1. 2015/16 Finance and Activity Plan 14 th May 2015 Submission to NHS England and Confirmation of 2015/16 Budgets

2. Introduction The 2015/16 Financial Plan and Budget Setting Update paper was presented to the Governing Body on the 28 th April. The Governing Body approved the updated plan and associated budgets subject to: - review of the QIPP plan by the new Interim Accountable Officer; - reaching agreement on the Hampshire Hospitals NHS FT (HHFT) contract; - further discussions and agreement with NHS England (Local Area Team). This paper provides an update on the 15/16 plan and includes: - audit trail from the draft 15/16 plan presented to the Governing Body in April to the financial plan submitted to NHS England on the 14 th May; - updated NHS England planning guidance; - update on the (HHFT) contract for 15/16; - updated financial bridge from the 14/15 actual position to the 15/16 plan; - updated activity plan for 15/16; - current QIPP plan (schemes identified) for 15/16; - main risks and mitigations in the 15/16 plan submitted; - summary and issues arising. 2

3. Summary of the movement from the (£8.2m) draft deficit plan presented to the April Governing Body to the (£5.5m) deficit plan submitted to NHS England on the 14 th May 2015. 3 Financial Plan Movement: from 24 th April to 14 th May Item£mDescription Draft Deficit Plan Submitted (24 th April 15) (8.2)Draft budgets and plan signed off by the Governing Body on the 28 th April 2015 subject to review of QIPP, agree HHFT contract and further discussions with the Local Area Team. 2014/15 Actual Out-turn+0.252014/15 actual out-turn of (£2,759k) vs forecast deficit (£3,008k) used as the baseline in the plan. Repayment of 14/15 Deficit+0.25Repayment of 14/15 deficit in 15/16 reduced from (£3,008k) forecast to (£2,759k) actual. Proposed Deficit Plan(7.7)CCG proposed deficit plan to Local Area team 11/5/15 (and subsequently on the 13/5/15) HHFT Contract Agreement - CCG Negotiation (0.1)To reach agreement on HHFT SLA on the 13/5/15 (see later slide). Agreed additional (£0.2m) coding & counting and +£0.1m reduction in RTT investment (from £2m to £1.9m). HHFT Contract Agreement - NHSE Guidance Impact (0.1)Based on latest NHSE guidance (see next slide) £0.8m of additional non elective activity commissioned in HHFT SLA above previous offer. £0.7m of this is funded from HHFT Non Elective contract reserve held in 24 th April plan, resulting in a net (£0.1m) pressure to the plan. Reduction in Investment0.1Reduction in contingency for impact of Winterbourne £255k to £155k Other Reductions0.1Reduced contingency from 0.54% to minimum 0.5% and removed budgeted activity growth for NCAs Additional Savings Required 2.2Additional savings required to meet deficit control total as informed by NHSE Local Area Team 13/5/15 Financial Plan Submitted (14 th May 15) (5.5)Financial Plan submitted following meetings / discussions with the NHS England Local Area Team

4. Updated NHS England Planning Guidance Following review of CCG 15/16 plans at national and regional level Andrew Ridley (NHS England Regional Director – South) wrote to all CCGs on the 13 th May. 13 th May Letter For plans to be submitted on 14 May aggregate position for the South of England to show elective growth +3.0% and non elective growth +2.7% to achieve NHS Constitutional Standards. Review indicated that the volume of activity in the CCG contracts with providers were significantly lower than the volume of activity in CCG plans which could mean providers may not be able to make appropriate provision for the year ahead to meet the expected commissioner demand. Therefore, NHS England required all CCGs to sign contracts with providers for the volume of non-elective and elective activity agreed in their plans. Impact for North Hampshire CCG Elective – net growth of 2.5% in CCG plan accepted and already in HHFT contract offer (RTT investment) Non Elective – Previously increased activity in CCG plan by 2.8% and set associated budget reserve. In response to the letter above, increased CCG activity plan by further 1.03% and now included total additional 3.8% non-elective growth in HHFT contract. 4

5. Hampshire Hospitals NHS FT Contract 5 The CCG reached general agreement on the SLA with Hampshire Hospitals NHS FT on the 13 th May with an agreed contract plan value for 2015/16 of £106.769m (as summarised in the table below). £mDescription / Comments 106.02015/16 Opening Baseline (14/15 Actual £105m + net £1m technical adjustments e.g. exclude 14/15 CQUIN, add back 14/15 70% NEL MRET & re-admission credits and remove 14/15 penalties) 1.9Activity Growth (1.07% demographic growth £1.1m (all activity) + additional non-elective activity £0.8m) 1.9RTT Backlog (Additional Elective & Outpatient activity commissioned per joint modelling work) (5.0)QIPP (£5.045m see QIPP plan slide i.e. all identified acute area of spend apart from “other”). In principle HHFT prepared to take some QIPP delivery risk on certain schemes - risk share details to be finalised. 0.0Net Price Changes (0.5% net price deflator on PbR & local tariffs -£0.5m offset by 10% uplift on drugs & devices +£0.5m) 0.4Coding & Counting Changes (£0.4m agreed from original Trust proposal of £2.1m with commitment to programme of work during 15/16 in some areas to arrive at final agreement and implementation in 16/17) 0.4Best Practice Tariff Improvement (£0.4m commissioned in SLA plan vs HHFT target/request of £0.8m) 0.1Winter Resilience(£0.14m included in SLA, with £0.4m set aside for discussion/agreement by SRG) (1.4)2015/16 Technical Adjustments (-£1.8m 30% NEL MRET & re-admission credits +£0.4m other e.g. unbundling diagnostics, maternity pathway) 2.52015/16 CQUIN (2.5% on contract value excluding drugs & devices, split 1.25% national and 1.25% local) 106.82015/16 AGREED SLA. Final agreed SLA £0.2m higher than budget for HHFT in paper presented on the 28 th April compared to c£7m contract offers negotiation gap. £107.0m budget 28/4/15 (HHFT main SLA budget £105.7m + HHFT Winter Resilience reserve c£0.6m + HHFT Non Elective reserve £0.7m) vs final position agreed £107.2m (HHFT SLA £106.8m + SRG Winter Resilience held in reserve £0.4m)

