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Recovery Plan Version 6.0 18 th March 2013 PowerPoint Presentation
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Recovery Plan Version 6.0 18 th March 2013

Recovery Plan Version 6.0 18 th March 2013

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Recovery Plan Version 6.0 18 th March 2013

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  1. Recovery PlanVersion 6.018th March 2013

  2. Contents I Executive summary 2 II The Current Realityand Context 9 III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality 63 Appendices Forecast assumptions Monthly board scorecard

  3. Executive Summary Context • As at February 2013, The Rotherham NHS Foundation Trust (“TRFT”) is facing a number of significant challenges. These were highlighted in the Monitor letter dated 15th Feb 2013: • A challenged financial position resulting from a failure historically to deliver savings plans – TRFT has made a net loss in each of the past 3 financial years. Given reducing top-line income in future years, unless action is taken this position will worsen. Clearly, this trend is not sustainable; • A poorly executed IT implementation – the implementation of a new electronic patient record (“EPR”) system in FY 2013 has not gone well. As a result, the accuracy of information around clinical activities has declined, there is clear evidence of decreased clinical productivity and increased pressure on front line staff. In addition, the ability to recover income for activity performed has been hampered. A significant amount of work is required to rectify the position; and • A weak governance environment – outdated Board governance arrangements and management structures have resulted in a lack of clear accountability and weak links into front line staff, resulting in a repeated failure to deliver plans. • This Recovery Plan outlines a proposed path forward. The Recovery Plan - Objectives • This High Level Recovery Plan (“the Plan”) has been compiled in February and March 2013. It aims to address the key concerns raised in the Monitor letter, specifically: • To outline a path to sustainable Financial Recovery – this Plan forecasts at a detailed level the result for FY 2014, together with the savings plans in progress/ to be taken to reduce operating costs by £13m in that year. In order to mitigate risk to patient quality, initial actions are focused on “corporate overhead” and other areas deemed “lower risk” to patient care. For future years (FY2015/2016), savings plans are at a higher level. The detail will be worked up for the strategic plan due 30 September 2013; • To outline the current EPR position with the steps required to rectify this – this plan provides an update on EPR together with the key issues faced and the timetable to develop a plan to resolve these issues; and • To start the process of remedying governance issues – one of the key factors behind the failure to deliver previous plans is likely to have been the lack of clear accountability in the management structure. Through steps already initiated, the structure has been slimmed down and new clear lines of reporting introduced. However, further work is required. • It aims to do this in a logical and sequenced manner while at all times preserving the high quality of patient care.

  4. The Plan - Overview 12 months Phase 1 - Key Activities • Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. • Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: • Corporate overhead of £21.9m. Target reduction of £5m in Year 1; • Tactical control areas. Target reduction of £4m in Year 1; and • CSU and divisional plans of £4m in Year 1. • Establish underlying EPR position and options. Develop plan for rectification with costings. • Build infrastructure to drive clinical productivity. Phase 2 - Key Activities • Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. • Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. • Work on synthesizing community and acute services and review divisional linkages. • Review and initiate larger scale opportunities (e.g. outsourcing). • Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities • Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). • Prepare and submit detailed 3 year plan to Monitor. • Review longer term strategic opportunities for the Trust. • Recruitment of permanent CEO.

  5. The Plan – Initial Financial Projections • Key messages • The forecast outturn for the current financial year (FY 2013) is a deficit of £6.5m after restructuring costs of £4m. The recovery plan starts from this point. • The Recovery Plan targets savings of £13m in FY 2014, underpinned by Phase 1 activities focused on “lower risk” savings targets. These are: • A significant reduction in corporate overhead (£5m); • Tactical controls around pay / non-pay expenditure (£4m); and • CIPs schemes put forward by CSUs of £4m (£2.5m against current run rates). • On current planning assumptions, savings at this level will ensure that the Trust breaks even (prior to restructuring costs) in FY 2014. This forecast assumes further EPR costs of £350k (should the final EPR report show a materially higher amount, then the Plan will need to be updated). The Plan also incorporates increased spending (Francis report) and other identified cost pressures. • Savings in FY 2015 are based on delivering an additional £13m of efficiencies - The critical piece of work in driving this will be the strategic planning process, which will need to include all key constituents such as Governors, Board, execs, CDs, consultants, specialist, matrons, CCG Board and GPs, and LA’s.

