FINANCIAL REPORT TO THE GOVERNING BODY FOR THE NINE MONTH PERIOD TO 31 DECEMBER 2017

At A Glance Statutory Duties KEY 1% Better than Plan On Plan M9 Better/ Worse Revenue Resource Limit Cash Limit Better Payment Practice Code NHS Non NHS KEY 1% Better than Plan On Plan 1% Worse than Plan Not Applicable Neutral awaiting information Financial Performance M9 Better /Worse 0.5% NR Surplus uncommitted as per the latest guidance from NHS England. 1% Recurrent Surplus 0.5 % NR Contingency QIPP Performance – delivery of target QIPP Performance – delivery against identified schemes Main Provider Performance

Monthly Summary Infographic – December 2017

Statutory Duties Revenue Resource Limit (RRL) Expenditure MUST stay within the limits set for the financial year Cash Limit (CL) Cash spending must stay within the maximum cash drawdown allocated to the CCG for the year Limit £’000 On Target Notes Commissioning Budgets 615,163 P The figures reported are the total of both the notified and confirmed allocations and also includes the Primary Care Co Commissioning allocation transferred from NHS England. Running Costs 7,809  P Limit £’000 On Target Notes CCG Total 599,263 P The CCG is currently on target as regards spending being within the maximum allocated cash drawdown. This figure changes subject to any allocation adjustments.

Cumulative Performance to Date Better Payment Practice Code (BPPC) The target is to pay ALL invoices within 30 days of receipt of a valid invoice Target Cumulative Performance to Date On Target for Year End Notes NHS Value 95% 99.9% P With regard to the Better Payment Practice Code, the CCG is currently exceeding target levels for both NHS and non-NHS invoices. Volume 98.1% Non-NHS 99.1% 99.4%

Performance Measures 1% Surplus The CCG has to plan to deliver a 1% surplus Annual Surplus £’000 Month 8 Planned Surplus Month 8 Actual reported Surplus Confidence Dial Notes 13,245 9,934 The CCG has agreed a surplus of £13,245 for 2017-18; the requirement is for the CCG to carry forward a 1% surplus which is £5,887. The CCG has planned for a surplus of £13,245 which is £7.4m in excess of the target. This will be carried over for the CCG to draw down to invest in future years, the timing of which will need to be agreed with NHS England. Although we are about to enter the winter months, confidence of delivery is increasing.

Financial Performance The CCGs statutory duty is for expenditure not to exceed the Revenue Resource Limit for 2017-18 which is £615.163m, of which £7.8m relates to running costs. As at month 8 the CCG remains on target to meet this duty. In 2017-18 the CCG has planned for a surplus of £13.245m, currently the CCG remains on target to deliver this surplus. The target is higher due to the 1% additional surplus declared in 2016/17 in line with NHS guidance. For 2017-18 the QIPP target is £14.6m, of which £9.9m has been identified recurrently , however should the schemes identified fail to deliver the savings, potentially leading to over-performance on the contracts, which may place the CCG at risk of failing its statutory duties. In addition if the non recurrent element is not converted to recurrent, this will be first call on 18/19 resources The CCG is permitted a cash drawdown limit £599,263k. Currently the CCG is on target to not exceed this limit.

Debtors & Creditors Monies owed to the CCG from NHS Organisations as at 31st December, 2017 total £477k, of which £296k is greater than 30 days. The main debtor as at month 7 £269k both Pennine Acute/Care due to disputes relating to the community contract value for 2016/17 £20k from NHS E./Health Education. Monies owed by Non-NHS organisations to the CCG as at 31st December 2017 total £0.7m of which £11k is greater than 30 days . Monies owed by the CCG to other NHS organisations totals £27.2m as at 31st December, 2017, of which £23.2 relates to ELHT , raised early to facilitate payment. Of the balance £1.0m is greater than 30 days and £1.01m is debt owed to ELHT. Monies owed by the CCG to Non NHS organisations totals circa £2.4m, of which £230k is greater than 30 days a reduction of the previous month, and is spread across a number of creditors.

