AGENDA ITEM NO: 002/19

Financial Performance for the period ending 30th November 2018 NHS Warrington CCG Governing Body Meeting 9th January 2019

GOVERNING BODY MEETING:

Governing Body Meeting

DATE OF MEETING:

9th January 2019

REPORT AUTHOR AND JOB TITLE:

Bryan Webb, Deputy Chief Finance Officer

REPORT TITLE:

Financial Performance for the period ending 30th November 2018

STRATEGIC OBJECTIVES:

Please tick which strategic objectives the paper relates to

NHS Constitution

Improve quality of services

Sustained financial balance

✓

Improve healthy life expectancy

Reduce inequalities

Build an effective and motivated workforce

Sound governance arrangements

✓

OUTCOME REQUIRED (tick)

Approval

Assurance

✓

Discussion

Information

EXECUTIVE SUMMARY

The financial position at month 8 (November) is an adverse variance to plan of £0.814m, equal to the phased impact of the Net Risk position (detailed below and within the report). Within this reported position £0.329m of contingencies have been released during the period. The movement has related to No Cheaper Stock Obtainable (NCSO) expenditure being released into the reported position. The CCG has, however, bolstered resilience to the reported financial pressures in prior periods by realising 50% of the identified mitigations, with the remainder being withdrawn from outturn assumptions. The CCG has therefore identified £1.3m of unmitigated risk to the forecast outturn position for the 2018/19 Financial Year. Further mitigations to offset these risks will need to be found to secure the CCG’s control total in 2018/19. Material financial risks (greater than £0.25m) are identified below: Acute Sector: The Sustainability Contract with local Partners is performing in line with agreed thresholds for periods to date. However, Manchester based Trusts present the greatest adverse variance within year to date reporting. A net risk position, following identified mitigations, of £0.5m has been reported to NHS England. Better Care Fund: Joint Funded Packages of Care: The increased caseload that has been evident since the establishment of the Better Care Fund identifies a clear trend of expenditure

AGENDA ITEM NO: 002/19

Financial Performance for the period ending 30th November 2018 NHS Warrington CCG Governing Body Meeting 9th January 2019

growth. Latest forecasts, based on current client caseload, project a pressure against the allocated budget of over £0.8m per Partner. A net risk position, following identified mitigations, of £0.4m has been reported to NHS England. Continuing Healthcare Packages: Growth has been planned for these service budgets, but it was to capture provider price inflation aligned to the movements in the National Living Wage (NLW) and not for increases to the number of client packages supported. Prescribing: NCSO prescribing pressures are to be managed centrally during 2018/19 financial year, as per planning guidance. However, the CCG has been alerted to NCSO increases, estimated to be c£1.5m above normal levels flowing through the CCG’s reported prescribing expenditure. This is reported fully, and unmitigated, within the month 8 position. A net risk position of £0.4m has been reported to NHS England. Delegated Budgets: The Governmental decision to award GPs and practice staff a 2% pay uplift in 2018/19, is to be backdated to 1 April 2018. The impact for Warrington CCG is anticipated to be around £0.2m. Other staff related financial pressures have emerged through the requirement to use locum cover within the financial year in a number of practices. RECOMMENDATIONS / ACTIONS

The Governing Body is asked to:

• Note the financial position for period 8, November 2018; and

• Acknowledge the financial risks identified within the report.

Outline any engagement – staff, clinical, stakeholder and patient / public

Not applicable

Are there any conflicts of interest which may be associated with this paper?

None known

Does this paper address any existing risks which are included on the Assurance Framework or Risk Register?

This report provides assurance against risks B1, B2, B3, B4 and D1 from the Assurance Framework.

Have the following areas been considered whilst producing this report?

Yes

N/A

Equality Impact Assessment (if yes, attach to paper)

✓

Quality Impact Assessment (if yes, attach to paper)

✓

Regulation, legal, governance and assurance implications (reference in the report if applicable)

✓

Procurement process (reference in the report if applicable)

✓

Document development

Has this document been presented to any other Committee or Forum? If yes, please list which meeting, date and outcome of presentation

Yes, shared virtually with CCG’s Finance & Performance Committee on 20th December 2018.

