GLOUCESTERSHIRE HOSPITALS NHS FOUNDATION TRUST

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1 GLOUCESTERSHIRE HOSPITALS NHS FOUNDATION TRUST MINUTES OF THE MEETING OF THE TRUST FINANCE COMMITTEE HELD IN THE BOARDROOM, 1 COLLEGE LAWN, CHELTENHAM ON TUESDAY 22 NOVEMBER 2011 THESE MINUTES MAY BE MADE AVAILABLE TO THE PUBLIC AND PERSONS OUTSIDE THE TRUST AS PART OF THE TRUST S COMPLIANCE WITH THE FREEDOM OF INFORMATION ACT 2000 PRESENT Mr W Dobbin - Chair Mrs M Bond - Non-Executive Director Mr G Mitchell - Non-Executive Director Dr F Harsent - Chief Executive Mrs E Barker - Deputy Chief Executive & Chief Operating Officer Mrs S Truelove - Finance Director APOLOGIES - None to record IN ATTENDANCE Mr A Collis - Trust Secretary Mr D Mahendran - Chief of Service (Women & Children) Mrs G Parker - Divisional Operations Director (Surgery) Mr S Wade - Senior Assistant Director of Finance The Chair welcomed the members of the Committee and explained that Mrs Bond was delayed by traffic. 105/11 DECLARATIONS OF INTEREST No declarations of interest were received. 106/11 DIVISIONAL UPDATE WOMEN & CHILDREN DIVISION Mr Dhushy Mahendran joined the meeting The Chair explained that the Chief of Service had agreed to spend a week signing-off agency requests to demonstrate and model a robust approach for the rest of the Division to follow. He acknowledged that the Chief of Service had realistically involved the Triumvirate but that it was important that he was seen to be taking a stricter line. The Chair invited Mr Mahendran to update the Committee with the current position. The Chief of Service (Women's & Children's) reported that bank staff usage had not fallen in October but that agency staff usage had reduced. Paediatrics and the Neonatal Intensive Care unit (NICU) had been holding a number of vacant posts and, as the specialties were entering into a busy period, a number of fixed term contracts to cover these vacancies had been agreed. This had reduced the use of agency staff. He stated that there was a limited number of bank staff in these specialties and it was therefore difficult to cover short-term sickness or activity issues without recourse to agency staff on some occasions. Improvements had been made within Maternity: where there had been a lack of awareness about the staffing across the speciality because of its size and spread, the introduction of a composite list of Midwife and MCA rotas and activity had resulted in improved management of existing staff, with speciality staff mobilised instead of using bank staff. The Chief of Service, the Divisional Operations Director and the Divisional Nursing Director were policing this. Additionally, staff intending to report short-term sick were required to do this via the Modern Matron rather than through the ward sister as they would have done in the past. There remained some concern that the recording of doctors' sick leave was inadequate in some cases. The Chief of Service explained that tighter management of staff and ACTION Minutes of the Finance Committee Meeting Page 1 of 9

