How To Check If A Health Trust Is Running A Healthy

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1 REPORT TO TRUST BOARD Date: 3rd June 2013 Agenda No: Item 10.1 Title of Document: 2012/13 Draft Annual Accounts and Annual Report Report Author: Jasmine Lee, Assistant Director of Finance, Financial Services Lead Director: Azara Mukhtar, Interim Director of Finance Summary: Attached are the Trust s draft 2012/13 Annual Accounts and Annual report, both of which include the Annual Governance Statement (AGS). These documents were presented to the Audit Committee of the 24 th May, along with a number of other documents which supported the request that the Audit Committee recommend that the Trust Board approves and adopts the 2012/13 Annual Accounts and Annual Report. The timing of sending out of board papers has meant that it was not possible to wait for the outcome of the Audit Committee meeting. The 2012/13 Annual Report section of this document will also be ratified at the Trust s Annual General meeting (to be held before the end of September 2013). An update of the outcome of the 24 th May Audit Committee will be provided at the Trust Board meeting. Recommendations: Subject to the update from the 24 th May Audit Committee, that the Trust Board approves and adopts the 2012/13 Annual Accounts and Annual Report. NHS Constitution considerations: Copy available at Who have you engaged with in the production of this document: Patients Public Staff Partners Patient Assembly Other please state Trust Committees please state Draft 2012/13 Annual Accounts were circulated to non-executive directors on the 15 th April for comment before submission to DoH, and 24 th May Audit Cttee. Draft Annual Report external consultation eg FT members Outcomes of engagement: No comments received. Has an equality impact assessment form been completed? Yes/No/Not applicable for this document Key Risks: Risks reflected in risk register Yes/No Other implications including financial /legal/governance/diversity/human resources: No other significant implications

2 ANNUAL ACCOUNTS 2012/13

3 Croydon Health Services NHS Trust - Annual Accounts 2012/13 FOREWORD TO THE ACCOUNTS These accounts for the year ended 31 March 2013 have been prepared by Croydon Health Services NHS Trust under Section 232, Schedule 15, of the National Health Service Act 2006 in the form which the Secretary of State has directed with the approval of the Treasury. Foreword to the Accounts Page 1

4 Croydon Health Services NHS Trust - Annual Accounts 2012/13 STATEMENT OF THE CHIEF EXECUTIVE'S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE TRUST The Chief Executive of the NHS has designated that the Chief Executive should be the Accountable Officer to the Trust. The relevant responsibilities of Accountable Officers are set out in the Accountable Officers Memorandum issued by the Department of Health. These include ensuring that: - there are effective management systems in place to safeguard public funds and assets and assist in the implementation of corporate governance; - value for money is achieved from the resources available to the Trust; - the expenditure and income of the Trust has been applied to the purposes intended by Parliament and conform to the authorities which govern them; - effective and sound financial management systems are in place; and - annual statutory accounts are prepared in a format directed by the Secretary of State with the approval of the Treasury to give a true and fair view of the state of affairs as at the end of the financial year and the income and expenditure, recognised gains and losses and cash flows for the year. To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an Accountable Officer. John Goulston Chief Executive Date: 3rd June 2013 (TBC) Chief Executive's Statement Page 2

5 Croydon Health Services NHS Trust - Annual Accounts 2012/13 STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS The directors are required under the National Health Service Act 2006 to prepare accounts for each financial year. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fair view of the state of affairs of the Trust and of the income and expenditure, recognised gains and losses and cash flows for the year. In preparing those accounts, directors are required to: - apply on a consistent basis accounting policies laid down by the Secretary of State with the approval of the Treasury; - make judgements and estimates which are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts. By order of the Board John Goulston Chief Executive Date: 3rd June 2013 (TBC) Azara Mukhtar Interim Director of Finance Date: 3rd June 2013 (TBC) Directors' Certificate Page 3

6 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Auditor's Certificate to be inserted after sign off of the accounts Auditor's Certificate Page 4

7 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Auditor's Certificate to be inserted after sign off of the accounts Auditor's Certificate Page 5

8 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Scope of responsibility Annual Governance Statement The Trust Board is accountable for governance at Croydon Health Services NHS Trust. As the Accountable Officer and Chief Executive of this Board, I have responsibility for maintaining a sound system of governance that supports the achievement of the organisation s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation s assets, for which I am personally responsible as set out in the Accountable Officer Memorandum. Accountability for risk management is set out in the Trust s Risk Management Strategy. The Executive Team is collectively responsible for maintaining the systems of internal control and directors are accountable to me for ensuring effective governance arrangements in their individual areas of responsibilities. These areas of responsibility are detailed in the Trust s Scheme of Delegation. Governance Framework The Trust Board has overall responsibility for reviewing the effectiveness of internal controls: clinical, financial, environmental and organisational and as such requires that each of its sub-committees has agreed terms of reference which describes the duties, responsibilities and accountabilities, and describes the process for assessing and monitoring effectiveness. The Board itself has Standing orders, reservations and delegation of powers and standing financial instructions in place which are reviewed annually. As the Accountable Officer, I support the Chairman in ensuring the effectiveness of performance of the Board and its committees. In addition to the regular annual review of effectiveness of each committee, a systems review of board committees was undertaken in July 2012, with changes to the structure to further improve the effectiveness of the board s committee framework (Appendix 1). There was then a broader Board Governance Review commissioned by the new Chairman in January During 2012/13, as an interim arrangement pending the appointment of the substantive Chief Executive, senior leadership in corporate governance was provided by the Deputy Chief Executive / Director of Finance through the Trust s Integrated Governance Team. Governance is embedded across the corporate directorates and clinical directorates, led by Directors or Clinical Directors, thus ensuring clear responsibility and accountability across the Trust. For 2013/14, following the Board Governance review, the Trust s Remuneration Committee has agreed to the establishment of the post Director of Corporate Governance, a role that will be jointly accountable to the Chairman and the Chief Executive. This post will be responsible for providing senior leadership on governance. Each clinical directorate has a governance structure which reports into a directorate Performance and Quality Board; these in turn report directly into trust-wide governance framework. During 2012/13, the Trust s performance management framework was redeveloped to allow clinical directorate s greater autonomy within a clear accountability framework. The Assurance Framework was reviewed by the Audit Committee and the Trust Board during the course of the year. The Trust Board met on 7 occasions in 2012/13 and was noted to be quorate in all occasions. Committees of the Board included the following: Board Committees No. Meetings Quorate Audit 6 100% Remuneration 5 100% Finance and Investment 9 100% Performance 2 100% Quality 4 75% Access, Equality & Diversity 3 50% Charities Funds 3 100% Strategic Leadership 2 100% During the course of 2012/13, the Trust was subject to 2 reviews of compliance by the Care Quality Commission (CQC). The first being an unannounced, but scheduled review at the Croydon University Hospital site in June 2012 where the Trust was issued with two warning notices with regards to outcome 4 (WHO surgical safety checklist), and outcome 11(availability of equipment) and upheld a previous compliance action for outcomes 13 and 16. The Trust was compliant with all other core outcomes of the Essential Standards of Quality and Safety assessed. In September 2012, the CQC carried out a responsive visit as a follow up to the warning notice and subsequently assessed the Trust as compliant with these two outcomes. Risk and Control Framework The Trust is committed to providing high quality care, in an environment which is safe for patients, visitors and staff and which is underpinned by the public service values of accountability, probity and openness. Robust risk management and internal control are an essential part of good governance and is integral to the delivery of this commitment. The Chairman approved the Risk Management Strategy in October 2012 and the Trust also developed the Clinical Risk Assurance Framework as the updated framework to provide the Trust Board with assurance as to whether our systems, process and procedures for clinical governance are working effectively across our clinical services. The Clinical Governance Assurance Framework went live in February The key aims of the Trust s risk management approach is to ensure that all risks to the Trust s achievement of strategic objectives are identified, analysed, evaluated, monitored and managed appropriately. The system of risk management is described in the trust s Risk Management Strategy which is accessible all staff via the Trust intranet. The Trust s system for internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. Risks are identified through feedback from many sources such as proactive risk assessments, adverse incident reporting and trends, clinical benchmarking, audit data, complaints, legal claims, patient and public feedback, stakeholder/partnership feedback and internal / external assurance assessments. All business cases and proposed service reconfigurations are routinely risk assessed and all corporate committee papers are asked to provide narrative on risk and equality impact. Annual Governance Statement Page 6

9 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Annual Governance Statement Risks are evaluated using a recognised risk assessment tool which assesses the impact and likelihood of the risk occurring using a 5 x 5 scoring matrix. This risk score feeds into the decision-making process about whether a risk is considered acceptable. High level risks require control measures / contingency plans to reduce them to an acceptable level. These risks are escalated to the Corporate Risk Register. Each risk has an identified owner who is responsible for reassessing and monitoring the effectiveness of the controls in place to manage and mitigate the risk; this is recorded and reported back at appropriate committees. The Trust Assurance Framework, which is aligned to the Trust s strategic corporate objectives, is a high level document based on structured and on-going assessment of the principle risks to achieving these objectives. It details the key controls, sources of assurance and gaps therein. The Trust Assurance Framework was reviewed by the Audit Committee and the Trust Board during the course of the year. The Integrated Governance Team, which includes the risk and assurance teams, supports staff in disseminating good practice across the organisation. Risk management training is a mandatory requirement for Trust staff at induction. Further education is available for Trust staff, relevant to their authority and duties; External assurance as to the appropriateness of the risk management system was provided in 2012 with the successful assessment at Level 1 of the Health Service Litigation Authority (NHSLA). NHSLA Level 1 is an assessment of how well the policy framework that governs risk management in a NHS organisation is organised. The Trust is actively working towards Level 2 assurance. Section 11 of the Health and Social Care Act 2008 places a duty on the NHS to consult and involve patients and the public in the planning and development of health services and in making decisions affecting the way those services operate. The Trust has continued to strengthen closer working relationships with public stakeholders through the Patient Issues Committee to work alongside the many user groups already engaged within the Trust, with the aim of providing information about issues relating to service provision. This is undertaken through an environment of openness, transparency and accessibility in order to allow the public to engage with the Trust to make service improvements. The Trust also engages with its 4,600 foundation trust members through bimonthly newsletters and health information events. As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure all employer obligations contained within the Scheme regulations are complied with. This includes ensuring that deductions from salary, employer s contributions and payments into the Scheme are in accordance with the Scheme rules, and that member Pension Scheme records are accurately updated in accordance with the timescales detailed in the Regulations. Control measures are in place to ensure that all the organisation s obligations under equality, diversity and human rights legislation are complied with. The systems of internal control has been in place in Croydon Health Services NHS Trust for the year ending 31 March 2013 and up to the date of approval of the annual report and accounts. The management of the Trust takes seriously the potential threat and losses associated with possible fraudulent activity. The Trust has complied with the Secretary of State s Directions on countering fraud in the NHS and nominated a professionally accredited Local Counter Fraud Specialist (LCFS) who undertakes a programme of work designed to raise awareness amongst staff of possible fraud and to carry out investigations of any suspicions of fraud. LCFS provide reports to each Audit Committee of the progress of on-going investigations. The annual work plans of our LCFS cover a wide range of activities and follow the recommended plans produced by NHS Protect. Included within these plans are specific exercises, known as proactive reviews, which seek to identify the risk of fraud. Our LCFS has undertaken a number of these exercises under the direction and overall management of NHS Protect. Staff are encouraged, through our counter fraud and whistle-blowing policies, to raise and refer any concern about fraud to the LCFS who will undertake an appropriate investigation. This encouragement is reinforced through the regular awareness presentations given by the LCFS to Trust staff. New risks identified in 2012/13: All risks were reviewed at the beginning of April 2012 to close down the old Assurance Framework as an integral part of the governance review following internal audit report in 2011/12. Therefore all of the risks on the Assurance Framework were refreshed at the Risk Management meeting in April The following risks were identified and added to the Board Assurance Framework during 2012/13, and the associated controls overseen by the Executive Management Team and the Risk Management Group. Resources to meet 24/7 demand for safe and effective care for the identification and management of the deteriorating patient (inclusive of implementing the London Health Programme for Adult Emergency Standards introduced in 2012). The Hospital at Night is being strengthened with a 500k programme to provide 24/7 senior critical care nurse practitioner support for deteriorating patients and the junior doctors caring for them. The delivery plan has been agreed with NHS London and the monitoring by our Commissioners. Nurse staffing levels and skill mix - The Trust has an established work programme, with the establishment of daily monitoring and disestablishment of the 20% temporary workforce cover line replaced by staff employed by the trust already achieved. During 2012/13, 120 registered nurses, midwives, health visitors and healthcare assistants were employed to reduce the use of agency staff. For 2013/14, the trust is moving to having a ratio of registered nurses to health care assistants of 70; 30 (from 50:50) on all adult wards. The on-going programme of work has been shared and discussed at various forums including Trust Board and with the Cluster Lead Nurse and Chief Nurse for London. VTE CQuIN Strengthen Thromboembolism Committee and launched VTE risk assessment onto the Trust Vital Pac system. Monthly monitoring is reported to the Board. Financial The Trusts principle risk relating to finance in 2012/13 was the failure to achieve its cost improvement programme (70% delivery against an 11m programme), reducing the planned surplus and impacting on the Trusts Liquidity and ability to meet its planned investments. Annual Governance Statement Page 7

10 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Annual Governance Statement Major Incident Preparedness - Risk assessment and preparedness reviewed in preparation for Olympics, with the Trust plans tested by SW London sector and approved. Risk mitigated. Mandatory and Statutory Training - Monthly monitoring is reported to the Board and sanctions in place for non-compliance with adherence to MAST Policy. A programme of work continues to ensure managers create their own culture of ownership and accountability ensuring that they are compliant and equally enabling staff to attend training sessions as required. Performance in the national staff survey - The survey showed that the Trust had low levels of staff engagement. In September 2012, the Trust was accepted as a national pioneer Trust to improve staff engagement and empowerment, through the adoption of the "Listening into Action (LiA)" methodology. LiA is a national NHS change management initiative supported by the NHS Chief Executive, Sir David Nicholson. It is a comprehensive, outcome-oriented approach to engaging the right people behind quality outcomes. The overarching aim is to improve patient care through increasing staff engagement and satisfaction. Data security breaches The Trust is committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, Care Standards Act 2000, The Data Protection Act 1998, The Freedom of Information Act 2000, Central Government Policies and best practice Guidance from organisations such as the Information Commissioner s Office. The Trust has policies and procedures that ensure that information is appropriately protected from accidental loss, destruction, damage and unauthorised access and disclosure; and to manage the business impacts and risks associated with confidentiality, integrity and availability of all Information. There were 4 incidents of a data breach which met the criteria for reporting to the Information Commissioner s Office, listed below: Date reported ICO Ref. Datix Ref. 1 15/08/2012 ENFO W /10/2012 RFA W /11/2012 ENF W /01/2013 ENFO W27818 Description Potential disclosure/temporary loss of medical records relating to a child Complaint made to the ICO, by a member of the public regarding disclosure of her medical records to the wrong GP Practice A patient discharge letter containing sensitive information was sent in error to another patient Disclosure of Health Visiting records of a mother, following request made by the father of a child Performance against national priorities set out on the NHS Operating Framework 2012/13 During 2012/13 the Trust has met 12 out of the 15 priorities within the NHS Operating Framework standards within the Single Operating Model (SOM). The Trust did not achieve the following priorities: Referral to treatment times open pathways five key specialties are driving non-compliance in open pathways. Late decisions to admit, the need to improve capacity utilisation and a marginal (in orthopaedics only) need to increase overall capacity. This has been addressed by an NHS Intensive Support Team (ESIST) validated action plan including non-recurring external capacity. The plan has been signed off by local commissioners and is expected to be resolved in 2013/14. 4hr access standard in A&E two key issues have contributed to failure to meet this standard. Croydon has historically seen high level of attendances and emergency admissions in proportion to the population against national benchmarks and this trend has now exposed an Emergency Department whose size and layout are outdated. This position is compounded by shift in complexity of patients attending and a significant (15%) increase in ambulance borne patients in 2012/13. A Croydon whole systems Emergency and Urgent Care Improvement Plan is being developed to address the key operational issues including improved flow in the hospital. A separate strategic capital application is in preparation to address the physical limitations. Control of infection (C-difficile) target - the introduction of the dual testing regime has meant that this improvement in patient safety indicator means many more patients fall in to the high risk definition for testing. This has been compounded by a series of noro-virus outbreaks. Core control of infection remains sound in the Trust and this is demonstrated on our excellent performance on MRSA and our internal standard operating procedures being seen as compliant and fit for purpose following peer review visit. Review of effectiveness As Accountable Officer, I have responsibility for reviewing the effectiveness of systems of internal control. My review is informed by the work of the internal auditors, clinical audit and the senior management team within the Trust who have responsibility for the development and maintenance of the internal control framework. I have drawn on the content of the Quality Report and other performance information available to me. My comments are also informed by comments made by the external auditors in their reports. I have been advised on the implications of the result of the effectiveness of the system of internal control by the Board, the Audit Committee and the Quality Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place. The Head of Internal Audit has provided me with an overall opinion of reasonable assurance that the internal controls are working effectively. This is based on an assessment of the Assurance Framework and on controls reviewed as part of the internal audit work. The internal auditors have issued reasonable or significant assurance opinion on most audits undertaken in 2012/13. (A full list of the audits undertaken is in Appendix 2). Annual Governance Statement Page 8

11 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Annual Governance Statement However, in 4 audits only limited assurance could be provided on the controls in certain areas - Cost Improvement Programme, Consultant Job Planning, Medical Devices and Temporary Staffing. A subsequent follow-up audit on Medical Devices provided reasonable assurance. A number of internal audits included in the programme are yet to be finalised, however indications are that there will be no more limited assurance audits. Some of the recommendations issuing from the finalised audits have already been implemented, and progress is being made in all other areas to address the issues identified by audit. Monitoring of implementation of recommendations is carried out by the Executive Management Board and the Audit Committee. Going forward into 2013/14, these monitoring arrangements will be reviewed to ensure they continue to be robust. The Head of Internal Audit s Opinion for 2012/13 noted that governance arrangements appeared to deteriorate during the year, resulting in a suspension of non-statutory sub-committees of the Board. The Trust commissioned an independent review of its governance arrangements, and a number of recommendations arose from this review which the Trust is in the process of implementing. The Head of Internal Audit s opinion is documented in appendix 3. The Board Assurance Framework provides me with evidence that the effectiveness of the controls used to manage the risks to the organisation achieving its principle objectives have been regularly reviewed. The Trust s committee structures ensure sound monitoring and review mechanisms to ensure the systems of internal control are working effectively. My review is also informed by a variety of other sources of information. These include: The views and comments of stakeholders Patient and staff surveys Internal and external audit reports Clinical benchmarking and audit reports Mortality monitoring Reports from external assessments such as CQC Quality and Risk Profile Deanery and Royal College assessments Accreditation inspections of clinical services NHSLA Risk Management Standards assessment PLACE self-assessments Significant Issues An independent review of the governance arrangements was undertaken in January 2013, following the appointment of a new Chairman leading to a period of suspension of the non-statutory sub-committees of the Board. During this period, assurance was provided directly to the Trust Board on all governance matters. This compensated for the period when the committees did not meet. As a result of the Governance Review, in March 2013, the Trust Board approved the move from 9 Board Committees to 4 Board Committee (Audit, Remuneration as Statutory Committees of the Board and Quality and Clinical Governance and Finance and Performance as the two Assurance Committees of the Board. The new Committees commenced in April audits reported with limited assurance were Cost Improvement Programme, Consultant Job Planning, Medical Devices and Temporary Staffing, actions have been put in place to address the gaps in assurance. (A subsequent follow-up audit on Medical Devices provided reasonable assurance.) Serious Incidents The Trust reported 160 serious incidents to the National Reporting and Learning Service (NRLS) within the year (this compares with 82for 2011/12), 2 of which were de-escalated by the Patient Safety Team at NHS London following investigation and submission of reports. All serious incidents are reviewed by the Executive Team and fully investigated using root cause analysis tools. Pressure Ulcers In 2011/12 the trust reported upward trend in hospital acquired grade 3+ pressure ulcers. A full action plan was developed to address this significant patient safety issue, including systems for internal validation. Whilst the number of grade 4 hospital acquired pressure ulcers has reduced (9 to 2) the overall grade 3+ figure has remained static. Further actions are being taken to address. Complaints and Serious Incident Management Timeliness of investigations completion for complaints and serious incidents in line with national practice, the Executive team now review on a weekly basis. On-going compliance with registration requirements of the Care Quality Commission (CQC) with compliance actions remaining in place for outcomes 16(Assessing and monitoring the quality of service provision), 13 (Staffing), and 10 (Environment). The Trust has developed a compliance framework which was launched in The Trust has produced an annual Quality Account for 2012/13 and the governance system described above has been used to validate its content and the data on which it is based. I have highlighted the significant issues, and all appropriate corrective action has been taken in response. Through review of the assurance framework, the Board has not identified any further significant issues that fall within the scope of the requirements of this Governance Statement. Accountable Officer: John Goulston, Chief Executive Signature: Date: 3 June 2013 Annual Governance Statement Page 9

