hfma finance may 2009r
TRANSCRIPT
8/3/2019 HFMA Finance May 2009r
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8/3/2019 HFMA Finance May 2009r
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Key facts 2009/10 NHS spend £91bn
11% of GDP
95% funded by tax
NHS funding is set based upon Government
policies and priorities
Three year Comprehensive Spending Review Public Service Agreement DOH and Treasury
33% real terms increase 03/4 to 08/09
35% into pay, 31% into new services, 12% into drugs
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Context
Aging and more obese population
Advances in technology
Patient expectation and choice Competition
Who rations?
Postcode prescribing v local decision making
Where did all the money go?
What does the current economic climatemean for us?
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How the Money is Divided Up
NHS allocation from DOH £91bn
Capital allocation (£5bn)
Topslice for statutory bodies (£6bn)
Primary Care Trust allocationincluding £1bn surplus
(£80bn)
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PCT allocations
@ 85% of total NHS spending
Formula to distribute funds to deliver equity
of service via(A) weighted capitation targets (population,
age related, socio economic factors, MFF)
(B) recurrent baselines
(C) distance from target
(D) pace of change
Cash limited
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What do PCTs do?
Define health needs (JSNA)
Commission services from providers
Performance manage providers
Manage market Ensure choice
Oversee GPs (new contract/QOF)
Practice Based Commissioning
Provide community services
Deliver public health targets with LocalAuthorities
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W
hat do P
CTs spend the money on?NHS Wiltshire £¶m %
NHS SLAs (Trusts) 368 60%
Primary care (GP, OOH) 68 11%GP Prescribing 62 10%
Non NHS SLAs 23 4%
Placements 16 3%
Provider services 66 11%
Administration 12 2%
Total spend 610 100%
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Another way of looking at it
Spend area %
Urgent and emergency care 23
First contact ² GP, pharmacies etc 23Community/intermediate care 15
Elective care including outpatients 20
Specialist services 8
Mental health 8
Maternity 2
Promotion/self care 1
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R elationship between Trusts andPCTs Annual Service Level Agreement (national)
Activity plans
Financial plans Quality targets including CQ UIN
Efficiency/productivity targets
Information requirements
In-year performance monitoring (two way)
Triggers for remedial action
Dispute/arbitration processes
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What do Trusts do?
Provide services to patients based on PCT·s
requirements
Deliver national and local targetsA&E
13 weeks
Hospital Acquired Infections
Work to quality and efficiency standards
Deliver annual cash releasing savings of 3+%
Compete with other providers
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W
hat do Trusts spend their money on?£'m £'m
Income (173) PCTs (156)
Training (6)
Private Patients (8)Other (8)
Pay 99 Medical 33
Nursing 39
AHP 12Admin/managers 15
Non pay 73 Drugs/clinical supplies 28
Estates and FM 30
Capital charges/other 15
(Surplus) (1)
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Why do we have to make savings?Tariff uplift %
Pay including working time directive 2.9
Non Pay 0.4
Clinical Negligence 0.2
Drugs/NICE 1.0
Cost of capital 0.4
Less VAT reduction on costs (0.1)Less efficiency savings (3.0)
Total Tariff Uplift 1.7
Plus CQUIN 0.5
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Savings required in the future
08/09 09/10 10/11 11/12 12/13
PCT gross
uplift
5.3 5.3 5.3 0.0 0.0
Provider
Inflation
(5.3) (5.2) (5.2) (4.0) (4.0)
Provider CRES 3.0 3.0 3.5 4.0 4.0
Net uplift toproviders
2.3 2.2 1.7 0.0 0.0
PCT net
uplift
3.0 3.1 3.5 0.0 0.0
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Ways of making savings
Bacon slicing
Targeting savings at less efficient areas
BenchmarkingReference costs/programme budgeting
Service line reporting
Streamlining processes ² internally and across
organisations
Ensuring income due is collected
Stopping doing things which are ineffective
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But the reality is
Approx 70% of costs are pay each year we will
have to
Reduce the staffingOr reduce the pay bill
Or treat more patients without incurring
any additional staffing costs
And we won·t be able to completely stop new
investment/cost pressures which means we
will have to make higher savings than 4%
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Service line reporting
Allocate activity, income and costs to
specialities
Cost allocation includes
Direct costs
Indirect costs
Corporate overheads
This gives profitability by speciality
Options for less profitable specialities
Divest or make more efficient
Future of core services?
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Profitability of a knee replacementIncome Tariff plus MFF (£6480)
Costs Prosthesis £1800
Theatres (90 mins) £690
Ward (ALOS 3.8 days) £1100
Pre-assessment £160
Estates/FM £1100
Path, rad, HSDU etc £600
Corporate £350
Contribution to contingency £550
Profit 2% £130
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Key targets f or all NHS organisations
Breakeven or surplus on income and
expenditure
External Financing Limit (Trusts) Cash Limit (PCTs)
Capital Resource Limit
Public Sector Payment Policy Management costs
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Capital Sources
Trusts ² retained depreciation
FTs - surpluses
PCTs ² SHA allocated capital
National capital allocations
Private finance
Local Improvement Finance Trust (LIFT) Third Party Developments
Private Finance Initiative
Joint ventures
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Capital costs
Capital in NHS generally underspends
Revenue costs of capital
Capital charges
3.5% of net assets
depreciation
Revenue costs of buildings
Lack of sources for transitional funding
Capital Resource Limit ² spend in year
Uncertainty of commissioners· plans
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Any questions?
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Governance
Standing Financial Instructions, Standing Orders,
Scheme of Reservation, Scheme of Delegation
Board Assurance Framework
Risk register
Comprehensive audit programme
Internal, external and clinical audit
Counter-fraud service
Audit and assurance committee
Budgetholders/authorised signatories
Finance training programme