RESPONSE FROM NHS HIGHLAND TO PUBLIC AUDIT COMMITTEE, RECEIVED 3 MARCH 2015 AUDITOR GENERAL FOR SCOTLAND (AGS) SECTION 22 REPORT “THE 2013/14 AUDIT OF NHS HIGHLAND: FINANCIAL MANAGEMENT” I am writing to you in response to your letter of 6th February 2015 following up actions arising from the Public Audit Committee on the 2nd February 2015 and the private informal meetings afterwards. In your letter you ask for a number of specific pieces of information, these were: 1. The steps taken to address the issues of poor financial management identified in the AGS report 2. Information relating to the work we are doing around patient flows 3. Letter from Dr Emma Watson concerning Scottish Medical Schools performance in relation to accepting Scottish students 4. Dates of Board Development Sessions and associated documentation In response, please find attached a number of papers and reports which covers the areas you have requested additional information on: 1. Item 1 details NHS Highland’s response to the issues identified in the AGS’s report and the Annual Audit report by the External Auditors. 2. Item 2 - NHS Highland, like all other NHS Boards across Scotland is currently working on their Local Unscheduled Care Action Plans (LUCAP), attached is our LUCAP plan which outlines a number of work streams that all contribute to improving the flow of patients through our services. 3. Item 3 - is a copy of the letter that Dr Emma Watson referred to in the discussion following her presentation. 4. Item 4 - You have requested confirmation of the date or dates of the NHS Highland Board Development sessions at which the Board members were advised that brokerage might be sought from the Scottish Government as well as copies of any papers or written information provided to Board members to inform that discussion. We would re-emphasise the point we have previously made that financial risks were discussed on an ongoing basis both at formal Board meetings and at various governance committees. These are summarised in the attached timeline, which has been independently corroborated by internal audit. Of particular relevance is the Improvement Committee that took place on 3 March 2014 at which the attached finance paper was considered. This paper was based on the Month 10 figures that would have become available on 18 February 2014. This paper made it clear that there remained a £2.9m gap to close and that discussions were taking place with the Scottish Government regarding the options for managing the position over year-end. The position was discussed again at the Board Development session the next day on 4 March 2014. There are no formal papers for Development sessions but the discussion was based on the Improvement Committee paper attached. We discussed the implications of actions necessary to secure breakeven, including the
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RESPONSE FROM NHS HIGHLAND TO PUBLIC AUDIT COMMITTEE, RECEIVED 3 MARCH 2015 AUDITOR GENERAL FOR SCOTLAND (AGS) SECTION 22 REPORT “THE 2013/14 AUDIT OF NHS HIGHLAND: FINANCIAL MANAGEMENT” I am writing to you in response to your letter of 6th February 2015 following up actions arising from the Public Audit Committee on the 2nd February 2015 and the private informal meetings afterwards. In your letter you ask for a number of specific pieces of information, these were: 1. The steps taken to address the issues of poor financial management identified in the AGS report 2. Information relating to the work we are doing around patient flows 3. Letter from Dr Emma Watson concerning Scottish Medical Schools performance in relation to accepting Scottish students 4. Dates of Board Development Sessions and associated documentation In response, please find attached a number of papers and reports which covers the areas you have requested additional information on: 1. Item 1 details NHS Highland’s response to the issues identified in the AGS’s report and the Annual Audit report by the External Auditors. 2. Item 2 - NHS Highland, like all other NHS Boards across Scotland is currently working on their Local Unscheduled Care Action Plans (LUCAP), attached is our LUCAP plan which outlines a number of work streams that all contribute to improving the flow of patients through our services. 3. Item 3 - is a copy of the letter that Dr Emma Watson referred to in the discussion following her presentation. 4. Item 4 - You have requested confirmation of the date or dates of the NHS Highland Board Development sessions at which the Board members were advised that brokerage might be sought from the Scottish Government as well as copies of any papers or written information provided to Board members to inform that discussion. We would re-emphasise the point we have previously made that financial risks were discussed on an ongoing basis both at formal Board meetings and at various governance committees. These are summarised in the attached timeline, which has been independently corroborated by internal audit. Of particular relevance is the Improvement Committee that took place on 3 March 2014 at which the attached finance paper was considered. This paper was based on the Month 10 figures that would have become available on 18 February 2014. This paper made it clear that there remained a £2.9m gap to close and that discussions were taking place with the Scottish Government regarding the options for managing the position over year-end. The position was discussed again at the Board Development session the next day on 4 March 2014. There are no formal papers for Development sessions but the discussion was based on the Improvement Committee paper attached. We discussed the implications of actions necessary to secure breakeven, including the
impact on services and the possibility of brokerage. We were directed to take all necessary action to secure break even position. A brokerage figure of £2.5m was then agreed in principle with the Scottish Government on 6 March 2014 and this was confirmed on 12 March 2014. Board papers confirming the brokerage (along with a media briefing) were issued on 25 March 2014. This was then discussed further at the next Development on 31 March 2014. Again, no formal papers were issued for this session, but the session was based on the Board papers referred to above (which were published on 25 March 2014 and then discussed at the formal Board meeting on 1 April 2014. These are also attached for ease of reference. If you have any further queries or questions regarding this matter please do not hesitate to contact us. Yours sincerely Elaine Mead Chief Executive
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NHS HIGHLAND
Additional evidence provided to the Public Audit Committee in response to letter of 6th
February 2015
Specifically NHS Highland committed to provide information about the steps it had taken
to address the issues of poor financial management identified in the AGS report.
The AGS’ report raised issues regarding poor financial management. These were not
translated into formal recommendations so it is not entirely clear what specific improvements
the AGS would expect to see. However, we understand that the AGS’ report was based on
the Annual Audit Report by the external auditor, which did have formal recommendations.
We will therefore base our response to your request by summarising our progress against
those recommendations that specifically relate to financial management.
External audit recommendation Current positionFinancial MonitoringThroughout 2013/14, the Board forecast ayear end breakeven position. In-year deficitswere reported as being addressed by‘management planned actions’, but therewere no detailed plans behind these actions,and it was not clear how the Board plannedto make these unidentified savings.