12 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Appendix 1 Annual Governance Statement Annual Governance Statement Page 10

13 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Appendix 2 INTERNAL AUDIT REPORTS 2012/13 Complaints Patient Experience Quality Accounts c.diff Staffing Job Plans Temporary Staff Use of Agency Nursing Staff Cost Improvement Programme Follow-up Data Quality Waiting Lists CQC Registration Consent Medical Devices (and Follow-up Audit) Assurance Framework/Risk Management Mandatory Training Capital - Purley IGT Toolkit IT Networks Follow-up IT Business Continuity and Emergency Planning Follow-up Security Financial Reporting/ Budgetary Control/ Financial Ledger Income Financial Controls Annual Governance Statement Page 11

14 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Appendix 3 CROYDON HEALTH SERVICES NHS TRUST HEAD OF INTERNAL AUDIT OPINION ON THE EFFECTIVENESS OF THE SYSTEM OF INTERNAL CONTROL FOR THE YEAR ENDED 31 MARCH 2013 Roles and Responsibilities The whole Board is collectively accountable for maintaining a sound system of internal control and is responsible for putting in place arrangements for gaining assurance about the effectiveness of that overall system. The Annual Governance Statement (AGS) is an annual statement by the Accountable Officer, on behalf of the Board, setting out: how the individual responsibilities of the Accountable Officer are discharged with regard to maintaining a sound system of internal control that supports the achievement of policies, aims and objectives; the purpose of the system of internal control as evidenced by a description of the risk management and review processes, including the Assurance Framework process; the conduct and results of the review of the effectiveness of the system of internal control including any disclosures of significant control failures together with assurances that actions are or will be taken where appropriate to address issues The organisation s Assurance Framework should bring together all of the evidence required to support the AGS requirements. In accordance with NHS Internal Audit Standards, the Head of Internal Audit (HoIA) is required to provide an annual opinion, based upon and limited to the work performed, on the overall adequacy and effectiveness of the organisation s risk management, control and governance processes (i.e. the organisation s system of internal control). This is achieved through a risk-based plan of work, agreed with management and approved by the Audit Committee, which should provide a reasonable level of assurance, subject to the inherent limitations described below. The opinion does not imply that Internal Audit have reviewed all risks and assurances relating to the organisation. The opinion is substantially derived from the conduct of risk-based plans generated from a robust and organisation-led Assurance Framework. As such, it is one component that the Board takes into account in making its AGS. The Head of Internal Audit Opinion The purpose of my annual HoIA Opinion is to contribute to the assurances available to the Accountable Officer and the Board which underpin the Board s own assessment of the effectiveness of the Trust s system of internal control. This Opinion will in turn assist the Board in the completion of its AGS. My opinion is set out as follows: 1. Overall opinion; 2. Basis for the opinion; 3. Commentary. My overall opinion is that: Reasonable assurance can be given that there is a generally sound system of internal control, designed to meet the organisation s objectives, and that controls are generally being applied consistently. However, some weakness in the design and/or inconsistent application of controls put the achievement of particular objectives at risk. We have issued reasonable assurance opinions on most areas of work that we have undertaken during the year. We have, however, provided several limited assurance reports on various aspects of the Trust s arrangements cost improvement programme, consultant job planning, medical devices (a subsequent follow-up audit provided reasonable assurance) and temporary staffing. We consider that the Trust needs to continue to review and enhance its Board Assurance Framework and risk management processes generally in order to improve and embed risk management within the Trust. The Trust s overall governance arrangements appeared to deteriorate during the year resulting in a suspension of nonstatutory sub-committees of the Board whilst an independent review of the governance arrangements was undertaken. A number of recommendations have or are being implemented in order to strengthen the governance arrangements of the Trust. 2012/13 has been a challenging year for the Trust and much work has been undertaken to ensure that the necessary improvements, which have been identified through a number of sources, are achieved. Further improvements are anticipated for 2013/14. Annual Governance Statement Page 12

15 Croydon Health Services NHS Trust - Annual Accounts 2012/13 The basis for forming my opinion is as follows: 1. An assessment of the design and operation of the underpinning Assurance Framework and supporting processes; and 2. An assessment of the range of individual opinions arising from risk-based audit assignments contained within internal audit risk-based plans that have been reported throughout the year. This assessment has taken account of the relative materiality of these areas and management s progress in respect of addressing control weaknesses. The commentary below provides the context for my opinion and together with the opinion should be read in its entirety. A review of the Trust s Board Assurance Framework (BAF) and its associated processes has been completed as part of the planned audit coverage for 2012/13. Our review in 2011/12 could only provide limited assurance, indicating that BAF did not comprehensively reflect the risks to the achievement of the Trust s objectives and that risk management was not well embedded within the Trust. We had made a number of recommendations to enable the Trust to improve and embed its risk management processes. Our findings during the current year s work indicate that whilst good progress has been made there is still further work to be undertaken to ensure appropriate population of the BAF, that risks identified within the BAF are being mitigated to acceptable levels and that risk management, generally, is embedded within the culture of the Trust. We understand that the Trust is committed to continue enhancing and reinvigorating its BAF and risk management processes generally and is revising its committee structure for 2013/14 accordingly. Internal Audit will provide ongoing, real time advice and support within this new structure with view to providing examples of best practice from other organisations. During the year, the Trust commissioned an independent review of its governance arrangements due to concerns that the Board may not be acting in a coherent and cohesive manner. A number of recommendations arose from that review which the Trust is in the process of implementing. There have been a number of changes at Trust Board level during the year, with a number of Board positions filled in an interim capacity. The Trust is recruiting to these positions on a permanent basis. We have also carried out a wide range of audits during the year, all of which enabled us to provide reasonable assurance that the controls and systems were operating effectively. We have identified throughout the audit work a number of weaknesses in either design or application of the controls for which we have proposed recommendations and for which management has developed action plans for improvement. We have issued several reports containing overall limited assurance - temporary staffing, consultant job planning, cost improvement programme and medical device management (in respect of this latter report we have undertaken a follow-up review and provided reasonable assurance as improvements have been effected through implementation of agreed recommendations). We have provided only limited assurance over a number of other specific control objectives. There have been no limitations of scope or coverage placed upon any internal audit work although certain planned work has not been undertaken as other pieces of work of higher priority have taken their place. In these cases the planned work has been deferred to the 2013/14 internal audit plan and has not limited the opinion in any way. Roger Brealey Director of Operations London Audit Consortium 15-May-13 Annual Governance Statement Page 13

16 Croydon Health Services NHS Trust - Annual Accounts 2012/13 ABOUT CROYDON HEALTH SERVICES NHS TRUST Croydon Health Services NHS Trust (the "Trust") was established in 1993 (Statutory Instrument 1993 No. 27) and provides a range of healthcare services to a population of around 343,000 centred on the London Borough of Croydon. The Trust provides services from the following sites: Croydon University Hospital, a 638 bed acute hospital in Thornton Heath; Purley Hospital, providing outpatient, urgent care and diagnostic services The Sickle Cell and Thalassaemia Centre located in Thornton Heath; A minor injuries unit in New Addington providing a nurse-led walk in clinic; Various Community Services sites. The Trust is one of the largest employers in Croydon, employing 2,987 permanent whole time equivalent staff at 31 March 2013, with a turnover of circa 244 million in 2012/13. The Trust's main source of income is from services commissioned by NHS Croydon. The Trust has smaller contracts with other neighbouring primary care trusts. SUMMARY OF 2012/13 FINANCIAL PERFORMANCE Key Financial Targets The table below sets out the Trust's Financial Targets, and its performance against these, in the 2012/13 Financial Year: Target Breakeven on revenue and operating costs Keep within the capital resource limit (CRL) of m Performance The Trust achieved a surplus of 9k ( 199k surplus after technical adjustments) The Trust remained within the CRL, and generated an underspend of 0.917m Target met? P P Remain within the external financing limit (EFL) of m The Trust remained within its EFL, and over achieved on this by 2.795m P Keep within a Capital Cost Absorption Rate (CCAR) of 3.5% The Trust kept within the 3.5% CCAR. This has resulted in dividend payments of 4.774m to the Department of Health. P Further copies of these accounts can be obtained from: PA to the Director of Finance and Information Croydon Health Services NHS Trust 2nd Floor, Nightingale House 530 London Road Croydon CR7 7YE Tel: Introduction Page 14

17 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Statement of Comprehensive Income for year ended 31 March / /12 Note Gross employee benefits 9 (165,160) (158,561) Other operating costs 7 (73,615) (69,445) Revenue from patient care activities 4 229, ,755 Other Operating revenue 5 14,023 13,186 Operating surplus/(deficit) 4,776 8,935 Investment revenue Finance costs 12 (23) (28) Surplus/(deficit) for the financial year 4,783 8,927 Dividends payable on Public Dividend Capital (PDC) (4,774) (4,868) Net Gain/(loss) on transfers by absorption 0 Retained surplus/(deficit) for the year 9 4, / /12 Other Comprehensive Income Impairments and reversals 13.1 (5,910) (6,962) Net gain/(loss) on revaluation of property, plant & equipment Total comprehensive income for the year* (5,875) (2,834) * This sums the rows above and the retained surplus / (deficit) for the year after adjustments for PDC dividend. Financial performance for the year 2012/ / Retained surplus/(deficit) for the year 9 4,059 Adjustments re donated asset/govt grant reserve elimination (190) 92 Adjusted retained surplus/(deficit) 199 3,967 The presentation of the financial performance note above is consistent with the Department of Health's Financial Monitoring and Accounts schedules. PDC dividend: balance receivable/(payable) at 31 March PDC dividend: balance receivable/(payable) at 1 April The notes on pages 18 to 37 form part of this account. Statement of Comprehensive Income Page 15

18 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Statement of Financial Position as at 31 March March March 2012 Note Non-current assets: Property, plant and equipment , ,437 Intangible assets 14 1,557 1,413 Trade and other receivables 19 1,290 0 Total non-current assets 159, ,850 Current assets: Inventories 18 2,413 2,204 Trade and other receivables 19 8,151 14,155 Cash and cash equivalents 20 11,323 7,726 Total current assets 21,887 24,085 Total assets 181, ,935 Current liabilities Trade and other payables 21 (26,407) (26,148) Provisions 23 (2,243) (989) Total current liabilities (28,650) (27,137) Total assets less current liabilities 152, ,798 Non-current liabilities Provisions 23 (921) (926) Total non-current liabilities (921) (926) TOTAL ASSETS EMPLOYED: 151, ,872 Financed By: Taxpayers' Equity Public Dividend Capital SOCITE 67,415 55,955 Retained earnings SOCITE 37,656 36,946 Revaluation reserve SOCITE 46,386 52,971 TOTAL TAXPAYERS' EQUITY: 151, ,872 The notes on pages 18 to 37 form part of this account. The financial statements on pages 14 to 37 were approved by the Board on 3rd June 2013 and signed on its behalf by: Statement of Financial Position Page 16

19 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Statement of Changes in Taxpayers' Equity for the year ended 31 March 2013 Public Dividend capital Retained earnings Revaluation reserve Total reserves Changes in taxpayers equity for 2012/13: Balance at 1 April ,955 36,946 52, ,872 Retained surplus/(deficit) for the year 9 9 Net gain / (loss) on revaluation of property, plant, equipment Impairments and reversals (5,910) (5,910) Transfers between reserves 701 (701) 0 New PDC Received 11,460 11,460 Net recognised revenue/(expense) for the year 11, (6,585) 5,585 Balance at 31 March ,415 37,656 46, ,457 Public Dividend capital Retained earnings Revaluation reserve Total reserves Changes in taxpayers equity for 2011/12: Balance at 1 April ,955 31,975 60, ,706 Retained surplus/(deficit) for the year 4,059 4,059 Net gain / (loss) on revaluation of property, plant, equipment Impairments and reversals (6,962) (6,962) Transfers between reserves 912 (912) 0 Net recognised revenue/(expense) for the year 0 4,971 (7,805) (2,834) Balance at 31 March ,955 36,946 52, ,872 Statement Of Cash Flows For The Year Ended 31 March / /12 Cash Flows from Operating Activities: Operating Surplus / (Deficit) 4,776 8,935 Depreciation and Amortisation 5,307 5,428 Donated Assets received credited to revenue but non-cash (27) (82) Dividend (Paid) / Refunded (4,768) (5,000) (Increase)/Decrease in Inventories (209) 338 (Increase)/Decrease in Trade and Other Receivables 4,714 (4,879) Increase/(Decrease) in Trade and Other Payables (4,675) 7,659 Provisions Utilised (728) (1,885) Increase/(Decrease) in Provisions 1, Net Cash Inflow/(Outflow) from Operating Activities 6,308 10,843 Cash Flows From Investing Activities Interest Received (Payments) for Property, Plant and Equipment (14,106) (4,996) (Payments) for Intangible Assets (95) (471) Net Cash Inflow/(Outflow) from Investing Activities (14,171) (5,447) NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING (7,863) 5,396 Cash Flows From Financing Activities: Public Dividend Capital Received 11,460 0 Net Cash Inflow/(Outflow) from Financing Activities 11,460 0 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,597 5,396 Cash and Cash Equivalents ( and Bank Overdraft) at Beginning of the Period 7,726 2,330 CASH AND CASH EQUIVALENTS (AND BANK OVERDRAFT) AT YEAR END 11,323 7,726 Statement of Changes in Taxpayers' Equity and Statement of Cash Flows Page 17

20 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies The Secretary of State for Health has directed that the financial statements of NHS Trusts shall meet the accounting requirements of the NHS Trusts Manual for Accounts, which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the 2012/13 NHS Trusts' Manual for Accounts issued by the Department of Health. The accounting policies contained in that manual follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to the NHS, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the NHS Trusts' Manual for Accounts permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the Trust for the purpose of giving a true and fair view has been selected. The particular policies adopted by the Trust are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. 1.1 Accounting convention These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities. 1.2 Acquisitions and discontinued operations Activities are considered to be acquired only if they are taken on from outside the public sector. Activities are considered to be discontinued only if they cease entirely. They are not considered to be discontinued if they transfer from one public sector body to another. 1.3 Transforming Community Services (TCS) transactions Under the TCS initiative, services historically provided by PCTs have transferred to other providers - notably NHS Trusts and NHS Foundation Trusts. Such transfers fall to be accounted for by use of absorption accounting in line with the Treasury FReM. The FReM does not require retrospective adoption, so prior year transactions (which have been accounted for under merger accounting) have not been restated. Absorption accounting requires that entities account for their transactions in the period in which they took place, with no restatement of performance required when functions transfer within the public sector. Where assets and liabilities transfer, the gain or loss resulting is recognised in the Statement of Comprehensive Income, and is disclosed separately from operating costs. 1.4 Critical accounting judgements and key sources of estimation uncertainty In the application of the Trust s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates and the estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods Critical judgements in applying accounting policies There have been no critical judgements, apart from those involving estimations (see below) that management has made in the process of applying the Trust s accounting policies and that have the most significant effect on the amounts recognised in the financial statements Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Revenue - Note 1.5 and Note 4 The basis of calculation for partially completed spells is detailed in note 1.5. Asset Lives Notes 1.10 to 1.12 and Notes 13.3 The reported amounts for depreciation of property, plant and equipment and amortisation of non-current intangible assets can be materially affected by the judgements exercised in determining their estimated economic lives. Economic lives are determined in a number of different ways such as valuations (external professional opinion) and physical asset verification exercises. The minimum and maximum estimated economic lives of each class of asset are disclosed in note 13.3, and the carrying values of property, plant and equipment and intangible assets in notes 13.1 and 14 respectively. Land and Buildings Valuations Notes 1.10, 13.1 and 13.4 All land and buildings are restated at fair value by way of annual professional valuations carried out by an independent external valuer. Provision for Impairment of Receivables Note 19.3 Provisions are based on the average percentage recovery rate of income received for current and prior financial years, according to each category of receivable. The Trust follows the guidance issued in the NHS Trusts' Manual for Accounts in relation to the recommended rate for Injury Cost Recovery receivables. Annual Leave Accrual The estimate for annual leave pay accrual is based on a sample of staff with leave owing at the end of the reporting period. Note 1 Page 18

21 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies Provisions - Note 1.16 and Note 23 Provisions are made for liabilities that are uncertain in amount and timing: a) NHS Litigation Authority member provisions: These provisions are subject to the future outcome of litigation in progress. The value of these provisions is as notified to the Trust by the NHS Litigation Authority (NHSLA); b) Pension provisions for staff and directors: The provision is calculated based on life expectancies of each individual. Life expectancy tables are used and these are obtained from the Office of National Statistics; and c) Provision for pay enhancements: i.e. overtime/on-call/weekend worked in March, but not paid until after closure of the accounts. The calculation is based on the previous 3 months payroll data adjusted for any bank holidays etc. falling in March. d) Other provisions: the Trust provides for the potential liability of the outcome of claims against the Trust, based on legal advice, for those cases not already covered by the NHSLA. 1.5 Revenue Revenue in respect of services provided is recognised when, and to the extent that, performance occurs, and is measured at the fair value of the consideration receivable. The main source of revenue for the Trust is from commissioners for healthcare services. Revenue relating to patient care spells that are part-completed at the year end are apportioned across the financial years on the basis of length of stay at the end of the reporting period compared to expected total length of stay. Where income is received for a specific activity that is to be delivered in the following year, that income is deferred. The Trust receives income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid e.g. by an insurer. The Trust recognises the income when it receives notification from the Department of Work and Pension's Compensation Recovery Unit that the individual has lodged a compensation claim. The income is measured at the agreed tariff for the treatments provided to the injured individual, less a provision for unsuccessful compensation claims and doubtful debts. 1.6 Employee Benefits Short-term employee benefits Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees. The cost of leave earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carry forward leave into the following period. Retirement benefit costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to expenditure at the time the Trust commits itself to the retirement, regardless of the method of payment. 1.7 Other expenses Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable. 1.8 Property, plant and equipment Recognition Property, plant and equipment is capitalised if: it is held for use in delivering services or for administrative purposes; it is probable that future economic benefits will flow to, or service potential will be supplied to, the Trust; it is expected to be used for more than one financial year; the cost of the item can be measured reliably; and the item has cost of at least 5,000; or Collectively, a number of items have a cost of at least 5,000 and individually have a cost of more than 250, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or Items form part of the initial equipping and setting-up cost of a new building, ward or unit, irrespective of their individual or collective cost. Where a large asset, for example a building, includes a number of components with significantly different asset lives, the components are treated as separate assets and depreciated over their own useful economic lives. Valuation All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the Trust s services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any impairment. Note 1 Page 19

22 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies Subsequent accumulated depreciation and impairment losses Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows: Land and non-specialised buildings market value for existing use Specialised buildings depreciated replacement cost Until 31 March 2008, the depreciated replacement cost of specialised buildings has been estimated for an exact replacement of the asset in its present location. HM Treasury has adopted a standard approach to depreciated replacement cost valuations based on modern equivalent assets and, where it would meet the location requirements of the service being provided, an alternative site can be valued. Properties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Cost includes professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS 23 for assets held at fair value. Assets are revalued and depreciation commences when they are brought into use. Until 31 March 2008, fixtures and equipment were carried at replacement cost, as assessed by indexation and depreciation of historic cost. From 1 April 2008 indexation has ceased. The carrying value of existing assets at that date will be written off over their remaining useful lives and new fixtures and equipment are carried at depreciated historic cost as this is not considered to be materially different from fair value. An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment for the same asset previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive income in the Statement of Comprehensive Income. Subsequent expenditure Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is capitalised. Where subsequent expenditure restores the asset to its original specification, the expenditure is capitalised and any existing carrying value of the item replaced is written-out and charged to operating expenses. 1.9 Intangible assets Recognition Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the Trust s business or which arise from contractual or other legal rights. They are recognised only when it is probable that future economic benefits will flow to, or service potential be provided to, the Trust; where the cost of the asset can be measured reliably; and where the cost is at least 5,000. Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, for example an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is not capitalised: it is recognised as an operating expense in the period in which it is incurred. Internally-generated assets are recognised if, and only if, all of the following have been demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use the intention to complete the intangible asset and use it the ability to sell or use the intangible asset how the intangible asset will generate probable future economic benefits or service potential the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use it the ability to measure reliably the expenditure attributable to the intangible asset during its development Measurement The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the criteria above are initially met. Where no internally-generated intangible asset can be recognised, the expenditure is recognised in the period in which it is incurred. Following initial recognition, intangible assets are carried at fair value by reference to an active market, or, where no active market exists, at amortised replacement cost (modern equivalent assets basis), indexed for relevant price increases, as a proxy for fair value. Internally-developed software is held at historic cost to reflect the opposing effects of increases in development costs and technological advances Depreciation, amortisation and impairments Freehold land, properties under construction, and assets held for sale are not depreciated. Otherwise, depreciation and amortisation are charged to write off the costs or valuation of property, plant and equipment and intangible non-current assets, less any residual value, over their estimated useful lives, in a manner that reflects the consumption of economic benefits or service potential of the assets. The estimated useful life of an asset is the period over which the Trust expects to obtain economic benefits or service potential from the asset. This is specific to the Trust and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year end, with the effect of any changes recognised on a prospective basis. Assets held under finance leases are depreciated over their estimated useful lives. At each reporting period end, the Trust checks whether there is any indication that any of its tangible or intangible non-current assets have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are tested for impairment annually. Note 1 Page 20

