Operating Plan 2016/17

March 2016

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Operating Plan for 2016/17

This document completed by:

In signing below, the Trust is confirming that:

The Operating Plan is an accurate reflection of the current shared vision of the Trust Board having had regard to the views of the Council of Governors and is underpinned by the strategic plan;

The Operating Plan has been subject to at least the same level of Trust Board scrutiny as any of the Trust’s other internal business and strategy plans;

The Operating Plan is consistent with the Trust’s internal operating plans and provides a comprehensive overview of all key factors relevant to the delivery of these plans; and

All plans discussed and any numbers quoted in the Operating Plan directly relate to the Trust’s financial template submission.

Approved on behalf of the Board of Directors by:

Chair Sian Bates

Signature Approved on behalf of the Board of Directors by:

Interim Chief Executive Ann Radmore

Signature Approved on behalf of the Board of Directors by:

Director of Finance Jo Farrar

Signature

Name Rachel Benton

Job Title Director of Strategic Development

e-mail address rachel.benton@kingstonhospital.nhs.uk

Tel. no. for contact 0208 934 2880

Date

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Contents

1. Executive Summary ............................................................................................................................ 4

Introduction .................................................................................................................................. 4 1.1

Vision and strategic objectives ..................................................................................................... 4 1.2

Successes in 2015/16 .................................................................................................................. 4 1.3

Key Priorities for 2016/17 ............................................................................................................. 5 1.4

2. Strategic Context ................................................................................................................................. 7

Introduction .................................................................................................................................. 7 2.1

Performance against strategic objectives in 2015/16 .................................................................... 7 2.2

Sustainability and Transformation Plan (STP) 2016-21 ................................................................ 9 2.3

Local Commissioners ................................................................................................................. 10 2.4

Conclusion ................................................................................................................................. 11 2.5

3. Delivering the Strategy in 2016/17 ..................................................................................................... 12

Introduction ................................................................................................................................ 12 3.1

Vision, Strategic objectives and supporting plans ....................................................................... 12 3.2

Quality Priorities ......................................................................................................................... 14 3.3

4. Productivity, efficiency and Cost Improvement Plans (CIPs) .............................................................. 17

Introduction ................................................................................................................................ 17 4.1

Benchmarking ............................................................................................................................ 17 4.2

CIP Programme ......................................................................................................................... 18 4.3

Next Steps.................................................................................................................................. 19 4.4

5. Operational Requirements ................................................................................................................. 20

Introduction ................................................................................................................................ 20 5.1

Activity assumptions and forecasts ............................................................................................. 20 5.2

Capacity requirements ............................................................................................................... 20 5.3

Workforce requirements ............................................................................................................. 20 5.4

Capital Requirements ................................................................................................................. 23 5.5

Key Risks to Operational Delivery .............................................................................................. 24 5.6

6. Financial Plan .................................................................................................................................... 25

Financial forecasts ..................................................................................................................... 25 6.1

Statement of financial position [To be updated for 11th April submission].................................... 30 6.2

The capital plan .......................................................................................................................... 31 6.3

Cashflow projections [To be updated for 11th April when phasing has been completed] ............. 31 6.4

Financial Risks ........................................................................................................................... 32 6.5

7. Glossary of Terms ............................................................................................................................. 33

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1. Executive Summary

Introduction 1.1

This document outlines Kingston Hospital NHS Foundation Trust’s Operating Plan for 2016/17. It has

been developed within the context of the emerging Sustainability and Transformation Plan for South West

London.

Chapter 2 reviews performance against the strategic objectives over the past year and considers changes

in the strategic environment to identify how the Trust’s strategy needs to evolve throughout 2016/17.

Chapter 3 sets out how the Trust will deliver the strategy over the next year, identifying priority plans in

support of each strategic objective and setting out quality priorities including the delivery of 7-day services

and the achievement of key access targets. Chapter 4 outlines the context for the development of the

Trust’s productivity programme and sets out the plans for achieving financial efficiencies in 2016/17.

Chapter 5 details the operational requirements for delivery of the plan including workforce and capital

requirements. Chapter 6 sets out the resulting financial plans.

Kingston Hospital is a successful District General Hospital delivering high quality services to a population

of c350,000 within South West London and Surrey. The Trust is firmly embedded into its local community,

with more than 1,000 local volunteers. Services are predominantly provided from the Galsworthy Road

site, with outpatient services provided from nine community locations. The local population has a higher

than average number of elderly resulting in approximately twice as many admissions at the Trust of

patients with dementia than the London or England average.

Vision and strategic objectives 1.2

The Trust’s vision statement is:

‘Working together to deliver exceptional, compassionate care – each and every time’

Four strategic objectives have been identified to support delivery of the Trust’s strategy:

1. To ensure that all care is rated amongst the top 20% nationally for patient safety, clinical

outcomes and patient experience.

2. To have a committed, skilled and highly engaged workforce who feel valued, supported and

developed and who work together to care for our patients.

3. To work creatively with our partners to consolidate and develop sustainable high quality care as

part of a thriving health economy for the future.

4. To deliver sustainable, well managed, value for money services.

Each of these objectives is underpinned by supporting strategies and key milestones refreshed on

an annual basis. Within this context, a summary of the key successes in 2015/16 and the priority

areas for 2016/17 is provided below.

Successes in 2015/16 1.3

In 2015/16 the Trust made good progress against its strategic objectives in a number of key areas.

The Trust delivered high quality care including excellent 18 week referral to treatment performance, much

improved performance against cancer wait targets and low levels of healthcare acquired infection.

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Delivery of the dementia strategy continued, receiving national media coverage and the Maternity Unit

was once again rated best in London by mothers. The Trust invested to achieve a stepped change in the

delivery of 7-day services, rolled out electronic prescribing, made significant improvements to patient food

in response to feedback and replaced the windows in Esher Wing to improve patient and staff experience.

Alongside these successes there were also challenges; in particular A&E waiting times were below target

although performance improved in the second half of the year, and whilst some progress was made in

improving patient administration the Trust has much further to go.

On workforce the Trust successfully reduced vacancy rates from 19% to 7%. This was achieved through

targeted investment in recruitment campaigns, the appointment of practice development nurses to support

newly appointed nurses and training for managers in adopting a coaching approach. However, turnover

remained high and the staff experience, particularly amongst the Black, Asian and Minority Ethnic group

was below expectations.

The Trust operates in a complex external environment and during 2015/16 was actively involved in a

range of strategic collaborations. Across South West London this has involved membership of the South

West London Acute Provider Collaborative and the South West London and Surrey Downs Healthcare

Partnership, focused on developing plans to support clinical and financial sustainability across the sector.

The Trust also became a member of the West London Cancer Vanguard, working towards forming an

Accountable Clinical Network for Cancer. More locally, the Trust worked with other providers in Kingston

and Richmond to develop plans for more integrated services with a focus on out of hospital care.

Financially, 2015/16 was challenging, with the Trust forecasting a full-year deficit of £6.4m. However this

is a £2.3m improvement on the original budget following a focused recovery plan. The Monitor

investigation into A&E performance and finances was closed without sanctions and the Well Led Review

concluded that the Trust has sound governance processes and structures in place.

Key Priorities for 2016/17 1.4

Key priorities for 2016/17 build on the successes of the past year and address the areas identified above

as requiring increased focus. The key priorities to support delivery of each strategic objective are

summarised below:

Strategic Objective 1 – High quality care

Deliver access targets – As well as maintaining performance on 18 weeks referral to treatment and

cancer waiting times, the Trust will build on the work done in 2015/16 to support delivery of the A&E

four hour waiting time standard on an ongoing basis by September 2016. To support this Trust will

undertake work to the estate to develop a Clinical Decision Unit and will strengthen staffing

arangements. Delivery of the standard will also require actions from the Trust’s partners to reduce the

number of Delayed Transfers of Care, improve discharge planning and out of hospital care, enhance

GP provision in A&E and put in place a sustainable solution for 24/7 psychiatric liaison.

Deliver the quality improvement programme to strengthen further patient safety including Sign up

to Safety projects (SEPSIS, maternity and pressure ulcers) and the End of Life project

Deliver year 3 of the dementia strategy with a focus on environmental factors including refurbishing

at least one ward to be dementia friendly.