RiskInformation provided to the Board is notsufficiently detailed to enable sound decisionmaking.
RecommendationDetailed plans for the savings required in2014/15 should be formally documented andmonthly finance reports to the Board shouldsufficiently capture any risks around theachievement of financial targets.
The Board’s Senior Leadership Team(comprising all Executive Directors andOperational Directors and chaired by theChief Executive) meets every week. Thefinancial position and progress againstsavings targets is discussed at most of thesemeetings. The key savings projects for2014/15 were developed as ‘SavingsCharters’ that were developed by theLeadership Team. This was consistent withprevious years where we have always had asuccessful track record of break even
In addition to the above, the Board has setup a Delivering Financial BalanceProgramme Board to monitor the delivery ofkey efficiency projects on a monthly basis.This is chaired by the Chief Executive andattended by all Executive Directors andOperational Directors as well as two non-executive Board members who play a role inproviding further assurance to other Boardmembers. A formal agenda is provided anda minute is taken. A detailed presentation isgiven covering the year-to-date position, atrend analysis, the forecast and the key risksto the forecast. . The key efficiency projectsare backed by formal charters and driverdiagrams. A trajectory of financialperformance to date and forecast to year-end is presented and this now includes adetailed trajectory relating specifically to theRecovery Plan agreed by the Board inDecember 2014.
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Monthly finance reports to the Board clearlyshow the savings achieved to date and thesavings forecast to be achieved (i.e. still atrisk) such that the degree of savings risk inthe forecast is quantified and explicit.
An in-year financial Recovery Plan waspresented to the Board at its December 2014meeting. After a full discussion, the Boardapproved this Plan. External audit reviewedthe reports submitted to the December Board(including the detailed Financial RecoveryPlan) and also watched a webcast of thedetailed discussions that followed. Externalaudit’s feedback was positive in terms of theclarity of the position to date, the forecastposition, the Recovery Plan and the risks tothe this Plan.
A trajectory has been applied to the Plan andthis is being monitored on a monthly basisand reported to the full Board, the DeliveringFinancial Balance Programme Board and theImprovement Committee.
Financial PressuresThe financial position and delivery of the costsavings plan for 2014/15 and subsequentyears will continue to remain challenging. Atthe start of 2014/15 the Board had a carryforward of non-recurrent savings of £8million. The overspend position at Raigmoreis a significant financial pressure for theBoard as are the pressures in relation toadult social care services. It is anticipatedthat it will need to seek non recurringsupport, in addition to the already agreedrecurring funding, from the council in futureyears to help alleviate these pressures (£1.5million non recurring agreed for 2014/15).
RiskThe required efficiency savings will not beachieved which could have an adverseimpact on the quality of service delivery.
RecommendationThe Board should ensure that formal plansare produced covering all of the requiredsavings for 2014/15 onwards
It is correct to state that the delivery of thecost savings plan for 2014/15 and beyondwill remain challenging. The Board faced avery challenging savings target of £22.4m in2014/15. Based on the Month 10 figures, itexpects to have delivered £20.4m of thesewith the shortfall of £2m to be covered byidentified underspends.
However, although the savings programmehas been successful it remains the case thattoo great a percentage was made on a non-recurring basis. As stated, the Board began2014/15 with a non-recurrent savings carryforward of £8m. The Board remainscommitted to the target of reducing the nonrecurring shortfall to £6m for 2015/16 andthere is a process in place to achieve this bythe 1/4/15. It is also correct to state thatthere are pressures arising from Raigmoreand Adult Social Care. There is an agreedrecovery plan target deficit of £6m forRaigmore in 2014/15. The current forecast(as at Month 10) is £7.5m (equivalent to1.1% adrift from the £6m target) butRaigmore continues to aim for the target of£6m. Further details on the Raigmoreposition are set out below.
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The forecast position on Adult Social Care(as at Month 10) is a deficit of £0.8m(equivalent to 0.75% adrift from the break-even target). Again, work continues to bringthe position back to target in the final twomonths.The overall in-year forecast outturn positionfor NHS Highland for2014/15 remains break-even (as it has been all year). As at Month10 figures there was a projected residualoverall gap of around £0.9m still to close.However, month-on-month improvementshave exceeded £1m every month sinceMonth 4 and the overall Recovery Plan isahead of trajectory. There is therefore a highdegree of confidence that the break-even willbe delivered.
The Board is committed to a more strategicapproach to service re-design and financialplanning. In August 2014 it approved a CareStrategy that set out its vision for the next 10years. This was then translated into a 10-year Operational Implementation Plan, whichwas approved by the Board in February2015. This more strategic approach toservice planning will in turn facilitate a morestrategic approach to financial planning – the10-year Plan included a financial outlook forthe next 10 years that gave a high levelindication of likely savings targets over thattimeframe. Within this framework the Boardhas a draft balanced budget for 2015/16which will go to the Board for formal approvalin April 2015. More work needs to be donein developing savings plans beyond 2015/16and this will be an ongoing and iterative andinteractive process.
Budget management procedures –Raigmore.Raigmore Hospital overspent against budgetby £9.65 million in 2013/14. Internal Auditraised concerns about poor budgetmanagement at the hospital and there is noassurance that these issues are not prevalentacross the other operating units.
RiskThe Board is unable to meet financial targetsas a result of poor budget monitoring acrossoperational units.
RecommendationBudget holders should be required to
There remain significant challenges withinRaigmore. The internal audit report wasundertaken at the request of seniormanagement in recognition of identifiedconcerns. As stated, Raigmore overspent by£9.65m in2013/14. The acute sector in theNHS is a very complex environment andacross the UK it is under significant financialpressure due to the impact of waiting timestargets, high cost drugs and a nationalshortage of some clinical staff (a shortagefelt more acutely in remote areas) whichoften leads to expensive locum cover. Theoverspend at Raigmore was therefore partly
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appropriately manage their budgets and beheld to account for overspends.
affected by cost pressures and not purelydown to poor budget management – butnevertheless this was undoubtedly asignificant factor.
