NHS Improvement (NHSI) Feedback on Trust Annual Plan & Trust Response Report written by:

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1 6.3 Report to: Board of Directors Date of meeting: 26 July 2018 Section: Regulatory issues Report title: NHS Improvement (NHSI) Feedback on Trust Annual Plan & Trust Response Report written by: Mark Platts Job title: Deputy Director of Finance Lead officer: Sarah Connery, Director of Finance & Information Board action required: For information For assurance (Yes or No): Yes Purpose of the Report This report provides the Board with a copy of the NHSI letter providing feedback on the Trusts 2018/19 plan submission. The report also provides an update on the Trust s response to the required actions included within the letter. 2018/19 Operational Plan Feedback Key Issues, Options and Risks Following the submission of the 18/19 annual finance and operational plans, NHSI have carried out a detailed review and provided feedback to all Trusts. A copy of LPFT s full feedback letter from NHSI is included within Appendix A. The letter provides feedback on 4 key areas. The key points, recommended actions and Trust response to these are included in Appendix B. Next Steps As part of the ongoing review of the Trust s financial performance, NHSI will carry out a number of detailed reviews of submitted returns. The Q1 return submitted by the Trust states that the Trust is currently reporting a financial position in line with planned values in all areas except Cost Improvement Plan (CIP) delivery. NHSI will review this and submit any questions to the Trust. The letter makes a number of references to the Trusts challenging CIP plans in 18/19. Savings generated year to date are 0.3m lower than planned and are forecast to be c 1.0 lower than planned, which further highlights the operational pressures faced by the Trust. Further updates on this are included in the Trust s private finance report. The letter sent to the Trust (and all other provider Trusts) also gave the opportunity to resubmit 18/19 financial plans to include any updates based on the recommendations in the letter. As the Trust had already reflected all recommendations within the plan submission and there were no material changes in assumptions, the Trust did not resubmit its plan. This was accepted by NHSI. 1

2 Executive Analysis The opportunity to resubmit the annual plan was not required by the Trust as there were no recommendations from NHSI or changes in Trust assumptions to warrant the resubmission. The finance team review the NHSI model hospital and other benchmarking tools to ensure that areas to improve efficiency are highlighted. A more detailed report on the Model Hospital will be presented at the September board. Recommendation (action required, by whom, by when) The Trust Board are asked to note the report and request the Finance and Performance Committee to inform future Boards on the progress of CIP delivery. Regulation, legislation and compliance CQC Impact on key lines of Well led enquiry: Financial Implications: Any under-achievement against the planned financial targets may have an adverse effect on the Trust s finance score rating detailed within the NHSI Single Oversight Framework. Equality Analysis: N/A Compliance Impact: The financial position impacts on the NHSI finance score rating. Risk Appetite Risk assessment Not applicable (delete as appropriate) Risk Level Avoid Minimal Cautious Open Seek Mature Key Elements Financial / VFM: G Compliance/Regulatory: Innovation/Quality: Reputation: APPETITE NONE LOW MODERATE HIGH SIGNIFICANT Explanation of variance from general (G) risk appetite The level of risk against each element should be indicated. Where more than one option is available the level of risk of each option against each element should be indicated by numbering each option and showing numbers in the boxes. The content of this report is the property of Lincolnshire Partnership NHS Foundation Trust Document Control Draft Version 4 November 2016 G G G 2

3 Appendix 1 NHS Feedback letter 3

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6 NHSI Feedback NHSI recommended Action LPFT response Workforce & Agency Your Trust is planning on spending 2.5m on NHSI are requesting the Trust reviews workforce plans to ensure agency staff in 2018/19. Whilst this constitutes a temporary staff costs are as low as possible. 0.5m improvement against your 2017/18 outturn, it is 0.5m higher than your agency ceiling. Your workforce plan shows that there will be an increase in the substantive workforce by 36.9 WTE, a reduction of 30.6 WTE in agency staff and a 0.3m reduction in bank staff costs. Your CIP plans also assume 61% of CIPs will be delivered through workforce changes. We would expect your trust to ensure planned workforce reductions are supported by robust and credible, quality impact assured workforce plans (supported by clear The continued pressures assumed in filling key consultant posts is driving the planned levels of spend. The 2.5m planned spend assumes some vacant posts will be filled substantively. Services are reviewing staffing models to ensure recruitment to substantive posts are maximised. The trust is also part of a Mental Health focussed development of safe staffing capacity modelling. This will support the Trust to ensure substantive recruitment is at required levels moving forward. The table below represents the data with notes on the values: Movement WTE Notes Workforce increase WTE reduction - CIPS Total increase 36.9 Reduction - Agency Appendix B NHSI key recommendations and LPFT response This increase is driven by additional WTE s for service developments such as the PCDU, employment advisors in IAPT and nurse associate and trainee posts The NHSI submission forces trusts to allocate WTE s to all CIP s. This means that all vacancy savings planned for have to be reported as CIP reductions even though they are not enforced removal of posts. At a recent HFMA workshop Trusts challenged this approach and NHSI are reviewing for future plans This reduction is driven by the anticipated lower spend on agency staff in 18/19. The WTE reduction is based on a proxy WTE based on an average cost of the agency specialism Reduction - Bank As per the agency reduction notes above. The high % of CIP s planned for through workforce savings (61%) are based on assumed vacancy savings as part of the continued Health roster refresh across clinical services and other levels of higher assumed vacancies across non clinical services. 6

