1. Finance Update as at Month 6
Julia Pattison – Director of Finance

2. Overview Reminder – Annual Plan 2017/18
Current Position as at Month 6, 2017/18:
Scale of challenge & why
Review of history
Actions
Impacts

3. 2017/18 Plan
Reminder – summer CoG presentation of ‘two halves’ – good position in 16/17; challenges in 17/18
Annual Plan / ‘Control Total’ = £5.2m deficit / gap
If no worse than this gap, receive ‘Sustainability & Transformation Funds (STF) of £4.2m
Net ‘gap’ with STF = £0.9m deficit by end of year

4. Current Position at Month 6
Plan as at end of Month 6:
Planned gap before STF income = £4,541k
STF = £1,470k
Expected gap after receipt of STF = £3,071k
Actual as at end Month 6:
Gap before STF income = £6,897k
Worse than plan by £2,356k
Therefore no receipt of STF ie loss of £1,470k
Overall gap = £2,356k + £1,470k = £3,826k

5. Current Position at Month 6
Underlying Position by Month (without STF loss):
Note: excludes impact of NHS Property Services income & £502k

6. Current Position at Month 6
Underlying Position by Month (with STF loss):
Note: excludes impact of NHS Property Services income & £502k

7. Cashflow
Likely scenario, i.e. non achievement of 2017/18 year end control total and therefore no access to STF of £4.2m means cash balances below £0 in June 2018
Actions:
Continued discussion with commissioners e.g. CCGs and Local Authorities around early payment profiles
Other Income opportunities
Deferral of commitments (revisit phasing)
Loan opportunities

8. Why? Set an ambitious CIP & efficiency target of +£18m
CIP gap at month 6 = £1.2m
Pay Pressures - £520k (exc shortfall on CIP):
Medical – agency pressures
Some offset by nursing vacancies
Non Pay - £145k (exc shortfall on CIP):
Pathology, appliances, drugs
Income shortfalls – net £533k:
Losses: Stroke income; under-performance/reduced activity
Gains: new funding streams; Vanguard funding; drugs
But…..this has been coming for some time

9. Assessment of History Income reducing faster than costs can be reduced
Acute services lose money – c£13m loss in 16/17 (on £100m income base)
Community offset loses but commissioners are reducing the income (or lose contracts) e.g. G’head contract ‘hit’ of £2.3m
Since 2012/13 loss of £22m income
Recruitment & agency pressures
Reliance on vacancies
Underlying gap £13m

10. Actions Actions considered to ‘close the gap’ include:
Income from commissioners e.g. ST CCG
Other income sources
Cost control e.g. Acute Division – includes focus on agency spend; reducing cost to match reduced activity; utilising evidence from Carter / Model Hospital; PMO involvement; balance sheet e.g. stock counts, revaluations…..
Outcome of actions discussed at Finance & Performance Committee in September
Board discussion end September

11. Actions
Board decided to declare year end forecast that it will not achieve the control total
Met with NHS Improvement (NHSI) 11th October to discuss process and shared background information:
Reasons for deficit – including a review of the history
Assessment of NHSI Protocol requirements
Actions taken to date and options dismissed
Discussed approach for longer term financial recovery – 3/5 years: NHSI and NHSE supportive
Notified NHSI 16th October – forecast gap

12. Impact
Face to face discussion between CEO/DoF and counter parts within regional team at NHSI
Expect heightened focus around actions taken and review of NHSI ‘check list’; potential ‘Board to Board’ or other escalation process
Process to develop a 3-5 year system wide financial recovery plan:
Both CCGs and both FTs – gap in 18/19 = +£70m
Building on on-going work e.g. Clinical Service Reviews; Canterbury (ST CCG); Multispecialty Community Provider (MCP – S’land CCG); Local Health Economy ‘risk share’ approach

13. Summary Detailed work to understand reasons for the gap completed
Options considered – to be tested by NHSI
In-year risk & impact on cash into 18/19
Joint approach to system wide financial sustainability supported – NHSI, NHSE, CCGs Governing Bodies
Urgent work to now develop options to manage within the financial envelope that the health system can afford!

14. Questions?