Financial Strategy 5 year strategy 2015/ /20

Transcription

1 Item 4.3 Paper 15 Financial Strategy 5 year strategy 2015/ /20 NHS Guildford and Waverley Clinical Commissioning Group Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 1 of 15

2 CONTENTS 1. Introduction Aims and purpose of the strategy 2. Principles & Strategic Approach 3. Financial Strategy 4. Key Points in Delivering & Managing Our Strategy 5. Background Data 6. Appendices Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 2 of 15

3 1. Introduction Aims and purpose of the strategy 1.1 Guildford and Waverley Clinical Commissioning Group s (GWCCG) Financial Strategy is built upon using the CCGs resources wisely to meet the health needs of the residents of Guildford and Waverley. It seeks to ensure value for money and the fair and effective use of resources to improve the health and well-being of the community and secure the provision of safe high quality services. It builds on the initial strategic, operational and financial planning that was developed since the formation of the CCG in April The Financial Strategy is focused on: communication of the CCG s financial position and context the financing of the strategy of the CCG to deliver health gain objectives, within the constraints of its resource allocation and responsibilities and ensuring that the CCG can trust its financial systems to support informed decision making. 1.3 The overriding objective of the Financial Strategy is to maintain, through prudent control, sustainable financial viability in order to enable the CCG to achieve its purpose and goals and achieve the CCG s statutory and financial duties. 1.4 The purpose of the financial strategy is to: monitor and ensure the on-going financial viability of the CCG ensure the resource needs of the CCG and potential financial risks are correctly identified enable the CCG to make informed decisions on new initiatives, future developments and opportunities support the CCG s service strategies through effective and prioritised use of resources and enable service review and redesign enable the movement of financial resources to support changing health needs and changes to the delivery of health enable the CCG to demonstrate robust financial management and control and best value for taxpayer funds 1.5 The CCG has a number of financial duties to achieve, both statutory and required by the 2014/15 to 2018/19 Everyone Counts Planning for Patients and updated in the forward view for 2015/16 published in December The statutory duties are: not to exceed its revenue resource in any one year not to exceed its capital resource in any one year not to exceed its cash limit in any one year act effectively, efficiently and economically take account of any Directions by NHS England on expenditure 1.6 In addition, the specific 2015/16 planning duties are: to pay all valid invoices by the due date or within 30 days of a valid invoice to deliver a 1% surplus on the revenue allocation o The CCG plans do not deliver against this requirement in 2015/16. The plan is for the CCG to breakeven to establish a 1% non-recurring strategic investment reserve to plan for a 0.5% contingency Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 3 of 15

4 to deliver a 10% reduction in CCG running costs and to not exceed the running cost target to show growth in Mental Health funding equitable to the growth in CCG allocation increases 2. Principles & Strategic Approach 2.1 The financial strategy has been developed on the following principles: an understanding of the current and prevailing financial position and current use of resource and the recognition that we need to better understand what we get for our healthcare spending through benchmarking, care pathway and disease spend analysis; consideration of the context in which the CCG operates in terms of health care policy and strategy and the impact of influences; resources are prioritised to deliver the CCG s strategic objectives in line with our Commissioning Intentions, as detailed in our Commissioning Strategic Plan; that GP practices, local clinicians and managers work together to develop financial awareness, understanding and ownership of financial issues in the delivery and commissioning of services to deliver immediate and long term change, and that the finance function will support them in making the right choices and commitments; the need to develop public engagement programmes which will facilitate ownership of the use of resources and the financial challenge; new investment and disinvestment reviews are focused on the change in health improvements delivered; underpinning financial processes need to be sufficiently developed to provide robust and complete financial information to assist in the delivery of the strategy. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 4 of 15

5 Monitoring, control, review & revision Where are we? What is influencing us? Communicating, implementing, delivering & learning Financial Strategy Where do we wish to be? Do we have the capabilities and controls to get there? What do we need to do? What do we wish to achieve? 3. Financial Strategy High Level Financial Summary 3.1 During the early to mid 2000 s, the NHS benefited from significant growth in funding and investment. This has now changed as a result of the current economic climate and presents significant financial challenges including: minimal growth in the medium term Nationally identified QIPP gap of 20bn Population growth and ageing population demographic CIP and QIPP impact on local providers Increases in secondary care activity and prices Impact of reduction in social care funding and development of the Better Care Fund. In 2014/15, the CCG received growth funding of 2.14% on its resource limit. This has been reduced to 2.09% in 2015/16 as published in the CCG allocations in December A summary of the 2015/16 assumptions is attached in Appendix Delivering the financial plan from 2015/16 onwards, in the context of uncertain growth and in a period of significant transformation, will be challenging. 3.3 A summary of the Income and Expenditure plan is attached at Appendix 2, reflecting the overall Guildford and Waverley CCG position. The summary 2015/16 position is detailed in the table below and is net of the forecast QIPP savings of 15.2m. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 5 of 15