The Board recognised it would not bepossible to bring Raigmore back into balancein a one-year time frame and a three yearrecovery plan was agreed. The targetoverspend for 2014/15 is £6m and as atMonth 10 the forecast for Raigmore is £7.5moverspent. Work continues with the aim ofbringing the forecast back to £6m over theremaining two months of the year.
A tremendous amount of work has beenundertaken at Raigmore in response to theinternal audit report. From a practical pointof view most of the process / governanceimprovements required are either completeor well in hand. There were also deeperrooted issues regarding culture andownership and these take time to turnaround. Progress against this wassummarised in the Board’s submission ofevidence for the Public Audit Committee on 2February 2015.
In addition the Board has embarked on aprogramme of internal audits across alloperational units. The first report relates tothe North West Unit and this was issued inOctober 2014. This report found that whilethere were some issues to address theywere not as serious or to the same extent asthose in Raigmore. Internal audit made sixrecommendations – all of which have beenaccepted by management and an action planhas been agreed. Three of theserecommendations are already complete andthree are partially complete.
Agency workersThe spending on agency/bank staffincreased significantly (82%) in 2013/14.NHS Highland faces continued challenges inrecruiting staff in rural areas, in particularconsultants, GPs, higher band nurses andpharmacists. Whilst the use of agency/bankstaff provides flexibility to the care systemand temporary cover for vacancies and staffabsence, it is important that controls are inplace and that trends and patterns aremanaged and monitored closely.
There has been significant focus on this areain 2014/15. One of the Savings Chartersreferred to in the first section above relatesto locums. The context for this is a nationalshortage of medical staff in certainspecialties. This pressure is exacerbated inremote and rural areas and there is a definitepattern of the more rural boards spendingrelatively high amounts on locum and agencystaff. Particularly in the Rural GeneralHospitals the rotas are very tight (1 in 3) and
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RiskContinued reliance on agency workers to thisextent will have a significant impact on theBoard’s ability to achieve the savingsrequired for longer term sustainability.RecommendationThe Board should monitor and manage theuse of agency staff with a view to reducingtheir cost.
the departure of one consultant will have asignificant impact. In larger hospitals wherethere is (for example) a one in 10 rota thereis more scope to carry a vacancy comparedwith one in three. Therefore a combinationof tight rotas and difficulty in recruitment canlead to use of locums even with robustworkforce planning. More widely, there is aneed to address the issue of fragility ofservices in rural areas and ensuring theyremain viable going forward.
There are several sub-streams to this work: Detailed workforce planning to recognise
early on the risk of staff departures andplanning appropriately
Tightening up and standardisation ofcontrol procedures
Development of a pan-Highland database
Working with suppliers to obtain bestprices for agency staff.
Wider reviews and redesign of theprovision of healthcare in remote andrural areas. Two major service changeproposals were approved in January2015 (the first in Scotland since 2007)which will bring about significantmodernisation and sustainability forcommunities in Badenoch and Strathspeyand Skye, Lochalsh and South WestRoss
As a result of this activity, the spend inRaigmore on locums has reduced by £1.0m(31%) for Months 1 to 10 in 2014/15(compared with Months 1 to 10 in 2013/14).However, this has been more than offset byincreased spend in Mental Health and RuralGeneral Hospitals – both of which are veryreliant on small numbers of medical staff andtherefore any increase in turnover willinevitably affect locum spend.
In addition there is a further charter relatingto Supplementary Staffing. This has broughtvery detailed scrutiny on all aspects ofsupplementary staffing spend (includingagency staff). This has led to a reduction inspend of £0.7m (5%) in Months 1 to 10(2014/15) compared to Months 1-10(2013/14).
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Highland Health & Social Care Committee11 September 2014
Item 7.4
1
LOCAL UNSCHEDULED CARE PROGRAMME
Report by Leah Morrison, Project Manager, LUCAP 2 on behalf of Deborah Jones,Chief Operating Officer.
The Highland Health and Social Care Committee are asked to Note the contents ofthis report.
1 SITUATION
All Board’s in NHS Scotland have been issued guidance from the Scottish Government inMarch 2014 to support them with the drafting of their Local Unscheduled Care Action Plans(LUCAPs) for the second year of the National Programme.
The first draft of the Action Plan was submitted to the Scottish Government in May 2014 andwas assessed against a set of criteria. The Local Unscheduled Care Action Plan requires awhole system approach to ensure the best outcome for Highland’s patients.
NHS Highland’s Action Plan was returned from the Scottish Government in June 2014 withcommentary and a request for a comprehensive Financial Plan to be developed. TheLUCAP Financial Plan contained details of what funding would be required for 2014/15 toenable us to meet the Scottish Governments expectations to achieve the 4 Hour WaitingTimes A&E HEAT Target of 98%.
2 BACKGROUND
The Scottish Government launched a three year £50 million National Unscheduled CareAction Plan in February 2013. The Action Plan contained improvements, transformationsand sustainability of Unscheduled Care Performance which should be applied in all NHSScotland Boards.
During the first year of the Unscheduled Care Programme (2013/2014) the focus was oncreating additional capacity in the acute sector, and Boards reported improvements in the 4Hour Waiting Times A&E HEAT Target, and a significant reduction in 8 and 12 hour patientwaits.
NHS Highland was allocated funding of £390,000 during 2013/2014 which was used torecruit an additional A&E Consultant for Raigmore Hospital. The aim of this appointmentwas to increase Medical and Surgical receiving through A&E to help improve the patient flowand achieve our trajectory of 98% by November 2014. The financial allocation in 2013/2014was also used in the Operational Units to recruit a Remote and Rural Physician in FortWilliam and Community based outreach.
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3 KEY THEMES
The Scottish Government has provided 5 Strategic Themes for Boards to develop theirAction and Financial Plans around:
1. Making the Community The Right Place and Developing the Primary Care
Responses (Right Place/Right Care/Right Time)
2. Flow and the Acute Hospital (Right Time)
3. Assuring Effective and Safe Care 24/7 at the Hospital Front Door (Right Care)
4. Promoting Senior Decision Making (Right Care, Right Time)
5. Cross Cutting Themes
Our local plans support the strategic aims of the Board and articulate a way forward inrelation to the delivery of our core strategy. The workstreams pick up current planned activityhighlighted in the OUDPs. These workstreams focus on supporting flow across the wholesystem.