Transform patient administration and the delivery of outpatient services. This will focus on systems

and processes, customer care and the environment, supported by the completion of the outpatients

refurbishment programme

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Continue to work towards 7 day services, with a focus on recruitment to vacant Care of the Elderly

consultant posts and a review of staffing structures to support 7/7 consultant cover on the medical

wards.

Strategic Objective 2 – Committed, skilled and engaged workforce

Develop and implement targeted recruitment and retention strategies by staff group, supporting

an overall reduction in vacancy rates from 7% to 5% and a reduction in turnover. This will enable a

reduction in the use of agency staff.

Respond to latest staff survey and put in place a programme of work to improve the staff

experience, particularly for Black, Asian and Minority Ethnic groups

Develop a multi-professional education and training strategy to strengthen training and

development to meet current and future needs

Strategic Objective 3 – Working creatively with partners

Develop the vision for the Kingston health campus in 2021

Progress plans through the Kingston Co-ordinated Care and Richmond Outcome Based

Commissioning programmes to support more integrated care for frail adults

Progress plans in relation to the Accountable Clinical Network for Cancer in West London,

shaping and responding to plans to improve the delivery of cancer services

Develop and deliver the Sustainability and Transformation Plan for South West London

Strategic Objective 4 – Sustainable, well managed, value for money services

Continue the recovery plan with a planned improvement of £2.2m to reach an underlying deficit of

£4.2m. Taking into account the proposed injection of £8.1m from the Sustainability and Transformation

Fund this will result in a planned surplus of £3.9m. To deliver this the Trust plans to achieve £9.9m of

productivity savings, with a particular focus on better procurement of non-pay items, reduced agency

expenditure through a combination of price caps and lower vacancy rates and improvements to

lengths of stay and discharge (including Delayed Transfers of Care). Further work is planned to

assess and realise the opportunities presented by the Lord Carter report into productivity in the NHS.

A capital programme of £8.8m is being planned, representing the minimum spend to maintain

buildings and equipment to safe standards and for investing in essential IT infrastructure.

Respond to actions from the CQC inspection and Well Led Governance Framework review

Develop the mid-term strategy, including clinical, workforce, IM&T and financial strategies

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2. Strategic Context

Introduction 2.1

This chapter reviews the Trust’s performance against the delivery of its strategic objectives over the past

year and considers changes in the external environment to identify how the strategy needs to evolve

throughout 2016/17.

Performance against strategic objectives in 2015/16 2.2

Progress against the Trusts four strategic objectives over the past year is summarised below:

Strategic Objective 1

To ensure that all care is rated amongst the top 20% nationally for patient safety, clinical outcomes and patient experience

The Trust prepared for the Care Quality Commission (CQC) inspection which was undertaken in

January 2016. It is currently awaiting the inspection report, which is anticipated in early spring 2016.

No immediate concerns have been raised to the Trust following the inspection. On receipt of the

report the Trust will develop and implement a plan in response to the findings.

A range of initiatives were implemented to support the achievement of the London Quality

Standards (LQS) including the delivery of 7-day working. Further detail can be found in section

3.3.2.

The Trust performed well against most operational targets. In particular, it had excellent 18-week

referral to treatment performance and low levels of hospital acquired infections. Performance

against cancer access standards improved significantly over the year. Whilst Accident and

Emergency (A&E) waiting times were below target, a comprehensive action plan improved

performance in the second half of the year. Further details of plans to improve performance are at

section 3.3.3

The Trust implemented year 2 of its dementia strategy, including improvements to the ward

environment, extending the activities programme to enable reminiscence therapy on all wards and

the identification and monitoring of key harm levels (for example, falls and pressure ulcers) in

patients with dementia, as a precursor to developing targeted safety improvement programmes.

The Trust has been recognised its work on dementia and was upheld as a positive case study of

dementia care in the Alzheimer’s Society report ‘Fix Dementia Care’ and featured in national BBC

coverage. The results of the PLACE Inspection highlighted room for improvement in relation to the

environment for patients which will be a key focus for 2016/17.

Progress was made towards paper light status through the completion of the roll out of electronic

prescribing, implementation of device integration in some areas and increasing electronic links with

GPs systems through DOCMAN.

Some progress was made against the improvement plan for patient administration in 2015/16,

particularly in relation to embedding the patient pathway coordinator model in each service line.

However, overall progress fell below expectations. This will be a key focus area for 2016/17.

The Trust developed a cancer strategy with a clear vision for how cancer services will be led.

Pathway redesign for specific tumour groups has been completed and implementation has

commenced.

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Year 2 of the Estates Strategy was implemented to address key quality of care issues associated

with the environment. Works completed include a new dedicated bereavement suite in maternity,

the replacement of the windows and associated external works to Esher Wing and the opening of a

commercial pharmacy for the convenience of patients. Refurbishment of the main outpatients

department did not progress as quickly as planned and completion will be a priority for 2016/17.

Strategic Objective 2

To have a committed, skilled and highly engaged workforce who feel valued, supported and developed and who work together to care for our patients

Investments made over the year had a positive impact on recruitment and retention with a

significant reduction in vacancy rates from 14% to 7% between April 2015 and February 2016 and a

small reduction in turnover. Investments included international recruitment campaigns, more

practice development nurses to support new recruits, the Kingston Positivity Programme and

training on a coaching approach to 1:1s and appraisals. A continued focus is required for 2016/17

and further detail can be found at section 5.4.

Initial indications from the Staff Survey for 2016 suggest an improved position. However, there is

more to do throughout 2016/17.

Strategic Objective 3

To work creatively with our partners (NHS, commercial, community and voluntary) to consolidate and develop sustainable high quality care as part of a thriving health economy for the future

The Trust worked collaboratively with partners across South West London, as part of the Acute

Provider Collaborative and the wider South West London and Surrey Downs Healthcare

Partnership. It developed plans to support clinical and financial sustainability across the sector.

The Trust worked in partnership with Kingston CCG and local providers to develop a new integrated

model of care for adults requiring care and support (Kingston Co-ordinated Care) and supported the

live testing of the model.

The Trust was selected by Richmond CCG as one of four Most Capable Providers to develop

proposals to provide out of hospital services through outcome based commissioning. The four

providers submitted a response to the Invitation to Submit Detailed Proposals in January 2016.

In July 2015 the Trust agreed to become part of an Accountable Clinical Network for Cancer

Services in West London to improve the integration of services across the entire pathway.

Delivery against year 2 of the volunteering strategy progressed well and the Trust is now supported

by 1,000 volunteers compared with 350 before implementation of the strategy.

Strategic Objective 4

To deliver sustainable, well managed, value for money services

The Trust commissioned an independent governance review based on the Monitor Well-Led

Framework. This concluded that the Trust is well led and that the governance processes and

structures are sound and working well including those relating to performance management. Some

areas of outstanding practice and many areas of good practice were identified. The review agreed

that patient safety and quality is the Trust’s priority.

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2015/16 was a challenging year financially for the Trust. It is forecasting a full-year deficit of £6.4m.

However, the total deficit is a £2.3m improvement on the budget set at the beginning of the year.

This improvement is a result of a focused recovery plan. Further details can be found in Section 5.

The Trust embedded and strengthened the effective functioning of service line management across

the organisation, with 14 of the 19 service lines now accredited.

Sustainability and Transformation Plan (STP) 2016-21 2.3

This one year operating plan sits within the context of the wider South West London Strategic Planning

Group and the South West London and Surrey Downs Healthcare Partnership. The Trust is an active

participant in several strands of work, which will come together to shape the future of South West London

for the next five years.

The overall work on the five year plan is being taken forward by the Strategic Planning Group, which is

developing the strategy to deliver clinical and financial sustainability. Analysis to date suggests that the

key components of this will be to agree a sustainable future for the acute sector, to manage demand and

reduce bed days through a shift to the out of hospital sector and to increase productivity. This will be

based on:

A review of the system architecture

A financial diagnostic for the Do Nothing

Development of a clinical base case and priorities

An analysis of estates and workforce requirements

A shift from the acute to out of hospital sector

Continued clinical work on the configuration of acute sites and clinical networking.

