Five Year Sustainability Plan

Transcription

1 Five Year Sustainability Plan [6th November 2014] *FINAL DRAFT*

2 Contents 1.Executive Summary 3 2.Overview 9 i.recent history of the Trust and strategic priorities ii.developing clinical services iii.capacity and capability 3.Trust profile and market position 19 4.Factors impacting the Trust during the plan period 28 i.demographic ii.demand for services and clinical policy developments iii.commissioning iv.funding 5.Financial baseline and five year plan 56 i.2014/15 outturn ii.5 year base plan 6.Range of strategic options 79 i.rapid cost reduction and value delivery ii.service development and commercial initiatives iii.trust wide structural change iv.other options 7.Next steps - plan for the next 6 months 115 Appendices 124 Glossary 142

3 The leaders of the Trust have signed the Sustainability Plan to demonstrate the Trust s ownership. Lucy Moore Interim Chief Executive Peter Wilson Chairman 2

4 1. Executive Summary 3

5 1. Executive Summary Aim of this document This Sustainability Plan (the SP, the Plan ) follows Colchester Hospital University NHS Foundation Trust s (the Trust ) Financial Recovery Plan ( the FRP ) submission to Monitor in August The overall aim of this Plan is to set out the detail of how the Trust will return to a financially sustainable position over the next 5 years and to do this, it has specifically considered : where the Trust sits in its market and local economy, with consideration of social and demographic change; current and upcoming challenges facing the Trust, focusing on quality and financial issues; how the Trust will stabilise its position over the next 18/24 months (incl. cost improvement plan ( CIP ) delivery); longer term transformational plans which the Trust is currently considering and will continue to work through over the next six months; and how the Trust will ensure that this Plan is prioritised and managed in the midst of other pressures. As part of the diligence that the Trust has gone through to develop this Plan, it has been mindful of: its over-arching strategic objectives; the need for inclusion of and engagement with all staff within the Trust; the importance of close and open communications with external bodies (such as the Trust s Clinical Commissioning Group ( CCG ) and Monitor); and the capability and capacity of the Trust to deliver. Immediate priorities Delivery of this Plan The Trust has hired an interim Transformation Director, who will assume responsibility for oversight of delivery of this Plan. There is currently a further assessment of the resources required to support delivery of the Plan. This assessment will be complete by the end of November Quality improvements The Trust is focused on continuing to improve the quality of its services at pace, as it has been doing over the past 12 months, in response to: the Keogh Review; the Care Quality Commission investigation (which found serious concerns regarding both the quality of some services for Cancer patients and the governance controls being applied by the Trust); Monitor putting the Trust into Special Measures, and applying conditions to the Trust s provider licence; and the Chief Inspector of Hospitals judging that the Trust Requires Improvement overall (albeit identifying that in all areas staff were caring and compassionate, and treated patients with dignity and respect ). The Trust expects to be compliant on the following performance indicators in line with the following timelines: 18 week RTT compliant by December 2014; 4 hour A&E target compliant Q4 2014/15; and Cancer target 2 week and 62 day targets compliant by Q4 2014/15. 4

6 1. Executive Summary Workforce and capacity to deliver Ensuring that the Trust has the capability and capacity to deliver this Plan is crucial and this is even more vital given that the Trust must also continue to address the aforementioned key quality and service delivery challenges. Specifically, the Trust has evaluated and is focused on: the leadership (Executive and Non-Executive) of the Trust, both in terms of enhancing leadership through substantive recruitment (and strong interim recruitment where substantive recruitment is not possible), as well as divisional stability; governance within the Trust. The Trust now has an agreed Board Assurance Framework, corporate risk register, a complete risk register (owned by operational and corporate managers, and discussed monthly), and a detailed assurance and escalation policy; communications, between the Executives and Non- Executives, as well as the Trust and Governors, Monitor, and the CCG; and wider workforce development and engagement, both developing and delivering the Trust organisational development strategy, as well as a review of the scale, skill and profile of the entire Trust workforce. Developing Clinical Services The Trust developed a clinical services development plan in March 2014, building on the clinical strategy published in 2008, setting out a stepped approach to returning the Trust to clinical and financial sustainability. The Trust will be focusing on this during the Plan period, alongside a review of sustainability of services currently provided, both from a clinical and a financial perspective. Financial control and cost improvement plan ( CIP ) delivery The Trust has a revised forecast deficit of 21.2m for 2014/15, after delivery of 8.4m of cost improvement plans. A best and worse case scenario have also been calculated. The Trust plans to return to a 3.8m surplus by 2018/19. The plan is predicated on three key factors: 1. Tighter budgetary and financial control. For example no order, no pay enforcement, and tighter bank and agency controls (via vacancy panels); 2. Granular and detailed tracking of CIP delivery. The Trust has started to focus on CIPs this financial year, after years of under-delivery, and is forecast to deliver c.3%. The Trust has modelled consistent delivery of between 3.5% - 4.5% during the Plan period, which will require continued focus and effort. In recognition of this, the Trust has sought external help to start this process, as well as identify and develop opportunities; 3. Pursuit and delivery of longer term strategic options, shaped by the areas that the Trust sees itself focusing on in the future. Again, the Trust has sought external help to work with Trust staff, to develop strategic options together. The Trust will further detail these options, to ascertain which should be focused on as a priority, following submission of this Plan and over the next six months. 5

7 1. Executive Summary Trust profile and market position The Trust faces many of the broader systemic challenges faced by other acute providers throughout the country, and a range of additional issues specific to its geographic and sociodemographic surroundings. Specifically, the Trust must plan to address issues stemming from: Demand pressure on services due to an increasing local population, with particular growth in the patient categories that rely most heavily on health services (e.g. the young and old); and Service delivery and demand challenges due to increasing prevalence of long term conditions. The Trust is also working with commissioners and partners to examine ways in which these issues can be managed against a backdrop of funding pressure and constrained commissioning budgets. The Trust recognises that it must contribute to Essex and region-wide initiatives to deliver improved whole health system value, and is committed to doing so via vehicles such as the Pan-Essex acute services review. The Trust also recognises that it must ensure that it complies with both national and regional clinical and governance policy developments if it is to develop and maintain strong relationships with commissioners. The Trust must also achieve these aims while also focusing on addressing the services in its portfolio that are unsustainable for clinical or financial reasons. Financial overview 2014/15 outturn The Trust s forecast deficit is 21.2m compared to the FRP deficit of 15.9m. The significant causes of this variance to plan are: Increased penalties from the CCG (- 1.9m) Under-delivery of planned care (- 3.2m) Pay and Non-Pay overspends (- 2.5m) Under-delivery of CIP Plan (- 0.5m) Other costs/benefits (+ 2.8m) The Trust s forecast financial position includes 8.3m of costs/income that are non recurrent, leading to a normalised or underlying deficit of 12.9m. Due to the pressures the Trust has faced in the recent period of time, these non-recurrent costs are higher than would usually be expected at other Trusts. PwC s baseline analysis of the Trust s financial position reported earlier in the year indicated a deficit range of 11.8m to 23.8m. The Trust is forecasting a CIP delivery of 8.4m, compared to a plan of 8.9m for the year. When consideration to the non-recurrent element of the Trust s forecast deficit is taken into account, the Trust s forecast deficit is in line with other Hospital Trusts in Essex. Other Trusts will have elements of non-recurrent expenditure, but it is assumed that the levels of these are higher at Colchester than at peers. Thus the Trust compares it s underlying deficit to it s peers deficit in the following table: 6

8 1. Executive Summary Hospital Forecast deficit m % Colchester Hospital % Colchester Hospital - Normalised % Southend University Hospital NHS Foundation Trust % Basildon and Thurrock University Hospital % Mid Essex Hospital Services NHS Trust % Princess Alexandra Hospital NHS Trust % CIP assumptions, and 2015/16 CIP Identification In relation to the CIP target for 2015/16 ( 9.2m, 3.5%), the Trust has undertaken a four phased approach to generate ideas for implementation, starting in month six of 2014/15. Ideas have been generated from teams working on business cases (service transformation and finance leads) and from staff (through workshops with clinical and corporate departments). The Trust is working to a timeline whereby schemes for 2015/16 are identified by the end of December 2014, and developed into workbooks by the end of March With regard to 2016/17, 2017/18 and 2018/19, the Trust has modelled national efficiency targets of 4.5%, 4.0% and 4.0% respectively. The Trust has modelled a range of annual CIP deliveries, this range is predicated on the following assumptions: The Trust has historically delivered a low level of CIP, and has become more focused on its necessity during 2014/15. there will be a marginal improvement in CIP delivery from 3.1% in 2014/15 ( 8.7m) to 3.7% ( 9.5m) in 2015/16, as the Trust becomes more familiar and comfortable with CIP efficiency targets, and also deals with quality issues. 2016/17 will be a more successful year in terms of CIP delivery (6.2%), due to both familiarity and also less pressure from quality improvement plans. CIP efficiency targets will reduce to 3.8% and 2.9% in 2017/18 and 2018/19 respectively, as these are the two key years for implementation of strategic options (detailed further in Section 6 of this Plan), and as a result there will be competing pressures on Trust time. Longer Term Strategic Options The Trust recognises that delivering cost improvement plans will not be sufficient to address its quality improvement requirement, contribute to system-wide efficiency improvement programmes, and support its planned return to surplus by end 2018/19. It must also deliver service transformation, working in partnership with commissioners and delivery partners. The Trust has provisionally identified seven key areas of focus for service transformation during the plan period, and completed an initial estimate of their potential quality and financial impact. These areas of focus are detailed in section 6 and include initiatives to transform, expand or re-shape the Trust s involvement in: Community care; Elderly care and broader social care; End of Life Care; and potentially Primary Care. The Trust is also exploring opportunities to repatriate elective care provided to local patients by other providers, and to exploit potential in its shared services. Further work will be completed during the next six months to assess these initiatives in more detail. The assumed benefits profile for these schemes is: 7

9 1. Executive Summary Additionally, the Trust has begun to explore the potential to deliver quality and efficiency improvements by pursuing more significant structural change options including merger and partnership. At present the Trust does not plan to implement any of these options, but will continue to review this position during the plan period if it becomes beneficial to do so. 2014/ /19 Plan The Trust is working closely with it s CCG colleagues to ensure that it s plans fully reflect the Commissioners plans and strategic goals. The Trust plan aligns with current CCG strategies, specifically the impact of the Care Closer to Home agenda and the impact of the Better Care Fund. The impact of these on the Trust remain uncertain, there is potential that the impact on the Trust will be less than currently forecast. The Trust will carry out a review of the sustainability of it s services during the next 6 months. This review will look at all opportunities to improve the quality of patient care, react to demands placed on it s services and improve it s financial position. The review will use the Trust s existing clinical, workforce, activity and financial data, including benchmarking and market analysis. Where necessary, for the improvement of the quality of services to patients in future, the Trust will consider all options such as hub and spoke models, clinical alliances, growing services, developing into new markets and where necessary exit from sub-scale services. The Trust recognises the significant challenge that it faces to move from it s current financial deficit to the forecast surplus of 3.8m in 2018/19, especially in the current financial environment. The Trust is not unique amongst acute hospitals in facing this. However, this plan sets out a number of factors which enable the Trust to have confidence that it will deliver the plan. One of these factors is the extent that the Trust incurs disproportionate costs due to the level of multi-site working. The Trust will use Monitor s recently published Strategy Development toolkit to support it in planning and delivering it s strategy during this plan period. The Trust will deliver CIPs, develop and deliver a number of strategic options and review the sustainability of all it s services over the plan period to ensure delivery. Trust cash profile The Trust s cash position will be low by the end of the 2014/15 financial year, but the Trust has measures in place to deal with this, and potential mitigations in case it requires additional cash by year end. The Trust projects that it will require 23m of cash support in 2015/16, 14m in 2016/17 and a further 7m in 2017/18. The projected move back to balance in 2018/19 means the Trust will not require any further cash support in this year. Capital The Trust will spend 56.4m over the 5 year plan period on capital items. This will largely be funded by internal resources, such as, depreciation and the sale of it s Essex County Hospital. However, there may be a requirement to seek external support for a proportion of this expenditure. Summary The Trust is confident that this plan is deliverable within the timescales set out. 8

10 2. Overview 9

11 2. Overview This Sustainability Plan (the SP, the Plan ) follows Colchester Hospital University NHS Foundation Trust s (the Trust ) Financial Recovery Plan ( the FRP ) submission to Monitor in July The Trust assumes knowledge of the FRP, and has not sought to include the background detailed in it within this Plan. Instead, in the section that follows the Trust provides a brief synopsis of its current position and changes in the past three months. The overall aim of this Plan is to detail the Trust s priorities over the next five years, specifically; where the Trust sits in its market and local economy, with consideration of social and demographic change; current and upcoming challenges facing the Trust, focusing on quality and financial issues; how the Trust will stabilise its position over the next 18/24 months (incl. cost improvement plan ( CIP ) delivery); longer term transformational plans which the Trust is currently considering and will continue to work through over the next six months; and how the Trust will ensure that this Plan is prioritised and managed in the midst of other pressures. As part of the diligence that the Trust has gone through to develop this Plan, it has been mindful of: its over-arching strategic objectives ; the need for inclusion of and engagement with all staff levels within the Trust; the importance of close and open communications with external bodies (such as the Trust s clinical commissioning group ( CCG ) and Monitor); and the capability and capacity of the Trust to deliver. A recent history of the Trust 1. Quality challenges As detailed in the FRP, 2012/13 and 2013/14 were particularly difficult for the Trust, with investigations by the Keogh Review team, followed by a Care Quality Commission ( CQC ) investigation and report. The CQC report found serious concerns regarding both the quality of some services for Cancer patients and the governance controls being applied by the Trust. These concerns resulted in Monitor putting the Trust into Special Measures, and applying conditions to the Trust s provider licence. The Chief Inspector of Hospitals inspected the Trust in May 2014 and published findings in July 2014, identifying that in all areas staff were caring and compassionate, and treated patients with dignity and respect. However it also noted a number of areas where improvements were required and made a number of recommendations to support this improvement. The Inspector s judgment was that the Trust overall Requires Improvement. A more detailed breakdown of the rating is shown below: Are services safe? Are services effective? Are services caring? Are services responsive? Are services well-led? Requires improvement Good Good Requires improvement Inadequate 10

12 2. Overview In particular where services are deemed inadequate or requiring improvement : Are services safe? Requires Improvement: the rating reflects nurse staffing levels being lower than best practice; inconsistent quality of equipment and medicine checks ; Five steps to safer surgery not being undertaken consistently and staff mandatory training not being up-to-date. Are services responsive? Requires Improvement: the rating refers to the response level being in the review period; a significant number of outpatient appointments being cancelled at short notice and allegations of manipulation of waiting list data. Are services well-led? Inadequate: the rating refers to the lack of stability at trust board-level and the number of services being rated as requiring improvement in terms of local leadership. Across this period, the Trust has remained focused on stabilisation and improvement of the quality of services. The Trust expects to be compliant on the following performance indicators in line with the following timelines: 18 week RTT compliant by December 2014; 4 hour A&E target compliant Q4 2014/15; and Cancer target 2 week and 62 day targets compliant by Q4 2014/ Financial performance challenges The Trust reported a 2.4m financial deficit in 2013/14. Further the Trust has planned a deficit of 15.9 after CIP plans. Some of the key reasons for this deficit include the local impact of national tariff adjustments, turnaround costs, and cost pressures (CNST, additional nursing spend and other staff pressures). Progress made towards achieving sustainability The Trust understands that it needs to fight hard to win back the trust of its patients, its health partners and its local communities, and is doing so. In support of this Plan, and since the FRP, the Trust has commissioned an independent review of its modelling assumptions for 2015/ /19, with a view to building a model which is evidence-based and gives a robust steer of the Trust s future sustainability. The Trust has completed this exercise. The Trust has also compiled market intelligence and developed an assessment of market trends in its key service areas. Using this intelligence the Trust has defined its goals and identified the broad range of, as well as a selection of particular, strategic options to enhance the baseline position and transform the organisation over the Plan period and beyond. Finally, the Trust has agreed its strategic priorities, developed a framework for its clinical strategy, and developed its workforce and organisational development strategy. 11

13 2. Overview Strategic priorities and aims of this Plan In August 2014 the Board agreed that in order to deliver on the Trust s vision, and to begin to regain the trust of our patients, partners and communities, the Trust needs to focus on eight strategic priorities. These priorities are set out below. The Trust s priorities capture the need to achieve or maintain high levels of patient care, quality and patient experience; to change the ways in which the Trust works externally and engages with partners; to deliver changes to its infrastructure; and to identify options for and then deliver a sustainable financial future for the Trust. Put the patients at the centre of all that we do Provide high quality and safe care for our patients Realise the potential of our workforce, empowering them to deliver Deliver services right first time improving patient pathways and reducing our waiting times Achieve sustainable financial performance Improve our infrastructure Be a strong partner with health, social care, education and academic colleagues and other key stakeholders Bring our Governance structures up to the standard of best practice 12

14 2. Overview Developing clinical services The Trust created a clinical services development plan in March 2014, building on its clinical strategy (published in 2008), as well as updated market share and commercial opportunity investigation, and quality review feedback through the Keogh and CQC inspections. The clinical services development plan sets out a stepped approach, focused on returning the Trust to clinical and financial sustainability, and sits alongside a suite of other strategy documents, all contributing to this Plan. The broad steps taken in developing the clinical services development plan are: 1. Stabilisation in response to the Keogh and CQC reviews across 2013 and 2014, as well as the financial investment required from the Trust to address respective concerns. This investment spread across core clinical staff, strengthening of governance arrangements and leadership capability. 2. Understanding the market in relation to current market trends impacting the Trust, services requiring investment, and a review of the Trust s short to medium term strategy. 3. Understanding the risks to sustainability initially in response to immediate short term risks (ref. Keogh and CQC), followed by risks assessment over the next five years; 4. Development of plans to deliver following the above, development of cost improvement plans for years zero to two of the Plan, as well as strategic plan development across year two to five; In the context of the above, the Trust aims to provide: High quality core local services emergency care, paediatrics and maternity care; Patient centred planned/elective care where possible delivered in an OP or day case; Specialist services in key areas of expertise which are developed building on the current portfolio including specialist cancer and vascular services; Increasing the range of community services supporting out of hospital care, including therapies and outreach consultant led specialist care. Amongst a number of other areas, key to delivery of the clinical services development plan will be: Forging strong partnership with NE Essex and other CCG s to ensure that the Trust s ambition is linked to CCG future plans; Developing strong partnership with other local NHS and other providers to enable joint approaches to service delivery where appropriate; Developing strong partnerships with other local acute providers to drive quality improvement across more specialist services developing the hub and spoke model where appropriate; and Ensuring our key stakeholders are communicated with regularly. 5. Recognising the key risks to delivery of plans. 13

