Report to the Board on 28 October 2014

Section D

NHS FIFE

Report to the Board on 28 October 2014

FINANCIAL POSITION TO 30 SEPTEMBER2014

1. INTRODUCTION

1.1This report represents a full report on the financial position of the Board for the financial year 2014/15. The report covers the six month period to 30 September 2014 and is based on the Financial Framework which was approved by the Board at the Special Board meeting on 25 March 2014.

2.ALLOCATIONS FOR THE YEAR

2.1Since the previous report to the Board, additional core revenue allocations from the Scottish Government Health & Social Care Directorate (SGHSCD) of £5.522m have been received. There has however been a reduction in other allocations of £3.524m giving an overall increase in allocations of £1.998m. These changes to the allocations were all anticipated and are mostly included in the Board’s Financial Framework. The allocations adjustment comprise of (£147k) of recurring funding, (£1.180m) of earmarked recurring funding and £3.324m of non-recurring funding.

2.2The main allocation reductions include NHS Fife’s share of National Risk Share (£2.506m) and National Distribution Centre costs (£656k),along with additional allocations for Drug Treatment and Support (£1,711k), Childhood flu, rota and shingles vaccine costs £906k, LUCAP £529k, LUCAP – delayed discharge £500k and waiting times standards and TTG pressures £400k. A full list of the allocation adjustments is shown in Appendix A.

2.3In addition, the Board has also received miscellaneous income from other sources. Since the previous report to the Board an additional £4.1m has been received. The main additional sources of income are other Health Board’s share of the Regional Endoscopy Unit, SEAT recharges, increased Service Level Agreements with other Boards and NES Income.

3.REVENUE EXPENDITURE TO DATE

3.1The Revenue Resource Limit position for NHS Fife for the six months to 30 September 2014 is showing an overspend of £2.247m. This compares with an estimated overspend of £1.8m which was included in the Board’s Local Delivery Plan (LDP).

3.2A summary of financial performance within the Acute Services Division, individual CHPs and Corporate Directorates is shown in the table on the following page. A chart showing the performance of the monthly outturn against the trajectory for the year as reported to the Scottish Government via the monthly Financial Performance Returns is also included.

3.3All significant variances are considered at the individual CHP, Acute Services Division or Directorate meetings, where underlying reasons and appropriate remedies are agreed and monitored. Commentary on the key underlying issues for each area is set out in the remainder of section 3. Given the extent to which the overall position is driven by the financial performance within the Acute Services Division, the major component of the narrative focuses specifically on this area.

NHS Fife – Financial Position as at 30 September 2014

Division / CHP / Directorate / Allocation for Year / Budget for Period / Expenditure for Period / Variance
£'000 / £'000 / £'000 / £'000 / %
Acute Services Division / 178,260 / 88,881 / 93,777 / 4,896 / 5.51
Kirkcaldy and Levenmouth CHP / 67,484 / 33,511 / 33,855 / 344 / 1.03
Glenrothes and N. E Fife CHP / 29,057 / 14,293 / 14,171 / (122) / (0.85)
Dunfermline and West Fife CHP / 43,131 / 21,370 / 21,144 / (226) / (1.06)
Estates and Facilities / 64,868 / 31,948 / 32,073 / 125 / 0.39
Board Admin & Other Services / 35,392 / 15,753 / 15,469 / (284) / (1.80)
Prescribing / 72,570 / 36,541 / 36,352 / (189) / (0.52)
PMS / 47,791 / 23,804 / 23,804 / 0 / 0.00
FHS / 39,260 / 19,540 / 19,540 / 0 / 0.00
Non Fife & Other Providers / 98,135 / 49,155 / 49,082 / (73) / (0.15)
OHSAS / 4,700 / 2,483 / 2,536 / 53 / 2.13
Depreciation / 21,441 / 11,621 / 11,621 / 0 / 0.00
SGHSCD Funds for Impairments etc / 9,799 / 0 / 0 / 0 / 0.00
Corporately Held Flexibility / Savings / 7,291 / 2,149 / 0 / (2,149) / (100.00)
Total Expenditure / 719,179 / 351,049 / 353,424 / 2,376 / 0.68
Miscellaneous Income / (73,523) / (37,752) / (37,881) / (129) / 0.34
Net Expenditure / 645,656 / 313,297 / 315,543 / 2,247 / 0.72

Acute Services Division

3.4The Acute Services Division is reporting an overspend of £4.896m for the first six months of the financial year. Whilst this is an increase from the £4.124m reported last month, it is an improvement against trend.

3.5The overall variance is increasingly driven by staffing costs, with 85% of the overspend relating to pay expenditure. Bank nursing and medical locums continue to be the two single biggest issues and although both are linked in part to vacancy cover across the Division, the expenditure is in excess of the budget available. Additional controls have been introduced on the use of bank nursing which are now reducing the use and cost of bank nursing.

3.6The chart below provides an analysis of the position within the Clinical Directorates:

3.7The key financial pressures within each of the clinical directorates are described below:

Planned Care Directorate

The Planned Care Directorate is £2.5m overspent at the end of September. The key financial concerns are the ongoing use of medical locums (both senior and junior cover) within Women & Children’s services and Theatres & Anaesthetics; and ongoing use of the nurse bank to cover sickness and vacancies.

Emergency Care Directorate

The Emergency Care Directorate is £2.9m overspent for the first six months of the year. The key drivers continue to be the use of bank nursing and medical locums, as well as the use of surge capacity, with no associated funding source. Unscheduled care activity over the last two months has been particularly challenging and it is not surprising to see this manifest through the financial results.