7 NHSI Feedback NHSI recommended Action LPFT response KPIs), and that delivery would be monitored through appropriate oversight arrangements, particularly around clinical impact Finance Whilst the plan is in line with your control total it does show a deterioration from your 2017/18 outturn surplus of 1.143m. CIP plans I expect your board to continue its planning and oversight of financial improvement including improving its surplus position on a year on year basis. In reviewing opportunities for continual financial improvement and to ensure delivery of your plan, your board should be assured on a regular basis on the development and delivery of CIP plans ( 3.5m), which at 3.2% is lower than the peer average. In reviewing CIP opportunities the trust should ensure that plans take account of opportunities to operationalise efficiencies identified through the emerging work on the mental health model hospital. Appendix B NHSI key recommendations and LPFT response The Trust undertakes a detailed quality impact assessment process annually. The protocol has been updated to also ensure that schemes proposed during the year are fully assessed for any implications on quality. The Finance & Performance Committee receive detailed reports on CIP s and associated QIA s in order to ensure a robust governance review of schemes proposed. The Trusts financial plan for 18/19 showed a deterioration from 17/18 as last year included a number of non-recurrent benefits improving the position. The anticipated operational challenges included within the 18/19 plan have also resulted in some non-recurrent benefits to be planned for. Further unplanned benefits may materialise during 18/19 improving the actual outturn. However there is also the risk around unplanned pressures or nondelivery of planned CIP s that may also impact on the actual reported positon. Full finance reports are provided to all Board meetings and the Finance and Performance committee is presented with a detailed financial performance paper detailing the impacts of any known new financial pressures or benefits. The lower than peer CIP % is driven by some financial benefits planned for not being declared as CIP s which other Trusts may record as CIP s. For example the 0.6m assumed recovery following the Trusts fraud case could be reported as a CIP artificially inflating the reported values of CIPs. The Trust has ensured that planned CIP s fully reflect schemes that will be implemented as savings as opposed to a list of all financial benefits. This approach was agreed by Board and supports an effective and streamlined QIA approach. The model hospital is utilised and any relevant areas for improvement are highlighted. It is being used in the comparison within the STP Operational Efficiency work stream, for example. The model hospital data does present some limitations through not being updated on a regular basis. As this information is refreshed the use and relevance to the model hospital will increase. Your board should also seek The comprehensive CIP Quality Impact Assessment (QIA) process for 18/19 7

8 Appendix B NHSI key recommendations and LPFT response NHSI Feedback NHSI recommended Action LPFT response ongoing assurance on the full did result in some schemes being withdrawn from CIP plans. identification and risk assessment of the CIP programme and ensure that oversight and accountability processes are robust to support The revised CIP QIA protocol also includes clear guidance around risk assessing new schemes proposed during the year to ensure any risks associated to delivery are minimised. delivery of the planned 3.5m savings. Operational Performance Benchmarking The Model Hospital is a tool that should be used as a guide to where opportunities for productivity improvements may exist based on benchmarking with national benchmarks and selected peers CIP classification Quality Your plan and subsequent discussions with NHS Improvement regional colleagues confirm that you have indicated that you have a Quality Impact Assessment process in place We also ask you to categorise your CIPs as outlined in the published planning guidance. This will enable NHS Improvement to more readily interpret your CIP plans and support you in the delivery of your plans during the year. It is suggested that as a further check on the robustness of this process that the Board and subcommittees of the Board have sight of schemes that have been rejected on quality grounds. Operational challenges around CIP delivery is impacting on the values of savings now being forecast. However the impact of these is currently being reduced by further unplanned benefits anticipated. In addition to notes above on the Model Hospital the Trust is also signed up to the NHS Benchmarking network during 18/19. The reports from these submissions will be presented to the Finance & Performance committee to highlight any areas of variance and opportunities to increase operational efficiency. The Trust has followed all guidance on CIP classification. This report will be presented to the Finance & Performance Committee in August. 8