Favourable variances are depicted in black and in brackets Adverse variances are depicted in red

Points to Note Area Comment Best Case £’000 Likely Case Worst Case Acute SLA’s Following receipt of ELHT month 8 data the forecast outturn reported has increased. The CCG has worked with the Trust to agree a final positon with the Trust and which has been reflected in the forecast outturn. The previously reported position for the other contracts , continues to be a mix of under/over trade and which continues to provide a marginal offset against the agreed position with ELHT. The LTH/NHS E IR Rules previously highlighted remains an issue, a number of meetings are being held between NHS E/LTH & CSRCCG to resolve, any resolution may have an impact upon ELCCG. £2000k Adv £3,000k £4,000k Prescribing As reported in previous months, the underspend in prescribing continues to increase, the latest position continues to report an underspend at month9 which captures seven months of prescribing data . As communicated by NHS E, benefits from price changes in Category M drugs are to be ring fenced by NHS England, and the CCG will not benefit in year from them. In addition, further pressures as a result of NCSO drugs may also impact on the CCG, potentially an additional pressure of £2.4m, which is an increase on the forecast at month 8. It is unclear whether or not these two adjustments have been captured within the forecast provided by the PPA. Therefore, airing on the side of caution, the CCG has factored minimal incremental underspend into the Forecast Outturn. (£2,100k) Fav (£1,800) £500 Primary Care For Primary care a potential underspend has been reported, this is mainly within Central Drugs and Commissioning Schemes . (£150k) (£300k) £0k Co-Commissioning Based upon the latest information from NHS England, they are anticipating an overspend of £300k, an improvement on last month and is due to additional allocation received for the increase in rent . The remaining overspend mainly relates to an under accrual from 2016-17 relating to QOF. Within the Co-commissioning budget the CCG is also having to maintain the 0.5% national risk reserve, and subject to the national position if released would improve the position to one of breakeven. £300k adv Continuing Health Care As at month 9 the CCG are reporting a potential FO overspend of £3.0m, an increase on the previous month. The CCG continues to seek assurances from the CSU regarding a number of IPA associated issues including the accuracy of the forecast information, which remains the largest area of risk . The CCG finance team continue to work closely with the CSU to resolve those issues. £2,000k £3,500k Mental Health As at month 9, the CCG are reporting a potential FO overspend for mental health of £0.6m, consistent with last month . As detailed above the CCG continues to have concerns regarding the accuracy of the forecast, and continue to work with the CSU to resolve. £600k £750k

Continuing Healthcare Spend per Head Sparkline Trend May to December 2017 Analysis of Total Expenditure = £797 = £186 = £166 Prescribing = £175 Primary Care = £138 = £68 Continuing Healthcare

ELHT Activity Trend Analysis Activity trends for planned care continues to demonstrate overall a progressive increase in both day case & Outpatient Procedures, with elective remaining relatively static. The spike since May for Outpatient procedures has continued . As previously indicated , although recently there have been spikes in activity, the trend line for NEL bed days still demonstrates a downward trajectory. The overall trend for unplanned activity remains relatively static, the trend for NEL still indicates a slight downward trend, however the rising activity number since September has continued. The trend within A & E and the MIU overall does appear to indicate a slight downward trend.

Airedale Activity Trend Analysis Clearly the Trust are increasing the number of outpatient procedures, demonstrated by the trend line; October was the first month where more outpatient procedures have been undertaken than daycases which has continued in November. NEL Excess Bed days is indicating a downward trend in the number of bed days, however EL & NELNE appear static, but the numbers are minimal. NELST activity appears to be indicating a marginal upward trend, whereas NEL & NELNE is relatively static. The trend for A & E attendances appears to show an increasing number of attendances over time, whereas at ELHT, the trend does appear to indicate that number of attendances are falling, albeit October & November attendances are marginally lower than previous months.

Potential Risks Winter Resilience – NHS England have requested CCGs to provide additional/alternative winter planning schemes in anticipation of pressures on the system i.e. Winter Flu. Partners are working together with the CCG to develop their schemes to mitigate, including financial mitigations. The risk is that insufficient mitigations are put in place that will have adverse financial implications for the CCG. Respiratory Assessment Unit – The unit opened on the1st November, with the aim to ultimately improve provision of respiratory services for patients whilst aiming to reduce bed capacity within the hospital. Funding was agreed until the 31st March, 2018, however no funding has been agreed beyond then. QIPP 2017/18 – based upon the latest financial plan, the CCG will be required to deliver QIPP savings in 2017/18 circa £14.6m, schemes identified have been analysed between recurrent and non recurrent £8.8m has been identified as recurrent and £5.6m non recurrent, those non recurrent schemes need to be converted into recurrent schemes otherwise this will be first call on resources in 2018-19. For additional information the QIPP report presented at the Sustainability Committee has been attached. Right Care – The CCG are part of the wave 2 implementation group and have been assigned a ‘Right Care’ delivery partner. The CCG will be monitored on progress towards delivery of the outputs; activities and outcomes of interventions commissioned through the Right Care approach. The expectation is that any monitoring will have to include a self-assessment on progress in delivering the outputs, financial and health gain outcomes. The risk is that the CCG are unable to demonstrate delivery of the Right Care programme. LD Transformation – in line with the national directive, Learning Disability (LD) services are undergoing a transformation. Our main local provider Mersey Care NHS FT (formerly Calderstones NHS Trust) LD clients will be re-settled within the community and there is a potential risk that the associated costs of re-settlement will be higher than the current service provision. As at December 2017 the majority of East Lancashire CCG clients have been re-settled, however whilst the site remains open the CCG are required to support the transitional costs. TCES – the contract continues to over-perform. Local initiatives are being implemented to reduce the over-performance, latest indications are that the average spend per day continues to fall, however vigilance should be maintained as this still remains a significant risk to the CCG. Based upon the latest information prescribers continue to prescribe off-formulary, which continues to cause pressure on the budget, however the CCG is working with the CSU to put mitigations in place.

