Finance Report Sheet 1 The Shrewsbury and Telford Hospital NHS Trust EXECUTIVE RESPONSIBILE David Gilburt Interim Finance Director AUTHOR (if different

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.

RECOMMENDATIONS The 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)

Plan £'000

Actual £'000

Variance £'000

L Year £'000

Plan £'000

Actual £'000

Variance £'000

L Year £'000

Annual Budget

21,849 22,960 1,111 21,406 Income 154,135 157,167 3,032 149,394 261,883(14,421) (15,138) (717) (14,928) Pay (102,226) (106,569) (4,343) (101,657) (174,222)

(5,930) (6,413) (483) (6,326) Non Pay (42,123) (43,557) (1,434) (41,145) (71,488)

1,498 1,409 (89) 152 EBITDA 9,786 7,041 (2,745) 6,592 16,173(1,128) (1,134) (6) (993) Finance Costs (7,918) (7,861) 57 (8,623) (13,606)

370 275 (95) (841) Total 1,868 (820) (2,688) (2,031) 2,567


Section One- EXECUTIVE SUMMARY


Section Two – Expenditure - Pay

Pay

13,000

13,500

14,000

14,500

15,000

15,500

16,000

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 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.

£000 £000 £000 %

Consultants (2,447) (2,512) (65) (2.6%)Medical Staffing (2,098) (2,066) 32 1.5%Nursing (5,417) (5,441) (24) (0.5%)Other Clinical (2,224) (2,239) (15) (0.7%)Non Clinical (2,873) (2,880) (7) (0.2%)

Total (15,059) (15,138) (79) (0.5%)

£000 £000 £000 %

Division 1 (5,099) (5,144) (45) (0.9%)Division 2 (4,622) (4,614) 8 0.2%Division 3 (3,501) (3,545) (44) (1.3%)Estates (189) (183) 6 3.2%Facilities (649) (601) 48 7.4%Corporate (999) (1,051) (52) (5.2%)

Total (15,059) (15,138) (79) (0.5%)

Control Total

Actual Var to

ControlVar to

Control

Actual Var to

ControlVar to

ControlControl

Total


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.

Agency Costs

400

600

800

1000

1200

1400


£'00

0

2010/11 Actual 2009/10 Actual


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.

Medical Staffing

0

500

1,000

1,500

2,000

2,500

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

£'00

0

Pay Agency Locum

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

% o

f to

tal

spen

d

Pay Agency Locum


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).

Plan Actual Plan ActualM7 M7 YTD YTD

Opening cash balance 80 316 441 441

EBITDA 1,450 1,332 8,925 6,218

Impairments 0 0 500 351

Working capital movement (200) (896) (3,855) 3,566

Operating cash flow 1,250 436 5,570 10,135

Capital expenditure (1,063) (693) (8,348) (7,916)

Proceeds from sale of assets 0 0 0 0

Operating cash flow after net capital expenditure 187 (257) (2,778) 2,219

Net interest paid 1 1 (15) 9

Provisions movement 0 (5) (20) (86)

Loan received 0 0 5,400 0

Loan repayment 0 0 (240) 0

Lease payment 0 0 0 0

PDC received 0 0 0 0

PDC dividend paid 0 0 (2,520) (2,528)

Cash flow for period 188 (261) (173) (386)

Closing cash balance 268 55 268 55


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.

Q1 Actual

Q2 Actual

Q3 Forecast

Q4 Forecast

FY11Total

FY11 Plan

FY11 Variance

£m £m £m £m £m £m £m

Income :

Patient Care 62.2 61.9 62.7 64.7 251.5 241.6 10.0Other 5.1 5.0 5.3 5.6 21.0 20.3 0.6

Total Income 67.3 66.9 68.0 70.3 272.5 261.9 10.6

Pay (46.1) (45.3) (46.0) (46.8) (184.2) (174.2) (10.0)Non Pay (18.5) (18.7) (18.8) (18.6) (74.6) (71.5) (3.1)

Total Expenditure (64.6) (64.0) (64.8) (65.4) (258.8) (245.7) (13.1)

EBITDA 2.7 2.9 3.2 4.9 13.7 16.2 (2.5)

Finance Costs (3.3) (3.4) (3.4) (3.4) (13.5) (13.6) 0.1

Surplus / (Deficit) (0.6) (0.5) (0.2) 1.5 0.2 2.6 (2.4)


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.

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 £1,258 £1,497

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.

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.


Section Seven- Activity and Income

Day Cases

3,000

3,250

3,500

3,750

4,000

4,250

4,500

4,750

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

Spells


Elective

0

200

400

600

800

1000


Spells


Emergency (Inc Maternity)

3,200

3,400

3,600

3,800

4,000

4,200


Spells


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 :


Section Seven - Activity and Income

New Out Patients

8,500

9,000

9,500

10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500


Attend


Follow Up Out Patients

11,000

12,000

13,000

14,000

15,000

16,000

17,000


Attend


Accident & Emergency

7,000

7,2507,500

7,750

8,0008,250

8,500

8,7509,000

9,250

9,5009,750

10,000


Attend


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.