2 reduced use of bank and agency was a challenge and needed to be undertaken with care to avoid introducing risk into the system. Mrs Bond arrived In discussion: the Chair explained that the Committee had wanted the Chief of Service to take personal charge to see if the application of his stricter criteria would be adopted throughout the Division. He noted that the Chief of Service and the Division had implemented robust processes and suggested that these might be replicated across divisions as best current practice. Mr Mitchell stated that it had been interesting to listen to the way the topic had been explored and had evolved. He noted that it had been the influence of the Chief of Service that had caused much of the change and that this demonstrated the need for continuing top-level, hands-on involvement in key issues within the Division. The Chief of Service stated that he intended to continue to take a lead in this area and to review the position on a regular basis. the Chair remarked that the issue of recording doctors' sickness was likely to be Trust-wide and that this should be communicated with Human Resources. Mr Mitchell asked if it might be possible to identify a positive financial impact from this work in the Division's next report. The Chief of Service explained that it was particularly difficult to collate and to validate the data and provide a clear auditable trail as it came from a wide range of sources. the Deputy Chief Executive and Chief Operating Officer stated that she would share the rota and location template with other Divisions for their consideration and adoption as appropriate. AC EB The Chair thanked the Chief of Service for attending and for the positive evidence in support of his actions. Mr Mahendran left the meeting The Committee RECEIVED the Chief of Service's update. 107/11 MINUTES OF THE FINANCE COMMITTEE MEETING HELD ON 25 OCTOBER 2011 The minutes were AGREED and signed as a true record. 108/11 MATTERS ARISING 067/11 Financial Performance Report: The Chief Executive reported that the metrics now appeared the Finance Director's paper and again in the Trust Performance Management Report to the Board. Completed. 098/11 Diagnostic & Specialty Division: The Deputy Chief Executive and Chief Operating Officer reported that she had begun work with the Chief of Service to take forward the points raised by the Division. Completed. 099/11 Estates & Facilities Division: The Deputy Chief Executive and Chief Operating Officer reported that she and the Finance Director had met with the Director of Estates & Facilities to help to identify priorities for the Division. The outcome of this work was reflected in the Board papers to be presented at the forthcoming Main Board meeting. Completed. The Committee acknowledged the enormity of the task and stated that the Director of Estates & Facilities might benefit from the support of a coach. EB Minutes of the Finance Committee Meeting Page 2 of 9

3 109/11 FINANCIAL PERFORMANCE REPORT The Director of Finance summarised the performance: the financial position of the Trust at the end of October 2011 was a deficit of income against expenditure of 1.0m. this was a negative variance against the plan of 2.6m. overall income was down against the plan by 0.6m. Divisional expenditure budgets were 5.8m overspent against the plan. the forecast outturn was a break even position. the monitor risk rating was 3. She explained that there were a number of issues responsible for the shift in position, and that these were: Plan: The Trust position improved in October, with income at the end of the month 1,257k ahead of plan compared with 522k ahead of plan at the end of September. The position was mixed across Divisions; Surgical deteriorated by 304k but this was offset by Medical improving by 333k, Diagnostics and Specialties by 221k and Women and Children by 163k. Elective spells: Elective income performance in October was broadly in line with plan, leaving the year to date position little changed with activity 4% behind and income on plan. Non-elective spells: there had been little change from last month. Emergency spells: Emergency spell income was weak compared to the plan. Pay: Overspend had slowed and this was encouraging. Non Pay: it was concerning that the Medical & Surgical Equipment (MSE) overspend had increased in month. This was mainly focused within the Surgical and Medical Divisions and though the activity position within Medical might explain part of this increase this was not the case within the Surgical Division. Despite being behind plan on activity there was an increase in MSE spend of 215k and spend patterns continued to be volatile. The Division had been asked to undertake a stock-take in all areas to identify if this was the issue. The Chair asked if the position was vulnerable because of the potential stock levels. The Finance Director stated that this would be the case if it was not tackled and explained that work was ongoing to identify ways of improving the process and the system (e.g: bar coding or similar). Savings Plan: The November meeting of the Savings Board had reviewed the intervention plan with a view to establishing financial targets to be achieved. It had then split into groups to discuss the larger savings items that need to be progressed to deliver benefits in the current and future financial years. As a result of this session each Division now had an action plan to follow and significant savings to be delivered. The Chief Executive stated that he was expecting the NHS Operating Framework 2012/13 to be published in the coming week and noted that this would this will help the process further. Mrs Bond noted that the Appendix that showed penalties was no longer included. The Finance Director explained that this could be made available. The Chair asked that this information be made available to the Board in confidential session. Appendix I: the appendix showed the impact of the intervention plan by describing the expenditure from month 1 to month 6 and showing variances: it revealed the reduced nursing spend. Risks: there had been no change to the Key Risks and the forecast outturn remained a break even position. Minutes of the Finance Committee Meeting Page 3 of 9 ST