23 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no initial impairment loss. The reversal of the impairment loss is credited to expenditure to the extent of the decrease previously charged there and thereafter to the revaluation reserve. Impairments are analysed between Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME) from 2011/12. This is necessary to comply with Treasury's budgeting guidance. DEL limits are set in the Spending Review and Departments may not exceed the limits that they have been set. AME budgets are set by the Treasury and may be reviewed with departments in the run-up to the Budget. Departments need to monitor AME closely and inform Treasury if they expect AME spending to rise above forecast. Whilst Treasury accepts that in some areas of AME inherent volatility may mean departments do not have the ability to manage the spending within budgets in that financial year, any expected increases in AME require Treasury approval Donated assets Following the accounting policy change outlined in the Treasury FREM for 2011/12, a donated asset reserve is no longer maintained. Donated non-current assets are capitalised at their fair value on receipt, with a matching credit to income. They are valued, depreciated and impaired as described above for purchased assets. Gains and losses on revaluations, impairments and sales are as described above for purchased assets. Deferred income is recognised only where conditions attached to the donation preclude immediate recognition of the gain. This accounting policy change was applied retrospectively and consequently the results were restated Government grants Following the accounting policy change outlined in the Treasury FREM for 2011/12, a government grant reserve is no longer maintained. The value of assets received by means of a government grant are credited directly to income. Deferred income is recognised only where conditions attached to the grant preclude immediate recognition of the gain. This accounting policy change was applied retrospectively, although the Trust had no government granted assets in 2010/11, hence no restatement of results for that year was necessary Leases Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. The Trust as lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred. Where a lease is for land and buildings, the land and building components are separated and individually assessed as to whether they are operating or finance leases. The Trust as lessor Rental income from operating leases is recognised on a straight-line basis over the term of the lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term Inventories Inventories are valued at the lower of cost and net realisable value using the first-in first-out cost formula. This is considered to be a reasonable approximation to fair value due to the high turnover of stocks Cash and cash equivalents Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and that form an integral part of the Trust s cash management Provisions Provisions are recognised when the Trust has a present legal or constructive obligation as a result of a past event, it is probable that the Trust will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HM Treasury s discount rate of -1.8% (for short term provisions of between 0 to 5 years inclusive); -1.0% (for medium term provisions of between 6 to 10 years inclusive); and 2.2% (for long term provisions of over 10 years) in real terms (2.35% for employee early departure obligations). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursements will be received and the amount of the receivable can be measured reliably. Note 1 Page 21

24 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the Trust has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. A restructuring provision is recognised when the Trust has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with on-going activities of the entity Clinical negligence costs The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the Trust pays an annual contribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged to expenditure. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liability remains with the Trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust is disclosed at note Non-clinical risk pooling The Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the Trust pays an annual contribution to the NHS Litigation Authority and, in return, receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable in respect of particular claims are charged to operating expenses as and when they become due Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Trust, or a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation or the amount of the obligation cannot be measured sufficiently reliably. A contingent liability is disclosed unless the possibility of a payment is remote. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Trust. A contingent asset is disclosed where an inflow of economic benefits is probable. Where the time value of money is material, contingencies are disclosed at their present value Financial assets Financial assets are recognised when the Trust becomes party to the financial instrument contract or, in the case of trade receivables, when the goods or services have been delivered. Financial assets are derecognised when the contractual rights have expired or the asset has been transferred. Financial assets are initially recognised at fair value. Financial assets are classified into the following categories: financial assets at fair value through profit and loss; held to maturity investments; available for sale financial assets, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. After initial recognition, they are measured at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to the initial fair value of the financial asset. At the end of the reporting period, the Trust assesses whether any financial assets, other than those held at fair value through profit and loss are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset. For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the revised future cash flows discounted at the asset s original effective interest rate. The loss is recognised in expenditure and the carrying amount of the asset is reduced through a provision for impairment of receivables. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through expenditure to the extent that the carrying amount of the receivable at the date of the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised Financial liabilities Financial liabilities are recognised on the statement of financial position when the Trust becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are derecognised when the liability has been discharged, that is, the liability has been paid or has expired. Loans from the Department of Health are recognised at historical cost. Otherwise, financial liabilities are initially recognised at fair value. Note 1 Page 22

25 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Note 1 - Accounting Policies 1.22 Value Added Tax Most of the activities of the Trust are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT Foreign currencies The Trust's functional currency and presentational currency is sterling. Transactions denominated in a foreign currency are translated into sterling at the exchange rate ruling on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the spot exchange rate on 31 March. Resulting exchange gains and losses for either of these are recognised in the Trust s surplus/deficit in the period in which they arise Third party assets Assets belonging to third parties (such as money held on behalf of patients) are not recognised in the accounts since the Trust has no beneficial interest in them. Details of third party assets are given in Note 30 to the accounts Public Dividend Capital (PDC) and PDC dividend Public dividend capital represents taxpayers equity in the NHS Trust. At any time the Secretary of State can issue new PDC to, and require repayments of PDC from, the Trust. PDC is recorded at the value received. As PDC is issued under legislation rather than under contract, it is not treated as an equity financial instrument. An annual charge, reflecting the cost of capital utilised by the Trust, is payable to the Department of Health as public dividend capital dividend. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average carrying amount of all assets less liabilities, except for donated assets and cash balances with the Office of the Paymaster General. The average carrying amount of assets is calculated as a simple average of opening and closing relevant net assets Losses and Special Payments Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the health service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different categories, which govern the way that individual cases are handled. Losses and special payments are charged to the relevant functional headings in expenditure on an accruals basis, including losses which would have been made good through insurance cover had NHS Trusts not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure) Subsidiaries Material entities over which the Trust has the power to exercise control so as to obtain economic or other benefits are classified as subsidiaries and are consolidated. Their income and expenses; gains and losses; assets, liabilities and reserves; and cash flows are consolidated in full into the appropriate financial statement lines. Appropriate adjustments are made on consolidation where the subsidiary s accounting policies are not aligned with the Trust s or where the subsidiary s accounting date is before 1 January or after 30 June. Subsidiaries that are classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. For , 2011/12 and 2012/13 in accordance with the directed accounting policy from the Secretary of State, the Trust does not consolidate the NHS charitable funds for which it is the corporate Trustee Accounting Standards that have been issued but have not yet been adopted The Treasury FReM does not require the following Standards and Interpretations to be applied in 2012/13. The application of the Standards as revised would not have a material impact on the accounts for 2012/13, were they applied in that year: IAS 27 Separate Financial Statements - subject to consultation IAS 28 Investments in Associates and Joint Ventures - subject to consultation IFRS 9 Financial Instruments - subject to consultation - subject to consultation IFRS 10 Consolidated Financial Statements - subject to consultation IFRS 11 Joint Arrangements - subject to consultation IFRS 12 Disclosure of Interests in Other Entities - subject to consultation IFRS 13 Fair Value Measurement - subject to consultation IPSAS 32 - Service Concession Arrangement - subject to consultation Note 1 Page 23

26 Croydon Health Services NHS Trust - Annual Accounts 2012/13 2. Operating segments Acute Services Community Services Total Services 2012/ / / / / / Revenue 211, ,826 31,933 36, , ,961 Costs (212,172) (197,608) (31,400) (35,294) (243,572) (232,902) Retained Surplus/(deficit) (524) 3, , Income generation activities The Trust undertakes income generation activities with an aim of achieving profit, which is then used in patient care. None of these activities individually exceed 1m, nor are they otherwise material. 4. Revenue from patient care activities 2012/ / NHS Trusts Primary Care Trusts - tariff 120, ,859 Primary Care Trusts - non-tariff 81,614 77,480 Primary Care Trusts - market forces factor 24,589 24,304 NHS Foundation Trusts Local Authorities 873 1,133 Non-NHS: Private patients Overseas patients (non-reciprocal) Injury costs recovery 909 1,094 Other Total Revenue from patient care activities 229, , Other operating revenue 2012/ / Education, training and research 8,828 8,529 Charitable and other contributions to revenue expenditure - NHS 26 0 Receipt of donations for capital acquisitions - NHS Charity Receipt of Government grants for capital acquisitions Non-patient care services to other bodies 3,427 3,018 Income generation 1, Rental revenue from operating leases Total Other Operating Revenue 14,023 13,186 Total operating revenue 243, , Revenue 2012/ / From rendering of services 243, ,094 In 2011/12, income from training, and donation income, was not included as revenue from the rendering of services. In 2012/13, there has been a change in the reporting required by the Department of Health, making the total revenue received by the Trust to be classed as either rendering of services, or sale of goods. The equivalent figure for 2011/12 would have been 236,941k. Notes 2 to 6 Page 24

27 Croydon Health Services NHS Trust - Annual Accounts 2012/13 7. Operating expenses (excluding employee benefits) 2012/ / Trust Chair and Non-executive Directors Supplies and services - clinical 33,722 31,378 Supplies and services - general 10,315 10,851 Consultancy services Establishment 4,219 3,761 Transport 1,559 1,573 Premises 10,848 9,371 Impairments and Reversals of Receivables Inventories write down 0 (33) Depreciation 4,968 5,015 Amortisation Audit fees Other auditor's remuneration 0 14 * Clinical negligence 5,531 5,340 Education and Training 1, Change in Discount Rate 1 Total Operating expenses (excluding employee benefits) 73,615 69,445 Employee benefits Employee benefits excluding Board members 163, ,413 Board members 1,191 1,149 Total employee benefits 165, ,562 Total operating expenses 238, ,007 * Other auditor's remuneration relates to support from the external auditors on the Trust's Foundation Trust application (2011/12). 8. Operating Leases 8.1 Trust as lessee 2012/ /12 Payments recognised as an expense in year Minimum lease payments 2,878 2,611 Total 2,878 2,611 Total future minimum lease payments Land Buildings Other 2012/ /12 Payable: No later than one year ,991 2,249 2,609 Between one and five years ,171 4,231 5,695 After five years Total ,162 6,789 8,633 Land lease payments relate to the peppercorn rent paid on the Purley Hospital site. Buildings lease payments are for the rents payable on various community services sites (leases end July 2013, and the freehold title of 4 of the sites will transfer to the Trust on 1st April, hence drop in the category "between one and five years". "Other" lease payments relate to the Trust's Pathology Analyser contract, and the lease of other equipment. 8.2 Trust as lessor The Trust is the lessor of parts of its premises to external organisations, and for staff accommodation, for which it charges rental revenue. 2012/ /12 Recognised as income: Rental revenue Total Receivable: No later than one year Between one and five years After five years Total 1,288 1,060 Note 7 to 8 Page 25

28 Croydon Health Services NHS Trust - Annual Accounts 2012/13 9. Employee benefits and staff numbers 9.1 Employee benefits 2012/ /12 Total Permanent Other Total Permanent Other Employee Benefits 2012/13 - Gross Expenditure Salaries and wages 140, ,014 27, , ,698 21,598 Social security costs 11,492 10, ,392 10, Employer Contributions to NHS BSA - Pensions Division 14,150 13, ,200 13, Termination benefits Total employee benefits 166, ,560 28, , ,317 22,650 Less recoveries in respect of employee benefits Total - Net Employee Benefits including capitalised costs 166, ,560 28, , ,317 22,650 Employee costs capitalised 1, Gross Employee Benefits excluding capitalised costs 165, ,283 27, , ,121 22,440 The increase in capital staff costs in 2012/13 is because of a number of major capital projects (Purley Hospital Redevelopment and new patient care record system implementation) undertaken in 2012/13, which required additional project management support. 9.2 Staff Numbers 1,162 5,437 Total Permanent Other Total Permanent Other Average Staff Numbers Number Number Number Number Number Number Medical and dental Administration and estates Healthcare assistants and other support staff Nursing, midwifery and health visiting staff 1, , Scientific, therapeutic and technical staff TOTAL 3,485 2, ,428 2, Of the above - staff engaged on capital projects Staff Sickness absence and ill health retirements The table below shows the average number of days lost to sickness, per member of staff, over the calendar year January 2012 to December 2012, and are the figures notified to the Trust by the Department of Health. The Department of Health considers these figures for calendar years to be a reasonable proxy for financial year equivalents. 2012/ /12 Number Number Total Days Lost 22,380 23,053 Total Staff Years 3,017 3,020 Average working Days Lost / /12 Number Number Number of persons retired early on ill health grounds Total additional pensions liabilities accrued in the year Exit Packages agreed in 2012/13 Exit package cost band (including any special payment element) *Number of compulsory redundancies 2012/ /12 Total number *Number of *Number of of exit *Number of other other packages by compulsory departures departures cost band redundancies agreed agreed Total number of exit packages by cost band Number Number Number Number Number Number Less than 10, ,001-25, ,001-50, Total number of exit packages by type (total cost Total resource cost ( 000) Redundancy and other departure costs have been paid in accordance with the provisions of the NHS Terms & Conditions of Service Handbook. Exit costs in this note are accounted for in full in the year of departure. Where the Trust has agreed early retirements, the additional costs are met by the Trust and not by the NHS pensions scheme. Illhealth retirement costs are met by the NHS pensions scheme and are not included in the table. This disclosure reports the number and value of exit packages taken by staff leaving in the year. Note: The expense associated with these departures may have been recognised in part or in full in a previous period. Notes 9.1 to 9.4 Page 26

29 Croydon Health Services NHS Trust - Annual Accounts 2012/ Pension costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under these provisions can be found on the NHS Pensions website at The scheme is an unfunded, defined benefit scheme that covers NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. In order that the defined benefit obligations recognised in the financial statements do not differ materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that the period between formal valuations shall be four years, with approximate assessments in intervening years. An outline of these follows: a) Accounting valuation A valuation of the scheme liability is carried out annually by the scheme actuary as at the end of the reporting period. Actuarial assessments are undertaken in intervening years between formal valuations using updated membership data and are accepted as providing suitably robust figures for financial reporting purposes. The valuation of the scheme liability as at 31 March 2013, is based on the valuation data as 31 March 2012, updated to 31 March 2013 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used. The latest assessment of the liabilities of the scheme is contained in the scheme actuary report, which forms part of the annual NHS Pension Scheme (England and Wales) Pension Accounts, published annually. These accounts can be viewed on the NHS Pensions website. Copies can also be obtained from The Stationery Office. b) Full actuarial (funding) valuation The purpose of this valuation is to assess the level of liability in respect of the benefits due under the scheme (taking into account its recent demographic experience), and to recommend the contribution rates. The last published actuarial valuation undertaken for the NHS Pension Scheme was completed for the year ending 31 March Consequently, a formal actuarial valuation would have been due for the year ending 31 March However, formal actuarial valuations for unfunded public service schemes were suspended by HM Treasury on value for money grounds while consideration is given to recent changes to public service pensions, and while future scheme terms are developed as part of the reforms to public service pension provision due in The Scheme Regulations were changed to allow contribution rates to be set by the Secretary of State for Health, with the consent of HM Treasury, and consideration of the advice of the Scheme Actuary and appropriate employee and employer representatives as deemed appropriate. The next formal valuation to be used for funding purposes will be carried out at as at March 2012 and will be used to inform the contribution rates to be used from 1 April c) Scheme provisions The NHS Pension Scheme provided defined benefits, which are summarised below. This list is an illustrative guide only, and is not intended to detail all the benefits provided by the Scheme or the specific conditions that must be met before these benefits can be obtained: The Scheme is a final salary scheme. Annual pensions are normally based on 1/80th for the 1995 section and of the best of the last three years pensionable pay for each year of service, and 1/60th for the 2008 section of reckonable pay per year of membership. Members who are practitioners as defined by the Scheme Regulations have their annual pensions based upon total pensionable earnings over the relevant pensionable service. With effect from 1 April 2008 members can choose to give up some of their annual pension for an additional tax free lump sum, up to a maximum amount permitted under HMRC rules. This new provision is known as pension commutation. Annual increases are applied to pension payments at rates defined by the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve months ending 30 September in the previous calendar year. From the Consumer Price Index (CPI) will be used to replace the Retail Prices Index (RPI). Early payment of a pension, with enhancement, is available to members of the scheme who are permanently incapable of fulfilling their duties effectively through illness or infirmity. A death gratuity of twice final year s pensionable pay for death in service, and five times their annual pension for death after retirement is payable For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to the employer. Members can purchase additional service in the NHS Scheme and contribute to money purchase AVCs run by the Scheme s approved providers or by other Free Standing Additional Voluntary Contributions (FSAVC) providers. Note 9.5 Page 27

30 Croydon Health Services NHS Trust - Annual Accounts 2012/ Better Payment Practice Code The Better Payment Practice Code requires the Trust to aim to pay all valid invoices by the due date or within 30 days of receipt of a valid invoice, whichever is later. 2012/ /12 Non-NHS Payables Number 000 Number 000 Total Non-NHS Trade Invoices Paid in the Year 75,242 89,585 54,481 63,262 Total Non-NHS Trade Invoices Paid Within Target 52,738 60,819 45,302 46,672 Percentage of non-nhs Trade Invoices Paid Within Target 70% 68% 83% 74% NHS Payables Total NHS Trade Invoices Paid in the Year 1,871 14,034 1,927 11,331 Total NHS Trade Invoices Paid Within Target 878 9,950 1,204 8,831 Percentage of NHS Trade Invoices Paid Within Target 47% 71% 62% 78% The increase in the number of invoices processed in 2012/13 is due to the bringing in-house of catering services (with a corresponding increase of invoices for supply of food and other catering items) and a significant increase in agency invoices. 11. Investment Revenue 2012/ /12 Interest Revenue Bank interest Total Investment Revenue Finance Costs 2012/ / Provisions - unwinding of discount Total Finance Costs Notes 10 to 12 Page 28

31 Croydon Health Services NHS Trust - Annual Accounts 2012/ Property, plant and equipment 13.1 Property, plant and equipment 2012/13 Land Buildings excluding dwellings Dwellings AUC & POA* Plant & machinery Transport equipment Information technology Furniture & fittings Cost or valuation: At 1 April ,729 96,778 3,017 2,352 13, , ,905 Additions of Assets Under Construction 9,644 9,644 Additions Purchased 0 4, , ,038 Additions Donated Upward revaluation/positive indexation Impairments/negative indexation (2,300) (4,781) (51) (7,132) Reversal of Impairments 0 1, ,222 At 31 March ,429 98,087 3,064 11,996 16, , ,730 Depreciation: At 1 April , , ,468 Charged During the Year 0 2, , ,968 At 31 March , , , ,436 Net Book Value at 31 March ,429 95,132 3,013 11,996 9, , ,294 Purchased 34,429 93,768 3,013 11,996 8, , ,723 Donated 0 1, ,359 Government Granted Total at 31 March ,429 95,132 3,013 11,996 9, , ,294 Asset financing: Owned 34,429 95,132 3,013 11,996 9, , ,294 Total at 31 March ,429 95,132 3,013 11,996 9, , ,294 Total Revaluation Reserve Balance for Property, Plant & Equipment Land Buildings excluding dwellings Dwellings AUC & POA* Plant & machinery Transport equipment Information technology Furniture & fittings At 1 April ,673 24,226 1, ,971 Movements due to revaluation (2,300) (4,313) (6,585) At 31 March ,373 19,913 1, ,386 Total Additions to Assets Under Construction in 2012/13: Buildings excl Dwellings 5,622 Plant & Machinery 4,022 Total Additions to Assets under Construction in 2012/13 9, Property, plant and equipment 2011/12 Land Buildings excluding dwellings Dwellings AUC & POA* Plant & machinery Transport equipment Information technology Furniture & fittings Cost or valuation at 1 April , ,985 3,148 1,525 11, , ,470 Additions - purchased 0 1, , ,135 Additions - donated Additions - government granted Reclassifications 0 1,889 0 (2,708) Revaluation & indexation gains Impairments (1,041) (5,788) (155) (6,984) Reversals of impairments Cumulative dep netted off cost following revaluation 0 (3,072) (53) (3,125) At 31 March ,729 96,778 3,017 2,352 13, , ,905 Total Depreciation at 1 April , , ,578 Charged During the Year 0 3, , ,015 Cumulative dep netted off cost following revaluation 0 (3,072) (53) (3,125) At 31 March , , ,468 Net book value at 31 March ,729 96,778 3,017 2,352 6, , ,437 Purchased 36,729 95,062 3,017 2,352 5, , ,328 Donated 0 1, , ,873 Government Granted Total at 31 March ,729 96,778 3,017 2,352 6, , ,437 Asset financing: Owned 36,729 96,778 3,017 2,352 6, , ,437 Total at 31 March ,729 96,778 3,017 2,352 6, , ,437 *Assets Under Construction & Payments on Account Note 13.1 to 13.2 Page 29