15 2. Overview Capacity and capability to deliver Ensuring that the Trust has the capability and capacity to deliver this Plan is crucial and this is even more vital given that the Trust must also continue to address the key quality and service delivery challenges outlined elsewhere in this document. To ensure that the Trust can do so, it has assessed its current capability and capacity to delivery, and sought to address gaps identified. Specifically, the Trust has evaluated: 1. the leadership (Executive and Non-Executive) of the Trust; 2. the delivery and tracking of this Plan; 3. governance; 4. communications; 5. wider workforce development and engagement. 1. Leadership a) workforce requirements b) workforce trajectory To deliver this Plan in the right way, a substantive Board, with the right blend of skills and experience, is needed. The Trust is working hard to put this in place. There have been some changes to the Trust Board since the FRP: Peter Wilson has assumed the post of Chairman as of October 2014, whilst the Trust seeks to appoint substantively; Lynn Lane has accepted a substantive role as Director of Human Resources and Organisational Development, as of August 2014; Sandy Spencer has been appointed as Interim COO, starting in December. The COO role has been enhanced to include Deputy CEO and Divisional Director accountabilities. Substantive recruitment is planned for November Shane Morrison-McCabe has been appointed as Interim Deputy COO; Andy Morris has started as Interim Director of Finance. Substantive interviews will take place in November 2014; Jackie Brown has assumed the post of Interim Director of Transformation. Substantive recruitment will begin shortly; Ann Alderton has joined the Trust as Interim Company Secretary. Substantive recruitment has started. Also, an interim has been appointed to support on governance and risk, and commenced at the Trust in October 2014; and Dr Barbara Stuttle has been appointed as Interim Director of Nursing. The substantive appointment process has started. Appropriate handovers between interim and substantive staff will continue. The Interim Company Secretary is also reviewing the allocation of governance responsibilities within the Board (both Executive and Non-Executive positions, as well as those directly supporting these staff) to ensure that the Trust has the correct governance domains covered. The Trust is focused on divisional stability. Key initiatives have included or will include: the appointment of key divisional leads. Eleven of twelve key appointments have been made, with interviews due for the final position of Associate Director of Operations in Medicine; the Three at Top programme for Divisional leaders is underway, focusing on local vision, priorities and success factors to drive performance of the team; 14

16 2. Overview external support has been commissioned to support the divisions on a transformation change programme; and a review of divisional director roles is underway to ensure appropriate focus and support. 2. Delivery and tracking of this Plan In section 7 of this Plan, the Trust has detailed its critical path over the next 6 months, to ensure that both momentum is maintained and also that the Plan is embedded within the organisation. This critical path is supported by a more detailed, granular, action plan. Oversight of the delivery of the Plan will pass to the Trust s Transformation Director. There is currently an on-going assessment of the team resources required to support delivery of the Plan. The team will have the right skill mix, and the Trust will be seeking a range across business planning, market analysis, commissioner and partner engagement, as well as the ability to provide practical day-to-day transformation support to clinical staff. Of course, the Trust will aim to utilise and develop its existing staff base where possible and appropriate. 3. Governance The Trust has put significant focus on clarifying and improving its governance procedures. Areas of focus have included: Developing the Board Assurance Framework ( BAF ) into and effective Executive tool, which is being developed for review at all appropriate Trust Board committees and Trust Board; Improving the content and utilisation of the corporate risk register, as a means of ensuring that risks are identified, assessed and escalated appropriately, for regular review; A full risk register, in standard format, which now driven and owned by operational and corporate managers and reviewed by risks manager on a monthly basis; Embedding and communicating an assurance and escalation policy; and New performance management arrangements have been put in place. 4. Communications Alongside efforts to ensure that the Trust has a committed workforce, with a common vision and focus, the Trust is also working on maintaining and improving open and transparent communications between: The Executive and Non-Executive team; The Trust and its Governors; The Trust and Monitor; and The Trust and its CCG. Specifically with regard to the CCG, the Trust recognises the importance of developing and implementing this Plan together, and working closer together going forward. An extract of the CCG strategic priorities is included in the Appendix (page 127). 15

17 2. Overview In recognition of the above, the Trust held a workshop to take the CCG through its approach and thinking for the Plan on 6 October Regular meetings will continue to take place, namely: The Trust CEO continues to meet regularly with the CCG CEO, as they have been over the past few months; The Trust interim COO and CFO meet with their respective counterparts; A nominated member of the CCG attends the steering groups held at the Trust to develop and deliver this Plan; and Regular Chair to Chair, Chair to CEO and Executive to Executive meetings. The CCG also attended and contributed to the update meeting to Monitor on the Trust s progress of this Plan on 13 October Wider workforce development and engagement The Trust has lacked expertise in this area to date, and is recruiting senior and experienced practitioners to develop further and deliver its organisational development strategy. A review of the scale, skill and profile of the Trust workforce, in the light of the significant challenges that the Trust face will commence shortly. In particular this review will assess the Trust s ability to address challenges related to: getting out of Special Measures; ensuring operational national standards i.e. A&E, RTT and Cancer are achieved sustainably to the communicated trajectories; and Addressing further pressures that the Trust will face (e.g. an ageing population and other demographic changes). There is a need to develop the Board, senior and middle management (including clinicians) immediately, as opposed to waiting for a fully substantive Board. The Trust will support this work by using leading edge management and development techniques for existing staff, and having identified the Top Leaders in the Trust, will engage with the Leadership Academy and LETB, to explore development opportunities. The Trust will prioritise this, along with dealing with its quality and financial challenges, if this Plan is to be delivered successfully. The Director of Human Resources and Organisational Development will lead this work. Engagement with Trust staff, and empowering them to do what is right for the patients of the Trust, as well as holding staff to account for delivery, is of key focus for the Trust moving forward. Linked to this, the Trust has re-launched its At Our Best programme, focusing on recognition of staff, senior management role-modelling, increased accountability through appraisals and recognition of staff. Further, the Trust has taken action to listen to and act on staff feedback over the past year, in terms of their ideas with regard to the direction in which the Trust should go, in an effort to ensure that this is developed together and that it is not dictated from the top. The Trust is to conduct an all staff survey for 2014, which it expects will give rise to Trust-wide, divisional and individual team insight. 16

18 2. Overview Engagement with clinicians has also been key, ensuring that the right balance between the finance element of running the Trust, and the maintenance and improvement of quality of services is achieved. The Trust is currently carrying out it s annual review of staffing requirements on the wards (Acuity review), as well as the corporate side of the workforce, with a view to assessing how to flex it most efficiently. 5a. Workforce requirements In 2014/15, the Trust financial plan assumes 68.6% of all expenditure to be on workforce. The requirement to ensure sustainable services at the Trust will lead to a number of impacts on the Trust s workforce. Specifically, it is expected that during the five year period, two significant transformations will occur which will automatically change the size of the Trust s workforce: TUPE of Scientific, Therapeutic and Technical staff to the Joint Pathology Venture in 2014/15 TUPE of a range of staff in a number of services expected to transfer from the Trust under the CCG s Care Closer to Home tender In addition to these changes, the Trust s workforce will need to be more flexible, using tools such as fixed term contracts where possible to minimise the impact on staff and maximise the speed of transition. The Trust will review its workforce requirements over the next six months, comparing this to its expected future workforce. The expected future workforce will take the following into account: Staff turnover; Staff age profiles/expected retirements; New ways of working; and Improved IT. This will be driven at a divisional level, and will be led by Human Resources and Organisation Development. Where possible, temporary staffing will be replaced with substantive or fixed-term staff, to improve both the quality of services provided and the financial cost of these. 5b. Workforce trajectory It is expected that the workforce will be able to maximise its clinical time following said reviews of workforce requirements. This will be delivered by a combination of back-office transformation and improved IT use to enable clinical staff to increase their clinical time. The Trust plans to escalate and develop its IT capacity in order to transform the organisation from a heavy reliance on paperwork for example purchase orders and certain HR processes, amongst many other areas. For modelling purposes over the first three years of the Plan period, the Trust has started with its current workforce requirements. Then it has: over-laid changes that it is currently certain of, such as the TUPE of STT staff to the Transforming Pathology Partnership; made assumptions on staff transferring from the Trust as part of the CCG s Care Closer to Home agenda; and made assumptions on staffing number requirements for CIP schemes and Developments. 17

19 2. Overview As an early indicator, this modelling suggests that the Trust workforce will be required to reduce from 4,008 whole time equivalents ( wte ) at the end of 2014/15 to 3,640 at the end of 2016/17. This is as a direct impact of CIP requirements faced by the Trust. Of the 368 wte (9.2%) projected reduction, 145 are due to TUPE arrangements linked to the impact of Transforming Pathology Partnerships and Care Closer to Home. Further workforce changes will be actively managed to minimise the impact on staff (naturally occurring events such as turnover, planned retirements etc). The table below sets out these projections. Projected wte 2014/ / / / /19 Base 4,008 4,078 3,945 3,640 3,637 Net investments TPP impact (63) - - Care Closer to Home - - (82) CIP and Strategic Developments Impact - (133) (223) (3) 198 Total 4,078 3,945 3,640 3,637 3,835 Modelled workforce number changes 70 (133) (305) (3) 198 Cumulative 70 (63) (368) (371) (173) 18

20 3. Trust profile and market position 19

21 3. Trust profile and market position Section overview This section assesses the main service offerings by the Trust and who the main commissioners and types of patient are for these services. Within this, the commissioners current and future situations are assessed, as well as the Trust s market share for the key services and commissioners. Finally, key competitors market share and characteristics are compared with the Trust. Key impacts Trust profile and market position 1 The Trust s main commissioner is North East Essex CCG, and the main patient cohorts are Outpatients, Non- Elective, Elective and Other Acute. Services offered by the Trust Key customers Key customer strategies Market share in key service areas Market overview Competitive landscape Assessment of key competitors 2 Commissioners will be under increased funding pressure over the coming years. The Trust is conscious of the need to reduce costs and increase efficiencies, whilst aligning itself more closely with the commissioners key funding initiatives and policies. Customer specific share of the market 3 The Trust has lost elective activity, particularly to private providers through Choose and Book. The Trust s most immediate competition is from the Oaks Hospital (run by Ramsay Healthcare), a private sector provider delivering a range of elective surgeries especially in Trauma & Orthopaedics. 20

22 3. Trust profile and market position Services offered by the Trust Colchester Hospital University NHS Foundation Trust provides healthcare services to around 370,000 people from Colchester and the surrounding area of north east Essex. In addition, the Trust provides radiotherapy and oncology services to the wider population of North and Mid Essex, which reaches around 670,000 people (including the population in Colchester). The services are provided across two main sites: Colchester General Hospital opened in There are 652 inpatient beds, 54 maternity beds (including at Clacton and Harwich hospitals) and 14 critical care beds; and Essex County Hospital opened in 1820 and two oncology (cancer) wards have moved to Colchester General Hospital. A number of daycase and outpatient services remain on site. Finally, the Trust is also an associate teaching hospital of the University of London, providing a range of training and education services. The Trust has historically had a strong reputation and delivered strong clinical and financial performance across a range of specialties. In some of these areas, the Trust has implemented a number of innovative models of delivery, including laparoscopic surgery which stands out for its quality and reputation, as well as its cancer and radiotherapy services. The hyper-acute stroke service is supported by a stroke team who provide services to support community care including a service supporting stroke care in a designated care home. The Trust s Stroke Service provides a very high level of stroke care as demonstrated by its frequently high Stroke Improvement National Audit Programme (SINAP) results. The Board is currently transferring services and departments off the Essex County Hospital site to Colchester General Hospital with an aim to complete this in 2014/15/16. Services remaining are now limited to day case surgery, breast and outpatient services. The Trust also provides services via Clacton, Harwich and Halstead which are important for the delivery of care close to patients. The Trust provides services to the local populations of North East Essex and part of Mid Essex, including specialist services to the wider Essex and Suffolk populations. Further, the Trust provides a range of community based services supporting care closer to home, including community paediatrics, and sexual health services. 21

23 3. Trust profile and market position Key commissioners The Trust s main commissioner is North East Essex CCG (NEE CCG). Mid Essex CCG (ME CCG) and East Anglia Local Area Team (EA LAT), as NHS England Specialist Commissioning host, are the next largest commissioners. The contracted position for 2014/15 is shown in the table below : Commissioner OPs Non- Elective Other Acute Elective Daycases Elective Inpatients Excluded Drugs and Devices A&E TOTAL % of total income NHS NE Essex CCG % NHS Mid Essex CCG % Essex LAT % East Anglia LAT % Subtotal - contracted % Non contracted, other clinical income % NHS Clinical Income % NHS Clinical Income 24% 28% 18% 9% 8% 5% 3% 100% As shown above Outpatients and Non-Elective alone represent more than 54% of the Trust s contracted income with c.25% and 29% respectively. Other Acute (e.g. Maternity Pathway, Critical Care and Radiotherapy) also represents a large income source at 19% of total SLA income. The majority of the volume is commissioned by NEE CCG, which accounts for 73.6% of services provided by the Trust. East Anglia LAT and Mid Essex CCG follow comprising 11.4% and 8.2% of commissioned services respectively. 22

24 East Anglia LAT NHS Mid Essex CCG NHS North East Essex CCG 3. Trust profile and market position Key commissioner strategies Current situation North East Essex CCG achieved financial balance in 2013/14, improving the efficiency of services by 7.8 million; They currently concentrate funding on acute with 54% of expenditure and GP and prescribing drugs with 14%; Focus has been on the integration of health and social care through work with Essex County Council. Mid Essex CCG has experienced under-achievement of Quality, Innovation, Productivity and Prevention (QIPP) and excess accruals for CHC that have led to a 2013/14 draft outturn deficit of 9.1 million; Their funding was 18m below the assessed need for the year; They currently concentrate funding on acute with 50% of expenditure and GP and prescribing drugs with 14%. Developments likely in next 3 years The CCG faces a productivity challenge of between 4% and 8% per annum; The CCG is planning savings of 73.3m ( 18.5m in 2014/15, 13.9m in 2015/16 and 40.9m ); In the CCG therefore wishes to subject a number of services traditionally covered by the Trust to competitive procurement to deliver Care Closer to Home (CC2H). CCG will operate a financial recovery plan following the incurred deficit and foresee a 7.8m deficit in 2015/16; The CCG has appointed a Turnaround Director to ensure that savings targets are met in 2014/15; Strategy will be driven by phases of life and an integrated approach in line with the Better Care Fund (BCF). East Anglia LAT is the specialist commissioner for the East of England, including Suffolk,area and the main commissioner of specialist secondary and tertiary services at the Trust. Ipswich and East Suffolk CCG has entered its second year of service redesign and plans to obtain savings of 20% by 2017; One of their key priorities will be the individual s health and independence action, supported by the BCF. The Trust understands that its main commissioners are all under considerable funding pressures and that they are reviewing how services will be commissioned in the next five years; Consequently, the Trust has considered strategic initiatives that enable it to reduce costs and provide services more efficiently, especially as competition by both NHS and private providers becomes stronger; All commissioners are likely to focus on the delivery of integrated, pathway-based care, potentially through the use of BCF funding and other large-scale integration schemes such as the CC2H agenda; Recent developments on pathway-based care represent both a threat to the Trust s current income as well as an opportunity for growth and reconfiguration of its services in line with local commissioning and policy initiatives. Sources: NEE CCG five year strategic plan ; Mid Essex CCG five year strategy ; East Anglia Area Team Commissioning for Value Pack (February 2014); Essex 5 year Health and Care Strategy; NEE CCG Annual report 2013/14; ME CCG Annual Report 2013/14; The Future of Healthcare in Ipswich and East Suffolk 2013/

25 3. Trust profile and market position Market share in key service areas Market overview Customer specific share of the market The Trust provides healthcare services to about 370,000 people in the North East Essex area. A breakdown of the Trust s market share in its principal specialties is shown below: 5 to 10 Mile radius Market Share 2013/14 (%) As can be seen, there has been a loss of market share in several areas, particularly Trauma & Orthopaedic work, which has being lost to the Oaks Hospital, the local private provider. The Trust has begun work to address this and a specific plan is included in the strategic options section of this document. Source: Healthcare Evaluation Data (HED) 2013/14 Market Share 2012/13 (%) Market Change (%) Share Change (%) Trust-wide 59.4% 58.7% 1.3% 0.7% Trauma & Orthopaedics 49.8% 54.2% 1.6% (4.4%) ENT 59.4% 58.0% 7.2% 1.3% Urology 73.9% 71.3% 7.0% 2.6% General Surgery 75.5% 73.7% 5.2% 1.8% Paediatrics 77.1% 74.3% 14.4% 2.9% Obstetrics 70.6% 75.0% (8.0%) (4.4%) North East Essex CCG The NEE CCG inpatient market was worth c 136m in 2013/14. Colchester Hospital University NHS FT s overall market share was 77.5% of this (66% of the elective market and 86% of the non-elective market). 3.5% ( 4.7m) is accounted for by neighbouring acute trusts, with patients going south to Mid Essex Hospital NHS Trust or north to Ipswich Hospital NHS Trust. 5% ( 6.8m) of elective expenditure goes to private providers, principally Ramsay Healthcare which runs The Oaks Hospital for mainly elective trauma and orthopaedic (T&O) and general surgery work. Of the balance, 3% ( 4m) per annum relates to specialist cardiothoracic work provided at Basildon Hospital, with the rest going to a mix of specialist acute providers and hospitals in London. Mid Essex CCG The ME CCG inpatient market was worth c 127m in 2013/14, of which Colchester Hospital University NHS FT had a 9.5% share, the principal specialties being radiotherapy, obstetrics, T&O, audiology and ophthalmology. 24

26 3. Trust profile and market position Competitive landscape The Trust is one of three main NHS acute providers to the south and north of the A12 corridor with Mid Essex Hospital NHS Trust 26.1 miles to the south and Ipswich Hospital NHS Trust 21.4 miles to the north. All three providers are of a comparable size but with a different mix of sub-regional and regional services. Amongst it s sub-regional services the Trust provides radiotherapy services to Colchester and Mid Essex and vascular services to Colchester and Ipswich. The Trust provides a range of District General Hospital work in addition to it s sub-regional services. The Trust has competition from the Oaks Hospital (Ramsay Healthcare), a 57 bed hospital located in close proximity to Colchester General Hospital providing elective surgery. Ipswich Hospital The Oaks Hospital Colchester Hospital Mid Essex Hospital 25

27 3. Trust profile and market position Competitive landscape (cont.) A visual representation of the market share for the Trust, Mid Essex Hospital and Ipswich Hospital is presented below. The map shows what percentage of the population (with outpatients used as a proxy) in Essex went to the respective competing hospitals in 2012/13. The red outline defines the Trust s catchment area. The Trust s market share Mid Essex Hospital s market share Ipswich Hospital s market share The Trust s market share is concentrated primarily in the east. Significant flows of patients from the Colchester Trust s notional catchment area are likely to travel to competitors (both private and NHS). By comparison, Mid Essex and Ipswich appear to have less patient outflow to competitors. This analysis only covers neighbouring NHS competitors. However, the Oaks Hospital (not shown on the map) is also a relevant threat to the Trust, holding high shares of the regional market in specialties such as T&O, General Surgery and Ophthalmology. The Trust plans to focus on repatriating those patients who are currently referring to other healthcare facilities and increase market share in its immediate catchment area and Essex overall, especially in growth areas. *Market share is defined by outpatient flows in 2012/13, HES (Hospital Episode Statistics) 26

28 3. Trust profile and market position Trust assessment of key competitors The Trust has conducted a initial, desktop review of the relative strength of the existing competitors in the healthcare market. A summary of this is shown in the table below. The assessment for Colchester Hospital University NHS FT recognises the deterioration in the Trust s competitive position as a result of the financial position and the impact of regulatory interventions. Key: Fully shaded circle is "Very high / strong", half shaded circle is "moderately high / strong", empty circle is "Low / weak". 27

