Trust Diagnostic EndProduct Nottingham University Hospitals NHS Trust FINAL REPORT 22'06'2006

1
Trust Diagnostic End-ProductNottingham
University Hospitals NHS Trust FINAL REPORT
22.06.2006
This report is solely for the use of the SHA,
its Trusts and the FT Diagnostic Team.  No part
of it may be circulated, quoted, or reproduced
for distribution outside these groups without
prior approval from the FT Diagnostic Team. This
material was used during an oral presentation it
is not a complete record of the discussion.
2
GUIDE TO PACK
3
EXPLANATION OF TERMS
4
CONTEXT
Nottingham University Hospitals NHS Trust (NUH)
was established on 1st April 2006 by the merger
of Nottingham City Hospital NHS Trust (NCH) and
the Queens Medical Centre (QMC). The Foundation
Trust Diagnostic process was conducted over a 20
week period in two 10 week phases, the first to
capture the history of both legacy organisations
with the second to capture the current and future
direction of the resultant new organisation.
Normally the FT Diagnostic process would be
undertaken over a 10 week period and be conducted
with a single organisation. The newly merged
Trust has been operational since 1st April 2006,
has an interim Board in place with newly
appointed Chair, Non-Executives and Interim
Executive Directors, pending the commencement of
the new Trusts Chief Executive on 31st July
2006. This process is an assessment of where the
Trust is at in respect of its readiness for FT
status. Based upon the key activities and
submissions throughout the FT Diagnostic process.
However, recognition will be given to the unique
situation that the Trust is in, which is a period
of transition. Therefore, the B2B and this pack
identify a number of issues to be addressed and
areas for development, which will challenge the
Trust and the Senior Team. These have, however,
been identified with consideration given to the
significant challenges that the Trust has faced
and will face moving forward with respect to the
merger process. Recommendations on key actions
are provided from the findings arising throughout
the 20 week FT Diagnostic process.
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CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices

6
SUMMARY OF ISSUES ESTIMATED TIME TO FT STATUS
7
BUSINESS PLAN KEY ISSUES
Overall gt2
8
GOVERNANCE KEY ISSUES
Overall 1-2
9
SERVICE PERFORMANCE KEY ISSUES
Overall lt1
10
EXTERNAL RELATIONS KEY ISSUES
Overall 1-2
11
PBR / CHOICE / PBC / ISTC KEY ISSUES
12
PBR / CHOICE / PBC / ISTC KEY ISSUES
Overall 1-2
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NOTTINGHAM UNIVERSITY HOSPITALS NHS TRUST
GEOGRAPHICAL AREAS SERVED BY NOTTINGHAM
UNIVERSITY HOSPITALS NHS TRUST
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NON EXECUTIVE DIRECTORS
Dr Peter Barrett Chairman

• Senior figure in the Nottinghamshire NHS. His
  wealth of experience includes being Chair of
  Nottingham Health
• Authority and the Chair of the Trent Regional NHS
  Executive from 1999 to 2001. He is currently
• Chair of the Independent Reconfiguration Panel
  and has also worked in Primary Care for 30 years
  in Nottingham.

• Experience

Professor Terence Stephenson

• Currently Dean of the Faculty of Medicine and
  Health Sciences at the University of Nottingham
  and acts
• as the university nominee on the Trust Board.
  Prof Stephenson is Professor of Child Health and
  has been
• an Honorary Consultant Paediatrician at both NCH
  and QMC for over 15 years. He is also involved
  with various
• national professional committees and is a
  Vice-President elect of the Royal College of
  Paediatrics and Child Health.

• Experience

Jawaid Khalil

• Assistant Director of Corporate Services for
  Nottinghamshire Probation Service, responsible
  for services
• including HR, finance and IT. He was previously
  Director of Personnel at Basford Hall College.
  For the past six
• years he has been an independent member of
  Nottingham Police Authority, where he is involved
  in setting the
• policing annual budget, approving and publishing
  a costed plan for policing and ensuring that the
  plan meets local
• and governmental objectives. Mr Khalil is also a
  member of the Employment Tribunal.

