Enclosure 11 REPORT TO CROYDON CLINICAL COMMISSIONING GOVERNING BODY Meeting in Public 28 May 2013 Title: 2013/14 FINANCE REPORT: PERIOD 1 Lead Director Mike Sexton Chief Finance Officer Report Author Phil Wheelhouse Deputy CFO Contact details [email protected][email protected]Committees which have previously discussed/agreed the report Finance Committee Senior Management Team (Verbal) Committees that will be required to receive/approve the report Purpose of Report Information Recommendations: 1. That the Governing Body note: That the new financial systems, ledgers, transaction processing arrangements and controls have been implemented and have been operational since the beginning of April 2013. That new reporting formats for the CCG are being developed for Month 2 reporting. 2. That the Governing Body note: The period 1 reported figures are largely based on Plan, given the limited availability of performance data available in for April 2013. The forecast outturn is to achieve plan: £19.9m deficit. 3. That the Governing Body note that there are a number of risks that will be managed within the overall position to achieve the planned deficit position. A new risk is the allocation for estates costs (£0.8m) as notified by NHS England (London).
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Enclosure 11
REPORT TO CROYDON CLINICAL COMMISSIONING GOVERNING BODY
Committees which have previously discussed/agreed the report
Finance Committee Senior Management Team (Verbal)
Committees that will be required to receive/approve the report
Purpose of Report Information
Recommendations:
1. That the Governing Body note:
That the new financial systems, ledgers, transaction processing arrangements and controls have been implemented and have been operational since the beginning of April 2013.
That new reporting formats for the CCG are being developed for Month 2 reporting.
2. That the Governing Body note:
The period 1 reported figures are largely based on Plan, given the limited availability of performance data available in for April 2013.
The forecast outturn is to achieve plan: £19.9m deficit. 3. That the Governing Body note that there are a number of risks that will be managed
within the overall position to achieve the planned deficit position. A new risk is the allocation for estates costs (£0.8m) as notified by NHS England (London).
The report presents the financial position for the first month of 2013/14. The key financial objective is to achieve the target for 2013/14, a planned deficit of £19.932m, which is included in the CCG’s Financial Improvement Plan, covering the three years 2013/14 to 2015/16. This Improvement Plan is still subject to approval by NHS England (London Region). The CCG’s 2013/14 QIPP plan is critical to achieving this objective. The CCG continues to deploy mitigating actions against risk and to reduce adverse variances.
Key Messages and Issues (making reference to paragraph within report)
Annex 2 Summary Financial Performance
Section 4.6: Risk and Mitigations
Governance:
Conflicts of Interest (indicate any conflicts of interests and how they were managed)
N/A
Clinical Leadership Comments where appropriate
CLG is supportive of GP Engagement Scheme and is leading QIPP programme.
Financial Implications
Stated within paper
Implications for other CCGs
SWL Risk Sharing agreement has been agreed by SWL CCG
Equality Impact Assessment
N/A
Patient and Public Involvement
N/A
Information Privacy Issues
N/A
Reputational Issues
Delivery of financial plan
Communication Plan On-going with Communications Team
Enclosure 11
Report Title: Finance Report 2013/14 – Period 1
1. CONTENTS
The report is structured as follows:
Main Report
Annex 1 Revenue Resource Reconciliation
Annex 2 Summary Statement of Financial Performance
Annex 3 Statement of Financial Position (as at 30 April 2013)
Annex 4 2013/14 QIPP Plan
2. INTRODUCTION 2.1 This Finance Report sets out the financial performance for the first period of 2013/14. The
availability of performance data is very limited at this point in the year. Based on the contractual reporting timetables, the first performance data will be available for Month 2.
2.2 From 1 April 2013, the NHS financial reporting system has been changed to ISFE (Integrated Single Financial Environment), which the CCG must use. This system enables standardised information and reporting at all levels to be centrally collated. Whilst implementation has progressed well (including CCG budgets uploaded ahead of the final deadlines), there are severe limitations in the coding structure, and therefore reporting capability, that needs to be addressed locally and nationally.
3. FINANCIAL SYSTEMS: Integrated Single Financial Environment (ISFE)
3.1 The ISFE is the new transaction processing and ledger solution for CCGs across England. The ledger system is on an Oracle platform and provided by NHS Shared Business Services Ltd (SBS) under a national contract let by NHS England.
3.2 The implementation and go-live on 1 April 2013 has been successful, with the system
operational from the first working day in April, payments to NHS providers processed as normal by the 15th of the month, and transactions being processed through purchase ordering system and the accounts payable system. The interface with the payroll feeder systems have also been successful in April. Croydon CCG was one of the few CCGs to meet the original national deadline for uploading budgets into the ISFE system
3.3 The local CSU Financial Management team has successfully delivered training to all key
users of the system. With many managers having previous experience with Oracle and the SBS services, the transition has been simpler that in other parts of London/England.