29 4. Factors impacting the Trust during the plan period 28

30 4. Factors impacting the Trust during the plan period Section overview This section assesses a wide range of varied factors that have the potential to affect the Trust during the plan period. In addition to the reputational and regulatory actions the Trust is faced with, the Trust has reviewed a number of factors which are not unique to it. Within the categories - demographic profiling, clinical policy developments and service reconfigurations, commissioning and funding - exist many sub-factors which have been analysed in further detail. Factors impacting the Trust during the plan period Demographic profiling Demand for services Clinical policy developments and service reconfigurations Commissioning Funding To understand the challenges and opportunities the Trust will face in the next 5 years, and inform the Trust s strategic options aimed at addressing the current issues for the Trust, it carried out an in-depth market analysis as well as an evaluation of forecast NHS changes and commissioner policies and intentions. The current and planned funding situation was also assessed in order to address the achievability of the strategic options. 29

31 4. Factors impacting the Trust during the plan period Demographic profiling: section overview Within demographic profiling, the current population characteristics for the area surrounding the Trust are analysed including that of total population, age structure above 65 years old and predicted growth of the population over the next 5 years. The most significant morbidity and health needs for both Colchester and Tendring DC are evaluated. Key impacts 1 The growing ageing population and the increase in births represent both a challenge and an opportunity for the Trust. Increased demand will place pressure on services - however, the Trust will further integrate pathways with community and social care for the elderly and women and children. Age structure Demographic profiling Population growth and demographic structure change Morbidity and health needs 2 3 There is an increasing number of patients with co-morbidities due to the ageing population as well as the black, minority and ethnic minority population in Colchester. Again, this places high demand on services which will need to address volume as well an health inequalities. In contrast, Tendring is one of the least ethnically diverse boroughs in Essex. However, there are problems with obesity and long term illness which the Trust intends to prioritise. 30

32 4. Factors impacting the Trust during the plan period Demographic profiling Colchester is the largest town in North East Essex. It is a largely affluent area with relatively low unemployment and above average life expectancy. The Tendring peninsula is more rural and has a much higher concentration of elderly and economically less well-off people. Tendring is one of the two most challenged and socially vulnerable districts in Essex beset with many of the more complex social and health care issues; it includes the most deprived small area (LSOA; approximately 1,500 people) in England (LSOA E ) Census The ONS 2012 Census total population data for the local authority and CCG areas principally served by the Trust and competitors was as follows: Source: Office for National Statistics ONS

33 4. Factors impacting the Trust during the plan period Age structure The age structure of the Tendring population is strongly skewed to the older age cohorts; this reflects high levels of later-life migration from London and the Home Counties to the coastal strip of the Tendring peninsula. Population growth and demographic structure change The population of all of Essex including North East Essex is expected to grow significantly in the planning period. ONS population projections suggest the growth between 2014 and 2019 in Colchester BC and Tendring DC will be disproportionately higher than the growth in the national population, and that the growth of the over 75 population (those who make proportionately larger use of hospital services) will be more significant than the national growth rate: The demographic shift to a larger old and very old population will increase pressure on a range of services including: A&E, endof-life, dementia, the frail and elderly care pathway; and it will increase the risk of bed blocking. Source: Office for National Statistics ONS

34 4. Factors impacting the Trust during the plan period Population growth and demographic structure change (cont.) Demographics in the area of Colchester and Tendring will develop as follows: The population will increase by 4.4% over the next five years; Colchester and Tendring births will increase by 4.3% from 3,570 currently to over 3,720 by 2019; Over 75s will increase by 13.33% from 33,000 to 37,400 by 2019; The underlying demand growth over the next five years is likely be faster than the population growth at around 10-15%, due to an increasing number of elderly and frail patients with multiple co-morbidities. Source: Office for National Statistics ONS 2012;Trust analysis 33

35 4. Factors impacting the Trust during the plan period Demand for services The table to the right sets out a demographic 5 year growth analysis for A&E, Inpatients (Spells) and Outpatients. The analysis sets out that: A&E growth in Colchester is expected to be higher than the Essex and England average; Inpatient growth in Colchester is expected to be higher than the England average, but lower than the East region and Essex average; and Outpatient growth is expected to be higher than the Essex and England average, but lower than the East region average. This analysis supports the comments on the previous page, demonstrating how demographic developments is expected to translate into service demand. 5 Year - North East Essex growth POD All ages NE Essex A&E 5.2% East Region A&E 5.5% England A&E 4.9% Essex A&E 5.2% Suffolk A&E 3.7% NE Essex Spells 6.6% East Region Spells 7.2% England Spells 6.5% Essex Spells 6.9% Suffolk Spells 6.4% NE Essex Outpatients 6.9% East Region Outpatients 7.1% England Outpatients 6.4% Essex Outpatients 6.9% Suffolk Outpatients 5.9% Source: Office for National Statistics ONS 2012;Trust analysis 34

36 4. Factors impacting the Trust during the plan period Morbidity and health needs The following summary is extracted from the Public Health England 2013 Health Profiles for the local authority in North East Essex: Colchester Deprivation is lower than average, however about 5,500 children live in poverty; Life expectancy for men is higher than the England average; Life expectancy is 8.4 years lower for men and 4.4 years lower for women in the most deprived areas of Colchester than in the least deprived areas; Over the last ten years, all-cause mortality rates have fallen. The early death rate from heart disease and stroke has fallen and is better than the England average; In Year six, 17.7% of children are classified as obese; The level of smoking in pregnancy is worse than the England average; The level of alcohol-specific hospital stays among those under 18 is better than the England average; An estimated 22.5% of adults smoke and 23.6% are obese; The rate of road injuries and deaths is worse than average; Rates of smoking related deaths and hospital stays for alcohol-related harm are better than average; The rates of statutory homelessness, violent crime and excess winter deaths are worse than average; The rates of long term unemployment, hospital stays for self-harm and drug misuse are better than average; Overall Colchester finds itself in the 63 rd percentile of the most deprived ranking, is more ethnically diverse than other towns in Essex and the local black and minority ethnic (BME) populations are over-represented on certain disease registry. Smoking and obesity, particularly child obesity, are of concern. Priorities include supporting vulnerable people, increasing levels of physical activity and addressing homelessness. 35

37 4. Factors impacting the Trust during the plan period Morbidity and health needs (Cont.) The following summary is extracted from the Public Health England 2013 Health Profiles for the local authority in North East Essex: Tendring DC Deprivation is lower than average, however about 6,200 children live in poverty; Life expectancy for men is lower than the England average; Life expectancy is 8.8 years lower for men and 6.3 years lower for women in the most deprived areas of Tendring than in the least deprived areas; Over the last ten years, all-cause mortality rates have fallen. The early death rate from heart disease and stroke has fallen and is similar to the England average; In Year six, 18.8% of children are classified as obese; Levels of teenage pregnancy, GCSE attainment and smoking in pregnancy are worse than the England average; The level of alcohol-specific hospital stays among those under 18 is better than the England average; The estimated level of adult physical activity is worse than the England average. The estimated level of adult obesity is better than the England average; Rates of road injuries and deaths and smoking related deaths are worse than the England average; Rates of sexually transmitted infections and hospital stays for alcohol-related harm are better than the England average; Recent data identifies that Tendring also has a higher than expected, and increasing, number of people with severe learning difficulties population; has higher than expected mental health needs and experiences lower than expected educational attainment. Overall Tendring finds itself in the 26 th percentile of the most deprived ranking and is one of the least ethnically diverse boroughs in Essex. Smoking, teenage pregnancy and obesity, particularly child obesity, are of concern. Priorities in Tendring include reducing levels of obesity, improving the outcomes of people suffering from long-term conditions and improving mental health outcomes. 36

38 4. Factors impacting the Trust during the plan period Overall impact on the Trust The growing ageing population and the increase in births will create both challenges and opportunities for the Trust. Specifically, the Trust is likely to experience increased demand which will place pressure on services it currently delivers. Opportunities exist if the Trust can integrate pathways and services through primary, community and acute sectors. This is especially true for elderly care and women and children s services which will allow the Trust to more efficiently manage the health impact of the demographic changes that Colchester and Essex are expected to undergo in the next five to ten years. Services and pathways linked to these demographics-driven changes will include: end of life care (EoLC), management of co-morbidities and complex conditions (particularly for an ageing population diabetes, COPD, dementia, etc.). Maternity services, gynaecology, and paediatrics should also see increased demand through predicted population growth. To realise the full potential of these opportunities and to be sustainable, the Trust will change services it currently delivers and develop new expertise by investing in new services and integrated platforms. Development of current services and investment will be required to establish a more effective interface between social and health care. At the same time, the Trust will maintain and develop the services which it is strong in delivering. 37

39 4. Factors impacting the Trust during the plan period Demand for services: section overview This section looks at four key services that will place increased pressure on the Trust over coming years: frail and elderly care, women and children care, and cancer treatment. The main drivers behind these increased service demands are considered as well as what this means for the Trust going forward. Key impacts 1 In line with the demographic changes that are forecast for the ageing population, there will be a large increase in dementia in coming years. The Trust will need to prioritise elderly and frail care especially in the community. Demand for services 2 The Trust s main commissioner, NEE CCG, has the aim of reducing cancer mortality rates over the next five years. The Trust will have to focus on this area of care in order to align with commissioners policy 3 Due to the high rates of obesity and long term illness in the population the Trust aims to provide care suitable to the local population in a setting and manner that minimises the demand for health services. 38

40 4. Factors impacting the Trust during the plan period Demand for services Service Driver Outlook Frail and elderly care Cancer treatment In the next 5 years the composition of the population of Essex will see an increase of 14.1% in the over 75 year old population people By 2019 Colchester s population will see an increase of 16.7% in people over 75; By 2019 Tendring s population will see an increase of 10.9% in people over 75. North East Essex CCG presents a significant number of premature deaths from cancer compared to similar CCGs, although the figure remains below the national average. From the presented figures follows an increase in patients with dementia, and in those with long-term conditions; Frail and elderly care will become a crucial service for the Trust in terms of volume. NEE CCG wishes to bring the rates of mortality down to the level of the best in Office of National Statistics cluster over the next five years; The commissioning intentions align with the Trust s desire to focus efforts on improving its cancer care provision. Sources: NEE End of Life Care Strategy , NEE CCG five year strategic plan , Mid Essex CCG five year strategy

41 4. Factors impacting the Trust during the plan period Clinical policy developments and service reconfigurations: section overview This section evaluates the six main clinical policy developments that have occurred/ are occurring within the NHS that may affect the Trust s plan period and therefore need to be considered. Each policy or service reconfiguration is briefly detailed with anticipated implications for the Trust. Key impacts Clinical policy developments and service reconfigurations National policy on seven day working Stroke reconfiguration 24/7 emergency cover Minimum volume for specialist services/ concern for single-handed and under-staffed specialties Minimum nursing levels Increasing community in-reach, hospital outreach and integrated service bundling Seven day working, 24/7 emergency cover, and minimum nursing levels all require an increase in care coverage which raises significant capacity issues for the Trust and will likely require a significant level of organisational change and investment. Policies requiring minimum volumes in order to maintain competence present the Trust with both threats and opportunities. Consultant capacity will be an issue and may result in some specialties being scaled down or needing to develop a network approach for sustainability of services. The push towards a more integrated care system will align with many other issues the Trust faces and the plan to extend the Trust s community and social care reach. 40

42 4. Factors impacting the Trust during the plan period Clinical policy developments and service reconfigurations National policy on seven day working There have been a number of clinical policy developments within the NHS that have the potential to impact the Trust s ability to offer certain services in a manner that is both safe and commercially viable. Examples of such developments include, but are not limited to: 1. National policy on seven day working; 2. Stroke reconfiguration; 3. 24/7 emergency cover; 4. Minimum volumes for specialist services/concern for singlehanded and under-staffed specialties; 5. Minimum nursing levels; 6. Increasing community in-reach, hospital outreach and integrated service bundling. These policy developments and the impact that they may have on the Trust are explored in further depth over the following slides. In December 2013 the medical director of NHS England, Sir Bruce Keogh, announced that hospital trusts will in the future be contractually bound to run a full service seven days a week. The reason for the policy is centred around the need for hospitals to make more efficient use of their expertise and equipment, as well as seeking to address the issue of increased mortality amongst patients who are admitted on Saturdays and Sundays relative to those admitted on weekdays. The exact shape of the change is unclear at present, but it is likely that it will first become evident in the areas of urgent and emergency care. The shift is likely to affect all parts of the hospital - ranging from the potential difficulties of getting adequate staff and specialists in place at a sufficient cost, through to the probability that equipment with increased utilisation and less downtime will need increased maintenance whilst at the same time not impinging on patients. 41

43 4. Factors impacting the Trust during the plan period National policy on seven day working (Cont.) Whilst emergency services are well advanced in providing services throughout the week, elective services are still routinely provided on weekdays with some ad hoc sessions at weekends to assist with capacity pressures. The Trust has enhanced levels of consultant delivered care in major specialities. Stroke reconfiguration In their latest business plan, NHS England have indicated their aim to promote the reconfiguration of stroke services across the country, building on the evidence-based model developed in London. Outcomes for stroke patients have improved in London since specialist care was centralised in eight hyperacute stroke units (HASUs) in In addition to this, the Essex Stroke Review in 2012 recommended that there should be three HASUs located in Colchester, Chelmsford and Southend. Any reconfiguration of the local stroke pathway presents the Trust with possible opportunities to become a centre for excellence in stroke care. At the same time, the risk that commissioners decide to allocate other local hospital trusts with HASU status instead of the Trust must be considered. The Trust will press its case with commissioners to further develop specialist hyper acute stroke services in Colchester with the potential to provide services to the East Suffolk and Mid Essex areas, in collaboration with local stroke services at the Ipswich and Chelmsford acute providers. 24/7 emergency cover In November 2013, NHS England published the first phase of a review of urgent and emergency care services throughout the country. The full implications of the review are not yet certain, but the NHS have indicated a plan to introduce two levels of hospital based emergency centre, currently called Emergency Centre and Major Emergency Centres. The difference will lie in a Major Emergency Centre s relatively enhanced scale and range of specialist services that would be available 24/7 on a consultant-led basis, with Emergency Centre s capable of assessing and initiating treatment for all patients and then transferring more specialist cases onwards to a Major Emergency Centre. The NHS currently estimates that there will be Major Emergency Centres. Although the full implications of this major policy shift are uncertain at the time of writing, the Trust anticipates that during the plan period major adjustments will be required to clinical staffing and procedures. These adjustments will be typical of those faced by all NHS providers. These adjustments will include but not be limited to: an increase in Consultant cover required, especially overnight; an increase in nurse and support staff cover, especially overnight and at weekends; and a significant adjustment in rostering practice, to spread the current staffing profile more effectively over a seven day working pattern. HFMA s Costing seven day services sets out a range of 5-6% additional cost attributed to Emergency Admissions for seven day services. The Trust is assuming this is funded through tariff inflationary pressures. 42

44 4. Factors impacting the Trust during the plan period National policy on seven day working (Cont.) As recognised in HFMA s paper, this will be an enabler for some improvement schemes, such as improved outcomes and length of stay for patients Whilst emergency services are well advanced in providing services throughout the week, elective services are still routinely provided on weekdays with some adhoc sessions at weekends to assist with capacity pressures. Minimum volume for specialist services/ concern for single-handed and under-staffed specialties There is a strong evidence base to support a situation where, in order to maintain proficiency, clinical staff are able to demonstrate that individuals are experiencing sufficient volumes of activity to maintain competence. This has been established for several years in relation to surgical elective activity, and in some specialty areas, e.g. cancer surgery; it is likely to increasingly extend into emergency surgery and into medical specialty practice. In order to deliver the critical mass of activity, to sustain the numbers of consultants required to maintain a manageable 24/7 commitment, there will be a case for rationalisation of clinical specialties between a number of DGH sites. The Trust has already seen this in vascular surgery; it is likely to be repeated in other services. This issue will form one of the drivers for the Essex review of the provision of acute specialist services across the five acute hospitals in the county. This presents both risk and opportunities for the Trust. The Trust could benefit from increased volumes associated with one of its specialties becoming a major centre in the region, with higher volumes bringing more funding to support the infrastructure. However, there is the risk that the Trust may have to exit specialties where the Trust is sub-scale. Minimum nursing levels The Francis report, along with the Berwick review and Keogh review, has highlighted the importance of adequate staffing in hospitals, particularly in the area of nursing care. Under requirements introduced as part of the government response to the Francis inquiry, NHS trusts must now publish monthly staffing data showing their planned number of nursing hours against the number they managed to fill. A guidance committee at NICE concluded that when each registered nurse is caring for more than eight patients this is a signal to check that patients are not at risk of harm. Whilst NICE does not support a statutory minimum ratio for nurses to patients, hospital trusts are expected to use recognised evidence-based tools to determine what staffing levels are required, review them on a regular basis to ensure they are appropriate, and publish them twice a year. In 2013/14 the Director of Nursing and Patient Experience at the Trust conducted a comprehensive review of nurse staffing and patient dependency levels in all nursing areas. As a consequence, new model target nurse staffing establishments have been identified for all clinical areas. The impact of the review has been to establish a significant number of additional nursing posts across the Trust in 2014/15. The commercial challenge involved with this undertaking is significant, with a recent Health Service Journal report finding that 105 out of 139 acute trusts failed to meet their own targets for total nursing hours in May The Trust is focussing on working with all its stakeholders to find the adequate nursing resources (in the UK, Ireland, Scotland and overseas) to enable us to provide high quality care in a safe and financially sustainable manner. 43

45 4. Factors impacting the Trust during the plan period Increasing community in-reach, hospital outreach and integrated service bundling As organisations across the NHS face continually increasing financial pressures whilst at the same time seeking to improve health outcomes for patients, there is a push towards adopting a modern model of wholly integrated healthcare. In their most recent business plan, NHS England indicated its aim to enable the delivery of a wholly integrated approach to health and care by 2018, built around the needs of individuals, their carers and families. The practical implications of such a focus are widespread, ranging from the creation of the Better Care Fund to address the issue at a national level through to specific commissioner initiatives such as NEE CCG s desire to move their commissioning model towards one of service bundles (further explored in the next section of this report). NEE CCG has also indicated that it will let a community services contract with an annual value of 36m of which an element is currently provided by the Trust (c. 9.5m per annum). 44

46 4. Factors impacting the Trust during the plan period Overall impact on the Trust Policy developments related to issues such as tight funding, increased demand for healthcare and more complex care requirements, present a range of challenges and opportunities for the Trust; The push towards increased care coverage will lead to further challenges for the Trust, albeit challenges that we have already identified and are preparing to address; In addition to this, focusing on creating a more integrated care system whilst simultaneously focusing services on providers with critical mass pose substantial risks for some specialties in the Trust. However, the Trust is also presented with opportunities to consolidate some services at the Trust and create centres of excellence for the region in which the Trust operates; The push towards wholly integrated healthcare will align positively with the plan to extend the Trust s community and social care reach. 45

47 4. Factors impacting the Trust during the plan period Commissioning: section overview This section highlights recent commissioning developments that have been put in place in response to increasing economical and operational pressures. The major developments considered are the Essex review of acute services, demand management and cost control initiatives, the Better Care Fund and Integrated commissioning with Essex County Council and partners. The initiatives are outlined and the implication for the Trust considered. Key impact Commissioning 1 The Essex Review of Acute services may require Trusts to reconfigure their services to serve the population on the principle of local when possible, specialist when necessary. This will be a significant challenge for the Trust, which will need to remain flexible to respond to the changes required. Essex review of acute services Demand management and cost control initiatives Other major commissioning initiatives 2 The commissioners saving plans see the creation of service bundles and a planned decrease in emergency admissions to reduce costs. The Trust will be flexible and transformational in this new environment. Better Care Fund Integrated commissioning with Essex County Council and partners 3 The commissioners focus will be on integrating health and community services pathways. NEE CCG will tender for community service next November. 46

