1. Finance Report Sheet 1 The Shrewsbury and Telford Hospital NHS Trust EXECUTIVE RESPONSIBILE David Gilburt Interim Finance Director AUTHOR (if different from above) Tony Brown Assistant Director Financial Performance Jill Price Assistant Director Financial Management Chris Benham Assistant Director Financial Accounting CORPORATE OBJECTIVE Ensuring a clinically viable and financially sustainable organisation KEY FACTS The table below summarises the Income and Expenditure position for October. ●The Better Payments Practice Code (BPPC) target is to pay 95% of creditors within 30 days. In October the Trust showed reduced performance: 61% for Non-NHS invoices (YTD 57%) 46% for NHS invoices (YTD 43%) ●Marginal improvement in liquidity, however pressures in cash position continue as a consequence of current performance. EXECUTIVE SUMMARY October 2010 (Month 7) financial performance shows : Actual deficit of £275k; plan surplus £370k. ●Year to date income includes £1.465m reduction for Emergency threshold adjustment (£262k in October). ●Pay costs; overspend £0.717m, of which 23% in Junior Medical staff and 49% in nursing. ●Pay run rate £15.1m. ●Medical staff agency spend reduced by £21k in month. ●e-Rostering lost opportunities being reviewed by Divisional Managers to ensure Ward Managers aware of cost of inappropriate rostering and how to avoid such losses. ●Forecast Outturn £225k surplus including assumption of £3.5m strategic change reserve support. ●Interim Finance Director reviewing forecast assumptions. RECOMMENDATIONSThe Board is asked to NOTE at month 7: 1.An Income and Expenditure deficit of £0.820m against planned surplus of £1. 868m. 2.Forecast Outturn £0.2 million surplus. 3.Deterioration in performance against the Better Payments Practice Code (BPCC) target of 95% for Non NHS creditors. Enclosure 4 Trust Board Meeting – 3 December 2010 FINANCE REPORT for the period ending 31st October 2010 (Month 7)

2. Finance Report Sheet 2 The Shrewsbury and Telford Hospital NHS Trust Section One- EXECUTIVE SUMMARY

3. Finance Report Sheet 3 The Shrewsbury and Telford Hospital NHS Trust Section Two – Expenditure - Pay PAY ●Month 7 Pay overspend £717k, across all staff groups except non- clinical. Efficiencies required to cover the pay award continue to be the main cost pressure. ●Pay cost in Month 7 was £15.1m, the average for months 1 to 6 was £15.2m ●Pay control totals were allocated to divisions during August. The June pay spend of £15.4m was taken as a base against which to allocate run rate reductions of £350k per month. In month 7 the pay cost exceeded the control total by £79k. The month 7 run rate is a reduction in pay cost of £277k against the June level. ●Key initiatives to reduce the level of nursing spend are being implemented, these include reducing bank shift duration, changing working patterns and contracting for hours to be worked over a given period rather than fixed weekly hours. Divisional lead nurses have led these reviews to ensure quality and service levels are maintained. ●Review of the progress in implementation of initiatives and the effectiveness of those already in place along with an assessment of further initiatives to control the pay run rate will take place in December. ●The tables opposite show the performance against control total by staff group and division.

4. Finance Report Sheet 4 The Shrewsbury and Telford Hospital NHS Trust Section Two – Expenditure – Pay - Agency AGENCY ●Month 7 agency costs reduced to £552k (September £576k). This is equivalent to 62 wte. ●The in month agency spend per wte is £8.9k. The month 6 average was £10.4k. ●Consultant agency utilisation shows an increase in the month. This is largely due to Locums in Radiology (linked to reducing external reporting costs), Oncology, Ophthalmology and Haematology covering sickness and vacancies. ●Medical staffing agency spend shows a further reduction in October. ●Use of nursing agencies has risen again in the month. The key driver for this has been the need to open escalation beds. ●Further reductions in agency utilisation are reported in Non-clinical groups, where the controls implemented by Facilities, particularly Housekeeping, continue. This has been possible due to some improvement in sickness levels. However sickness in this area remains an issue. Discussions have taken place with HR and it is expected that implementation of the new sickness policy early in the new year will help address sickness management issues in a more expedient manner.

5. Finance Report Sheet 5 The Shrewsbury and Telford Hospital NHS Trust Section Two – Expenditure – Pay – Medical Staffing ●Medical Staff overspend £164k (September £141k). Agency overspend within this is £129k which as reported previously is due to the premium cost of providing cover to ensure continuity and safety of service and compliance with EWTD requirements. Where safe and possible, Divisions only provide agency cover for out of hours and weekend periods. ●Temporary staffing department reports that in October 422 shifts were filled. Of these 70 (16.6%) were internally covered, the balance of 352 (83.4%) were filled by agency. For 2009/10 the average was 652 shifts with the agency cover averaging 511. ●Medical staff agency cover costs have decreased in October to £356k (£377k in September). ●The graphs opposite show the trend in medical staffing expenditure over the past 12 months. In October 2009 agency was 29.5% of the total medical staffing spend, in October 2010 this has reduced to 17.2% ●The impact of the improved fill rate in the August rotation is now fully reflected in the run rate.