4 In discussion: Mrs Bond noted that the capital programme had been reduced by 6m and asked if there was a negative impact or a risk because of this. The Finance Director explained that 2.5m of this figure was related to the equipment for the Hereford Satellite Radiotherapy project and that it had been moved appropriately into next year. Tendering for pathology analysers had been removed as a capital cost and the removal of spend related to managed services was also part of this figure. The review had been conducted with risk as a primary consideration. Mrs Bond asked if the Trust had received a response from NHS Gloucestershire in relation to the chemotherapy issue discussed previously. The Finance Director reported that she was to follow this up with the PCT over the coming days. The Finance Director explained that month 5 had seen deterioration in the financial position of the Trust and that there had been some debate about whether a Board meeting in August would have avoided this. She tabled her report to the Board on the topic which focussed on a review of what the issues were behind the Month 5 deterioration and what had been reported to the Board previously. She concluded by stating that the report showed that the issues were apparent before August and that a meeting in August would not have identified anything different or sooner. The Chair thanked the Finance Director for her report. The Committee RECEIVED the report. 110/11 DIVISIONAL ATTENDANCE SURGERY DIVISION Mrs Parker and Mr Wade joined the meeting The Senior Assistant Director of Finance described the Surgical Division Month 7 Financial position and reported the prior-month and currentmonth variances and highlighted the forecast outturn for: Contract Income: - 2,428k Operating Income: - 338k Pay Expenditure: 890k Non Pay Expenditure: - 3,836k Total: - 5,712k He further explained that the position was: an adverse variance from plan of 3,709k (2.5%) that contract income was behind plan by 1,802k (2.1%) a pay underspend of 519k a non-pay overspend of 2,229k Secured/Green savings of 4,528k (63%) improved by adjustment issues by 462k He then described the Expenditure and the Activity & Income positions noting that: the elective case mix was being reviewed there was elective T & O over performance against plan Ophthalmology, Upper GI, Breast Surgery & Urology were behind plan emergency Income was significantly behind plan there was an activity recovery plan in place Minutes of the Finance Committee Meeting Page 4 of 9

5 Senior Assistant Director of Finance described the Savings Position: Secure: 3,698k Green: 830k Amber: 163k Red: 2,470k MSE: The Chair stated that the Committee was most concerned about the significant overspend on MSE and asked why there was an 800k increase from the previous year. The Divisional Operations Director: explained that there had been a rise in general orthopaedic activity and that there was a volatility in spend related to this. She stated that the Division was backfilling lists and had moved some trauma cases into orthopaedics and that the plan had not taken these into account. The Finance Director remarked that overall orthopaedic elective and non-elective activity was still 66 cases down against plan. reported that the 2.5% increase in VAT impacted MSE costs by 215k and that inflation added to this. noted that there had been an increase in hip and knee work. The Division was to undertake Healthcare Resource Group (HRG) data analysis related to this. agreed that the Division should extend its stock-take to cover all theatres. informed the Committee that the Division was: undertaking detailed work relating to align staff employment and banding appropriately: this would have an added benefit of achieving up to 250k savings. progressing with the A&C review and had taken out 315k with more to be removed as the project advanced. booking more cases to increase Ophthalmology activity with a view to delivering the 4 week wait for cataract target. Activity: The Divisional Operations Director highlighted the activity position and acknowledged the need to recoup more activity. This would be achieved through the micro management of lists and the robust application of consultant leave rules to ensure teaching time and study leave were appropriate in all cases. Mrs Bond stated that any tightening of the regulations should be applied Trust-wide. The Chief Executive stressed the importance of having robust contingencies to ensure that lists were planned effectively to cope with the planned day of industrial action, noting that orthopaedic activity would be affected by action taken by radiology staff. The Divisional Operations Director explained that the lists had been booked with patients that did not require radiology and that fracture clinic bookings had been made either side of the day in question. She stated that orthopaedic staff would be occupied fully on the day with cases that were not radiology dependent. Savings Plans: The Divisional Operations Director reported that 63% of the plans were secure or green-rated but that the biggest issue was non-elective work and the need to reduce some rotas and to centralise some emergency work to take out expenditure. All job plans were being scrutinised and the Division was putting in locums and fixed-term contracts where appropriate to respond to the contraction of services. The Chair asked when the 34% of red-rated savings would be moved to green-rated and secure. The Divisional Operations Director explained Minutes of the Finance Committee Meeting Page 5 of 9

