1 Report Title Month 08 Finance Report to The Board of Directors Date of Meeting Friday 8 th January 2016 Agenda Number 13 Report typeTo note the current.

1

Report Title Month 08 Finance Report to The Board of Directors

Date of Meeting Friday 8th January 2016

Agenda Number

13

Report type To note the current and forecast financial position of the Trust

Prepared by Edward John (Director of Operational Finance)

Executive Lead Martin Sykes (Director of Finance)

Executive Summary Performance is on track against the mid- year resubmission to Monitor. Agency expenditure continues to be a cause of cause of concern but both pay and non-pay are currently performing to plan and therefore the year end forecast is still held at the revised plan level of £12m. Income is continuing to overperform as per revised forecast so there is some negation of the cost overrun. To achieve any better than this by the year end it will be imperative that remaining CIP will deliver and that agency costs are controlled to below current run rates. Income overperformance has been agreed with CCGs for Q1 but not Q2 yet and so this income risk has been reflected in prudent provisions within the year to date and forecast position.

Background The Trust originally set a deficit budget of £14.2m for 2015/16 against which this report is monitored. In October 2015 a re-plan was submitted to Monitor and DH suggesting a £12m deficit is achievable. This report provides financial performance information in relation to the achievement of both the original and revised target deficit position and key dependent indicators including CIP, Cash and Capital.

Issues and Options - Agency continues to be the main driver of overspend and is not reducing at the planned rate to get below a £12m deficit- the CIP is profiled to deliver greater benefit in Q3 and is heavily dependent of recruitment and retention to reduce agency costs - this remains the main risk to delivery of the plan and indeed betterment of the plan.

Recommendation The Board is asked to note the month 08 and forecast year end position.

Appendices Finance and Commercial Board Report

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Finance & Commercial Board Report

October 2015

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Finance at Month 08: Overall Summary Performance is on track against the mid- year resubmission to Monitor once again, however, agency cost pressures continue. Income overperformance is however also on track to help negate some of this risk. Consequently the forecast deficit is held at £12m. To achieve any better than this by year end remaining CIP must deliver and agency spend controlled below Monitor plan levels.

Area Key points Action taken

Income • In month operating income is £50.3m which is £1.0 above original plan.

Year-to-date £6.2m ahead of plan. The forecast variance on income of £11.4m (£10m overperformance plus £1.4m winter pressures) is subject to confirmation with CCGs.

• CCGs settled on prior year outturn and have acknowledged overperformance.

Expenditure• operating expenditure £48.3m spend in month. Overall £7.2m over original

plan ytd. Pressure this month has been seen in pay which has been allowed for in the year end forecast. Integration expenditure is £7.7m ytd which is matched to income on a spend-recover basis.

• Focus needs to continue on recruitment and ensuring rota’s are delivered to plan i.e. delivery of pay CIPs are critical to achieving target budget or indeed achieving better.

Net surplus/ deficit

• On plan in month. Because year to date performance is no better than revised plan the forecast is held at £12m deficit.

• None not covered elsewhere

CIPs

• The Trust annual plan assumes delivery of a minimum of £21.4m of savings schemes. In month 08 the trust has delivered £2.03m of schemes against a plan of £2.08m• Year to date £969k adverse -> £14.1m against a target of £15.1m.• Additional CIP schemes are £72k behind a £1.6m ytd plan.

• None required at this stage

Cash balance• in month £2.7m above plan of £48.8m due largely to improvement in

working capital i.e increase in payables. Year end cash is not forecast to be affected.

• Consideration on operation impact of capital slippage needed. Monies are available to carry forward.

Capital expenditure

• Month 8 saw a further under spend against plan of £1.2m increasing the YTD under spend to £14.6m although this reflects a slight recovery on the trend seen of previous months in excess of £2m. Full year now forecast held at £28.4m against the plan of £41.2m a potential £12.8m variance. Slippage on the modular ward and car park (both Wexham) comprise the main unders.

• None as capital can be carried forward as long as essential infrastructure and equiment of maintained.

Income & Expenditure - Month 08 and Year to Date – Summary

Key messages:

Plan: The Trust reported a £0.44m deficit in month, slightly lower than the planned £0.47m. This has slightly reduced the year to date adverse variance to £0.97m.

Operating Income: Although the plan was for a ‘low’ income month, the over performance continues. Private Patients have returned to a more ‘normal’ level after an exceptional performance in M07

Operating Expenditure: For the second month in succession, pay is marginally down from the previous month. Agency expenditure has remained at the same level. Non-pay costs are lower this months, which is mainly due to drug costs.