6. Finance Bridge 2014/15 to 2015/16 The CCG has reported a (£2.76m) deficit in 2014/15 and has calculated the position on exiting 2014/15 to be a (£5.9m) deficit position which becomes a (£5.5m) deficit plan for 2015/16. The 2015/16 plan shows a recurrent £2.2m surplus and non recurrent (£7.7m) deficit. 6 Item£mDescription 14/15 In Year Deficit(2.8)Acute contracts and Continuing Care Non recurrent items / full year effect(3.1)Capped contract for Frimley (£0.5m), favourable settlement of 13/14 contracts in 14/15 (£1.1m), quality premium (£0.7m) and all other non recurrent benefits e.g. out of hours services / in year recovery plan actions (£0.8m). Underlying Position as at 31 st March 15(5.9) 15/16 Growth in Allocation Funding9.54.4% 15/16 Winter Resilience Funding1.2Equivalent to tranche 1 received in 2014/15 Repayment of 2014/15 deficit(2.8) Net Impact of ETO(0.8)Spend £1,464k (£504k 0.3% & £960k NEL MRET 50% to 70%) vs Resource Funding £667k Price Changes (Inflation/Efficiency)(1.6)Pre ETO PbR (0.8%) and Non Acute (1.87%) deflators offset by price uplifts for continuing care +1.93%, Drugs & Devices +10% and Prescribing +8%. Activity Growth and Other Pressures(7.4)Demographic Growth 1.07%. Acute c£2m to meet constitution targets (RTT) & HHFT additional £0.6m (various) and £0.8m non elective activity. 1.8% non acute, 1% voluntary/private and 4% continuing care. Contingency(1.2)= 0.5% minimum requirement. National Continuing Care Risk Pool(1.1)£1.4m 2015/16 vs £0.3m 2014/15 Winter Resilience Expenditure(1.2)Match funding received above Better Care Fund Financial Arrangement(1.9)One off cash and risk share in Hampshire wide BCF agreement Investments(1.2)£0.75m Mental Health & £0.48m Other (e.g. Ambulance & NICE). £5 per head ‘Accountable GP’(0.8)£0.75m budget set for (£ p/head) Net All Other Items(1.2)Mainly non elective marginal rate 30% to 50% £0.96m QIPP Plan Schemes Identified (3.8%)8.73.8% (£8.67m Programme Schemes Identified) Unidentified QIPP (0.9%)2.2Additional savings required to meet deficit control total as informed by NHSE Local Area team 13/5/15 Deficit plan (14 th May 15)(5.5)Recurrent Position = £2.2m Surplus and Non Recurrent Position = (£7.7m) Deficit

7. 2015/16 Activity Plan Submitted (14 th May) 7 1.07% demographic growth applied to all Points of Delivery 2.8% additional non elective growth based on historical trend and additional 1.03% (G&A) per NHSE guidance RTT activity agrees with joint HHFT modelling (additional cost of c£2m) QIPP activity reduction agrees with QIPP plan schemes identified 2.5% net increase in Inpatient and Day Case Elective admissions including RTT 2.4% net increase in Non Elective spells (all specialties). Net increase of 2.1% for General & Acute subset (i.e. excludes some activity) per latest NHSE guidance, commissioned additional 669 (489+180) from HHFT (£0.8m).

8. 2015/16 QIPP Schemes Identified 8 (To be reviewed through Programme Management Office) £8.7m QIPP Plan – RAG rated Green £3.4m (39%), Amber £4.6m (53%) and Red £0.7m (8%).

9. 2015/16 Risks & Mitigations 9

10. Summary and Issues Arising 10 Summary Final 2014/15 out-turn position reduces draft 15/16 deficit plan from (£8.2m) to (£7.7m). Agreed 15/16 contract value with HHFT. Net £0.2m pressure, £0.1m impact from CCG negotiation (+£0.2m Coding & Counting - £0.1m RTT) and £0.1m from new NHSE SLA requirements (+£0.8m additional Non Elective activity - £0.7m HHFT contract reserve). Heads of Terms to be drafted (some detail to be finalised e.g. risk share on some QIPP schemes) and contract drawn up ready for signature. £0.2m pressure on deficit plan mitigated through reduction in investment and contingency. Deficit plan of (£5.5m) submitted on 14 th May with £2.2m of additional savings required to meet deficit control total as informed by NHSE Local Area Team on the 13 th May. (£5.5m) 2015/16 plan deficit is a £2.2m recurrent surplus and (£7.7m) non recurrent deficit. Commissioned net 2.5% increase in elective activity and net 2.1% increase in non-electives. Issues Arising To achieve to plan the CCG needs to manage the delivery risk on the current identified QIPP schemes of £8.7m and additional schemes will need to be developed to mitigate any shortfall on these. No schemes yet in place for additional £2.2m savings required to meet control total. The main net risks and mitigations show a net risk of (£2.2m) against the deficit plan submitted of (£5.5m) with a best case deficit of (£4.3m) and worse case deficit of (£9.5m). The CCG needs to meet the challenging (£5.5m) deficit plan submitted for 15/16, to enable the CCG to address non recurrent issues and achieve recurrent sustainable balance in future years.