6 that some of these savings were related to theatre sessions within community clinics. There was no onus on the existing staff to book lists fully because they were not employed by the Trust and there was therefore a need to transfer the staff and or the role to the Trust. In response to a further question from the Chair she stated that the Division expected to achieve 85% of its total savings realistically and that external assistance in the form of a process review would be engaged to tackle the remaining 15%. Mr Mitchell stressed the need for Divisions to set accurate and realistic plans to avoid creating crises in respect of the forecast outturn. The Finance Director explained that the planning process had begun earlier and that her Savings Plan Update was an item on the agenda. The Divisional Operations Director stated that some of the red-rated savings were related to the planned closure of some ward areas but that this had been put on hold because of a number of medical outliers. She remarked that the Division believed that it could function with a smaller bed-base. The Chief Executive stated that he would prefer the Division to undertake additional work and receive the income for this. There was capacity to increase the level of elective work but the Division was down against the plan and the level of emergency admissions was not expected to will be as high as previous years. He acknowledged that there was a more complex case mix in some instances but stressed that there was a need to maximise every list. The Committee challenged the Division's forecast outturn and the Divisional Operations Director accepted that it was not high as stated in the report. The Chair thanked the Division for its work to date and stated that the target for the Division was to move all the red-rated savings to amber and to green. Mrs Parker and Mr Wade left the meeting In further discussion: the Chief Executive stated that there was a need for the Division to focus on what it could influence rather that chasing internal circular money. Mrs Bond stated that the answer was to increase activity and maximise capacity and asked if setting a specific target for the remaining months of the year was appropriate. The Finance Director stated that this would be covered in her conversation with the Division during the coming week and that this was also an opportunity to ensure next year's capacity planning was robust. The Chair asked why this was not happening already. The Deputy Chief Executive and Chief Operating Officer reported that she had discussed with the Division using weekly production targets and she stated that the Division's micromanagement would help. Mr Mitchell questioned if it was possible to identify the capacity more accurately to plan the additional more effectively. The Chief Executive stated that data existed to provide the Trust with a realistic indication of what each surgeon could accomplish and that this would be progressed and considered in future planning. The Committee RECEIVED the Divisional paper. 111/11 FINANCE AND CAPACITY PLAN INTERNAL AUDIT REPORT The Finance Director reported that the Internal Audit Report had been received by the Audit Committee and that the auditors were to begin a follow-up audit shortly. Minutes of the Finance Committee Meeting Page 6 of 9

7 The Chair remarked that he had been surprised that no-one from the Finance Committee had been questioned as part of the process. Mr Mitchell commented that the report and conclusion addressed the process rather than the management of the process. The Chair acknowledged that some weaknesses remained in the planning process. The Committee RECEIVED the Internal Audit Report of the Finance and Capacity Plan. 112/ SAVINGS PROGRAMME - UPDATE The Finance Director reported that: Financial Planning Guidance had been issued in September 2011 TMT Planning workshops were held in October and November the contracting process had started the Operating Framework was due on 24 th November a review meeting was to be held with each Division to agree cost pressures, savings targets and opening budgets by 15 th December She described the additional support: 2-week review to be carried out by Newton Group to assess potential for No win, no fee piece of work. There would be a cost for the observational work to begin the process and the work would take into account the A&E fines and ambulance delays too. Estates & Facilities: a number of areas were being explored including consultancy work. the Deputy Chief Executive and Chief Operating Officer had allocated additional management resource into the Medical Division. The Finance Director then detailed the Next Steps, highlighting: a review of the financial impact of the Operating Framework finalisation of cost pressures. commissioning intentions and QIPP plans were due from the PCT in early December. details of the tariff for 2012/13 would be released in December. Assessment of over-arching savings requirement by the end of December 2011 from previous components. Compilation of savings plans into Trust-wide savings plan in January 2012 The Chair thanked the Finance Director for the update and in discussion: Mrs Bond asked if the work had identified a training requirement for staff at the next level down to be able to deliver the plans. The Chair remarked that this would be covered by the Service Line Management (SLM) implementation. The Finance Director reported that she had attended the Divisional Triumvirate meetings to ensure that the right topics were being considered. The Deputy Chief Executive and Chief Operating Officer stated that the Divisions had structured agenda that began with Quality items. the Chair asked if the project managers were embedded within Divisions to help with this and questioned whether external expertise might prove beneficial. The Deputy Chief Executive and Chief Operating Officer stated that the project managers were part of the Clinical Strategy department and the Finance Director agreed to speak with the Director of Human Resources and Organisational Development about internal and external possibilities for assistance. ST The Committee RECEIVED the update in respect of the 2013 Savings Minutes of the Finance Committee Meeting Page 7 of 9