3.4 It should be noted that as currently configured the ISFE has very restrictive coding
structures that do not meet the local needs for budget management in key areas. The issue is being worked through with the NHS England to allow greater local flexibility on sub-analysis codes. The risk, if not satisfactorily resolved, is limitations in reporting to support budget management, that can only be mitigated by time-consuming off-ledger analysis.
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3.5 The system is designed so that NHS England can monitor CCG financial performance
directly from the viewing the ledger reports.
4. FINANCIAL PERFORMANCE SUMMARY
4.1 Financial Performance Target The 2013/14 operating framework requirements (Everyone Counts: Planning for Patients
2013/14) to: (i) deliver an in-year 1% control total underspend (£4m), and (ii) maintain a 2% development and financial risk reserve (£8m), have been suspended for this year, and a deficit Plan (£19.9m) has been submitted to NHSE(L); in accordance with the Directions and Conditions of Authorisation applicable to this CCG, NHSE(L) must sign-off before the Plan can be regarded as final.
The key focus for the year, apart from observing strict financial control and management obligations, is to finalise and deliver the £14m QIPP plan, and to conclude, receive approval for, and deliver against the 3-Year Financial Improvement Plan.
4.2 Financial Performance
4.2.1 The current position against Key Performance Indicators is summarised below:
Financial
Performance
Target/
Indicator
Measure Target Forecast Status Performance
Trend
Planned Duties
Revenue Resource Limit (RRL)
Planned deficit (£19.932m) (£19.932m) Green
Capital Resource Limit (CRL)
Stay within CRL Nil Nil Green
Cash Resource Limit
Stay with Cash Limit
Breakeven £20m cash support to be agreed
Red
Administration Duties
Better Practice Payment Policy
Payment of valid invoices within 30 days
90% Not
Available Amber
Other Significant Financial Targets
QIPP Delivery of Programme
Savings £14.0m £14.0m
Red (see Annex 4)
Running Costs Stay within
running cost envelope.
£9.111m £9.111m Green
4.2.2 Given the limited level of data for Month 1, the CCG is forecasting that it will achieve the £19.9m deficit target for 2013/14. This includes delivery of £14m QIPP programme (Annex 4). The financial position is summarised below and outlined in Annex 2.
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4.2.3 Whilst the year-to-date position shows an adverse variance, this should not be interpreted as reflecting an underlying trend. Variances will be reviewed and updated when performance data is received from Month 2 reporting.
4.3 Data Availability For Period 1 there is very limited actual performance data available. The following summarises the data available: Acute Services Only monthly contract payment data available Mental Health Only monthly contract payment data available Out of Hospital Care 1 months data Prescribing Not available Running Costs 1 month’s data
4.4 Resource Limit Changes
There have been some small changes in the Revenue Resource Limit in Period 1. Additional allocation for premises and GP IT have been received. Adjustments for primary care and the anticipated correction have been made to comply with central reporting requirements – with discussion continuing with NHSE to secure the funding.
4.5 GP Member Engagement on Financial Objectives
The CCG has developed a Clinical Engagement Scheme that rewards GP Members for engagement in commissioning responsibilities, actively undertaking specific QIPP schemes (e.g. Waiting List Initiative), and for remaining within their share of the commissioning budget.
Statement of Financial Position For the period ended 30 April 2013
The scheme now has the support of the LMC and practices are signing up to the scheme.
Practice and GP Network level budget setting information is being shared as is reporting arrangements for Month 2 onwards.
4.6 QIPP Plan
4.6.1 The 4th cut of the QIPP Plan for inclusion in the Operating Plan was submitted on 26 March 2013. At this time, £14.0m worth of net savings had been identified. The PMO assessed and risk-rated each project in the QIPP Plan and applied a standard risk-adjustment across the plan (red risk = 50% achievement of target, amber risk = 75% achievement of target, green risk = 100% achievement of target) to give a risk-adjusted forecast of £10.3m.
4.6.2 The projects included in the QIPP Plan as at 26 March 2013 have undergone further scrutiny and iterations to refine the saving and reinvestment assumptions. This has resulted in a number of projects revising their net saving target and a small number of projects have subsequently been removed from the QIPP Plan as not being viable in-year. Furthermore, the Non-Elective Threshold Adjustment has been calculated and included, which reduced the saving target of the projects aimed at reducing Non Elective Admissions by £1,113k. This is offset by a significantly greater opportunity on PLD commissioning. The latest version of the QIPP Plan, dated 15 May 2013, now forecasts a net saving of £14.2m, with a PMO risk-adjusted forecast of £10.0m. .
