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Financial Planning and Budgets Setting and Managing a Budget March 2012

Financial Planning and Budgets Setting and Managing a Budget March 2012. Financial Planning Cycle. Starts around December Focus on projected out-turn Add pre-commitments and emerging pressures – including activity increases Add performance issues Add commissioning changes

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Financial Planning and Budgets Setting and Managing a Budget March 2012

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  1. Financial Planning and BudgetsSetting and Managing a BudgetMarch 2012

  2. Financial Planning Cycle Starts around December Focus on projected out-turn Add pre-commitments and emerging pressures – including activity increases Add performance issues Add commissioning changes Add unforeseen cost pressures Other areas

  3. Resources Allocations Baseline allocation – opening resource DH set uplift – sets allocation in the new year (with a further 2-3 year projections for planning purposes) Against what you have to spend is the current year spend plus all cost pressures (including inflation), activity increases, pre-commitments and national and local commissioning priorities Inevitably resources needed in total exceed allocations

  4. Closing the Gap Cost Reduction vs Cost Avoidance QIPP as the vehicle for delivery Service reduction / managing demand Pathway changes leading to overall reductions in volumes or complexity and therefore cost of care – or both Infrastructure changes / rationalisation

  5. Some Context Annual growth in allocations: 2.2-2.5% Average increase in elective activity: 4-6% Average increase in non-elective activity: 4% Continuing Care – increases between 3% - 10% LD – exceeds 2% Prescribing – typically 4% SCG – drugs and developments (e.g. NICE approval of new drugs) Addressing local need Addressing national priorities Addressing local performance issues – A&E, Ambulance response times, cancer waits etc.

  6. Setting the Plan & Budgets Balanced Plan Close the financial gap identify budget changes identify risk Mitigate risk Set Overall Budgets Set devolved budgets Clarify budget management rules, checks and balances

  7. Local Budgetary Management Resources available are fixed Local discretion around setting a balanced budget Agree balanced plan Identify monitoring arrangements around cost reduction / cost avoidance areas Monthly reporting – variance analysis, traffic lights, exception reporting and actions

  8. Local Budgetary Management (cont:-) In year variances: practices discretion to vire budgets Locality rules around under/overspends CCG level controls

  9. Sharing your Views Level of budgetary delegation to: CCG Locality Practices Short, Medium and Long Term Transformational Change – major system / pathway change needed in the system Link to System-Wide QIPP Targets the £20 bn problem Shaping Commissioning in Leeds

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