Presentation on theme: "The outturn financial position for the Trust at 31 March 2015 was a surplus of £0.27m compared to a revised plan surplus of £0.2m summited to Monitor in."— Presentation transcript:
The outturn financial position for the Trust at 31 March 2015 was a surplus of £0.27m compared to a revised plan surplus of £0.2m summited to Monitor in December. A detailed analysis of the significant variances between forecast outturn and the actuals for the year across the categories of income, pay and non pay can be found on page 4. For the month of March, the actual performance was a deficit of £0.3m against a surplus plan of £0.45m. There were a number of significant non pay variances within this, including a £0.7m provision for backdated Novell maintenance costs which the Trust continues to seek legal advice on. Also there was £0.4m of blood product expenditure accounted for in month. These items were offset in part by an upward revaluation of fixed assets (due to significant changes in the building indices) which has resulted in a £0.5m favourable accounting adjustment to the bottom line in month. The Trust had agreed with the Commissioners and the Auditors a method of forecasting month 12 income based on the first 2 weeks of activity in April. This was to meet the tight reporting deadlines for year end given the timing of the Easter holidays. The reported financial position reflects this forecast income with a provision in for actual activity delivered in the last 2 weeks of April. Excluding the income provision shown as non pay, clinical income for month 12 was £0.5m above plan, with Medicine over-performing across all points of delivery including electives, outpatients, A&E and cost per case, whilst Surgery and Critical Care was slightly below plan (please refer to page 2 for details). Pay expenditure moved out by £0.9m in month, however a significant amount of this was offset by over recovery of non clinical income, including research and recharged income. Non pay moved out by £1.4m in month above the forecast outturn position, this included unexpected expenses such as the Novell licence issue (£0.7m), income provision (£0.35), and blood product invoices (£0.4m). Full year efficiency delivery against the target of £6.78m was £4.99m (73%). However within this, there were £1.6m of non recurrent plans, therefore recurrently the Trust delivered 50% of the full year target. The level of carry forward efficiency target is therefore £3.1m which includes £1.5m of unidentified schemes. REPORT TO THE TRUST BOARD OF DIRECTORS HELD IN PUBLIC ON 28 APRIL 2015 Finance Report – 12 Months to 31 st March 2015 Summary of key points 1
2 Does not include items accrued last month of £973k
The efficiency target for 2014/15 was £5.1m, added to this was unachieved efficiency targets from the previous year of £1.68m. As a result, a total efficiency target of £6.78m was required to be delivered in 2014/15 for the Trust to meet it’s overall financial plan. Of the target for the year, circa £5.3m of plans were identified (£4.4m at month 11), this included £1.6m of non recurrent plans (£0.8m last month). For the year, efficiency schemes delivered a total saving of £4.99m (£3.6m last month), this significant increase in month was due to the recognition of non recurrent plans including the release of capacity funding and over recovery of income in specific specialties. Achievement against the full year target was 73% (58% as at month 11). However, this reduces to 50% when non recurrent plans are excluded. This is a significant recurrent shortfall which needs to be factored into the financial plan for the new year. A different approach is being taken to address the 2015/16 efficiency targets which includes a number of corporate schemes led by the Project Management Office and numerous division specific schemes. Table 1 - Summary of Trust’s Efficiencies 3
Performance Against Reforecast Income and Activity Plans (Surgery & Critical Care and Medicine) 4
Year End Forecast Position V Month 12 Actuals 6 The Trust delivered a surplus of £0.27m for the year against a reforecast plan of £0.2m surplus. Although the performance was only £0.07m better than plan, there were some significant variances within income, pay and non pay. Some of these variances were reflected in the internal budgets in the last quarter, for instance, where there was an agreement to increase contract payment from commissioners. The variances shown above are therefore against the original reforecast plan submitted to Monitor, but the analysis on page 1 include contractual changes which have been reflected in the internal budget.