4.6.3 Croydon CCG have engaged the support of PWC over the last 2 months to assist in the development of the Financial Improvement Plan, which includes a suggested list of options for additional QIPP savings that are either stretch of existing schemes or brand new initiatives. A member of the PwC team will be working with Project Managers over the next 3-4 weeks to further develop these plans and refine the additional saving assumptions. These will then be fed into the QIPP Plan for monitoring in-year.
4.6 Risk Analysis
4.6.1 There are a number of risks which may impact on the delivery of the CCG’s 2013/14 Revenue Plan, which include risks associated with key NHS policy initiatives. The CCG has limited reserves to manage these risks.
4.6.2 The key generic financial risks the PCT is exposed to in 2013/14 are:
Allocation assumptions, including specialised commissioning, premises and primary care
Inability to strengthen the robustness of savings/QIPP initiatives to deliver the required £14m savings plan
Continued increases in acute and non-acute (incl prescribing) activity in excess of growth estimates and overperformance reserves
The actual value of continuing care restitution claims in relation to the provisions from PCTs.
Effective application of contract levels to enforce financial penalties for non-compliance with activity and quality contract terms.
4.6.3 There are a number of mechanisms in place to manage risk, in line with NCB guidance:
All provisions and reserves are excluded from individual budgets in favour of centralised control and application.
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The demographic and residual growth reserves (acute and non-acute) have been created to mitigate against the risk of increased demand in service areas caused generally as a result of population and demand growth.
The contingency (0.5%) reserve is, as in prior years, entirely uncommitted and is expected to contain any unforeseen pressures that the CCG may face or be required to fund during 2012/13.
The CCG has entered into a financial risk sharing agreement, as agreed by the Governing body in March 2013, to share risk with other SWL CCGs on in-year unknown risks. All members will contribute 0.5% and programme cost for the Better Services Better Value strategy. This expenditure is funded from the 2% headroom contingency, leaving £4.8m uncommitted. The agreement requires a Financial Review Group (FRG) to be established to govern the agreement. This agreement satisfies one of the outstanding conditions from authorisation.
The CCG has also engaged PwC to support it to strengthen QIPP savings schemes and the delivery of them. The external clinical engagement input has been extended in May to move initiatives to Project Initiation stage and to develop detailed implementation plans.
The risk analysis and mitigations are summarised below:
Croydon CCG - Risk AnalysisDown Side2 Down Side1 Base Case Upside
Plan
£000s £000s £000s £000s
Financial Plan (19,932) (19,932) (19,932) (19,932)
5.1 The Statement of Financial Position (as at 30 April 2013) is summarised in Annex 3. The position is relatively simple with £10m of creditors offset by cash £6m. The difference reflecting that the CCG drew down less than 1/12 of its annual cash limit. This under drawn cash is available in future months.
5.2 Transfer of PCT Assets and Liabilities to Successor Bodies
The current understanding of the timetable for agreeing transfer of liabilities to successor bodies is outlined below: Audited PCT Annual Accounts submitted to Dept of Health (DH) 10 June 2013 Legacy Team (DH) continue to pay invoices and collect debts 30 June 2013 Legacy Team map assets and liabilities to successor bodies 31 July 2013
CCG to receive assets and liabilities September 2013
The mapping is expected to follow the functions transfer as agreed in the Transfer Orders and in general the functional responsibilities of the new organisations.
6. RECOMMENDATIONS 6.1 That the Governing Body note:
That the new financial systems, ledgers and transaction processing arrangements have been implemented and have been operational since the beginning of April 2013.
That new reporting formats for the CCG are being developed for Month 2 reporting.
6.2 That the Governing Body note:
The period 1 reported figures are largely based on Plan, given the limited availability of performance data available in for April 2013.
The forecast outturn is to achieve plan: £19.9m deficit.
6.3 That the Governing Body note that there are a number of risks that will be managed within the overall position to achieve the planned deficit position. A new risk is the allocation for estates costs (£0.8m) as notified by NHS England (London).
Mike Sexton Chief Finance Officer NHS Croydon CCG
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Annex 1: Movement in Allocations
Revenue
Resource
Limit
Expected
Impact:
Expenditure
Impact:
Net Financial
Position
Comment
£000s £000s £000s
2013/14 Financial Plan (30 April 2013) 405,210 425,142 (19,932)
Adjustments:
Correction to CCG Allocation (HCAS/CEA) (964) (964) 0 Allocation still anticipated
NCB Further Adjustment (Primary care etc) 374 374 0 Final adjustment still being negotiated
Premises Allocation 808 808 0 NHSE indicate this allcoation may not be confirmed
GP IT Allocation 738 738 0 Agreed
Total Adjustments 956 956 0
Period 1 406,166 426,098 (19,932)
Revenue Resource Limit Allocation 2013/14
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Annex 2: Summary Financial Performance (Period 1)
Annual <------------ In Month - -----------> <------------ Year To Date - -----------> <-----------> <----------->
Budget Budget Actual Variance Budget Actual Variance Forecast Forecast Var