• Experience

Alex McKee

• Was previously Managing Director of John Deere
  until he retired at the end of December. He
  worked for
• the company for over 33 years. His career
  included time spent working in Africa and the USA
  as Vice
• President for marketing, and also in Russia where
  he started the companys current operations.
  Whilst in
• Russia, Mr McKee also supported the Russian
  National Orchestra in their outreach programme,
  helping
• orphanages in the Moscow region. Mr McKee is a
  local parish councillor.

• Experience

13
15
NON EXECUTIVE DIRECTORS
Louise Skull
Former non-executive director of Nottingham City
Hospital. She is an Associate of the Chartered
Institute of Management Accountants and an
independent consultant in change implementation
and business start-up. She has many years
experience of supporting staff through mergers,
cultural change and managing major cost
improvement programmes in the banking sector. Ms
Scull has co-authored a book called Beyond
Childlessness, which was published last summer
in the UK, South Africa, Australia and New
Zealand and is shortly to be published in Germany
and Holland.

• Experience

Julia Tabreham

• Experience

A former non-executive director of Trent
Strategic Health Authority and Nottingham Health
Authority. Her early career was in the banking
sector, but she is currently Chief Executive of
The Carers Federation, an organisation which she
set up 15 years ago to provide a wide range of
services to patients and carers.

14
16
EXECUTIVE TEAM
Jenny Leggott CBE Interim Chief Executive

• Experience

A registered nurse, midwife and sick childrens
nurse, completing her MBA from De-Montfort
University in 1997, has held a number of
managerial and leadership positions within the
Leicester acute trusts, including Director of
Nursing. She was appointed as Director of Nursing
at Nottingham City Hospital in May 1999. Her
current substantive post in the legacy Trust was
Director of Service Improvement, Planning
Nursing until July 2005. In July 2005 she became
the Acting CE of Nottingham City Hospital until
April 2006 when she became the interim CE of
Nottingham University Hospitals NHS Trust. Jenny
was awarded a CBE in 2003 in recognition of her
services to nursing and midwifery.
Dr Stephen Fowlie Interim Medical Director
A consultant physician with special
responsibility in geriatric medicine. He has
previously held clinical positions in Scotland,
Newcastle and Oxford and has 15 years consultant
experience of all aspects of general and
geriatric medicine at Nottingham City Hospital.
Stephen was Clinical Director of the City
Hospital Medicine Division prior to taking up his
appointment as Medical Director at Nottingham
City Hospital in 2004. He has also been involved
with a variety of hospital clinical groups and
committees. Stephen was appointed the interim
Medical Director for Nottingham University
Hospitals in April 2006.

• Experience

Tim Woods Interim Director of Finance

• Experience

• Started his NHS career as a Regional Finance
  Trainee. He worked at Hinchingbrooke Hospital in
  Cambridgeshire
• and then became Director of Finance for Barnsley
  District General Hospital before moving to
  Nottingham City
• Hospital in 1999. Tim has attended the INSEAD NHS
  Foundation Trust Chief Financial Officer
  Programme in
• Tim became the interim Director of Finance for
  Nottingham University Hospital NHS Trust in April
  2006.
• Tim has been a CIPFA P3 project examiner and is
  an accredited mentor for the HFMA.

