1. Council of Governors Meeting Financial Climate and its implications Suzanne Tracey Director of Finance and Business Development January 2010, Item 8

2. National Headlines Pre budget report health sector protected relative to other public sectors Previous levels of growth 5.4% per annum Savings of £15-20bn over 3 years from 2011/12

3. Operating Framework – Impact for PCTs 2010/11 Revenue growth average 5.5% 2011/12 & 2012/13 “flat real term” growth 2% of 2010/11 growth set aside non recurrently to support system transformation Commissioner development Timetable for proposals for community services by March 2010 (implementation March 2011) – particular focus on integration 30% reduction in management costs over 4 years across PCTs and SHAs

4. Operating Framework – Impact for Trusts 0% tariff uplift in 2010/11 (3.5% efficiency gain) No better than 0% to 2013/14 with increased efficiencies 30% marginal payment for emergency activity above 2008/09 outturn levels (SHA rules for handling savings) Introduction of 4 best practice tariffs Contract penalties (cancer, 18 weeks, CDiff, mixed sex accommodation, A&E waits) No payment for the 7 “never events” 1.5% available through CQUIN Accelerate FT pipeline – trajectories for all remaining NHS Trusts by April 2010

5. What does this mean for RDE ? NHS Devon Financial Position –Transformation Programme –10% Reduction in contract income Growth in activity within less resources Savings target £14m for 2010/11

6. How are we preparing ? Introduction of Service Line Reporting Development of programme management approach Communications strategy to engage all staff and key stakeholders Review of Trust’s future strategy Partnership working with NHS Devon