Local Priorities
The LUCAP 2 Programme Board has agreed to focus on the following Key Workstreams:
Workstream Summary
Unscheduled Care Pathway for Falls andFrailty (Right Call for a Fall)
Workstream Lead:Katherine Sutton and Amanda Trafford
Implementation of the Unscheduled CarePathways for Falls and Frailty in the InvernessArea will provide an alternative option for theScottish Ambulance Service to help avoidunnecessary conveyance to RaigmoreHospital, and to deliver a more person centredapproach to care provision.
Redesign of Primary Care Out of HourServices
Workstream Lead:Gill McVicar and Tracy Ligema
Redesign of the Out of Hours infrastructureidentifying clinical skills required, carepathways and referral options. EstablishHighland wide policies required to support theconsistency of approach, developing out ofhour infrastructure requirements to supportmore effective provision
Ambulatory Care
Workstream Lead:Linda Kirkland and Dr Ken MacDonald
Development of an Ambulatory Care Unit inRaigmore Hospital to provide alternatives toadmission for GPs to help improve thepatient’s journey.
Front Door Services
Workstream Lead:Jean Pierre Sieczkarek and AmandaTrafford
The establishment of AHPs, Nurses andSocial Workers as part of front door servicesand community pull to provide intensivesupport and on-going assessment for patients.
Flow
Workstream Lead:Evelyn Gray and Jo Veasey
The principles of flowology implemented inRural General Hospitals. Timely data isprovided to RGH’s through a Dashboardsystem implemented to manage the volumeand patient flow via A&E and the impact ofdysfunction in other areas of the hospital.
3
Care @ Home
Workstream Lead:Jean Pierre Sieczkarek and Simon Steer
Working with the independent and third sectorto increase Care @ Home capacity
Transport
Workstream Lead:Graham MacLeod (SAS) and Jo Veasey
The establishment of a transport co-coordinator to help improve the flow ofdischarges from Raigmore Hospital.
The transport pilot in Lochaber could beapplied to the greater Inverness area withinvolvement of the Red Cross and SAS.
Community Pull
Workstream Lead:Jean Pierre Sieczkarek
The establishment of a Multi-disciplinaryTeam. The focus is to create opportunities to“pull” people with complex care needs into theCommunity setting.
These workstreams will sit within the Scottish Governments 5 Strategic Themes and dovetailin with the Operational Unit / CHP Development Plans to develop a sustainable future andcoincide with the Governments 2020 Vision.
4 RESOURCE ALLOCATION
The Scottish Government has allocated £806,572 during 2014/2015. This provides the basisto pump prime service change with an expectation that pick up costs from 2015/2016 will beassumed in the Operational Unit Delivery Plans.
This year (2014/2015) NHS Highland bid for funding of £506,572 (as detailed in our FinancialPlan) which has been agreed by the Scottish Government; with the addition of an extra£300,000 to support the focused work to improve performance in discharge from hospital.
Summary Table
Funding Allocations
Unit / Project Description Allocation
Raigmore Hospital A&E ConsultantOPATAmbulatory Care0.5 Band 7 SCN
£50,000£42,000£35,000£22,000
South and MidOperational Unit
Front Door ServicesFalls
£120,000£55,000
North and WestOperational Unit
OOH RedesignCommunity PullPatient Flow Manager
TBA
Argyll and Bute CHP Reduce 4 hour waits £65,000
Pre Hospital Care Basics £25,000
4
The allocations for the rest of this funding will be dependent on the quality and detail of theKey Project Charters submitted from the Operational Units to ensure that we get the most outof the funding for a sustainable future. The Chief Operating Officer, Executive Lead forLUCAP is currently considering requests from the Operational Unit’s / CHP and will bewriting out to confirm allocations shortly.
NHS Highland has established a Local Unscheduled Care Programme Board chaired by theChief Operating Officer. The LUCAP 2 Programme Board meets monthly and hasmanagerial and clinical representation from all of the Operational Units, Argyll and Bute CHPas well as representation from Service Planning, Strategic Commissioning, FinancialPlanning and the Scottish Ambulance Service.
5 MONITORING PERFORMANCE
Key project charters and driver diagrams have been developed and CHP / Operational UnitLeads have been identified.Key performance indicators and outcome measures are being developed to monitorprogress. Critical milestones are being established and a dashboard is in development toenable monitoring to take place.
It is important to note that workstream represents “a sum of the parts” and as such takentogether will deliver improvements in the flow of patients through our care system.
The Directors of Operations are aware that any funding received will be non-recurrent, and ifthe Charters prove to be beneficial, units will have to support them financially when theallocation is finished.
6 RECOMMENDATIONS
The Committee is asked to note the contents of this SBAR and provide ongoing support tostaff undertaking these Key Project Charters locally.
Chief Operating Officer will keep the Highland Health and Social Care Committee updatedregarding the progress of LUCAP 2 this year.
Deborah JonesChief Operating Officer
NHS Highland Director of Medical Education
Microbiology Department
Old Perth Road
Raigmore Hospital
Inverness
IV2 3UJ
Telephone: 01463 705431
Fax: 01463 705648
Headquarters: Assynt House, Beechwood Park, INVERNESS IV2 3BW
Chair: Garry CouttsChief Executive: Elaine MeadHighland NHS Board is the common name of Highland Health Board
Dear Gary
You will be aware that the Remote and Rural Board, in particular, Dumfries and Galloway, Highland and the Islandboards have significant challenges around medical recruitment. You will also be aware that the only strong evidencearound recruitment to these areas is to train the resident population up to be healthcare workers. As Health Boards, wehave supported initiatives with the local education councils to ensure school pupils who are interested in a career inmedicine have access to work experience and support with the admissions process. However, we feel this is only one partof a several pronged approach and we would like to ask the medical schools in Scotland to consider two distinct pathwaysfor those pupils in regions who would aspire to be medics.