The four acute trusts in South West London are working together as the Acute Provider Collaborative to

increase productivity. The Acute Provider Collaborative is developing proposals to strengthen staff bank

arrangements and a business case for a joint procurement cluster. As part of this productivity work the

Trust is already working in partnership with local mental health trusts and will engage in joint working with

commissioners.

In addition, each acute trust has its own ongoing transformation programme which will need to feed into

the overall plan. Locally these include outcome based commissioning for Richmond and a potentially

similar approach for Kingston. The Trust is currently working with local commissioners and providers

across health and social care to develop a sub-regional plan covering Kingston and Richmond in

particular. This will feed into the Strategic Transformation Plan for South West London. The planned

refresh of the Trust’s five year vision and strategy will be consistent with this.

The June 2016 Sustainability and Transformation submission will be a progress update drawing together

all of the above strands, although it will not be possible to be definitive in any areas which still require

public consultation.

The longer term implementation of the five year plan, including any consultation on reconfiguration

options, will be taken forward through the South West London and Surrey Downs Healthcare Partnership.

The Trust’s one year Operating Plan should be read within the context of the other submissions from the

South West London acute provider trusts as well as the SWL and Surrey Downs CCGs.

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Local Commissioners 2.4

CCG resource allocations and key funding assumptions 2016/17 2.4.1

The Trust’s main commissioners, Kingston CCG and Richmond CCG have received funding allocations of

3.05% for 2016/17. The Trust understands, however, that 1.4% of this is committed to other mandated

budgets such as mental health and GP IT and that 1.6% is required to cover inflation.

Commissioners have in the last week provided more details of Quality, Innovation, Productivity and

Prevention (QIPP) savings amounting to £7.1m. The Trust is working through these details with

commissioners to ascertain how realistic these plans are, both in terms of timing and value. At this stage,

no impact of these schemes has been assumed, however the Trust would seek to incorporate activity

reductions, along with an estimate of the marginal cost that could be removed, should any of the schemes

appear likely to succeed.

Local Commissioning Intentions 2.4.2

A summary of local commissioning intentions and impact where known is provided below:

As part of the 2016/17 main contract commissioners have proposed to include a trajectory towards

compliance with London Quality Standards. The Trust is currently undertaking a gap analysis to

assess the resource implications to meet these standards.

Cancer services will be commissioned in line with NICE Guidance, the National Cancer

Survivorship Initiative and compliance with the London Quality Standards. Providers are to support

delivery of cancer waiting times including allowing GPs direct access to a greater range of

diagnostic tests to support the two week wait. It is expected this will increase demand. The Trust is

working with the lead CCG to assess the impact on demand and capacity to develop improvement

plans as part of the contract negotiations process.

Commissioners are proposing to introduce pathways and a new local tariff for Ambulatory

Emergency Care to support an increase in activity across the sector. The Trust has not yet

received the details of the tariff but on receipt an impact assessment will be completed.

New London asthma standards for children and young people are being introduced. The Trust is

already compliant with these and therefore no impact is expected.

A number of services will be tendered during 2016/17 including Kingston Integrated Community

Diabetes Service and the Sexual Health Services in Richmond and Wandsworth. The Trust will

assess these opportunities as they arise.

Richmond CCG is planning to move towards outcomes based commissioning for c£70m of services

across all providers over the next two years. This equates to c£10m of the contract held with the

Trust. In 2016/17, it is anticipated that the Trust will continue to receive payment through PbR

whilst pathways are worked up in detail, enabling further assessment of risk and mitigation

strategies to inform future arrangements.

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Conclusion 2.5

The Trust has made good progress against many elements of its strategic objectives over the past year.

Investments in recruitment and retention, A&E staffing, patient flow and 7-day working have started to

deliver benefits which the Trust can build on in 2016/17 to support the sustainable delivery of key targets.

The financial context remains challenging and the Trust will need to continue to focus on the delivery of its

recovery plan and the development of plans to support longer term sustainability. As well as driving out

internal efficiencies the Trust will collaborate with local partners across South West London to transform

service delivery across organisational boundaries and ensure limited resources are used to deliver the

best value for patients.

The external environment is complex with the emergence of a number of collaborations and new models

of commissioning and delivery including outcomes based commissioning and Accountable Care

Organisations. The Trust will need to continue working through the implications of these developments to

ensure that it is well placed to mitigate the risks and take advantage of the opportunities that arise from

these new mechanisms.

In such a complex environment it will be important for the Trust to have a clear vision that is shared with

local stakeholders and there will need to be a clear focus on this in the early part of 2016/17.

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3. Delivering the Strategy in 2016/17

Introduction 3.1

This chapter sets out how the Trust will deliver the strategy over the next year. It identifies priority plans in support of each strategic objective and sets out the quality priorities for 2016 including quality goals, the delivery of 7-day services and achievement of key access targets in 2016/17.

Vision, Strategic objectives and supporting plans 3.2

The Trust’s vision of ‘Working together to deliver exceptional, compassionate care – each and every

time’ underpins the Trust’s four strategic objectives. A summary of the key plans to support delivery of

the Trust’s strategic objectives in 2016/17 is set out below:

Strategic Objective 1

To ensure that all care is rated amongst the top 20% nationally for patient safety, clinical outcomes and patient experience

Key plans include:

Delivering year 3 of the Dementia Strategy 2014-2017, including refurbishment of a minimum of

one ward to be dementia friendly, improving the experience of dementia patients in outpatient

settings, progressing joint working with the Alzheimer’s Society on a range of projects and

implementation of the actions arising from the PLACE Inspection.

Improving patient administration and the delivery of outpatient services to support a 10% reduction

in the number of clinics cancelled within 6 weeks of the date they are due, a 50% reduction in the

number of complaints regarding patient administration and a 10% reduction in Did Not Attend

(DNA) by March 2017.

Improving patient safety in line with the Quality Strategy 2013-2017, through implementation of the

2nd year of the Sign Up to Safety Projects (SEPSIS, Maternity and Pressure Ulcers) and the End of

Life Quality Improvement Project. There will be ongoing refinement of the Quality Improvement

Programme to include projects resulting from complaints or incidents throughout the year. The

Trust will also develop plans to implement electronic medical records.

The Trust will benchmark falls performance against a similar hospital/population to support the

identification and achievement of a targeted reduction in falls.

Strategic Objective 2

To have a committed, skilled and highly engaged workforce who feel valued, supported and developed and who work together to care for our patients

Key plans include:

Continuing to strengthen the recruitment and retention programme including a comprehensive

assessment of recruitment and retention issues to inform and implement targeted solutions by staff

group. Further details can be found in section 5.4.

Developing and implementing an action plan in response to the latest Staff Survey with the aim of

reducing by 10% the numbers of key findings in the bottom 20% nationally while at least holding the

position elsewhere.

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Undertaking a programme of work to improve the experience of all staff members in the Trust and

in particular black, Asian and minority ethnic groups demonstrated by improved performance in the

Workforce Race Equality Standard.

Developing a multi-professional Education and Training Strategy to strengthen training and

development to meet current and future needs, including implementation of protected time for staff

development and training across the Trust.

Strategic Objective 3

To work creatively with our partners (NHS, commercial, community and voluntary) to consolidate and develop sustainable high quality care as part of a thriving health economy for the future

Key plans include:

Developing the Accountable Clinical Network for Cancer Services in West London with partners,

developing plans to manage the transition from shadow running in April 2016 to full implementation

in April 2017. It is anticipated that this will involve pooled budgets and potentially shared staffing. It

is intended to support integration across the entire cancer patient pathway to improve the delivery

of patient centred and more financially sustainable care.

Continuing to support the live testing of the new Kingston Co-ordinated Care model and working

with Commissioners on proposals for new commissioning and contracting arrangements anticipated

for April 2017. The impact of proposed changes on the Trust site will be worked through and

solutions to mitigate key risks developed.

Continuing to work with local Richmond partners and Richmond Clinical Commissioning Group to

develop and implement a programme of work to support out of hospital shifts and the delivery of

outcomes based commissioning. This will include the identification and mitigation of clinical and

financial risks.

