Enclosure 3 Trust Board Meeting – 7th October 2010

Finance Report Sheet 1 The Shrewsbury and Telford Hospital NHS Trust

EXECUTIVE RESPONSIBILE

Steve Shanahan Finance Director

AUTHOR (if different from above)

Tony BrownAssistant Director Financial PerformanceJill PriceAssistant Director Financial ManagementChris BenhamAssistant Director Financial Accounting

CORPORATE OBJECTIVE

Ensuring a clinically viable and financially sustainable organisation

KEY FACTSThe table below summarises the Income and Expenditure position for August.

● The Better Payments Practice Code (BPPC) target is to pay 95% of creditors within 30 days. In August the Trust achieved an improvement :

55% for Non-NHS invoices (50% July) 23% for NHS invoices (38% July)● Overall deterioration in liquidity, increased cash balance offset by

increases in net liabilities. Increased cash holding in preparation for payment of PDC Dividend £2.6m

in September.

EXECUTIVE SUMMARY

August 2010 (Month 5) financial performance shows :Actual deficit of £383k; plan surplus £99k.●Income; Further reduction for Emergency Threshold

£256k; year to date £897k.●Pay run rate £15.1m.●Pay costs; overspend £0.511m, of which 63% due to

overspend in Junior Medical staff.●Junior medical staff pay pressures continue. In month

overspend £323k. Medical staff agency spend reduced by £47k in month. Non recurrent pressures linked to provision for non-compliant rotas and locum arrears (£91k) in month.

●Further pay control measures forecast from September giving improvement to pay run rate.

●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, Month 5 FIMS return £2.6m surplus

RECOMMENDATIONS The Committee is asked to NOTE at month 5:

1. An Income and Expenditure deficit of £0.804m against planned surplus of £1.224m.

2. Forecast Outturn remains at £2.6 million surplus.

3. Improvement in performance against the Better Payments Practice Code (BPCC) target of 95% for Non NHS creditors.

Enclosure 3Trust Board Meeting – 7th October 2010

FINANCE REPORT for the period ending 31st August 2010 (Month 5)

Plan £'000

Actual £'000

Variance £'000

L Year £'000

Plan £'000

Actual £'000 Variance £'000

L Year £'000

Annual Budget

21,753 22,120 367 21,630 Income 110,366 111,926 1,560 105,987 261,883(14,589) (15,100) (511) (14,321) Pay (73,126) (76,237) (3,111) (71,764) (174,222)

(5,937) (6,277) (340) (5,458) Non Pay (30,376) (30,883) (507) (29,185) (71,488)

1,227 743 (484) 1,851 EBITDA 6,864 4,806 (2,058) 5,038 16,173(1,128) (1,126) 2 (1,309) Finance Costs (5,640) (5,610) 30 (6,533) (13,606)

99 (383) (482) 542 Total 1,224 (804) (2,028) (1,495) 2,567


Section One- EXECUTIVE SUMMARY


Section Two – Expenditure - Pay

Pay

13,00013,50014,00014,50015,00015,50016,000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

£'00

0

2010/11 Actual 2010/11 Plan 2009/10 Actual

PAY● Month 5 Pay overspend £511k, across all staff groups. Efficiencies required to

cover the pay award continue to be the main cost pressure.● Pay cost in Month 5 was £15.1m, the average for months 1 to 5 was £15.3m● 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 5 the pay cost exceeded the control total by £41k, a reduction in pay cost of £313k against the June level.

● Key initiatives to reduce the level of nursing spend are in process of 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.

● When considering the reduction in run rate it should be noted that some of the initiatives described above will begin to impact on pay spend in September and October and so further reductions linked to these can be expected over the next two months.

● Within the month 5 pay spend £131k non recurrent items have been identified. After adjusting for these the underlying pay spend is just below £15m.

