Highland NHS Board

							                                                                          Highland NHS Board
                                                                                  1 April 2008
                                                                                     Item 10.3

AREA FINANCE REPORT FOR THE ELEVEN MONTHS TO 29 FEBRUARY 2008

Report by Malcolm Iredale, Director of Finance


 The Board is asked to:

         Note the consolidated forecast surplus.
         Note that this is non-recurrent.


1.       INTRODUCTION

This report provides a consolidated view of the Area Financial position to 29th February, and
reflects the movements over the last month since the previous Area Financial Report to the
March Board Meeting. It includes a consolidated view of NHS Board Financial Performance
including DHS Operational Units, which have already been considered by the DHS
Management Team, and the relevant Management Teams / Governance Committees within
Operational Units. It also covers Corporate Services and Central Finance.

2.       REVENUE PERFORMANCE

The summary forecast position is highlighted in Table 1, which shows a forecast surplus of
£3.2m before adjustments. This represents an increase of £1.3m on the January forecast,
which is mainly attributable to:

 Vacancies in a number of units;
 Additional Operational Income of just over £300.000
 Slippage on Supplementary allocations of £780,000

Table 2 shows the main forecast variations by type across Operational units, highlighting the
forecast underspend of almost £2.5m on DHS / Corporate Services, and additional income of
almost £750,000. To place these figures in context, the underspend represents less than a
half of one percent of the agreed budget.

The forecast highlights very positive progress following the financial challenges faced at the
start of the year, although continued attention to detail is required during the last month of the
Financial Year to ensure that the forecast position is delivered through careful budgetary
control, delivery of agreed Efficiency programmes, etc.

It should also be noted that the forecast surplus arises from a number of non recurring
sources, and, while the year end benefit will be carried into 2008/09, this provides only a non
recurring benefit, leaving a range of recurring issues to address.


2.1       Argyll & Bute CHP

Argyll& Bute CHP continues to forecast an underspend of £1,500,000 as a result of
previously reported benefits around vacancies, prescribing and slippage on allocations. The
previously noted SLA contract resource to cover patient flow with Greater Glasgow Clyde
has been finalised for 2007/08, and the agreed amount of Transitional Relief received.




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2.2      North Highland CHP

A year end underspend of £115,000 is forecast, which represents an improvement of £5,000
on the previously reported position. The position reflects the previously reported trends with
additional pressures in Caithness and Hosted Services, offset by underspending within East
and North West Sutherland.

2.3      Mid Highland CHP

Mid Highland CHP continues to forecast a year-end break even for Directly Provided
Services, subject to a number of risks, including Belford staffing, complex care packages,
GMS and Glencoe.

A £29,000 underspend is projected for Hosted Services – relating to Sexual Health Services.
The Financial data for the hosted Out of Hours services is provided at Table 3 to break down
the performance for the non Argyll & Bute service. The previously forecast level of additional
expenditure (£650,000) continues, but as noted last time this has been formally covered non
recurrently by earmarked reserves. The whole area of Out of Hours is addressed separately
within the Board Meeting under Agenda item 4.1.

2.4      South East Highland CHP

South East Highland CHP forecasts a £38,000 under-spend for directly provided services, an
improvement of £6,000 on the previously reported position; together with a £108,000
underspend for hosted services. As with other CHPs, the forecast position assumes break-
even on Prescribing, and the ability to manage GMS within budgets.

2.5      Raigmore

Raigmore is projecting a year-end under-spend of £431,000, which represents an
improvement of about £67,000 on the previously reported position. The forecast still includes
the impact of financial pressures in Surgical and Cancer Services, which are offset by
vacancies and savings across other areas.

2.6      Facilities

Facilities continues to forecast a small year-end underspend of £4,000 over all sites /
operations, assuming that expenditure on utilities and property maintenance remains within
budget, and that there are no extraordinary items, such as adverse weather.

2.7      Integrated Pharmacy

The forecast position for the year-end is an underspend of £72,000 which represents a
£33,000 improvement from the previous report due mainly to staffing vacancies.

2.8      Tertiary/Income/Resource Transfer/Voluntary Organisations

Additional expenditure within the Resource Transfer / Voluntary Organisation budget is
currently off-set by savings within Other Healthcare Purchases, although the effect of the
National Tariff has not yet been fully included pending the local work underway - this may
have a financial impact in the current year.

2.9      Corporate Services and Central Costs and Reserves

Corporate services is projecting an under-spend of £65,000 due to vacancies, and Central
Costs and Reserves is showing forecasted year end underspend of £105,000, which reflects



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an improvement of just over £1m due to allocation slippage of £780,000 and additional
operational income of £300,000 referred to above.


3      2007/08 SAVINGS PLAN

Progress against Savings target is summarised at Table 4 and shows that 99% of the total
has been achieved in the year to date with the balance forecast by year-end. The £1.685m of
recurrent Operational CRES forecast to be achieved non-recurrently in Raigmore this year
will result in the target being rolled forward into the 2008/09 budget; however recurrent
savings have been identified for next year.


4      ADJUSTMENTS AND RISKS

A number of adjustments can be made to the Operational forecast as follows:


                                                                  Non-
                                                      Recurrent   Recurrent   Total
                                                      £’000       £’000       £’000

Month 11 Operational Forecast Adjustments                 (228)     (2,986)    (3,214)

Balance of DHS/Pump Priming reserve                                 (1,382)    (1,382)
Renal Slippage                                                        (529)      (529)
LDSAY: Learning Disability Infrastructure                             (600)      (600)
                                   Ward Savings                       (443)      (443)
Prescribing (£20m ceiling)                                          (1,700)    (1,700)
Prescribing (>£20m)                                                   (900)      (900)
Potential Reserves Slippage                                           (200)      (200)
Agenda for Change – Provision for Review                              3,319      3,319
CNORIS/Clinical Negligence                                 672        (234)        438
Net Provision for NCA                                                   180        180
Total Adjustments                                          672      (2,489)    (1,817)

Month 11 Forecast                                          444      (5,475)    (5,031)


Notes:
 Slippage on developments totals £1.5m, being Renal and delays in accommodation for
   Learning Disability Same as You (LDSAY) resulting in a non-recurrent saving on LDSAY
   infrastructure;
 The Tariff agreement for Generic drugs will result in an under-spend on CHP Prescribing
   budgets but as this is a windfall, the credit has been taken centrally. Although all of this
   will benefit will be clawed back by the Health Department in 2008/09, there is still some
   uncertainty over the extent of benefit that will be left with Boards in this year.
   Consequently, this benefit is shown as two notes: the first being Highland’s share of the
   initial £20m estimate of the National benefit and the second being Highland’s share of the
   additional £15m that the National benefit is projected to exceed the initial £20m estimate.
 A £3.3m provision has been established to cover AFC appeals;
 Notification of a potential Clinical Negligence risk pool contribution (CNORRIS) giving rise
   to a £438,000 cost pressure (with £672 ,000 recurrent effect) has been provided for.

The application of these, along with the balance on the DHS reserve gives an adjusted
forecast of £5m, which will be available to be carried forward into next year’s non-recurrent
budget.




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 5.    CAPITAL

The summarised Capital Monitoring Statement is detailed at Table 5, highlighting the agreed
capital banking of £13.1m with SGHD for carry forward into the next financial year.



6.     CONCLUSION

The 2007/08 forecast has increased to £5m which is almost at the Board’s 1% revenue carry
forward limit of £5.1m.



Finance Directorate
20 March 2008




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