6 Summary of Budgets 2015/16 m Acute Services 138 Mental Health Services 23 Community Services 20 Continuing Care Services 16 Primary Care Services (inc. Prescribing) 32 Other Programme Services 3 Total Commissioning Services 232 Running costs 5 Contingency & Reserves 5 Total expenditure 242 Surplus 0 Resource allocation 242 Revenue Outlook 3.4 During the term of this financial strategy the CCG will experience considerable pressures primarily in acute but also in non-acute areas of spend. 3.5 A focus on Service Transformation is the key to unlocking the levels of efficiency required. Achievement is dependent upon local clinicians, GP practices and managers working together to deliver both immediate and long term change. 3.6 The delivery of the required efficiencies, in an increasingly challenging financial environment, is central to achieving financial balance. It is a continued requirement to maintain the CCG s focus on contingency and surplus planning, prudent financial planning, investment prioritisation and the delivery of significant, sustainable efficiency savings. 3.7 Additional investment will only be achievable if efficiency savings are created through service review and redesign, over and above that required to deliver financial balance. Sources of Funds 3.8 The allocation given to the CCG for 2015/16 is 242m. This includes growth funding of 2.09%, Better Care Fund allocation of 3.3m and CCG Running costs of 4.8m. Efficiency Plans and Best Value Reviews 3.9. The forward view for 2015/16 implies a gross national tariff/uplift of 1.9% less efficiency of 3.5% resulting in a -1.6% tariff deflator. The tariff assumes that all providers will achieve internal efficiencies through changing the way services are delivered, reducing variations in activity and improving procurement practices Efficiency strategies, resulting from lower growth and increasing demand, will be required to be developed further by the CCG to deliver sustainable savings outside of, and in addition, to the tariff. These plans will be under-pinned by best value principles, which recognise service delivery and quality improvement as well as cost reduction. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 6 of 15

7 3.11 The objectives of the Service Transformation programme are to drive efficiencies in providers, optimise spend and deliver quality and shift care into the most appropriate settings An important focus of on-going efficiency will be the development of a programme of service review. This will focus on all commissioned services, which will be conducted under the best value principles of: challenge, consultation, competition and comparison and the economic concept of value added or health gain achieved Financial Improvement Plans Facing the Challenge 3.13 Delivering the financial plan from 2015/16 onwards will be a significant challenge, with the total savings requirement for Guildford and Waverley CCG of approximately 6% of the overall resource limit This savings requirement clearly increases if the CCG wishes to generate an internal investment fund over and above that reflected in the existing plan, or if the savings plans delivered are non-recurrent In order to meet the financial challenge, the CCG, has embarked on a number of pieces of work to develop and deliver sustainable savings from greater efficiency and through managing demand for reinvestment The following levers will form the CCG s demand management and efficiency plan: Redesign and Lower Cost Settings. Finding ways of achieving the same (or better) outcomes for patients for less cost by completely redesigning and re-organising the way in which services are delivered and/or delivering services in a lower cost setting. This includes improving access to urgent care services in the community. Long Term Conditions Case Management. Improving the management of long term conditions, developing integrated pathways through better use of community specialist and existing services. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 7 of 15