Forecasted Outturn:

The forecasted outturn has been held to £12m, however both income and expenditure have been uplifted by £4m, to acknowledge the increase cost from winter pressures and Vanguard.

The risks to delivering that outturn remains the potential for agency expenditure to rise back up again as pressure to hit the A&E targets continue and also from the cost of buying in external capacity to meet the 18 Week RTT target.

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Plan Actual Variance Plan Actual Variance Plan Actual Variance£m £m £m £m £m £m £m £m £m

Income 49.3 50.3 1.0 387.8 394.0 6.2 581.2 592.6 11.4Expenditure (47.3) (48.3) (1.0) (375.8) (383.0) (7.2) (566.5) (575.7) (9.2)Trust Financing (2.4) (2.4) 0.0 (19.0) (19.0) (0.0) (28.9) (28.9) 0.0Net Revenue Surplus / (Deficit) (0.5) (0.4) 0.0 (7.0) (8.0) (1.0) (14.2) (12.0) 2.2

Integration Funding 0.6 0.9 0.3 5.0 7.7 2.7 8.9 8.9 0.0Integration Costs (0.6) (0.9) (0.3) (5.0) (7.7) (2.7) (8.9) (8.9) 0.0Net Revenue Surplus / (Deficit) after one-off items

(0.5) (0.4) 0.0 (7.0) (8.0) (1.0) (14.2) (12.0) 2.2

Frimley HealthCurrent Month Year to Date Full Year Forecast

Income & Expenditure Month 08 – Subjective Analysis

Income:Total YTD income is 2% over the plan, whilst the bulk of the total variance is CCG income, and that category is also 2% above plan, Private Patients are over 10% above their plan as are Pharmacy Recharges to the CCG.

Pay:Total pay is 1.2% overspent YTD and although agency staff remain a concern. In month 8 Agency staff make up 9.8% of the total pay bill.

Non Pay:Total Non pay is 2.8% over the YTD plan, although this is largely related to activity, which is reflected in the overspend in clinical supplies, which is 5% over the original plan.

Note: In this analysis adverse variances are shown as a positive number 5

Trust Operations - Excluding Integration

I&E by Subjective HeadingMth Bud

£mMonth Act

£mMth Var

£mYTD Var

£mTotal Ann Bud £m

IncomeIncome From Activities (44.86) (45.82) (0.96) (6.35) (531.93)Other Operating Income (4.42) (4.45) (0.03) 0.15 (50.64)Income Total (49.28) (50.27) (0.99) (6.20) (582.57)PayMedical And Dental 8.24 7.97 (0.27) (3.25) 98.97Nursing & Midwifery 9.33 8.67 (0.67) (4.51) 111.02HCAs & Other Support Staff 3.46 3.55 0.08 0.56 41.58AHPs, Prof, Scientific & Technical 4.01 3.70 (0.31) 1.72 48.70Agency Staff External 0.95 3.08 2.13 16.61 16.52Other Staff 4.77 4.36 (0.41) (8.13) 56.72Pay Total 30.76 31.31 0.55 3.00 373.51Non-PayClinical Service And Supplies 9.43 9.95 0.52 3.89 112.69General Supplies And Services 0.65 0.66 0.02 (0.17) 7.75Premises & Fixed Plant 5.23 5.34 0.11 1.64 63.15Other Non Pay 3.67 3.45 (0.23) (1.20) 39.69Non-Pay Total 18.99 19.40 0.42 4.17 223.27

Grand Total 0.47 0.44 (0.03) 0.97 14.21

Integration

I&E by Subjective HeadingMth Bud

£mMonth Act

£mMth Var

£mYTD Var

£mTotal Ann Bud £m

Income (0.63) (0.88) (0.25) (2.67) (7.50)Pay 0.42 0.33 (0.09) (0.97) 5.00Non-Pay 0.21 0.55 0.34 3.65 2.50Grand Total 0.00 (0.00) (0.00) 0.00 0.00

Expenditure Trend – Excluding Integration

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Pay:The graph shows that whilst pay continues above the budgeted plan, the trend has dropped slightly for the second month in a row.

Non-Pay:Non-pay has reduced from M07 and mirrors the fact that the drug spend has also fallen this month.

