Integrated Service Line Reporting Royal Berkshire NHS Foundation Trust 11th April 2013 Integrated Service Line Reporting Dmitry Dorsky Albatross Financial Solutions

Integrated Service Line Reporting Traditional NHS Service Line Reporting Functional budgetary control New integrated SLR – internal tariffs & budgets New integrated SLR – how it works…

Traditional Service Line Reporting Is generally accepted to be the production of full cost and income trading accounts at specialty or service level. Produced using total cost absorption; summary of PLICS or other costing models Generally produced annually, bi-annually or quarterly Timescale: PLICS based SLR usually available two to three months after period end (one or two Trusts deliver faster with major investment)

Traditional Service Line Reporting Problems: Generally focus only on patient care costs & income Accounts often not “closed down” for stock takes, bad debts etc... Cost transfer regimes use weightings rather than tariffs So profitability of one service can be affected by actions of another service No comparison to plan No clarity as to what drives apparent changes in performance Uses significant resource and lengthy time to produce External tariffs reviewed annually, so profitability can change, outside the control of service We cannot therefore just use profitability as an indicator of improved efficiency

Traditional Service Line Reporting SLR Information Standard Budgetary Information from GL Traditional SLR exist along side main budgetary reports thus providing managers with two versions of the truth

Guy’s & St Thomas’ 2010/11 – Functional Budgetary control Financial Performance monitored against expenditure plan Directly controlled expenditure budgets Adjustments for under & over performance against income plan BUT: Indirect costs rarely charged Income plan accounted for centrally, but variance allocated as above Overhead costs never charged Trading position not monitored

Financial performance monitored against trading position Guy’s & St Thomas’ 2011/12 – New integrated Service Line Reporting - iSLR Financial performance monitored against trading position Income accounted for at Specialty Level Directly controlled expenditure budgets Indirect costs both volume related & standing charges Overhead costs as fixed or standing charge Trading position known

iSLR - Income Income – All Income! Patient care Education Research Service Increment For Teaching (SIFT) – undergraduate medical & dental education Medical & Dental Education Levy – post graduate M&D education (MADEL) Non medical education and training (NMET) Research Clinical Excellence Awards Private Patients External contracts

iSLR – Direct & Indirect costs Bad debts! Internal services transferred on an internal tariff set for the year where activity information available Volume & Mix variances sit with front line services Efficiency variances sit with providing departments Internal tariff calculation re-visited annually Demonstrate achievement of provider savings; zero net impact statement (ZNIS) Internal tariffs for: Radiology Nuclear Medicine Wards Theatres Therapies Pathology Internal services without “activity”, based on SLA, as an availability or fixed charge Pharmacists Physicists Emergency out-of-hours Operating Theatres

Internal tariff construction Standard cost exercise in volume driven internally charged departments (or should we perhaps use an external provider tariff?) Directorate briefings on methodology Key Points: Based on actual Cost and Activity for first six months, or full year 2010/11. Tariff set to recover cost Derived by dividing relevant cost by relevant activity Recognise that this reflects current practice, not most efficient practice

iSLR – Overheads & Trading position Currently a fixed charge Proposals for incentives to reduce demand on Overhead services in 2012/13 Space Cleaning Portering Laundry Contribution (planned Profit or Loss, Surplus or Deficit) to capital programme Monitor all services against a bottom line plan BUT - Income & Cost at Specialty (not patient) level However – interactive drill down to transaction level for activity based internal charges - iSLR

iSLR – Timetable Financial reporting to Trust Exec & Board by working day 10 FD review working day 9 Head of Financial Management needs to review position on working days 7 and 8 FM calculate and agree projections working days 4 to 6 FM review current month position working days 2 and 3 All SLR transactions therefore need to be posted by the end of working day 1

iSLR – Timetable As all SLR transactions need to be posted by the end of working day 1 Potential Data quality issues “Good enough” approach Post as accrual journal for month just ended Post “errors” to charging department One month to resolve errors & improve data quality Income: two month accrual

iSLR menu

Directorate or Service Line Report

Drill to volume based charges

Drill to source transaction data

Drill to unused time in theatres

iSLR – Financial forecasts Receiving departments should project both anticipated cost and income, and share that with providing departments. Providing departments to analyse the results of projections to their internal income, and where they hold a materially different view, initiate a discussion to reach an agreed forecast position for future monthly reporting.

iSLR – Impact for “Provider”departments Now have an internal income target to fund their budget. Can no longer just appoint to a post when it becomes vacant but… Need to understand future anticipated demand changes to fund their ongoing budget Provider departments need to clear “their errors” each month

iSLR – How does it work? – 1. Data preparation RADIOLOGY PATHOLOGY THEATRE THERAPIES PHARMACY WARD STAY iSLR DATA REPOSITORY STANDARD TARIFFS ORGANISATIONAL HIERARCHY AND ASSIGNMENT RULES iSLR PROCESSOR JOURNALS UN-BILLABLE ACTIVITIES REPORTER GENERAL LEDGER PROVIDER DEPARTMENT DIVISIONAL MANAGER

iSLR – data preparation Working day 1 – Month 8, reporting period Month 7 : Departments provide scheduled data download between midnight & 6.00 am each day, containing at least 100 days data (i.e. m5,6,7). We take last months cumulative data file for iSLR (i.e. M1-6). We remove the last months (m6) data from that file so we have M1-5 data. We import last two months data from yesterday’s download i.e. M6 & M7. We now have a cumulative file for the whole years data.

iSLR – How does it work? – 2. Extract, Transform & Load RADIOLOGY PATHOLOGY THEATRE THERAPIES PHARMACY WARD STAY iSLR DATA REPOSITORY STANDARD TARIFFS ORGANISATIONAL HIERARCHY AND ASSIGNMENT RULES iSLR PROCESSOR JOURNALS UN-BILLABLE ACTIVITIES REPORTER GENERAL LEDGER PROVIDER DEPARTMENT DIVISIONAL MANAGER

iSLR – Extract, Transform & Load Visual Importer A set of automated import tasks Ability to import data from any structured data source (Excel, SQL, Oracle, csv, etc…) Full audit trail & Error tracking Set of reconciliation reports to valid import Ability to schedule batch run processes

iSLR – How does it work? – 3. Journal Creation RADIOLOGY PATHOLOGY THEATRE THERAPIES PHARMACY WARD STAY iSLR DATA REPOSITORY STANDARD TARIFFS ORGANISATIONAL HIERARCHY AND ASSIGNMENT RULES iSLR PROCESSOR JOURNALS UN-BILLABLE ACTIVITIES REPORTER GENERAL LEDGER PROVIDER DEPARTMENT DIVISIONAL MANAGER

iSLR – Journal Creation Journal processing Based on user defined rules Updated via easy to use graphical interface Fast Processing time (minutes) Full set of validation reports Ability to track and analyse errors Automatic upload into Oracle

iSLR – How does it work? – 4. Reporting RADIOLOGY PATHOLOGY THEATRE THERAPIES PHARMACY WARD STAY iSLR DATA REPOSITORY STANDARD TARIFFS ORGANISATIONAL HIERARCHY AND ASSIGNMENT RULES iSLR PROCESSOR JOURNALS UN-BILLABLE ACTIVITIES REPORTER GENERAL LEDGER PROVIDER DEPARTMENT DIVISIONAL MANAGER

iSLR – Reporting Reporting options: Journals imported into General Ledger (Oracle at GSTT) Users access financial performance reports through GL reporting (OBIEE) For internal transactions, use Business Objects to drill to source data that drives cost Five clicks to patient activity record Exportable to Excel & Other formats Available through Trust Intranet