AGENDA ITEM NO 13

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AGENDA ITEM NO 13 CLUSTER BOARD Date 14 July 2011
REPORT OF Director of Finance
DATE OF PAPER 28 June 2011
SUBJECT Finance Report for the two months ended 31 May 2011
IN CASE OF QUERY, PLEASE CONTACT Mrs Claire Yarwood 0161 212 4835
PURPOSE OF PAPER This paper provides an update to the Cluster Board on the financial position for Greater Manchester for the first two months of 2011-12. PURPOSE OF PAPER This paper provides an update to the Cluster Board on the financial position for Greater Manchester for the first two months of 2011-12.
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Contents

• 1. Key Financial Performance Dashboard
• 2. Summary Financial Position
• 3. Risks
• 4. Cost Improvement Programme Performance
• PCT Performance Exception Report
• 6. Capital Investment Programme
• 7. Recommendations

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1 Key Financial Performance Dashboard
Review Commentary Year to Date Rating Year End Rating
Revenue The current revenue position after two months is a cumulative surplus of 2,167k, which is slightly behind the planned year to date surplus of 2,604k. PCTs are forecasting achievement of the planned surplus of 14,717k for 2011-12 although this is based on limited information from providers at this early stage in the financial year, and dependent on the achievement of significant levels of QIPP savings.
Capital To date there has been minimal spend of 382k against a total net capital resource limit of 14,716k.
Cash PCTs are largely drawing down cash in accordance with their plans, with the exception of NHS Bury (1.3 ahead of plan) and NHS Trafford (0.56 ahead of plan). No PCTs are currently indicating a requirement for cash in excess of their allocation.
Provider Breakeven NHS Stockport and NHS Bolton are the only PCTs with provider arms. NHS Stockport has reported a year to date surplus of 122k due to lower than planned pay costs and NHS Bolton is reporting a break even position. Both PCTs are forecasting that their provider arms will break even in 2011-12. Both PCTs are planning to transfer their provider services to Acute Trusts during 2011/12
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2 Summary Financial Position
  Surplus / (Deficit) YTD Surplus / (Deficit) YTD Surplus / (Deficit) YTD    
Resource Limit Opening in-year allocation Budget Actual Variance   Forecast Surplus
  000's 000's 000's 000's   000's
NHS Ashton Leigh and Wigan 573,073 602 486 (116)   2,726
NHS Bolton 488,691 96 79 (17)   1,000
NHS Bury 316,152 5 0 (5)   250
NHS Heywood Middleton and Rochdale 396,762 270 270 0   2,000
NHS Manchester 1,032,509 56 135 79   1,000
NHS Oldham 422,179 335 0 (335)   2,015
NHS Salford 476,052 691 691 0   2,260
NHS Stockport 482,475 111 233 122   667
NHS Tameside and Glossop 429,940 166 166 0   1,000
NHS Trafford 379,322 272 107 (165)   1,799
             
           
Total Greater Manchester 4,997,155 2,604 2,167 (437) 14,717
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3 Risks
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3 Risks

• There are a number of financial risks that are
  included in the PCTs forecast financial position
  however the magnitude and certainty of these
  risks is variable. The table on the previous
  page lists the major risks and the potential best
  and worst cases. Currently the most likely
  positions are included in the forecast outturns
  and are mitigated by contingencies, under spends
  on developments and strategic initiatives.
• Each PCT has assessed the risks applicable to
  their financial position and commissioned
  services. Whilst some risks are specific to
  particular PCTs, the risks relating to secondary
  care contracts, QIPP delivery and prescribing
  spend are common to most PCTs.
• This format of presenting financial risks is new
  to some PCTs, and therefore the information
  contained within this schedule at month two
  should be treated with caution. However, this
  will continue to be developed with Organisations.

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4 Cost Improvement Programme (CIP) Performance

       
Resource Limit Opening in-year allocation CIP Plan CIP Plan as of Resource Limit CIP Forecast
  000's 000's   000's
NHS Ashton Leigh and Wigan 573,073 12,700 2.2 12,700
NHS Bolton 488,691 9,300 1.9 5,944
NHS Bury 316,152 26,903 8.5 26,903
NHS Heywood Middleton and Rochdale 396,762 10,478 2.6 10,938
NHS Manchester 1,032,509 20,243 2.0 23,238
NHS Oldham 422,179   0.0  
NHS Salford 476,052 2,258 0.5 3,379
NHS Stockport 482,475 8,180 1.7 8,180
NHS Tameside and Glossop 429,940 10,200 2.4 10,200
NHS Trafford 379,322 15,300 4.0 15,300
         
         
Total Greater Manchester 4,997,155 115,562 2.3 116,782
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4 Cost Improvement Programme (CIP) Performance

• NHS Bury has the highest CIP target as a
  percentage of revenue resource limit, at 26.9m.
  Of this amount, 21.7m or 81 of the schemes are
  rated as high risk at month two, but this is a
  slight improvement over the plan position.
  However, achievement of CIP at month two is only
  1.4m , which is 2.6m behind plan, but further
  analysis will be undertaken over the course of
  the next two months to evidence the savings.
• NHS Manchester set an initial CIP target of
  20.2m and then added a further 50 to allow for
  slippage on schemes, optimism bias, and to
  provide a potential contingency for any
  deterioration in the underlying financial
  position. Detailed plans have been drawn up by
  consortia leads and other budget holders to
  address 23m of the revised 30m target and are
  currently working on proposals to achieve the
  balance. However significant savings are
  anticipated from service agreements, with over
  50 of the original target covered by block
  contract arrangements and therefore these have
  been achieved. The highest risk areas are in
  schemes to save costs in relation to secure
  mental health and running costs.
• NHS Stockport is reporting achievement of 6.8m
  of the 8.2m CIP savings at month two, and 4.6m
  of this relates to a 2 reduction in elective and
  unscheduled care contracts. If these contracts
  over perform later in the year, the PCT will
  report this as a cost pressure rather than an
  underachievement of CIP.

