NHS FIFE
Report to the Finance & Resources Committee on 27th May 2014
ACUTE SERVICES DIVISION FINANCIAL RECOVERY PLAN
1. INTRODUCTION
1.1. This report provides the Committee with an overview of the initial plans and proposed actions over the coming months, required to ensure the Acute Services Division is able to support NHS Fife deliver ongoing financial balance. The Acute Services Division Management Team (ASDMT) supports the planned approach, and further consideration will be given to the issues at the Acute Services Division Committee on 21 May 2014.
1.2. Work remains at an early stage but further momentum is essential over the next few weeks to ensure plans are developed and actions put in place.
2. BACKGROUND
2.1. Subject to external audit review, NHS Fife delivered a breakeven outturn against budget for 2013/14. Within this however, there were a number of significant areas of overspend particularly within the Acute Services Division which reported an overspend of £7.958m for the year.
2.2. The NHS Fife Board approved the Financial Framework for 2014/15 at a special meeting on 25 March 2014. This set out the financial planning assumptions for the new financial year, with a cash efficiency savings target of £6.006m, representing the gap between planned income and expenditure. Subject to the full achievement of this efficiency target, NHS Fife will deliver a breakeven financial outturn in 2014/15. The plan includes funding identified to support a number of areas within the Acute Services Division, including unplanned care, elective capacity, SMC drugs and other general uplifts for pay and supplies.
2.3. The financial challenge for the Acute Services Division Management Team, and budget holders across the Division, is to deliver ongoing safe and effective services, within these new (and existing) resources.
2.4. A robust exercise is underway to develop a financial recovery plan for the Division. This takes cognisance of a number of factors, including the underlying financial pressures; the additional funding available through the approved Financial Framework; and any existing flexibility within Division-wide budgets. However, it must also recognise the requirement for efficiency savings, to support the wider NHS Fife cash target as well as any local reinvestment.
2.5. Through discussion at the Senior Management Team, the Acute Services Committee and indeed at the Finance & Resources Committee, it is acknowledged that this recovery may take up to 2 years to be delivered; with a phased approach by Directorate most likely.
2.6. The development and implementation of a financial recovery plan is undoubtedly a challenging task. Ongoing changes in the Acute Division Management structure and vacancies within the Management Accounting function mean that this work has not progressed as quickly as would have been hoped.
3. ACUTE SERVICES DIVISION FINANCIAL PERFORMANCE 2013/14
3.1. In 2013/14, the Acute Services Division overspent by £7.958m. This includes the benefit of £1.665m of unallocated in year budgets. Table 1 highlights the outturn by Directorate.
Table 1 – Acute Services Division Outturn 2013/14
Directorate / (Underspend) / Overspend(£000)
Planned Care and Surgery / 5,349
Ambulatory Care / (83)
Emergency Care and Medicine / 4,885
Other Non-Clinical Directorates / (528)
Acute General budgets / (1,665)
Total Overspend / 7,958
3.2. Whilst there remain a number of issues which need resolution within Ambulatory Care (such as agency staff within Radiology and use of the private sector for Endoscopy), this directorate remains broadly within financial balance. Through the budget review process to be undertaken over the coming weeks, there will be the opportunity to realign budgets within the directorate, as required.
3.3. The key financial pressures are most prevalent within the Planned Care and Emergency Care directorates. The first step in the recovery plan is to fully analyse these areas and to determine the full year impact. This work is underway and a number of key themes have been confirmed. These are highlighted in paragraph 4.4 below.
3.4. Significant components of the overspend within Emergency Care during 2013/14 can be directly attributed to the impact of delivering the unscheduled care plan. This has been addressed through the NHS Fife Financial Framework, however, the analysis underway needs to identify any shortfall or excess in the funding available.
3.5. As noted in paragraph 2.5 a phased approach to the recovery plan is proposed, with Planned Care being the main focus for 2014/15 and Emergency Care thereafter.
4. KEY ACTIONS
4.1. In developing the recovery plan, there are a number of specific actions required, some of which are already underway; others which require input from Directorate colleagues; and some which will be taken forward throughout the financial year and beyond.