Fiona Ward-Interim Director of Human Resources

• Experience

Having started in the NHS as a management
trainee, Fiona has extensive HR experience at all
levels and joined the QMC in 1986, where she
became Director of Human Resources in April 1993.
In addition to her HR role, her general
management responsibilities have included risk
management and non-clinical governance and the
role of Deputy Chief Executive for QMC for its
final 2.5 years.
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EXECUTIVE TEAM
Colin Ovington-Interim Director of Nursing
Midwifery

• Experience

Colin is a qualified registered nurse and sick
childrens nurse. He has worked in the NHS since
1978 both as a clinical nurse and as a manger and
has a particular interest in the development of
innovative practice. Colin has been working as a
Director of Nursing Midwifery at QMC since
December 2004. During this time he has also been
lead director for children, and Director of
Infection Prevention and Control. He has also
held the executive responsibility for clinical
risk management, and the development of a robust
risk register and accountability for risk
reporting to the board.
Mike Dinsmore-Interim Director of Facilities and
Estates

• Experience

Mike took up the role as Operations Director for
Diagnostics and Facilities at Queen's Medical
Centre in 2001 and was previously Director of
Development. Mike has worked in the NHS since
1967 and moved from Nottingham General Hospital
to the QMC in1991. Has been interim Director of
Facilities Estates in April 2006.
Andrew Fearn-Interim Director of ICT
Qualified as a Work Study/Organisation Methods
Engineer from Derby University, worked in the NHS
since 1988. In1993 he became Quality Manager
Asst. Director of Performance, where his broad
range of achievements included working with
clinical teams on identifying and monitoring
standards and applying the EFQM Business
Excellence Model to performance management. In
1999 he became Programme Director for the
Nottingham LIS Programme (the local
implementation strategy for Information for
Health - the NHSIT Strategy). In 2001, became
the Director of ICT Services for NCH and QMC and
in January 2004, He is the lead IT specialist for
Nottingham on the East Midlands 21C IT Board and
plays an influential role in the National
Programme for IT, including providing consultancy
support to the East of England and East Midlands
Cluster.

• Experience

Cheryl Warwick-Interim Director of Organisational
Development

• Experience

Has worked in the NHS for the last sixteen years,
in a variety of posts across Primary Secondary
Care, Local Health Authorities and Strategic
Health Authorities, prior to that she worked for
fifteen years in the private sector. She has
considerable experience in facilitating change
within a team environment and is a passionate
believer in the impact and importance of
developing empowering organisational cultures.
Her work with Nottingham Health Authority in
developing an inclusive culture led to the award
of an NHS Beacon. She is a Fellow of the
Chartered Institute of Personnel and
Development.
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EXECUTIVE TEAM
Julie Stammers-Interim Director of Planning and
Performance
Joined the NHS in 1996. She has a broad range of
senior managerial experience, key elements being
operational management, planning and performance
management at all levels. At the end of 2004 she
took up the role of Director of Planning
Delivery at the Queens Medical Centre with the
particular challenge of ensuring the organisation
met key national and local targets. Her career
prior to joining the NHS spanned over 20 years
working within the academic community in the
field of medical research. She gained a PhD in
Child Health, with her main area of research
being nutrition during pregnancy and growth of
the foetus.

• Experience

Kathy Kirkwood Interim Joint Trust Secretary

• Experience

Has worked in the NHS since 1979 and entered NHS
management in 1987 after successfully attaining a
Bachelors Degree as a mature student. She has
held a number of management positions in the NHS
including leading on consumer relations and
managing support services. Kathy is a committed
public servant and was appointed as QMC Trust
Secretary in 2001 with responsibility for leading
on all aspects of corporate governance,
including compliance with statutory duties and
public service values, and providing high-level
support and guidance to the Board and Senior
Managers on both governance and risk management.
Rachael Magnani Interim Director of Strategic
Development
Qualified as a therapy radiographer in 1989. Has
held a number of clinical and managerial
positions in the NHS over the past 20 years,
working in acute hospitals in London, Kent, and
Derby. Transferred to Erewash PCG as a primary
care development manager in 1999, being appointed
as the Director of Commissioning and Service
Delivery for the PCT in 2001. She later became
the Director of Strategic Development and the
Deputy Chief Executive. Has extensive experience
in operational management, strategic planning,
development and implementation as well as
commissioning experience as both a commissioner
and a provider. Has led the development of major
projects including the first primary care-led
DTC and has acted as a consultant for NatPaCT and
the NHS Alliance in the development of national
documentation. She has a masters degree in
Health Science.