AGENDA ITEM NO: 002/19

Financial Performance for the period ending 30th November 2018 NHS Warrington CCG Governing Body Meeting 9th January 2019

Strategic Objectives and Risks 2018/19

A1 Failure to performance manage to ensure continuous improvement

A2 Failure to agree and measure outcomes

A3 Failure to ensure clear arrangements are in place for quality management of non-commissioned providers in the independent sector

B1 Failure to implement the financial strategy

B2 Failure to ensure sound business practices are at the heart of running the CCG

B3 Failure to secure best value

B4 Failure to adequately provide for external factors, which impact on financial sustainability

C1 Failure to continuously develop the organisational culture that meets the needs of the changing needs of the workforce

C2 Failure of delivery by outsourced critical business functions

C3 Failure to establish primary care capacity

D1 Failure to ensure that we are compliant with our statutory duties

D2 Failure to demonstrate patient and public engagement

E1 Failure to provide appropriate reporting, for joint working arrangements

E2 Failure to describe benefit of integration and joint working arrangements to local people

Financial Reporting

2018/2019

December 2018

Contents

1• Executive Summary

2• Financial Position

3• Use of Reserves

4• Risks and Mitigations

1. Executive Summary

The financial position at month 8 (November) is an adverse variance to plan of £0.814m, equal to the phased impact of the Net Riskposition (detailed below and within the report). Within this reported position £0.329m of contingencies have been released duringthe period. The movement has related to No Cheaper Stock Obtainable (NCSO) expenditure being released into the reported position.The CCG has, however, bolstered resilience to the reported financial pressures in prior periods by realising 50% of the identifiedmitigations, with the remainder being withdrawn from outturn assumptions. The CCG has therefore identified £1.3m of unmitigatedrisk to the forecast outturn position for the 2018/19 Financial Year. Further mitigations to offset these risks will need to be found tosecure the CCG’s control total in 2018/19.

Material financial risks (greater than £0.25m) are identified below:

• Acute Sector: The Sustainability Contract with local Partners is performing in line with agreed thresholds for periods to date.However, Manchester based Trusts present the greatest adverse variance within year to date reporting. A net risk position,following identified mitigations, of £0.5m has been reported to NHS England.

• Better Care Fund: Joint Funded Packages of Care: The increased caseload that has been evident since the establishment of theBetter Care Fund identifies a clear trend of expenditure growth. Latest forecasts, based on current client caseload, project apressure against the allocated budget of over £0.8m per Partner. A net risk position, following identified mitigations, of £0.4mhas been reported to NHS England.

• Continuing Healthcare Packages: Growth has been planned for these service budgets, but it was to capture provider priceinflation aligned to the movements in the National Living Wage (NLW) and not for increases to the number of client packagessupported.

• Prescribing: NCSO prescribing pressures are to be managed centrally during 2018/19 financial year, as per planning guidance.However, the CCG has been alerted to NCSO increases, estimated to be c£1.5m above normal levels flowing through the CCG’sreported prescribing expenditure. This is reported fully, and unmitigated, within the month 8 position. A net risk position of£0.4m has been reported to NHS England.

• Delegated Budgets: The Governmental decision to award GPs and practice staff a 2% pay uplift in 2018/19, is to be backdatedto 1 April 2018. The impact for Warrington CCG is anticipated to be around £0.2m. Other staff related financial pressures haveemerged through the requirement to use locum cover within the financial year in a number of practices.

Year to Date Risk Rating : Amber

Forecast Outturn Risk Rating : Red

2. Financial Position RAG RATING : AMBER

Key Highlights

The financial position at month 8 is an adverse position to plan of £0.814m, reflecting the phased impact of the Net Risk position in theforecast outturn of £1.3m.

Acute contract expenditure is above plan at Manchester based Trusts. The Sustainability Contract is within planned expenditure thresholds todate.

Continuing Healthcare costs continue to grow due to an increase in the number of Personal Health Budgets (PHBs) and changes to guidancetransferring the responsibility for the cost of patients awaiting assessments to the NHS.

Prescribing budgets are overspent by £0.84m YTD.