8 Prevention. Focusing on and promoting prevention, screening and selfmanagement. Management of Acute Contract Activity. Monitoring and challenging of activity and finance monitoring returns to ensure adherence with PbR contracting rules, performance targets and effective commissioning guidance. Utilisation of Demand Management Activities. Reducing GP referrals by managing referral thresholds and managing conditions in the community. Decommissioning. Decommission evidence-based low value-added interventions. Market Management/Procurement. The appropriate market testing of services to secure i) best value from the market and ii) innovative ideas for maximising outcomes for patients. The priorities for the GWCCG are built on the Commissioning Intentions. Inflationary & generic pressures 3.17 The first call on growth or efficiency generated funds is to fund the recurrent cost of prior year outturn, inflationary tariffs and generic pressures, and to recurrently fund known existing and future uncontrollable activity increases. Inflation is set by the DH and reflected in the national tariff In addition to growth funding, the negative Acute and non-acute tariffs means a net increase in available resources to the CCG. It is expected that this will be reinvested in services and provide funding to meet activity growth. Contingency Reserve 3.19 It is assumed that NHS England will expect all CCGs to continue to include a level of contingencies in their financial plans. The contingency is held in reserve and assessed in-year to determine its availability for investment.. Target Surplus & Non Recurrent Headroom 3.20 Similarly it is assumed that CCGs will continue to plan for surpluses of 1%. The CCG has not delivered this requirement within the 2015/16 plans and has built the financial plan on the assumption of a breakeven budget. The forward view clearly states that CCG s should plan for a 1% strategic investment reserve to support transformation and agreed investment plans. The CCG has set this funding aside within the financial plan although this is already committed against agreed schemes including, Frailty initiative, Continuing Healthcare risk pool and the Referral Support Service. Maintenance of Reserves & Provisions 3.21 There are a number of risks which may impact on the delivery of the CCG s Revenue Plan. Going forward there is minimal opportunity for the use of reserves to mitigate financial risk and therefore the CCG must ensure that risks are identified as early as possible and mitigation plans exist to support the CCG achieving financial balance. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 8 of 15

9 Investments 3.22 The CCG has set aside the required 1% investment reserve in the 2015/16 financial plan to support the delivery of key agreed initiatives as described above. Service Transformation 3.23 The programme of Service Transformation will be managed by regular meetings of the QIPP Delivery Assurance Group and the implementation of a joint collaborative Programme Management Office with the Royal Surrey County Hospital. These will ensure that: There are regular reviews of the progress against each scheme and pathway change proposal and appropriate financial information to support. Risks to delivery are identified at an early stage and effective corrective action is taken, with project leads supported in this process. Other initiatives are identified, as required, to ensure overall efficiency targets are delivered. Senior leadership inputs to achieving the Service Transformation goals. Escalation processes are in place to ensure appropriate procedures are followed in the event of non-delivery or slippage against schemes. Joint ownership placing responsibility with delivery Details of the Service Transformation programme are contained within Appendix 3 Treasury Management Strategy 3.24 The CCG has a financial duty not to exceed its cash limit in any one year. The CCG receives a cash resource, which is based on its revenue and capital resource less capital charges. The CCG draws its cash resource from the treasury on a monthly basis; it is unable to invest this resource The CCG s cash management strategy is based on: continued delivery of income and expenditure balance production of accurate detailed cash flow forecasts achievement of creditor payment targets income collection and debtors management 3.26 Key to the delivery of the CCG s cash management strategy is the robust and regular forecasting of the CCG s cash flow to ensure that it achieves its year-end balance and that it utilises appropriately the cash it draws on a monthly basis. Achievement of Creditors Payment Policy & Targets 3.27 One of the CCG s financial duties is to pay all valid invoices by the due date or within 30 days of a valid invoice. The achievement of this Better Payment Practice Code (BPPC) for all of the CCG s creditors is an important part of the CCG s cash management strategy The CCG aims to pay its smaller suppliers as quickly as possible within the 30 days Better Payment Practice code. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 9 of 15

10 3.29 The CCG is working with budget holders to ensure: invoices are promptly coded and electronically approved by authorised signatories immediate action is taken where necessary to resolve invoice disputes Capital 3.30 GWCCG has bid for 84k capital funding for 2015/16. Robust Financial Processes 3.31 Financial management is central to the CCG s decision making process, to provide information that is used to direct and control the CCG s activities, report and discharge accountability and utilise resources efficiently and effectively Central to the CCG s ability to provide good financial planning, budget setting and budget reporting and monitoring is the delivery of accurate, timely and efficient treasury management functions, including adherence to better payment practice codes Significant focus will continue to be placed on improving financial processes The CCG s Prime Financial Policies and budget virement powers control the use of the CCG s resources. In order to maintain sustainable financial viability of the CCG, strong financial control is required to be maintained over recurrent budgeted expenditure, which must not exceed recurrent resource. Nonrecurrent resources are not to be used to finance recurrent expenditure without the written authority of the Chief Officer and Chief Finance Officer. Risk Assessment & Management 3.35 The main risks the CCG faces as it goes forward include: The level of acute activity Provider financial positions deteriorating Delivering the challenging Service Transformation Programme target required to achieve financial stability Changes in national policies regarding funding adjustments and service requirements 4. Key Points in Delivering & Managing Our Strategy Robust Financial Systems 4.1 The strategy will be delivered through the continued development of robust financial systems to enable informed decision-making. Focus will be on: developing and communicating financial policies, controls and processes the timeliness and efficiency of treasury management functions including creditor payments and debt recovery the implementation of sound, modern financial systems, procedures and policies Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 10 of 15

