Appendix 5D

NHS BUDGET SCRUTINY

KEY QUESTIONS

Group 4 –SUSTAINABILITY

4aHow have the impact of current year (2011/12) activity levels and budget variances (under and overspends) been reflected in proposals for 2012/13 and beyond?

4bIs the budget sustainable in the medium-term?

4cWhat is the reliance on one-off funding/reserves/government grants etc?

4dHow do proposals contribute to CO2 reduction/increased recycling?

Hertfordshire Partnership Foundation Trust (HPFT)

4a To support service transformation, the programme incorporates an efficiency and productivity programme for the period 2010 – 2014 around the principles of Quality, Innovation, Productivity and Prevention (QIPP) which is designed to meet the financial challenges going forwards, whilst maintaining service quality. This is built into current plans reflecting the 4-5% efficiency saving year-on-year to 2014 set out within the Comprehensive Spending Review and in line with Monitor guidance.

In addition to this, the Trust has a number of key areas of cost pressure:

  • Drug costs – in particular dementia drugs
  • Social Care Placements
  • Health Secondary Commissioning
  • Temporary staffing
  • Above inflation non-pay price increases e.g. energy/utilities

NICE guidance and demographic pressures have increased the volume of the prescription of drugs for the treatment of dementia. Discussion is underway with commissioners in relation to the potential recycling of efficiency gains and the use of any growth funding available.

Demography pressures for social care are included within budget proposals, utilising national forecasting measures, and considering need on a name-by-name basis. These projections are shared openly, and funding negotiated with the local authority, through the joint commissioning arrangements.

We have a significant three year (through to 2014) efficiency requirement set by the local authority. This is particularly challenging being a 7.5% requirement against the 2012/13 baseline contract value. The Trust has put a ‘Value for Money’ team in place to tackle this significant savings target, reducing admissions to residential care and developing alternative community models, commissioning alternative accommodation where appropriate, and working in partnership with providers to ensure care meets the needs of the service user and cost efficiency are delivered through reduced prices. However, elements of the required savings cannot be delivered without additional cross agency partnership, particularly in relation to housing issues.

Demand against health secondary commissioning expenditure relates to low and medium secure services, and includes the effect of additional placements for service users with Aspersers’. We are in discussion with commissioners concerning the potential for growth in 2012/13 to offset this increase in demand, which would recycle some of the efficiencies delivered over the last two years. The original budget transferred from the PCT with an underlying c.£3m overspend and approximately 64 placements. This was brought into line, and subsequent internal investment into HPFT services has enabled PICU beds to be provided ‘in-house’ without ongoing referral to the private sector. However, both low and medium secure services give rise to significant demand and cost pressures, with demand in 2011/12 at over 100 placements. It is worth noting that no demographic or demand growth has been invested since the transfer of the responsibility in 2005. This is in contrast to the nationally understood position on demand for medium secure services.

The use of personal budgets is a key priority, basing the allocation of resources on a clear needs assessment and enabling the management of expectations of services available and to be received. This will promote the ability of individuals to develop imaginative personal choices around their care needs, incorporating support from family, friends, peers and community groups, delivering better outcomes.

4b No growth funding was received for 2011/12, and we continue in discussion with commissioners concerning 2012/13 with no investment currently in place.Against the backdrop of the significant efficiency challenge over a period of years, the sustainability of the position becomes more of an issue should savings not be recycled back to mental health and learning disability services to reflect a ‘fair share’ of resources available.

The Trust has developed a rolling three year plan which is agreed by the Board and reviewed by the economic regulator, Monitor. This sets out the Trust strategy and three year financial plans which are risk rated by Monitor between 1 and 5 (5 being the maximum). The Trust has a projected financial risk rating of 3 (‘good’) for the three years, ensuring that financial performance and service quality and safety are balanced. The plan is based on assumptions of a 4-5% efficiency health saving requirement and is therefore robust in relation to the details of the Comprehensive Spending Review and forecast financial position nationally.

Whilst the NHS is ‘ringfenced’ the mechanism by which efficiency gains are recycled as investment into developments remains a ‘bidding’ process. In particular for HPFT, the efficiency savings to 2014 are in the region of £30m and there is no current surety that this will be available to support Mental Health and Learning Disability services.

4c Budget proposals are on the principle that non-recurrent funding is matched only by non-recurrent expenditure. The key risks relate to potential double-running costs as the service models emerging from our service transformation programme are rolled-out across Hertfordshire, and the costs associated with workforce transformation. There is PCT non-recurrent transitional support or ‘pump-priming’currently available to support this process, but this is yet to be secured for 2012/13.

4d Within the Trust strategy, HPFT sets out objectives for carbon management, the priority being to minimise our impact on the environment. The key objective is to implement our carbon reduction programme to deliver a year-on-year reduction in carbon footprint.

HPFT implemented a new waste management system from April 2011, with special bins using transparent waste sacks for collecting dry mixed recyclable waste.The planned target is to improve the proportion of waste which goes for recycling to 45 per cent of total waste. Currently it is about 39 per cent, and advice on recycling has been made available to all staff and is prominent on the Trust intranet.