Agency Costs

400600800

100012001400


£'00

0

2010/11 Actual 2009/10 Actual

AGENCY● Month 5 agency costs decreased to £571k (July £654k). This is equivalent to

56 wte.● The in month agency spend per wte is 10.2k. The month 4 average was £9.3k.● Agency costs in all areas other than consultants show a reduction on the month

4 figure. ● The consultant increase is largely in Radiology where the appointment of a

locum radiologist is predicted, by the division, to reduce reliance on external reporting of films/scans and reduce waiting list expenditure with radiologists. The current forecast spend reduction is £13k per month .

● Non clinical agency staff spend shows a £14k reduction on the month 4 level. This is predominantly in agency usage in facilities for housekeepers


Section Two – Expenditure – Pay – Medical Staffing

● Medical Staff overspend £323k (July £237k). Agency overspend within this is £263k 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.

● In July 559 shifts were filled. Of these 88 (16%) were internally covered, the balance of 471 (84%) were filled by agency. For 2009/10 the average was 652 shifts with the agency cover averaging 511 (78%).

● Medical staff agency cover costs have seen a slight reduction in August to £448k (£495k in July).

● The graphs opposite show the trend in medical staffing expenditure over the 12 months. The graph shows that the cost of directly employed and locum have remained even. However, since September 2009 the reliance on agency to cover Deanery vacancies and EWTD rota gaps is clearly illustrated. In September 2009 agency was 19.8% of the total medical staffing spend, in August 2010 this has risen to 20.4%

● Following the August rotation the fill rate for training posts has substantially improved. This has reduced reliance on medical agencies, for longer term posts, and had a favourable impact on pay run rate.

● Managers are currently assessing the potential impact and risk linked to agency reliance following the October rotation.

Medical Staffing

0

500

1,000

1,500

2,000

2,500

Sep Oct Nov Dec Jan Feb Mar Apr May June Jul Aug

£'00

0

Pay Agency Locum

0%10%20%30%40%50%

60%70%80%90%

100%

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

% o

f tot

al s

pend

Pay Agency Locum


Section Three - Cash

Closing cash balance of £1,938k is an increase of £1,893k on the prior month

EBITDA shortfalls (YTD £1,621k) and the requirement to make capital expenditure payments have been managed through creditor payments within working capital.

The Trust is liaising with the SHA to assist in accelerating cash allocations and payment of +60 day invoices from the local PCT’s to improve the BPPC.

Revised forecasting procedures are in place. There were significant cash outflows in the first quarter 2010/11 due to the completion and timing of large capital projects (including decontamination offsite solution).

Increase in cash balance to fulfil PDC payment obligation of £2,528k to DH payable 17 September 2010.

Plan Actual Plan ActualM5 M5 YTD YTD

Opening cash balance 203 45 441 441

EBITDA 1,179 681 6,123 4,502

Impairments 0 0 500 0

Working capital movement 200 1,979 (2,955) 3,720

Operating cash flow 1,379 2,660 3,668 8,222

Capital expenditure (1,457) (740) (6,378) (6,645)

Proceeds from sale of assets 0 0 0 0

Operating cash flow after net capital expenditure (78) 1,920 (2,710) 1,577

Net interest paid 1 2 5 6

Provisions movement 0 (29) (10) (86)

Loan received 0 0 2,400 0

Loan repayment 0 0 0 0

Lease payment 0 0 0 0

PDC received 0 0 0 0

PDC paid 0 0 0 0

Cash flow for period (77) 1,893 (315) 1,497

Closing cash balance 126 1,938 126 1,938


Section Four – Forecast Outturn – FIMS Month 5

● The forecast outturn submitted as part of the Month 5 FIMS return is a £2.6 million surplus in line with original plan.