48 4. Factors impacting the Trust during the plan period Commissioning This section focuses on recent developments in the commissioning environment. The model of care and how services are commissioned has been shaped by national standards and local policy initiatives. For Colchester Hospital, the following key trends are affecting the Trusts operations: 1. Essex review of acute services; 2. Cost control initiatives undertaken by CCGs; 3. System resilience planning Essex review of acute services In the context of this review, the Trust plans to explore the Trust s future organisational model. Taking account of the impact of all the issues set out above namely: Current initiatives to respond to Keogh and cancer; Further initiatives to assess and address the issues of clinical sustainability for single handed specialties; Commissioner plans to reduce activity; Commissioner tendering decisions; Outcome of work in neighbouring health economies. The Essex review of acute services is currently at an early stage and information on the project is provisional and limited. The Review programme will start in full in early 2015 The Acute Trusts and CCG commissioners in Essex have agreed that in order to respond to the financial and operational challenges faced by all acute providers and health economies in Essex, they will undertake a review of the provision of acute care in the five DGH sites. The aims of this review are as follows: 1. Investigate the feasibility of a new acute services configuration across Essex based upon the principle of local where possible, specialist where necessary 2. Review back office services and assess whether shared services agreement schemes and outsourcing can deliver cost efficiencies and improved quality of care to patients 47

49 4. Factors impacting the Trust during the plan period Review of sustainable services This section links closely to the Essex Review of Acute Services and considers the sustainability of a number of services that the Trust provides. The Trust expects that the Essex Review of Acute Services is unlikely to provide a significant change in the provision of Acute Services across Essex in the Plan period. Acute providers will be expected to provide 24/7 specialist support across a number of acute services during this period and given the financial, clinical and workforce constraints on the NHS, this will not be possible across all providers were they to work in isolation. In recognition of this, the Trust is committed to working with local partners to identify the most appropriate acute services to provide in which locations. The Trust intends to begin a clinical review of its services in Q3 2014/15. The review will collate clinical, workforce, demographic and financial information to ascertain which services the Trust considers sustainable at Colchester Hospital in the future. Trust clinical leads will be involved in this review from the outset. Specifically, the criteria that the Trust intends on applying is: 1. Is the service significant? 2. Is the service financially viable (both currently, and potentially - i.e. with growth opportunities)? 3. Is the service core or non-core? 4. Is there workforce constraints in this service? 5. Is the service a commissioner requested service? 6. Does it need to be provided from an acute site? The Trust will also seek to create clinical alliances with local provider partners to ensure that 24/7 specialist support is available to it s patients in a sustainable manner. Initial analysis and review suggests that the following clinical services will be of focus during this Plan: Sub scale (i.e. Services where a quality service cannot be delivered in a sustainable way) Complex spinal surgery; Orthodontics; Gynaecology cancer; Microbiology; Not sub-scale Dermatology; Head and neck surgery; Oncology services and; Radiology. It is expected that the above service reviews could range from a commitment to working together to a complete reconfiguration of a services across Essex of beyond. This list will be added to as the Trust develops its clinical strategy. In addition to clinical services, the Trust will review all nonclinical services at the same time, including all back-office functions and other non-clinical services such as the Trust s joint partnership with Anglia Ruskin University (the Iceni Centre). Where possible, non-clinical services changes will be expected to financially benefit the sustainability of clinical services at Colchester Hospital. 48

50 4. Factors impacting the Trust during the plan period Demand management and cost control initiatives The CCG QIPP targets required to balance the financial position across the five year period of this plan for the Trusts main commissioners, North East Essex CCG, Mid Essex CCG and East Anglia LAT are significant. North East Essex CCG alone, which accounts for c.77% of the Trusts total income, is planning savings of 73.3m ( 18.5m in 2014/15, 13.9m in 2015/16 and 40.9m between 2015/16-19). These are unprecedented levels of savings and demand management driven by national NHS allocations at near to flat cash with minimal funding for healthcare inflation. CCGs have planned a series of initiatives to address demand and cost pressures: 1. Move to service bundles: This initiative targets the bundling of service contracts and the use of a prime-provider system to reduce contract costs for service and management (the bundling still needs to be tested by consultation). The CCG intend to refine the detail of the bundled pathways in Q1 2014/15, with a procurement process in the remainder of 2014/15, leading to an award in Q1 2015/16 and service start in Q3 2015/16. The initial focus in the CCG QIPP targets is on bundling three types of care: (i) urgent care, (ii) end of life and (iii) care closer to home. 2. Reviews of acute and care pathway: The main near-term (2014/15) initiatives for the QIPP targets that appear to be aimed at the acute care and pathway reviews are: Reducing Ambulatory Care Sensitive (ACS) condition admissions / Pathway Reviews; Delivering Care Closer to Home (CC2H); Reducing rates of procedures of low or limited clinical value; Reducing elective and non-elective admission rates. The CCGs are also targeting areas such as GP referrals, Trauma Admissions and Urgent Care which could have a demand impact on the Trust. The Trust is committed to working with the CCG and other partners to redesign the infrastructure of urgent and emergency care in North East Essex to ensure that patient pathways are simplified through a single point of access and that urgent assessment processes are in place to route individuals requiring care to the most appropriate services. In 2013/14 and 2014/15, the Trust has undertaken significant reconfiguration of services in the Emergency Department and in adjacent space at CGH and will be working with commissioners to redevelop space in this area to support the urgent and emergency care hub of the local health economy. 49

51 4. Factors impacting the Trust during the plan period Demand management and cost control initiatives (cont.) A key commissioning strategy of North East Essex CCG is to focus the commissioning of a range of services traditionally provided from acute hospital facilities to deliver CC2H. This initiative affects not only the Trust but other providers in North East Essex. In the period 2014/15 to 2015/16 the CCG has described its intention to subject a number of services, traditionally provided by a range of providers including the Trust, to a competitive procurement. These services include a range of clinical specialties and service that operate largely under an elective ambulatory care model. For the Trust this includes: MSK Therapies Urology / continence Cardiology Respiratory Dermatology Audiology Ophthalmology Diabetes The Trust s plans are aligned to the CCG s current expectations of the impact of their Care Closer to Home agenda on Colchester Hospital. In addition to the risk to the Trust as the current provider of these services, CC2H presents some opportunities for the Trust to lead the development of integrated pathways of care and potentially to take a greater role in shaping the provision of community based services for example in the management of community hospital beds. 50

52 4. Factors impacting the Trust during the plan period Other major commissioning initiatives Better Care Fund The Better Care Fund (BCF) is a single pooled budget supporting the integration agenda for health and social care services. The BCF starts in 2015 for North East Essex CCG and its value 21m. Mid Essex CCG has a fund of similar value currently standing at 22m. The Better Care Fund will undoubtedly impact the ability of the CCGs to spend on acute and other types of care. CCGs plan to use the fund to drive through changes required to: (i) support seven day services in health and social care, (ii) support patients being discharged and (iii) prevent unnecessary admissions at the weekend. Integrated commissioning with Essex County Council and partners Essex County Council is facing significant financial savings targets. The integration of health and social care is a primary aim of CCGs as a mechanism for coping with on-going rises in demand and for reducing the funding envelope. The Trust is working closely with the CCG to ensure that the impact of this is a positive one. This will only be achieved through successful integration of services and innovative models of service delivery. The Trust will proactively manage the potentially competing priorities of ensuring sufficient capacity to deliver high quality and timely acute care, whilst at the same time supporting prevention and timely intervention that support people to be healthy and live independently for as long as possible. The Trust s plans are aligned to the CCG s current expectations of the impact of the Better Care Fund on Colchester Hospital. 51

53 4. Factors impacting the Trust during the plan period Overall impact on the Trust The Trust will be agile and flexible to respond to the outcome of the Essex Acute Review which is expected to require changes to the model of acute care across Essex; The Trust will be more competitive as CCGs will increasingly search for the most cost effective and high quality services which may include private providers. The CCGs Care Closer to Home agenda is expected to impact on the Trust as services are modelled to move from the Trust under this agenda. However, the Trust will consider it s options to tender for these services if it is in the interest of all parties to do so. 52

54 4. Factors impacting the Trust during the plan period Funding: section overview This section focuses upon the current financial constraints upon the NHS as a whole as well as the challenges that the Trust s key commissioners are facing. The Trust s current deficit and planned deficit are also illustrated. Key impacts 1 Funding across the NHS is highly constrained for at least the next five years. This is especially apparent for acute services. The Trust has begun to identify ways of creating more efficient and adaptable services to manage pressures despite these constraints. Funding 2 The main commissioner, NEE CCG, is also facing financial constraints. Therefore, the Trust will align services with commissioner policies in order to be competitive in the changing healthcare market 3 The Trust has a deficit of 2.4m at the end of 2013/14. The impact of unfunded cost pressures, tariff deflation and efficiency requirements means the Trust had forecast a deficit of 21.2m at the end of 2014/15. 53

55 4. Factors impacting the Trust during the plan period Funding The Trust will face an increasingly challenging funding environment over the course of the plan period, with funding for all NHS services at both national and local levels continuing to be constrained. Overall, pressures on the NHS are forecast to grow at c. 4% per annum up to 2021/22, with a variety of factors leading to increases in demand for health care and the cost of providing this health care itself increasing. In the short term, Monitor has estimated the affordability challenge for providers will be 3-7% p.a. over the next five years: 13/14 14/15 15/16 16/17 17/18 Affordability challenge 3.1% 6.6% 5.5% 4.7% 4.6% Assumed CIP delivery 3.4% 3.6% 6.0% 4.0% 4.0% Source: Monitor Guidance for the Annual Planning Review 2014/15 NHS funding for acute services is particularly constrained, with the sector forecast to record a net deficit of 773m in the year 2014/15 after posting a net deficit of 421m in the previous financial year. The situation at the local health economy level is challenging, all acute hospital trusts in Essex are forecast to run deficits in 2014/15. Alongside this, the key commissioners of the Trust services, namely North East Essex CCG and Mid Essex CCG, are facing significant financial challenges. NEE CCG, which accounts for 77.3% of contracted SLA income in 2014/15, faces a productivity challenge over the next 3 years of between 4% and 8% per annum at a time when the CCG are forecasting funding uplifts of 2.5% in 2014/15 and 2015/16, equating to broadly flat funding in real terms despite rising demand. From September 2014 CCG Board minutes, North East Essex CCG is currently reporting a forecast surplus of 15.2m against a target of 15.2m. ME CCG, which accounts for 8.6% of 2014/15 contracted SLA income, commenced the year with an underlying deficit of 13m and was not able to demonstrate how financial balance could be achieved in the medium term. As a result of challenges to clinical services, the Trust (having enjoyed the delivery of financial surpluses in past years) ended 2013/14 with a deficit of 2.4m with a normalised surplus carried forward into 2014/15 of 0.9m. However the impact of unfunded cost pressures, tariff deflation and efficiency requirements means the Trust has an revised forecast deficit of 21.2m in 2014/15. 54

56 4. Factors impacting the Trust during the plan period Overall impact on the Trust - Funding Funding is likely to be broadly flat or declining in real terms across substantially all of the Trust s services, forcing it to find more efficient ways of delivering care and/or redesign its models of care to meet growing demand without additional funding; In addition to this, funding constraints at CCGs may lead to revenue risks as commissioners intend to competitively procure a range of services including the outpatient-based clinical specialties and focus the commissioning of services under a CC2H model; and The funding environment for acute care will remain highly challenging for the foreseeable future, and the Trust is being proactive in taking steps to provide high quality care within such a demanding commercial landscape. 55

57 5. Financial baseline and 5 year plan 56

58 5. Financial baseline and 5 year plan Section overview This section provides detail on: 2014/15 YTD performance. The financial overview and assumptions for 2014/15 have been set out in the Appendix, as detailed in the FRP; on-going identification, development and delivery of cost improvement plans ( CIPs ) for 2014/15, following on from the detail included in the FRP; and the Trust base five year model, which highlights the sustainability gap to be filled before the Trust becomes financially sustainable again. Trust financial baseline and five year plan 2014/15 outturn (incl. YTD performance) 2014/15 CIP identification, delivery and governance Risks to 2014/15 outturn Five year plan base case 57

59 m m 5. Financial baseline and 5 year plan Financial plan 2014/15 The graph opposite sets out the monthly surplus / (deficit) position, using actuals up to and including September, as well as the cumulative deficit. As per the plan for a 15.9m deficit in the FRP, the graph shows an improvement in performance from September onwards due to: increases in income from September onwards to account for winter case loads (increase of between 0.5-2m per month) 1.0 m winter pressures income anticipated to be received from November to March. There is however a risk that the full amount is not received from North East Essex CCG; increases in CIP delivery from September onwards including decreases in pay from a reduced level of temporary spend. There is a risk to CIP delivery which could increase the deficit in the latter months; as a result of the CIP implementation, there is a planned decrease in PMO and turnaround costs in Q3 and Q4. If CIP delivery is not maintained or further costs are incurred, there is a risk to this assumption. 2014/15 monthly surplus (0.5) (1.0) (1.5) (2.0) (2.5) (3.0) Planned surplus / (deficit) Cumulative plan Actual surplus / (deficit) Cumulative actual It should be noted that there is a significant surplus in March 2015 due to high income levels. These are driven by the increased activity in March, supported by historical profiles as well as year end activity and balances. The Trust recognises that there are some risks to the 2014/15 outturn, namely further contract penalties ( 0.5m- 1.0m) and CCG challenge on activity (up to 0.8m), however also some upsides in the form of Winter pressures CCG funding and full CQUIN delivery (up to 2.0m). The Trust has reserves in place in the event of under delivery on recovery plans within the Surgery and Medicine divisions. Further, the Trust has some budgetary and cash controls in place to mitigate some of the risks inherent in its Plan, including all purchase orders over 1k to be signed off by the Director of Finance, as well as a Trust vacancy panel for all non-agency staff and tighter financial controls (including no order, no pay) by end October. 0.0 (2.0) (4.0) (6.0) (8.0) (10.0) (12.0) (14.0) (16.0) (18.0) 58

60 5. Financial baseline and 5 year plan 2014/15 YTD performance as at September 2014 As at September 2014, the Trust delivered a deficit of 13.2m, a 0.4m adverse variance against the plan of 12.8m. Income: cumulatively break even to plan by 0.5m. However, additional excluded drug income ( 1.3m) and a benefit on the expected year-end settlement ( 0.6m) masks significant underperformance in clinical income. Without these benefits, there was an adverse variance of 1.9m. Particular areas of under performance include elective where there is a shortfall in day case performance ( 1.2m) and Inpatients ( 0.5m). Pay: Temporary pay costs reduced slightly compared to the previous month but still make up 15% of all spend on pay. Junior doctor pay continues to significantly overspend, largely caused by the use of agency and locum staff to cover vacancies and other unplanned absences. Drugs: Overspends against plan are largely caused by greater than expected use of high cost drugs in Cancer. These drugs are directly chargeable to the commissioners and are met by additional income, as noted above. Other non-pay: Other non pay costs are driven by higher than expected project costs (turnaround 0.2m and Cancer Project 0.1m) and Radiology out sourced reporting costs ( 0.1m). The remaining variance relates to unidentified CIP budget. Contract penalties: The CCG has imposed contract penalties on the Trust for failure to achieve 18 weeks and ambulance handover targets. Plan Actual Fav / (Adv) Operating Income Daycase 11,732 10,243 (1,489) Elective Inpatients 10,006 9,389 (617) Non-Elective 36,314 36,284 (30) Outpatients 23,447 23, A&E 4,380 4, Other 31,341 33,469 2,128 Total NHS Clinical Income 117, , Private Patient Revenue Non NHS Clinical Revenue Total Non NHS Clinical Income Research and Development Income (17) Education and Training Income 3,381 2,965 (416) Misc. Other Operating Income 6,130 6, Other Operating Income 10,012 9,680 (332) Total Operating Income 128, ,029 (9) Operating Expenditure Pay (90,938) (89,740) 1,198 Drugs (11,932) (13,201) (1,269) Clinical Supplies and Services (13,131) (12,859) 272 Non-Clinical Supplies (2,023) (2,003) 20 Secondary Commissioning (1,831) (2,104) (273) Other Operating Costs (14,145) (14,493) (348) Total Non Pay (43,063) (44,661) (1,598) Total Operating Expenditure (134,001) (134,401) (400) EBITDA (5,962) (6,371) (409) Non Operating (6,810) (6,791) 19 Net Surplus/(Deficit) (12,771) (13,162) (390) Contract Penalties Year to Date All in 000 Plan Actual Fav / (Adv) 18wk Penalty (458) Ambulance Handover (153) PPNCO Readmissions (70) OP 1st to FUP 6 58 (52) Total 1,068 1,794 (726) 59

61 5. Financial baseline and 5 year plan 2014/15 CIP delivery workstream and divisional position, as at September 2014 CIPs are reported through two lenses. From; a workstream view, and the division where the budgeted saving is planned. Year to date CIP delivery of 2.5m, was 0.6m behind Plan as at month 6. The forecast outturn position at month six is 8.7m, which represents a 0.2m variance against the CIP plan of 8.9m. Within the financial baseline, this delivery is riskassessed by 0.3m. The Trust PMO is working with workstreams and divisions, who are reporting a less than planned outturn, to identify corrective actions and alternative schemes. Progress of schemes is monitored through the Level 1 reporting process. This process is detailed further within the Appendix of this Plan. CIP scheme All in ms Plan outturn Forecast outturn YTD Plan YTD Actuals YTD Variance Estates Optimisation B Facilities Optimisation (0.1) G Procurement and Supply Chain B Pharmacy procurement (0.0) G Other Clinical Productivity (0.0) (0.0) (0.0) R Theatres 0.4 (0.1) 0.0 (0.1) (0.1) R Length of Stay (0.0) (0.0) (0.0) B Outpatients 0.2 (0.1) (0.0) (0.0) (0.0) R Other Income opportunities (0.0) B Operational Support 0.1 (0.0) (0.0) (0.0) (0.0) R Temporary Spend (0.2) R Corporate P13Division Specific (0.1) G Cancer & CSS Division Specific (0.0) B Medicine Division Specific (0.6) R Surgery Division Specific (0.1) B Women's & Children's Division Specific (0.3) G Adjustment to revised plan (2.8) 0.0 (0.6) TOTALS (0.6) Forecast Outturn BRAG Finance BRAG Rating BLUE - Scheme forecast to deliver >100% of plan GREEN - Scheme forecast to deliver between 75% and 100% of plan AMBER - Scheme forecast to deliver between 50 and 74% of plan RED - Scheme forecast to deliver <49% of plan 60

62 5. Financial baseline and 5 year plan 2014/15 CIP plan phasing and delivery Delivery of the 2014/15 CIP programme is phased across the year in line with the modelled financial benefit of these. The planned delivery of these schemes increases at a faster rate each month from month 6, per the graph below. The Trust has in place a robust process to track progress of project milestones and financial delivery. Over the past 2 months the Trust has reviewed its tracking process, to be more focused on financial outcomes. In month 6, CIP delivery was 0.1m behind plan, and cumulatively the Trust was 0.6m behind plan YTD. The Trust has identified corrective actions to recover this shortfall in delivery. 61