Pay expenditure was £0.7m above the revised plan, this was due to a combination of winter pressure expenditure together with costs associated with delivering the recovery plan, and expenditure on agency staffing. Total agency spend for the year was £4.2m compared to £3.3m last year, an increase of £0.9m. Last year Medical agency staff spend was £0.7m compared to £1.3m this year, staffing issues across all the 3 clinical divisions around recruitment have had a significant impact in 2014/15. In addition to this there was a £0.4m increase in Admin and Clerical agency spend mainly in Non Clinical Support, which was due to a combination of staff vacancies, additional resources required following the implementation of Medway, exacerbated by the HMRC ruling on not allowing VAT reclaim for admin and clerical staff. The number of whole time equivalent staff employed by the Trust and going through payroll increased by 72 compared to last year, but was 92 below budget at the year end. Detailed analysis of increase WTE from February 2014 to March 2015 by Division and by department is provided in the table shown on the next page which excludes capitalised staff. Staff Whole Time Equivalent (WTE) Analysis Analysis of Agency Spend 7
8 Increase in Whole Time Equivalents (WTE) From March 2014 to March 2015 By Division
In the table above, all Divisions are showing an adverse contribution position against the original budget plan with the exception of CWAMH, HR and R&I who are on plan or better. Surgery and Critical Care is showing the most significant adverse variance of £3.6m from plan. In the month of March, the Division’s income position deteriorated slightly from its £2.5m underperformance reported last month. Throughout the year, there were staffing issues within the Division which impacted on activity delivery. In the final quarter, Surgery and Critical Care’s income performance was expected to deteriorate by a further £0.4m against the original plan, however, it deteriorated by a further £0.3m. The Division of Medicine is also showing a significant variance from plan of £3.3m. Although income seemed to be over performing, this was due to cost per case activity and was offsetting pay and non pay overspends. Outpatient and Elective income was £1.2m behind plan for the year. The division was £1.8m overspent on pay which included unidentified efficiency targets and pay pressures associated with covering vacancies. Note: Red = adverse performance by greater than 5%, Amber = actual performance is within plan by 5% either adverse or favourable, Green = favourable performance by greater than 5%. Summary Service Line Report by Division (12 Months to 31st March 2015) – Original Plan 9
The above analysis shows the performance of the divisions against the reforecast plan. In effect the adjustments made have mitigated the reported variances by division by categories of income, pay and non pay for months 1 to 8. As such the variances shown above are that for months 9 to 12 only. All divisions were able to contain their financial position in line with the plan for the last four months of the year with the exception of Surgery & Critical Care where the income position continued to deteriorate along with continued overspends on pay and non pay. Summary Service Line Report by Division (12 Months to 31th March 2015) – Revised Plan 10
Divisional Commentaries (Month 12 Variance Only to original plan) – Clinical 11 Income (£391k above plan) - above plan in all areas except Outpatients (even against revised plan.). Pay (overspend by £63k) - due to continued use of agency staff but savings in other areas. Non-pay (overspend by £448k) - mainly due to a mixture of drugs and blood factor products expenditure. Income variance in March was mainly attributable to test income from the Genetics Diagnostics Service. However for the full year the services was circa £150k below their revised plan. The service will actively manage spend on non pay going forward in order to reduce wastage and costs of developing panels. Pay underspend was mainly attributable to the release of capacity funding which had been held centrally, but at year end, this was reflected at divisional level. The division’s outturn position was an overspend of £225k. This was in part attributable to under performance of clinical genetics income which is expected to be non recurrent in nature due to recruitment issues experienced in 2014/15. Income (original plan) under delivered by £110k, including a £169k deficit on elective activity. However, Non-elective income was £85k ahead of plan and offset some of the elective shortfall. The pay movement includes £125k cost due to undelivered CIP. The non-pay position is skewed by the release of capacity funding not utilised (£709k favourable). Otherwise, non-pay was over spent as a result of a negative stock count adjustment (£293k) and costs which are fully rechargeable to commissions (£110k). The month 12 variance on income was primarily a result of 2 key factors: recognition of additional funding in relation to Children and Young People’s IAPT (£97k) and reduction to income targets associated with Gibson House and the 16/17 year old’s service (£39k). These income movements were substantially offset by pay expenditure, which fully accounts for the in-month pay over-commitment. The primary elements affecting the in-month non pay position were: Personal Child Health Records (£20k), School Nursing scanning (£20k), TCS property costs (£20k), IAPT consultancy (£19k), long service/retirement awards (£13k), Speech and Language software (£11k) and fixtures and fittings at Becton (£8k).