• Experience

Mike ODaly Interim Joint Trust Secretary

• Experience

Has worked in the public sector for 25 years. A
graduate entrant to the DHSS, he joined DHSS HQ
on promotion in 1988. Until January 2005, he
worked in the civil service and the NHS within
senior management in mental health provision.
Although predominantly in a corporate governance
/ Trust Secretary role in several NHS providers,
some of which he helped establish, he also has
strategic and operational experience, including
caretaker Director of Operations at Rampton High
Security Hospital for nine months. In January
2005 he joined Nottingham City Hospital NHS
Trust, having been recruited to act as its first
Foundation Trust Secretary. Mike has a personal
and professional interest in ethics. He has a
bachelors degree in law and a masters degree in
medical ethics.
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19
BUSINESS OVERVIEW KEY STATS
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CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices

21
SUMMARY OF BUSINESS PLAN
22
SUMMARY OF KEY FINANCIALS
1
2
3
4
5
6
Clinical income is projected to fall between
2006/07 and 2008/09 driven mainly by loss under
PbR, projections of decreasing activity as the
ISTC comes online and due to the RAB effects of
previous years deficits. Decrease in other income
in 2006/07 is mainly due to post merger
elimination of income transactions between QMC
NCH and also due to repayment of 5m
brokerage. Increase in other income from 2008/09
partly due to recharge of costs of providing
diagnostic and support facilities to
ISTC. Increase in pay costs in 2006/07 due to
cost of pay reforms, full-year effect of capital
developments and increase in staff due to lower
agency usage. Fall in pay costs in 2007/08
driven by realisation of CIPs. However the Trust
failed to adequately detail these. The Trust is
projecting reported deficits each year until
2009/10 the RAB effects are driving the
reported deficits in years 2007/08 and 2008/09.
However there is an underlying surplus from
2007/08 mainly due to pay cost savings factored
in. Deficits are accompanied by a significant
cash shortfall. The Trust has failed to fund the
financial plan as it stand. The cash position is
untenable and the Trust has not identified how
the plan will be financed.
1
2
3
4
5
6
Trust reliant on recharge income from ISTC. Cash
position is untenable and Trust has not
identified how the plan will be financed
21
23
BRIDGE ANALYSIS NORMALISED NET SURPLUS
Short-term historical 2004/05 to 2005/06 (m)

• Income inflation 24.4m
• Clinical income 17.3m
• Non NHS clinical income (0.3m)
• RD 0.3m
• Education 0.9m
• Other 5.6m

• Non-pay cost pressures (12.2m)
• Drug costs (4.7m)
• Clinical Supplies Services (3m)
• Other (4.6m)

• CIPs 18.7m
• Pay expense 10.3m
• Drug costs 4m
• Clinical supplies 2.1m
• Other 2.3m

• Activity growth (4.1m)
• Clinical income 3.2m
• Drug costs (2.4m)
• Clinical supplies (4.9m)

(21.6)
(21.0)
24.4
(37.7)
18.7
(12.2)
(4.1)
10.7
3.2
(4.0)
1.6

• Pay cost pressures (37.7m)
• Pay awards (16.3m)
• EWTD (2.2m)
• A4C (5.1m)
• Consultant Contract (1.5m)
• Other (12.6m)

04/05 normalised deficit
Non Pay Inflation
Depreciation, PDC, Etc
05/06 normalised deficit
non recurrent CIPs
Pay Inflation
Activity Growth
Income Inflation
Develop-ments
Other
CIPs
PbR
In 2004/05 the combined underlying deficit for
QMC and NCH remained at c.21m. Errors in the
Trusts modelling make it difficult to analyse
the drivers of this
Includes inflation due to activity change
(8.5m), Developments (1.6m), Non Recurrent
Savings in previous year (1.9m) and a baseline
pay expense due to change in number of staff
(0.6m) Non recurrent CIPs have been
incorrectly modelled by the Trust and thus appear
here on the normalised bridge. The bridge
balances despite this error suggesting that there
is an error in at least one of the other
categories shown here. The trust has been unable
to correct these errors within the timescales of
the diagnostic
24
BRIDGE ANALYSIS NORMALISED NET SURPLUS
Short-term forecast 2005/06 to 2006/07 (m)