63 5. Financial baseline and 5 year plan 2014/15 CIP Programme granular monitoring The Trust has further developed its CIP workbooks to include the introduction of a new reporting format, referred to internally as Level 1 reporting. The Level 1 format includes all information in relation to a particular project and is provided in two parts: Part 1 - project overview; and Part 2 - financial details. A summary of Part 1 and 2 is shown within the Appendix to this Plan. Each workstream or division has a Level 1 reporting tool, used for the monitoring and reporting of all projects. The Level 1 details include: All projects within the workstream or division; Project owners/ lead; The planned in-year and full year effect saving and financial phasing per project; and The YTD plan, actuals and variance per project. Milestones and financial forecast outturn is BRAG rated for each workstream or division, and where this results in a non-green BRAG, corrective action or substitute schemes are to be identified. In order to address this, a corrective action template must be completed, detailing actions, decisions and / or required endorsements to bring a scheme back on track. The template will also provide opportunity to propose new schemes to act as substitute CIPs to ensure CIP financial plan is achieved. 62

64 5. Financial baseline and 5 year plan Risks to delivery in the 2014/15 Financial plan The Trust is 0.4m behind plan year to date. The Trust s gross baseline forecast has now deteriorated from it s 15.9m plan by 7.5m to a deficit of 23.4m (base case). This forecast includes a projected CIP delivery of 8.4m. The most significant reasons are: Elective activity (especially day cases) is not recovering as planned ( 3.2m loss) Winter pressures income will now be met with increased costs ( 1.2m loss) Penalties (especially ambulance handover and 18 week) are not reducing ( 1.9m higher) Pay and Non Pay overspends forecast ( 2.6m) Other positive benefits, e.g. CIP shortfall, increased cost of turnaround, poorer divisional performance ( 1.4m) The following table sets the movement in greater detail: Plan (15.9) Increased Penalties Ambulance Handover and 18 week non compliance (1.9) Elective Activity Shortfalls in inpatient and DC activity (3.2) 13/14 Reconciliation Negotiation delivered improved outcome 0.6 A&E Income Increased activity 1.3 Excluded Drugs Pass through income netted against costs - Other Income Shortfall on Winter pressures funding contribution (1.2) Training Income Deanery contracts on medical staffing (0.6) Pay and Non Pay overspends Divisional overspends on pay and non pay (2.6) Depreciation Capital programme reduced and slipped 0.1 Total Variance (7.5) Gross Baseline Forecast (23.4) 63

65 5. Financial baseline and 5 year plan Working from this Gross Baseline Forecast, the Trust has a number of risks and opportunities which combine to forecast a best, worst and base case for the 2014/15 financial year end forecast. At the month 6 position the Trust is forecasting a financial deficit of 21.2m. The following table sets out the risks and opportunities: All m Worst Base Best Notes Gross Baseline Forecast Deficit (23.4) (23.4) (23.4) Before risk items RTT Inititative Oct/Nov (0.3) Risk cost will exceed funding Mobile Theatre (0.2) (0.2) (0.1) Assumes LAT no longer funding Monitor (A&E Funding) Funding for capital into surplus Service Resilience/ Winter Pressures Funding for capital into surplus Overseas Recruitment (0.7) (0.5) (0.2) Recruitment of 151 nurses, range of costs dependent on speed of recruitment and experience of nurses (double running) CQUIN 100% Currently 80% delivery budgeted Upside on contingency Base forecasts assumes consumed Risk on CIP (1.0) (0.3) - Worst case assumes 7.6m delivery, base case shows a 0.3m) Portal - lost income (0.5) (0.3) (0.2) Based on BUTH experience Non recurrent CCG Offer For emergency admissions not yet accepted Penalties (18wks compliance in FOT) (0.3) - - Risk 18 week not achieved from December Forecast Range Deficit (24.3) (21.2) (18.2) In addition to the above, it is recognised that the financial impact of the risk to income of the Clinical Portal may be worse than expected, however the Trust is putting in place mitigation schemes to minimise this risk. The Transforming Pathology Partnership (TPP) is forecasting an overspend. The Trust is liable for an element of any actual financial overspend by TPP. 64

66 5. Financial baseline and 5 year plan 5 year baseline excluding CIP delivery and strategic options The table below sets out the Trust s base case five year plan challenge. It assumes no CIP efficiency delivery or strategic actions from 2015/16 onwards. Surplus / (Deficit) 2014/ / / / /19 Total Efficiency requirement (8.9) (10.9) (9.0) (8.8) (8.5) (46.1) Care closer to home impact - - (3.6) - - (3.6) Movement to Surplus - (4.7) (4.3) (8.4) (7.6) (25.0) Other movements Closing (8.9) (9.5) (15.3) (15.3) (15.3) (64.2) Detail on 2015/16 CIP and Strategic Development plans are set out within Section 6 of the Plan. The growth in deficit from 2014/15 to 2018/19 is largely attributable to: the 4 / 4.5% Monitor CIP efficiency requirement, totalling 46.1m; the 21.2m deficit to recover to 3.8m surplus, totalling 25.0m; the assumption made for the impact of Care Closer to Home (income loss and some reductions in expenditure), based on the Trust s latest discussions with the CCG, totalling a 3.6m loss; assumptions around inflation and known tariff changes, totalling 1.1m above those funded through tariff the assumption of demographic growth increasing income by 4.6m; non-recurrent items including turnaround costs, costs related to the clinical portal project, and 2013/14 CCG agreement totalling 8.3m Increased PDC costs of 1.5m as a result of the Trust s cash support requirements Other benefits of 0.2m The Trust is also in discussions with its CCG with regard to transitional funding support, to aid the transition to Care Closer to Home. 65

67 5. Financial baseline and 5 year plan 5 year baseline including CIP delivery assumptions and strategic options The table below shows the Trust s projected Income and Expenditure account for the 5 year period ending 2018/19 after CIP delivery and Strategic scheme impacts. The tables are all stated at 2014/15 rates, tariff funded inflationary pressures are excluded from income and expenditure. However, the Trust is assuming some inflationary pressures above those funded through the national tariff. The impact of tariff efficiency requirements leads to a reduction in income for the Trust over the 5 year period. The is most prevalent within the first three years. 2014/ / / / /19 Income Local CC2H initiatives are also expected to NHS Clinical Income negatively impact on the income of the Trust over Non NHS Clinical Income this 5 year plan period, starting in 2016/17. Other Operating Income Demographic growth partially offsets the negative Education & Training impacts above, but the overall impact on income is Non-patient services to other bodies negative. Other Total income The Trust is committed to delivering realistic cost reductions over this period of time, to ensure that it moves back to annual financial balance by the 2018/19 financial year. During the latter 2 years of the planning period, the impact of the Trust s Strategic aims starts to have a positive impact on the income of the organisation. At this point the Trust is expecting to see costs increase to deliver this increased income projection. Expenditure Pay (178.5) (168.0) (158.4) (159.1) (164.4) Non Pay Drugs (Incl. Excluded Drugs) (23.5) (23.1) (21.6) (21.4) (22.0) Clinical Supplies (30.5) (30.9) (29.6) (31.2) (33.6) Premises & Fixed Plant (11.0) (10.2) (9.8) (9.9) (10.2) Other Non Pay (23.8) (21.8) (21.0) (21.6) (22.8) Total expenditure (267.3) (254.1) (240.5) (243.1) (253.0) EBITDA (6.9) (0.3) Non Operating Income Non Operating Expenditure Depreciation (8.8) (10.0) (9.6) (9.4) (9.4) Other Non Operating Expenditure (5.5) (6.3) (6.7) (7.0) (7.0) Total Non Operating (14.2) (16.2) (16.2) (16.3) (16.3) (Deficit)/ Surplus (21.2) (16.5) (12.1) (3.8)

68 5. Financial baseline and 5 year plan 5 year baseline including CIP delivery assumptions and strategic options The Trust has modelled a prudent CIP delivery target from 2015/16 to 2018/19, ranging between 3.4% and 5.8%. This range is predicated on the following assumptions: the Trust has historically delivered a low level of CIP, and has only become more focused on its necessity during 2014/15; there will be a marginal improvement in CIP delivery from 3.1% in 2014/15 ( 8.4m) to 3.7% ( 9.5m) in 2015/16, as the Trust focuses on CIP efficiency targets and also deals with quality issues; that 2016/17 sees an increased CIP delivery target (5.8%), as CIP implementation and monitoring is fully embedded and also less pressure from quality improvement plans; and that CIP efficiency targets will reduce to 3.8% and 2.9% in 2017/18 and 2018/19 respectively, as these are the two key years for implementation of strategic options (detailed further in Section 6 of this Plan), and as a result there will be competing pressures on Trust time. In addition to these CIP scheme assumptions the Trust has set a Strategic Schemes delivery target from 2015/16 to 2018/19, ranging between 0.0% and 2.7%. The financial impact of these are included in the previous table. For planning purposes the Trust assumes a delivery of halfway between the high and low range delivery of strategic schemes. 2015/ / / /19 Total Base case CIP assumptions CIP % (3.7%) (5.8%) (3.8%) (2.9%) Strategic options Strategic % (0.0%) (0.4%) (2.2%) (2.7%) Total As a potential mitigation to non delivery of this plan, the Trust has initially explored transformational strategic options. The work done to date on this is detailed in the Section 6 of this Plan. 67

69 5. Financial baseline and 5 year plan The Trust recognises that this is a challenging plan to deliver. However, there are also a number of wider areas where it has opportunities for rationalisation and improvement. These provide further opportunities for efficiency savings as well as feed into a number of the existing CIP plans. A summary of these is provided below. Opportunity area Essex County Hospital Maternity Services on three sites Contract management Spare capacity in key areas State of the Art Radiotherapy facility Low ambulatory care provision Lower than expected Daycase rates Post Acute patients Low theatre utilisation Low use of technological advances High temporary spend Low secondary care funding Excellent pharmacy reputation Local spare capacity High spend services High number of Specialist nurses Summary Old site, multi site working. Current financials do not assume any clinical efficiency from moving from the site Additional costs of three site working Poor existing arrangements for contract management enables the Trust to exploit this area SSU, Vascular Theatres and Radiotherapy Attractive for patients and staff Potential to improve patient care/experience, reduce costs and increase income E.g Laparascopic Cholecystectomy, improved patient care experience, increased productivity and income Potential to decrease overall length of stay Enables opportunity to increase patient care/experience and productivity Enables opportunity to increase patient/staff care/experience and productivity Enables opportunity to increase patient care/experience and reduce costs Opportunity for Trust to improve funding for services Exploit markets, improve community efficiency PCC/Liftco facility, near Trust site For example Estates and Facilities, high ERIC return costs Potential to re-model Trust workforce (e.g. Lack of Junior Doctors) 68

70 5. Financial baseline and 5 year plan 5 year period cash requirements The table below sets out the Trust cash profile over the Plan period. The Trust will need to approach Monitor and the ITFF for cash support during the 5 year period. The Trust is not expecting to require any cash support in the 2014/15 financial year. The Trust projects that it will require 23m of cash support in 2015/16, 14m in 2016/17 and a further 7m in 2017/18. The projected move back to balance in 2018/19 means the Trust will not require any further cash support in this year. The Trust is assuming that the cash support will come in the form of PDC. As such, additional PDC costs of 3.5% per annum are projected into the financial position of the Trust. The Trust has forecast cash monthly for 2014/15 and 2015/16, and annually for the remaining years. As a result, only year end closing cash balances have been presented below. The Trust will hold cash buffers during the period to manage the fluidity of the cash movements in year and enable it to meet it s payment requirements as they are due. m 2015/ / / /19 Total Closing cash position PDC Requirements Cash position with no PDC (19.1) (11.2) (2.1) 10.0 (22.4) 69

71 5. Financial baseline and 5 year plan 5 year plan - Balance Sheet The table below sets out the Trust s projected Balance Sheet over the 5 year plan period. 'm 2014/ / / / /19 Intangible Assets Tangible Assets PFI Assets Non Current Assets Inventories Trade and Other receivables Accrued Income Prepayments, current Working Capital Cash Deferred Income (1.7) (1.7) (1.7) (1.7) (1.7) Provisions, Current (0.2) (0.1) (0.1) (0.1) (0.1) Interest-Bearing borrowings, Current (5.2) (1.2) (1.2) (1.2) (1.2) Trade and other payables, Current (14.1) (14.1) (14.1) (14.1) (14.1) Other Financial Liabilities, Current (10.6) (10.6) (10.6) (10.6) (10.6) Net Current Assets/(Liabilities) (10.6) (6.4) (7.5) (5.5) (0.3) Interest-Bearing borrowings, Non-Current (20.2) (19.0) (17.8) (16.7) (15.5) Deferred Income, Non-Current (3.3) (2.9) (2.9) (2.9) (2.9) Provisions, Non-Current (1.0) (0.9) (0.9) (0.9) (0.9) Other Financial Liabilities, Non-Current (1.4) (1.0) (0.7) (0.4) (0.0) Net Current Assets/(Liabilities) (25.8) (23.9) (22.3) (20.8) (19.3) Total Assets Employed Taxpayer equity

72 5. Financial baseline and 5 year plan 5 year plan- Cash Flow The table below sets out the Trust s projected cash flow over the Plan period. ' / / / / /19 OPENING CASH AND CASH EQUIVALENTS 28,674 3,393 3,885 2,817 4,860 SURPLUS / (DEFICIT) AFTER TAX (21,148) (16,469) (12,101) (3,771) 3,888 NON-CASH FLOWS IN OPERATING SURPLUS / (DEFICIT) 14,251 16,233 16,362 16,425 16,425 OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING CAPITAL (6,897) (237) 4,260 12,654 20,312 INCREASE / (DECREASE) IN WORKING CAPITAL (229) NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES (7,126) (196) 4,260 12,654 20,312 (15,775) (10,547) (11,492) (9,563) (7,098) NET CASH INFLOW / (OUTFLOW) BEFORE FINANCING (22,902) (10,744) (7,232) 3,091 13,214 NET CASH INFLOW / (OUTFLOW) FROM FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (2,380) 11,236 6,163 (1,047) (8,047) (25,281) 492 (1,069) 2,043 5,167 CLOSING CASH AND CASH EQUIVALENTS 3,393 3,885 2,817 4,860 10,027 71

73 5. Financial baseline and 5 year plan 5 year plan- Continuity of Service Risk Ratings The table below sets out the Trust s Continuity of Service Risk Rating (CoSRR) over the Plan period. COSRR 2014/ / / / /19 Debt Service Cover rating Liquidity rating Continuity of Service Risk Rating The Trust is projecting that it will have a CoSRR of 1 until 2016/17. In 2017/18 It is projecting that it will move to a CoSRR of 2 when it s Debt Service Cover rating increases to a 2. In 2018/19 it is projecting that it will move to a CoSRR of 3 when it s Debt Service Cover rating increases to a 3 and it s Liquidity rating increases to a 2. 72

74 5. Financial baseline and 5 year plan 5 year plan- Capital Expenditure Programme The table below sets out the Trust s projected Capital expenditure over the Plan period. Full details of the Capital expenditure plans over the 5 year plan period are set out in Appendix E of this document. Service centralisation costs are largely the capital costs of moving from the Essex County site. The sale of the asset will ultimately provide the majority of the funding for these. However, to enable the provision of the facilities to enable services to move from the Essex County site prior to transfer the Department of Health will provide the Trust with an interest bearing loan. The loan will be repayable on receipt of sale proceeds. As a consequence of the TPP Pathology joint venture, the Trust must provide a Pathology laboratory on site. The capital costs of providing this on site are included within the Clinical Support category above. With the exception of the sale of the Essex County site, the above capital programme will be funded from the Trust s income. However, as noted previously, the Trust will need to draw down cash from the DH s ITFF, part of this requirement may be to deliver the Trust s capital programme. 73

75 5. Financial baseline and 5 year plan 5 year plan- Workforce Implications As an early indicator, this modelling suggests that the Trust workforce will be required to reduce from 4,008 whole time equivalents ( wte ) at the start of 2014/15 to 3,640 at the end of 2016/17. This is as a direct impact of CIP requirements faced by the Trust. Of the 368 wte (9.2%) projected reduction, 145 are due to TUPE arrangements linked to the impact of Transforming Pathology Partnerships and Care Closer to Home. As the Trust starts to implement it s Strategic schemes during the latter part of the plan period, it is expected that the Trust s workforce requirements will increase. The Trust will need to develop a flexible workforce to enable the impact of changes over the period of time to be minimised. Any further workforce changes will be actively managed to minimise the impact on staff (naturally occurring events such as turnover, planned retirements etc). The table below sets out these projections. 74

76 5. Financial baseline and 5 year plan Improved CIP governance The Trust has further developed its governance arrangements for the Transformation Programme. The Turnaround structure established earlier in 2014/15 has been reviewed with the following changes to be implemented from December 2014: Replacement of Turnaround Board with Transformation Board. This will convene fortnightly and chaired by the CEO Introduction of two Transformation Board sub-groups: o o CIP Delivery Group. This will convene weekly in order to maintain pressure on cost reduction and will be chaired by the Director of Transformation. This will focus on 2015/16 CIP identification and delivery. Clinical & Non-clinical Strategy Delivery Group. This will convene fortnightly and will be chaired by the Director of Transformation. This group will focus on the refresh of the clinical strategy, further work up of the 7 strategic options identified for the future and the sustainable services agenda. 75

77 5. Financial baseline and 5 year plan Improved Transformation Governance Trust Board Trust Executive Quality & Patient Safety Committee Finance Assurance Committee People and Organisational Development Committee Transformation Board [Monthly] [Chair CEO] Senior Consultants Meeting [Weekly] External Partners (incl. NEE CCG, Acute Services Review, Health & Wellbeing Board) CIP Delivery Group [Weekly] [Chair DoT] Clinical & Non-clinical Strategy Delivery Group [Fortnightly] [Chair DoT] Direct report Inform Sustainable services Integrated Care Pathways Infrastructure Redesign

78 5. Financial baseline and 5 year plan Improved Transformation governance CIP Delivery Group [Weekly] [Chair DoT] CIP Delivery 6 workstreams Corporate incl. Procurement and Temp Pay Management Surgery Division incl. Theatres Cancer & CSS Division incl. Pharmacy Estates & Facilities Women s & Children s Division Medicine Division incl. LOS From 2015/16, Divisions will assume responsibility for projects aligned to their division. For 2014/15 work streams will remain until further notice.

79 5. Financial baseline and 5 year plan Improved Transformation governance Clinical & Non-clinical Strategy Delivery Group [Fortnightly] [Chair DoT] SP Options Working Groups Outcomes 1 2 Community care Elderly care Integrated Care Pathways Clinical Strategy Social care End-of-life care Repatriation Sustainable Services Future years strategic options, alliances, sustainability of existing services, service growth 6 7 Primary care Shared services Infrastructure Redesign Essex County Hospital Plan, Workforce Strategy Clinical, executive and operational leads for each working group will be identified.