• NHS Bolton are currently forecasting an under
  achievement against their CIP plans of 3.4m, of
  which 2m is related to prescribing schemes and
  based on holding spend to 2010-11 levels, and
  1.4m is for demand management schemes.
  However this is expected to improve as the
  programme takes effect but will be closely
  monitored.

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5 PCT Performance Exception Report

• PCTs are currently forecasting achievement of
  the planned surpluses totalling 14,717k. This
  is the surplus control total agreed with the
  Strategic Health Authority. Therefore achieving
  the planned 2 recurrent headroom target.
• The year to date position is a surplus achieved
  of 2,167k against a budgeted position of
  2,604k, with the majority of the
  underachievement contributed by NHS Ashton Leigh
  and Wigan, NHS Oldham and NHS Trafford.
  However, as expected at this stage of the
  financial year, many of the sources of
  information used to generate forecasts are not
  available, most notably prescribing,
  collaborative commissioning and other provider
  activity monitoring reports. Most PCTs have
  incorporated month one activity from their main
  provider into their forecasts.
• NHS Bury has a number of financial recovery
  schemes in place, and those related to secondary
  care, prescribing and continuing care in
  particular have had a slower impact than
  anticipated. NHS Bury is forecasting achievement
  of the target surplus on the basis that in year
  savings on financial recovery schemes will be
  made to mitigate any recurrent shortfall. To
  date, there have also been non recurrent savings
  in other areas and work will be undertaken to
  secure these savings recurrently.
• NHS Manchester has identified forecast overspends
  of 6.3m, mainly within prescribing (2m), mental
  health non secure contracts (2m) and
  specialist/collaboratively commissioned services
  (1m). There are ongoing negotiations between
  NHS Manchester and Manchester City Council
  regarding the settlement of mental health non
  secure over performance for 2009-10, the 2010-11
  mental health pool contribution and pooling
  resources for 2011-12.
• Currently all PCTs are assuming that the full
  amount of the 2 non recurrent top slice will be
  returned in 2011-12 and be available for planned
  non recurrent expenditure.

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5 PCT Performance Exception Report

• NHS Oldham are in the process of developing
  dashboards to provide evidence based reporting
  on CIP achievements including financial benefits
  realised, and therefore whilst banked savings
  at month two are low, it is anticipated these are
  understated. The financial position is being
  closely monitored by Cluster and Locality
  Director of Finance.

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6 Capital Investment Programme
PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME PCT CAPITAL PROGRAMME

  Plan Plan Plan Forecast Forecast Forecast
  Expenditure Disposals /Grants /IFRIC-12 Charge against CRL Expenditure Disposals /Grants /IFRIC-12 Charge against CRL
             
NHS Ashton Leigh and Wigan 2,068 (1,633) 435 2,068 (1,633) 435
NHS Bolton 16,130 (11,925) 4,205 15,930 (11,725) 4,205
NHS Bury 1,558 (592) 966 966   966
NHS Heywood Middleton and Rochdale 925 (340) 585 925 (340) 585
NHS Manchester 3,718 0 3,718 3,718 0 3,718
NHS Oldham 15,346 (16,942) (1,596) 15,981 (18,212) (2,231)
NHS Salford 3,954 (831) 3,123 3,954 (831) 3,123
NHS Stockport 2,092 (427) 1,665 2,092 (427) 1,665
NHS Tameside and Glossop 1,105 (340) 765 1,105 (340) 765
NHS Trafford 1,900 (1,050) 850 1,900 (1,050) 850
             
  48,796 (34,080) 14,716 48,639 (34,558) 14,081
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6 Capital Investment Programme

• Although there has been very little expenditure
  to date on the capital programmes, all PCTs are
  forecasting to remain within the net Capital
  Resource Limit for 2011-12.
• Approximately 6.3m of capital expenditure is
  dependent on the disposal of assets, all to non
  NHS bodies, and PCTs have programmed capital
  schemes to commence only when disposals are
  certain. However, there is a risk that if
  disposals are delayed until later in the year,
  that there will be insufficient time to complete
  planned schemes and there may be capital resource
  limit under spends which cannot be carried
  forward to 2012-13.
• IT schemes total 4.4m and work is currently
  being undertaken to review the nature of planned
  expenditure and determine whether efficiencies in
  procurement and/or implementation are possible
  across the Greater Manchester footprint.

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7 Future Performance Management Information

• In future reports information will be presented
  on the following areas of financial performance
• Performance against main provider contracts
• Delivery of running cost targets/paybill
• Non recurrent 2 expenditure plans

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8 Recommendations

• 8.1 The Cluster Board is asked to note the
  contents of the report.
• 8.2 The Cluster Board is asked if the
  information contained within or proposed is
  sufficient to meet the needs of Board members,
  given full detailed financial reports will be
  prepared for Locality Boards. Any comments can
  be sent directly to Mrs C Yarwood.