BHRUT annual report 2009 - Barking Havering and Redbridge ...
BHRUT annual report 2009 - Barking Havering and Redbridge ...
BHRUT annual report 2009 - Barking Havering and Redbridge ...
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18<br />
<strong>Barking</strong>, <strong>Havering</strong> & <strong>Redbridge</strong> University Hospitals NHS Trust<br />
Operating <strong>and</strong> Financial Review <strong>2009</strong>/10<br />
The requirement for NHS bodies to prepare an<br />
Operating <strong>and</strong> Financial Review as part of the <strong>annual</strong><br />
<strong>report</strong> was introduced in 2005/6. The OFR seeks to<br />
provide information on the developments, trends,<br />
performance <strong>and</strong> business position of the Trust in<br />
terms both of the year in question <strong>and</strong> future<br />
development.<br />
Review of <strong>2009</strong>/10<br />
The Trust agreed a Plan with NHS London for <strong>2009</strong>/10<br />
for an income <strong>and</strong> expenditure deficit of £8.0m,<br />
excluding the technical impact of asset impairments<br />
<strong>and</strong> of implementation of International Reporting<br />
St<strong>and</strong>ards (IFRS). The Plan compared with a deficit of<br />
£29.1m in 2008/09 (IFRS re-stated <strong>and</strong> excluding<br />
impairments) <strong>and</strong> an underlying deficit of £37.5m. The<br />
planned improvement in <strong>2009</strong>/10 was primarily driven<br />
by a significant Cost Improvement Programme of<br />
£33.3m.<br />
As part of its contract agreement with the local<br />
Primary Care Trusts for <strong>2009</strong>/10, the Trust agreed to<br />
jointly commission an independent review in to the<br />
value of its non-PbR service agreements, which had<br />
been subject to a long-st<strong>and</strong>ing dispute with the PCTs.<br />
The outcome of this review was concluded in the last<br />
quarter of the financial year <strong>and</strong> resulted in a £21m<br />
adverse movement in the planned income position.<br />
This was partially offset by £8m non-recurrent ‘risk<br />
pool’ support from the PCTs, to mitigate the impact of<br />
the review. The control total Plan deficit was adjusted<br />
by NHS London for these factors, which together with<br />
a favourable adjustment of £1.3m, gave a revised<br />
target deficit for the Trust of £19.7m.<br />
The Trust finished the year with a deficit of £22.3m,<br />
excluding the technical impact of fixed asset<br />
impairments (£31.9m) <strong>and</strong> IFRS (£2.1m). This was<br />
£2.6m above the control total of £19.7m, with the<br />
main reason being disputed income of £2.6m with<br />
local PCTs at year end, which the Trust provided<br />
against in the Accounts.<br />
The Trust did not achieve its duty to break even over<br />
the five year period ending 31 March 2010. The<br />
relevant cumulative deficit was £116.9m. Accordingly,<br />
the external auditor referred the Trust to the Secretary<br />
of State under section 19 of the Audit Commission<br />
Act 1998.<br />
2010/11 Plans<br />
The Trust has provisionally agreed a Plan deficit with<br />
NHS London for <strong>2009</strong>/10 of £19.4m (excluding<br />
impairments <strong>and</strong> IFRS). Taking away the impact of the<br />
PCT risk pool support <strong>and</strong> other non-recurrent<br />
measures taken to meet the 09/10 control total, the<br />
underlying position coming in to 2010/11 was a<br />
£41.1m deficit. The Trust also has additional cost<br />
pressures in 2010/11 of £19.2m <strong>and</strong> a reduced<br />
income contribution of £10.5m arising from reduced<br />
activity dem<strong>and</strong> from PCTs. Against this, the Trust has<br />
benefited from net pricing gains of around £13.0m<br />
(including an increase in the Market Forces Factor<br />
funding, removal of the out-patient scaling<br />
adjustment, less £5m risk pool support to the PCTs)<br />
<strong>and</strong> is planning for a Cost Improvement Programme of<br />
£34.5m (8.5%) <strong>and</strong> £3.9m of other upside<br />
adjustments. Excluding the £5m risk pool support, the<br />
plan is therefore to improve the underlying deficit<br />
position from £41.1m to £15.4m, a reduction of<br />
£25.7m.<br />
The cumulative deficit at the end of 2010/11 is<br />
therefore planned to be £136.3m. As part of the<br />
Medium Term Financial Strategy agreed in 2008/09,<br />
NHS London, in conjunction with the Challenged Trust<br />
Board of PCTs, earmarked £84m to eliminate the<br />
accumulated deficit, based on the planned position as<br />
at the beginning of <strong>2009</strong>. The NHSLA <strong>and</strong> the CTB are<br />
assessing the scope for use of further funds to<br />
eliminate the planned deficit to the end of 2010/11.<br />
The Trust’s role will be to deliver the control total for<br />
2010/11<br />
Operating <strong>and</strong> Financial Review