Developing functionality of the Electronic Patient Record to facilitate integration across the Health

and Social Care economy, including developing plans for the implementation of a secure system

that links GPs to hospital specialists for rapid expert advice, subject to agreement and funding.

Working with partners to develop the 2021 vision of healthcare locally for the Kingston Health

Campus and across South West London.

Strategic Objective 4

To deliver sustainable, well managed, value for money services

Key plans include:

Continuing the delivery of the recovery plan with an improvement of a further £2.2m planned to

reach an underlying deficit of £4.2m before any sustainability and transformation funding. This

recovery plan will focus on internal elements within the Trust’s control and on driving the external

elements that will deliver more through collaboration and alliances within the local health economy.

Further detail can be found in sections 4 and 6.

Responding to the actions arising from the CQC inspection and Well Led Governance Framework

Review.

Progressing technology solutions to improve productivity and safety, for example, device

integration.

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Further development of the leadership, management and governance structure of the Trust. This

will include the implementation of a revised meetings structure and protocol, and a stocktake of

management arrangements and supporting infrastructure for clinical and administration services,

following the implementation of the service line management structure to identify any areas of

potential refinement or improvement.

Developing a mid-term strategy for the Trust incorporating the clinical, workforce, IM&T, estates

and financial strategies.

Quality Priorities 3.3

Quality Strategy and Goals 3.3.1

Quality underpins the Trust’s vision. The Trust’s quality strategy was refreshed in 2015. It describes how

the Trust will enhance the safety and effectiveness of care while continuing to improve patient experience

against a backdrop of financial constraint and ensures that clear quality goals are in place for each year.

The Quality Account has been developed in partnership with staff, local community partners and

commissioning bodies. The nine priorities selected are the proposed Trust Quality priorities for 2016-17:

Reduce use of agency staff by reducing vacancies

Reduce avoidable harm from sepsis

Reducing falls in the hospital setting

Reduction in patient reported pain

Reduction in readmissions in non-elective care

Reduction in length of stay

To transform administration across the hospital

Improve end of life care

Improve experience of discharge

Priorities identified in the Trust’s corporate objectives for 2016/17 were discussed in section 3.2, including

implementing year 3 of the dementia strategy, reducing falls, improving recruitment and retention,

implementing year 2 of the Sign Up to Safety projects and implementing the End of Life quality

improvement project.

Delivering 7-Day Services 3.3.2

During 2015/16 the Trust made some essential investments in quality which, alongside a review of staffing

structures and adjustments to job plans, supported progress against achievement of the London Quality

Standards including the delivery of 7-day services. The full year effect of a number of these initiatives will

be realised in 2016/17. Initiatives include:

Recruitment of 3 Emergency Surgeons to deliver improved emergency services, ensuring quality

standards are delivered;

Introduction of a dedicated 24/7 emergency surgeon rota;

Recruitment of paediatric consultants providing consistent presence between 8am and 10pm every

day. This enhanced consultant paediatrician cover also provided greater support to neonatology;

Enhanced consultant geriatrician cover including surgical and elderly care patients undergoing

orthopaedic procedures;

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24/7 intensive care outreach from September 2015 and enhanced intensive care consultant cover

enabling review of patients every 12 hours from January 2016;

Enhanced consultant cover on the Acute Assessment Unit;

Strengthened junior doctor arrangements and introduction of physician assistants on the medical

wards;

Enhanced consultant obstetric cover enabling 118 hours consultant presence per week from March

2016 and additional midwives to deliver a ratio of 1:30.5 midwives to births;

Weekend pharmacy cover on the Acute Assessment Unit enabling early review of medication

requirements and supporting 7-day multidisciplinary review;

Weekend therapy support on the inpatient wards, enabling treatment plans to be in place within 24

hours and supporting 7-day multidisciplinary review;

7-day consultant radiologist presence in place since January 2016 with extended days during

weekdays and outsourcing of CT reporting out of hours.

While further financial investment is not reflected in plans for 2016/17, the Trust will continue to work

towards the delivery of 7-day services with plans summarised below:

Recruitment to vacant consultant geriatrician posts (stroke and general);

Bid to Macmillan for 2 additional nurses to support 7-day palliative care provision;

Review of staffing structure and job planning to support 7-day consultant cover on the medical wards.

Delivering Access Targets 3.3.3

A&E

The four hour waiting time standard was not delivered consistently during 2015/16. This was largely due

to staffing issues and internal processes within A&E as well as internal and external delays to discharge.

A range of actions were taken resulting in improved performance across the year and providing a strong

foundation for continuing improvement in 2016/17. Key initiatives include:

The establishment of a dedicated ambulance rapid assessment area, improving turnaround and

significantly reducing the numbers of ambulance breaches;

Investment in the nursing establishment and middle grade rota;

Revised consultant rotas to match demand and ensure 16 hours of presence each day;

Implementation of a primary care pilot with a GP and Advanced Nurse Practitioner present in the

department from 5pm-10pm weekdays and during the day at weekends;

Strengthened leadership with a substantive Clinical Director and Service Line Manager for A&E both

now in post;

Significant improvements to information including a Patient Treatment List model which flags internal

and external delays to discharge;

Strengthening of the daily bed meetings and introduction of a daily delay meeting with representation

from community and social care partners;

Introduction of the frailty model to ensure that patients receive the input of the multidisciplinary team

including a consultant geriatrician on the Acute Assessment Unit;

Increased input from the Mental Health team and the provision of 24/7 psychiatric liaison.

Further developments are planned for 2016/17 to enable the Trust to achieve the standard sustainably in

the future. These include:

Refurbishment to create a Clinical Decision Unit;

Revised clinical model to include Extended Scope Practitioners and Emergency Nurse Practitioners;

Development of the Ambulatory Emergency Care service;

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Analysis of the success of the GP pilot and the negotiation of its continued presence in A&E with

commissioners as appropriate;

Revised fast tracking policies to facilitate the early transfer of patients from A&E to the Acute

Assessment Unit.

As a consequence of the above the Trust is forecasting an improving position over the first half of 2016/17

with the standard sustainably achieved from September 2016. Key assumptions underpinning this

include:

The development and commissioning of a Clinical Decision Unit

More robust staffing within the A&E department

The availability of appropriate psychiatric liaison

Reduced levels of Delayed Transfers of Care

Better discharge planning and use of out of hospital care

An enhanced GP presence in A&E

The final four of these assumptions will require significant input from partners.

Cancer

Following the strengthening of tracking and escalation procedures in the early part of 2015/16,

performance improved significantly with all standards met in Q2. In Q3 the Trust met all standards with

the exception of the ‘31 day to first treatment’ standard. This standard was missed narrowly due to

administrative issues in the Skin Tumour Group, which have now been resolved. It is forecast that the

Trust will meet the standards in 2016/17. However, there are some factors which are outside of the

Trust’s control including patient choice and those parts of the pathway which take place in tertiary centres.

Key assumptions underpinning this forecast are, therefore, that the new rules on breach attribution

between providers are adhered to and that the trend in patients choosing to defer treatment does not

change significantly.

18 Weeks Referral to Treatment

The Trust has consistently achieved the 18 Week Referral to Treatment standard throughout 2015/16 and

it is forecast that this position will be maintained during 2016/17. Key assumptions underpinning this

forecast are that growth is broadly in line with the activity predictions in this plan, that sufficient activity is

contracted for by commissioners and that no extra steps are added to the pathway by commissioners in

relation to external approvals.

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4. Productivity, efficiency and Cost Improvement Plans (CIPs)

Introduction 4.1

This chapter outlines the context for the development of the Trust’s productivity programme and sets out

the plans for achieving financial efficiencies in 2016/17.

