1. FINANCIAL UPDATE JUNE 2017 Council of Governors
Julia Pattison Director of Finance South Tyneside Foundation Trust & City Hospitals Sunderland Foundation Trust

2. 2016/17 Financial Position – end of year 2017/18:
OVERVIEW
2016/17 Financial Position – end of year
2017/18:
Governance approach to managing the finances
Early Position statement
Next Steps

3. Financial Headlines for the year
2016/17 Year End
Financial Headlines for the year
(pr Annual Accounts & Report – submitted end May 2017)
Sustainability & Transformation Funds (STF)

4. Headlines Planned Position at start of year:
Planned deficit = ‘agreed’ starting deficit
STF allocation = Sustainability & Transformation Funding provided in year if all conditions were met
Control Total = Trust agreed to be no worse than £3,243k deficit by the end of the year 4

5. Headlines Actual Position by the end of the year:
Financial Position better than forecast by £1.8m
STF allocation – achieved all conditions:
70% linked to achievement of financial position
30% linked to achievement of performance targets – A&E, cancer & RTT
Ended the year with a £1.45m deficit
However……….. 5

6. Headlines - STF
In quarter 4, Trusts were informed that if they achieved their control total they had access to:
STF ‘incentive’ payment – for every £1 better than control total an additional ‘incentive’ would be paid of the same amount
STF ‘bonus’ payment – if a Trust hit their control total there was a potential bonus available (value tbc)
Overall impact:
Better than control total = STF ‘incentive’ fund of £1.8m
Achievement of control total = ‘bonus’ of £0.9m
Total extra STF funds of £2.7m
Core STF of £4.9m + extra of £2.7m = £7.6m 6

7. Operational Position
Summary Position for the year: 7

8. Net Financial Position
* Note – technical adjustments as a result of revaluing the estate of the Trust 8

9. Why £1.8m ahead?
Key reasons for the £1.8m improvement in the position:
CIPs - by the end of the year we achieved £10.7million against a plan of £11.7 million, so shortfall of £1m 9

10. Summary 2016/17 Remained volatile through to the end….
A number of one-off benefits helped the position
Good performance resulted in access to STF incentive & bonus payments of £2.7m which we wouldn’t have received otherwise
Comparison – quarter 4 number just published many others have also performed well in patch including CHS
Excellent position at the end of the year – thanks to all those who have supported this achievement 10

11. 2017/18 Governance approach to managing the finances:
Scale of the challenge
Approach in 2017/18
Early Position statement – Month 1
Opportunities & Next Steps 11

12. Scale of the Financial Challenge - Context
CIP targets: STFT £11.4m + CHS £13m
Vacancy factor at STFT = £4m
Unfunded pressures & income retractions at STFT £2.9m
Total savings to identify = £31.4m (£18.4m STFT; £13m CHS)
Impact of block v PbR contracts
STF funding continues into 17/18 & 18/19 – with conditions
£4.2m STFT; £9.2m CHS
70% financial position; 30% A&E target
Cash major concern – continuing deficits can cause cash flow problems

13. Lessons Learnt – Committee feedback
Learning from the previous financial savings approach:
Realistic plans
Accountability for delivery
Timeliness in reporting and responding to risks
Honesty & Transparency – lets know the scale of the challenge and our options
Intervention / escalation at the right point
Importance of communication
Learn from feedback – internal & external

14. Governance & Reporting Structure

15. Areas of Focus – STFT & CHS
2016/17 outstanding
Group opportunities
DGMs/DDs suggestions
Local health Economy discussions
Benchmarking data eg Carter; Refn Costs; GIRFT
2017/18 Financial
Savings Plans
Financial path to excellence
Clinical Service Reviews
2017/18 bottom up plans
Previous business cases
CD suggestions 15