1. We request that applicants from Dumfries and Galloway, Highland and the Island boards who achieve theminimum academic standards required for entry to the respective medical school and whose personalstatements demonstrate commitment to a career in medicine and a reflective nature; are prioritised for a places inthe Scottish Medical Schools.
2. We would ask you to inform us of the academic cut off for the school pupils in our more deprived areas of theHighlands and Islands and Dumfries and Galloway, of which there are many, where very bright pupils might notmeet the academic attainment standards required for entry into medical school and may not be given appropriatesupport to apply. We would propose to then support these pupils in the application process. We feel if we’reequipped with this information, we could support those pupils to successful application to medical school andthen a fulfilling career as a doctor.
We make no apology for our request and feel that this is an essential part of our plan to develop a sustainable workforcein the remote and rural regions of Scotland.
With kind regards,
Dr Emma Watson Dr Angus McKellarDirector of Medical Education Medical Director, NHS Western IslesNHS Highland
Dr Roger Diggle Dr Marthinus RoosMedical Director, NHS Shetland Medical Director, NHS Orkney
Jean RobsonDirector of Medical Education
NHS Dumfries and Galloway
cc Paul Gray, Director General Health and Social Care
Dr Aileen Keel, Acting Chief Medical OfficerHelen Raftopoulos, Assistant Director (Health and Social Care)Prof Stewart Irvine, Director of Medicine, NHS Education for Scotland
Professor Gary MiresChair of Scottish Deans GroupSchool of Medical DeaneryLevel 8, Library Block West WingNinewells Hospital and Medical SchoolDD1 9SY
Note: The continued forecast out-turn of break-even overall. Note: The considerable challenges in delivering break even. Note: The requirement of a £5.5m improvement by the end of the financial year.
1 Introduction
This paper highlights the financial forecast and progress on savings plans as at 31 January2014 (Month 10)
2 Key Messages
An overall break-even position forecast by 31/3/14 Considerable challenge to deliver this within timescales The year to date overspend is £4.9m The current reported potential overspend forecast at £5.5m An improvement of £0.1m on the month 9 position previously reported
The current overspend is split between;
Savings to be identified - units £3.2m Adult Social Care (mainly S&M) £2.4m Pressures less offsetting benefits £6.1m Non-Recurrent Benefits Expected (£6.2m)
The Month 10 forecast in the previous year was a potential overspend of £4.6m
3 Financial Position Overview
Previous reports predicated a break-even position on an improvement in operationalforecasts of £2m in the last 3 months of the financial year. The month 10 forecast hasimproved by only £0.1m with a £0.5m overall improvement offset by an adverse movement inRaigmore of £0.4m
The Month 10 position is detailed in Table 1 (attached) and the current forecast issummarised in the following table;
PA/S4/15/5/9
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2
Fig 1
Table 5 identifies savings achievement by Unit and also highlights the increasing reliance onnon-recurrent savings, currently estimated at £8.6m.
As highlighted in previous reports, the adult social care forecast needs to be considered as awhole, as well as a part of South and Mid Highland’s forecast, as the Unit positions aredistorted by the removal of Care at Home budgets to a central area. This resulted in theremoval of prior year underspends in South & Mid and overspends in North & West.
The usual financial tables are attached as follows;
Table 1 presents the overall income and expenditure position, inclusive of adult socialcare funding transferred in from Highland Council and excluding funding transferred outto Highland Council relating to children’s services.
Table 2 provides more detail on the overall expenditure position. The budgets for South& Mid Highland and North & West Highland operational units are now integrated budgetsinclusive of adult social care relating to their areas.
Table 3 shows the same information but excluding Adult Social Care.
Table 4 shows the total position on adult social care alone.
Table 5 summarises the position against savings..
Table 6 summarises the position with regards capital expenditure.
N&W S&M Raigmore ASC HQ Tertiary Others HSCP A&B Corp. Central Total
In summary, the breakdown of the position by unit is:
£m Raigmore (9.5) South & Mid (ASC) (4.2) Adult Social Care - Central 2.7 Argyll & Bute 1.3 North & West (1.5) Forecast non-recurrent benefits 6.2 Tertiary (0.7) Others (inc Corp) 0.2
Specific issues within operational units are as follows;
4.1 Argyll & Bute CHP- £1.3m Underspend
A&B CHP’s forecast remains unchanged.
4.2 North and West Unit - £1.5m Overspend
N&W Unit’s forecast for traditional NHS services deteriorated by £0.2m, mainly due tocontinued costs in respect of locums and vacant practices. This is entirely offset byimprovements in the forecasted cost of ISC placements in adult social care.
Overall the forecast remains the same.
4.3 South and Mid Unit - £4.2m Overspend
S&M are also reporting an unchanged forecast although a £0.1m improvement in NHSservices is offset by increases in ISC costs.
ASC overspends in units are partially offset by an underspend of £2.7m within the centralAdult Social Care budgets.
4.4 Raigmore Hospital - £9.5m Overspend
The Month 10 position shows an adverse movement of £0.4m on the previous report and themajority of this movement relates to increases in Theatres, Orthopaedics and Cancer Drugs.
Interim management arrangements have now been put in place at Raigmore and it isexpected that this will result in improvements however, this will take time and it is now notclear whether there will be any significant financial benefits in the current financial year.
4.5 Out of Area (Tertiary) -£0.8m Overspend
The forecast for tertiary has deteriorated by a further £0.1m due to high cost CAHMSplacements in the private sector.
5 Actions Being Taken
As described in previous reports, a co-ordinated approach is required to improve the financialposition further with all parts of the organisation needing to contribute. Detailed actions aretaking place with regular meetings with Operational Units to measure progress and, in line
PA/S4/15/5/9
4
with previous years’ improvements. It had been expected that this will generate furtherbenefits of circ £2.0m in the final quarter of the year however, the month 10 position has notdemonstrated any movement in this direction.