8 Programme. 113/11 MINUTES OF THE SAVINGS BOARD MEETING HELD ON 2 NOVEMBER 2011 The Finance Director informed the Committee that the November meeting of the Savings Board had focused on several issues including the following: A review of the intervention plan and establishing financial targets to be achieved. The workforce savings programme and revised Divisional Admin & Clerical structures as a result of the A & C review. Principles to be developed in establishing a Trustwide A & C Bank to gain greater control over authorisation and spend. Savings Board members had then split into groups to discuss the larger savings items that need to be progressed to deliver benefits in the current and future financial years. As a result of this session each Division now had an action plan to follow and significant savings to be delivered. In discussion, Mrs Bond referred to the 6.5m cost of staff sickness and asked if there would be value in communicating this to the Trust. The Finance Director reported that she was aware that the Director of Human Resources and Organisational Development was considering if this was a useful issue to pursue and, if it was felt that this was the case, how to best communicate the topic. The Chief Executive remarked that the greater issue was about performance management: he noted that Mrs Bond was working with the HR team on this and that the Nursing Director and Head of Patient Experience had devised a set of staff behaviours which were to be adopted and embraced by staff. In response to a question from Mrs Bond, the Finance Director stated that savings challenges would be presented to the HR and IT service providers as part of the implementation of SLM. The minutes were RECEIVED and NOTED. 114/11 MINUTES OF THE BUSINESS DEVELOPMENT GROUP MEETING HELD ON 10 NOVEMBER 2011 The Trust Secretary reported that the meeting was held very recently and that the minutes had not been written or tabled in time for the meeting. They would be included in the December papers. 115/11 WORK PLAN The Trust Secretary was to liaise with the Finance Director to develop the work plan for AC/ST The Committee NOTED the business. 116/11 ANY OTHER BUSINESS Finance and Performance Committee: the Chief Executive informed the Committee that the Board had invited consideration of the creation of a Finance and Performance Committee. He stated that there was much merit in this idea but stressed that any outcome would need to retain the current focus of the Finance Committee. The Chief Executive presented a draft of the proposed Terms of Reference for the Committee and invited discussion: the Chair acknowledged the need for the Committee to consider some form of performance report and suggested that it would be Minutes of the Finance Committee Meeting Page 8 of 9

9 wise to receive and tackle specific issues, such as Length of Stay (LOS), and avoid replaying any Board discussion. the Chief Executive suggested that the Committee would commission Root Cause Analysis reports on specific issues to inform its discussions. Mrs Bond suggested a 3-month or an until-the-committee-decidesotherwise approach to topics would ensure sufficient attention to detail to be able to achieve results. the Chair commented that topics might be identified by: the Committee itself the Board Chiefs of Service the Finance Director's report if the Committee was content to introduce the changes the Chief Executive suggested that these should take place from January 2012 and that this should be taken to the Board in confidential session for its consideration and final decision. The Committee AGREED to recommend to the Board that the Finance Committee evolved into the Finance and Performance Committee and ENDORSED the draft Terms of Reference. 117/11 DATE OF THE NEXT MEETING The next meeting of the Gloucestershire Hospitals NHS Foundation Trust Finance Committee will be held on Monday 12 December 2011 in the Boardroom, 1 College Lawn, Cheltenham commencing at 3.00 p.m. Papers for the next meeting: Completed papers for the next meeting of the Finance Committee are to be lodged with the Trust Secretary no later than Tuesday 6 December Minutes of the Finance Committee Meeting Page 9 of 9