Although the clinical directorates continue to overspend, the trend has moderately improved, M07 YTD pay overspend was £4.5m, a monthly average of £0.64m, the in month variance for M08 was £0.5m. Non-pay has followed a similar pattern, M01-7 was an average of £0.49m and M08 £0.3m. But since the drug spend dominates, the variance on non-pay is mainly influenced by whether the month is a high or low drug spend.

The YTD underspend on the Corporate Directorates has reduced slightly this month – reverting closer to the M06 trend.Note: In this analysis adverse variances are shown as a positive number

Income & Expenditure Month 08 – Directorate Analysis

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I&E by Directorate

YTD Bud £m

YTD Act £mYTD Var

£mYTD Bud

£mYTD Act £m

YTD Var £m

YTD Bud £m

YTD Act £m

YTD Var £m

Total Ann Bud £m

YTD Var

Directorate: ClinicalGeneral Surgery & Urology 17.4 17.4 0.0 4.7 4.8 0.1 (0.5) (0.5) 0.1 32.2 0.18Medicine: Frimley 31.5 33.3 1.8 16.9 18.6 1.7 (0.4) (0.5) (0.1) 72.2 3.45Medicine: Wexham 36.0 36.8 0.8 15.9 17.5 1.6 (0.3) (0.3) (0.0) 77.8 2.41Orthopaedics & Plastics 14.5 15.0 0.4 7.5 7.8 0.4 (0.0) (0.0) 0.0 33.0 0.80Paeds, Maternity & Gynae 31.0 31.2 0.2 3.9 3.9 (0.1) (0.5) (0.3) 0.2 51.5 0.40Pathology 13.3 12.8 (0.5) 9.6 9.7 0.1 (3.3) (3.5) (0.2) 29.5 (0.53)Private Patients 3.3 3.2 (0.1) 1.0 1.1 0.1 (6.3) (7.0) (0.7) (2.9) (0.73)Radiology 8.9 9.5 0.7 5.7 6.0 0.3 (0.3) (0.3) 0.0 21.5 0.96Specialist Surgery 8.5 8.2 (0.3) 5.6 5.5 (0.1) (0.8) (0.8) (0.0) 20.0 (0.43)Theatres, Crit Care & Anaes 28.1 30.0 2.0 9.6 9.2 (0.4) (0.2) (0.1) 0.0 56.2 1.59

Clinical Total 192.4 197.5 5.0 80.4 84.1 3.7 (12.6) (13.3) (0.6) 391.1 8.10Directorate: CorporateDirector of Integration 3.3 2.4 (1.0) 1.7 5.3 3.6 (5.0) (7.7) (2.7) 0.0 0.00Finance & Strategy 9.4 9.3 (0.2) 4.0 4.7 0.6 (0.1) (0.1) 0.0 20.1 0.48HR & Corporate Services 15.6 15.4 (0.2) 19.0 18.9 (0.0) (5.2) (5.4) (0.2) 44.1 (0.44)Medical Director 0.7 0.7 (0.0) 0.9 0.8 (0.1) (0.9) (1.0) (0.1) 1.0 (0.20)Nursing & Quality 3.4 3.1 (0.3) 1.5 1.4 (0.1) (0.9) (0.8) 0.1 6.0 (0.27)Operations: Frimley 11.9 11.7 (0.2) 6.0 5.3 (0.7) (4.7) (5.2) (0.5) 19.9 (1.41)Operations: Wexham 10.7 10.4 (0.3) 0.9 2.0 1.1 (0.2) (0.2) 0.0 17.1 0.83

Corporate Total 55.1 53.0 (2.1) 33.9 38.4 4.5 (17.0) (20.4) (3.4) 108.1 (1.01)

CCG Income and financing cost 2.2 1.3 (0.9) 35.8 35.4 (0.3) (363.2) (368.0) (4.9) (485.0) (6.12)

Grand Total 249.8 251.8 2.0 150.1 157.9 7.8 (392.8) (401.7) (8.9) 14.2 0.97

Pay Non Pay TOTAL inc Income

Total Trust Agency Expenditure (Excl. Winter Pressures (FPH) and Integration funded spend)

Agency expenditure has held relatively constant to the M07 reported figure.

Nursing and Medical agency spend has held its position across both sites.Although there has been a slight glitch in coding of Informatics agency staff costs in M08 (which has shifted expenditure to WPH) and there has been a transfer in of invoices previously coded to capital.