Potential Risks Continued Business Rates revaluation – the CCG has been made aware of changes to rates costs for 17/18 and future years. The current rating list came into force 1st April 2010, and all properties were due to be revalued as at 1st April 2015, however this was postponed. The next rating list comes into force 1st April 2017, until published the rating list cannot be formally challenged. Based upon the latest information provided by Community Health Partnership (CHP) it is anticipated that this revised rating list may lead to significant cost pressure for the CCG. As yet we have not received any correspondence from NHS Property Services, this remains outstanding. Continuing Healthcare – The CSU has met with Lancashire County Council regarding a number of outstanding invoices relating to 13/14 and 14/15 that payment is being requested. CSU continue to liaise with LCC on behalf of the CCG, however there is a significant risk if these invoices prove to be valid that the CCG will be required to pay. Identification Rules Review – NHS England Hubs for commissioning Specialised Services undertook a review in 2016-17 to establish funding baselines for 2017-18 based upon the revised identification rules. This area still remains a significant risk due to the difficulties secondary care providers have had in applying the IR rules to the latest datasets and ensuring the funds flow in line with the activity. In the month 5 & 6 data, we have identified Lancashire Teaching Hospital as a risk in this area which we are currently investigating, some progress has been made, however there are still a number of areas requiring investigation. Salford Royal has also been highlighted as a Trust having difficulty applying the IR rules.

Horizon Scanning Dry AMD – Recently the CCG has been made aware of the increasing demand for Dry Acute Macular Degeneration. The CCG needs to undertake a scoping exercise to quantify the current capacity and potential demand together with the associated costs. The expectation is that NICE approval will be granted in the not to distant future. Stroke – East Lancashire Hospitals Trust are working towards an improvement in the Stroke pathway, and a business case has been submitted to the CCG for review. The CCG have agreed to work with the Trust to ensure any changes are in line with CCG strategy and agreed Lancashire wide stroke pathways. Pennine Lancashire Transformation Programme Team are working on delivering the ‘Case for Change’ model, focussing on six key areas of enquiry to ensure affordability; health outcomes and inequality gap; current care delivery system; technology and innovation; workforce and citizen participation and empowerment. The outcomes of these work streams continue to be developed. Strategic Transformation Plans (STP) – In total there are 44 STP sites across the country, the more advanced plans are being selected to be the pilot sites. The CCG has been advised that although Lancashire & South Cumbria will be a pilot site, the implementation of the pilot is for there to be a two stage approach, with the Fylde Coast being the early adopter. Identification Rules Review – NHS England Hubs for commissioning Specialised Services undertook a review in 2016-17 to establish funding baselines for 2017-18 based upon the revised identification rules. Based upon the latest information, this area still remains a significant risk due to the difficulties secondary care providers have had in applying the IR rules to the latest datasets. TCES - Work has commenced to formulate a pooled budget for the contract to be hosted by LCC via a section 75 agreement. The risk is in agreeing the CCG’s contribution to the pool, as currently the TCES provider has not yet fully implemented the commissioner identifier for equipment purchases. QIPP 18/19 – based upon the latest financial planning the QIPP target for 2018-19 £14m, of which £3.9m has been identified, however this includes 100% achievement of the Quality Premium (£1.9m), as there are penalties attached to the delivery of key targets (i.e. A & E), there is a risk the CCG will not receive 100% of the premium. In addition, should the Non recurrent 2017/18 QIPP remain this will increase the level of planned QIPP required to £17m.