Business miles account for 17% of the HPFT carbon footprint and this can be reduced through information and advice to staff. So far the Trust has enhanced its bandwidth to enable over 1000 people to access the network remotely, promoted cycling and walking to work, published a ‘Planning your journey’ page onthe HPFT intranet enabling staff to easily checkwhen the next bus or train is going from their local areaand is currently investigating variousfacilities tomake cycling/ walking/ running a real option forall.

Eliminating water leaks is part of the HPFT carbon management plan, and the repair programme equates to an annual saving of 12 tonnes in carbon dioxide output.

Hertfordshire Community NHS Trust (HCT)

4a Almost all of our contractual arrangements with NHS Hertfordshire are

subsumed into a “block” contract which do not flex over the year based on

activity. HCT continually monitors activity and spending throughout the year

and will, within the confines of the block funding, re-direct resources to

pressure areas as necessary having carefully considered service levels,

impact to patients etc. HCT is working with commissioners to move more

services onto a cost and volume basis so that funding is re-active to changes

in service levels. Individual service budgets are re-based each year to reflect changes in activity and resources needed to deliver that level of service.

4b Long term financial modelling has shown that the budget assumptions are

sustainable in the medium term. The model is refreshed regularly to reflect

changes in assumptions, commissioning intentions and discussions with the

PCT.

4c As a proportion of overall funding, this is minimal. Short term transformation

funds from the PCT are used to support start-up and ‘costs of change’ to

redesign services to release savings across the health economy.

4d As the Trust refurbishes its estate developments are incorporated to minimiseenergy utilisation and achieve reductions in CO2 usage.

WestHertfordshireHospital Trust (WHHT)

4a The Trust has used expected outturn activity in 2011/12 as the starting point for 2012/13 plans. This is the most realistic starting point to use. This has then been adjusted for the expected impact of QIPP plans. Actual activity will be monitored during the year to ensure that any variations can be managed.

As regards budgets, a similar approach has been taken. Budgets are aligned with expected activity levels and take account of known cost increases such as the need to increase the number of midwives and to invest in the estate.

We have concluded our 12/13 contract for healthcare services with NHS Hertfordshire (NHSH) that takes into account some of the growth, changes to patient flows and over-performance against contractual patient levels in 11/12. NHSH have based the contract on 12 months activity from October 2010 to September 2011 and the Trust is working with our commissioners to understand the unprecedented and recognised growth in demand on A&E and emergency inpatient hospital services over the last 6 months of 11/12. The PCT has partially reflected changes to patient flows caused by service changes in other parts of the county and we are committed to a joint review at electoral ward level by the end of June 2012. This exercise should result in a closer correlation between Trust and PCT estimates for patient activity in 2012/13 and beyond.

4b The Trust has a sustainable plan to be a financially successful organisation in a time of minimal growth in NHS funding. The plan is summarised in the Integrated Business Plan for the next 5 years.

4c The Trust has very low levels of one off funding. The only source last year was the NHS Hertfordshire Transformation Fund and we expect to get further one off funding from this to help with costs of change and some pump priming of new initiatives, such as those to support improved emergency services.

4d The Trust is committed to achieving a 10% reduction in carbon footprint by 2015 associated with each of the areas of waste; energy; transport; and procurement. The Trust’s key priorities in addressing sustainability are:

To manage the use of resources by:

  • Making energy and carbon savings
  • Minimising waste
  • Conserving water
  • Using information technology and telephony/communication technology efficiently
  • To design sustainable buildings
  • To promote low carbon transportation and active travel
  • To purchase sustainable products and services

For example:

  • The Trust has recently secured DH funding to deliver a Combined Heat and Power plant and the selected option is likely to deliver carbon savings in the order of 23% when compared with the boiler replacement baseline, and when considered to the emissions up to 2010 when the boilers were running on heavy fuel oil, this represents a 39% carbon saving.
  • Waste Minimisation: Currently the Trust recycles only 6% of waste. This will be increased to 50% by March 2014
  • Transport Reduction: The Trust aims to encourage staff to reduce the carbon emissions associated with travelling to and from work, e.g., car share schemes, buses, encouraging cycling etc.

The Trust’s Sustainable Development Management Plan was approved by the Board in September 2011 and has incorporated feedback from the national Sustainability Development Unit (SDU). The Trust’s Sustainability Programme Board is chaired by one of the Trust’s Non Executive Directors, who is the Sustainability Champion and the CEO is actively involved in sustainability work. Some of the key schemes are noted above and all are highlighted in our Annual Plan.

East and North Hertfordshire NHS Trust (ENHT)

4aThe Trust maintains a forecast position in the current year in activity and financial terms. The recurrent impact of current year pressures (whether activity related or not) are considered in the plans for 2012/13 and beyond.