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Hospital Agency 2014/15

Average M05 M06 M07 M08FPH Medical 580,238 459,753 634,912 537,317 540,473

Nursing 487,269 257,699 297,344 327,043 325,880Prof Tech & Scientific 0 76,607 51,789 66,526 140,569AHP 0 85,965 99,277 69,811 58,924Admin 0 60,899 46,989 112,963 25,368Ancillary 0 7,388 9,450 12,388 2,005MOD Agency 0 0 0 0 0Other Staff 180,070

FPH 1,247,577 948,312 1,139,761 1,126,048 1,093,219WPH Medical 829,817 708,791 767,283 653,696 653,909

Nursing 809,852 617,380 767,937 631,893 637,790Prof Tech & Scientific 0 138,932 137,439 83,011 65,138AHP 0 131,098 150,557 121,877 145,885Admin 0 244,421 178,006 172,903 312,137Ancillary 0 152,620 153,457 174,982 78,481MOD Agency 0 0 0 0 0Other Staff 551,104

WPH 2,190,774 1,993,242 2,154,679 1,838,362 1,893,339

Total 3,438,351 2,941,554 3,294,441 2,964,410 2,986,558

YTD Cumulative Mth1 Mth2 Mth3 Mth4 Mth5 Mth6 Mth7 Mth8Nursing Spend 9,420,249 18,701,218 27,846,970 36,905,210 45,995,792 55,415,139 64,692,576 74,005,493

Nurse Agency Spend 937,007 1,781,434 2,549,017 3,327,969 4,232,846 5,327,481 6,311,255 7,300,581% 9.95% 9.53% 9.15% 9.02% 9.20% 9.61% 9.76% 9.86%

Nurse agency spend for M08 was 10.62 % of all nursing spend. Slightly higher than at M07.

Total Trust Agency Expenditure (Excl. Winter Pressures (FPH) and Integration funded spend) Premium Element Only

The dotted line shows the expected reduction in agency premium spend, this reduction was predicated on delivery of the CIPs. Actual expenditure remains some way off that level.

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2015/16 Core CIP Schemes

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Target Total CIP Value

M08 - Plan M08 - Actual M08 Variance YTD - Plan YTD - Actual YTD Variance

£21.4m £22.4m £2.081m £2.025m -£0.57m £15.127m £14.158m -£0.969m

In Month 8 (November), the trust has delivered £2,025m of schemes against the planned £2,081m. This has resulted in an under delivery of -£57k in month (or -2.72%) Year to date, the CIP delivery is -£969k against plan, representing -6.41%. Forecast Outturn is £19.9m or 90% achievement on schemes valued at £22.4m

£0

£500

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£2,000

£2,500

£0

00

CIP 15/16 -Plan vs Actual

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£50

£100

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CIP 15/16 - Plan vs Actual

2015/16 Additional CIP Schemes

Actuals

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Target Total CIP Value

M08 - Plan M08 - Actual M08 Variance

YTD - Plan YTD - Actual YTD Variance

£3.1m £2.6m £0.243m £0.311m £0.069m £1.634m £1.562m -£0.072m

In Month 8 (November), the trust has delivered £311k of schemes against the planned £243k This has resulted in an over achievement of £69k in month. (or 28.3%) Delivery against these schemes YTD is £1,562k against a plan of £1,634k (or -4.4%) Forecast Outturn is £2.5m or 96% achievement on schemes valued at £2.6m

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Capital Month 08

12

Month 8 saw a further under spend against plan of £1.2m increasing the YTD under spend to £14.6m although this reflects a slight recovery on the trend seen of previous monthly underspends in excess of £2m.

The FBC redevelopments and site specific Estates programme’s were on plan in month and are now £7.8m behind plan YTD, although the full year forecast remains at £19.3m, £6.7m under plan. The principal contributors to this is the postponement of the 28 bed modular build new ward on the Wexham Park site, delays to implementation of the car park at Wexham Park and the postponement of refurbishment projects to summer 2016 at Frimley Park.

The IM&T and Integration programme’s fell a further £1m behind plan in month and are now £5.5m behind plan YTD. Although project teams are starting to form and the procurement process is underway for certain projects it is still anticipated there will be a £6.1m slippage in the full year position.