In line with a number of other Boards, NHSH wished to revise the policy for defining assetlives and therefore reducing expenditure costs for depreciation but was nationallyconstrained from doing this due the way depreciation is funded across Scotland. However, itappears that this constraint could now be lifted and the Board has been given approval toinvestigate the impact this would have in year. It had been expected that this couldpotentially bring a benefit totalling some £2.0m however work has progressed on this and thebenefit is now likely to be £1.6m.
Positive discussions have taken place with senior officials of Highland Council regarding thefinancial pressures being experienced in the Adult Social Care budget. It is mutuallyacknowledged that there needs to be greater clarity regarding the sharing of financial risksand that a three year planning horizon would be beneficial. Agreement has been reached inprinciple that a recommendation will be made to the March Council meeting that the Councilshould contribute non-recurring financial support of £1.0m towards the Adult Social Carebudget in 2013/14.
Overall, further benefits of £2.9m need to accrue to the bottom line to deliver break-even inthe final 2 months of the year.
6 Conclusion
The month 10 position is extremely disappointing given the need to deliver month on monthimprovements to achieve break-even. There is now a requirement to deliver £2.9m of furtherbenefits in the final two months of the financial year in order to break-even. We are in closedialogue with colleagues in the Scottish Government regarding the options for managing thisposition.
7 Governance Implications
Accurate and timely financial reporting is essential to maintain financial stability and facilitatethe achievement of Financial Targets which underpin the delivery and development of patientcare services. In turn, this supports the deliverance of the Governance Standards aroundClinical, Staff and Patient and Public Involvement.
8 Risk Assessment
Financial risks, including the potential failure to deliver the necessary Financial Targets areincluded on the Corporate Risk register and managed accordingly.
9 Planning for Fairness
A robust system of financial control is crucial to ensuring a planned approach to savingstargets – this allows time for impact assessments of key proposals impacting on any changesto services.
PA/S4/15/5/9
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10 Engagement and Communication
The majority of the Board’s revenue budgets are devolved to operational units, which reportinto two governance committees that include staff-side, patient and public forum members inaddition to local authority members, voluntary sector representatives and non-executivedirectors. These meetings are open to the public. The overall financial position is consideredat the full Board meeting on a regular basis. All these meetings are also open to the public.The overall financial position was described in “Health Check” which was sent to everyhousehold in Highland.
Nick KentonDirector of Finance24 February 2014
PA/S4/15/5/9
NHS Highland TABLE 1
Income & Expenditure Report as at JANUARY 2014
Initial Current Plan Actual Variance Forecast Variance from Forecast MovementPlan Plan Summary Funding & Expenditure to Date to Date to Date Outturn Current Plan Variance in month£000 £000 £000 £000 £000 £000 £000 £000 £000
108,421 111,292 North & West Operational Unit 92,899 94,101 (1,203) 112,836 (1,544) (1,544) 0145,611 160,786 South & Mid Operational Unit 132,950 136,322 (3,371) 164,951 (4,165) (4,192) 2820,969 21,155 Adult Social Care - Central 17,857 16,631 1,226 18,391 2,764 2,563 201
Note a forecast out-turn of break-even. Note the securing of £2.5m of Scottish Government Brokerage in order to ensure
delivery of break-even. Acknowledge the need to repay brokerage in future years.
1 Introduction
This paper highlights the financial forecast and progress on savings plans as at 28 February2014 (Month 11).
2 Key Messages
Final quarter benefits have not materialised as anticipated. The forecast out-turn is break-even but there was a requirement to secure
brokerage of £2.5m from Scottish Government Health & Social Care Directoratesin order to ensure this.
This will have to be repaid in future years, over a schedule to be agreed.
3 Financial Position Overview
The February Board report, based upon the Month 9 position, highlighted the requirement ofan improvement in Units’ positions of £2m in order to deliver financial breakeven; this is inline with improvements in the final quarter of previous financial years. This was in addition toa potential benefit from re-profiling asset lives of £2m, additional funding from The HighlandCouncil of £1m and other benefits of £0.6m.
At the end of month 11, £1m has been secured from The Highland Council and the assetlives re-profiling has also been actioned albeit at £1.6m, the benefit is £0.4m less thanoriginally predicted.
The improving trend in respect of operational units however, did not continue through the firsttwo months of the final quarter with a £0.1m adverse movement overall, offset by animprovement in Corporate Services of £0.2m and additional and £0.4m of slippage onallocations and earmarked resources.
The month 11 position is summarised in the figure 1:
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Fig 1
The overall improvement show within the Highland Health & Social Care Partnership(HH&SCP) is after the application of £1m of additional resource from The Highland Counciland the £2m central improvement relates predominantly to the asset lives benefit of £1.6m.
Table 5 identifies savings achievement by Unit and also highlights the continuing reliance onnon-recurrent savings, currently estimated at £8.0m and this is an improvement of £0.7m onthe previous report.
As highlighted in previous reports, the adult social care forecast needs to be considered as awhole, as well as a part of South and Mid Highland’s forecast, as the Unit positions aredistorted by the removal of Care at Home budgets to a central area. This resulted in theremoval of prior year underspends in South & Mid and overspends in North & West.
The usual financial tables are attached as follows;
Table 1 presents the overall income and expenditure position, inclusive of adult socialcare funding transferred in from Highland Council and excluding funding transferred outto Highland Council relating to children’s services.
Table 2 provides more detail on the overall expenditure position. The budgets for South& Mid Highland and North & West Highland operational units are now integrated budgetsinclusive of adult social care relating to their areas.
Table 3 shows the same information but excluding Adult Social Care.
Table 4 shows the total position on adult social care alone.
Table 5 summarises the position against savings
Table 6 summarises the position with regards capital expenditure.
N&W S&M Raigmore ASC HQ Tertiary Others HSCP A&B Corp. Central Total
In summary, the breakdown of the position by unit is:
£m Raigmore (9.5) South & Mid (ASC) (3.9) Adult Social Care - Central 3.8 Argyll & Bute 1.3 North & West (1.7) Forecast non-recurrent benefits 8.0 Tertiary (0.9) Others (inc Corp) 0.4
Specific issues within operational units are as follows;
4.1 Argyll & Bute CHP – £1.3m UnderspendThis is in line with previous reposts. In addition to this, the CHP continues to managea number of pressures, the most significant of these relate to medical and surgicallocums.