32 Croydon Health Services NHS Trust - Annual Accounts 2012/ Remaining Economic Lives of Non Current Assets Min Life Max Life Intangible Assets Years Years Software Licences 0 6 Property, Plant and Equipment Buildings exc Dwellings 6 87 Dwellings Plant & Machinery 0 15 Information Technology 0 9 Furniture and Fittings Revaluation Exercise The Trust s land and buildings were valued independently by the Valuation Office Agency (an executive agency of HM Revenue and Customs) as at March on a Modern Equivalent Asset (MEA) basis. The valuation report was signed by Peter Ashby, MRICS an external RICS Registered Valuer who has the appropriate knowledge, skills and understanding to undertake the valuation competently, as required by the RICS Valuation - Professional Standards, 8th edition. The valuation exercise was a desk top exercise supplemented by a site visit, and the last full valuation was in October The MEA basis requires the valuer to review the building in use and value them on the basis of what it would cost to build a new structure capable of providing identical services. The valuation included positive and negative valuation movements, as detailed in Note All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the Trust s services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows: Land and non-specialised buildings market value for existing use Specialised buildings depreciated replacement cost 14. Intangible non-current assets 2011/12 and 2012/ / /12 Computer Software - Purchased Cost at 1 April 3,473 3,198 Additions - purchased Additions - donated 30 0 At 31 March 3,956 3,473 Amortisation at 1 April 2,060 1,647 Charged during the year At 31 March 2,399 2,060 Net Book Value at 31 March 1,557 1,413 Net book value at 31 March comprises: Purchased 1,527 1,413 Donated 30 0 Total at 31 March 1,557 1,413 As software assets are not revalued, there is no corresponding revaluation reserve for intangible assets. The Trust does not carry any internally generated intangible assets. All intangible assets are held at cost and depreciated at rates calculated to write them down to nil net book value over the estimated useful life of the asset. 15. Analysis of impairments and reversals recognised in 2012/13 Property, Plant and Equipment impairments & reversals charged to the revaluation reserve: 2012/ Changes in market price 5,910 Total impairments for PPE charged to reserves 5,910 Total Impairments charged to Revaluation Reserve 5,910 Total Impairments charged to SoCI - DEL 0 Total Impairments charged to SoCI - AME 0 Overall Total Impairments 5,910 Notes 13.3 to 15 Page 30

33 Croydon Health Services NHS Trust - Annual Accounts 2012/13 16 Commitments 16.1 Capital commitments Contracted capital commitments at 31 March not otherwise included in these financial statements: 31 March March Property, plant and equipment 4, Intangible assets Total 4,851 1,296 In 2013/14, the majority of the capital commitment relates to the Purley War Memorial Hospital Redevelopment Scheme, which is due to complete in June / July Other financial commitments The Trust has entered into non-cancellable contracts (which are not leases or PFI contracts or other service concession arrangements), for a wide range of services including computer maintenance and licensing; hotel and other domestic services; facilities, building, grounds and fire alarm maintenance. The payments to which the Trust is committed are as follows: 31 March March Not later than one year 9,134 9,348 Later than one year and not later than five years 3,955 7,212 Later than five years 1,562 2,002 Total 14,651 18,562 The decrease in the "Later than one year and not later than five years" banding is because a significant high value contract for domestic services, security, car-parking and portering is due to end next financial year, and will be subject to appropriate procurement procedures. 17 Intra-Government and other balances Current receivables Non-current receivables Current payables Non-current payables Balances with other Central Government Bodies 4, ,043 0 Balances with Local Authorities Balances with NHS bodies outside the Departmental Group Balances with NHS Trusts and Foundation Trusts ,254 0 Balances with Public Corporations and Trading Funds Balances with bodies external to government 2,865 1,290 17,912 0 At 31 March ,151 1,290 26,407 0 Prior period: Balances with other Central Government Bodies 9, ,891 0 Balances with Local Authorities Balances with NHS Trusts and Foundation Trusts Balances with Public Corporations and Trading Funds Balances with bodies external to government 3, ,243 0 At 31 March , , Inventories Drugs Consumables Energy Balance at 1 April , ,204 Additions 15,097 10, ,571 Inventories recognised as an expense in the period (15,007) (10,346) (9) (25,362) Balance at 31 March , ,413 Total Notes 16 to 18 Page 31

34 Croydon Health Services NHS Trust - Annual Accounts 2012/ Receivables 19.1 Trade and other receivables 31 March March NHS receivables - revenue 4,464 ~ 9,553 NHS prepayments and accrued income Non-NHS receivables - revenue 1,215 1,224 Non-NHS prepayments and accrued income Provision for the impairment of receivables (1,450) (1,362) VAT Operating lease receivables 628 # 241 Other receivables 2,202 2,829 Total current receivables 8,151 14, March March Operating lease receivables 336 * 0 Other receivables 954 ** 0 Total non-current receivables 1,290 0 Total current and non current 9,441 14,155 Non-current Receivables Explanatory Note Current The great majority of trade is with Primary Care Trusts, as commissioners for NHS patient care services. As Primary Care Trusts are funded by Government to buy NHS patient care services, no credit scoring of them is considered necessary. Non-current * The non-current operating receivables balance relates to monies owed to the Trust by an external party for the rental of Trust premises. In 2012/13, a repayment plan was agreed with the tenant, and the balance of 336k is the portion of the debt due after 1 year agreed under the terms of the repayment plan. ** The 0.954m relates to Injury Cost Recovery receivables; clarification guidance states that an element of the receivable should be shown as a non-current receivable. The corresponding value for 2011/12 was 1.062m 19.2 Receivables past their due date but not impaired 31 March March By up to three months 216 3,956 By three to six months 479 1,388 By more than six months 405 1,974 Total receivables past their due date not impaired 1,100 7,318 The significant variance between the two years is because, in the prior year, a significant level of receivables past their due date but not impaired related to NHS receivables ( 6.4m). Under DoH guidelines, NHS receivables are not impaired. In 2012/13, the majority of these NHS receivables were paid. Of the 2012/13 1.1m figure shown above, 0.346m is NHS receivables. The figures do not include Injury Cost Recovery (ICR, formerly Road Traffic Act) receivables as these are not classed as financial assets Provision for impairment of receivables 2012/ / Balance at 1 April (1,362) (1,320) Amount written off during the year Amount recovered during the year 0 12 (Increase)/decrease in receivables impaired (178) (161) Balance at 31 March (1,450) (1,362) The figures shown above include provisions for Injury Cost Recovery receivables, and therefore do not correlate directly to the figures shown Note 19.2 above (which excludes ICR receivables). 20. Cash and Cash Equivalents 2012/ /12 000s 000s Opening balance at 1 April 7,726 2,330 Net change in year 3,597 5,396 Closing balance at 31 March 11,323 7,726 Made up of: Cash with Government Banking Service 11,312 7,719 Cash in hand 11 7 Cash and cash equivalents as in statement of financial position 11,323 7,726 Cash and cash equivalents as in statement of cash flows 11,323 7,726 Patients' money held by the Trust, not included above 1 1 Notes 19 to 20 Page 32

35 Croydon Health Services NHS Trust - Annual Accounts 2012/ Trade and other payables 31 March March NHS payables - revenue 2,776 3,023 NHS accruals and deferred income Non-NHS payables - revenue 1,782 6,272 Non-NHS payables - capital 7,238 2,304 Non-NHS accruals and deferred income 8,815 8,413 Social security costs 1,631 1,605 Tax 1,863 1,911 Other 2,043 2,178 Total 26,407 26,148 Total payables (current and non-current) 26,407 26,148 Included above: - outstanding Pension Contributions at the year end 1,869 1, Deferred income Current Current 2012/ / Opening balance at 1 April Deferred income addition Transfer of deferred income (21) (155) Deferred Income (current) at 31 March Provisions Total Pensions Relating to Other Staff Legal Claims Comprising: Balance at 1 April , Arising During the Year 2, ,047 Utilised During the Year (728) (97) 0 (631) Reversed Unused (216) 0 (14) (202) Unwinding of Discount Change in Discount Rate Balance at 31 March , ,159 Expected Timing of Cash Flows: No Later than One Year 2, ,044 Later than One Year and not later than Five Years Later than Five Years Other Pension provisions relate to pre-1995 early retirements. The Trust pays NHS Pensions an amount each quarter for these former employees, and the provision balance represents the estimated costs of the continuing liabilities. Legal claims are Liabilities to Third Parties Scheme (LTPS) cases which are being dealt with by the NHS Litigation Authority on behalf of the Trust. Included in "other" liabilities are amounts relating to injury benefits, pay provisions for outstanding bank holidays, overtime, on call and night duty, the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme; and contract termination and compensation provisions. Amount Included in the Provisions of the NHS Litigation Authority in Respect of Clinical Negligence Liabilities: As at 31 March ,121 - As at 31 March , Contingencies 31 March 31 March Contingent liabilities 000s 000s Liabilities to Third Parties* (42) (24) Net Value of Contingent Liabilities (42) (24) * Liabilities to Third Parties Scheme (LTPS) are cases which are being dealt with by the NHS Litigation Authority on behalf of the Trust. The Trust had no contingent assets at 31 March 2013 (nil at 31 March 2012). Notes 21 to 24 Page 33

36 Croydon Health Services NHS Trust - Annual Accounts 2012/13 25 Financial Instruments 25.1 Financial risk management Financial reporting standard IFRS 7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. Because of the continuing service provider relationship that the NHS Trust has with primary care Trusts and the way those primary care Trusts are financed, the NHS Trust is not exposed to the degree of financial risk faced by business entities. Also financial instruments play a much more limited role in creating or changing risk than would be typical of listed companies, to which the financial reporting standards mainly apply. The NHS Trust has limited powers to borrow or invest surplus funds and financial assets and liabilities are generated by day-to-day operational activities rather than being held to change the risks facing the NHS Trust in undertaking its activities. The Trust s treasury management operations are carried out by the finance department, within parameters defined formally within the Trust s standing financial instructions and policies agreed by the board of directors. Trust treasury activity is subject to review by the Trust s internal auditors. Currency risk The Trust is principally a domestic organisation with the great majority of transactions, assets and liabilities being in the UK and sterling based. The Trust has no overseas operations. The Trust therefore has low exposure to currency rate fluctuations. Interest rate risk The Trust borrows from government for capital expenditure, subject to affordability as confirmed by the strategic health authority. The borrowings are for 1 25 years, in line with the life of the associated assets, and interest is charged at the National Loans Fund rate, fixed for the life of the loan. The Trust therefore has low exposure to interest rate fluctuations. Credit risk Because the majority of the Trust s income comes from contracts with other public sector bodies, the Trust has low exposure to credit risk. The maximum exposures as at 31 March 2013 are in receivables from customers, as disclosed in the trade and other receivables note. Liquidity risk The Trust s operating costs are incurred under contracts with primary care Trusts, which are financed from resources voted annually by Parliament. The Trust funds its capital expenditure from funds obtained within its prudential borrowing limit. The Trust is not, therefore, exposed to significant liquidity risks Financial Assets At fair value through profit and loss Loans and receivables Available for sale Total Receivables - NHS 4,464 4,464 Receivables - non-nhs 1,171 1,171 Cash at bank and in hand 11,323 11,323 Total at 31 March , ,958 Receivables - NHS 9,864 9,864 Receivables - non-nhs 1,387 1,387 Cash at bank and in hand 7,726 7,726 Total at 31 March , , Financial Liabilities At fair value through profit and loss Other Total 000s 000s 000s NHS payables 3,035 3,035 Non-NHS payables 17,998 17,998 Total at 31 March ,033 21,033 NHS payables 3,465 3,465 Non-NHS payables 17,356 17,356 Total at 31 March ,821 20,821 Note 25 Page 34

37 Croydon Health Services NHS Trust - Annual Accounts 2012/ Events after the end of the reporting period i) ii) On the 1st April 2013, with the dissolution of Croydon Primary Care Trust (NHS Croydon), the freehold title to a number of community services sites (property assets) were transferred to the Trust. The net book value of these sites (land and buildings) as at 31 March 2013 was 3.1m. In accordance with Department of Health guidelines, the Trust will account for these sites in its 2013/14 opening balances, ie at 1 April The Trust is forecasting a draft deficit of circa 8.8m for 2013/14. This is as a result of significant investments in quality measures in order to improve patient experience and drive productivity improvements, and a significant QIPP challenge from the Trust s host commissioner, Croydon CCG. Whilst the Trust may face a difficult year in 2013/14, the Department of Health and the NHS Trust Development Authority (TDA), in line with other deficit organisations, will effectively underwrite the final agreed deficit. The Trust will then be in formal recovery and will work with the TDA to develop a robust 3 year recovery plan over the summer period. The Trust therefore has a reasonable expectation that adequate resources will be available to continue in operational existence as a going concern for the foreseeable future. 27. Related party transactions During the year none of the Trust Board members or members of the key management staff, or parties related to any of them, has undertaken any material transactions with Croydon Health Services NHS Trust. The Department of Health is regarded as a related party. During the year, the Trust has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. Those entities with which the Trust has had significant transactions in 2012/13 of over 1m (either revenue or expenditure) are listed below: Body London Strategic Health Authority (NHS London) Croydon PCT Bromley PCT Surrey PCT Sutton and Merton PCT Lambeth PCT Epsom and St Helier NHS Trust NHS Litigation Authority Nature of Transactions/Relationship Revenue for education and training Revenue/expenditure for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue for the provision of healthcare and other services Revenue/expenditure for the provision of healthcare and other services Payments for Clinical Negligence Scheme for Trusts contributions In addition, the trust has had a number of material transactions with other government departments and other central and local government bodies. These are listed below: Body HM Revenue & Customs NHS Pensions London Borough of Croydon Nature of Transactions/Relationship PAYE, National Insurance contributions and VAT refunds Employers' & employees' pension contributions Revenue/expenditure for the provision of healthcare and other services The Trust Board is the Corporate Trustee of the Croydon Health Services Charitable Fund (Registered Charity No ), and some of the members of the Trust Board are also members of the Charitable Funds Committee. The total value of charitable contributions to the Trust was 26k in 2012/13 ( 82k in 2011/12). 28. Losses and special payments The total number of losses cases and their total value was as follows: Total Value of Cases 2012/13 Total Number of Cases Total Value of Cases Total Number of Cases No. No. Losses 88, , Special Payments 11, , Total Losses and Special Payments 99, , The majority of the "losses" figure represents bad debts written off in the year. 2011/12 Of the 11k special payments figure, 4k related to reimbursement to a patient of their private medical fees; 7k related to re-imbursing patients for the loss of their personal effects while on Trust site receiving treatment. Notes 26 to 28 Page 35

38 Croydon Health Services NHS Trust - Annual Accounts 2012/ Financial performance targets The figures given for periods prior to are on a UK GAAP basis as that is the basis on which the targets were set for those years Breakeven performance 2005/ / / / / / / / Turnover 161, , , , , , , ,551 Retained surplus/(deficit) for the year (5,847) 122 5,044 2,149 1,098 4,913 4,059 9 Adjustments for Impairments Adjustments for policy change re donated/govt granted assets (92) 190 Break-even in-year position (5,847) 122 5,044 2,149 1,106 4,913 3, Break-even cumulative position (5,912) (5,790) (746) 1,403 2,509 7,422 11,389 11,588 Due to the introduction of International Financial Reporting Standards (IFRS) accounting in , NHS Trust s financial performance measurement needs to be aligned with the guidance issued by HM Treasury measuring Departmental expenditure. Therefore, the incremental revenue expenditure resulting from the application of IFRS to IFRIC 12 schemes (which would include PFI schemes), which has no cash impact and is not chargeable for overall budgeting purposes, is excluded when measuring Breakeven performance. Other adjustments are made in respect of accounting policy changes (impairments and the removal of the donated asset and government grant reserves) to maintain comparability year to year. Materiality test (I.e. is it equal to or less than 0.5%): 2005/ / / / / / / /13 % % % % % % % % Break-even in-year position as a percentage of turnover Break-even cumulative position as a percentage of turnover The amounts in the above tables in respect of financial years 2005/06 to 2008/09 inclusive have not been restated to IFRS and remain on a UK GAAP basis Capital cost absorption rate The dividend payable on public dividend capital is based on the actual (rather than forecast) average relevant net assets and therefore the actual capital cost absorption rate is automatically 3.5% External financing The Trust is given an external financing limit which it is permitted to undershoot. 2012/ / External financing limit 10,658 (4,321) Cash flow financing 7,863 (5,396) Finance leases taken out in the year 0 0 Other capital receipts 0 0 External financing requirement 7,863 (5,396) Undershoot/(overshoot) 2,795 1, Capital resource limit The Trust is given a capital resource limit which it is not permitted to exceed. 2012/ / Gross capital expenditure 19,192 6,728 Less: capital grants 0 (236) Less: donations towards the acquisition of non-current assets (57) (82) Charge against the capital resource limit 19,135 6,410 Capital resource limit 20,052 6,560 (Over)/underspend against the capital resource limit Third party assets The Trust held cash and cash equivalents which relate to monies held by the NHS Trust on behalf of patients or other parties. This has been excluded from the cash and cash equivalents figure reported in the accounts. Third party assets held by the Trust (Patients' money) March March Notes 29 to 30 Page 36

39 Croydon Health Services NHS Trust - Annual Accounts 2012/13 Glossary of Accounting Terms Term Statement of Comprehensive Income (SOCI) Finance Costs Explanation This statement shows the in year revenue (income) generated by the Trust for the healthcare and non-healthcare services it has provided to other organisations. The statement also shows other comprehensive income, which can include, for instance, increases and decreases in the value of its non current assets. These increases/decreases are unrealised because the Trust has not yet actually generated a profit or loss by selling these assets. This includes, for instance, interest the Trust has paid on its loans. It also includes the increase the Trust has made for the difference between this year s and last year s provisions (also known as the Unwinding of Discount.) Public Dividend Capital (Dividends) The Trust has to pay to the Department of Health an annual charge that is calculated by taking 3.5% of its average net relevant assets as per the SOFP. This is also sometimes referred to as the Cost of Capital. 3.5% is a percentage set by HM Treasury. Statement of Financial Position (SOFP) Non-Current Assets Intangible Assets Formerly known as the Balance Sheet, this is a snapshot at a particular date of the Trust s total assets and liabilities. Items held for use by the Trust e.g. buildings, equipment, fixtures and fittings. These items have an economic life of at least 1 year. Also sometimes referred to as capital assets. Items as above, but which have no physical substance, e.g. computer software and licences. Also sometimes referred to as capital assets. Depreciation and Amortisation Each year, for each of the non current and intangible assets shown on the SOFP, the Trust has to charge depreciation (non current assets) and amortisation (intangible assets) to its accounts. These charges represent the using up of the asset over its economic life. For example, for a piece of furniture originally costing 5,000 with a life of 5 years, 1,000 per annum will charged to the Trust s expenses, such that at the end of 5 years the furniture will have nil value. Inventories Receivables Payables Formerly known as stock, these are items held in the short term for the carrying out of the Trust s business, e.g. stores of drugs and other consumables. Formerly known as debtors, this is money that is owed to the Trust by our customers. Formerly known as creditors, this is money that the Trust owes other organisations or individuals. Provisions Money that the Trust has a liability to pay in the future, that can be reliably estimated now. These may be either current (due within 1 year) or non current (due after 1 year). Examples could include legal claims. The majority that are relevant to the Trust are amounts set aside for those former employees who have had to take early retirement. Public Dividend Capital (Reserve) The funding that was historically made available to the Trust from the Department of Health to pay for its assets, including all of its buildings. Movements on this reserve must be agreed with the Department of Health. Retained Earnings (Reserve) This a reserve holding the surpluses and deficits built up by the Trust from previous years. Revaluation Reserve When a non current asset is revalued (i.e. when property is revalued each year) the movement in value is added to or deducted from this reserve. Statement of Changes in Taxpayer s Equity (SOCITE) This statement shows the movements in the year on the reserves described above. Capital Resource Limit External Financing Limit (EFL) Impairment of Receivables Accruals Impairment Undershoot Unwinding of Discount Contingent A centrally set limit that controls the amount of money the Trust can spend in a year on non current assets (see above). The Trust must not go above this limit. This is a limit set by the Department of Health to control and manage the cash expenditure of the Trust. It covers all sources of finance available to the Trust: internal, external or from the Department of Health. Formerly known as Bad Debts, this is the amount the Trust sets aside to cover those monies it is owed by its customers, but from whom there is little chance of recovery. Amounts that are set aside for money the Trust is owed/owes, and for which there is no invoice as at the 31 March. However, there is a very high degree of certainty as to both the likelihood of the receipt/payment and the amount. These amounts are sometimes estimated, i.e. the final quarter s electricity bill. Where an asset is reduced in value. For instance, when land is revalued during an economic downturn; or when we believe a debt is not recoverable because a customer has been declared bankrupt. Achieve a level below the limit set, e.g. with EFL above. Trusts are permitted to undershoot against their EFL target as long as it is "not excessive". A Financing charge relating to the increase the Trust has made for the difference between this year s and last year s provisions. Depending on something else in the future in order to happen. Glossary Page 37

40 Annual Report DRAFT

41 Contents 1. Introduction by the Chairman and Chief Executive 2. About the Trust and the community it serves 2.1 Vision and Promises 2.2 Who we are 2.3 Structure of the Trust 3. Trust Board 3.1 Attendance at Board Meetings 3.2 Committee Structure 4. Where we are going 4.1 Our strategy 4.2 Meeting our objectives 5. Workforce development 5.1 Ensuring equality 5.2 Listening into Action 6. How we are doing 6.1 Quality indicators and performance 6.2 Sustainability Waste management Travel planning Carbon footprint reduction 6.3 Emergency Planning and Business Continuity 6.4 Information governance Croydon Health Services Annual Report Page 2 of 67