Ambulatory Care Directorate

The Ambulatory Care Directorate remains £0.3m overspent at the end of September, which shows a continued slowing down of the trend seen earlier in the year. This is principally the result of the ending of weekend Endoscopy clinics as part of a waiting list initiative which ceased from June. The key cost pressure which continues is within Health Records, where there are a number of unfunded posts and high use of bank staff. This area is being considered as part of the Directorate’s financial recovery plan.

Other Acute Budgets

An element of general supplies funding continues to be reported centrally within the Division. It is likely that this will be released in time for the October financial results, through discussion with the Director of Acute Services and individual Clinical Directorate General Managers.

Actions underway to address the financial pressures within the Acute Services Division include the introduction of tighter controls on the use of bank and agency nursing, maximising the benefit from the use of the Discharge Hub and better weekend planning.

Dunfermline and West Fife CHP

3.8The Dunfermline and West Fife CHP continues to report an underspend for the period to date (£226k). Close monitoring of the position is ongoing, to determine the likelihood of the current underspend which relates to vacancies continuing, as recruitment is ongoing. Further discharges from the Learning Disability service are planned for which costs will be incurred from Fife Council as these are cost sharing packages.

Kirkcaldy and Levenmouth CHP

3.9The Kirkcaldy and Levenmouth CHP is reporting an overspend (£344k) for the period to date. This reflects the ongoing trend seen in previous months on the level of expenditure for Anti-TNF drugs within the Rheumatology Service. Activity and cost continue to grow in this area. To address these issues, the management team are looking to improve the level of clinical pharmacist input to the service, to ensure more robust scrutiny and challenge of prescribing patterns.

A new Hepatitis C high cost drug has been approved by the Area Drugs and Therapeutics Committee which will result in additional costs in the CHP for the remainder of this year, these costs are being closely monitored.

Glenrothes and North East Fife CHP

3.10The Glenrothes and North East Fife CHP is reporting an underspend for the period to date (£122k), which is predominantly driven by the position within the community dental service, with offsetting overspends in both Hospital and Community services.

Board Admin and Other Services

3.11An underspend of £284k is reported across Board Administration and other services for the period to date. The main drivers are vacancies in a number of corporate departments, most significantly within Finance and eHealth.

Prescribing

3.12At the end of September, Prescribing Services continue to shows an underspend (£189k).

Primary Medical Services

3.13Primary Medical Services show a break even position.

Non Fife and Other Healthcare Providers

Service Level Agreements

3.14At this stage of the financial year, most agreements with other Health Boards have yet to be agreed. Based on the information currently held an underspend of £2k is shown. This is a result of over and underspends across a range of Boards.

UNPACs/OATs

3.15Significant amounts of data is now available for both UNPACS and OATS. UNPACS are assumed to have an overspend of £156k with an underspend position of £150k assumed for OATs. The position on UNPACS has deteriorated as a result of additional charges from NHS Lothian for Renal Transplants and Cancer Drugs. A patient in an Ayrshire and Arran hospital who is requiring placement by Fife Council is also costing £852 per day.

Resource Transfers

3.16 The Resource Transfer agreements have been agreed with Fife Council and a breakeven position is shown.

Other Services

3.17An underspend of £76k is shown as a result of refunds due from Fife Council for activity from the previous financial year.

OHSAS

3.18A small overspend of £53k is reported for the period to date in this area which is managed jointly by Fife and Tayside Health Boards. Following a review of contract values and timelines, income and expenditure budgets have been adjusted accordingly. This is offset by an over recovery of income of £15k.

SGHSCD Funds for Impairments

3.19Current estimates suggest that the Board will incur £8m on Property Impairments and £2m on Annually Managed Expenditure on Provisions. To date, Impairments of £2.4m have been recognised. An additional estimate of £2.3m has also been made in respect of non-core funding for the abandonment of assets in the course of the construction and other non-cash losses.

Corporately Held Flexibility / Savings

3.20These show an underspend of £2.149m largely due to slippage on commitments and new allocations received.

Miscellaneous Income

3.21A small over-recovery of £129k is shown for the first five months.

4. EFFICIENCY SAVINGS

4.1The Board’s Financial Framework set out the need to deliver a total of £16.7m efficiency savings in year to meet the Efficient Government target of 3%. Of this, £6.006m was identified in the Financial Plan as a cash releasing target, and is required to support delivery of financial balance at the year-end.

4.2At the end of September, plans to deliver against this target total £10.603m, with £5.317m achieved for the period. The actual position is ahead of the planned trajectory for the period. The chart below shows progress to date against trajectory.

5.RISKS

5.1Although the approved Financial Plan seeks to address the most significant underlying cost pressures, as well as unavoidable new costs and approved developments, there are a number of financial risks which remain. These include:

• Financial exposure of the delivery of elective and unscheduled care capacity requirements for RTT and waiting times targets;
• Ongoing identification and delivery of robust management actions to address the financial performance issues within the Acute Division;
• Discussions with Fife Council on financial consequences of the mental health discharge programme ;
• Ongoing delivery of agreed recurrent efficiency schemes;
• Output and implementation of the National Nursing Workforce Tool.

5.2Based on the financial information for the first six months of the financial year, there is a risk that the Board will be challenged in delivering its breakeven requirement by the year end. A range of assumptions would indicate the year end position could range from an optimistic position of breakeven to a pessimistic position of a £5m overspend.

6.RECOMMENDATION

6.1The Board is asked to:

• Note the financial position for the six month period to 30 September 2014 and the potential year end forecast.

CHRIS BOWRING

Director of Finance

28 October 2014