4bYes, the Trust’s 5 year Long Term Financial Model demonstrates that the Trust has a sustainable medium term plan. Acute services consolidation is a key aspect of achieving such sustainability.

4cGenerally, the Trust has minimal reliance on non-recurrent funding, but in 2011/12 and 2012/13 the Trust will receive a share of the heath economy’s Transformation Fund. This non-recurrent funding is to support major change programmes which will improve efficiency and remove recurrent expenditure.

It is important to note that loans from Department of Health are required for the Phase 4 capital investment programme. The two major components of this programme will require DH and HM Treasury approval given their size.

4dThe Trust has in place a comprehensive plan, captured in the Trust’s Sustainability Strategy and Sustainable Development Management Plan, to meet the carbon emission target reductions. The plans include numerous schemes to reduce carbon emissions; in particular the Trust has plans in place to deliver:

- A 14% reduction in carbon emissions from energy use in 2012 against the national target of 10% by 2015. The 14% reduction will be delivered through the implementation of a Combined Heat and Power Plant at ListerHospital. The CHP will become operational in September 2012;

- A 32% reduction in water consumption in early 2014 as a result of the acute service consolidation against the national target reduction of 25% by 2020;

- An increase in the amount of waste recycled to 50% by 2015.

The Trust’s Sustainable Development Management Plan (SDMP) is available on the Trust’s website. The SDMP provides details of the 10 work streams focussed upon the importance of sustainable development and outlining the Trust’s plans to achieving the national target reductions and limiting the environmental impact of the Trust.

East of England Ambulance Trust

4aTrust budgets are fully reconciled to forecast outturn (2011/2012) activity level. Budgets are fully reconciled to cost improvement results and reflect discussions with budget holders. The PCT has proposed contracted activity will rise by c 3% in 2012/2013.

4bPlans are in place, through cost improvement programme work streams, to deliver the year on year efficiency saving required by commissioners for the next two years.

4cThe Trust’s plans do no rely on one-off funding.

4dThe organisation worked closely with the Carbon Trust during 2011/12 to set its carbon footprint baseline and complete a five year carbon management plan. The Trust has also set an ambitious target of a 30% reduction on baseline over five years – twice as much as statutory requirements. The target reduction in emissions is 6,117tCO2 in five years. It is anticipated that when all of the projects in the carbon management plan are implemented, the Trust will realise annual savings in fuel and energy bills of around £2.4m.

NHS Hertfordshire (PCT)

4aThe planning assumptions shared with acute providers are based on activity levels for the last 6 months of 2010/11 and the first 6 months of 2011/12, as adjusted for changes set out in the QIPP programme. The baseline therefore reflects projected levels of activity based on current trends, and assuming that demographic and non-demographic pressures are balanced by the fact that activity rates are reducing.

Other budget proposals are largely based on activity and spend in 2011/12, adjusted to take account of any non-recurrent spend or savings in that year.

Pay and price pressure has been included in the planning assumptions that have been shared with all providers.

4bThe budget is sustainable in the medium term. The position in future years has been modelled building in assumptions made in the QIPP, which is based on zero real terms growth, and is shown to be affordable.

The integrated plan sets out the next 3 years finances that were agreed at the last spending review, through to March 2015.

4cThere is little reliance on one-off funding as most of the PCT’s allocation is recurrent.

We have to create a 2% non-recurrent transformation fund to support QIPP initiatives. We are also required to create a 1% contingency fund to cover unforeseen in-year cost pressures. Contracts are therefore negotiated on 97% of the PCTs overall budget.

4dSustainable Development Management Plan (SDMP)

In early 2010 NHS Hertfordshire worked with the Carbon Trust to develop the Carbon Management Plan which was adopted by the PCT Board in November 2010. This set out how the PCT will reduce the impact of its business on the environment and cut carbon emissions by 20% by 2015 from a defined baseline.

Targets were set to:

•Reduce carbon emissions from buildings by 25% by 2015;

•Reduce the impact from transport emissions from staff and patient travel;

oReduce carbon emissions related to staff business travel;

oReview how the Trust works across a large geographical area to minimise its environmental footprint;

oInclude environmental criteria in specifications for third party non-emergency and emergency transport contracts;

•Minimise waste and increase recycling;

oReduce waste by 20% by 2015;

oIncrease recycling to 50% by 2015;

•Strengthening procurement policies to include environmental and carbon management criteria;

The PCT worked with the Carbon Trust & SKN Consulting to produce a carbon baseline matrix that can be disaggregated between the successor bodies. This emission baseline includes emissions from; buildings (fossil fuel and electricity consumption); waste; water consumption; and travel (car business travel by staff, Non-emergency patient travel and emergency patient travel). It is not intended to extend the scope of emissions reporting. Successor organisations will be at liberty to extend the range of emission targets but will need to retain consistency of reporting against the baseline. The PCT plans to disaggregate existing targets amongst the successor organisations. The majority of commitments will be inherited by Hertfordshire Community NHS Trust. They are incorporating the targets into their SDMP which should be completed in April 2012.

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