4.2 North and West Unit – £1.7m OverspendN&W has moved adversely by £0.2m over the two month period. The Unit continuesto experience financial pressures with the two main items being medical locumswithin the Rural General Hospitals and GP out of hours costs.
4.3 South and Mid Unit – £3.9m OverspendS&M are reporting an improvement £0.3m which is mainly due to a small reduction inits forecast for adult social care packages.
ASC overspends in units are offset by an underspend of £3.8m within the centralAdult Social Care budgets.
4.4 Raigmore Hospital – £9.5m overspendThe most significant overspend relates to Raigmore and this has deteriorated furtherand can be broken down into the following elements;
£m 2012/13 non-recurrent carry forward 2.6 Increase expenditure to meet TTG/Access targets 2.5 Expenditure on cancer & rheumatology drugs 0.7 Locum costs due to sickness, maternity and capacity 2.7 Clinical supplies/other pressures 1.0
The Month 11 adverse movement is £0.3m on the previous report and the majority ofthis movement relates to increases in Theatres costs, Orthopaedic lists and CancerDrugs.
In terms of the carry forward of unmet savings, the Local Delivery Plan (LDP)assumed that Raigmore would require time to deliver a balanced budget and that itwas unlikely to significantly improve its achievement against this target. The under-achievement on this savings target is therefore not unexpected and is offset withinthe NHS Highland overall bottom line on a non-recurrent basis.
Whilst Interim management arrangements have now been put in place at Raigmore itis too late in the financial year to expect any further significant improvement.
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4.5 Out of Area (Tertiary) – £0.9m OverspendThe forecast for tertiary has deteriorated by a further £0.2m.
As previously highlighted, this majority of this overspend is due to a small number ofhigh cost Child and Adolescent Mental Health patients placed within non-NHSfacilities. In addition to this, a number of high cost transplant cases have alsocontributed to the overall overspend.
4.6 Others (£0.2m Under) including Central (£8m under)Corporate Services continued to improve by £0.2m and, as previously highlighted, the£2m improvement in central relates, in the main, to asset lives.
5 Brokerage
Discussions have been held with the Scottish Government Health & Social Care Directorates(SGHSCD) with regards to support in the form of financial brokerage and £2.5m has beenagreed in the current year. This resource needs to be repaid to the SGHD and it is expectedthat this will be managed over two years starting in 2015/16.
6 Capital
NHS Highland has a mixture of ring-fenced funded projects and ongoing replacementprogrammes in place to maximise the use of this year’s Capital Resource Limit (CRL). Thereplacement programmes have been prioritised and phased and will continue into next andsubsequent years and the capital spend continues to show a forecasted position ofbreakeven as per the LDP
The year to date position is showing spend to date of £9.7m against a budget of £17m andalthough challenging this position is consistent with previous years, where that majority ofspend is in the last quarter of the year. The Oban Dental scheme is now near completion.Raigmore Biomass, Endoscopy Decontamination and Dingwall Health Centre are scheduledto complete early 2014/15. Detailed scrutiny is undertaken on the Board’s behalf by theAsset Management Group – key budget holders continue to offer assurance that theirbudgets will be spent in line with the forecasts. There have been some delays associatedwith the weather but at the moment it is anticipated that any slippage can be managed and abreak-even delivered.
The reported position is consistent with recent discussions with Scottish Governmentcolleagues, to agree that any in-year slippage on schemes will be managed within NHSHighland by advancing planned spend from 2014/15, to protect the overall funding. Recentexamples of this include slippage in the current year on the Raigmore Critical Care projectand Dingwall Health Centre being utilised by bringing forward planned spend from 2014/15for eHealth and Tain Health Centre and holding funds for Drumnadrochit Health Centrewhich starts next year.
7 Conclusion
The need to obtain brokerage is clearly disappointing and emphasises the need for robustsavings plans and controls which deliver recurrent savings and reduce the Boards relianceon non-recurrent resource which has grown in recent years.
The receipt of brokerage will allow the Board to meet its financial targets in 2013/14.
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8 Governance Implications
Accurate and timely financial reporting is essential to maintain financial stability and facilitatethe achievement of Financial Targets which underpin the delivery and development of patientcare services. In turn, this supports the deliverance of the Governance Standards aroundClinical, Staff and Patient and Public Involvement.
9 Risk Assessment
Financial risks, including the potential failure to deliver the necessary Financial Targets areincluded on the Corporate Risk register and managed accordingly.
10 Planning for Fairness
A robust system of financial control is crucial to ensuring a planned approach to savingstargets – this allows time for impact assessments of key proposals impacting on any changesto services.
11 Engagement and Communication
The majority of the Board’s revenue budgets are devolved to operational units, which reportinto two governance committees that include staff-side, patient and public forum members inaddition to local authority members, voluntary sector representatives and non-executivedirectors. These meetings are open to the public. The overall financial position is consideredat the full Board meeting on a regular basis. All these meetings are also open to the public.The overall financial position was described in “Health Check” which was sent to everyhousehold in Highland.
Nick KentonDirector of Finance
21 March 2014
NHS Highland TABLE 1
Income & Expenditure Report as at FEBRUARY 2014
Initial Current Plan Actual Variance Forecast Variance from Forecast MovementPlan Plan Summary Funding & Expenditure to Date to Date to Date Outturn Current Plan Variance in month£000 £000 £000 £000 £000 £000 £000 £000 £000
108,421 111,540 North & West Operational Unit 101,937 103,341 (1,404) 113,239 (1,700) (1,544) (156)145,611 160,840 South & Mid Operational Unit 146,493 149,669 (3,176) 164,790 (3,950) (4,192) 24320,969 21,176 Adult Social Care - Central 18,589 17,402 1,187 17,345 3,831 2,563 1,268
AUDITOR GENERAL SECTION 22 REPORT: TIMELINE OF KEY EVENTS
Report by Elaine Mead, Chief Executive NHS Highland
The Board is asked to:
Note that the draft confidential Auditor General Section 22 Report was considered bymembers in-committee in October.