80 6. Range of strategic options 79

81 6. Range of strategic options The Trust s chosen strategy is to rapidly improve costs while developing a suite of chosen services which will lead to financial stability. During the Plan period, the Trust will also continue to explore options for fundamental structural change. Rapid cost reduction and value delivery Service development and commercial initiatives Trust wide structural change The Trust has identified a broad range of cost reduction and value delivery options; These options will form part of the Trust s CIPs and efficiencies pipeline for Year two of the Plan and beyond; Delivery of these options will also support the Trust s broader quality improvement agenda; The forecast indicative benefits and costs of these options have been considered against the backdrop of CIP efficiency targets and the wider sustainability gap faced by the Trust. The Trust has identified seven potentially transformative strategic options to be explored further in Year one of the Plan; Cumulatively, these options could have a positive impact on the quality of the Trust s services and the financial position of the organisation; While the delivery of these options will be challenging, the Trust believes that the mitigations being put in place will address these challenges; The forecast indicative benefits and costs of these options have been considered against the backdrop of CIP efficiency targets and the wider sustainability gap faced by the Trust. The Trust has also explored potential options for organisation-wide or service level structural and managerial change; However, at present, the Trust does not plan to imminently implement any of these options; Further work to explore potential partnerships will be completed during Years one and two of the Plan; The indicative benefits and costs of these options have not been modelled into the Trust s five year financial Plan. Potential financial impact m (CYE) The Trust estimates the net financial impact of these options to be between 11 (low case) and 16.5m (high case) The Trust has not modelled the net financial impact of these options 80

82 6. Range of strategic options Introduction of strategic options Rationale behind option development In response to regulatory action and the Keogh Review, the Trust has developed a new vision to guide its turnaround and to become the Trust that patients, carers and staff would recommend 100% of the time to friends and family. To fulfil the new vision, it is imperative that the Trust develops the ability to provide the best NHS care for its patients, meet targets for service delivery and achieve clinical excellence. To achieve this during the five year plan period, the Trust has generated a series of strategic options, aimed at improving the quality of the services offered as well as addressing the changing needs of the local health economy. A selection of such options will become an integral part of the Trust s strategic plan and will allow the Trust to deliver on its objectives. Many of these options also have the potential to help the Trust address its deficit position during the five year plan period. These options are presented in a provisional manner and require significant further work, including detailed financial modelling. The Trust is committed to working with CCGs, LAs and partners to deliver on the planning and implementation of these options. Approach to option development In order to address the quality of care challenges, as well as the financial situation that the Trust faces, three categories of strategic options have been generated. These categories encompass three different approaches the Trust can implement in order to meet its strategic objectives. The three categories are: 1. Re-shaping of existing services: options in this category are aimed at improving cost efficiency of current services, while not compromising - and in some cases increasing quality. They are likely to be implemented imminently. Along with other ideas identified from the Trust, these form the ideas hopper ; 2. New service offering: options in this category are aimed at creating new revenue streams and at increasing care quality through provision of new services with a focus on service integration. These options are likely to be implemented throughout Years 2 and 3 with benefits realised in Years 4 and 5 (see detailed timeline later in this section); 3. Trust-wide structural change: options in this category are aimed at fundamentally reshaping and restructuring the organisational model of the Trust and unlike category 2, several of these options are mutually exclusive. These options have been considered in overview but are unlikely to be implemented in the near future. Within each Category, the Trust identified a number of options, that have been tailored to tackle specific internal and external challenges it is facing. The options, also aim to align the Trust with CCG strategy and vision as well as key CCG policies. 81

83 6. Range of strategic options Process for option evaluation Each option within Categories 2 and 3 was evaluated through an assessment using the four lenses presented below (see more detailed assessment framework in Appendix). The Trust is still exploring options to, and feels confident that it can, improve quality of its services and is therefore prioritising the implementation of Category 2 options for this plan. As a result, Category 2 options have been evaluated in more detail than Category 3. Options have been rated on a five point scale, with 1 being difficult / low potential and 5 being achievable / high potential. Please note that options are all to be explored further and before they are implemented, will be subject to the usual Outline and Full Business Case development process used by the Trust. 1. Financial impact 1. Financial impact i. Can this option help the Trust achieve financial stability in the medium to longer term? ii. Can this option generate sustainable revenue streams? iii. Will this option result in reduced operational and up-front costs required to maintain service delivery? 4. Operational and clinical efficiency Strategic option assessment 2. Deliverability 2. Deliverability i. Can this option be implemented using existing capabilities and skills? ii. Can the Trust acquire/build the required capabilities and skills to implement this option? 3. Quality and outcomes i. Can this option help achieve excellence in care delivery? ii. Will the option help develop more integrated pathways of care to improve patient outcomes? 3. Quality and outcomes 4. Operational and clinical efficiency i. Can the Trust achieve improved clinical efficiency that will in turn improve quality of service and patient outcomes? ii. Can the Trust improve costs and service delivery through integration and specialisation? 82

84 6. Range of strategic options The roadmap to a sustainable, high-quality service offering at the Trust will require a staged approach Illustrative pathway Months 6-12 of Year 1 Year 2 Year 3 Years 4 and 5 Stabilise, support and drive quality Continue intensive quality turnaround work, to bring the Trust into line with key targets (e.g. RTT) and address key concerns of regulators. Bolster the Executive team, senior management, operational management and clinical leadership with substantive appointments to drive improvements. Drive delivery of Year 1 CIPs to stabilise the Trust s financial position. Engage with key commissioners on the future of underperforming, unsafe and unviable services. Continue improvement while planning for the future Pursue further quality turnaround work if required, while also optimising the quality and outcomes of stable services that have the potential for improvement. Continue to deliver on cost improvement plans, based on the list of opportunities already identified. Begin a major programme of scoping and business case development work, to enable the implementation of key strategic options in Year 3 and beyond. Launch strategic transformation If necessary, modify strategic plans to reflect the outcomes of pan-essex and broader regional service reconfiguration initiatives. Begin to roll out medium term strategic initiatives, based on Year 2 planning, while further developing plans for the Year 4 and 5 plans. Deliver further transformational CIPs, supported by service- and pathway redesign work, as agreed with commissioners. Transformation delivery Finalise the optimisation of existing services and the transformation or divestment of poor quality or loss-making services. Full range of strategic options begin to deliver benefits, support by robust partnership or structural change options. Following continuous improvement, the Trust is on a stable financial footing. 83

85 6. Range of strategic options Process for option generation and short-listing The strategic options were generated through an iterative process that included workshops, idea generation and a series of evaluation sessions with a broad range of key Trust stakeholders: The Executive Team and Board provided insight to shape and refine the long list of strategic options; The CCG was consulted on strategic option selection to ensure alignment with commissioners plans; Clinicians were engaged throughout the identification and selection process; and Patients feedback was drawn upon at various stages of this process to help identify what initiatives could improve patient outcomes and the quality of care the Trust provides. In addition to this, in-depth market research was conducted as well as research about the broader healthcare environment and recent policy changes. Data have been extracted from the Office for National Statistics (ONS), Hospital Episode Statistics (HES), and other sources. Moreover, past benchmarks and best practices have been considered when modelling the potential impact of the strategic options. Short-listed options Category 1: Rapid cost reduction and value delivery Corporate Clinical workforce Operational productivity Income and profit & loss Other workforce Pharmacy Divisional and corporate CIPs Unsustainable services Sterile services Category 2: Service development and commercial initiatives Community care Elderly care Social care End-of-life care Repatriation Primary care Shared services Category 3: Trust wide structural change Maintain current structure* Seek a full merger Seek an acquisition Integrate into provider chain Seek operating franchise to lead Trust Integrate with a provision cluster Note: *This option has not been discussed in detail in this section as it is covered in Section 5 - Financial baseline and 5 year plan 84

86 Category 1 and the ideas hopper Rapid cost reduction and value delivery 85

87 6. Range of strategic options Category 1 and the ideas hopper Rapid cost reduction and value delivery In relation to the CIP target for 2015/16 ( 9.2m), the Trust PMO has undertaken a four phased approach to generate ideas for implementation. Ideas have been generated from teams working on business cases (service transformation and finance leads), from staff (through workshops with clinical and corporate departments), and from opportunities not pursued from benchmarking as well as CIPs not previously delivered. All ideas are logged with the PMO in an ideas hopper (set out to the right (top)), and ideas are then followed-up and prioritised into a twopage scheme summary (set out to the right (bottom)). This is then used to determine whether a scheme is worthwhile pursuing, based on quality concerns, financial upside and ease of deliverability. The ideas hopper that has captured CIP ideas generated via workshops has identified 480 ideas, currently being reviewed and validated. The approval of these schemes for implementation is the Turnaround Board, and ultimately the Trust Board. To date, analysis suggests that there is 12.9m ( 15.0m full year effect) of CIP to be investigated. This will be split by division in the coming weeks. The Trust aims to complete the two-page summaries by the end of November, with outline approval of schemes by the end of December Following approval of a scheme, the project will then be further developed into a full PMO Workbook by the end of February These timelines are set out in the pages that follow. 1. Corporate 2. Clinical workforce 3.Operational productivity 4. Income and Profit & Loss CIP opportunity area 2015/16 FYE a. Estates & Facilities Optimisation b. Procurement and Supply Chain Transformation a. Reduction in Medical costs b. Reduction in Nursing costs c. AHPs & Healthcare Scientists efficiency a. Theatres Productivity [incl. endoscopy] b. Patient flow/ Length of Stay/ Urgent Care Pathway c. Outpatients Productivity a. Other Income Opportunities b. Staff Reward Optimisation c. Temporary Staff cost reduction a. Admin and Clerical Clinical workforce optimisation Other workforce b. Admin and Clerical Non-Clinical (incl. Back Office Transformation) 6. Pharmacy a. Pharmacy/ drugs cost improvement/ income Divisional & Corporate Specific CIPs a. Various CIPs across Divisions b. Corporate efficiency Unsustainable services a. Identification and closure of unsustainable services : Sterile Services a. Sell unused capacity of sterile services unit for Income Generation

88 Presentation Creation of plans Agree & communicate targets 6. Range of strategic options Category 1 and the ideas hopper Rapid cost reduction and value delivery Detailed timeline to end of November focus to be placed on two-page summaries. Timeline to deliver 2015/16 CIP implementation plans October/ November October November 2014 w/c 27/10 w/c 3/11 w/c 10/11 w/c 17/11 w/c 24/11 w/c 29/11 Approve timeline at Turnaround Board 28/10 Agree divisional CIP targets for 2015/16 at Turnaround Board 4/11 Communicate divisional CIP targets for 2015/16 by 7/11 Sessions/ Workshops with Operational Divisions to work up plans against CIP themes and targets Sessions/ Workshops with Workstreams and Corporate Departments to work up plans against CIP themes and targets Presentation of Divisional and Corp plans 30/11 1/2day session Scheme outline approval Agree CIP targets and communicate Creation of plans in divisions Presentation session ½ day 87

89 6. Range of strategic options Category 1 and the ideas hopper Rapid cost reduction and value delivery Detailed timeline to end of February focus to be placed on benefits assessment of potential schemes, and development of delivery plans. Timeline to deliver 2015/16 CIP implementation plans Dec 2014/ Q4 December 2014 Jan 2015 Feb 2015 March 2015 w/c 1/12 w/c 8/12 w/c 15/12 w/c 22/12 w/c 29/12 PMO stocktake / Risk adjustment Workbooks Development Turnaround Board review impact of schemes 9/11 Additional CIP opportunities worked-up to fill any gap Turnaround Board review impact of additional schemes 23/11 Final amendments to high level plans Creation of Workbooks Scheme formal approval Creation of plans in divisions Turnaround Board review progress Creation of Workbooks Formal approval 88

90 Category 2 Service development and commercial initiative 89

91 6. Range of strategic options Category 2- Service development and commercial initiative Category 2 is aimed at creating new revenue streams for the Trust through the offering of new services or through broadening the reach of existing services into the community. The options also aim to improve care quality and patient outcomes through the provision of new services with a specific focus on service and pathway integration which should enhance the overall patient experience. The options presented in Category 2 are not mutually exclusive and some can therefore be pursued in parallel. The majority of options are likely to be implemented throughout Year two with partial benefits realised towards the end of Year three and beginning of Year four, and with full benefits arising towards the end of Year four and throughout Year five. The financial impact numbers presented below are net of cost and have been very prudently modelled. The financial impact of these options will only partially be realised during the five year Plan period further benefits will continue to be accrued after the Plan period. Options have been rated on a five point scale, with 1 being difficult / low potential and 5 being achievable / high potential. Category 2: Service development and commercial initiatives Financial Impact Key Outcomes 1 2 Community care Elderly care m m Each of these options will support the delivery of the Trust s clinical strategy and will contribute to the improvement of patient outcomes and patient experience. 3 Social care m The majority of these options will also lead to the development of more integrated pathways of care and greater dialogue between the Trust and delivery partners End-of-life care Repatriation Primary care Shared services 0m m 0.15m m The specific contribution of each option to the improvement of outcomes is illustrated in the following slides and below. Scheme benefit ( m) 2016/ / /19 Total 1. Community Care Elderly Care (0.0) Social Care EoLC Repatriation Primary Care Shared Services Total

92 6. Range of strategic options Service development and commercial initiative Strategic Option 1 Community care Financial impact m 1 Description This option assumes the Trust expands its presence in community care services such as community health services, patient management, lifestyle management, home health services, wellbeing and lifestyle support. The Trust does currently run some community services and therefore has a level of expertise in this area that can be leveraged. However, in the short term, the Trust is forecast to become a less active provider of these services due to the Care Closer to Home (CC2H) tender. The CC2H bundle is forecast to be worth approximately c. 40m. With this is mind, there are three routes the Trust is considering regarding expansion in this area: Route 1A. Sustain current activity levels with CC2H tender: the Trust can either lead or be part of the consortium that wins the CCH tender and subsequently continues to deliver similar levels of service as it currently does, thus defending its position; Route 1B. Increase activity levels with CC2H tender: the Trust can push to become a lead partner for the CC2H tender with a view to increasing service activity levels. This is dependent upon which activities the CC2H bundle incorporates and the outcomes of commercial negotiations with the partners involved in the bidding process; Route 2. Increase activity levels irrespective of CC2H tender: the Trust looks to develop community care activity irrespective of the CC2H tender through either partnering with local providers and charities or establishing entirely new services. Both Route 1A and 1B imply the Trust is able to do more in the context of the CC2H tender and at the moment, the Trust s board has not yet made a commitment on whether to bid for the CC2H contract. 2 Key assumptions As it will be challenging for the Trust to be successful in the CC2H tendering process, either as a sole bidder or as part of a consortium, no revenue or profit derived from that contract has been modelled. Therefore, only Route 2 has been considered for inclusion in the financial modelling assumptions for this Plan. The key assumptions for the implementation and delivery of Route 2 are as follows: The Trust is able to compete in the local market and gain market share through either partnering with local providers or through establishing entirely new services; The Trust is able to run services profitably and is able to achieve profit margins in line with local providers currently operating in Essex; The Trust incurs minimal upfront costs relating to the set up and implementation of this option. 91

93 6. Range of strategic options Service development and commercial initiative Strategic Option 1 Community care 1. Financial Impact The financial impact of the three routes is as follows: Route 1A. The Trust s current revenue and profit levels from community service offerings will be sustained over the next five years; Route 1B. The increased activity will boost the Trust s revenue above current levels over the length of the CC2H contract; Route 2. The Trust addresses 5% of the total addressable community care market in Essex (estimated at c. 180m in 2015/16/17 and increasing to c. 200m in 2017/18/19): The Trust is able to run services profitably achieving margins of 10% (based on external benchmarks); The Trust receives partial benefit (50% of full financial benefit) by Year three and full benefit (100% of full financial benefit) by Years four and five resulting in a net financial benefit (after costs) of 2.0m to 2.4m by the end of the five year Plan period Deliverability Strength: the Trust is already operating community care services and therefore has a solid grounding from which to further develop its services in this area, irrespective of whether it is able to win the CC2H tender; Risk: this is an increasingly competitive market place with private sector entrants and AQP procurement the norm; Risk: the Trust s ability to develop a competitive bid and deliver the CC2H contract is limited due to the Trust s current capacity restrictions and position regarding special measures; Key: 1 difficult with low potential, 5 achievable with high potential 92

94 6. Range of strategic options Service development and commercial initiative Strategic Option 1 Community care Quality and outcomes The implementation of this option is likely to improve the integration of care services across different specialties as well as across primary and secondary care; Increasing service activity within the community is likely to help reduce levels of the emergency admissions; The increased integration will enhance the management of the patients treatment pathway and thus will improve care quality and may improve patient outcomes Operational and clinical efficiency The Trust may be able to achieve additional cost savings and improved service delivery through better pathway integration; This option should reduce the amount of care duplication present through re-assessment as well as closing care gaps Timing and additional considerations Implementation of this option has been considered with the CC2H contract in mind: Scoping and planning for this option will begin immediately with implementation occurring in the latter half of Year two. Partial benefits may be realised in Year three, with Years four and five showing full benefit realisation (see detailed timeline on page 111); The timings will be broadly similar regardless of the CC2H contract, however the initial scoping and planning phase may not start so immediately, which will result in the subsequent stages being pushed back accordingly; The risk to this option arises should the Trust be unable to form a successful relationship with a partner for the delivery of services. 93

95 6. Range of strategic options Service development and commercial initiative Strategic Option 2 Elderly care Financial impact 1.3m - 2.0m 1 Description The Trusts expands its presence in the elderly care pathway. This could be achieved in two ways and will depend on commissioner appetite and procurement methodology: Route 1. The Trust buys and manages assets such as a care home (specialist and general), domiciliary care, health visiting and other frail and elderly support; Route 2. The Trust seeks to become a prime provider managing expanded elements of the pathway and sub-contracting to providers in that pathway. This will provide the Trust with new and profitable revenue streams as well as improving pathway integration and patient pathway management. In turn, this should improve service delivery in other parts of the hospital through increased capacity and efficiencies. The Trust can leverage its current experience in this service area and form effective partnerships with local providers that can help it expand its market share. The Trust can also target areas of undersupply and underserved regions when implementing this option. 2 Key assumptions The Trust modelled the financial impact of this option based on the scenario of direct provision of care through a care home facility. The second option, whereby the Trust becomes a prime provider managing the whole pathway, has not been modelled as it relies heavily upon potential service inclusions within the CC2H bundles and this is still in its early days in terms of development. Based upon the direct provision option (Route 1): It is assumed the Trust develops a capacity for 30 beds (through potential acquisitions or new developments); It is assumed two types of benefits derive from this activity: i) direct benefits from running the care home, and ii) indirect benefits from pathway management (i.e. reduced bed days) over and above benefits achieved through options in Category 1A. 94

96 6. Range of strategic options Service development and commercial initiative Strategic Option 2 Elderly care 1. Financial Impact Using benchmarks from other providers in the elderly care space, both direct and indirect benefits have been modelled for the direct provision option based on the assumption that the Trust provides a 30 bed facility: Direct benefits are defined as benefits derived from managing and running the facility. The Trust modelled the financial impact of such benefits to total 120k over the five years of the plan (with partial benefits realised in the first three quarters of Year four and full benefits in Q4 of Year four and in Year five); The Trust assumed that indirect benefits from pathway integration, better pathway management and reduced bed days total between 1.2m and 1.9m over the five year plan period; Based on the above assumptions, the Trust estimates the total financial impact from the implementation of this option to total 1.3m and 2.0m over the plan period Deliverability Strength: many aspects of the care home provision will be an extension of the Trust s current capabilities and skills e.g. nursing care provision; Strength: local CCG strategy prioritises elderly care in the context of integrated pathways of care (e.g. NEE see elderly care as one of their four priority areas for their Five Year Strategic Plan) and local commissioners state the need to promote and deliver elderly independence through intermediate care services and on-going support care. These initiatives all support the implementation and delivery of this option for the Trust; Risk: expansion into the elderly care pathway, especially via direct care home provision, is not easy for the Trust to implement as there are extra services and skillsets that would need to be brought in; Key: 1 difficult with low potential, 5 achievable with high potential 95