Assumptions are: PCT QIPP schemes delivered in line with agreed plan

levels of activity from August to March. Shropshire County PCT non elective activity

overperformance continues (after accounting for QIPP schemes)

Month 5 pay run rate continues after adjusting for non- recurrent items

Pay run rate reductions including confirmed schemes and medical agency cost reductions phase in from month 6

CIPs at 74% of target Additional posts (£1.2m) offset with additional run rate

reductions Emergency threshold adjustment is reimbursed (£0.9m)● Non pay inflation continues to be managed as in previous

years

M1-5 Actual

M6 Forecast

Q3 Forecast

Q4 Forecast

FY11Total

FY11 Plan

FY11 Variance

£m £m £m £m £m £m £m

Income :

Patient Care 103.4 20.3 60.8 60.2 244.7 241.6 3.1Other 8.6 1.7 5.1 5.5 20.8 20.3 0.5

Total Income 111.9 22.0 66.0 65.7 265.5 261.9 3.6

Pay (76.2) (14.9) (43.8) (43.0) (178.0) (174.2) (3.8)Non Pay (30.9) (5.8) (17.4) (17.1) (71.3) (71.5) 0.2

Total Expenditure (107.1) (20.8) (61.2) (60.2) (249.3) (245.7) (3.6)

EBITDA 4.8 1.2 4.7 5.5 16.2 16.2 0.0

Finance Costs (5.6) (1.1) (3.4) (3.5) (13.6) (13.6) (0.0)

Surplus / (Deficit) (0.8) 0.1 1.3 2.0 2.6 2.6 0.0


Section Five - Improvement Programme

The summary position is as follows:

IP target for 2010/11 is £6.8 million.

At Month 5 £0.894m has been delivered against a target of £1.197m. This equates to 75%. Against the revised forecast of

£1.103m delivery equates to 81%.

The current forecast outturn assumption is that delivery will be at 74% (£5m)

A more detailed report is presented separately to the Finance & Performance Committee.

SaTH Improvement Programme Status Report

£0

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

£7,000

£000

Actual Savings £'000 £87 £208 £383 £631 £894

Planned Saving (FIMS) £'000 £90 £240 £463 £803 £1,197 £1,756 £2,462 £3,248 £4,041 £5,035 £5,876 £6,792

Forecast Savings £'000 £81 £212 £409 £729 £1,103 £1,653 £2,324 £3,080 £3,880 £4,896 £5,756 £6,696

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12


Section Six - Financial Risk Rating

Risk rating of 2.

Deterioration in each of the FRR performance metrics.

Liquidity metric shows rating of 1. Increased cash balances offset by increasing net current liabilities. Cash balance growth due to planning cash holdings to ensure Trust is able to meet PDC Dividend payment in September.

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 deterioration against each of the metrics.

The Trust is currently underperforming in each area.


Section Seven- Activity and Income

Inpatient Performance: Total elective and day case activity was 101 spells below plan in August. This has given

rise to an income under-recovery of £276k in August.

Overall Day Cases show an over performance of 4 spells in August. Over performance in Day Case is reported in Gastroenterology, Ophthalmology, Clinical Haematology, Gynaecology and Clinical Oncology this is offset by underperformance in all other specialties.

Backlog activity validated to 31st August is 891 spells in surgical specialties

Elective inpatient activity was 105 below plan in August. Under performance is reported in all specialties other than Paediatrics,

Non elective activity is 128 spells above plan in August. 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 £897k. Non elective activity in total including maternity is £307k above plan in August

Maternity activity is below plan 32 spells in August

Outpatient Performance:

In August outpatients were 2 attendances above plan (1,756 July) the income over recovery for the five months is £1,427k.

In August new outpatients are 740 attendances above plan and 1329 attendances below the July level. This includes Outpatient Procedures over performance in the month of 1,039. The underlying new outpatient activity is 299 below plan.New attendances notably show under performance in Orthopaedics, Oral Surgery, Orthodontics, Dermatology and Geriatric Medicine.

Outpatient Procedure activity is significantly above plan in Orthodontics, Oral Surgery, Dermatology and Obstetrics. This partially offsets underperformance in new outpatients.

Backlog activity validated to 31st August is 1,532 attendances in surgical specialties

Follow up outpatients are 737 attendances below plan and 1709 attendances below the July level.

Accident and Emergency A & E attendances are 207 above plan in August (880 YTD). In month activity analysis

shows RSH 53% and PRH 47%, income shows RSH 52% and PRH 48% split.