42 7. Financial Review /13 Key Financial Targets 7.2 Where our money comes from 7.3 What we spent the money on 7.4 Capital Investment 7.5 Going Concern 7.6 Improving Value for Money 7.7 Counter Fraud 7.8 Directors' Representations 7.9 Setting charges for information 7.10 Looking Forward to 2013/ Summary Financial Statements and Other Notes 8.1 Glossary of Accounting Terms 8.2 Summary Financial Statements 8.3 Notes to the Summary Financial Statements 8.4 Audit Services 8.5 Audit Committee 8.6 Pension Liabilities 8.7 Salaries and Pensions of Senior Managers 8.8 Pay Multiples 8.9 Exit Packages 8.10 Tax arrangements 9. Statements 9.1 Statement of Accountability/Annual Governance statement 9.2 Statement of the Chief Executive's Responsibilities as the Accountable Officer of the Trust 9.3 Statement of Directors' Responsibilities in Respect of the Accounts 9.4 Independent Auditor s Statement 10. Our Future Croydon Health Services Annual Report Page 3 of 67

43 1. Introduction by the Chairman and Chief Executive Welcome to the Annual Report for Croydon Health Services NHS Trust an integrated care organisation which aspires to deliver excellent care for you and your family when and where you need it. At a time of increasing demand for our services the Trust took action to improve the care we provide for the most seriously ill patients. Improving emergency care involves all the Trust s services, not just the A&E department. You can see a summary of what we have achieved in section 6. Another key development was the publication of the Francis Report which emphasised the importance of listening to the views of patients (and their relatives and friends), staff, trainees and students and our stakeholders. We need to ensure that when issues are raised we listen, and feedback what we are doing about them. There are three aspects to sustaining improvement: Consistency (not dropping standards at any point across the care of our patients); Compassion (for all our patients and their families and friends) and Communications (between colleagues, staff and patients, across a patient s entire care pathway). A key priority going forwards is to make further changes which put our staff at the centre of the actions we need to take to improve our services. That s why we are giving our full support to Listening into Action. You can read more about this in section 5.2 It is hard to make sustained improvements without Board level stability so the publication earlier this year of the Governance Review and the establishment by the end of the financial year of a Board with the right skills to support our clinicians and senior staff in improving performance and delivering better care for patients was a key achievement. As chair and chief executive we pledge to listen to any concerns, whoever they are from, and to fully investigate any issues so that together we can continue to make the Trust fit for the future. We hope that after reading this report you will feel the Trust is one which is becoming an organisation which staff and patients really feel is changing for the better. Insert signatures or photos? Michael Bell Interim Chairman John Goulston Chief Executive Croydon Health Services Annual Report Page 4 of 67

44 2. About the Trust and the community it serves Croydon Health Services (CHS) provides acute and community healthcare services across the borough of Croydon either in patient s own homes or from clinics and specialist centres, including Croydon University Hospital and Purley War Memorial Hospital. Purley is currently undergoing an 11 million refurbishment and is due to re-open later in The site will be transformed into a centre for integrated care services for the communities in South Croydon. There will be improved access to a full range of primary, community and secondary health services to meet the care closer to home principle. More details of this scheme can be found in section 4. Around 3,500 CHS staff provide services for a population of over 360,000 people who are relatively young with a high level of ethnic diversity. 2.1 Vision and promises The Trust s vision is excellent integrated care for you and your family, when and where you need it. At Croydon Health Services we promise that we are always here for you. We promise everyone in Croydon, whether you are in hospital, in the community or at home, that we will do our best to ensure: You feel cared for by helpful and welcoming staff, who respect you as an individual You feel in safe hands with highly professional staff who work well together in clean clinics and hospitals. You feel confident in your treatment from skilled teams of compassionate clinicians who listen to you and keep you informed You feel we value your time with convenient appointments, minimal waiting and care closer to home. You feel it s getting better all the time as we continue to improve our services Croydon Health Services Annual Report Page 5 of 67

45 Our Objectives To deliver high quality integrated patient centred care which improves outcomes, patient safety and patient experience. To work with partners to improve the health and wellbeing of the people of Croydon. To develop our workforce and to establish a way of working that builds a culture that is committed to an open transparent evidence based approach. To deliver best practice performance standards against the national operating framework. To deliver well managed quality services which are value for money 2.2 Who we are In August 2010 following an extensive tendering process, Mayday Healthcare NHS Trust was successful in its bid to Croydon Primary Care Trust (PCT) to manage community services, and integrated with Croydon Community Health Services to become an Integrated Care Organisation (ICO). To reflect this new status, the Trust formally changed its name from Mayday Healthcare NHS Trust to Croydon Health Services NHS Trust on 1 October The year in numbers Treated 28,328 day case and 3,182 elective (planned) in-patients 37,843 non elective in-patients 353,554 out-patient contacts 371,256 adult community services contacts 200,416 children s community services contacts 66,853 people were seen in the accident and emergency department at Croydon University Hospital, and an additional 52,249 at the Urgent Care Centre (provided by VirginCare since 11 April 2012) 13,768 people were treated at the Urgent Care Service at Purley and the Minor Injuries Unit in New Addington 4,229 babies were born in the Maternity Unit and Birth Centre 2.3 Structure of the Trust During the 12/13 year the Trust extended and strengthened its structure to develop a more clinically focused organisation with delegated clinical leadership allowing them increased influence in corporate decision-making. This fits well with the national context of the NHS reforms which put GPs and other clinicians at the centre of commissioning with the establishment of local Clinical Commissioning Groups (CCGs). Croydon Health Services Annual Report Page 6 of 67

46 Organisation chart showing Board at end of the financial year Croydon Health Services Annual Report Page 7 of 67

47 3. Trust Board The role of the Trust Board is to determine strategy and policy for the Trust, to monitor in-year performance against its plans and to ensure the Trust is well run and well governed, making informed and transparent decisions. The Board is responsible for maintaining the highest standards of conduct and being accountable for its use of public funds. The Trust Board in 2012/13 comprised of the Chairman, appointed by the Secretary of State, five Non-Executive Directors, four voting Executive Directors, four Non-voting Executive Directors and the Chief Executive. The Non-Executive Directors bring a range of skills and expertise from outside the Trust. Their role is to hold Executive Directors to account. The Trust Board held seven meetings during the year, which were open to the public. The times and venue are advertised on the staff intranet and the public website. Details of the Trust Board and their attendance at Board meetings are outlined below. Biographies of the Directors are available on the Trust website. 3.1 Attendance at Board Meetings Executive Directors: Name Designation From To Board Attendance John Goulston Chief Executive 2-May-12 Present 5 of 7 Anthony Leonard Deputy Chief 1-Sep Apr-13 5 of 6 Executive and Director of Finance and Information Present Azara Mukhtar Interim Director of 11-Mar-13 Present 1 of 1 Finance Sara Coles Interim Chief 2-Jan Mar-13 2 of 2 Operating Officer Tony Newman-Sanders Medical Director 1-Sep-11 Present 6 of 7 Zoё Packman Richard Parker Director of Nursing & Allied Health Professionals Director of Operations (Acute) 19-Sep-11 Present 7 of 7 25-Oct Mar-12 5 of 5 Director of Operations 1-Apr Jan-13 Croydon Health Services Annual Report Page 8 of 67

48 Non-voting Executive Directors Name Designation From To Board Attendance Michael Burden Dominic Conlin Interim Director of HR & OD Director of Strategy & Commercial Development 3-Oct-11 Present 7 of 7 2-Jan-11 Present 7 of 7 Sharon Jones Director of Operations (Community) 10-May Mar-13 7 of 7 Director of Health and Well Being 1-Apr-12 Present Mike Ralph Director of Estates and Facilities 1-Apr-09 Present 6 of 7 Non-Executive Directors Name Designation Tenure (Yrs) To Board Attendance Michael Bell Chairman 1 2-Jan-13 Present 2 of 2 Michael Parker Chairman 4 10-May Dec of 5 Godfrey Allen Non-Executive Director 6mths (until 14- Jul-13) 14-Jan-13 Present 2 of 2 Carol Bernstein Mary Clarke Jeevan Gunaratnam Non-Executive Director and Chair of Audit Committee Associate Non-Executive Director Non-Executive Director and Senior Independent 4 1-Oct-10 Present 7 of 7 12 months 14-Apr-13 Present 1 of Aug -10 Present 6 of 7 Croydon Health Services Annual Report Page 9 of 67

49 Non-Executive Directors Name Designation Tenure (Yrs) Constance Hall Non-Executive Director 1.5 Reappointed 1-Sep-11 To 31-Mar- 13 Board Attendance 4 of 7 Karen Jones Non-Executive Director 4 1 May Jan-13 5 of 5 John Thompson Non-Executive Director 6 months (until 14-Jul -13) 14-Jan-13 Present 2 of 2 Nero Ughwujabo Non-Executive Director 4 1-Nov-08 Present 6 of 7 * Board Attendance denotes number of board meetings attended out of number that could have been attended 3.2 Committee Structure The Trust Board discharges its responsibilities through a committee structure which has been reviewed in a consultation led by the Chairman of the Trust. Sub committees for the financial year are: Audit Committee provides assurance on the Trust s internal financial controls, and compliance with accounting and statutory standards. Remuneration and Terms of Service Committee - determines the rates of pay and contracts of the Executive Directors against a Department of Health framework. Charitable Funds Committee - responsible for ensuring that donations given to the hospital are spent wisely and properly, in accordance with The Charities Commission and NHS regulations. Integrated Governance & Clinical Governance Committee (IGCG) - delegated Board authority to oversee the overarching governance and risk arrangements. It provides assurance that the most efficient, effective and economic risk, control and governance processes are in place. During the course of the year the volume of business for this committee and the need to allow sufficient time to focus of the key issues led to the committee dividing to become a Quality Committee and a Performance Committee. Croydon Health Services Annual Report Page 10 of 67

50 Finance and Investment Committee - provides the Trust Board with an objective review of the financial strategy, financial position, investment policy, major investment decisions and the financial management of the Trust and oversee the delivery of financial targets. The Integrated Governance and Clinical Governance Committee/Quality and Performance Boards are supported by: Risk Management Committee - reviews in detail all Serious Incidents (SIs), agrees and monitors action plans and learning. The Committee considers and validates the corporate risk register each month. Health and Safety and Environmental Governance Committee - provides assurance that there are effective structures and systems to support the continuous improvement of quality services and safeguard high standards of patient care, safety and welfare at work of employees. Information Governance Committee - ensures that there are effective strategies, structures, policies and systems in place to meet the Information Governance agenda across the integrated organisation. In addition, Directorates hold monthly meetings led by the Clinical Director and involve members of the multi-disciplinary clinical team to: Consider patient and carer feedback and ensure this is incorporated into practice and service development; Assess, populate and validate risk registers; Agree and monitor the implementation of action plans for locally managed risk; Review complaints, claims and incidents to identify trends for further analysis; Monitor patient safety metrics and action plans; Ensure that learning is disseminated across the Directorates and wider organisation. The Trust Board regularly reviews its Assurance Framework, and this has been regularly reviewed by the Board sub-committees. The Trust Assurance Framework 2011/12 links risks with corporate objectives and the wider strategic business plan. It sets out the key objectives and the principle risks against achieving them. It details the key controls, sources of assurance and gaps therein. Additionally, the Assurance Framework is cross-referenced with the Corporate Risk register to ensure that all risks faced by the Trust are managed consistently and seamlessly. The Trust Assurance Framework was reviewed by the IGCG Committee and the Trust Board during the course of the year. Further details can be found in the Annual Governance statement in section 9. The Trust welcomes and encourages feedback on its services provided. Complaints received from or on behalf of patients in no way affect how they are treated and in dealing with both formal and informal complaints, the Trust takes into account the six Principles for Remedy as defined by the Parliamentary and Health Service Ombudsman. The Principles can be found at Croydon Health Services Annual Report Page 11 of 67

51 Remuneration Committee The Chairman and Non-executive Directors form the Remuneration Committee, which is a sub-committee of the Trust Board. The Committee determines the rates of pay and contracts of the Executive Directors against a Department of Health framework. During 2012/2013, the committee was chaired by the Trust Chairman. Members during the 2012/13 year were: Constance Hall; Carol Bernstein; Jeevan Gunaratnam; Karen Jones; Nero Ughwujabo. The committee also monitors and evaluates the performance of the Executive Directors. This approach is consistent with the overall performance management ethos of the Trust, and ensures linkage to national targets and local priorities. The committee's role is to ensure that the Executives are fairly rewarded for their contribution to the Trust, having proper regard to its circumstances and performance and to the provisions of any national arrangements for such staff where appropriate. Annual data comparisons will continue to be made with other Trusts of a similar size to ensure that Croydon Health Services continues to pay what is generally considered to be the market rate. No part of the Chief Executive's or Directors' remuneration is subject to their performance (in other words they do not attract any kind of performance bonus). None of the Directors have fixed-term contracts. Their contracts can be terminated by either side giving, in the case of the Chief Executive, six months notice, and for the Executive Directors, three months. Croydon Health Services Annual Report Page 12 of 67

52 4. Where we are going The challenge for Croydon Health Services NHS Trust (CHS) is to provide high quality health services, improve patient experience and contribute to improving the health and wellbeing of our population. This has to be achieved within the context of a very challenging financial environment and significant organisational change for the NHS. As an integrated care organisation, CHS has the opportunity to meet this challenge by fundamentally changing the model of care across a range of its services. This will meet the objectives and aspirations of its patients, commissioners and partners. A shift of the focus of care from acute services towards prevention, early intervention, rapid discharge, rehabilitation and re-ablement will provide safer, more effective and more economic health care for the people of Croydon Our vision statement has been developed to express this aim: Excellent integrated care for you and your family, when and where you need it. 4.1 Our strategy To achieve this ambition, we have five corporate priority areas that map to the key Department of Health domains of care: Quality Performance Leadership and Organisational Development Commissioning and Business relationships Finance A major strategic development in this year was the project to refurbish Purley War Memorial Hospital. The Trust s Full Business case was approved by NHS London in June 2012 and it received a capital funding of 11.15m The site is being transformed into a centre for integrated care services for the communities in South Croydon. There will be improved access to a full range of primary, community and secondary health services to meet the care closer to home principle. The building is due to re-open later in 2013 and is expected to meet 80% of the south Croydon population's (current) outpatient requirements. Whilst it will mainly benefit local people it is important to note that the impact of transferring activity from the CUH site also provides improved access and patient experience for the wider Croydon population. Croydon Health Services Annual Report Page 13 of 67

53 Greater access to services at Purley increases the range of current and prospective choices available to patients and achieves improved equality in access to services across the whole of the borough. The refurbishment will increase delivery of outpatient and therapy-led activity and the majority of patients will be seen on a one-stop basis. Using the Procure21+ (P21+) procurement framework, which provides assurance of performance management and best practice, the Trust appointed Miller HPS as its partner. The design process has included clinicians and support services and there has been patient and user representation on the Project Board, at working meetings and as part of wider engagement activities. GP commissioners support the development and commissioners are involved at stakeholder seminars and on the Project Board. An Urgent Care Service has continued at the site throughout almost all of the building work and the Trust is looking forward to a successful re-opening later in Meeting our objectives Five strategic objectives have been developed which align with these corporate priority areas and are in place to support the achievement of our vision, provide the framework for continuous improvement against our priority areas and to allow the development of delivery of specific milestones, timelines and actions to demonstrate progress in 2012/13: To deliver high quality integrated patient centred care which improves outcomes, patient safety and patient experience. To work with partners (request from FT members to explain what partners are meant) to improve the health and wellbeing of the people of Croydon. To develop our workforce and to establish a way of working that builds a culture that is committed to an open transparent evidence based approach. To deliver best practice performance standards against the national operating framework. To deliver well managed quality services which are value for money for the tax payer Croydon Health Services Annual Report Page 14 of 67

54 In the 2012/13 year we set ourselves four priorities for improving quality. More details can be found in our Quality Account on the website but in summary we have made excellent progress on three of those areas. On the fourth area (patient experience) many of our actions were achieved but we have not had the desired impact: Improve mortality rates o We have met or exceeded the 5% target on improving Standardised Hospital Mortality Indicator (SHMI). We are below the national index figure of 100 and our trend is going in the right direction downwards. Reduction of harm o We have achieved the key objectives on the national programme on the reduction of harm (NHS safety thermometer). In common with the majority of the NHS we still need to meet the six data point compliance mark but our progress is such that commissioners are assured that we have met the national CQUIN standard and, within the limitations of the data, it demonstrates that we are above the national benchmark of 90% harm free care. Maternity improvement programme. o These have been measured by workforce and consultant cover Key Performance Indicators (KPIs), specific recruitment and estate and environment improvement schemes. Commissioners have assessed the local CQUINS as met and are enthusiastic and supportive about the progress that has been made. Patient experience o The impact of the actions has been insufficient to improve our position on many of the national inpatient survey metrics and we failed the national CQUIN. While some progress is noted in other areas of patient experience the national inpatient survey remains the sentinel standard and our performance is poor. Croydon Health Services Annual Report Page 15 of 67

55 5. Workforce development The Trust is committed to developing and enabling a working environment that promotes the health, safety and wellbeing of its staff to the benefit of patients and other service users. Over the past year, in response to staff feedback, there have been concerted efforts within the Trust to get staffing levels right. The Trust has embarked on proactive recruitment campaigns for hard-to-fill posts, with a particular focus on Nursing, Midwifery and Healthcare Assistants. Innovative recruitment campaigns for Accident and Emergency have been placed in the national press, and successful campaigns have attracted nurses recruited from the local community as well as Ireland and Portugal. The Trust has used various methods to promote itself as an employer of choice such as developing a nursing career information booklet and using social media to promote the Trust as a place to work and a place to be treated. The Trust s creative Join our Team DVD which can be viewed on the Trust s website page, highlights the various service areas in the Trust and features comments from staff about why Croydon Health Services is a great place to work and be treated. This DVD is used to promote the Trust at external events. As part of the 2012 Olympics legacy and, with support from NHS London, the Trust has put in place a number of initiatives to support staff health and wellbeing. The Trust s in-house catering team work closely with dietetics and Occupational Health to promote healthy eating options for staff and patients. Fitness classes such as Zumba and Pilates are run on a weekly basis from one of the Trust s sites (Lennard Road). Staff can take part in physical activities onsite such as table tennis and have access to a purpose built gym. Walking and cycling schemes are also in place. Trained staff wellbeing champions are available to promote all such initiatives. Our approach to workforce and organisational development is strongly linked to staff engagement, ensuring effective leadership, service improvement and transforming our workforce to help us achieve higher levels of quality to improve the patient experience. The Trust being accepted onto the second wave of Listening into Action was a major development this year (see section 5.2 below) which means we are putting staff at the centre of change so we understand what matters and what gets in the way for staff and are taking action to enable the organisation to unblock the way. To improve the patient experience, a Trust-wide multidisciplinary organisational development programme was launched in February This innovative and challenging training gives staff the necessary skills and knowledge to deliver a first class patient experience. It is also importantly provides the opportunity for staff to reflect on their current practice and to consider Croydon Health Services Annual Report Page 16 of 67

56 how their own behaviour during every single interaction, creates either a positive or negative patient experience. Feedback has been great thus far, and the over aim is to motivate all CHS staff to develop the mind-set of continuous improvement The Trust welcomes the support of recognised trade unions in their commitment to working in partnership to ensure that our common objectives are achieved. The Trust and the unions recognise their responsibility to encourage all staff to make use of appropriate channels to ensure active communications throughout the organisation. Managers and trade union representatives recognise their interdependence and agree that matters affecting their interests shall be considered jointly, both by consultation and negotiation through the Joint Staff Consultative Committee (JSCC) which acts as the overarching body of the organisation and is concerned with all employee relations issues. In addition to the JSSC a Trust-wide Medical and Dental Negotiating Group (LNC) also exists. However, it should be noted that the LNC only covers matters exclusive to Medical and Dental (M&D) employees and the JSCC deals with other employment matters which cover all staff including M&D staff e.g. general HR policies and procedures. 5.1 Ensuring equality During 2012, the Trust formed the Access, Equality and Diversity Committee, whose role is to provide assurance to the Trust Board about the effective discharge of its responsibilities for Access, Equality & Diversity and compliance with the Equality Act and other regulatory requirements. One of the key Trust objectives through this committee is the development and implementation of the NHS Equality Delivery System (EDS). The EDS aims to provide a single framework for NHS organisations to meet most of the legal requirements of the Public Sector Equality Duty. The EDS has a set of outcomes against which NHS performance should be analysed using grades: Red, Amber, Green or Gold Star. It is proposed that the Care Quality Commission (CQC) will take account of the ratings and in particular any highlighted concerns as part of its process to monitor registration status. The EDS has 18 outcomes grouped under four objectives: Better health outcomes for all Improved patient access and experience Empowered, engaged and inclusive staff Inclusive leadership Throughout 2013 we will be holding a series of meetings with local stakeholders to grade the Trust and agree a limited number of priority actions. Croydon Health Services Annual Report Page 17 of 67

