR 2 for FY 2013 (subject to Monitor override) and is likely to remain so until FY 2016 when it is forecast to improve to 3. Financial efficiency shows a steady improvement over the period. Liquidity rating is and remains an issue due to relatively low cash reserves. Calculation shown alongside excludes any WCF.

60 Service Risk Rating forecast
Observations The new Service Risk Rating is in consultation although the SRR has been calculated on the guidance currently available. This assumes that a WCF will not meet the ‘committed’ facility criteria. This suggests the Trust will reach 3 in FY 2016 (on the assumption of rounding – up. If a FTFF loan repayment holiday is taken, the improvement to 3 may be accelerated with the improvement in Capital servicing capacity.

61 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

62 Current Governance Arrangements
Observations Along with the simplification in Executive Structures, there is a clear need to streamline the number of corporate meetings held and to clarify the roles and responsibilities of each of these meetings. The current governance structure is unwieldy and has not been effective in ensuring transparency and good governance (e.g. EPR, staff consultation, savings programmes). Specific issues noted: The number of meetings – there is a need to greatly reduce the number of meetings required to “satisfy” governance and reduce the administrative burden these place on staff. As the organisational structure is simplified, the meeting structure needs to be greatly simplified so that execs and staff have time to deliver commitments; The role and remit of meetings – at present, there are several meetings, which although they have theoretically clear Terms of Reference, it is not clear what their practical remit is (e.g. audit & assurance; NRATs; CMB). There is a need to ensure that executive, staff and non-executive time is used efficiently and that there are clear parameters and time limits to each meeting. As required

63 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

64 Quality Governance Framework
Observations The Trust Quality Governance Framework and Monitoring process, that includes non-executive scrutiny has been identified as very favourable by KPMG. The framework is assessed monthly by the Board to provide evidence for quarterly sign off to Monitor. An evidence database has been developed and all documents, data and information relating to the framework are updated and stored on the system. The end of year score will remain as those highlighted in the left hand diagram. The data quality score has been impacted by EPR issues, although we now have evidence this is improving we will retain red score until Q1 FY 2014 assessment. We anticipated changing 2a this quarter to 0, however we will await the feedback from Monitor in relation to the Recovery Plan before re-assessing this score. Overall we have moved from a score of 3.5 Q1 FY 2013 to 3.00 at Q4. The target was 2.5 at year end however the data quality issues from EPR implementation have prevented this target being reached.

65 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

66 Forecast assumptions – Income

67 Forecast assumptions – Expenditure

68 Forecast assumptions – Cash flow

69 Contents I Executive summary 2 II The Current Reality and Context 9
III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality Appendices Forecast assumptions Monthly board scorecard

70 Monthly Board scorecard – Exec Summary

71 Monthly Board scorecard – Finance and Governance

72 Monthly Board scorecard – Quality Governance

73 Monthly Board scorecard – Quality

74 Monthly Board scorecard – Efficiency

75 Monthly Board scorecard – People


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