RESOURCE LIMIT (YTD) 220.945

SECTOR REPORTING (ISFE) PLAN YTD ACTUAL YTD VARIANCE YTD VARIANCE

£m £m £m %

ACUTE SERVICES 110.324 112.397 -2.074 -1.9%

MENTAL HEALTH SERVICES 21.685 21.468 0.216 1.0%

COMMUNITY SERVICES 17.423 17.857 -0.434 -2.5%

CONTINUING CARE 11.070 11.579 -0.509 -4.6%

PRIMARY CARE 26.977 26.599 0.378 1.4%

DELEGATED COMMISSIONING 18.020 18.152 -0.132 -0.7%

OTHER PROGRAMME 10.350 9.014 1.335 12.9%

TOTAL COMMISSIONED SERVICES 215.848 217.067 -1.218 -0.6%

RUNNING COSTS 2.981 2.576 0.404 13.6%

TOTAL CCG POSITION YTD 218.829 219.643 -0.814 -0.4%

Revenue Financial Position - Highlights

Acute

• Highlights: Adverse variance to plan reported at Manchester University Hospitals NHSFT, Countess of Chester andSt Helens NHSFT. WHHFT (Sustainability Contract) is performing within identified thresholds to date.

• Key risks : Activity risk, QIPP delivery, and the lack of availability of up to date performance information for anumber of providers. £0.5m net risk has been reported to NHS England.

Mental Health

• Highlights: Most investment priorities have been managed within 2018/19 contracts.

• Key Risks: Joint Funded Packages of Care within BCF presenting growth levels above expectations; PsychiatricIntensive Care Unit (PICU) performance in early periods and Out of Area (OOA) placements. A net risk of £0.4m hasbeen reported to NHS England.

Primary care

• Highlights: PMS Premium resource investment plans developed and implemented. Prescribing QIPP delivery andNCSO drugs included within Drug Tariff rather than being managed centrally.

• Key risks: Continued increased prescribing pressures. A net risk of £0.4m reported to NHS England.

Continuing Care

• Highlights: Some recently approved high cost packages of care; Backdated Personal Health Budgets (PHB); Shift ofclients from Walton Rehabilitation (Level 2) to CHC.

• Key risks: Increased number of supported clients and National Living Wage impact.

3. Use of Reserves

Allocations: +£0.349m Additional Global Sum Payments for New Patient Transfers / +£0.005m Hosting Armed Forces Networks / +£0.374m UEC Transformation Allocation / -£0.416m Charge Exempt Overseas Visitors Adjustment

Reserves (Activity / Contingency) £000s

Opening balance 2,621

Contract Budget Reconciliation -403

B/Fwd pressures (Prescribing ISTC) -503

Sub total i.e. reserves available to

support in-year pressures 1715

In-year pressures July - October 1,386-

In-year pressures November 329-

Total Reserves Remaining -

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

£000s

2018/19 Reserves Utilisation YTD

Even distrbution of available reserves Actual distrbution of available reserves

Recurrent Investments (Activity Risk) £ Contingency £ Earmarked Reserves £

Opening balance 1,044,000 Opening balance 1,577,000 Opening balance -

Allocations: Allocations: Allocations:

2018/19 Acute Contract Budget Rec 66,690- 2017/18 Prescribing B/Fwd Pressure 275,000- Diabetes Transformation Fund 83,000

2018/19 Activity Pressures to M04 285,000- 2017/18 ISTC B/Fwd Pressure 228,268- DWP Employment Advisers in IAPT 24,000

2018/19 Activity Pressures at M05 356,611- Utilising Contingency at M05 500,000- CYP IAPT Trainee staff salaries 10,500

Countess of Chester Contract 335,699- Utilising Contingency at M06 125,000- 2018/19 Elective Care funding 282,000

Utilising Contingency at M07 120,000- UEC Transformation Allocation 709,500

Utilising Contingency at M08 328,732-

Sub total - Sub total - Sub total 1,109,000

Anticipated allocations: Anticipated allocations: Anticipated allocations:

Diabetes Transformation Fund 83,000-

DWP Employment Advisers in IAPT 24,000-

CYP IAPT Trainee staff salaries 10,500-

2018/19 Elective Care funding 282,000-

UEC Transformation Allocation 709,500-

Closing Balance - Closing Balance - Closing Balance -

4. Risks and Mitigations

• Acute – There is a net risk of £0.5m due to a combination of QIPP non delivery and contractual adverse positions against planned levels of expenditure.

• Mental Health – A net risk of £0.4m due to the pressures of Joint Funded Packages of Care.

• Primary Care Services – A net risk position of £0.4m due to increased prescribing pressures and further No Cheaper Stock Obtainable (NCSO) impact in year.

• Mitigations - The level of identified mitigations has reduced in period, with 50% being realised and the remainder (NSCO central funding) being removed from the outturn assumptions

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

-

0.20

0.40

£m

Risks and Mitigations

Risks Mitigations Net Risk (Unmitigated Risk)