11 clear & timely financial reporting and preparation accurate and improved forecasting and modelling techniques the support and training given to service managers transparency and governance within the CCG devolved decision making to encourage greater accountability Investment/Disinvestment Prioritisation 4.2 GWCCG will develop a prioritisation process to assess the relative importance or value of health service interventions and programmes against agreed principles and criteria. Prioritisation decisions include; introducing new or increasing resources or services, reducing existing resources or services and replacing existing resources or services. 4.3 The prioritisation process is essential as it: aligns investment to pre-agreed strategies, priorities and policies facilitates making fair decisions which balance competing need supports understanding of funding options, outcomes, consequences and opportunity costs supports the delivery of clinical commissioning provide better value for money. Value for Money 4.4 Commissioning and provision decisions will become increasingly informed by value for money or best value considerations. Health Outcomes 4.5 Success will be measured through using improvements in health outcomes. This can be achieved by routine before and after measurements of health to monitor and manage the performance of providers, to ensure the CCG s resources are focused on securing demonstrable health gain. Action, Monitoring, Control, Review & Revision 4.6 The financial strategy has been developed after an assessment of GWCCG s financial background, current position and consideration of the impact of policy, priorities and influences of the context in which it operates. 4.7 The financial strategy by its nature will require continuous review and update and will be formally reviewed on a six monthly basis by the Executive Team. 4.8 The Audit and Finance Committees are an integral part of the governance structure established by the CCG to ensure it meets its financial objectives. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 11 of 15

12 Local Context Better Care Fund and Surrey County Council 4.8 GWCCG has worked very closely with the local Council in developing its Integrated Strategic Operating Plan and also in planning, commissioning and delivering services. 4.9 In August 2013, the Local Government Association and NHS England published their planning vision for how the pooling of 3.8 billion of funding, announced by the Government in the June spending round, will ensure a transformation in integrated health and social care. The Better Care Fund (BCF) is a single pooled budget for health and social care services to work more closely together in local areas. The BCF is a pooled budget which is being deployed locally on social care and health, subject to the following national conditions which will need to be addressed in the plans: plans to be jointly agreed; Protection for social care services (not spending); As part of agreed local plans, 7-day working in health and social care to support patients being discharged and prevent unnecessary admissions at weekends; Better data sharing between health and social care, based on the NHS number (it is recognised that progress on this issue will require the resolution of some Information Governance issues by the Department of Health; ensure a joint approach to assessments and care planning; ensure that, where funding is used for integrated packages of care, there will be an accountable professional; risk-sharing principles and contingency plans if targets are not met including redeployment of the funding if local agreement is not reached; and Agreement on the consequential impact of changes in the acute sector. The BCF includes NHS contributions already transferred to local Councils as part of the whole systems partnership funding, carers funding, reablement funding, social care grant and capital grants. Royal Surrey County (RSCH) The CCGs local acute provider is the Royal Surrey County Hospital NHS Foundation Trust, which accounts for 45% of the CCG s commissioning expenditure. GWCCG will work collaboratively with the Trust to ensure strategic service redesign is incorporated through the Commissioning Intentions and the Trust s long term plans. Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 12 of 15

13 5. Appendices Appendix 1 Financial planning assumptions NHS Guildford and Waverley CCG 15/16 Funding levels 2.09% Cost Inflation 1.9% Cost Efficiency 3.5% Tariff inflator/deflator (Acute) (1.6)% Tariff inflator/deflator (Non Acute) (1.6)% Contingency 0.50% Surplus 0% Non recurrent investment reserve 1.0% Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 13 of 15

14 Appendix 2 Income & Expenditure 2015/16 Appendix 3 Service Transformation Programme /16 Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 14 of 15

15 Appendix / /20 Indicative plans Medium Term Financial Strategy / Finance and Performance Committee May 2015 Page 15 of 15