Benchmarking 4.2

The Trust is already relatively efficient following the delivery of significant cash releasing savings year on

year for the last six years. The Trust’s Reference Cost Index (RCI) is routinely well below 100 (86 in

2014/15), and the recent Lord Carter analysis identified the Trust as best in peer with an Adjusted

Treatment Cost (ATC) of £0.87 against an average of £1.00. A productivity benchmarking exercise in

early 2015/16, using a peer group of London acute hospitals, indicated that the Trust is in the top quartile

for a range of outpatient indicators (for example DNA rates) and day case and out-patient procedure rates

and near the top quartile for length of stay. An independent piece by PwC around the same time

confirmed that the Trust’s small overall workforce size presented no financial opportunity from resizing

staff groups. This provides a challenging context for the development of the Trust’s Cost Improvement

Programme for 2016/17.

Despite this overall level of relative efficiency, benchmarking has revealed some opportunities as

described below.

The first Trust-specific outputs from the Lord Carter review of productivity received in November 2015

identified £11.3m of opportunities for savings at clinical specialty level if the Trust could achieve peer

group average (where below, holding the position where above). Whilst it is likely that differences in how

costs are attributed at Healthcare Resource Group (HRG) level across providers will account for some of

the opportunities identified, the Trust will work closely with the Carter team to understand this further.

The final Lord Carter report released in February 2016 set out a number of recommendations,

benchmarks and examples of best practice with further Trust-specific outputs expected in the coming

months. Ahead of this, the Trust has started working through the recommendations to identify where it

has real potential to make savings and specific opportunities have been identified in procurement and

workforce (specifically agency spend) for 2016/7, both of which form key planks of the Trust’s productivity

programme for 2016/17. The review by PwC identified opportunities for improving theatre productivity

which is also being progressed.

An in-depth service line productivity review in Q3 of 2015/16, utilising benchmarked clinical and Service

Line Reporting (SLR) data, has unearthed small opportunities at service line level, for example, low clinic

utilisation in some areas., which have also been reflected in the productivity programme for 2016/17.

Whilst length of stay benchmarks relatively well, for elderly emergency patients the Trust is above the peer

group average suggesting opportunities for increased efficiency in 2016/17. These partly relate to the

opportunity to reduce delayed transfers of care (DTOCs) where the Trust’s rate of 4.5% is well above the

national average of 2.5%.

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CIP Programme 4.3

As in previous years, a robust process has been followed, with each Service Line receiving benchmarking

data to inform opportunities and then developing their CIPs with support and challenge from the Divisional

Director and Associate Director. Divisional plans are then reviewed by executive directors to provide a

further round of support and challenge, prior to approval of the programme. Alongside this, a range of

cross-cutting CIPs are identified and worked up with a dedicated senior management lead and executive

sponsor. This process has enabled the identification of CIPs totalling £6.7m against a target of £9.9m to

date, with further work planned for March and April 2016 to finalise the programme.

The breakdown for the 2016/17 CIP programme by type and category is provided at table 4.1 below.

Table 4.1: CIP programme for 2016/17 by type

Identified by Category Identified

(£m) Examples

Pay CIP 2.2 FYE of 2015/16 schemes Reduced agency spend Restructuring of staff in corporate teams

Non-pay CIP 1.8 FYE of 2015/16 schemes (£0.78m) Procurement programme Off patent drugs Renegotiation of contracts e.g. Soft FM Appropriate use of patient transport

Net Income – Patient Care

2.0 FYE of 2015/16 Repatriation e.g. breast clinics from QMH Increased market share e.g. diabetes clinics at Raynes Park Fine avoidance e.g. reduction of A&E breaches Best practice tariff e.g. heart failure

Net Income – Other 0.7 FYE of 2015/16 schemes South London Occupational Health contract Income from private patients and provision of workshops/classes

Grand Total 6.7

Summary Target (£m)

Identified (£m)

Variance (£m)

Identified (%)

Total identified to date 9.9 6.7 (3.2) 68%

Each scheme is recorded on a ‘one-pager’ document with key milestones, trajectories and risks and RAG

rated against ease of delivery. Support is provided by the CIP Programme Manager in developing detailed

project plans for larger or more challenging projects. One-pagers have been developed together with a

quality and equality impact assessment. This ensures that the appropriate steps are in place to safeguard

quality whilst delivering significant changes to service delivery.

In addition to the divisional and directorate CIP programmes, the Trust has identified a number of trust-

wide efficiencies which have been used to develop the cross cutting CIP programme. Examples of key

schemes include:

Reducing agency spend - savings of £1.045m identified as a result of the implementation of the price

caps, making the assumption that the Trust will either be paying less for agency or that agency staff

will move back towards bank or substantive work as the price differential narrows. Additional price

savings will also be achieved through implementing the temporary workforce process for medical

locums with 247Time who manage the bookings and ensuring that VAT is not paid on the pay element

of temporary worker charges.

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Procurement – savings of £0.75m identified. The Strategic Procurement Board has been running

since January 2015, and focuses on supporting service lines in the successful delivery of non-pay CIP

savings targets, primarily in the form of year on year cash releasing and cost avoidance savings.

Savings will be achieved through the monitoring of effective sourcing strategies, efficient innovation

capture, process enhancements and continuous improvement to client-focussed supply chain

services. At this stage there are 56 schemes in the procurement programme.

Next Steps 4.4

Work will continue to close the gap during March and April 2016. Cross cutting schemes will be

developed further and Executive Directors will support Divisions in identifying and developing further

opportunities at service line level. There are currently 46 schemes being scoped within the plan, with

examples including:

Improved discharge and reduce length of stay – opportunities to reduce delayed transfers of care and

improve internal processes could realise up to £0.5m in savings in 2016/17. Plans are being

developed to support this

Further procurement opportunities – at this stage the target has been increased from £0.75m to £0.9m

based on a realistic assessment of further opportunities. It may be possible to go further than this,

particularly in light of sector work-wide proposals to create a shared catalogue

Reduced turnover – plans to reduce turnover are expected to reduce recruitment and induction costs

which could realise up to £0.4m in savings in 2016/17

Enhancing theatres productivity – scoping of options to support extending sessions in day surgery is

being completed which may realise up to £0.3m savings.

Extension of ambulatory pathways – identifying opportunities to reduce the workload in A&E by using

the ambulatory emergency care pathways

Further opportunities for efficiencies which will be progressed over the course of the year to support longer

term sustainability include:

Full baseline assessment of opportunities against the Lord Carter report in March and April 2016 to

inform a detailed action plan

Through the South West London Acute Provider Collaborative progressing proposals for the

development of a procurement hub in conjunction with the Wolfson Institute and London Procurement

Partnership, reviewing the potential to share back office functions and assessing the scope to reduce

agency spend further through improvements to the staff bank arrangements across South West

London.

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5. Operational Requirements

Introduction 5.1

Chapter 5 presents the operational requirements for the Trust with the underpinning activity assumptions

and the resultant capacity, workforce and capital requirements and identifies any key risks to delivery and

potential mitigating strategies.

Activity assumptions and forecasts 5.2

Work has been undertaken jointly with commissioners to share Trust and commissioner planned activity

levels for 2016/17. Growth figures have been aligned at approximately 2% growth before service

development initiatives or commissioner QIPP.

Over and above this growth, service development plans bring the overall expected growth to

approximately 4% for elective and non-elective admissions and outpatients. An increase in market share

has been seen during 2015/16 in many specialties, and it is expected that this activity will be retained as

well as there being further plans to increase market share in areas of strength.

Commissioners are assuming that growth will be offset by QIPP but details of these QIPP schemes have

been only recently received and are currently being reviewed. The Trust will continue to work with

commissioners with a view to seeking to agree reasonable assumptions for activity levels and any QIPP

and associated marginal cost reduction once the details of the schemes, their impacts and timings are

more fully understood.

Capacity requirements 5.3

Between April and December 2015, 384 beds were used (adult, medical and surgical) on average. The

2% growth in emergencies that is forecast for 2016/17 would require an additional 6 beds, all else being

equal. The Trust will continue to work on internal processes around length of stay, and with

commissioners on delayed transfers of care to ensure that growth can be accommodated in current bed-

stock.

The number of patients requiring surgery in 2016/17 is not expected to be more than 2-3% higher than in

2015/16. Continuing shifts from elective inpatient to day case to outpatient procedure and improved

theatre utilisation should enable the Trust to manage forecast procedural work in current theatres.