6. Finance Report Sheet 6 The Shrewsbury and Telford Hospital NHS Trust Section Three - Cash Closing cash balance of £55k is a decrease of £261k on the prior month. EBITDA shortfalls (YTD £2,707k) and the requirement to make capital expenditure payments have been managed through creditor payments within working capital. This management of working capital is reflected within the poor compliance status of the Better Payment Practice Code (BPPC). The Trust follows the national timetable of activity reconciliation and as a result is carrying significant levels of accrued revenue. Until agreement has been reached the Trust cannot invoice this significant amount of accrued revenue. The Trust has concluded it’s review of the historical working capital loan drawdown. Papers have been submitted to Finance and Performance Committee Meeting and Trust Board. Further to recent SHA and Chief Executive meetings the Trust will be pursuing an application for a working capital loan and is investigating the possibilities of drawing PDC to cover short term cash requirements. Revised forecasting procedures are in place with significant cash outflows in the first quarter 2010/11 due to the completion and timing of large capital projects (including decontamination offsite solution).

7. Finance Report Sheet 7 The Shrewsbury and Telford Hospital NHS Trust Section Four – Forecast Outturn ●During October and November further work has taken place with Divisions to build detailed forecasts; in addition a detailed review and assessment of activity and income has been undertaken. ●Following this the forecast outturn remains as a £0.2m surplus. This has been submitted in the month 7 FIMS return to NHS West Midlands. The forecast includes the following assumptions: ●PCT QIPP schemes not at planned levels. ●Current non-elective activity over performance for Shropshire County PCT continues. ●Emergency Threshold adjustment, forecast at £2.6m is not returned. ●Pay run rates continue in line with divisional forecasts. ●The process for recruitment to previously approved additional posts, including consultant and medical staff linked to ensuring patient safety and strengthening clinical quality levels, is undertaken in a phased and measured way. ●Future fill rates for junior doctor rotations are similar to the August rotations. ●Escalation beds required during the winter pressure period. ●Divisional forecasts incorporate pay run rate reductions and medical agency cost reductions. ●CIPs at 66% of target. ●Strategic Change Reserve funding receivable £3.5m.

8. Finance Report Sheet 8 The Shrewsbury and Telford Hospital NHS Trust Section Five - Improvement Programme The summary position is as follows:  IP target for 2010/11 is £6.8 million.  At Month 7 £1.497m has been delivered against a target of £2.462m. This equates to 61%. Against the revised forecast of £2.324m delivery equates to 64%.  The current forecast outturn assumption is that delivery will be at 66% (£4.5m)  For a detailed analysis of Divisional performance see Appendix A7.  A more detailed report is presented separately to the Finance & Performance Committee.

9. Finance Report Sheet 9 The Shrewsbury and Telford Hospital NHS Trust Section Six - Financial Risk Rating Risk rating of 2. Improvement in each of the FRR performance metrics other than liquidity. Liquidity metric shows rating of 1. Net current asset reduction mainly linked to lower cash balance, increased NHS and capitral creditors and accrual for PDC dividend Performance below plan continues to impact on the liquidity position The diagram above illustrates the Trust position in each metric of the FRR against the full year plan position and illustrates the in- month improvement against each of the metrics, other than liquidity. The Trust is currently underperforming in each area.

10. Finance Report Sheet 10 The Shrewsbury and Telford Hospital NHS Trust Section Seven- Activity and Income Total elective and day case activity was 610 spells above plan in October. This has given rise to an income over-recovery of £640k in October; Overall Day Cases show an over performance of 466 spells in October. Over performance in Day Case is reported in most specialties. This is offset by underperformance in other specialties notably General medicine and Oral Surgery. Elective inpatient activity was 144 above plan in October. The most notable areas of overperformance being General Surgery, Gynaecology, Urology and ENT. Non elective activity is 9 spells below plan in October, General Medicine being the main area of over performance. Reported income has been adjusted to reflect the emergency threshold tariff adjustment, this has reduced reported income by £262k. Non elective activity in total including maternity is £141k below plan in October. Maternity activity is below plan 59 spells in October. The graphs opposite detail the 2010/11 activity and 2009/10 actual levels for each activity type. PCT QIPP has been profiled and the reconciled plan incorporated into the graphs. Performance for October shows :