Section Eight - Expenditure – Non-Pay and Finance Costs

Non Pay

4,500

5,000

5,500

6,000

6,500

7,000


£'00

0

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

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.

Finance Costs

0200400600800

1,0001,2001,400


£'00

0

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


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.

All Current + 30 days + 60 days Total

£ '000 £'000 £'000 £'000

NHS 1,707 525 1,036 3,268

Priv ate Patients 146 37 57 240

Other * 221 46 106 373

Total 2,074 608 1,199 3,881

* Includes prescriptions, catering recharges, accomodation, telephones, ov erseas

v isitors and MES activ ity

Non NHS Debtors > £25k £'000 NHS Debtors > £100k £'000

CP Plus 62 Shropshire County PCT 987

BUPA 60 RJAH 834

Ov erseas Visitor Z 56 Pow y s 547

Telford & Wrekin PCT 151

West Mids Specialised Serv ices -109

Total 178 2,410

NHS Current + 30 days + 60 days 2009/10 Total

£ '000 £'000 £'000 £'000 £'000

Shropshire County PCT 353 28 73 533 987

Telford & Wrekin PCT 26 22 67 36 151

Pow y s 16 531 547

RJAH 612 98 123 1 834

Others 700 -154 194 9 749

Total 1,707 525 457 579 3,268


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.

Table 1NON NHS YTD M1 M2 M3 M4 M5 M6 M7 YTD

2009/10 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11By VolumeTotal Volume 75587 4240 7670 6614 6654 4503 5514 7188 42383BPPC compliant volume 49629 1813 2135 2062 1318 1962 1921 2374 13585BPPC compliant % 66% 43% 28% 31% 20% 44% 35% 33% 32%

By ValueTotal value (£000) 72097 5275 7056 11389 9671 8155 9066 10630 61242BPPC compliant value (£000) 46040 2679 1850 7013 5234 6082 5590 6464 34912BPPC compliant % 64% 51% 26% 62% 54% 75% 62% 61% 57%

Table 2Payment made QuantityQuantity % Value £000 Value %0-30 days 2,374 33% £6,464 61%31-35 days 238 3% £267 3%36-40 days 251 3% £313 3%41-45 days 334 5% £465 4%46-50 days 301 4% £447 4%51-55 days 344 5% £303 3%56-60 days 288 4% £268 3%over 60 days 3,058 43% £2,103 20%Total invoices paid 7,188 100% £10,630 100%

Better Payment Practice Code - Trade Creditors

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

40118 40148 40179 40210 40238 40269 40299 40330 40360 40391 40422 40452

Month

Per centage

% 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 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.

Table 1NHS Spend YTD M1 M2 M3 M4 M5 M6 M7 YTD

2009/10 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11 2010/11By Volume

Total Volume 2189 29 79 154 489 24 272 121 1168BPPC compliant volume 1192 14 35 23 97 7 88 53 317BPPC compliant % 54% 48% 44% 15% 20% 29% 32% 44% 27%

By Value

Total value (£000) 20045 1776 1529 1487 3448 415 2371 1246 12272BPPC compliant value (£000) 6993 687 892 347 1242 67 1424 573 5232BPPC compliant % 35% 39% 58% 23% 36% 16% 60% 46% 43%

Table 2Payment made QuantityQuantity % Value £000 Value %0-30 days 53 44% £573 46%31-35 days 8 7% £4 0%36-40 days 11 9% £65 5%41-45 days 1 1% £0 0%46-50 days 1 1% £2 0%50-55 days 8 7% £43 3%56-60 days 1 1% £8 1%over 60 days 38 31% £551 44%Total invoices paid 121 100% £1,246 100%

Better Payment Practice Code - NHS Creditors

10

20

30

40

50

60

70

80

90

100

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

Month

Percentage

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


Total

Expenditure/ Forecast % of spend

Plan CRL Expenditure Committed Committed Outturn /committed

2010/11 M07 YTD M07 YTD M07 YTD 2010/11 against

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

B/Fwd 2009/10 projects 546 272 135 407 472 86.2%

2010/11 projects

CT Scanner PRH 800 493 179 672 676 99.4%Bathroom refurbishment 350 0 0 0 0 0.0%Decontamination Project 3,734 1,518 911 2,429 3,434 70.7%

3,000 0 0 0 0 0.0%Electrical infrastructure 600 0 0 0 0 0.0%Theatres Air Handling 450 290 58 348 360 96.7%Breast Screening (Digital) 466 129 399 528 540 97.8%Others 1,438 416 183 599 1,622 36.9%

10,838 2,846 1,730 4,576 6,632 69.0%

2010/11 contingency funds 1,350 450 107 557 1,080 51.6%

2010/11 unallocated funds 371 0 0 0 321 0.0%

Total 2010/11 13,105 3,568 1,972 5,540 8,505 65.1%

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 0

CRL Transfer - PSAG 500CRL Transfer - Maty Refurbishment 300

Total 2010/11 13,105 Total 2010/11 8,505

Redevelopment of Women and Children Zone

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.

Documents

Finance Report Sheet 1 The Shrewsbury and Telford Hospital NHS Trust EXECUTIVE RESPONSIBILE David Gilburt Interim Finance Director AUTHOR (if different