• CIPs 12.6m
• Pay expense 6.9m
• Drug costs 1.0m
• Clinical supplies 3m
• Other 1.7m

• Pay cost pressures (16.5m)
• Pay awards (11.3m)
• A4C (0.9m)
• Consultant Contracts (1m)
• Change in staff number (2m)
• Other (1.3m)

• Activity growth 4.4m
• Clinical income 1.2m
• Drug costs 1.6m
• Clinical supplies 1.6m

• Income inflation 4.0m
• Clinical income 9.8m
• Non NHS clinical income (0.3m)
• RD 0.3m
• Education (4m)
• Other (1.8m)

(21.0)
(23.3)

• Non-pay cost pressures (1.9m)
• Drug costs (2m)
• Clinical Supplies Services (2.1m)
• Other 6m

(16.5)
12.6
4.4
(4.5)
4.0
1.9
(3.2)
(1.5)
0.6
05/06 normalised defict
Non pay costs pressures
Income Inflation
06/07 normalised deficit
Pay cost pressures
Depreciation
Activity growth
Develop- ments
PbR
CIPs
Other
The normalised deficit is projected to increase
slightly in 2006/07 as increased PbR losses and a
reduction in the level of CIPs cancel out any
benefit from reduced pay cost pressures
25
BRIDGE ANALYSIS NORMALISED NET SURPLUS
Long-term forecast 2006/07 to 20010/11 (m)

• CIPs 78.5m
• Pay expense 62.1m
• Drug costs 3.4m
• Clinical supplies 6m
• Other 7m

• Pay cost pressures (43.5m)
• Pay awards (43.2m)
• Other (0.3m)

• Non-pay cost pressures (28.2m)
• Drug costs (15.8m)
• Clinical supplies (6.4m)
• Other (6m)

• Income inflation 72.9m
• Clinical income 36.6m
• Non NHS clinical income 0.2m
• RD 1.1m
• Education 3.0m
• Other 32.0m

20.2

• Activity growth (26.8m)
• Clinical income (30.5m)
• Drug costs 1.4m
• Clinical Supplies Services 2.3m

(23.3)
78.5
(43.5)
(28.2)
72.9
(26.8)
(4.3)
(3.8)
(1.3)
06/07 normalised deficit
10/11 normalised surplus
Non pay costs pressures
Pay cost pressures
Depreciation
Income Inflation
Activity growth
Develop- ments
PbR
CIPs
The Trust is projecting a significant normalised
surplus by 2010/11
26
LTFM ASSUMPTIONS
Comments

• There is a reduction across all activity types in
  2006/07. The Trust over-performed in 2005/06 and
  has assumed that this level of activity will not
  be funded by PCT commissioners in 2006/07.
• The Trust is modelling a significant reduction
  across all activity types as the ISTC comes
  online. The ISTC is due to come into operation
  during late 2007.
• Price Inflation assumptions are broadly in line
  with those circulated as a guide by the SHA.
• Cost Improvement targets as a percentage of
  income are relatively low, with the exception of
  2007/08, compared with those for historic years.
• Cost pressures from Agenda for Change and
  Consultant Contract are assumed to continue due
  to incremental progression. Although the
  additional costs of these initiatives have been
  quantified the Trust has not provided firm
  quantified plans on the benefits from these.
  These are believed to be included in the high
  levels of CIPs that are still to be identified

1
2
3
4
5
Activity assumptions show reduction of activity
as ISTC comes online
27
SUMMARY OF CIP AND CAPEX
Capex to date and future projections m
Comments