Workforce requirements 5.4

The workforce requirements for 2016/17 are not significantly different to 2015/16 in terms of numbers of

whole time equivalents (WTE). However, forecasts assume an increase in the numbers of substantive

staff through recruitment (including some double-running for overseas nurses) and reducing spend on

agency staff usage facilitated through the implementation of the price caps for agency staff. Table 5.1

below summarises the WTE analysis by staff group from March 2016 to March 2017:

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Table 5.1: Analysis of WTE by Staff Group (To be finalised for April Submission based on completed workforce templates)

Analysis of WTE 31

st

March 2016

31st

March 2017

Substantive medical and dental staff 369 369

Substantive non-medical, clinical staff 1,824 1,884

Substantive non-medical, non- clinical staff 276 275

Total Substantive WTE 2,469 2,528

Bank and overtime staff 207 207

Agency staff 154 137

Total WTEs 2,830 2,872

To support this approach, Trust plans for 2016/17 focus on recruitment and retention and reductions in

bank and agency usage and spend. Further details are prescribed below.

Recruitment 5.4.1

The objective for 2016/17 is to fill the substantive establishment to 95% supported by 5% temporary

staffing. This staffing profile will allow management of fluctuations in activity with the vast majority of

temporary staff sourced through the in-house bank and specialist roles sourced via framework agencies.

Due to investments made in 2015/16 the Trust achieved a significant reduction in vacancy rates from 14%

to 7% between April 2015 and February 2016. Table 5.2 shows the WTE required to achieve the

additional 2% reduction to reach a vacancy rate of 5%.

Table 5.2: Vacancy rates by staff group at February 2016 and targets at March 2017

The Trust will proactively recruit taking into account turnover and anticipating regular patterns of starters

and leavers in key roles. The following activities will be undertaken to support recruitment:

Linking with local partners and investment in apprenticeships

Continuation of new systems following wholesale redesign of the in-house recruitment process in

2015/16. This has improved efficiency and improved lead times to recruit

Ongoing investment in international recruitment which yielded significant numbers of new nurses in

2015/16

Continued use of the recently developed predictor tool which enables service lines and corporate

departments to forward-plan recruitment, dovetailing with a range of incentives and bespoke

approaches to help with recruitment of hard-to-fill posts

Staff Group Vacancy Rate at Feb-16

Additional WTE (for 95% fill)

Vacancy Rate

Target

Qualified Nursing 10.9% 39 5.9%

Admin & Estates 5.3% 35 0.3%

Medical & Dental 6.4% 22 1.4%

Nursing Assistants 5.8% 14 0.8%

Qualified Allied Health Professionals 9.4% 6 4.4%

Qualified Scientific & Technical 7.6% 7 2.5%

Qualified Midwives 4.4% 0 4.4%

Clinical Support Staff 0.9% 0 0.9%

Total 7.0% 123 5.0%

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Retention 5.4.2

The Trust has developed local retention plans to respond to priorities in service lines. Whilst these plans

have seen some increase in retention rates, turnover remains high at 20%. Further detail by staff group is

shown at table 5.3.

Table 5.3: Turnover by staff group at February 2016

In 2016/17 it is planned to reduce turnover to and specific targets and underpinning plans are being

developed for each staff group. The overarching retention plan will build on the training offer and personal

and professional development commitments to staff. The Trust will seek to expand on existing

relationships with local providers to aid retention through combined training plans and development

workshops as part of defined career pathways. Further details of activities that will be undertaken to

support improved staff retention are provided below:

Investment in on-boarding, ensuring new starters have a positive recruitment and joining experience;

Continued Trust wide investment in management development and leadership training

Continued use of 100 day surveys along with exit interview data which is fed back to local action plans

in service lines and departments

Review of the package that is offered, ensuring that this is localised as required, for example, flexible

return to work packages for nurses and development of career pathways for administrative staff;

Development of a clear training and development strategy, ensuring that all staff have access to

education and training to improve and refine skills and future needs of the workforce as services

change and patient care needs develop

Use of the new Staff Grade and Associate Specialist (SAS) Tutor to lead on professional development

and education for SAS grade doctors. In–house simulation training is being developed for junior

doctors including training of faculty. This will have benefits for other staff groups as all simulation

training is multidisciplinary.

Responding to the emerging themes of the 2015 staff survey. Initial indications from the survey

provider are that the Trust has improved in 49% of questions compared with last year. Full

benchmarking will be received in February 2016, when a thorough review of the results will be

completed to inform the development of the staff survey action plan.

Improving the experience of all staff members and in particular black, Asian and minority ethnic

groups. A group has been established to scope and action initiatives to address the concerns of this

group. This will feed into the wider retention programme.

Staff Group Turnover Feb-2016

(%)

Qualified Scientific & Technical 24.2%

Admin & Estates 23.5%

Qualified Allied Health Professionals 20.9%

Qualified Nursing 20.0%

Qualified Midwives 14.4%

Clinical Support 12.8%

Medical & Dental 7.6%

Overall Total 20.3%

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Absence management 5.4.3

Overall the Trust has low absence rates supported by a clear absence management policy with a

dedicated Occupational Health service and employee assistance programme. Through regular monitoring

of reasons for absence, the Trust has identified some emerging patterns within the organisation. As a

result a Health and Well-Being Programme is being developed to support staff, prevent absence and

improve the health of the workforce.

Table 5.4 indicates the average sickness rates per staff group in 2015/16:

Table 5.4: Staff Sickness Absence Rate by Staff Group

As shown in the table above, the Trust’s average sickness rates compare favourably with peers. In order

to improve this yet further, the Trust will focus on areas where there is a higher rate of sickness absence.

Reduction in bank and agency usage and spend 5.4.4

The recruitment forward plan, local workforce plans and the recently established vacancy control panel

are ensuring a reduction in agency spend and temporary staffing usage overall. The agency price caps

are helping with this but ensuring effective forward rostering as well as incentivising in-house bank and

improving the employment experience of staff will support this. Further investment is planned for e-roster

roll out to ensure all staff are on the system and are rostered.

Capital Requirements 5.5

The Trust’s capital programme (set out at table 6.5, section 6.3) involves a total spend of £9.2m. This

includes approximately £1m of slippage from the current year. In light of the forecast financial position, the

Trust has worked through those critical schemes which must be completed for business continuity and

patient safety and has developed a prioritised delivery plan. Given the age and condition of some of the

equipment and buildings, it is not felt that it is possible to constrain this plan any further, however the Trust

will need to monitor the timing of cash flows and capital expenditure closely.

Staff Group

Average Sickness

Absence Rate 2015/16

Clinical Support staff 4.6%

Admin & Estates 4.1%

Qualified Midwives 3.2%

Qualified Nursing 3.0%

Qualified Scientific & Technical 2.7%

Nursing Assistants 2.6%

Qualified Allied Health Professionals 1.3%

Medical & Dental 0.8%

Total 2.9%

Average rate for Acute Small Hospitals 4.2%

Average rate for South London 3.7%

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Key Risks to Operational Delivery 5.6

Key risks to operational delivery and potential mitigating strategies are summarised in table 5.2 below:

Table 5.2: Key Risks to Operational Delivery

Key risks Potential mitigating strategies

Demand significantly higher than anticipated and cannot be met within existing physical capacity

Unforeseen problems with estates works impacting adversely on planned capacity

Escalate work with local providers to manage demand and maximise delivery of services in the community.

Accelerate flow work-stream to reduce length of stay

Increase use of outreach community sites for outpatient attendances, procedures and certain diagnostic tests

Use of facilities at private hospitals

Explore innovative solutions through the SWL Acute Provider Collaborative

Workforce

Insufficient staff to meet anticipated demand due to recruitment and retention issues and/ or inability of staff bank to supply temporary staff

Escalate work with local providers to manage demand and maximise delivery of services in the community

Accelerate flow work-stream to reduce length of stay

Further review of packages on offer to attract staff

Flexible use of clinical staff in managerial and development posts if required

Consider potential to pool some staff with other providers to increase flexibility e.g. pooling therapies staff with community providers

Explore innovative solutions through the SWL Acute Provider Collaborative

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6. Financial Plan

Financial forecasts 6.1

Basis of preparation 6.1.1

The draft financial plan is for an underlying deficit budget of £4.2m. Taking into account the proposed

injection of £8.1m from the Sustainability and Transformation Fund (STF) outlined in a letter sent to the

Trust by Monitor on 15th January, this results in a planned surplus position of £3.9m.