11. Finance Report Sheet 11 The Shrewsbury and Telford Hospital NHS Trust Section Seven - Activity and Income In October outpatients were 4,082 attendances above plan, the income over recovery for the seven months is £2,464k, (October £517k). In October new outpatients are 2,104 attendances above plan but 1,152 attendances below the September level. This includes Outpatient Procedures overperformance in the month of 1,050. The underlying new outpatient activity is 1,054 above plan. New outpatient over performance is reported for most specialties. Areas of underperformance include Orthopaedics, Orthodontics, Dermatology and Geriatric Medicine. Outpatient procedure activity shows notable over performance in Breast Surgery, Colorectal Surgery, Orthodontics, Dermatology, Obstetrics and Gynaecology. Some of this offsets new outpatient underperformance. Follow up outpatients are 1,978 attendances above plan but 837 attendances below the September level. A & E attendances are 523 above plan in October (1,611 YTD). In month activity analysis shows RSH 51% and PRH 49%, income shows a near 50/50 split.

12. Finance Report Sheet 12 The Shrewsbury and Telford Hospital NHS Trust Section Eight - Expenditure – Non-Pay and Finance Costs Non pay shows an overspend of £483k in month. All non-clinical non-pay expenditure requisitions continue to be reviewed and scrutinised for validity and necessity before being approved. The Divisional Report highlights specific areas of non pay over spend including: Cancer/ Oncology/ Haematology drugs offset, by income recovery Theatres Orthopaedic products, hip, knee and trauma related. Division 3 are undertaking a baseline review to identify expenditure linked to backlog work. Patient Transport Costs, offset by income. Theatres stents under accrual correction. Drugs issues correction due to system error in month 6. Finance costs are £6k underspent in October. Forecast outturn is in line with plan.

13. Finance Report Sheet 13 The Shrewsbury and Telford Hospital NHS Trust Section Nine - Debtors Trade debtors have increased by £1,033k compared to prior month with an increase in accrued revenue of £274k. Total debtors have therefore increased by £1,307k. Of the other debtors outstanding £30k has been referred to a specialist collection agency with appropriate provisions for write off made based on expected collection success. £56k in respect of an overseas visitor with no means to pay is shown in line with DH guidance – this debtor has been provided for in full. The credit balance of £109k for West Midlands Specialised Services is the net result of a September raised credit note for £227k. Shropshire County PCT prior year invoices remain unpaid with no movement within the month. As part of the recent Month 6 financial returns submission the PCT disputed these invoices via the agreement of balance process. Discussions at FD level have commenced with resolution required by the end of November. There have been small reductions in the +60 and +30 days categories. Telford and Wrekin PCT prior year invoices show a reduction of £11k with the remaining balance represented by high cost drugs. There have been small increases in the +60 and +30 days categories.

14. Finance Report Sheet 14 The Shrewsbury and Telford Hospital NHS Trust Section Ten – Creditors (Non NHS) Table 1 summarises the non-NHS creditor payment performance for the cumulative prior year, month 7 and year to date position. The graph shows the prior year by month with current month position. The Better Payment Practice Code stipulates a target of 30 days. Increase in monthly compliance position due to prioritisation of non-NHS payments. The current cumulative compliance is on par with month 6 and is 32% for volume and 57% for value. Table 2 summarises the actual payment performance in the month.

15. Finance Report Sheet 15 The Shrewsbury and Telford Hospital NHS Trust Section Ten – Creditors (NHS) Table 1 summarises the non-NHS creditor payment performance for the cumulative prior year, month 7 and year to date position. The graph shows the prior year by month with current month position. The Better Payment Practice Code stipulates a target of 30 days. The cumulative compliance position at Month 7 is on par with the prior month at 27% for volume and 43% for value. Table 2 summarises the actual payment performance in the month.

16. Finance Report Sheet 16 The Shrewsbury and Telford Hospital NHS Trust Section Eleven - Capital The Capital Programme for 2010/11 remains at £8,505k. £321k of capital funds remains available. CT Scanner PRH – now completed and fully operational. Scheme ‘signed off’. Decontamination Project – Building handed over to Trust on 3 November. Commissioning of the autoclaves and washer – disinfectors commenced. Procurement of additional instrumentation is ongoing. Unit is on target to open February 2011 with PRH service moving first. Theatres Air Handling Scheme – Theatre 1 and 2 now fully operational. Formal hand over and ‘sign off’ completed. Breast Screening Service move to Digital - Ex-demo mobile has been delivered to PRH site - currently undergoing commissioning and radiation safety checks to make ready for clinical use. Old equipment has been removed from static room 1 at RSH and enabling works are currently under way. Delivery of PACS equipment expected 22nd November.