• Projected level of CIPs in 2006/07 are not higher
  than historical achievements. The Trust believes
  it will be 2007/08 before the full year effects
  of of merger CIPs will be realised.
• CIPs in 2007/08 are modelled to be exclusively
  delivered through recurrent measures. 45m of
  CIPs is higher than the Trusts had achieved
  historically. Trust has modelled to deliver 32m
  of the 45m through workforce changes. This is
  not reflected in projected staff numbers.
• After 2007/08 CIPs are unambitious for a
  struggling Trust and are consistently lower than
  national benchmark of 2.5 of income

• Capital expenditure has been modelled as matching
• depreciation in future years. This profile is
  inconsistent
• with the 1.2bn of capex developments within the
  SDS.
• The Trust has no detailed plans for capital
  development
• at this stage.
• There is significant non-maintenance capital
  expenditure
• in 2005/06 and 2006/07. No estimate is provided
  in the
• model for any non-maintenance capital expenditure
  from
• 07/08 onwards.
• Significant capital expenditure projects in
  2006/07
• include Clinical Haematology Telecoms PACS.

1
1
2
2
3
3
Unambitious CIPs projected in early and later
years for a merged Trust
Undeveloped Capital Expenditure Plans for Future
Years
28
COST IMPROVEMENT PROGRAMME PROJECTIONS
1
2
3
4
Significant CIPs are projected for 2007/08. The
amounts involved are exclusively from recurrent
resources and at a greater level than achieved in
any year before. Trust informs 2007/08 is year
when full effect of merger savings will be
realised. CIPs as a percentage of income in later
years are unambitous and much lower than the
national benchmark of 2.5. A detailed schedule
of schemes to support the Trusts forecast cost
improvement programme has not been provided. CIPs
have been categorised in broad headings( most
notably 31.9m from additional workforce changes
in 2007/08). A significant proportion of cost
reductions remain to be developed in the model
for later years.
1
2
3
4
Cost Improvement Programmes are Underdeveloped
and Lack Detail
29
KPIs ANALYSIS (1/3)
Activity growth
Elective
Comments Activity decrease in 06/07 as a result
of downsizing funding levels since 04/05.
Demographic growth offset by various initiatives
e.g. waiting list management, managing patients
in community settings
Comments Day case activity decrease from 07/08
is a result of TCs coming online.
Non elective
Elective Inpatient
Elective Day Case
Comments Reduction of outpatient attendances
from 06/07 is due to the relocation of some
services to a community setting e.g. LIFT at
Nottingham Erewash PCTs and to primary care
centres
Comments The trust will be working with primary
care to better manage patients in community
settings e.g. telemedicine, enhanced services for
urgent ambulatory care, predictive tools for
viruses/weather
AE
Outpatient (First Follow-up)
30
KPI ANALYSIS (2/3)
Productivity
Clinical income as of total assets
Total clinical income per bed
Total staff costs per bed
Comments A 5 reduction in bed numbers between
05/06 and 08/09 is offset by flat trend for staff
costs over the same period
Comments Increase in income/bed is a result of
a reduction of beds numbers against a minimal
change of clinical income
Comments Minimal change of clinical income is
offset by a significant increase in, mainly, the
value of fixed assets in 09/10 and 10/11
Staff costs
Non clinical staff costs/clinical staff costs
total agency costs / total staff (pay) costs
Comments Almost no change to the cost of agency
staff has been modelled over the period.
Comments No change to ratio has been modelled
except 07/08 significant decline in non
clinical (non agency) staff costs offset by a
corresponding but lesser decline of clinical
staff costs.
Bed number excludes ITU beds and all cots
31
KPIs ANALYSIS (3/3)
Other
Theatre utilisation,
Bed occupancy,
Comments Trust anticipates bed occupancy to be
maintained between 84 and 86 over the period
Comments From 05/06 the trust has modelled a
steady increase to 87 by 10/11. Details to be
confirmed on how this will be achieved.
Length of stay Non-Elective, days
Average length of stay Elective, days
Comments Trust has modelled a reduction from
06/07 onwards through implementation of a bed
management project reviewing LOS, ward/nursing
levels and junior doctor planned activities
Comments The trust has modelled a steady
reduction in average length of stay. The main
barrier will be discharge to other NHS settings
as planned for day cases
32
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(1/7)
33
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(2/7)
34
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(3/7)
35
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(4/7)
36
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(5/7)
37
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(6/7)
38
SUMMARY OF TRUST KEY RISKS per RISK ASSESSMENT
(7/7)
39
SUMMARY OF OTHER KEY RISKS ASSESSED BY DIAGNOSTIC
TEAM
40
CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices

41
WE HAVE ASSESSED TRUST GOVERNANCE THROUGH LENSES
SHA and Trust interviews
Trust governance self-assessment
Board meeting observations
Questions to be answered

• What gaps does the Trust have in its governance
  compared with a well-governed Foundation Trust?
• When is the Trusts governance likely to be
  adequate for Foundation Trust status?

42
GOVERNANCE SELF-ASSESSMENT (1/7)
43
GOVERNANCE SELF-ASSESSMENT (2/7)
44
GOVERNANCE SELF-ASSESSMENT (3/7)
45
GOVERNANCE SELF-ASSESSMENT (4/7)
46
GOVERNANCE SELF-ASSESSMENT (5/7)
47
GOVERNANCE SELF-ASSESSMENT (6/7)
48
GOVERNANCE SELF-ASSESSMENT (7/7)
49
COMBINING THESE ASSESSMENTS WITH THE DIAGNOSTIC
TEAMS FINDINGS LEAD US TO CONCLUDE.
Time to meeting FT requirements
Diagnostic lens
Category of governance
Issues identified
lt1

• Organisational capacity
• Performance management
• Risk management

• Full and permanent Trust Board to be established
• Integrated performance framework and reporting to
  be established
• Overarching Assurance Framework and Risk
  Management to be embedded across the new
  organisation

lt1

• Absence of a merger plan monitoring of progress
  against milestones
• Merger efficiencies not given sufficient priority
• Limited exception reporting not all reports
  discussed (e.g CEO report)
• New NEDs so restricted challenge at this stage
• Agenda very little in public session (50 mins)
• Over- emphasis upon detail around FT diagnostic
  risk governance

• Effective challenge and participation
• Relevant meeting agenda
• Ability to follow through decisions

Overall
lt1

• Assurance frameworks
• Comparative clinical governance
• Comparative financial governance
• Comparative HR
• governance

• Good assurance frameworks at legacy
  organisations.
• Need to integrate and embed common governance
  arrangements across new Trust. Risk that some of
  the benefits of the individual approaches are
  lost in merger
• HR strategy required to support significant staff
  reductions (1,200 wte)

lt1
50
CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices

51
SERVICE PERFORMANCE ASSESSMENT NUH (1/2)
52
SERVICE PERFORMANCE ASSESSMENT NUH (2/2)
Overall lt1
53
SERVICE PERFORMANCE ASSESSMENT QMC (1/2)
54
SERVICE PERFORMANCE ASSESSMENT QMC (2/2)
Overall lt1
55
SERVICE PERFORMANCE ASSESSMENT NCHT (1/2)
56
SERVICE PERFORMANCE ASSESSMENT NCHT (2/2)
Overall lt1
57
CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices

58
TRUST EXTERNAL RELATIONS SELF-ASSESSMENT 1/4
Are the Trusts external partners supportive of
its strategy?
59
TRUST EXTERNAL RELATIONS SELF-ASSESSMENT 2/4
60
TRUST EXTERNAL RELATIONS SELF-ASSESSMENT 3/4
61
TRUST EXTERNAL RELATIONS SELF-ASSESSMENT 4/4
62
CONTENTS FOCUS