The Trust has necessarily made a number of simplifying assumptions for financial planning purposes and

these underpin its acceptance of the proposed £8.1m STF monies. The assumptions are listed below:

It will be paid for the work done and in a timely manner

Constraints on commissioner funding allocations and resulting QIPP will not adversely impact on the

Trust’s financial position

The Trust’s assumed level of growth is both reasonable and will be affordable

Risk of continued escalation costs due to delayed transfers of care are managed and reduced which

will require action on the part of parties external to the trust

Some reduction in agency staffing has been assumed with the further impact of the proposed caps

helping deliver the CIP programme

Difficulties in recruiting to key areas – nursing, theatres, middle grade doctors and their potential

impact on assumed agency savings do not worsen

No financial impact of the SWL Healthcare Partnership work in 2016/17

No financial impact of the Richmond Outcome Based Commissioning exercise in 2016/17

No adverse impact following on from the CQC inspection

No ongoing adverse impact of the junior doctors’ pay dispute

A capital programme of £9.2m is being planned, representing the minimum spend considered essential for

maintaining buildings and equipment to appropriate standards and for investing in essential IT

infrastructure.

This financial plan has been set based on the forecast deficit outturn of £6.9m for 2015/16, adjusting for

non-recurrent costs and benefits. In line with national guidance, a draft tariff uplift of 1.1% has been

applied along with assumptions for pay and non-pay inflation, resulting in an efficiency factor of 2%. Local

cost pressures such as an increase in the premium for clinical negligence (£1.8m of which £1.0m is

funded through the tariff), full-year effects of investments made in the current year, increased depreciation

due to investments in the current year and the full-year effect of costs related to the National Programme

for IT (£2m full-year cost of which 6 months’ worth of costs were included in the 2015/16 outturn) have

been included. A contingency of 0.5% (£1m) has been assumed within the projections but it is expected

that this will be fully absorbed early in the year as business cases for essential investments are approved.

Commissioning intentions require that acute providers collectively agree a trajectory to meet the full range

of LQS but there has been no agreement regarding delivery in-year and the Trust is unlikely to agree to

any proposal that would incur incremental cost in 2016/17 without (non-CQUIN) funding attached.

As discussed in chapter 4, identified schemes within the Cost Improvement Plan amount to £6.7m,

comprising cross-cutting schemes of £2.5m and service line and departmental schemes of £4.2m. Cross-

cutting schemes include procurement savings, agency cost avoidance (on the basis that pay has not been

materially overspent this year despite significant agency usage) and savings on transport, linen and drugs.

Further cross-cutting and local savings are now being identified and worked up in order to close the CIP

gap and achieve the target of £9.9m.

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At this stage, phasing of the plan across the year has been estimated based largely on equal twelfths for

expenditure with adjustments to estimate the impact of cost improvements such as agency cost (price and

volume) reductions over the course of the year. Income has been phased on calendar days for non-

elective/unplanned areas and working days for other areas. The final version of this plan will reflect more

precise phasing of signed-off budgets in particular; taking into account the fact that receipt of the

Sustainability and Transformation Funding quarterly payments will be dependent upon delivery of

quarterly trajectories.

The high level plan and the budget setting guidance has been shared with and discussed by the Finance

and Investment Committee and the Trust Board and they will continue to be updated as the budget setting

process nears completion.

Income and expenditure projections 6.1.2

Overview

The underlying forecast outturn for 2015/16, after adjusting for non-recurrent income and expenditure is a

£5.6m deficit. The planned position for 2016/17 is a surplus position of £3.9m assuming full receipt of the

proposed general STF of £8.1m. An overview of the Trust’s income and expenditure projections for

2016/17 is shown in table 6.1 and a summary of the factors driving the movement in the normalised

surplus is shown in table 6.2.

Table 6.1: Income and expenditure projections for 2016/17

Income and expenditure projections 2015/16 Outturn

£m

2016/17 Plan £m

NHS Clinical Income 203.8 215.4

Non NHS Clinical Income 2.1 2.1

Non Clinical Income 26.7 25.3

Sustainability and Transformation Fund (STF) 0.0 8.1

Total Income 232.6 250.9

Pay (148.4) (150.7)

Non-Pay (75.9) (80.2)

Total Operational Expenditure (224.3) (230.9)

Earnings before interest, tax, depreciation and amortisation (EBITDA) 8.3 20.0

Depreciation, PDC and Interest (15.2) (16.1)

Net (deficit)/surplus (including STF) (6.9) 3.9

Less Sustainability and Transformation Fund (STF) 0.0 (8.1)

Underlying deficit excluding STF (6.9) (4.2)

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Table 6.2 Changes in income

Patient care income is planned to increase by £11.6m. This includes growth of 2% on the relevant

activity and income, amounting to £4.3m. A further £3.7m relates to the impact of the tariff, including

£2.0m for tariff uplift, an estimated £1.0m for Clinical Negligence Scheme for Trust’s (CNST) and £0.6m

related to the removal of the specialised services marginal rate. The remaining £4.6m relates to income

CIP schemes.

An estimate has not been included for commissioner QIPP. Commissioners have recently shared more

detail on their plans which amount to £7.1m. The Trust has historically seen only a limited impact of

commissioner QIPPs on activity levels however if after detailed review and discussion, any of the

schemes appear likely to have an impact, the Trust will seek to remove the activity and income from the

plan as well as an estimate of the related marginal cost.

Other income includes education income, recharges to other Trusts, car parking and nursery income.

This is planned to reduce initially due to one-off training monies received in 2015/16 as well as pathology

recharges which are expected to reduce (alongside the associated pay and non-pay cost) in 2016/17.

Table 6.3 Changes in pay expenditure

232.6

242.8

250.9

225.0

230.0

235.0

240.0

245.0

250.0

255.0

Forecast income2015/16

Non-recurrentadjustments

Growth Tariff changes CIP Other Total before STFfunding

STF funding Total income2016/17

148.4

150.3

140.0

142.0

144.0

146.0

148.0

150.0

152.0

Forecast pay 2015/16 Less non-recurrentcosts

CIP Pay cost of CIP incomeschemes

Marginal cost ofgrowth

Cost pressures Pay and pensionsinflation and

incremental drift

2016/17 pay

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Pay is planned to increase by £2.3m. Within this, there is a £2.1m planned reduction in pay relating to

2015/16 costs not expected to be incurred in 2016/17 including corporate agency costs and one-off

operational costs of the recovery programme for A&E. The underlying increase in pay is therefore £4.4m.

This is driven by inflation, grade drift and pensions cost pressures (£4.3m), the marginal cost of growth

(estimated £1.5m), local cost pressures of £0.5m and CIPs of £3.7m of which £2.2m have been identified

to date.

Table 6.4 Changes in non-pay expenditure

The Non-pay position in 2015/16 includes £1.2m of non-recurrent benefit relating to a release of system-

generated accruals not required. The underlying planned increase in non-pay is therefore £5.5m, £1.8m of

which relates to inflation. A further £1.8m of the increase relates to the CNST premium, £1m of which is

funded in the tariff and the remaining £0.8m of which is a cost pressure. The full year effect of the Trust

being required to take on the costs of the patient administration system/electronic patient record from

October 2015 (£1m) have also been included, as has the marginal cost of growth (£1.0m). The remaining

movements relate to local cost pressures of £1.1m and CIP of £3.1m, of which £1.7m has been identified.

The planned increase in non-operating costs of £0.8m relates to an increase in depreciation of £0.7m

due to capital expenditure in 2015/16 and interest of £0.2m relating to the £10.0m loan now fully drawn

down.