57 The Access, Equality and Diversity Committee will then develop its work programme in response to this feedback and will devolve responsibility to the Trust s equality leads to ensure equal access is built into action plans and strategies for their areas of responsibility as the EDS is implemented during the year. As part of this work we will be gathering feedback so we can eliminate any possible discrimination. This involves asking people from different groups what they think of our services (we will use existing sources of data e.g. staff survey; patient survey; Friends and Family test card data). We will also review how we currently engage with staff and our patients across the nine protected characteristic groups (Age, Disability, Gender Reassignment, Marriage and Civil Partnership, Pregnancy and Maternity, Race, Religion or Belief, Sexual Orientation and Gender).to identify any gaps and how to address them. In addition to this core work, HR presents a session titled Positively Diverse to all new members of staff at their induction. This workshop promotes equality and diversity and raises awareness for both clinical and non-clinical staff. For existing staff, we have regular Work sessions as part of team meetings and Clinical Governance, with particular success in Women s Services. In addition, a number of bespoke sessions have been run for staff groups by the Religion and Faith Sub-Group in response to specific service delivery requests. In 2012, HR also published a Workforce Report, which analysed recruitment and employee relations from an equality and diversity perspective for the previous 12 months. A similar report reviewing 2013 is due to be published shortly and will be available on our website. 5.2 Listening into Action In September 2012, the Trust was accepted as a national pioneer Trust to improve staff engagement through the adoption of the Listening into Action (LiA) methodology. This work began in earnest late in 2012 by really listening to what staff and our patients had to say about improving services, then putting staff at the centre of the changes and supporting them so they can take action. Listening to the Big Conversations The Trust is committed to ensuring that concerns can be, and are, raised in an open environment. Most importantly, we need to make sure that when concerns are raised by staff and patients that we feed back to them what we are doing or are going to do about them. Croydon Health Services Annual Report Page 18 of 67

58 This was brought into even sharper focus by the publication of the Francis report and our communications to our staff specifically quoted from the letter from Sir David Nicholson, the CEO of the NHS that was sent to all NHS Trusts in the country:.if we are to learn the lessons of Mid Staffordshire, then every individual needs to take the time to read the full report and most important of all, make the time to reflect on what went so badly wrong at every level of the service. I would ask you all to reflect carefully on the findings of the report, in the context of the services you deliver, and discuss it in a public board meeting. The Secretary of State is today writing to the chairs of every organisation asking that internal events are held with staff to listen to them, and to ask them, not just what we can learn from Francis, but also how, in an ever busier NHS, we can make sure that we provide every patient with a service that stays true to our core values of care and compassion. Sir David Nicholson CHS has used the LiA approach to engage with our staff on all aspects of the Francis Report, encouraging and developing continued scrutiny of our services and our culture. LiA is on-going but at the time of writing this report more than 1,000 staff from the across the whole organisation community and hospital have contributed to the Big Staff Conversations where they took the opportunity to voice their opinion about what more we can do to deliver the best care for our patients and their families 98% of staff who attended these Big Conversations felt that that engaging staff and giving them permission to make positive changes will help us to improve care for our patients. 84% of staff who attended one of the Big Conversations rated the event as either good or excellent. 95% of staff who attended felt it had been either a good or very good use of their time. The events clearly showed that staff were keen to cultivate a more positive working environment but felt frustrated with the fact that previous initiatives have either fizzled out or that they hadn t seen any real change. To counteract this issue, 10 clinical teams were selected to be Early Adopters of the Listening into Action way of working and began to make improvements in a wide range of projects including performance in the A&E department, reducing waits for medication when patients are discharged from hospital, portering, therapies and maternity. In addition, the Trust developed five supporting work streams to remove obstacles so our staff are able to do their jobs more easily. Croydon Health Services Annual Report Page 19 of 67

59 The five schemes are: Communication IT Human Resources Workforces Development Environment At the time of writing this report, the teams have not yet presented their findings but there are plans for a Pass It On event. This event aims to enthuse the next wave of teams who will adopt the LiA way of working until it becomes embedded across the Trust and the way we do business around here. We will report on progress on all the above in the coming months. Croydon Health Services Annual Report Page 20 of 67

60 6. How we are doing 6.1 Quality indicators (national and local) - also known as Key Performance Indicators or KPIs There are a number of national targets that the government set for NHS Trusts. Our performance against the key priorities of the NHS Operating Framework is detailed here: Measure Target 2011/12 Meeting the MRSA objective Clostridium Difficile year on year reduction Maximum of 2 cases MRSA bacteraemia Maximum 20 cases of Clostridium Difficile infection 2011/12 RAG 2012/ /13 RAG 0 G 1 G 27 R 30 R All cancers: two week wait from referral to date first seen Cancer: two week wait from referral to date first seen - for symptomatic breast patients (cancer not initially suspected) All cancers: 31-day wait for second or subsequent treatment Surgery All cancers: 31 day wait for second or subsequent treatment with anticancer drugs. All cancers: 31 day wait from diagnosis to first treatment All cancers: 62 day wait for first treatment from urgent GP referral All cancers: 62 day wait for first treatment for consultant upgrade referrals Referral To Treatment - Admitted At least 93% of qualifying patients to be seen within 14 days of referral. At least 93% of qualifying patients to be seen within 14 days of referral for symptoms of breast cancer. At least 94% of qualifying patients to receive subsequent surgery treatment within 31 days of a decision to treat. At least 98% of qualifying patients to receive subsequent drug treatment within 31 days of a decision to treat. At least 96% of qualifying patients to receive first definitive treatment within 31 days of diagnosis. At least 85% of qualifying patients to receive first definitive treatment for cancer following urgent GP referral. At least 85% of qualifying patients to receive first definitive treatment for cancer following consultant upgrade referral. At least 90% of patients treated within 18 weeks from point of referral to treatment 97.80% G 96.16% G 98% G 96.33% G 100% G 100% G 100% G 100% G 99.70% G 98.50% G 90% G 86.68% G 85% G 90.00% G 91.50% G 90.16% G Croydon Health Services Annual Report Page 21 of 67

61 Measure Target 2011/ /12 RAG 2012/ /13 RAG Referral to Treatment - Open Pathways At least 92% of patients waiting for admission should be waiting 18 weeks or less 88.46% R 90.22% R Referral To Treatment Non-Admitted Maximum waiting time of four hours in A&E from arrival to admission, transfer or discharge. At least 95% of patients treated within 18 weeks from point of referral to treatment At least 95% of patients presenting to A&E to be admitted, transferred or discharged within 4 hours % G 97.2% G 96.70% G 94.50% R Significant performance issues in 2012/13 During 2012/13 the Trust has met 12 out of the 15 priorities within the NHS Operating Framework standards within the Single Operating Model (SOM). The Trust did not achieve the following priorities: Control of Infection (C-Difficile) trajectory Referral to treatment times open pathways 4hr access standard in A&E More details can be found in the Annual Governance Statement in section 9 Getting better Below are examples of where the Trust has performed well in nationally recognised standards or has invested significant amounts of resources both financial and staff. Improving staffing levels In the year we recruited to substantive positions more than 40 nurses, 60 healthcare assistants and 10 health visitors. More than 20 more midwives arrived, bringing our midwife to birth ratio to 1:29 (below the benchmark of 1:30) and we are close to achieving the gold standard of 1:28. Improving emergency care At a time of increasing demand for our services the Trust took action in the 12/13 year to improve the care we provide for the most seriously ill patients. Attention focuses, quite rightly, on achieving the four hour standard - to see, assess (called triage), treat and discharge or admit 95% of people who come to the department within four Croydon Health Services Annual Report Page 22 of 67

62 hours and the ambulance handover standard - to ensure that everyone who arrives by ambulance is assessed (triaged) and allocated a safe place for either treatment or observation within an hour, although we aim to do this within 15 minutes. The solutions to improving performance for these two standards involve all the Trust s services, not just the A&E department. Below is a brief summary of the recent actions we have taken and the plans for the future. Opening of the Acute Medical Unit (AMU): This became operational early December 2012 with additional X-ray facilities in use by February It allows patients who may or may not need a hospital stay access to senior decision-makers, diagnostic tests and pharmacy for medicines early on in their journey. Patients can also be admitted to the unit directly from their GP, avoiding unnecessary admission to a ward. RATT (Rapid Assessment, Triage and Treatment). In February 2013 a new area was created for the rapid assessment of patients coming into A&E by ambulance. The advanced triage, assessment and treatment system is led by emergency care consultants and allows us to ensure that patients arriving by ambulance are promptly assessed and provide quicker treatment for a range of urgent conditions. Observation beds in A&E: The Trust was successful in obtaining winter pressures funding to expand its Observation Unit capacity for the winter months. This expansion and relocation allows for single sex accommodation and more bed spaces. Establishing a Surgical Assessment Unit (SAU): Two bays on Queens 2 Ward are now reserved for non-elective (emergency) surgical admissions. This allow consultants to review patients earlier and either complete their treatment within 48 hours or admit them to a surgical ward. Staffing in Queens 2 has been enhanced and will be reviewed regularly to ensure the unit operates smoothly. The National Cancer Patient Survey 2012 rated the Trust as good or excellent as benchmarked against all 160 acute trusts in the survey and achieved one of the highest overall ratings in London. The Trust received this rating from 89% of our patients. CHS Learning Disability Team achieved the highest rating in London in the Big Health Check for 2012/13. The rating event included people with learning disability, and local partners including the local authority. The CHS Stroke Unit performed very well in the Stroke Unit Annual Assessment for 2012/13. It is rated the 11th best unit in the country on the national SENTINEL audit. The Children s Hospital at Home service received a very positive result in the last survey of patients families. The service was overwhelmingly rated as valuable by families. CHS Teenage Pregnancy and Sexual Health Outreach Service won the Pamela Sheridan Young People s Sexual Health Service of the Year award in the UK Sexual Health Awards Croydon Health Services Annual Report Page 23 of 67

63 6.2 Sustainability The Trust is committed to working in partnership with the local authority and other regional and local stakeholders to contribute to the overall sustainability of the Borough of Croydon and its environs by following the principles of good corporate citizenship in line with the Trust s sustainable development management plan Waste Management The Trust recognises that by its activities waste is created. Waste is stored and transported through the hospital before its ultimate disposal. Some of the Trust s waste streams are not only harmful to the environment but can present a risk to human health. The Trust has a variety of chemical and infectious waste streams. The Trust endeavours to manage its waste prudently in compliance with legislation, recognising that waste of any kind is not only a drain on its own resources but that waste can only be the end product derived from natural resources with limited finite life spans such as fossil fuels, minerals and forestation which sustains the ecological balance. It is also recognised that waste whether in the initial packaging or at the end of the products life cycle has an adverse effect on the environment, and for this reason forms a key part of this Trust s objectives for sustainable waste management solutions. The Trust aims to improve and introduce new waste management procedures resulting in increased waste prevention, minimisation, re-use and recycling, thus contributing towards sustainability. All Trust staff have a responsibility to ensure that waste is managed in a manner that minimises any risk to themselves, other staff and those who transport the waste. The Waste Management Committee reports to the Health and Safety and Environmental Governance Committee Travel planning The Trust has been an active participant in projects to reduce the environmental, health and congestion effects of transport generated by the NHS in London and the surrounding areas. The Trust has a demonstrated commitment to working with other hospitals on travel plan development and sharing knowledge and resources. This Trust is willing to play its part in reducing pollution and creating an environment which will support the development and good health of local people. Croydon Health Services Annual Report Page 24 of 67

64 6.2.3 Carbon footprint reduction The Trust has a Board-approved strategy which encompasses the main objectives of: Reducing energy consumption; Ensuring compliance with mandatory targets for emissions and carbon reduction; Improving efficiencies to enable energy savings and reduced costs of asset ownership. The Trust has registered as a full participant of the CRC Energy Efficiency Scheme and is investing in energy efficient processes, technologies and management programmes. In line with the Trust s Sustainable Development Management Plan, an appraisal for maximisation of the existing Energy Centre infrastructure, with enhancements to significantly reduce emissions, is underway. The Trust has established a partnership with Croydon Council to develop a local strategy for low carbon solutions for the public sector. 6.3 Emergency Planning and Business Continuity As a category one emergency responder, Croydon Health Services NHS Trust is legally obliged to have robust emergency planning processes in place which meet the requirements of the Civil Contingencies Act 2004 and the NHS Emergency Planning Guidance This state of preparedness means that we have the ability to respond effectively to any emergency incident within the local community or to any event that causes an interruption to the services that we provide. The Trust has a comprehensive set of Business Continuity Plans which prioritise our essential services and make the optimum use of our available resources related to any challenging circumstance. Our emergency preparedness and business continuity practices are rigorously audited annually by NHS London, whose remit is to provide strategic leadership for the capital's health system. This process provides an extensive assessment of our major incident and business continuity planning. For the past few years, we have been placed as one of the highest performing Trusts in London and have received highly positive comments from them. Indeed, some of our emergency preparedness processes were cited as examples of best practice within London. The 2012 Olympic and Paralympic Games created a significant workload in terms of planning, exercising and in generating assurances relating to progress against both the Trust and London s Emergency Preparedness agenda. Whilst there was little Games-related activity planned for Croydon, we did not underestimate the impact that it could have on this Trust if there was increased demand for services in other Trusts which would have had a knock-on effect on ours. An Olympic 2012 Planning Group was set up consisting of senior managers across the Trust. The planning and preparation included: Croydon Health Services Annual Report Page 25 of 67

65 Reviewing existing key guidance for staff and creating new policies where required Mapping our service provision against the days of the Olympics using the NHS London provided tool Assurance was sought from all major suppliers about 2012 Olympic resilience and Business Continuity Plans Estates and Facilities contacted the contractors they employ and were satisfied with their plans Assessment of impact of torch relay passing the Trust s health centres and Croydon University Hospital Many of our staff were involved, either with the planning, being volunteers at the stadium or taking part in the ceremonies and their support was invaluable. Hundreds of staff lined the streets when the Olympic Torch passed Croydon University Hospital (CUH) and other community bases. The torch handover (known as the kiss ) took place outside the hospital on 23 July 2012 Two of our doctors joined the Olympic medical team supporting athletes Three staff volunteered at the Games Three staff took part in the opening ceremony Eight staff were able to see the rehearsal of the opening ceremony which celebrated the NHS and managed to #SaveTheSurprise With the support of our staff and suppliers, the Trust maintained business as usual for the NHS during the Games-period. Whilst infrastructure problems and terrorist attacks did not materialise during the Games, we must continue to remain alert to these risks and not become complacent. The Trust has a diverse portfolio of emergency preparedness documents which cover a wide variety of potential risks including heat wave planning, security threats, major incidents and a robust influenza pandemic plan for the management of an outbreak. Over the last 12 months, our emergency plans have been robustly validated by annual and three-yearly mandatory exercises designed to assess their effectiveness in key areas. Croydon Health Services Annual Report Page 26 of 67

66 6.4 Information Governance There were 204 incidents of data lapses during the year. In terms of severity, 158 were low risk incidents, 27 moderate, 17 significant and 2 high. Five incidents were declared as Serious Incidents by the executive team and full root cause analysis investigations were conducted and appropriate reports written. Where relevant, the Information Commissioner s Office was informed and relevant reports sent. Preventative and corrective actions have been taken, and lessons learnt implemented as part of improvement plans. Staff are now subjected to mandatory annual Information Governance training to further improve awareness, and highlight responsibility for the maintenance of confidentiality, security, integrity and availability of information. The Trust is fully committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, Care Standards Act 2000, the Data Protection Act 1998, the Freedom of Information Act 2000, Central Government Policies, and best practice, supported by guidance from organisations such as the Information Commissioner s Office. The Trust has robust policies and procedures in place that ensure information is appropriately protected from accidental loss, destruction, damage and unauthorised access and disclosure; and also to manage the business impacts and associated risks. Croydon Health Services Annual Report Page 27 of 67

67 7. Financial review /2013 Key Financial Targets The table below sets out Croydon Health Services NHS Trust s Financial Targets, and its performance against these, in the 2012/13 Financial Year: Target Breakeven on revenue and operating costs Keep within the capital resource limit (CRL) of m Performance The Trust achieved a surplus of 9k ( 199k surplus after technical adjustments) The Trust remained within the CRL, and generated an underspend of 0.917m Target met? Remain within the external financing limit (EFL) of m The Trust remained within its EFL, and over achieved on this by 2.795m Keep within a Capital Cost Absorption Rate (CCAR) of 3.5% The Trust kept within the 3.5% CCAR. This has resulted in dividend payments of 4.774m to the Department of Health. The Trust closed the financial year with a million surplus when the cumulative financial position is viewed over an 8 year period. Croydon Health Services Annual Report Page 28 of 67

68 7.2 Where our money comes from Trust income has increased by circa 6.6 million between 2011/12 and 2012/13, and the total income received by the Trust during the financial year was 244 million, of which: 230 million was income for clinical services (from both other NHS and non-nhs), and 14 million related to income for non-patient care services such as training and education. The following chart shows the breakdown of the different types of income received by the Trust during the year: 2012/13 Income Non-patient care services 3.4m; 1% Non NHS Clinical Income 2.4m; 1% Other 1.8m; 1% Education, training and research 8.8m; 4% NHS Clincial Income 227.1m; 97% Croydon Health Services Annual Report Page 29 of 67

69 7.3 What we spent the money on The Trust spent 244 million during the financial year, an increase of 11 million from the previous financial year. The largest spend was on staffing at 165.2m. The Trust also spent: 33.7m on supplies and services in relation to direct patient care; 7.9m on patient transport, education and training and administrative costs; 5.5m to the NHS Litigation Authority; 10.3m on other supplies and services; 10.8m on premises, which includes computer costs; 4.8m on dividends to the Department of Health; and finally, 5.3m on depreciation and impairment of our capital assets. 2012/13 Expenditure Premises 10.8m, 4% Clinical negligence 5.5m, 2% Depreciation & Amortisation 5.3m, 2% Patient transport, education and administrative costs 7.9m, 3% Dividends to the DoH 4.8m, 2% Supplies and services - general 10.3m, 4% Supplies and services - clinical 33.7m, 14% Employee benefits 165.2m, 68% Croydon Health Services Annual Report Page 30 of 67

70 7.4 Capital Investment During 2012/13 the Trust invested 19 million in capital schemes. Major Trust schemes included: The redevelopment of the Purley War Memorial Hospital site, 5.8m; (NB this was spend in 12/13 with a further 5m to be spent in 13/14) (see section 4 for details of the Purley project) Medical Equipment, 3.6m (including 0.8m for a new state-of-the-art CT scanner; the replacement of patient monitors across the site 0.6m); Premises works to improve the patient environment, 6.4m (including the creation of a new Acute Medical Unit in the Bensham wards and associated areas 1.9m; the final phase of the fire alarm replacement programme 0.6m; significant works to improve the maternity environment and birthing areas 0.6m); and a number of projects designed to improve the patient experience, identified through the Trust s Listening into Action staff conversations; Cerner patient care system ( 2.3m). 2012/13 Capital Investment Purley Hospital Refurbishment, 5.8m, 30% Premises, 6.4m, 34% Other IT Projects, 1m, 5% Medical Equipment, 3.6m, 19% Cerner Patient System, 2.3m, 12% The capital program for 2013/14 continues with the on-going investment in patient care and well-being, with substantial budgets set aside for: The final phase of the Purley Hospital refurbishment; The final phase of the Cerner Millennium patient care system; Awaiting outcome of bids for funding for redeveloping the A & E area, improving the environment of care for people with dementia; Extensive programme for further improvements to our premises. Croydon Health Services Annual Report Page 31 of 67

71 7.5 Going Concern The Trust is forecasting a draft deficit of circa 8.8m for 2013/14. This is as a result of significant investments in quality measures in order to improve patient experience and drive productivity improvements, and a significant QIPP challenge from the Trust s host commissioner, Croydon CCG. The Trust is continuing to work with commissioners in reducing its financial gap on its contract. Material uncertainties related to events or conditions that may cast significant doubt about the ability of the Trust to continue as a going concern have been identified by the directors, but the going concern basis remains appropriate. Whilst the Trust may face a difficult year in 2013/14 the Department of Health, in line with other deficit organisations, will effectively underwrite the final agreed deficit. The Trust therefore has a reasonable expectation that adequate resources will be available to continue in operational existence for the foreseeable future. 7.6 Improving Value for Money The Trust has made million of efficiency savings during the 2012/13 financial year, which equates to 3% saving against actual turnover. These savings have been reinvested in patient care. 7.7 Counter Fraud Counter Fraud services are provided via the Trust s internal audit contract and the Trust has Counter Fraud and Corruption and Whistle-blowing (Speak-Up) policies. The Counter Fraud service provides advice and support to the Trust, and gives guidance on appropriate best practice initiatives, while being available to carry out any ad-hoc investigations if required. 7.8 Directors' Representations The Directors are not aware of any significant differences between the carrying amount and the market value of interests in land. The Trust s directors confirm that as far as they are aware there is no relevant audit information of which the Trust's auditors are unaware. 7.9 Setting Charges for Information It is government policy that as much information about public services as possible should be made available either free or at low cost, in the public interest. Anything originating in Crown bodies, including many public sector organisations, has the protection of Crown copyright. So people may need to pay if they want to duplicate or process (reuse) such material for profit. Croydon Health Services Annual Report Page 32 of 67

