Appendix 5C
SCRUTINY OF THE BUDGET PROPOSALS 2011/12:
The service and financial challenge for the local NHS over the next four years
KEY QUESTIONS
Group 3 - SUSTAINABILITY
3.1How have the impact of current year (2010/11) activity levels and budget variances (pressures) been reflected in proposals for 2011/12 and beyond?
East and North Hertfordshire NHS Trust
The Trust maintains a forecast position in the current year in activity and financial terms. The recurrent impact of current year pressures are considered in the plans for future years.
NHS Hertfordshire
NHS Hertfordshire propose to use the activity as at month six multiplied by two, to be the baseline and discussion for setting 2011/12 contracts. This will take account of pressures seen in 2010/2011.
Hertfordshire Partnership Foundation Trust
To support service transformation, the Leading By Design 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
- 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 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.
To reflect national benchmarking which suggests Hertfordshire has higher numbers of care placements annually, a three year efficiency requirement has been set by the local authority. 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.
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.
WestHertfordshireHospital Trust
In setting the budgets the following is provided to the divisions:
The activity built on historic trends;
an assessment of the PCT’s commissioning intentions,
forecasts of demographic change,
requirements of national targets and locally planned service changes
Recurring baseline budgets for 2010/11
Savings targets for 2011/12
The DH operating framework, the published PbR tariffs and the SLA negotiations with the PCT have a key impact on 2011/12 and at this time there are too many unknowns to factor these all in.
Hertfordshire Community NHS Trust
HCT, in its previous form, incurred a deficit of £1.9 m in 2009/10, making it a priority for 10/11 to address the areas with underlying deficit. Almost all of our contractual arrangements with NHS Hertfordshire are subsumed into a “block” contract which did not flex over the year based on activity. There are areas such as skin health where the risk of changes in activity become a risk for HCT.
3.2Is the budget sustainable in the medium-term?
East and North Hertfordshire NHS Trust
Yes, the Trust’s 5 year Long Term Financial Model demonstrates that the Trust has a sustainable medium term plan.
NHS Hertfordshire
Yes. The budget reflects the assumptions in the strategic plan to 2013/14, including no real terms growth during the period.
Hertfordshire Partnership Foundation Trust
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 financial risk rating of 4 (‘excellent’) for 2010/11 and projected 3 (‘good’) for the following two years, ensuring that financial performance and service quality and safety are balanced. The plan is based on assumptions of a 4-5% efficiency saving requirement and is therefore robust in relation to the details of the Comprehensive Spending Review and forecast financial position nationally.
What remains unclear is that whilst the NHS is ‘ring fenced’ the mechanism by which efficiency gains will be recycled as investment into developments. In particular for HPFT, the efficiency savings to 2014 are in the region of £30m and there is no current surety that this will by available to support Mental Health and Learning Disability services.
WestHertfordshireHospital Trust
As set out in the Trust’s IBP and LTFM the Trust is shown as maintaining a Financial Risk Rating (FRR) of 3 in the base case which is the lowest ‘acceptable’ level
Hertfordshire Community NHS Trust
HCT is currently in surplus and aware of the cost pressures it has to tackle before year-end in order to maintain such.
3.3What is the reliance on one-off funding/reserves/government grants etc?
East and North Hertfordshire NHS Trust
The Trust has minimal reliance on non-recurrent funding.
NHS Hertfordshire
Most of the PCT’s allocation is recurrent. In 2010/11 there is one-off funding of £8.2m (0.5%), the loss of which has been factored into future years’ plans.
Hertfordshire Partnership Foundation Trust
Budget proposals are on the principle that non-recurrent funding is matched only by non-recurrent expenditure. The key risk relates to potential double-running costs as the service models emerging from the Leading By Design programme are rolled-out across Hertfordshire. There is no transitional support or ‘pump-priming’ currently available to support this process.
WestHertfordshireHospital Trust
The Trust has not factored any one-off funding /reserves/ government grants in its base case.
Hertfordshire Community NHS Trust
No non-recurring income has been relied upon to reach this position.
3.4How do proposals contribute to CO2 reduction / increased recycling?
East and North Hertfordshire NHS Trust
The 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
- 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; work is currently underway to achieve this target
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.
NHS Hertfordshire
The PCT has a Carbon Management Plan. To meet our target by 2015, we have set additional target for our buildings, transport, waste and procurement:
Reduce carbon emissions from buildings;
To reduce carbon emissions from our estate by 25% by 2015;
Reduce our impact from transport emissions from staff and patient travel;
Reduce carbon emissions related to staff business travel by 10% by 2015;
Reviewing the way the Trust works across a large geographical area to ensure services and facilities are provided in such a way that minimises as far as practicable the environmental impact;
Include environmental criteria in specifications for third party non-emergency and emergency transport contracts by 2013;
Minimise waste, reducing incineration waste and increasing recycling;
To reduce waste arisings by 20% by 2015;
To increase waste recycling to 50% of the Trusts total waste arising by 2015;
Strengthening our procurement policies and practices to include environmental and carbon criteria;
We will develop an environmental policy for local procurement by December 2010;
In order to meet these targets, we have measured our emission baseline, which includes emissions from the following areas:
Buildings - fossil fuel and electricity consumption
Waste
Water
Travel – car business travel by staff, Non-emergency patient travel (where recorded), Emergency patient travel (data provided by the Ambulance Trust
Figure 1 outlines the baseline emissions from both PCTs from March 2008 to April 2009. . Carbon emissions calculated from the buildings in the estate have been split between electricityand gas.