4.2. Table 2 provides a summary of the key actions. The shaded sections identify meetings at which update reports are to be provided:
Table 2 – Acute Division Recovery Plan: Key Actions
Task / Lead / Timescale /Prepare and populate financial template with analysis of prior year over / underspends / GC / Complete
Report to ASDMT on methodology & approach / CP / GC / Complete
Ambulatory Care budget review meeting (incorporating efficiency & productivity plans) / CP/ GC / AMcC / MH / MC / Complete
Planned Care budget review meeting (incorporating efficiency & productivity plans) / CP/ GC / AMcC / SF / Complete
Emergency Care budget review meeting (incorporating efficiency & productivity plans) / CP / GC / AMcC / VH / Complete
Verbal update to SMT on methodology & approach / HK / Complete
Verbal update to ASDMT on output from budget review meetings / CP / 20 May
Verbal update to Acute Services Division Committee (Private Session) incorporating overview on methodology & approach, and output from budget review meetings / CP / 21 May
Refresh incremental progression analysis / GC / Directorate Accountants / 23 May
Reissue financial templates, taking cognisance of budget review discussions, opening budgets for 2014/15, and known financial plan funding / GC / 23 May
Report to Finance & Resources Committee incorporating overview on methodology & approach, with a verbal update on progress / CP / GC / 27 May
Review level of budget devolvement / CP / GC / HK / 31 May
Follow up meetings with Directorate General Managers / Director of Acute Services to determine management actions required to address issues / CP / GC / Directorate Accountants
HK / VH / SF / MH / Service Managers / Early June
Submission of PIDs for Directorate efficiency plans (non cash releasing) / GMs / 9 June
Realign budgets as required / GC / Directorate Accountants / 30 June
Identify any known risks or emerging new issues / GC / Directorate Accountants / Service Managers / Early June / ongoing
Submission of PIDs for Directorate efficiency plans (cash releasing) / GMs / 30 June
Budget development sessions / CP / GC / July onwards
CP – Carol Potter; GC – Gordon Cuthbert; HK – Heather Knox; AMcC – Ann McCarlie; VH – Val Hatch; SF – Susan Fraser; MH – Margaret Henderson; MC – Murray Cross
4.3. Draft templates were partly completed for each of the clinical directorates, with details included for the key pressures in 2013/14. These were shared with Directorate General Managers at the budget review meetings in early May. However these require further scrutiny on the part of Service Managers, General Managers, and Directorate Accountants. A further set of updated templates will be issued early next week, reflecting any additional funding allocated from the approved financial plan, adjusted for any know ‘one off’ costs (or funding) in 2013/14. Further detailed meetings are required with each Directorate, to identify and agree specific management actions.
4.4. In summary, the key issues being investigated include:
· Ongoing use of bank nursing across the majority of specialties – this is largely driven by sickness absence and vacancies;
· Agency cover for senior medical staff and gaps in middle grade rotas (orthopaedics / anaesthetics / theatres / women & children);
· Additional supplies costs associated with activity to meet treatment time guarantee, which is not captured within the capacity plan funding;
· Costs to support the unscheduled care plan including surge capacity and additional staffing at the ‘front door’ and the extent of any costs beyond the recurring funding available;
· Considerable overspend on supplies within emergency care which are not directly attributable to a specific specialty
5. PRINCIPLES
5.1. Through the development of the recovery plan and ongoing in year financial management, a number of specific principles are to be applied. These have been discussed and agreed by the Director of Acute Services and Assistant Director of Finance:
· Pay uplift (£2.1m) – to be allocated to Directorate / Services in opening budgets
· Supplies uplift (£1.2m) - based on a 4% uplift for drugs & medical supplies, and a 1% uplift for general supplies - to be held centrally within the Director of Acute Services supplies budget, pending further analysis of non pay cost pressures as the year progresses
· SMC drugs funding (£2m) – the additional drugs funding available through the financial planning process is required to address pressures across NHS Fife, and not only those within secondary care. These funds are held corporately within the wider NHS Fife reserves and will be allocated following further analysis as the year progresses.
· Existing general budget (c £1.6m) - to be held centrally within the Director of Acute Services supplies budget, pending further analysis as the year progresses
· LUCAP funding (£3.2m) – to be allocated per agreed plans, including funding for other areas across NHS Fife, as well as the Acute Division. Further analysis needs to be completed to determine any budget realignment required.
· Capacity plan funding (£0.5m) – to be allocated per agreed plans. Further analysis needs to be completed to determine any budget realignment required, particularly in relation to the recurring funding allocated during the previous financial year.
· Incremental progression – work is underway to scope the extent of the issue as at 31 March 2014, and to model different budget scenarios. No funding is available from the approved Financial Framework to support this area.
6. EFFICIENCY SAVINGS
6.1. The NHS Fife Financial Framework requires delivery of £6m cash releasing savings in 2014/15, in order to deliver financial balance across NHS Fife; of which £1.7m is the target for the Acute Services Division. This represents 1% of the overall baseline budget for the Division.
6.2. Identification and achievement of a 3% cash savings target would generate a further £3.5m which could be held within the Division to address existing or new cost pressures which have not been funded through the financial planning process such as incremental progression.
7. RISKS
7.1. It is essential that any potential impact on the quality and quantity of clinical services provided across Fife is mitigated through a robust risk management approach. As the work progresses, any risks and / or dependencies will be identified and brought back to the ASDMT for consideration.
8. RECOMMENDATIONS
8.1. The Finance & Resources Committee is asked to:
· Note the work undertaken to date;
· Support the ongoing development of the financial recovery plan to allow early application of actions identified;
HEATHER KNOX CAROL POTTER CHRIS BOWRING
Director of Acute Services Assistant Director of Finance Director of Finance