72 The Trust posts information about our activities and services on our public website, and this can be accessed for free. We make available recent legislation, public policy announcements, consultation documents and supporting material sufficient to understand the Trust s business. The Trust charges a small fee to cover the cost of production of certain information e.g. copies of medical records. The Trust does not charge for Freedom of Information requests where the information is readily available, or can be provided within the time limits stipulated in the Freedom of Information Act. The Trust makes no additional charge for material made available to meet the needs of particular groups of people, eg in Braille or other languages Looking Forward to 2013/2014 The Trust is forecasting a draft deficit of circa 8.8m for 2013/14. This plan was submitted to the NHS Trust Delivery Authority (TDA) on the 5th April This is as a result of significant investments in quality measures in order to improve patient experience and drive productivity improvements and a significant QIPP challenge from the Trusts host commissioner Croydon CCG. The Trust is continuing to work with commissioners in reducing its financial gap on its contract. In January 2013 the Better Services, Better Value Programme Board agreed a series of recommendations for the future of Epsom, Croydon, Kingston, St George s and St Helier hospitals. They include reducing the number of A&E departments from 5 to 3, reducing the number of maternity units from 5 to 3 and a planned care centre for all inpatient surgery in the region. Final proposals will be subject to full public consultation, and any impact on this organisation would not occur until 2017/18 at the earliest. The reconfiguration of the Trusts in South London will also impact on the Trust with an anticipated inflow of patients to Croydon from the Bromley area. It is expected this flow will commence in 2016/17. Improvements planned for next year include investing 6.2m in a series of workforce initiatives aimed at addressing wider quality and patient experience issues. Croydon Health Services Annual Report Page 33 of 67

73 8. Summary Financial Statements and Other Notes The financial statements set out on the following pages are a summary of the information published in the full accounts for the year ended 31st March The summary financial statements may not contain sufficient information for a full understanding of the Trust's financial position and performance. A full set of accounts may be obtained free of charge by contacting the Deputy Chief Executive and Director of Finance and Information at the following address: PA to the Deputy Chief Executive and Director of Finance and Information Croydon Health Services NHS Trust 2nd Floor, Nightingale House 530 London Road Croydon CR7 7YE Tel: The full accounts are also available on the Trust s website. The accounts for the year ended 31 March 2013 have been prepared by Croydon Health Services NHS Trust under Section 232, Schedule 15, of the National Health Service Act 2006 in the form which the Secretary of State has directed with the approval of the Treasury. Croydon Health Services Annual Report Page 34 of 67

74 8.1 Glossary of Accounting Terms Term Statement of Comprehensive Income (SOCI) Finance Costs Public Dividend Capital (Dividends) Statement of Financial Position (SOFP) Non-Current Assets Intangible Assets Depreciation and Amortisation Inventories Receivables Payables Provisions Public Dividend Capital (Reserve) Retained Earnings (Reserve) Revaluation Reserve Statement of Changes in Taxpayer s Equity (SOCITE) Capital Resource Limit External Financing Limit (EFL) Impairment of Receivables Accruals Impairment Undershoot Unwinding of Discount Contingent Explanation This statement shows the in year revenue (income) generated by the Trust for the healthcare and non-healthcare services it has provided to other organisations. The statement also shows other comprehensive income, which can include, for instance, increases and decreases in the value of its non-current assets. These increases/decreases are unrealised because the Trust has not yet actually generated a profit or loss by selling these assets. This includes, for instance, interest the Trust has paid on its loans. It also includes the increase the Trust has made for the difference between this year s and last year s provisions (also known as the Unwinding of Discount.) The Trust has to pay to the Department of Health an annual charge that is calculated by taking 3.5% of its average net relevant assets as per the SOFP. This is also sometimes referred to as the Cost of Capital. 3.5% is a percentage set by HM Treasury. Formerly known as the Balance Sheet, this is a snapshot at a particular date of the Trust s total assets and liabilities. Items held for use by the Trust e.g. buildings, equipment, fixtures and fittings. These items have an economic life of at least 1 year. Also sometimes referred to as capital assets. Items as above, but which have no physical substance, e.g. computer software and licences. Also sometimes referred to as capital assets. Each year, for each of the non-current and intangible assets shown on the SOFP, the Trust has to charge depreciation (non-current assets) and amortisation (intangible assets) to its accounts. These charges represent the using up of the asset over its economic life. For example, for a piece of furniture originally costing 5,000 with a life of 5 years, 1,000 per annum will charged to the Trust s expenses, such that at the end of 5 years the furniture will have nil value. Formerly known as stock, these are items held in the short term for the carrying out of the Trust s business, e.g. stores of drugs and other consumables. Formerly known as debtors, this is money that is owed to the Trust by our customers. Formerly known as creditors, this is money that the Trust owes other organisations or individuals. Money that the Trust has a liability to pay in the future, which can be reliably estimated now. These may be either current (due within 1 year) or non-current (due after 1 year). Examples could include legal claims. The majority that are relevant to the Trust are amounts set aside for those former employees who have had to take early retirement. The funding that was historically made available to the Trust from the Department of Health to pay for its assets, including all of its buildings. Movements on this reserve must be agreed with the Department of Health. This a reserve holding the surpluses and deficits built up by the Trust from previous years. When a non-current asset is revalued (i.e. when property is revalued each year) the movement in value is added to or deducted from this reserve. This statement shows the movements in the year on the reserves described above. A centrally set limit that controls the amount of money the Trust can spend in a year on noncurrent assets (see above). The Trust must not go above this limit. This is a limit set by the Department of Health to control and manage the cash expenditure of the Trust. It covers all sources of finance available to the Trust: internal, external or from the Department of Health. Formerly known as Bad Debts, this is the amount the Trust sets aside to cover those monies it is owed by its customers, but from whom there is little chance of recovery. Amounts that are set aside for money the Trust is owed/owes, and for which there is no invoice as at the 31 March. However, there is a very high degree of certainty as to both the likelihood of the receipt/payment and the amount. These amounts are sometimes estimated, i.e. the final quarter s electricity bill. Where an asset is reduced in value. For instance, when land is revalued during an economic downturn; or when we believe a debt is not recoverable because a customer has been declared bankrupt. Achieve a level below the limit set, e.g. with EFL above. Trusts are permitted to undershoot against their EFL target as long as it is "not excessive". A Financing charge relating to the increase the Trust has made for the difference between this year s and last year s provisions. Depending on something else in the future in order to happen. Croydon Health Services Annual Report Page 35 of 67

75 8.2 Summary Financial Statements 8.2a Statement of Comprehensive Income for year ended 31 March / / Gross employee benefits (165,160) (158,561) Other operating costs (73,615) (69,445) Revenue from patient care activities 229, ,755 Other Operating revenue 14,023 13,186 Operating surplus/(deficit) 4,776 8,935 Investment revenue Finance costs (23) (28) Surplus/(deficit) for the financial year 4,783 8,927 Dividends payable on Public Dividend Capital (PDC) (4,774) (4,868) Retained surplus/(deficit) for the year 9 4, / /12 Other Comprehensive Income Impairments and reversals (5,910) (6,962) Net gain/(loss) on revaluation of property, plant & equipment Total comprehensive income for the year* (5,875) (2,834) * This sums the rows above and the retained surplus / (deficit) for the year after adjustments for PDC dividend. Financial performance for the year 2012/ / Retained surplus/(deficit) for the year 9 4,059 Adjustments re donated asset/govt grant reserve elimination (190) 92 Adjusted retained surplus/(deficit) 199 3,967 The presentation of the financial performance note above is consistent with the Department of Health's Financial Monitoring and Accounts schedules. PDC dividend : balance receivable/(payable) at 31 March PDC dividend : balance receivable/(payable) at 1 April Croydon Health Services Annual Report Page 36 of 67

76 8.2b Statement of Financial Position as at 31 March March March Non-current assets: Property, plant and equipment 156, ,437 Intangible assets 1,557 1,413 Trade and other receivables 1,290 0 Total non-current assets 159, ,850 Current assets: Inventories 2,413 2,204 Trade and other receivables 8,151 14,155 Cash and cash equivalents 11,323 7,726 Total current assets 21,887 24,085 Total assets 181, ,935 Current liabilities Trade and other payables (26,407) (26,148) Provisions (2,243) (989) Total current liabilities (28,650) (27,137) Total assets less current liabilities 152, ,798 Non-current liabilities Provisions (921) (926) Total non-current liabilities (921) (926) TOTAL ASSETS EMPLOYED: 151, ,872 Financed By: Taxpayers' Equity Public Dividend Capital 67,415 55,955 Retained earnings 37,656 36,946 Revaluation reserve 46,386 52,971 TOTAL TAXPAYERS' EQUITY: 151, ,872 Croydon Health Services Annual Report Page 37 of 67

77 8.2c Statement of Changes in Taxpayers' Equity for the year ended 31 March 2013 Public Dividend capital Retained earnings Revaluation reserve Total reserves Changes in taxpayers equity for 2012/13: Balance at 1 April ,955 36,946 52, ,872 Retained surplus/(deficit) for the year 9 9 Net gain / (loss) on revaluation of property, plant, equipment Impairments and reversals (5,910) (5,910) Transfers between reserves 701 (701) 0 New PDC Received 11,460 11,460 Net recognised revenue/(expense) for the year 11, (6,585) 5,585 Balance at 31 March ,415 37,656 46, ,457 Public Dividend capital Retained earnings Revaluation reserve Total reserves Changes in taxpayers equity for 2011/12: Balance at 1 April ,955 31,975 60, ,706 Retained surplus/(deficit) for the year 4,059 4,059 Net gain / (loss) on revaluation of property, plant, equipment Impairments and reversals (6,962) (6,962) Transfers between reserves 912 (912) 0 Net recognised revenue/(expense) for the year 0 4,971 (7,805) (2,834) Balance at 31 March ,955 36,946 52, ,872 Croydon Health Services Annual Report Page 38 of 67

78 8.2d Statement of Cash Flows for the year ended 31 March / /12 Cash Flows from Operating Activities: Operating Surplus / (Deficit) 4,776 8,935 Depreciation and Amortisation 5,307 5,428 Donated Assets received credited to revenue but non-cash (27) (82) Dividend (Paid) / Refunded (4,768) (5,000) (Increase)/Decrease in Inventories (209) 338 (Increase)/Decrease in Trade and Other Receivables 4,714 (4,879) Increase/(Decrease) in Trade and Other Payables (4,675) 7,659 Provisions Utilised (728) (1,885) Increase/(Decrease) in Provisions 1, Net Cash Inflow/(Outflow) from Operating Activities 6,308 10,843 Cash Flows From Investing Activities: Interest Received (Payments) for Property, Plant and Equipment (14,106) (4,996) (Payments) for Intangible Assets (95) (471) Net Cash Inflow/(Outflow) from Investing Activities (14,171) (5,447) NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING (7,863) 5,396 Cash Flows From Financing Activities: Public Dividend Capital Received 11,460 0 Net Cash Inflow/(Outflow) from Financing Activities 11,460 0 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,597 5,396 Cash and Cash Equivalents ( and Bank Overdraft) at Beginning of the Period 7,726 2,330 CASH AND CASH EQUIVALENTS (AND BANK OVERDRAFT) AT YEAR END 11,323 7,726 Croydon Health Services Annual Report Page 39 of 67

79 8.3 Notes to the Summary Financial Statements 8.3a Better Payment Practice Code - measure of compliance The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoices by the due date or within 30 days of receipt of goods or a valid invoice, whichever is later. 2012/ /12 Non-NHS Payables: Number 000 Number 000 Total Non-NHS Trade Invoices Paid in the Year 75,242 89,585 54,481 63,262 Total Non-NHS Trade Invoices Paid Within Target 52,738 60,819 45,302 46,672 Percentage of NHS Trade Invoices Paid Within Target 70% 68% 83% 74% NHS Payables: Total NHS Trade Invoices Paid in the Year 1,871 14,034 1,927 11,331 Total NHS Trade Invoices Paid Within Target 878 9,950 1,204 8,831 Percentage of NHS Trade Invoices Paid Within Target 47% 71% 62% 78% The Trust is a signatory to the Prompt Payment Code. 8.3b Staff sickness absence The table below shows the average number of days lost to sickness, per member of staff, over the calendar year January 2012 to December 2012, and are the figures notified to the Trust by the Department of Health. The Department of Health considers the resulting figures for calendar years to be a reasonable proxy for financial year equivalents. 2012/ /12 Number Number Total Days Lost 22,380 23,053 Total Staff Years 3,017 3,020 Average working Days Lost Audit Services The Trust s external auditors are Grant Thornton. During the financial year, Grant Thornton carried out work in relation to the statutory audit. The cost of these services in 2012/13 was 124k. No other audit services were provided to the Trust in 2012/13. Croydon Health Services Annual Report Page 40 of 67

80 8.5 Audit Committee The Audit Committee comprises a minimum of three of the Non-Executive Directors of the Trust, and meets at least six times a year. The function of this Committee is to assist the Board in fulfilling its oversight responsibilities by reviewing and monitoring the governance, financial, risk management and internal control systems. Taking counsel from both internal and external auditors, the Committee can make recommendations as to the steps to be taken if it considers that action or improvement is needed. Members of the Audit Committee in 2012/13 were: Carol Bernstein (Audit Committee Chair) Jeevan Gunaratnam Nero Ughwujabo All were Non-Executive Directors of the Trust in 2012/13. The Audit Committee s key roles, as set out in its Terms of Reference, are: Governance, Risk Management and Internal Control - reviewing the establishment and maintenance of an effective system of integrated governance, risk management and internal control, across the whole of the organisation s activities (both clinical and non-clinical), that supports the achievement of the organisation s objectives; Internal Audit - ensuring that there is an effective internal audit function established by management, that meets mandatory NHS Internal Audit Standards and provides appropriate independent assurance to the Audit Committee, Chief Executive and the Board; External Audit - reviewing the work and findings of the External Auditor appointed by the Audit Commission and consider the implications and management s responses to their work; Other Assurance Functions - reviewing the findings of other significant assurance functions, both internal and external to the organisation, and consider the implications to the governance of the organisation; reviewing the work of other committees within the organisation, whose work can provide relevant assurance to the Audit Committee s own scope of work. This will include the Governance Committee and any other committees that are considered relevant by the Committee; Financial Reporting - ensuring that the systems for financial reporting to the Board, including those of budgetary control, are subject to review as to completeness and accuracy of the information provided to the Board; Review the Trust s effectiveness in its Counter Fraud measures. At the end of each meeting, the Audit Committee carries out a self-assessment on the preparation for and conduct and effectiveness of the meeting. Internal Audit is undertaken by the London Audit Consortium. Croydon Health Services Annual Report Page 41 of 67

81 8.6 Pension Liabilities Past and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under these provisions can be found on the NHS Pensions website at The scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. For further detail, please refer to Note 9 of the full accounts, and also the Salaries and Pensions of Senior Managers Report below. Croydon Health Services Annual Report Page 42 of 67

82 8.7 Salary and Pensions of Senior Managers 2012/13 The information contained below in the Salary and Pension Entitlement of Senior Managers (the Remuneration Report ) has been audited by the Trust s External Auditors None of the Executive or Non-Executive Directors pay includes bonus payments. 2012/ /12 Name / Position John Goulston Chief Executive Appointed as Interim CE from 2 May 2012 to 28 February From 1 March 2013 appointed as Chief Executive. Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Register of Interests 180 to Vice Chair and Chair of the Finance & Audit Committee of NHS Innovations London from 2004 to 31 May 2012; Member of the Croydon Chief Executive Group, leading on planning and provision of social infrastructure from June 2012 to present. Nick Hulme Chief Executive Until 28 February 2012 Anthony Leonard Director of Finance & Information and Deputy Chief Executive The Director assumed Acting Chief Executive role from 1 April 2012 to 30 April to to to Terrence Higgins Trust - non-executive Director (Chairman); Volunteer with Crisis (Charity). 0 0 Spouse is a director at West Middlesex University Hospitals NHS Trust. Azara Mukhtar Interim Director of Finance Appointed 18 March 2013 Sara Coles Interim Chief Operating Officer From 2 January 2013 to 31 March 2013 (no recharges of salary). 0 to Seconded from NHS London from 18 March to 31 March 2013 not a Director. Seconded from Trust Development Agency from 1 April 2013 not a Director Spouse is an interim director at NE & NC London, with NHS CB London. Croydon Health Services Annual Report Page 43 of 67

83 2012/ /12 Name / Position Sharon Jones Director of Health and Wellbeing Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Salary (bands of 5,000) Other Remuneration (bands of 5,000) 95 to to 95 0 Benefits in Kind (to nearest 00) 0 None Register of Interests Richard Parker Director of Operations (Acute) Until 11 January Michael Burden Interim Director of Human Resources & Organisation Development In 2011/12, on a secondment role to this Trust from 3 October Annette Gately Director of Human Resources & Organisation Development Until 9 October Debbie Eyitayo Acting Director of Human Resources & Organisation Development In 2011/12, acting role from 1 April 2011 to 28 April Mike Ralph Director of Estates & Facilities 75 to to None 90 to to None to None to None 90 to to Medical Gas Association (MGA) - Chairman; Trustee of Combat Services Charity (UK). Dominic Conlin Director of Strategy and Commercial Development Appointed 1 January The salary for 2011/12 is part year only. Sally Smith Director of Strategy and Business Development Until 5 June to to Spouse is employed by Lambeth Clinical Commissioning Group, who are in contract with Croydon Health Services NHS Trust; however contract is managed through South London Commissioning Support Unit hence no direct financial involvement in contract to None Croydon Health Services Annual Report Page 44 of 67

84 2012/ /12 Name / Position Zoe Packman Director of Nursing, Midwifery and AHPs Appointed 19 September The salary for 2011/12 is part year only. Cynthia Davis Acting Director of Nursing, Quality and AHPs In 2011/12, acting role from 1 April 2011 to 18 September Tony Newman-Sanders Medical Director Appointed 1 September The Medical Director s details show his earnings as a Director ( salary ) and as a Consultant ( other remuneration ). Gavin Marsh Medical Director Until 31 August 2011 Lynette Wells Director of Governance & Trust Secretary Until 12 February 2012 Michael Bell Chairman Appointed 2 January 2013 Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) 95 to to None to None Register of Interests 85 to to to to 60 1 Member of Medical Advisory Committee to Shirley Oaks Hospital, until 31 December 2012; PACT Educational Trust Director to to 45 0 South West London Healthcare - Clinical Director; Zimmer Spine - Clinical advisor to None 10 to Owner of MBARC Ltd; consultancy and research company with contracts with NHS Organisations, Government Departments and other public bodies. Board member of HIV Prevention England. Trustee of Embarcation. Croydon Health Services Annual Report Page 45 of 67

85 2012/ /12 Name / Position Michael Parker Chairman Appointed from 1 April 2012 to 31 December Brian Phillpott Chairman Until 30 April 2012 Constance Hall Non - Executive Director (Vice Chair) Jeevan Gunaratnam Non - Executive Director Nero Ughwujabo Non - Executive Director Carol Bernstein Non - Executive Director Godfrey Allen Non Executive Director Appointed 14 January 2013 Mary Clarke Non Executive Director Appointed 14 January 2013 Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Register of Interests 10 to Declaration of interest form not received from member, who has now resigned from the Trust. A review of the minutes of each meeting that the member attended confirms that, as far as the Trust is aware, there were no conflicts of interest 0 to to Spouse part time consultant on contract basis with the NHS. 5 to to Declaration of interest form not received from member, who has now resigned from the Trust. A review of the minutes of each meeting that the member attended confirms that, as far as the Trust is aware, there were no conflicts of interest 5 to to Toshiba Medical Systems Ltd- Commercial Service Manager British Institute of Radiology Honorary Treasurer 5 to to None 5 to to Employee of BT PLC (Non- Financial) 0 to Associate to the NHS SWL Joint Boards from 22 January to 31 March to NHS London Quality and Safety Handover and Closure Project Manager; Registered Nurse Merton Clinical Commissioning Group; Director and Owner Clarkes Consultancy Limited. Croydon Health Services Annual Report Page 46 of 67

86 2012/ /12 Name / Position John Thompson Non Executive Director Appointed 14 January 2013 Karen Jones Non - Executive Director Until 31 January 2013 Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Salary (bands of 5,000) Other Remuneration (bands of 5,000) Benefits in Kind (to nearest 00) Register of Interests 0 to Associate Non-Executive Director of NHS South West London (January to March 2013); Chair of the Lay Advisory Panel, Trustee, and Council Member of the College of Optometrists; Trustee of the Richmond Carers Centre. 5 to to Croydon Economic Development Company - Non Executive Director; Applied Business Counsel Ltd Director. Croydon Health Services Annual Report Page 47 of 67