Outpatients

20500

22500

24500

26500

28500Attendances

2010/11 Actual 2009/10 Actual 2010/11 Plan

Accident & Emergency

7,000

7,500

8,000

8,500

9,000

9,500

10,000


Attendances


Inpatients

7,500

8,000

8,500

9,000

9,500

10,000

Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

Spells



Section Eight - Expenditure – Non-Pay and Finance Costs

Non Pay

4,500

5,000

5,500

6,000

6,500

7,000


£'00

0


Non pay shows an overspend of £340k 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. Use

of specific implants, under review. Increased demand for blood products in Medical specialties. Patient Transport Costs, offset by income.

Finance costs are £2k underspent in August. Forecast outturn is in line with plan.

Finance Costs

0200400600800

1,0001,2001,400


£'00

0



Section Nine - Debtors

Trade debtors have increased by £274k compared to prior month with a reduction in accrued revenue of £258k. Total debtors have therefore increased by £16k.

Of the other debtors outstanding £34k 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.

Shropshire County PCT +60 days decreased by £67k. The +60day category has been escalated and raised at the recent local FD meeting with little impact and/or movement. The key invoices still outstanding are £363k for EPO drugs and £141k for a disputed balance of cardiac catheterisation (part payment of £203k received in month of May). FD is due to write to PCTs with possible involvement with the SHA.

Telford and Wrekin PCT +60 days category shows an increase of £128k and is represented by the continued ageing of + 30 day category. The 3 main invoices outstanding are; £201k relating to Month 12 2009/10 Herceptin; £15k that refers to Nuffield activity – the credit team are working with Contracts and Performance to resolve and £22k relating to Lucentis injections. Recent communication indicates the Herceptin amount of £201k will be paid 15 September 2010. The over-performance invoice of £212k within current category will be paid 8 September 2010.

Herefordshire +60 days relates to month 12 forecast out-turn. All but 1 of the 8 PCTs have agreed with the year end position. This is worth a net gain of £66k.

All Current + 30 days + 60 days Total£ '000 £'000 £'000 £'000

NHS 1,280 480 1,145 2,905Priv ate Patients 78 19 84 181Other * 258 78 148 484Total 1,616 577 1,377 3,570* Includes prescriptions, catering recharges, accomodation, telephones, ov erseas

v isitors and MES activ ity

Non NHS Debtors > £25k £'000 NHS Debtors > £100k £'000CP Plus 124 Shropshire County PCT 1,107NHS Employ ers 72 Telford & Wrekin PCT 785Ov erseas Visitor Z 56 RJAH 303Keele Univ ersity 50 West Mids Specialised Serv ices 122BUPA 34 Herefordshire PCT 109League of Friends - PRH 30

Total 366 2,426

NHS Current + 30 days

+ 60 days 2009/10 Total

£'000 £'000 £'000 £'000 £'000

Shropshire County PCT 437 53 77 540 1,107

Telford & Wrekin PCT 367 11 129 278 785

Powys 7 9 18 34

RJAH 179 122 1 1 303

Others 290 285 79 -87 567

Total 1,280 480 312 833 2,905


Section Ten – Creditors (Non NHS)

Table 1 summarises the non-NHS creditor payment performance for the cumulative prior year, month 5 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 5 and is 31% for volume and 55% for value.

Table 2 summarises the actual payment performance in the month.

Table 1NON NHS YTD M1 M2 M3 M4 M5 YTD

2009/10 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11By VolumeTotal Volume 75587 4240 7670 6614 6654 4503 29681BPPC compliant volume 49629 1813 2135 2062 1318 1962 9290BPPC compliant % 66% 43% 28% 31% 20% 44% 31%

By ValueTotal value (£000) 72097 5275 7056 11389 9671 8155 41546BPPC compliant value (£000) 46040 2679 1850 7013 5234 6082 22858BPPC compliant % 64% 51% 26% 62% 54% 75% 55%