75.9

80.2

71.0

72.0

73.0

74.0

75.0

76.0

77.0

78.0

79.0

80.0

81.0

Forecast non-pay 2015/16

Non-recurrentadjustments

CIP Non Pay cost ofCIP income

schemes

Marginal cost ofgrowth

Cost pressures CNST costpressure

Inflation Contingency Other Forecast non-pay 2016/17

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Key assumptions

Key assumptions applied within the plan are set out in table 6.5 below:

Table 6.5: Key assumptions

Key assumptions % Value (£m)

Comment

Activity-related

Growth assumption for NHS Patient Care Income

2.0% 4.3 On relevant activity, partially offset by marginal cost

Impact of commissioner QIPP nil nil Commissioner QIPP historically not delivered.

Non-activity related income assumptions

Tariff impact as a % of patient care income

1.7% 3.7 Includes a 0.9% tariff uplift, 0.5% for CNST and 0.3% impact of removal of marginal rate for specialised services

% CQUIN assumed 90% 4.9 Estimate of 90% achievement, based on estimated contract values

Cost assumptions

Pay inflation as a % of pay 0.8% 1.2 Based on bottom up costing

Incremental drift as a % of pay 0.6% 0.9 Based on bottom up costing

Pensions cost uplift as a % of pay 1.3% 2.1 Based on bottom up costing

Non-pay inflation 2.3% 1.8 Average, including PFI and drugs

Contingency as a % of income 0.5% 1.0

The Trust has commissioned a full valuation of its Land and Buildings for March 2016 and is currently

reviewing the outputs. It has been assumed that there will be no consequential revenue impact of this

valuation.

2015/16 and 2016/17 Contract position [To be updated for 11th April submission] 6.1.3

The Trust has reached a settlement with commissioners for the 2015/16 year and is in the process of

billing the agreed activity.

Some detailed discussions with commissioners have taken place regarding 2016/17, in particular, around

planned activity levels. The Trust anticipate that a planning gap will still exist due to differences in

assumptions regarding QIPP and CIP schemes, however there is some alignment between Trust and

commissioner positions regarding the opening outturn position and growth.

The arbitration date for contracts has been extended to 24th April however it is expected that agreement in

most areas will have been reached and to have a Heads of Agreement in place before that date.

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Statement of financial position [To be updated for 11th April submission] 6.2

Projections are shown at table 6.6 below:

Table 6.6: Balance sheet projections 2016/17

Balance sheet projections 2016/17 2015/16 Forecast

Outturn (£m)

2016/17 Plan (£m)

Non-current Assets

Intangible assets 10.7 10.5

Property, Plant & Equipment 115.9 116.3

On-balance sheet PFI 20.3 19.6

Other 0.2 0.2

Total 147.1 146.6

Current Assets

Cash and cash equivalents 1.0 4.6

Other current assets 17.8 16.8

Total 18.8 21.4

Current Liabilities

PFI / LIFT leases (0.9) (0.9)

Other borrowings (0.6) (0.6)

Other current liabilities (34.1) (33.7)

Total (35.6) (35.2)

Non-current Liabilities

PFI / LIFT leases (24.9) (23.9)

Other borrowings (9.9) (9.4)

Other non-current liabilities (1.3) (1.3)

Total (36.1) (34.6)

Net Assets 94.2 98.2

Public Dividend Capital Income and Expenditure Reserve Revaluation Reserve

58.7 9.6

25.9

58.7 13.6 25.9

Total Assets Employed 94.2 98.2

The projected balance sheet shown above reflects the outcomes of the assumptions, productivity plans

and overall asset management of the Trust over the course of the year. The fixed asset net book value is

forecast to decrease as a result of the value of the planned capital programme being less than

depreciation. Further detail on the capital programme is shown below.

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The capital plan 6.3

The capital expenditure programme for 2016/17 is set out at table 6.7 below:

Table 6.7: Capital expenditure programme 2016/17

Category £m Comment

Estates 4.4

Includes standby generators interconnection and one new generator, also pipework replacement. This also includes an allowance of £0.5m to work up and/or commence a scheme around developing endoscopy and theatres

IT 1.9 Includes CRS Transition and Upgrades

Clinical Engineering: Central 1.3 Allocation for addressing obsolete and high risk medical devices requirements only

Clinical Engineering: Divisional 1.7 Allocations based on prioritised submissions from clinical areas

Contingency 0.4 Contingency for progressing the work up of further schemes including endoscopy and theatres

Projected slippage (0.5)

Total 9.2

A capital prioritisation exercise and risk assessment has been undertaken in order to develop a five year

capital plan. This has involved obtaining information from service lines as well as central departments

such as Estates, IT and Equipment to ascertain the ‘must do’s’ over the coming years. The £9.2m

expenditure planned for 2016/17 is significantly lower than the £12.3m plan in the current year but

2015/16 included expenditure on an Estates Strategy including new windows (£3m) and the refurbishment

of Vera Brown House (£2.3m) which was in part funded by a loan.

The capital programme will be severely constrained by cash availability but there are risks around

equipment, much of the Trust’s equipment already being old and fully depreciated. Options are also

being reviewed for purchasing and servicing equipment including a managed equipment service and the

Trust will compare this to purchasing the equipment outright.

Cashflow projections [To be updated for 11th April when phasing has been completed] 6.4

The Trust is currently planning to start the year with a cash balance of £1.0m which assumes that £6.0m

of an estimated £8m CCG over-performance will not be paid until April and May 2016. £1.5m of this has

been paid in January 2016.

The modelling for 2016/17 shows that cash will be constrained such that without receipt of the £8.1m

Sustainability and Transformation Funding, the Trust would be likely to need to access the £6.0m Lloyds

working capital facility at some stage during the year.

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Table 6.6: Cashflow projections 2016/17

This modelling assumes an improvement in working capital resulting from the receipt of the 2015/16 over-

performance payments in April to May 2016 which have been held back by commissioners in 2015/16.

The modelling also assumes a similar delay in any 2016-17 over-performance payments into 2017/18.

The Trust have however assumed a prudent £1m improvement in working capital related to improved

collection of debtors assumed to be within their control. Sustainability and Transformation Funding has

been assumed to be received in full, quarterly in arrears.

Financial Risks 6.5

There is a significant degree of uncertainty in relation to the local health economy and the potential

consequences of the conclusion of the ongoing review within the sector.

To illustrate the level of risk currently in the position, the Trust has estimated the financial impact of some

of the key downside risks as set out in table 6.7 below. The Trust considers the greatest risk to be related

to commissioner funding and affordability.

CIP slippage risk reflects potential risk on income schemes within the programme work is ongoing to

identify mitigating schemes and to look to move away from service line level income schemes and towards

cross-cutting cost saving schemes.

Table 6.7: Financial risks 2016/17

Risk I&E £m Cash £m

I&E surplus / year end cash balance after STF 3.9 6.4

Margin on growth not achievable / affordable (0.8) (0.8)

Risk of delivery of commissioner QIPP schemes without ability to remove cost

(2.5) (2.5)

CIP Schemes Slippage to 3% (1.5) (1.5)

Loss of STF as a result of the above (8.1) (8.1)

Worst Case (9.0) (6.5)

Mitigations

Contingency 1.0 1.0

Working capital facility 0.0 6.0

Capital slippage 0.0 2.0

Further working capital improvement 0.0 2.0

Mitigated Worst Case (8.0) 4.5

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7. Glossary of Terms

A&E – Accident and Emergency

ATC – Adjusted Treatment Cost

CCG – Clinical Commissioning Group

CIP – Cost Improvement Programme

CNST – Clinical Negligence Scheme for Trust’s

CQC – Care Quality Commission

CQUIN – Commissioning for Quality and Innovation

DNAs – Did Not Attends

DTOCs – Delayed Transfers of Care

EBITDA – Earnings before interest, tax depreciation and amortization

HRG – Healthcare Resource Group

I&E – Income and Expenditure

LIFT – Local Improvement Finance Trust

LQS – London Quality Standards

PFI – Private Finance Initiative

QIPP – Quality, Innovation, Productivity & Prevention

RCI – Reference Cost Index

SAS – Staff Grade and Associate Specialist

STF – Sustainability and Transformation Fund

SSHP - South West London and Surrey Downs Healthcare Partnership

SWL – South West London

WTE – Whole Time Equivalent