16. Programme Structure Division of Surgery Exec Sponsor Prog Lead
PMO Lead
IFR
Orthodontics
Bariatrics
CDDFT
Vacancy factor
Agency
Avastin
Track Patient Pathways
Service specific
Division of Medicine
Biosimilars
Endoscopy*
Service Specific Heart Failure
Interface Team
?Discovery
Intermediate Diabetes
Falls
Chronic Fatigue
Clinical Support/Family Care
Vacancy Factor
LOS Paeds
Community Nurse
Track patient pathways/NHSP
Service specific:
CFS
Dietetics in retinal screening
Child Health Screening
Community
Patient flow
Vacancies
Unfunded posts
Service Specific:
0-19 service
Acute
Contract impacts
Urgent Care Hub
Pharmacy
Prosthetics
medicines
Theatres
Additional Sessions
Skill mix
STEP (STFT)
Pain service
Enablers: Productivity measures including capacity and demand & job planning; Benchmarking including GIRFT, PLICs data;
Capacity eg PMO, KPO, IT, data analysis, information services, financial management & operational.

17. Programme Structure Patient Pathways Exec Sponsor Prog Lead PMO Lead
Right Care
Demand Management
Changes & cessation
Vanguard/ED
Corporate Services/ Back Office
Internal Efficiencies
NHS Professionals
Agency
E-Roster
EMIS/GDE
Clinical Service Review Group
Service Reviews including Carter and GIRFT
Estates and Facilities
Carter
Catering/Facilities
Rationalisation
Companies
Procurement
Workplan efficiencies
Prog 12
Income increases
Agency Cap
Reserves
Enablers: Productivity measures including capacity and demand & job planning; Benchmarking including GIRFT, PLICs data;
Capacity eg PMO, KPO, IT, data analysis, information services, financial management & operational.

18. Risks and Mitigation Risks Mitigation Scale of the challenge
Month 1 position and onwards
Time critical to introduce and embed process
New approach at STFT – ? resistance
Same approach at CHS - ? Resistance
Is it clinically transformational?
Buy-in from stakeholders
Resources to deliver
Mitigation
Cash – eg loans
System wide working
Capitalise on what works well
Pace – from month 1
Engagement & accountability
Scrutiny and oversight
Full financial tracking
Use of wider organisational resources – not just PMO
KPO alignment to programmes
Minimised overhead to support the process

19. 2017/18 Efficiency Target
STFT - Efficiency target of +10.2% of turnover
Heavy non recurrent savings in prior years i.e. one off things helped the position
Income retraction/loss of ‘contributing’ services

20. High level Plans
Closure of CIP gap is essential to deliver 17/18 control total and gain access to STF funding
Concerns around the scale of the financial challenge & realistic opportunities to close the gap

21. Risks – Month 1 Gap in savings plans Risk around current savings plans
Impact to STF funding and cash
Regulatory action - call with NHSI to discuss progress & actions
STFT Month 1 position:
Plan = £580k deficit; actual = £1.44m deficit; gap of £859k
This includes assumed ‘loss’ of STF funds of £210k
Why? Numerous, but high level reasons:
CIP shortfall of £427k (plan £572k; actual £145k)
Agency – increasing pressure £132k
S.Tyneside CCG QIPP gap £80k
Block contracts /18 block contracts will help but CCG QIPP challenges are looking high risk
Must deliver safety and quality

22. Opportunities and next steps
Review of all opportunities – joint work between both Trusts and with CCGs (Local Health Economy)
Targeting areas of overspend eg agency, overtime, medical staffing pressures
Patient pathway work:
Areas of service overlap by different providers/commissioners
Streamlining of service
Can we afford to continue delivering all the services we currently do?
Can we afford to achieve all the other ‘asks’ required of us?
How do we make those choices?
Discussions at Programme Management Group, Executive Committee, Finance & Performance Committee & Board (between 22nd - 28th June) – difficult decisions will be required

23. Summary 2017/18
Enormous financial efficiency challenge is faced by both Trusts
STFT is already behind plan at month 1, and control total is at risk for 2017/18. No STF = cash problems.
Grown up conversations about the reality of challenge we all face – across 2 Trusts and 2 CCGs
The only way this can deliver is system wide actions – silo is not feasible for any of us
We need to ensure focus on the right things i.e. where does the system save money?
If one of us fails, we all fail