Table 2Payment made QuantityQuantity % Value Value %0-30 days 1,962 44% £6,082 75%31-35 days 170 4% £183 2%36-40 days 353 8% £286 4%41-45 days 341 8% £274 3%46-50 days 236 5% £178 2%51-55 days 342 8% £300 4%56-60 days 402 9% £317 4%over 60 days 697 15% £535 7%Total invoices paid 4,503 100% £8,155 100%

Better Payment Practice Code - Trade Creditors

1520253035404550556065707580859095

100

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Month

Percentage

% Invoices Paid In 30 Days % Value of Invoices Paid In 30 Days


Section Ten – Creditors (NHS)

Table 1 summarises the non-NHS creditor payment performance for the cumulative prior year, month 5 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 5 is 23% for volume and 37% for value.

Table 2 summarises the actual payment performance in the month.

Table 1NHS Spend YTD M1 M2 M3 M4 M5 YTD

2009/10 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11By VolumeTotal Volume 2189 29 79 154 489 24 775BPPC compliant volume 1192 14 35 23 97 7 176BPPC compliant % 54% 48% 44% 15% 20% 29% 23%

By ValueTotal value (£000) 20045 1776 1529 1487 3448 415 8655BPPC compliant value (£000) 6993 687 892 347 1242 67 3235BPPC compliant % 35% 39% 58% 23% 36% 16% 37%

Table 2Payment made Quantity Quantity % Value Value %0-30 days 7 29% £68 16%31-35 days 2 8% £0 0%36-40 days 0 0% £0 0%41-45 days 1 4% £58 14%46-50 days 0 0% £0 0%50-55 days 3 13% £61 15%56-60 days 0 0% £0 0%over 60 days 11 46% £228 55%Total invoices paid 24 100% £415 100%

Better Payment Practice Code - NHS Creditors

1020304050

60708090

100

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Month

Percentage

% Invoices Paid In 30 Days % Value of Invoices Paid In 30 Days


TotalExpenditure/ Forecast % of spend

Plan CRL Expenditure Committed Committed Outturn /committed2010/11 M05 YTD M05 YTD M05 YTD 2010/11 against

£'000 £'000 £'000 £'000 £'000 forecast

B/Fwd 2009/10 projects 546 181 291 472 552 85.5%

2010/11 projectsCT Scanner PRH 800 0 672 672 676 99.4%Bathroom refurbishment 350 0 0 0 0 0.0%Decontamination Project 3,734 1,118 1,213 2,331 3,734 62.4%

3,000 14 4 18 18 100.0%Electrical infrastructure 600 0 0 0 0 0.0%Theatres Air Handling 450 137 202 339 400 84.8%Others 1,904 194 259 453 1,023 44.3%

10,838 1,463 2,350 3,813 5,851 65.2%

2010/11 contingency funds 1,350 389 50 439 1,080 40.6%

2010/11 unallocated funds 371 0 0 0 222 0.0%

Total 2010/11 13,105 2,033 2,691 4,724 7,705 61.3%

Planned CRL consists of: Forecast CRL consists of:Depreciation 7,705 Depreciation 7,705DH Loan for Decontamination 2,400 DH Loan for Decontamination 0DH Loan for W&C Zone 3,000 DH Loan for W&C Zone 0Total 2009/10 13,105 Total 2009/10 7,705

Redevelopment of Women and Children Zone

Section Eleven - Capital

The Capital Programme for 2010/11 has been revised to £7.7m, based on internally generated funds only.

Only £222k of capital funds remains available.

CT Scanner PRH – temporary CT Scanner currently in use. Planned date for new CT Scanner to be operational is 25 October 2010.

Decontamination Project – delay in commissioning of equipment due to utility upgrades not being completed as agreed. PRH service move will be on completion of works and commissioning. RSH service move planned for Mid-Spring 2011.

Theatres Air Handling Scheme – works to complete theatre 1 air plant currently being undertaken. Once theatre 1 air plant becomes operational, then installation works of theatre 2 air plant will commence. Estimated operational date for theatre 2 is 27 September 2010.

Documents

Enclosure 3 Trust Board Meeting – 7th October 2010