87 Pension Benefits 2012/13 Name Title Real increase / (decrease) in pension at age 60 Real increase / (decrease) in pension lump sum at aged 60 Total accrued pension at age 60 at 31 March 2013 Lump sum at age 60 related to accrued pension at 31 March 2013 Cash Equivalent Transfer Value at 31 March 2013 Cash Equivalent Transfer Value at 31 March 2012 Real increase/ (decrease) in Cash Equivalent Transfer Value Bands of 2.5k Bands of 2.5k Bands of 5k Bands of 5k John Goulston Interim Chief Executive 0 to to 5 50 to to 165 1,080 1, Anthony Leonard Deputy Chief Executive and Director Of Finance & Information -2.5 to 0-5 to to to Azara Mukhtar Interim Director of Finance 0 to to to to Richard Parker Director of Operations (Acute) 0 to to to to Sharon Jones Michael Burden Zoe Packman Dominic Conlin Director of Operations (Community) Interim Director of Human Resources & Organisation Development Director of Nursing, Midwifery and AHPs Director of Strategy and Commercial Development 0 to to to to to to to to to to 5 30 to to to 0-5 to to to Michael Ralph Director Of Estates & Facilities 0 to to to to Anthony Newman- Sanders Medical Director 2.5 to to 5 55 to to Croydon Health Services Annual Report Page 48 of 67

88 Significant movements in real increase / (decrease) in pensions and lump sums are mainly due to: acting arrangements in this year and prior year; change in factors used to calculate CETV by NHS Pension Agency. As Non-Executive members do not receive pensionable remuneration, there are no entries in respect of pensions for Non-Executive members. Cash Equivalent Transfer Values A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member s accrued benefits and any contingent spouse s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The CETV figures and the other pension details include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries. Real Increase in CETV This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, and contributions paid by the employee (including the value of any benefits transferred from another scheme or arrangement). A change in the Government Actuarial Department's (GAD) actuarial factors has occurred during the year, following revised guidance from HM Treasury. NHS Pensions are using the most recent set of actuarial factors produced. Croydon Health Services Annual Report Page 49 of 67

89 8.8 Pay Multiples Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation s workforce. The calculation is based on the full-time equivalent staff of the reporting entity at the reporting period end date on an annualised basis. This is shown in the table below: 2012/ /12 Band of Highest Paid Director s Total Remuneration 165k to 170k 145k to 150k Median Total Remuneration of all staff 32,781 31,769 Remuneration Ratio Number of employees who received remuneration in excess of the highest paid director 9 11 Remuneration for these staff ranged from: 169k to 211k 152k to 174k Total remuneration includes salary, non-consolidated performance-related pay, benefits-inkind as well as severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions. 8.9 Exit Packages 2012/ /12 Exit package cost band (including any special payment element) *No. of compulsory redundancies *No. of other departures agreed Total no. of exit packages by cost band *No. of compulsory redundancies *No. of other departures agreed Total no. of exit packages by cost band No. No. No. No. No. No. Less than 10, ,001-25, ,001-50, Total number of exit packages by type (total cost Total resource cost ( 000) This note explains the exit packages that have been agreed in the year. Redundancy and other departure costs have been paid in accordance with the provisions of Section 16 of the NHS Terms and Conditions of Service Handbook. Croydon Health Services Annual Report Page 50 of 67

90 Where the Trust has agreed early retirements, the additional costs are met by the Trust and not by the NHS Pensions scheme. Ill-health retirement costs are met by the NHS Pensions scheme and are not included in the table. This disclosure reports the number and value of exit packages taken by staff leaving in the year. Note: The expense associated with these departures may have been recognised in part or in full in a previous period Reporting related to the Review of Tax Arrangements of Public Sector Appointees As part of the Review of Tax Arrangements of Public Sector Appointees published by the Chief Secretary to the Treasury on 23 May 2012, departments and their arm s length bodies published information in relation to the number of off payroll engagements at a cost of over 58,200 per annum (ie more than 220 per day and more than six months) that are / were in place within those organisations. In relation to off payroll engagements at a cost of over 58,200 per annum that were in place as of 31 January 2012 within the Trust, there were 17 such engagements in place within the Trust. Since that time: 1 of these engagements has since come onto the Trust payroll, and 9 of these engagements have since come to an end. There have been 11 new off-payroll engagements between 23 August 2012 and 31 March Croydon Health Services Annual Report Page 51 of 67

91 9. STATEMENTS /13 ANNUAL GOVERNANCE STATEMENT Scope of responsibility The Trust Board is accountable for governance at Croydon Health Services NHS Trust. As the Accountable Officer and Chief Executive of this Board, I have responsibility for maintaining a sound system of governance that supports the achievement of the organisation s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation s assets, for which I am personally responsible as set out in the Accountable Officer Memorandum. Accountability for risk management is set out in the Trust s Risk Management Strategy. The Executive Team is collectively responsible for maintaining the systems of internal control and directors are accountable to me for ensuring effective governance arrangements in their individual areas of responsibilities. These areas of responsibility are detailed in the Trust s Scheme of Delegation. Governance Framework The Trust Board has overall responsibility for reviewing the effectiveness of internal controls: clinical, financial, environmental and organisational and as such requires that each of its sub-committees has agreed terms of reference which describes the duties, responsibilities and accountabilities, and describes the process for assessing and monitoring effectiveness. The Board itself has Standing orders, reservations and delegation of powers and standing financial instructions in place which are reviewed annually. As the Accountable Officer, I support the Chairman in ensuring the effectiveness of performance of the Board and its committees. In addition to the regular annual review of effectiveness of each committee, a systems review of board committees was undertaken in July 2012, with changes to the structure to further improve the effectiveness of the board s committee framework (Appendix 1). There was then a broader Board Governance Review commissioned by the new Chairman in January During 2012/13, as an interim arrangement pending the appointment of the substantive Chief Executive, senior leadership in corporate governance was provided by the Deputy Chief Executive / Director of Finance through the Trust s Integrated Governance Team. Governance is embedded across the corporate directorates and clinical directorates, led by Directors or Clinical Directors, thus ensuring clear responsibility and accountability across the Trust. For 2013/14, following the Board Governance review, the Trust s Remuneration Committee has agreed to the establishment of the post Director of Corporate Governance, a role that will be jointly accountable to the Chairman and the Chief Executive. This post will be responsible for providing senior leadership on governance. Each clinical directorate has a governance structure which reports into a directorate Performance and Quality Board; these in turn report directly into trust-wide governance framework. During 2012/13, the Trust s performance management framework was redeveloped to allow clinical directorate s greater autonomy within a clear accountability framework. The Assurance Framework was reviewed by the Audit Committee and the Trust Board during the course of the year. The Trust Board met on 7 occasions in 2012/13 and was noted to be quorate in all occasions. Committees of the Board included the following: Board Committees No. Meetings Quorate Audit 6 100% Remuneration 5 100% Finance and Investment 9 100% Performance 2 100% Quality 4 75% Access, Equality & Diversity 3 50% Charities Funds 3 100% Strategic Leadership 2 100% 52

92 During the course of 2012/13, the Trust was subject to 2 reviews of compliance by the Care Quality Commission (CQC). The first being an unannounced, but scheduled review at the Croydon University Hospital site in June 2012 where the Trust was issued with two warning notices with regards to outcome 4 (WHO surgical safety checklist), and outcome 11(availability of equipment) and upheld a previous compliance action for outcomes 13 and 16. The Trust was compliant with all other core outcomes of the Essential Standards of Quality and Safety assessed. In September 2012, the CQC carried out a responsive visit as a follow up to the warning notice and subsequently assessed the Trust as compliant with these two outcomes. Risk and Control Framework The Trust is committed to providing high quality care, in an environment which is safe for patients, visitors and staff and which is underpinned by the public service values of accountability, probity and openness. Robust risk management and internal control are an essential part of good governance and is integral to the delivery of this commitment. The Chairman approved the Risk Management Strategy in October 2012 and the Trust also developed the Clinical Risk Assurance Framework as the updated framework to provide the Trust Board with assurance as to whether our systems, process and procedures for clinical governance are working effectively across our clinical services. The Clinical Governance Assurance Framework went live in February The key aims of the Trust s risk management approach is to ensure that all risks to the Trust s achievement of strategic objectives are identified, analysed, evaluated, monitored and managed appropriately. The system of risk management is described in the trust s Risk Management Strategy which is accessible all staff via the Trust intranet. The Trust s system for internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. Risks are identified through feedback from many sources such as proactive risk assessments, adverse incident reporting and trends, clinical benchmarking, audit data, complaints, legal claims, patient and public feedback, stakeholder/partnership feedback and internal / external assurance assessments. All business cases and proposed service reconfigurations are routinely risk assessed and all corporate committee papers are asked to provide narrative on risk and equality impact. Risks are evaluated using a recognised risk assessment tool which assesses the impact and likelihood of the risk occurring using a 5 x 5 scoring matrix. This risk score feeds into the decision-making process about whether a risk is considered acceptable. High level risks require control measures / contingency plans to reduce them to an acceptable level. These risks are escalated to the Corporate Risk Register. Each risk has an identified owner who is responsible for reassessing and monitoring the effectiveness of the controls in place to manage and mitigate the risk; this is recorded and reported back at appropriate committees. The Trust Assurance Framework, which is aligned to the Trust s strategic corporate objectives, is a high level document based on structured and on-going assessment of the principle risks to achieving these objectives. It details the key controls, sources of assurance and gaps therein. The Trust Assurance Framework was reviewed by the Audit Committee and the Trust Board during the course of the year. The Integrated Governance Team, which includes the risk and assurance teams, supports staff in disseminating good practice across the organisation. Risk management training is a mandatory requirement for Trust staff at induction. Further education is available for Trust staff, relevant to their authority and duties; External assurance as to the appropriateness of the risk management system was provided in 2012 with the successful assessment at Level 1 of the Health Service Litigation Authority (NHSLA). NHSLA Level 1 is an assessment of how well the policy framework that governs risk management in a NHS organisation is organised. The Trust is actively working towards Level 2 assurance. Section 11 of the Health and Social Care Act 2008 places a duty on the NHS to consult and involve patients and the public in the planning and development of health services and in making decisions affecting the way those services operate. The Trust has continued to strengthen closer working 53

93 relationships with public stakeholders through the Patient Issues Committee to work alongside the many user groups already engaged within the Trust, with the aim of providing information about issues relating to service provision. This is undertaken through an environment of openness, transparency and accessibility in order to allow the public to engage with the Trust to make service improvements. The Trust also engages with its 4,600 foundation trust members through bimonthly newsletters and health information events. As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure all employer obligations contained within the Scheme regulations are complied with. This includes ensuring that deductions from salary, employer s contributions and payments into the Scheme are in accordance with the Scheme rules, and that member Pension Scheme records are accurately updated in accordance with the timescales detailed in the Regulations. Control measures are in place to ensure that all the organisation s obligations under equality, diversity and human rights legislation are complied with. The systems of internal control has been in place in Croydon Health Services NHS Trust for the year ending 31 March 2013 and up to the date of approval of the annual report and accounts. The management of the Trust takes seriously the potential threat and losses associated with possible fraudulent activity. The Trust has complied with the Secretary of State s Directions on countering fraud in the NHS and nominated a professionally accredited Local Counter Fraud Specialist (LCFS) who undertakes a programme of work designed to raise awareness amongst staff of possible fraud and to carry out investigations of any suspicions of fraud. LCFS provide reports to each Audit Committee of the progress of on-going investigations. The annual work plans of our LCFS cover a wide range of activities and follow the recommended plans produced by NHS Protect. Included within these plans are specific exercises, known as proactive reviews, which seek to identify the risk of fraud. Our LCFS has undertaken a number of these exercises under the direction and overall management of NHS Protect. Staff are encouraged, through our counter fraud and whistle-blowing policies, to raise and refer any concern about fraud to the LCFS who will undertake an appropriate investigation. This encouragement is reinforced through the regular awareness presentations given by the LCFS to Trust staff. New risks identified in 2012/13: All risks were reviewed at the beginning of April 2012 to close down the old Assurance Framework as an integral part of the governance review following internal audit report in 2011/12. Therefore all of the risks on the Assurance Framework were refreshed at the Risk Management meeting in April The following risks were identified and added to the Board Assurance Framework during 2012/13, and the associated controls overseen by the Executive Management Team and the Risk Management Group. Resources to meet 24/7 demand for safe and effective care for the identification and management of the deteriorating patient (inclusive of implementing the London Health Programme for Adult Emergency Standards introduced in 2012). The Hospital at Night is being strengthened with a 500k programme to provide 24/7 senior critical care nurse practitioner support for deteriorating patients and the junior doctors caring for them. The delivery plan has been agreed with NHS London and the monitoring by our Commissioners. Nurse staffing levels and skill mix - The Trust has an established work programme, with the establishment of daily monitoring and disestablishment of the 20% temporary workforce cover line replaced by staff employed by the trust already achieved. During 2012/13, 120 registered nurses, midwives, health visitors and healthcare assistants were employed to reduce the use of agency staff. For 2013/14, the trust is moving to having a ratio of registered nurses to health care assistants of 70; 30 (from 50:50) on all adult wards. The on-going programme of work has been shared and discussed at various forums including Trust Board and with the Cluster Lead Nurse and Chief Nurse for London. VTE CQuIN Strengthen Thromboembolism Committee and launched VTE risk assessment onto the Trust Vital Pac system. Monthly monitoring is reported to the Board. Financial The Trusts principle risk relating to finance in 2012/13 was the failure to achieve its cost improvement programme (70% delivery against an 11m programme), reducing the planned surplus and impacting on the Trusts Liquidity and ability to meet its planned investments. 54

94 Major Incident Preparedness - Risk assessment and preparedness reviewed in preparation for Olympics, with the Trust plans tested by SW London sector and approved. Risk mitigated. Mandatory and Statutory Training - Monthly monitoring is reported to the Board and sanctions in place for non-compliance with adherence to MAST Policy. A programme of work continues to ensure managers create their own culture of ownership and accountability ensuring that they are compliant and equally enabling staff to attend training sessions as required. Performance in the national staff survey - The survey showed that the Trust had low levels of staff engagement. In September 2012, the Trust was accepted as a national pioneer Trust to improve staff engagement and empowerment, through the adoption of the "Listening into Action (LiA)" methodology. LiA is a national NHS change management initiative supported by the NHS Chief Executive, Sir David Nicholson. It is a comprehensive, outcome-oriented approach to engaging the right people behind quality outcomes. The overarching aim is to improve patient care through increasing staff engagement and satisfaction. Data security breaches The Trust is committed to ensuring that its information is managed to the highest standards and in accordance with the Health and Social Care Act 2008, Care Standards Act 2000, The Data Protection Act 1998, The Freedom of Information Act 2000, Central Government Policies and best practice Guidance from organisations such as the Information Commissioner s Office. The Trust has policies and procedures that ensure that information is appropriately protected from accidental loss, destruction, damage and unauthorised access and disclosure; and to manage the business impacts and risks associated with confidentiality, integrity and availability of all Information. There were 4 incidents of a data breach which met the criteria for reporting to the Information Commissioner s Office, listed below: Date reported ICO Ref. Datix Ref. Description 1 15/08/2012 ENFO W23474 Potential disclosure/temporary loss of medical records relating to a child 2 05/10/2012 RFA W22942 Complaint made to the ICO, by a member of the public regarding disclosure of her medical records to the wrong GP Practice 3 27/11/2012 ENF W26105 A patient discharge letter containing sensitive information was sent in error to another patient 4 25/01/2013 ENFO W27818 Disclosure of Health Visiting records of a mother, following request made by the father of a child Performance against national priorities set out on the NHS Operating Framework 2012/13 During 2012/13 the Trust has met 12 out of the 15 priorities within the NHS Operating Framework standards within the Single Operating Model (SOM). The Trust did not achieve the following priorities: Referral to treatment times open pathways five key specialties are driving non-compliance in open pathways. Late decisions to admit, the need to improve capacity utilisation and a marginal (in orthopaedics only) need to increase overall capacity. This has been addressed by an NHS Intensive Support Team (ESIST) validated action plan including non-recurring external capacity. The plan has been signed off by local commissioners and is expected to be resolved in 2013/14. 4hr access standard in A&E two key issues have contributed to failure to meet this standard. Croydon has historically seen high level of attendances and emergency admissions in proportion to the population against national benchmarks and this trend has now exposed an Emergency Department whose size and layout are outdated. This position is compounded by shift in complexity of patients attending and a significant (15%) increase in ambulance borne patients in 2012/13. A Croydon whole systems Emergency 55

95 and Urgent Care Improvement Plan is being developed to address the key operational issues including improved flow in the hospital. A separate strategic capital application is in preparation to address the physical limitations. Control of infection (C-difficile) target - the introduction of the dual testing regime has meant that this improvement in patient safety indicator means many more patients fall in to the high risk definition for testing. This has been compounded by a series of noro-virus outbreaks. Core control of infection remains sound in the Trust and this is demonstrated on our excellent performance on MRSA and our internal standard operating procedures being seen as compliant and fit for purpose following peer review visit. Review of effectiveness As Accountable Officer, I have responsibility for reviewing the effectiveness of systems of internal control. My review is informed by the work of the internal auditors, clinical audit and the senior management team within the Trust who have responsibility for the development and maintenance of the internal control framework. I have drawn on the content of the Quality Report and other performance information available to me. My comments are also informed by comments made by the external auditors in their reports. I have been advised on the implications of the result of the effectiveness of the system of internal control by the Board, the Audit Committee and the Quality Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place. The Head of Internal Audit has provided me with an overall opinion of reasonable assurance that the internal controls are working effectively. This is based on an assessment of the Assurance Framework and on controls reviewed as part of the internal audit work. The internal auditors have issued reasonable or significant assurance opinion on most audits undertaken in 2012/13. (A full list of the audits undertaken is in Appendix 2). However, in 4 audits only limited assurance could be provided on the controls in certain areas - Cost Improvement Programme, Consultant Job Planning, Medical Devices and Temporary Staffing. A subsequent follow-up audit on Medical Devices provided reasonable assurance. A number of internal audits included in the programme are yet to be finalised, however indications are that there will be no more limited assurance audits. Some of the recommendations issuing from the finalised audits have already been implemented, and progress is being made in all other areas to address the issues identified by audit. Monitoring of implementation of recommendations is carried out by the Executive Management Board and the Audit Committee. Going forward into 2013/14, these monitoring arrangements will be reviewed to ensure they continue to be robust. The Head of Internal Audit s Opinion for 2012/13 noted that governance arrangements appeared to deteriorate during the year, resulting in a suspension of non-statutory sub-committees of the Board. The Trust commissioned an independent review of its governance arrangements, and a number of recommendations arose from this review which the Trust is in the process of implementing. The Head of Internal Audit s opinion is documented in appendix 3. The Board Assurance Framework provides me with evidence that the effectiveness of the controls used to manage the risks to the organisation achieving its principle objectives have been regularly reviewed. The Trust s committee structures ensure sound monitoring and review mechanisms to ensure the systems of internal control are working effectively. 56

96 My review is also informed by a variety of other sources of information. These include: The views and comments of stakeholders Patient and staff surveys Internal and external audit reports Clinical benchmarking and audit reports Mortality monitoring Reports from external assessments such as CQC Quality and Risk Profile Deanery and Royal College assessments Accreditation inspections of clinical services NHSLA Risk Management Standards assessment PLACE self-assessments Significant Issues An independent review of the governance arrangements was undertaken in January 2013, following the appointment of a new Chairman leading to a period of suspension of the non-statutory sub-committees of the Board. During this period, assurance was provided directly to the Trust Board on all governance matters. This compensated for the period when the committees did not meet. As a result of the Governance Review, in March 2013, the Trust Board approved the move from 9 Board Committees to 4 Board Committee (Audit, Remuneration as Statutory Committees of the Board and Quality and Clinical Governance and Finance and Performance as the two Assurance Committees of the Board. The new Committees commenced in April audits reported with limited assurance were Cost Improvement Programme, Consultant Job Planning, Medical Devices and Temporary Staffing, actions have been put in place to address the gaps in assurance. Serious Incidents The Trust reported 160 serious incidents to the National Reporting and Learning Service (NRLS) within the year (this compares with 82for 2011/12), 2 of which were de-escalated by the Patient Safety Team at NHS London following investigation and submission of reports. All serious incidents are reviewed by the Executive Team and fully investigated using root cause analysis tools. Pressure Ulcers In 2011/12 the trust reported upward trend in hospital acquired grade 3+ pressure ulcers. A full action plan was developed to address this significant patient safety issue, including systems for internal validation. Whilst the number of grade 4 hospital acquired pressure ulcers has reduced (9 to 2) the overall grade 3+ figure has remained static. Further actions are being taken to address. Complaints and Serious Incident Management Timeliness of investigations completion for complaints and serious incidents in line with national practice, the Executive team now review on a weekly basis. On-going compliance with registration requirements of the Care Quality Commission (CQC) with compliance actions remaining in place for outcomes 16 (Assessing and monitoring the quality of service provision), 13 (Staffing), and 10 (Environment). The Trust has developed a compliance framework which was launched in The Trust has produced an annual Quality Account for 2012/13 and the governance system described above has been used to validate its content and the data on which it is based. I have highlighted the significant issues, and all appropriate corrective action has been taken in response. Through review of the assurance framework, the Board has not identified any further significant issues that fall within the scope of the requirements of this Governance Statement. Accountable Officer: John Goulston, Chief Executive Officer Signature: Date: 3 rd June

97 Appendix 1 58