Divisional Commentaries (Month 12 Variance Only to original plan) – Non Clinical 12 Income variance in the month was due to charitable income received offsetting some of the non pay overspend. In addition to this, there was a £50k overspend on energy & utilities. The division was showing an overspend of £144k at year end, this was mainly attributable to the increasing costs of managing the estates of the Trust including energy, utilities and minor works. Income over performed due to higher than planned volume on catering and hospitality sales The pay position was supported through the release of capacity funding, which offset the continued impact of undelivered CIPs and agency over spending. The income variance relates to the apportionment of private patient income between Non Clinical Support and the clinical divisions. Work is ongoing between Finance and the Private Patients Manager to agree an appropriate methodology for 2015/16. The month 12 pay underspend was a function of 2 key factors: 1) allocation of additional funding to support the IM&T organisational structure (£210k), 2) provision of budget in recognition of delivery of the coding efficiency target (£200k). The principal influences on the in-month non pay position were hardware & software purchases (£74k), telephone services (£42k) and scanning (£28k). The significant income variance in month was due to over recovery of training and education income, which was directly offsetting non pay overspends.
The table above details the amount of centrally held budgets at the year end, and which have been released into the Trust’s bottom line to support the reported £0.27m surplus. Following the Monitor reforecast exercise, the financial plan was adjusted to reduce the original plan surplus of £2.7m to £0.2m. This in effect had increased the centrally held budget balance by £2.5m as shown above. The £8.5m was released to offset variances against the original financial plan which included £2m underperformance against contract income, £1.8m of unachieved efficiency targets, £2.8m of pay overspends including agency staffing costs and £1.9m of non pay overspends.
Analysis of Contract Income Performance – Year to Date Against Revised Activity Plan for December to March 14
Income Overview by Points of Delivery - Year to Date Against Revised Income Plan for December to March 15
The comments in this section relate to performance against contracted activity targets plus the additional activity target not contracted for. Emergency Department A&E activity was 703 cases (1.3%) above plan to the end of March and £229k above year to date financial plan (5%). Elective Excluding Day Cases and Excess Bed Days Elective activity was 557 cases (9.4%) below year to date plan or £1m (6.7%) under plan financially. The key underperforming specialties were: ENT (£420k), T&O (£386k) and BMT(£353k). Day Cases Day Case activity was 482 cases below year to date plan (3.7%) or £290k (2.4%) in financial terms. Rheumatology (£207k), T&O (£140k) and ENT (£122K) underperformed whilst Dentistry and Metabolics over-performed by (£278k) and (£122k) respectively. Non Elective Excluding Excess Bed Days and inc. Marginal Rate Non Elective activity was 241 spells below plan (2.9%) or £399k under financial plan (3.1%). Underperforming specialities include: Oncology (£209k) and ENT (£189k). Over-performing specialities included Paediatrics (£366k) and Dentistry (£121k). Outpatients excluding Diabetes Best Practice Outpatient activity (including AAU) was 7572 attendances (4.6%) or £1.9m (6.8%) below plan. First attendances were 2494 below plan (£626k), follow-ups 4316 under plan (£884k) and AAU down 762 (£408k) on plan. The key under-performing specialties as at March were Neurology (£404k), Clinical Genetics (£351k) and Paediatrics (£330k). 16 Activity and Income Variance Against Contracts
The following graph shows the Trust’s net working capital, alongside the level of working capital cover compared to cash expenditure. The level of cash has decreased in March by £3.36m. There was Trust funded capital expenditure, in excess of depreciation of £3.4m in the month, which accounts for the decrease in cash, along with a PDC Dividend payment of £997k in the month. Also, the level of trade payables has increased by £1.32m as a result of increased non pay activity in the month, which as a result of the shift in payment policy, has resulted in an inflated cash position. Due to the New Build and Theatres projects, the level of cash is falling as predicted. It is anticipated that £12.5m of loans will be drawn down in April 2015, with an additional £10m being drawn down in October 2015. This should ensure that for the next 12 months, liquidity is not going to be a significant concern in the short term. However, in 2016/17, the cash position of the Trust is expected to fall as the New Build approaches completion. Working Capital and Cash Balances 17
The capital programme for 2014/15 was initially £24.3m but this was revised downwards to £19.5m as a result of slippage in the New Hospital Wing Development, although there was not an overall reduction in the level of capital expenditure budgeted for the next 5 years. The main elements of the 2014/15 revised capital programme were: New Hospital Wing (£6.7m), Theatres (£3.4m), 3T MRI (£2.5m) and EPR/PAS (£1m). The main areas of capital spend for March were: 3T MRI (£2,229k), New Hospital Wing (£1,877k), Theatres 8&9 (£1,340k), MEMG (£179k), IT Schemes (£119k), out of a total capital expenditure for the month of £6.028m. CIT have now completed the 2015/16 capital plan, after collating risk assessments on the schemes which were put forward for discussion and work is ongoing to model the plan throughout the year, as this will have an impact of the cash flows of the Trust Capital Expenditure 20