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Agenda Item 06 Enclosure KPCT/11/06 NHS KIRKLEES Report To:

PCT Board

Title:

Finance Report

FOI Exemption Category

Open

Lead Director:

Bryan Machin Executive Director of Finance

Author:

Bryan Machin

Key Points to Note:

The PCT is forecasting to achieve the control total. However, fundamentally, this is dependent on the PCT’s ability to agree sufficient actions with our acute providers to mitigate the reported overtrades and/or successfully challenge trading reports.

Budget Implications:

As above

Risk Assessment:

As above

Legal Implications:

None identified

Health Benefits:

No change arising from this report

Staffing Implications:

No change arising from this report

Equality Impact:

None identified

Environmental Impact:

None identified

Sub Group/Committee:

Finance, Performance and Strategy Committee

Recommendation:

The Board is asked to recognise the forecast achievement of the control total and reaffirm its commitment to achievement of this target.


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NHS Kirklees Finance Report to January Board for the 9 Months to end of December 2010

1. Purpose of this Report 1.1.

The purpose of this report is to update the Board on NHS Kirklees’ forecast financial performance for 2010/11, including associated risks, and to advise the Board on action being taken to manage those risks.

2. Overall Revenue Position 2.1.

Our control total has been amended to £8.1m in agreement with the StHA. This is a reduction from the previous control total of £9.9m. This amendment has been done to facilitate organisational change across the health economy that will reduce the recurrent cost base.

2.2.

This report explains that we are forecasting to deliver the revised control total. However, acute contracts are forecast to be overspent at the end of the year by £5.9m. We have identified a number of issues on which to challenge the financial amounts our acute providers wish to charge for activity provided. The negotiations between ourselves and our providers are progressing but we remain short of agreeing a position acceptable to the PCT.

3. Financial Risk Analysis 3.1.

Although we have been able to be more certain in our assumptions this month, in forecasting the year end position there remain a number of factors that need to be considered where there is a risk that expenditure may change from that currently forecast and these are summarised below. There is a risk that volatile areas of spend which have historically been pressured such as continuing care, out of area treatments and noncontracted activity may show increased patterns of expenditure in the final quarter. Costs devolved from central budgets to the PCT may result in pressures above the level provided for in the budgets. Prescribing expenditure has been reasonably stable for a number of months now but the PPA’s assessment of the impact of Category M price adjustments may change in the coming months. The position with MYHT is subject to a high degree of uncertainty involving a number of issues including 18 weeks and contractual challenges and this means the year end forecast is subject to significant uncertainty. The reported level of overtrade on the CHFT SLA including: o the difficulty of assessing the likelihood of achieving an acceptable settlement, and


o the uncertainty of the reductions to forecast SLA outturn from the mitigating actions agreed with the Trust. 3.2.

I will update the Board on the current position on these issues at the Board meeting.

4. Delivery of Efficiency Plans 4.1.

We are on track to deliver the majority of the planned efficiencies for 2010/11. Work is ongoing to deliver these efficiencies and to identify plans for 2011/12. Whilst it is important to maintain the efforts to deliver this year’s plan, it is now equally important that the planning work undertaken for 2011/12 is turned into firm plans to deliver the required level of savings. I will update the Board on our current thinking at the Board meeting.

5. Conclusion on Financial Performance 2010/11 5.1.

I am confident that the PCT will deliver the agreed control total. However, this is predicated on my assessment of our ability to successfully challenge acute trading positions, and management of the risks highlighted above.

6. Cash 6.1.

The PCT will manage its cash position within the available cash limit.

7. Public Sector Payment Policy 7.1.

We paid 96.8% of invoices by number and 93.8% of invoices by value, which is a slight improvement of previous performance.

8. Capital 8.1.

The PCT is forecasting to spend its capital allocation of ÂŁ1,149k.


9. Summary Performance against Key Statutory Duties/Targets 9.1.

A summary of the forecast achievement of the PCT’s financial duties are shown in the table below. Table 3: Summary of financial duties Financial Duties /Targets

Forecast Financial Duty Achieved

Achieve financial balance by containing revenue expenditure with the PCT’s revenue resource limit.

Meet SHA’s £8.1m surplus control total

Containing capital expenditure with the PCT’s capital resource limit.

Recovery of full costs on provider activities.

To manage cash payments within the PCT’s cash limit

Public Sector Payment Policy

Source: Financial Reporting Pack

10. Implications for 2011/12 10.1. A

separate paper on the revised Medium Term Financial Plan is presented elsewhere on the agenda.

11. Recommendation 11.1. The

Board is asked to recognise the forecast achievement of the control, subject to the usual risks and uncertainties.

Bryan Machin Executive Director of Finance January 2010


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