• 1) Overview Summary
• 2) Business plan
• 3) Governance
• 4) Service performance
• 5) External issues
• Appendices
• Appendix 1 Detailed Financials

63
TRUST PCT PROJECTED ACTIVITY COMPARISON (05/06
TO 07/08)
Trust Nottingham University Hospitals
PCTs Broxtowe Hucknall, Gedling, Nottingham
City, Rushcliffe,
Trust
PCT
Gap in activity 09/10
CAGR PCT-8.9 Trust-6.6
CAGR PCT-8.3 Trust-8.7

• Trust and PCT forecasts are based on proposed
  planning assumptions, which are yet to be agreed
  and result in a signed SLA for 2006/07 between
  trust and PCT.

CAGR PCT-0.2 Trust -0.1
CAGR PCT-8.9 Trust -9.8
Variance analysis of 04/05 and 05/06 Elective
discrepancy in 08/09 and 09/10 driven by PCT
planning increased activity for Digestive System,
Skin/Breast/Burns, Female Reproductive and
Haematology Non-Elective difference largely due
to lower Obstetrics Neonatel activity planned
by PCTs Outpatients there is significant
divergence across many specialities, especially
follow-ups in later years. This appears partly
to be due to data definition issues between trust
and PCTs.
CAGR from 2004/05 to 2009/10 Source PCT and
Trust Activity Returns
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BASE CASE NORMALISED EARNINGS
1
2
3
4
Trust has relied on brokerage and non-recurrent
solutions to achieve a small surplus in previous
years. Projecting a net deficit in each year
between 2006/07 and 2007/08 leads to the failure
of achieving their statutory breakeven
duty. Repayment of brokerage and RAB effects of
deficits drive deficit positions between 2006/07
and 2008/09. Trust is projecting an underlying
net surplus from 2007/08 onwards.
1
2
3
4
The Trust projects large deficits driven by the
affects of RAB in later years
65
BASE CASE IE ACCOUNT
1
2
3
4
5
NuH makes a loss under full PbR. Increase in
other operating income due to recharge of costs
of providing diagnostic and support services to
ISTC. Brokerage repayment in 2006/07 and RAB
effects of deficits shown as Non-Operating
Income. Zero growth in pay costs is projected
between 05/06 and 10/11 as the effects of reduced
activity and service reconfiguration reduce the
paybill. Severance costs of 11.3m in 2006/07
and 3.8m in 2007/08 are included. Loss of income
under PbR and reduced activity, repayment of 5m
brokerage support received in 2005/06 and
increase in pay costs drives 2006/07 deficit.
Deficits in future years mainly driven by RAB
effects of deficits.
1
2
3
4
5
66
BASE CASE IE DETAIL (1/2)
Loss of Income under PbR and of Activity to ISTC
in later years
67
BASE CASE IE DETAIL (2/2)
Low growth in salary costs and staff numbers in
future years due to the effects of reduced
activity and service reconfiguration.
68
BASE CASE BALANCE SHEET
1
2
1
3

• Trade creditors reduction driven by removal of
  intra-trust balances on merger together with
  repayment of brokerage. Trade debtor reduction
  also partly due to elimination of intra-trust
  balances on merger.
• Trust has stated the requirement for a loan or
  brokerage in future years.
• Taxpayers equity restated on merger. The
  income expenditure reserve and revaluation
  reserve were rolled into PDC when the Trusts
  merged.

1
2
3
Trust faces significant cash and liquidity
problems in near future.
67
69
BASE CASE CASH FLOW
1
2
3
4

• Movements due to elimination of intra-trust
  balances and also repayment of brokerage.
• Trust forecasts maintenance capex equivalent to
  depreciation from 2007/08 onwards
• Trust has not provided any figures for
  non-maintenance capital expenditure for period
  2007/08 onwards.
• The Trust projects significant cash flow problems
  and has indicated arranging a loan or brokerage
  to resolve this.

1
2
3
4
68