Note the timeline regarding the issues raised in the Section 22 from the AuditorGeneral Report relating to the 2013/14 financial audit of NHS Highland.
Advise the Chair, Chief Executive and Director of Finance on issues to share with thePublic Audit Committee in February 2015 in terms of the S22.
1 Background
The Board is aware that the Auditor General raised a Section 22 Report relating to the2013/14 audit of NHS Highland.
A Section 22 Report is a report prepared under Section 22 of Public Finance & Accountability(Scotland) Act 2000, which allows the Auditor General to bring issues to the attention of theScottish Parliament. This report (which can be accessed on Audit Scotland’s website) waslaid before parliament alongside the Board’s accounts on 24 October 2014. Subsequently,the report was considered by the Parliamentary Audit Committee on 5 November 2014, andattracted significant media attention.
This Committee was attended by the Auditor General and the External Auditor. No officersof the Board were invited to attend the Committee at this stage It is understood that theBoard’s Chair, Chief Executive and Director of Finance will be invited to attend theCommittee in early February 2015. If called they will have the opportunity to formallyrespond to the concerns raised by the Committee and this would be in public.
The External Auditor reported to the Audit Committee in September that the Auditor Generalintended to raise a Section 22 Report.
Prior to the Board meeting of 7 October 2014 NHS Highland was advised that it was notpossible to discuss the content of the Section 22 Report, as it was still a confidential draft.Board members were alerted, however, to the detail of the report whilst in-committee.
This Board meeting of 2 December 2014 is, therefore, the first opportunity for the Board toformally discuss the Report in public.
1.1 Time-line of key events relevant to Section 22 Report
Subsequent to the Parliamentary Audit Committee meeting of 5 November 2014, the ChiefExecutive and Director of Finance of NHS Highland met with senior officials from the ScottishGovernment. They provided Scottish Government with detailed information relating to theissues raised in the Section 22 Report including an audit trail of associated relevantdocumentation and key events in the timeline from December 2013 to the Board meeting of 2April 2014. The Audit Committee has asked Internal Audit to undertake a review of theissues raised by the Section 22 Report which will be considered at the Audit Committee on9th December 2014.
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This time line is updated to the current position and also covers the sequence of events andinvolvement of non-executive members, the audit committee and internal auditors involved inthe scrutiny of the financial position for 2013/14 (Appendix 1).
1.2 Communications and awareness
The board and formal committees of the board are held in public and a number of them arewebcast. NHS Highland board papers are available on the website in advance of themeetings and board briefings for the media are also issued.
The board finance papers and improvement committee are well covered in the local media.In terms of the Section 22 Reports, NHS Highland issued various media statements,informed MSPs and other stakeholders.
The reports was considered by the Parliamentary Audit Committee on 5 November 2014,was webcast and attracted significant media attention.
A review of media clippings and social media show that NHS Highland financial position wasextensively reported during 2013/14.
2 SUMMARY
The Board is invited to consider the timeline of key events relevant to the Section 22 reportand advise the Chair, Chief Executive and Director of Finance of any issues that they wouldwish to bring to the attention of the Public Audit Committee.
Elaine Mead
Chief Executive, NHS Highland
21 November 2014
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APPENDIX 1 Timeline of Key Events Relevant to the Section 22 Report
Time Committee Description28 May 2013 Audit Committee Internal audit on Raigmore financial management
underway at the request of management.1 July Improvement
13 August Board meeting June figures considered. Potential forecastoverspend £9.8m. Report describes this as‘significant’ and further actions required.
2 September ImprovementCommittee
July figures considered. Potential forecastoverspend £10.8m (of which Raigmore £8.5m).Paper from Raigmore with action plan.
10 September Audit Committee Reports from Raigmore. Minute show a detaileddiscussion with non exec member about finances
1 October Board meeting August figures considered. Potential forecastoverspend £9.6m. Report refers to actions beingtaken in Raigmore.
4 November ImprovementCommittee
September figures considered. Potential forecastoverspend £9.5m (of which Raigmore £8.5m).Report from Raigmore but actions not quantified.
3 December Board meeting October figures considered. Potential forecastoverspend £8.5m.
10 December Audit Committee Update on Raigmore including update on ActionPlan and in year position. Recovery planpresented.
13 December Mid-year Review Scottish Government (SG) summary letter confirmsanticipated break-even but risks.
6 January 2014 ImprovementCommittee
November figures considered. Potential forecastoverspend £6.5m.
4 February Board meeting December figures considered. Potential forecastoverspend£5.6m but still formally reporting break-even. (NB
this was a £2.9m improvement on M7 – sotrajectory still reasonable and plans in place.
3 March ImprovementCommittee
January figures considered. Significant adversevariance. Potential forecast overspend. £5.5m stillto find (compared to £5.6m at month 9). Raigmoreposition deteriorated. Report says ‘in dialogue withcolleagues in SG regarding the options formanaging the position’.
6 March ScottishGovernment
Confirm brokerage figure in principle with SG.
12 March ScottishGovernment
Brokerage of £2.5m confirmed and CEO informsChair.
25 March Board papers Board papers and media briefing issued – stating£2.5m brokerage requirement.
1 April Board Discussion on £2.5m brokerage.13 May Audit Committee Follow up internal audit on Raigmore financial
management.9 June Annual review Chair acknowledges need for brokerage.
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Appendix 1 Cont'd.
Time Committee Description26 June Audit Committee Accounts signed by Audit Scotland as
unqualified.9 September Audit Committee Reported to the Audit Committee in August that
the External Auditor explains that AuditorGeneral minded to raise S22 and nowconfirmed.
7 October Board meeting S22 still confidential draft and discussion inpublic not possible but considered in-committeeBoard meeting.
24 October Parliament Accounts and S22 laid before parliament.5 November Parliamentary Audit
CommitteeS22 discussed in public in Audit Committee.