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£'m Month PlanMonth Actual

Diff YTD Plan YTD Actual Diff FY PlanFY

ForecastDiff

HWPHHeatherwood 0.24 1.24 (1.00) 1.20 1.71 (0.52) 1.68 2.30 (0.62)Wexham - Emergency Dept 0.09 0.05 0.04 0.40 0.16 0.24 1.00 0.55 0.45Wexham - Women's and Children's 0.15 0.03 0.12 0.56 0.10 0.46 0.95 0.35 0.60Wexham - Estate 1.25 1.05 0.19 8.06 3.76 4.30 11.91 7.95 3.96Information technology 0.52 0.08 0.44 2.53 0.16 2.38 4.60 1.75 2.85Medical equipment 0.31 0.07 0.24 1.77 0.52 1.25 3.08 3.08 0.00

HWPH total 2.55 2.52 0.03 14.51 6.41 8.11 23.22 15.98 7.24FPHEstate 1.39 0.58 0.80 6.92 3.62 3.31 10.50 8.18 2.32Medical Equipment 0.07 0.00 0.07 0.53 0.48 0.05 0.80 0.80 0.00Information Technology 0.38 0.08 0.31 2.47 0.74 1.73 3.91 1.91 2.00

FPH total 1.84 0.66 1.18 9.92 4.84 5.09 15.21 10.89 4.32Integration capital 0.30 0.00 0.30 1.51 0.07 1.44 2.77 1.58 1.20

Frimley Health Total 4.68 3.18 1.50 25.95 11.32 14.63 41.20 28.44 12.76

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Cash Position Month 08

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Plan Actual Variance Plan Actual Variance Plan Forecast Variance£m £m £m £m £m £m £m £m £m

Net Cash Increase / (Decrease) -1.3 1.2 2.5 -10.3 -7.6 2.7 -12.2 -12.2 0.0

Cash Brought Forward 50.1 50.3 0.2 59.1 59.1 0.0 59.1 59.1 0.0

Cash Carried Forward 48.8 51.5 2.7 48.8 51.5 2.7 46.9 46.9 0.0

Full Year Forecast

FRIMLEY HEALTHCurrent Month Year to Date

The cash balance in month 8 increased by £1.2m and represents a favourable variance of £2.5m against plan and reflects a stronger working capital position from the previous period due to an increase in trade and other payables.

As a result the year to date balance is ahead of plan by £2.7m at £51.5m although as seen in the in year cash movement graph despite in-month variations to plan we remain on trend to achieve the year end balance of £46.9m.

1414

Key variances are highlighted below;

• The combined assets across all 3 sites total £417m.

• Capital expenditure is slightly behind the reforecast exercise for 2015/2016 plan.

• Cash holding continues to equate to approx 48% of the currents assets and is favourable to plan.

• The Trust is expecting settlement of prior years invoices in due course from our commissioners in the North. Once this has occurred debtors will reduce.

• Trade and Other Payables have increased in month due to the recent introduction of the new finance invoice approval mechanism. All approved creditors continue to be paid within 30 day payment terms for all sites.

August September October NovemberActual Actual Actual Actual

£m £m £m £m

Non-Current Assets 308.173 307.715 307.177 308.837

Current AssetsInventories 3.390 3.329 3.511 3.137Trade and Other Receivables 24.073 28.434 24.411 30.128Other Financial Assets 10.026 9.970 16.843 13.162Prepayments 8.675 10.526 9.797 10.432Cash 58.905 47.071 50.300 51.494

Current Assets Total 105.069 99.330 104.862 108.353

Total Assets 413.242 407.045 412.039 417.190

Current LiabilitiesLoans 0.000 0.000 0.000 0.000Deferred Income (6.372) (7.021) (8.389) (6.878)Current Tax Payables (6.521) (6.811) (6.682) (6.650)Trade and Other Payables (47.190) (45.558) (50.652) (58.056)Other Financial Liabilities (10.516) (5.476) (3.492) (3.219)

Current Liabilities Total (70.599) (64.866) (69.215) (74.803)

Net Current Assets (Liabilities) 34.470 34.464 35.647 33.550

Non-Current LiabilitiesLoans 0.000 0.000 0.000 0.000Provisions (0.472) (0.472) (0.472) (0.494)Other Financial Liabilities (0.614) (0.519) (0.537) (0.518)Intercompany Transactions 0.000 0.000 0.000 0.000

Total Non-Current Liabilities (1.086) (0.991) (1.009) (1.012)

Total Assets Employed 341.557 341.188 341.815 341.375

Taxpayers EquityPublic dividend capital 194.659 194.659 194.659 194.659Retained Earnings 18.865 18.496 19.123 18.683Charitable Funds 0.000 0.000 0.000 0.000Revaluation Reserve 128.033 128.033 128.033 128.033

Total Taxpayers Equity 341.557 341.188 341.815 341.375TRUE TRUE TRUE TRUE

Frimley HealthBalance Sheet M8