97 6. Range of strategic options Service development and commercial initiative Strategic Option 2 Elderly care Quality and outcomes Provision of a care home will refine the elderly care pathway in the local area and is also likely to further build on the integration of care services from the expansion into community care. This will likely improve care quality and thus patient and family experiences Operational and clinical efficiency The Trust may be able to achieve additional cost savings and improved service delivery through better pathway integration; The increased efficiency may free up capacity through other parts of the hospital, especially if pressure from emergency admissions is relieved; This option should reduce the amount of care duplication present through re-assessment as well as closing care gaps Timing and additional considerations Scoping and planning for this option will begin during the second half of Year two. If this option is to be implemented along side the community care option then the scoping and planning will commence after this same phase has been completed for the community care option. Implementation will take most of Year three with partial benefits being realised through most of Year four. Full benefits will start to be realised towards the last quarter of Year four and in Year five (see detailed timeline on page 111); 96

98 6. Range of strategic options Service development and commercial initiative Strategic Option 3 Social care Financial impact 1.0m - 3m 1 Description The Trust is increasingly working in complex care pathways. In addition, there may be an option on community care and elderly care above articulate the opportunity for the Trust to do more outside of its current areas of operation. There may be an opportunity, as there is the community care space, for the Trust to become a direct provider of a range of relatively high end specialist and social care. The Trust is considering providing services in underserved specialities, providing new services or competing with existing services in this space (e.g. specialist care and nursing care, but also potentially learning disabilities, community and mental health services). This option would address both NHS and CCG funding streams above and beyond what the Trust addresses at the moment. Many of these services require clinical input and the Trust is likely to already be involved in other parts of the pathway and it could therefore become an integrator. To implement this option, the Trust would need to develop or acquire specialist social care services capabilities and skills. This could be achieved either via (i) the Trust bidding to take over the management of a local social care provider or (ii) the Trust is seeking a full acquisition of a social care provider. 2 Key assumptions The Trust believes that implementing this option via the acquisition of a social care provider will be extremely challenging and has therefore not modelled this scenario. The social care market place is extremely competitive as many private providers currently serve the majority of the market. There would also be considerable upfront costs and benefit realisation would take longer to materialise. The most realistic options for the Trust would be to exclusively, or in partnership with a local provider, win a contract or body of work for the provision of services in social care. This has been modelled on the following assumptions: Market size for social care services in Essex is estimated at c. 600m to 630m, of which 480 to 500m is adult social care and 130 to 140m is children social care; It is assumed that the Trust is able to achieve between 2% and 5% market penetration with an assumed profitability margins of 10%; It is assumed that the Trust will take on a TUPE contract whereby staff, buildings and equipment are transferred resulting in minimal upfront transition costs of approximately K; It is assumed that the Trust will need to develop new skillsets and capabilities in order to provide an effective social care service. 97

99 6. Range of strategic options Service development and commercial initiative Strategic Option 3 Social care 1. Financial Impact Using the assumptions detailed on the previous page, the Trust has modelled the potential financial impact deriving from the implementation of this option. The Trust will aim to receive partial benefit (50% of full financial benefit) for half of Year 4 and half of Year five, with full benefits being realised in the second half of Year five. The upfront transition costs (estimated at between 150k to 200k) were factored in the modelling resulting in a net benefit impact of 1.0m to 3.0m over the plan period; The Trust has not modelled any indirect benefits that may result from pathway integration and better pathway management Deliverability Strength: there is an opportunity for the Trust to use their clinical expertise in services requiring specialist clinical input (e.g. specialist nursing) especially as local and national commissioners are looking to buy this type of service; Risk: however, the Trust does not have previous experience in social care service delivery and it will need to consider options around the acquisition of capabilities and potential initial investment/ transition costs; Risk: there is a high level of local competition for these services from both public and private providers which presents a risk to the Trust regarding ability to capture market share Key: 1 difficult with low potential, 5 achievable with high potential 98

100 6. Range of strategic options Service development and commercial initiative Strategic Option 3 Social care Quality and outcomes Opportunity for deliverability of high quality services if the option is implemented effectively; however, the deliverability of this options creates a challenge; Opportunity for the Trust to provide a comprehensive treatment pathway for their patients by entering into social care services which are complimentary to their clinical services Operational and clinical efficiency This option could help with emergency admissions, delayed discharge and care planning; It is also expected that the Trust will develop specialist social care service capabilities and skills which will contribute to operational efficiency and an improved, and seamless, patient experience Timing and additional considerations Scoping and planning for this option will begin in Year three. If this option is to be implemented alongside the community care and elderly care options then the scoping and planning will commence after this same phase has been completed for the elderly care option. The Trust estimates implementation to take place in the first half of Year four with partial benefits being realised in the latter half of the year, and the first half of Year five. Full benefits are expected in the second half of Year five (see detailed timeline on page 111). 99

101 6. Range of strategic options Service development and commercial initiative Strategic Option 4 End of life care Financial impact 0 net financial impact in the five year period for this Plan due to significant upfront costs required to set up a EoLC facility. 1 Description The Trust can consider several implementation methods for this option: Route 1. Work across the specialties to improve the identification, management and service transition of patients entering EoLC; Route 2. Work with other service providers as part of area-wide initiatives and reviews of EoLC; Route 3. Explore, potentially in the form of a partnership, the development of EoLC specialist provision through a new hospice service. Through the implementation of this option, the Trust can: 1) Make improvements to the EoLC pathway and improve its capacity (i.e. better support to be provided to more patients), efficiency (i.e. greater number of patients receiving appropriate quality of service) and quality of service through provision of integrated care; 2) Play a major role in delivering service improvements in partnership with a range of organisations including community services providers, existing hospitals, charities and social care providers; 3) Support the delivery of CCG agenda and relevant national initiatives, especially given the Trust s major role and specialism in key pathways of care; 4) Contribute to the stability of the Trust s financial position (i.e. the option could potentially have a positive impact on reducing the average length of stay and bed days, and on freeing up capacity for other revenue streams such as elective care). 2 Key assumptions The Trust has modelled the financial implications of developing EoLC specialist provision by offering a new hospice service and in doing so has made the following assumptions: Based on benchmarks from the charitable and hospice sectors, it is prudent to assume that no direct profit will be generated for the Trust through the management and running of a hospice (donations will need to be attracted if this method is pursued); Build and set up costs of c. 1.5m to be borne by the Trust; Build and set up cost assume that an existing building will be used for the facility/hospice. External benchmarks have been used to establish the level of funding likely to be required for the establishment of a new hospice facility Upside from this opportunity comes in the form of opportunities elsewhere in the hospital (freeing bed days that will then be filled by replacement elective/emergency care activity, subject to capacity modelling in Years one and two). Assumptions about the level of bed days to be released were based on sector benchmarks for EoLC patients. A Trustspecific mapping of EoLC patients beds must also be completed in Years one and two to confirm this assumption 100

102 6. Range of strategic options Service development and commercial initiative Strategic Option 4 End of life care Financial Impact Running the assumptions laid out above suggests that the Trust may start to see gross benefits (i.e. not taking into account initial build and set up costs) during the SP period and that it will continue to see benefits delivered after the plan period; The Trust has not modelled a significant cost or revenue impact for implementation methods (a) and (b) on the previous page; Based on benchmarks and assuming the Trust is able to build a 20 bed hospice facility on site, it has modelled: Initial build and set up costs of 1.5m; No benefits derived through the management and running of the hospice; Partial benefits, through savings in bed days, achieved in the first three quarters of Year four and full benefits at the end of Year four and in Year five; Total gross benefits (not taking into account initial build and set up costs) of between c. 1m and 1.5m (for both Years four and five). Taking into account phasing, timing and initial cost considerations over the plan period and the above assumptions, yields a net financial impact of between 0m; Further potential upside from freeing up capacity and increased activity in more profitable services (e.g. elective) has not been modelled. 2. Deliverability Strength: implementation methods (a) and (b) relate to a relatively basic pathway redesign and are therefore relatively easy to implement (e.g. through offering additional training and support, designing and implementing new protocols, etc.); Strength: the Trust will be able to leverage existing skillset, staff (e.g. in palliative care, cancer care etc.) and experience in offering advice for patients and families; Strength: additional capacity will take the form of a new unit that can be developed without requiring the closure or restructuring of existing units and services; Strength: the Trust can leverage its existing relationships with other stakeholders in EoLC pathway (e.g. local hospices); Risk: potential challenges in delivering this option relate to the ability of the Trust to recruit trained and experienced EoLC nurses Key: 1 difficult with low potential, 5 achievable with high potential 101

103 6. Range of strategic options Service development and commercial initiative Strategic Option 4 End of life care Quality and outcomes This option has the potential to improve quality of care provided to patients and patient outcomes through better and more integrated pathway management; This option could help with decanting patients more efficiently from the main hospital site into a more appropriate setting for EoLC; Local demographics development suggest that this option could provide a service that will be increasingly needed in both Colchester and Essex; it is therefore helping to better respond to local patient demand; The Trust recognises that EoLC is an important part of local CCG and national policy and strategy (e.g. Dying Well and Dying with Dignity) Operational and clinical efficiency This option can potentially help with issues related to: Current capacity (i.e. through freeing up capacity through better pathway management); Patient discharge through the management of EoLC more efficiently and in a more integrated manner; and Reducing average length of stay for patients and therefore costs to the hospital Timing and additional considerations Detailed modelling work will need to be undertaken to verify the opportunity and to develop a detailed capacity, cost and income model for a hospice; To fully scope this opportunity, the Trust will need to engage with staff who currently work in EoLC to come to a go or no go decision; The Trust will continue to engage with regional groups on the development and implementation of this option; The Trust estimates to be able to derive partial benefits in Year four, and full benefits in Year five from this opportunity (see page 111 for detailed timeline); 102

104 6. Range of strategic options Service development and commercial initiative Strategic Option 5 Repatriation Financial impact 4.9m to 5.4m 1 Description The Trust seeks to regain patients from the North East Essex commissioning area who currently, via Choose and Book choose to receive elective care at another provider. A number of patients are choosing the local private sector provider, The Oaks Hospital (run by Ramsay Healthcare UK) and a minority to Mid Essex Hospital and Ipswich Hospital. The reasons behind this decrease in elective patient activity may be due to the Trust s need to improve relationships with GPs and communication with patients as well as issues around efficiency and capacity utilisation and the recent quality problems which have damaged the Trust s reputation. The Trust specifically plans to address repatriation of elective care including the following specialties: Trauma & Orthopaedics; General Surgery; Gastroenterology; Urology; and Ophthalmology. Within these specialties, the choose- and-book surgeries provide the highest profitability margins, which will immediately benefit the Trust. In taking the necessary steps to repatriate services, it is likely that the Trust will also gain some additional benefit from private patient activity through the improvement in public perception and quality of the services. 2 Key assumptions The key assumptions relating to repatriation are as follows: Repatriation has the potential to be a profitable option if excess capacity is available or becomes available after the implementation of other options aimed at rationalisation; Basic elective services are not guaranteed to a specific provider by contract and therefore the Trust has the opportunity to reappropriate these services; Increased quality of services and marketing efforts may attract private patients and bring an additional financial benefit. 103

105 6. Range of strategic options Service development and commercial initiative Strategic Option 5 Repatriation 1. Financial Impact The Trust has modelled a prudent impact of repatriating up to 50% of elective work from targeted providers by the end of Year 4. The Trust has: Analysed at specialty and HRG level the quantum of elective activity and associated income NE Essex CCG spends with local and out of area providers; Identified those specialties and competitor providers that the Trust wishes to target to determine the income opportunity; Modelled at specialty level the costs associated with the targeted activity (theatre session and ward costs, outpatient clinic requirements, diagnostics etc.); Applied national efficiency assumptions to the cost of undertaking the repatriated activity; Recognised that costs in the model may be overstated as additional theatre and length of stay efficiencies are assumed elsewhere in the Plan Deliverability Strength: the services targeted for repatriation are not contractually guaranteed to any provider. The Trust has therefore the opportunity to compete and regain market share; For this to happen the Trust must: Risk: strengthen its relationships with GPs to increase the number of referrals for elective care services; Risk: gain buy-in from its clinicians that private-sector work can be best delivered by the Trust; Risk: invest in marketing and promotional efforts to reach a larger number of patients and improve Trust reputation with all stakeholders. A change in reputation might take a considerable amount of time, thus affecting deliverability; Risk: ensure that sufficient theatre and ward capacity is either available or that adequate capacity is freed up through the implementation of other strategic options Key: 1 difficult with low potential, 5 achievable with high potential 104

106 6. Range of strategic options Service development and commercial initiative Strategic Option 5 Repatriation Quality and outcomes High quality of care is necessary in order to attract elective patients that are currently getting care from other local providers. Therefore, the Trust must focus on improving its quality of care, especially in target specialties; Work on service transformation required to deliver this option is likely to free up capacity, leading to quality of care improvements; The Trust feels confident that by directly addressing quality improvement, it will be able to achieve high quality results in the planned period Operational and clinical efficiency Repatriation of elective activity can support efficiency through better capacity utilisation and more efficient use of rostering, but only if theatre and ward capacity to host the elective work can be generated; For instance, plans to use a different model to create excess capacity that can be filled through repatriated activity are currently being considered by the Surgery Division Timing and additional considerations The Trust will begin the scoping and planning phase in the second half of Year one and until the middle of Year two; Implementation will occur in the latter half of Year two, with partial benefits being realised throughout most of Year three; Full benefits will be realised from the second quarter of Year four and throughout Year five; The main risk for this option is lack of theatre capacity, which will significantly influence the realisation of this option. The Trust has separate workstreams that will address this specific issue. 105

107 6. Range of strategic options Service development and commercial initiative Strategic Option 6 Primary care Financial impact 0.15m* 1 Description The Trust can consider several implementation methods for this option: Route 1. Strengthening and professionalising the Trust s outreach and engagement with GPs and other primary care providers to modify patient flow and ensure seamless care; Route 2. Exploring opportunities for the Trust alone, and in partnerships, to directly provide primary care services either via (i) through opening and managing an urgent care centre, (ii) through directly employing GPs. Through the implementation of this option, the Trust can: 1) Increase, and improve, the involvement and relationships of the Trust with primary care providers which could help deliver community-wide benefits in terms of patient cohort management, access to services and it would help address the challenges around GP referrals and the management of LTCs; 2) Gain more visibility and an increased ability to shape patient flows (especially into A&E) and the flows of patients back to primary and community care; this could deliver significant benefits to the Trust both in terms of cost and efficiencies. 2 Key assumptions The Trust has not modelled the financial implications of implementation method (a) as aspects of this are considered under the Repatriation option; The Trust looked at two models to help understand the implications of implementing this option: i) the Trust opens and manages an urgent care centre; ii) the Trust directly employs GPs; High level benchmarking was used to understand the financial implications of the above scenarios; The roll out of other small A&E pre-triage set ups was used to estimate benefits to the Trust from the management and running of an urgent care centre (see next page for details); Assumptions were made on market share the Trust could realistically address through directly employing GPs (see next page for details); The Trust estimates that indirect benefits through patient flow management can be achieved in the medium to long term; however, due to lack of benchmarks, it was not possible to model what the financial impact of such indirect benefits might be; It was assumed that the Trust starts planning in Q2 Year two and the option becomes operational in Year four (see timeline on page 111 for details) Note: * This does not include the scenario of directly employing GPs which based on high level, preliminary, modelling, appears to be a less attractive option. 106

108 6. Range of strategic options Service development and commercial initiative Strategic Option 6 Primary care Financial Impact Two routes were modelled when considering this option: (i) the Trust provides primary care services in an urgent care centre that is run and managed as part of the hospital, on-site; (ii) the Trust directly employs GPs. Route 1. This route Benchmarking suggests that the Trust could recoup c. 100k p.a. for every 2-3 FTEs (specifically GPs) (i.e. 0.15m after accounting for phasing of this option over the plan period and assuming the Trust only uses 2-3 FTEs); GPs are part of a multi-disciplinary team, in the context of an urgent care centre. Route 2. This route leads to limited financial impact due to likely large set up costs required upfront If the Trust choses to directly employ GPs, it has been assumed the Trust is able to achieve 10% to 20% market penetration in Colchester (i.e. it employs between 20 and 35 GPs); It has assumed limited direct benefits are derived from running a salaried GP business model and have modelled a profit of between 0.5m and 1.0m over the plan period This is likely to be offset by large upfront set up costs (the Trust took a conservative approach and based the modelling of set up costs on typical GP practice acquisition costs) 2. Deliverability Route 1. Strength: the implementation of improving and strengthening relationships with local primary care providers is less challenging to deliver: This would require the Trust to implement more active engagement and PR programmes and training of staff Route 2. Risk: opening and operating an urgent care centre is of moderate difficulty from an implementation perspective and would require: The recruitment of 2-3 salaried GPs or arrangement of care from existing FTEs; The revision of a range of pathways Risk: the implementation of this option is extremely difficult due to: Potential GP resistance and issues around GP recruitment; Increased regulatory burden and oversight; Lack of track record in applying this business model. Key: 1 difficult with low potential, 5 achievable with high potential 107

109 6. Range of strategic options Service development and commercial initiative Strategic Option 6 Primary care Quality and outcomes This option can potentially deliver an improved referral pathway for patients and better case management Quality of care and patient outcomes are likely to improve as a result; Issues experienced by patients in the referral process between primary and acute care would cease to exist. This option would help alignment with the Better Care Fund, part of which is being aimed at reducing emergency admissions and providing integrated pathways of care; This option could potentially provide alignment with national policy developments (Labour has already announced that should it win the 2015 general election, its intention is to encourage integration of primary care provision by hospitals) 4. Operational and clinical efficiency This option can help the Trust achieve: Reduced emergency admissions through case management of GP practice lists; The channelling of elective care pathways through the Trust (to be considered carefully due to potential conflicts of interest); Further efficiencies and cost improvements could be achieved by using GPs as a flexible workforce and leveraging their skillset across urgent care, geriatrics, etc. The issues of referral and delegation between primary and acute care may be reduced Timing and additional considerations The modelling of this option assumes that planning and scoping begins in Q2 Year two, implementation in Year three and that partial benefits are realised in Year four and full benefits in Year five (see detailed timeline on page 111); The Trust would need to carefully manage implied conflicts of interest (e.g. elective referral); Staff recruitment could be a challenge (although more trained GPs are expected in the coming years) for both the urgent care and GP practice models of implementation; The Trust would need to consider how it manages increased workload and demand alongside tightening QOF and increased regulatory burden by CQC. 108

110 6. Range of strategic options Service development and commercial initiative Strategic Option 7 Shared services Financial impact 1.7m to 3.6m 1 Description This option covers potential cost savings that the Trust could realise through participating in shared service schemes with local providers. There are two routes the Trust is considering: Route 1: the Trust charges other neighbouring organisations for delivering shared services to them (model to be determined but it could be on the basis of gain share, transaction fee, SLA contracts, etc.); Route 2: the Trust enters into a shared service agreement as a receiver of services from a partner organisation and makes cost savings by scaling down its own existing provision. The routes above include a range of shared services such as pharmacy and back-office functions. Care has be taken to ensure that there is no overlap with Category 1- Re-shaping of existing services and options in Category 1 must be implemented before this option can be taken forward. Successful implementation of this option will result in the Trust being able to unlock some relatively rapid and achievable cost savings, or forms of income and revenue generation. Savings are modelled at 50% in 2017/18 with the further 50% in 2018/19 2 Key assumptions The Trust has used an external review of it s Pharmacy Services by the Hambleton Group and the PWC opportunity identification on back-office functions to identify the initial potential opportunity. Modelling assumes 1.4m per annum, with 50% realised in 2017/18. It is assumed that the intermediate period of time will be required to implement these. Where possible, the Trust will seek to bring these forwards. A detailed analysis of the services that local health providers are able to provide under a shared services scheme to the Trust is required for further benefits to be realised; It is assumed that the Trust has the capacity and ability to develop and manage relationships with local providers for both of the above routes; Category 1 options have been borne in mind when the Trust considers which services to take forward into shared service schemes. 109