Figure 1, Baseline CO2 emissions (tonnes)
The table below sets ot the estimated cost of these emissions, based on actual expenditure where available.
Table 1 Herts PCT Baseline CO2 Emissions and Costs
Scope category / Total CO2 Emissions / Buildings / Transport / Further scope (waste, and water ) (tonnes)Baseline CO2 emissions (t) / 9,483 / 5,791 / 3,489 / 203
Baseline Cost (£) / £2,382,220 / £1,203,044 / £1,170,384 / £8,793
We have identified a number of projects over the coming 5 years to reduce carbon consumption across the estate and PCT activities. The projects fall in quantifiable (mostly technical) measures and additional actions designed to embed carbon management into the organisation.
The quantifiable actions fall into the following categories:-
Improvements to the built estate: To increase energy efficiency, whilst improving working conditions for our staff. Improvements will focus on optimising existing building controls, upgrading controls and makingimprovements to the building fabric, lighting heating systems and upgrading inefficient building plant;
Travel: Reduction in travel through the promotion of car sharing, incentivising low carbon modes of transport and vehicles, whilst maximising the use of information technology; and
Waste: Increasing recycling and improved clinical waste division;
Actions to embed carbon management into the organisation are outlined in detail in the report and these cover the following areas:
Policy: Reflecting carbon management in existing and future policies;
Responsibility: Ensuring the programme has a project team, an Executive Steering Committee and a link into the Board; Establishing carbon management within staff job descriptions and objectives;
Data Management: Installing improved metering for electricity and gas and waste and water
Communication: Development of a communication strategy that supports the objectives and timescales of the plan; Providing relevant training for initially new starters and estates and facilities teams;
Procurement: Develop a local environmental policy for procurement by December 2010
Monitoring and Evaluation: Present an Annual Report Carbon Management Report for the Board
The actions identified should be sufficient to meet our target until 2012 as set out in figure 2. However, towards the end of the programme, additional measures will need to be identified. With a dedicated and hard-working programme team taking the plan forward, we believe that we have set an ambitious but achievable target.
Figure 2, Carbon Progress against Target
Where possible, we have developed business cases to quantify the costs, financial and carbon savings from our identified projects.
Table 2 below provides a summary of the estimated savings. Actual costs of these projects and priorities may evolve over the programme lifetime,
Additional unquantifiable savings will also be realised from the plan, such as improved reputation, staff contentment and greater efficiencies realised across the organisation.
Table 2, Quantified savings
2010 / 2011 / 2012 / 2013 / 2014Annual cost saving / £121,801 / £214,328 / £324,585 / £356,865 / £363,071
Annual CO2 saving / 509.08 / 1067.46 / 1428.11 / 1545.64 / 1545.64
% of target achieved / 27% / 56% / 75% / 81% / 81%
Table 3 provides the annual estimated costs of the programme. The majority of the projects identified have paybacks within 3 years.
Table 3, Financial Costs
Figures in £ 1000’s / 2010 / 2011 / 2012 / 2013 / 2014Annual costs:
Total annual capital cost / £378,949 / £327,236 / £272,311 / £131,494 / £0
Total annual revenue cost / £6,562 / £38,764 / £39,438 / £40,124 / £40,822
Total costs / £385,511 / £366,000 / £311,749 / £171,618 / £40,822
In developing this plan, the PCTs have become more literate in carbon management and the areas we need to address in order to measure our carbon emissions and enable us to put together a comprehensive Carbon Management Programme. Our ambition to reduce emissions by 20% by 2015 will be challenging, but we are committed to deliver the projects, actions and policies outlined in this plan.
Hertfordshire Partnership Foundation Trust
Within the Trust strategy, HPFT sets out objectives for carbon management, thepriority 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 new waste management system began in April, 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.
WestHertfordshireHospital Trust
The Trust is registered for the Carbon Reduction Scheme and has started a considerable amount of work on Energy and Sustainability.
This year we have identified and put in place a dedicated team of staff who manage our energy consumption, identify improvements and projects to improve performance. This applies to waste management and recycling.
Over the coming years we propose to invest in energy saving schemes i.e. Energy-centre, lighting improvements, appropriate metering.
Finally, we have started to produce a policy and strategy document for Board approval in 4th Quarter 2010/11.
Hertfordshire Community NHS Trust
HCT does not operate any single premise where energy costs oblige us to participate in the carbon reduction equipment scheme. However, we are aware of our corporate responsibility and are seeking to work with the PCT, who own the properties from which we operate, to ensure that the principles of the scheme are reflected in our practices.
1