111 6. Range of strategic options Service development and commercial initiative Strategic Option 7 Shared services 1. Financial Impact The Trust has used an external review of it s Pharmacy Services by the Hambleton Group and the PWC opportunity identification on back-office functions to identify the initial potential opportunity. Pharmacy benefits of 0.5m are projected, with m potential benefits assumed on back-office transformation 2. Deliverability Strength: this option is less challenging to implement as it leverages existing assets, skills and capabilities where the Trust chooses to share services. Specifically the Trust could leverage: Specific expertise (e.g. Pharmacy); Financial potential (e.g. Back-office transformation) Strength: this option is also less challenging to implement where the Trust chooses to share services that other organisations currently manage; Risk: this option may require significant capability and investment in contractual management expertise and skills; Risk: significant legal input into contract management and drafting could be required. Additional considerations Implications for Quality and outcomes are limited as entering into shared service schemes is more focused on improving cost efficiencies; Implications for Operational and clinical efficiency are that The Trust can achieve efficiencies of scale, full capacity utilisation and divestment of inefficient services. Key: 1 difficult with low potential, 5 achievable with high potential 110

112 6. Range of strategic options Illustrative phasing and timing Category 2 options Option 1 Community care Year 1 Year 2 Year 3 Year 4 Year /15 - Q3&4 2015/ / / /19 Option 2 Elderly care Option 3 Social care Option 4 End-of-life care Option 5 Repatriation Option 6 Primary Care Option 7 Shared Services Legend Pre-implementation phases: Scoping and planning Implementation Post-implementation phases: Live with partial benefit* Live with full benefit** Notes: * Option is in start-up phase and activities are being ramped up; benefits to the Trust have not yet reached their full potential; ** Option is live and fully operational; benefits to the Trust, as a result of the implementation of this option, have reached their full potential 111

113 Category 3 Trust wide structural change 112

114 6. Range of strategic options Category 3 - Trust wide structural change The Trust may, during the Plan period, determine that it needs to explore dramatic change options. These options could include structural changes such as mergers, partnerships and other forms of organisational structural change. A range of them have been provisionally identified and selected through a series of workshops and discussions with Executives, the Board and consultation with advisors and other third parties. These options are to be considered as mutually exclusive, although they might be applicable jointly if applied on one or more specific specialty or service area. Seek a full merger or make a major acquisition or Integrate into provider chain or Seek operating franchise to lead Trust or Integrate with a provision cluster If necessary, each option could support the Trust in delivering: Clinical benefits: resulting from shared best practices and the opportunity to reconfigure services to offer more effective pathways of care for patients; Financial benefits: resulting from savings and efficiencies from consolidation and integration of services and operational models; Managerial benefits: resulting from augmented managerial skills and capacity either through shared best practices or from takeover of managerial responsibilities by another entity. While all options will be considered by the Trust if necessary, none of these Trust wide structural changes are included in the current Five-year Plan. This is because the Trust is developing other options as set out in Categories 1 and 2 previously in this document. 113

115 6. Range of strategic options There are three major risks that threaten the ability of the Trust to plan, implement and monitor the delivery of any or all of the strategic options presented in this document. Those risks are presented below, along with an indication of where the mitigating strategy to be deployed by the Trust is presented. Risk: the Trust does not have capacity or capability to complete planning work and deliver As acknowledged elsewhere in this document, at present the Trust lacks capacity and capability to deliver a plan of this ambition. However, to mitigate this risk the Trust is currently looking to put in place specialist strategic planning and delivery resource, and to ensure that sufficient clinical and service management time is available to support planning work. Progress will be reviewed regularly, and plans revised if necessary. Risk: further quality concerns undermine the ability of the Trust to succeed commercially The ability of the Trust to deliver several of the options included in the Plan depend upon the Trust repairing its reputation for quality, and to persuade commissioners, referrers and patients of this. If the Trust encounters further quality problems, or fails to continue to make sufficient progress in quality improvement, it is unlikely that it will be well-positioned to pursue tenders or gain share in the elective market. Risk: uncertainty throughout the region poses a barrier to Trust reconfiguration There are region-wide redesign initiatives that could lead to transformational service redesign at the Trust. However, many of these are at an early stage, or could take a significant amount of time to mature. The consequence of this could be that the Trust is unable to act as rapidly as is desirable. To mitigate this, the Trust is engaging in discussions as to how to focus discussions and work more closely with Commissioners. 114

116 7. Next steps - plan for the next 6 months 115

117 7. Next steps - plan for the next 6 months The Trust has developed a high level plan of key actions for the next 6 months to ensure that the implementation of this Plan is at pace and delivered with rigour and the required degree of focus. The high level plan sets out the key steps for the : Transformation governance and CIP delivery arrangements; Budget setting and CIP; Strategic Options implementation; Review of unsustainable services, Clinical Strategy refresh, & CCG engagement; and Workforce and Organisational Development impact of CIP, strategic options and 24/7 Working. The key stages are shown over the next seven pages. 116

118 7. Next steps - plan for the next 6 months 117

119 7. Next steps - plan for the next 6 months 118

120 7. Next steps - plan for the next 6 months 119

121 7. Next steps - plan for the next 6 months 120

122 7. Next steps - plan for the next 6 months 121

123 7. Next steps - plan for the next 6 months 122

124 7. Next steps - plan for the next 6 months 123

125 Appendices 124

126 A. Leadership, Governance & Organisational Development - Developing the Governance Framework 125

127 A. Leadership, Governance & Organisational Development - Developing the Governance Framework 126

128 B. Working closely with the CCG CCG strategic principles The following high-level strategic principles will inform all commissioning and contracting dialogues: To ensure the continuous improvement of quality and service provision for the patients of North East Essex. To achieve the whole-system financial viability, all organisations will be required to deliver their required part of the service transformation including both disinvestments and reinvestments to improve quality and effectiveness. This means that the financial viability of providers is an important consideration with our commissioning intentions. Where practical all investment, disinvestment or change proposals will be preceded by clinical and patient engagement. Focus will be given to securing added value in all current and prospective services within existing resource constraints. Existing services must be able to demonstrate value for money. Only activity that has been commissioned by commissioners will be paid for and commissioners will not fund the consequences of changes that have not been agreed. 127

129 m C. Financial baseline and 5 year plan 2014/15 I&E key assumptions A reconciliation between the 2013/14 reported deficit ( 2.4m) and the 2014/15 plan deficit of 15.9m has been provided in the below graph. (4.7)m net non recurring items including 0.9m for a 2013/14 impairment incurred following a year end review of the new Radiotherapy Centre; (0.8)m for 2013/14 nonrecurring CIPs and (4.8)m for the FYE of cost pressures agreed part-way through 2013/14. (3.0)m of inflation including (1.3)m for incremental drift on pay, (0.9)m in line with the national 1% pay rise for employees and (0.8)m for inflation. Inflation was set at 3% for held contracts. (3.3)m tariff adjustment reflecting the local impact of the nationally set reduction in the national tariff. 2013/14 deficit to 2014/15 deficit (5) (10) (15) (20) (25) (30) (2.4) (4.7) (3.0) (3.3) (12.6) m net activity/case mix reflecting improvements in recording and increased complexity of the patients treated at the Trust. (12.6)m agreed cost pressures including a further 1.6m of turnaround costs, 1m relating to quality improvement initiatives, 1.6m relating to CNST, 1.5m additional nursing spend, 1.2m other staffing costs, 1.2m depreciation on the new Radiotherapy Centre, 250k PDC and 1.5m other cost pressures. Due to the size and potential quality impact of the cost pressures, the Trust set up an Investment Committee to review all proposed cost pressures/investment decisions. 0.9m net service developments reflecting the net financial impact of service developments planned by the Trust s divisions 11.0 (8.1) (2.1) (2.5) (1.2) (1.5) (15.9) 128

130 C. Financial baseline and 5 year plan 11m CIPs target reflecting the expected 4% annual CIP delivery (2.1)m CIPs target - due to the Trust s history of under delivery on CIPs, along with the changes to management and the distraction of the quality issues, a c20% contingency has been put in place to reduce the forecast CIPs in the plan to 8.m (2.5)m budget contingency - a 1% contingency was in place at the start of the year, but due to ambulance penalties and overspend within surgery and medicine divisions this 1% contingency has either already been utilised or is expected to be utilised in the coming months, and so a further 1% has been introduced (1.2)m winter contingency - 2.5m was received in 2013/14 and included in outturn however the Trust believe there is a risk that this may not be received again and hence a 50% contingency has been included (0.5)m penalties contingency this is an additional contingency included to prepare for the more disciplinary approach being adopted by the CCG. This has been evidenced by the ambulance penalties being enforced to date in 2013/14/15. (1.5)m 2013/14 CQUIN relates to potentially undelivered CQUINs. The 1.5m is lower than the initial CCG proposed figure of 2.5m however the Trust are reaching the agreement stage with the figure expected to be c 1m. 129

131 BRAG PMO BRAG Rating Workstream Name Estates Workstream Project Trade STOR (Short Term Operating Reserve) Division Corporate Service Line Trade STOR (Short Term Operating Reserve) Project Completion Status Finance Status based on Forecast outturn Scheme ID 100% 1 Title of Scheme Trade STOR (Short Term Operating Reserve) Estates Boiler economiser Corporate Boiler economiser 100% Boiler economiser Estates Steam Traps Corporate Steam Traps 100% Steam Traps Estates Estates Estates Energy Procurement Estates labour review Confidential waste review Savings source Corporate Corporate Corporate Energy Procurement Estates labour review Confidential waste review Money & Milestone - Status 200% Energy Procurement 183% Estates labour review 154% Confidential waste review Estates Switch it off Corporate Switch it off 100% Switch it off Scheme description This scheme comprises of two components: TRIAD Specified times emergency demand call up of power from the generator over winter period only. The Trust will get paid for having the generator available, whether it is used or not. The Trust also avoids fines for not utilising the National Grid during specified core times of high national usage. Short Term Operating Reserve (allowing standby generator to support the national grid), is where payments are received for actual usage by the National Grid. Install Boiler Economiser for heat transfer and recovery from boiler flue stack and transfer to Boiler house plate heat exchanger. Installed Gem Steam traps to hospital steam distribution system which creates energy efficiency savings. This scheme is the advance purchase of future energy needs at beneficial prices whilst ensuring that price risk is mitigated. This is an increase of the Estates WTE by 5 to enable an increase in maintenance activity at costs lower than those currently incurred under various contracts, for example PAT testing Person responsible 14/15CYE 15/16 Plan Element FYE YTD Plan YTD Actual YTD Variance Forecast Outturn Variance CYE Plan - v Forcast Outturn /15 Plan /15 Plan Actuals Forecast /15 Forecast Savings Type & Impact Account Code Cost Centre Actuals 75, ,000 31, ,250 75, ,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 75, ,000 Recurrent Non-Pay 82,500 90, ,500 30,000 30, , ,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 82,500-7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 82,500-7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 82,500 No 0 Recurrent Non-Pay Estates Efficiency 80, ,000 33,333 33, , ,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 80,000 No 0 Recurrent Non-Pay Estates Efficiency 50, ,000 20,833 41,667 (20,833) 100,000 (50,000) 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 4,167 50,000 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8, ,000 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8, ,000 No 0 Recurrent Non-Pay Estates Efficiency 25, ,000 10,417 31,285 (20,868) 45,868 (20,868) 2,083 2,083 2,083 2,083 2,083 2,083 2,083 2,083 2,083 2,083 2,083 2,083 25,000-20,587 3,564 3,570 3, ,285-20,587 3,564 3,570 3,564 2,083 2,083 2,083 2,083 2,083 2,083 2,083 45,868 Recurrent Non-Pay Confidential waste review 10,000 10,000 20, ,417 (5,417) ,667 1,667 1,667 1,667 1,667 1,667 10, ,083 2,917 2,917 2,917 2,917 2,917 2,917 15,417 Recurrent Non-Pay Requires buy-in from organisation/organisational behaviour / cultural change Scheme details 50,000 50, , , k to be assumed delivered, 50 energy champions recruited ,333 8,333 8,333 8,333 8,333 8,333 50, ,333 8,333 8,333 8,333 8,333 8,333 50,000 Recurrent Non-Pay Sub TOTAL 372, , , , ,285 (10,452) 448,785 (76,285) 19,167 26,667 26,667 26,667 26,667 26,667 36,667 36,667 36,667 36,667 36,667 36, ,500 15,000 43,087 26,064 26,070 26,064 22,500 22,500 22,500 22,500 22,500 22,500 22, ,785 15,000 43,087 26,064 26,070 26,064 22,500 35,833 35,833 35,833 35,833 35, , ,785 TOTALS 372, , , , ,285 (10,452) 448,785 (76,285) 19,167 26,667 26,667 26,667 26,667 26,667 36,667 36,667 36,667 36,667 36,667 36, ,500 15,000 43,087 26,064 26,070 26,064 22,500 22,500 22,500 22,500 22,500 22,500 22, ,785 15,000 43,087 26,064 26,070 26,064 22,500 35,833 35,833 35,833 35,833 35, , ,785 Impact? No of WTE removal planned Savings Type Savings Category CIP Category C. Financial baseline and 5 year plan CHUFT 2014/15 Turnaround Programme Internal governance Introducing Level 1 governance processes for all CIP schemes The Trust has further developed the CIP workbooks for managing the Trust s Turnaround schemes. This has included the introduction of a new reporting format, referred to internally as Level 1 reporting. The Level 1 format includes all information in relation to a particular project and is provided in two parts; - Part 1, project overview, and Part 2, Financial details. A summary of the Part 1 and 2 is shown below. Part 1 Project overview Part 2 Financial details Project milestone & status Course corrective action Current Month 5 Level 1 - Project review only Financial Management Use Only Course Corrective Actions agred April '14 May '14 June '14 July '14 Aug '14 Sept '14 Oct '14 Nov'14 Dec '14 Jan '15 Feb '15 Mar-15 CYE April '14 May '14 June '14 July '14 Aug '14 Sept '14 Oct '14 Nov'14 Dec '14 Jan '15 Feb '15 Mar-15 CYE April '14 May '14 June '14 July '14 Aug '14 Sept '14 Oct '14 Nov'14 Dec '14 Jan '15 Feb '15 Mar-15 Forecast outturn WTE Workstream / division/ service line Project title and description (all project in workstream are listed) Planned saving Phased financial plan Reported financial actuals Reported financial forecast Savings type Part 1 refreshed weekly Part 2 refreshed monthly by Finance Manager at month end and reviewed in detail with PMO and financial actuals and forecast summarised in part 1 130

132 C. Financial baseline and 5 year plan CHUFT 2014/15 Turnaround Programme Governance & assurance- Level 1 reporting Example Level 1 Part 1 Current Month 5 Level 1 - Project review only BRAG Savings source Money & Milestone - Status Scheme details PMO Workstream BRAG Name Rating Workstream Project Division Service Line Project Completion Status Finance Status based Scheme Title of Scheme on Forecast ID outturn Scheme description Person responsible 15/16 14/15CYE Plan Element FYE YTD Plan YTD Actual YTD Variance Forecast Outturn Variance CYE Plan - v Course Corrective Actions agred Forcast Outturn This scheme comprises of two components: TRIAD Specified times emergency demand call up of power from the generator over winter period only. The Trust will get paid for having Estates Trade STOR (Short Term Operating Corporate Reserve) Trade STOR (Short Started - with Term Operating delay Reserve) Trade STOR (Short 27% 1 Term Operating Reserve) the generator available, whether it is used or not. The Trust also avoids fines for not utilising the National Grid during specified core times of high national usage. Short Term Operating Reserve (allowing standby generator to support the national grid), is where payments are received for actual usage by the National Grid. 75, ,000 31, ,250 20,000 55,000 The team are identifying further projects to mitigate this delay Started - with Estates Boiler economiser Corporate Boiler economiser delay Started - ontrack Estates Steam Traps Corporate Steam Traps 100% Boiler economiser 100% Steam Traps Install Boiler Economiser for heat transfer and recovery from boiler flue stack and transfer to Boiler house plate heat exchanger. Installed Gem Steam traps to hospital steam distribution system which creates energy efficiency savings. 82,500 90, ,500 30,000 30, , , ,000 33,333 33, ,000 0 The milestone delivery is behind plan. We have assessed this nd this will not impact on the financial inyear plan. Estates Energy Procurement Corporate Energy Procurement Completed ahead of time 200% Energy Procurement This scheme is the advance purchase of future energy needs at beneficial prices whilst ensuring that price risk is mitigated. 50, ,000 20,833 41,667 (20,833) 100,000 (50,000) Estates Estates labour review Corporate Estates labour review Completed - On time 183% Estates labour review This is an increase of the Estates WTE by 5 to enable an increase in maintenance activity at costs lower than those currently incurred under various contracts, for example PAT testing 25, ,000 10,417 31,285 (20,868) 45,868 (20,868) Confidential waste Confidential waste Completed - Confidential waste Estates Corporate 154% review review On time review Estates Switch it off Corporate Switch it off 100% Switch it off Confidential waste review 10,000 10,000 20, ,417 (5,417) Requires buy-in from organisation/organisational behaviour / 50,000 50, , ,000 0 cultural change Sub TOTAL 372, , , , ,285 (10,452) 393,785 (21,285) TOTALS 372, , , , ,285 (10,452) 393,785 (21,285) 50k to be assumed delivered, 50 energy champions recruited. MILESTONE PROGRESS BRAG Each project is reviewed in terms of milestones on a weekly basis, where a BRAG rating is applied based on milestone progress FINANCIAL FORECAST OUTTURN BRAG Each project is reviewed in terms of forecast outturn on a weekly basis, where a BRAG rating is applied based on forecast outturn v- plan COURSE CORRECTIVE ACTIONS Where a BRAG rating is non-green, course corrective actions are requested 131

133 C. Financial baseline and 5 year plan CHUFT 2014/15 Turnaround Programme actions and new schemes Where a non-green BRAG rating on milestones or forecast outturn is identified, the Level 1 requires course corrective action or substitute schemes to be identified: Where corrective action is triggered on the Level 1, a course corrective actions template must be completed. The course corrective actions template will detail actions, decisions or required endorsements to bring a scheme back on track The template will also provide opportunity to propose new schemes to act as substitute CIPs to ensure CIP financial plan is achieved. Course corrective actions and suggested new CIPs to improve forecast outturn position These are reviewed by the Turnaround Interface meeting, and reporting up into the Turnaround Board for approval. The PMO then also monitor these course corrective plans Action plan to improve CIP forecast outturn: xxx workstream Actions & decions to be agreed by the Executive: No Action in relation to what project within your workstream? Suggested action and/ or decision required Potential value of impact of action/ decision Suggested implementation Suggested Lead date Scheme endorsed Impact of scheme by Turnaround on improving Board Y/N/ forecast outturn Conditional (Select from dropdown) apporoval (Select from dropdown) Comments / notes Progress of agreed action against planned date Proposed new schemes to improve CIP forecast outturn: Suggested schemes: No Name of scheme: Description of scheme: Potential value of scheme inyear Suggested implementation date xxx workstream Suggested Lead Scheme endorsed Impact of scheme by Turnaround on improving Board Y/N/ Comments forecast outturn Conditional (Select from dropdown) apporoval (Select from dropdown) Progress of agreed action against planned date 132