  6. Key Risks and Mitigations • Ensuring that Savings Initiatives do not Risk the Quality or Safety of Patient Care – this initial Recovery Plan has been specifically designed to drive a rapid improvement in financial position while minimising risk to patient care. Specifically: • The Plan has deferred any closure of wards or removal of outpatients capacity, until EPR is functioning more effectively and until more reliance can be placed on performance statistics. Ward closures were previously planned for December 2012 and outpatients capacity was also scheduled to be removed – these actions have been delayed and will only be progressed once it is demonstrably safe to do so; • The Plan initially focuses on “non-patient” facing areas (e.g. corporate overhead) where cost can be removed without a direct impact on patient care. Given stresses on front line operations and the impact of EPR, further detailed review will be undertaken before implementing changes in front line services; • There is clinical and front line representation into all tactical controls – actions will only be taken in conjunction with the front line staff in each area. In many cases, the tactical controls simply represent application of suitable financial controls (e.g. negotiating down supplier rates, ensuring that basic reconciliation processes are followed); • The Plan specifically assumes that all wards and other clinical areas are recruited to establishment. This was not the case at the end of the last financial year when a significant number of vacancies had been allowed to build up. In addition, an investment of £1m is provided in the Plan for additional investment in nursing staff as a result of the Francis Report; and • The only CSU schemes included in this Recovery Plan have been QIA’d at the end of 2012 and have been put forward by the clinical leads in each area. This has been confirmed with the Executive Directors of Nursing and Medicine. • Governance and Management Arrangements - The Trust has historically suffered from ineffective governance and consequently poor delivery of major projects in recent years (e.g. EPR, staff consultation, delivery of savings). As a starting point, a simplified Executive structure with enhanced representation of Clinicians and other staff groups is in the process of being implemented. There will need to be significant ongoing work on re-engaging and listening to staff, simplifying management structures, improving information reporting and board governance over the coming year to ensure a more effective Governance environment is established. Specifically, a cohesive management team and Board relationship must be established. • EPR – issues with EPR in FY 2013 have resulted in lost activity and income as well as creating a barrier to implementing operational efficiency improvements. The precise approach, timing and costs to fix EPR are yet to be finalised. An EPR expert has now been engaged by the Trust specifically to identify the major issues faced, to outline the potential solutions and to provide a plan of rectification with timings and costings. The current plan includes estimated “rectification” expenditure on EPR of £350k. Should the final EPR report require a significantly higher investment, the Plan will need to be updated. • Cash and Capex– there is no immediate risk to cash and liquidity at TRFT. However, in the strategic plan, there will need to be a consideration of the longer term financial position of the Trust and funding of appropriate investment in the longer term. This will be covered in the strategic plan.

  7. Monitor Letter (15tH February 2013) - Next Steps

  8. Monitor Milestones 2013 – Control Schedule (Appendix 2) – high level timetable 1. Financial underperformance leading to concerns over financial viability Monthly Financial Reporting (incl. CIPS Reporting) External Assurance Review April Recovery plan 18th March Strategic Plan 30th Sept 2. Deteriorating liquidity Weekly 13 week / 26 week cash flow shared with Monitor 3. EPR Implementation Issues (Identification and Resolution) Regular reporting of Progress Initial Diagnostic Report Appointment of CIO or equivalent 4. Weakness in Board Governance Develop plan to implement TD recommendations External Assurance over Effectiveness of new Structure and effective clinical engagement + Peer Support for Chair

  9. Contents I Executive summary 2 II The Current Realityand Context 9 III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality 63 Appendices Forecast assumptions Monthly board scorecard

  10. Overview of TRFT TRFT • Provider of Acute and Community Services from one main site: ~450 beds across 20 wards • Revenue of ~ £230m • Loss making for last 3 years • 85% of clinical revenue from local commissioner (Rotherham) • ~3,600 WTE staff including ~150 consultants Clinical Services Elective Care • Revenue of ~£82m • ~1,000 WTE staff • CSUs: (i) Anaesthetics & Theatres (ii) General Surgery (iii) Obs & Gynae (iv) Orthopaedics (v) Specialist Surgery (vi) Urology (vii) Ophthamology Urgent Care • Revenue of ~£67m • ~1,000 WTE staff • CSUs: (i) Radiology (ii) Lab Medicine (iii) Pharmacy (iv) Therapies (v) Photopheresis (vi) Specialist Medicine (vii) Integrated Medicine (viii) A&E (ix) Medicine (x) Specialist Medicine Community Services • Revenue of ~£53m • ~900 WTE staff • CSUs: (i) Adults LTC/ Urgent Care/ Re-Ablement (ii) Adults – planned care (iii) Adults – Staying Healthy (iv) Children & Young People Facilities & Estates Infrastructure • Net cost base of £15m (£18m gross cost base offset by £3m revenue) • ~ 250 WTE staff Corporate Infrastructure • Net cost base of £22m (£24m gross cost base offset by £2m revenue) • ~ 400 WTE staff including Finance (49), HR (63), Medical (55), Nursing (18), IT (34), Corporate Affairs (31), Patient Services (110) and Business Information (25)

  11. Elective Care • Context • Elective Care includes all standard DGH specialties as well as a full Maxillofacial service. • In summary it employs 1,070 WTEs based at the main hospital including 75 consultants, has 11 theatres and 162 beds across 8 wards. • Anaesthetics and Theatres • Dedicated day surgery facility, but run together with Main Theatres to maximise usage. Centralised pre op assessment/theatre scheduling and in-house service provision of Sterile Services. • 11 theatres • 23 consultants • 2 wards, ITU (6 beds) and HDU (8 beds) • Dedicated JAG accredited Endoscopy Unit • Obstetrics and Gynaecology • Dedicated Outpatient facility • Currently in deficit against plan, which in the main can be attributed to issues surrounding EPR particularly around volumes in outpatients and consequently in elective admissions, also had some 18ww breaches. • Obstetrics includes the community midwifery services, covering around 3,000 births per annum. Midwives to births around 1 to 28 (within CNST recommended parameters). Bookings and births around 4% above last year. • 1 theatre • 10 consultants • Gynaecology has dedicated early pregnancy/TOP facility and ward area for inpatients (14 beds) • Ophthalmology • Currently responding to changes in demands on their service, decreased cataract demand, increased demand in ARMD • Ward facility is combined day care area and some outpatient facilities (no beds). • TRFT runs the Barnsley service at the BFT site and there are 4 consultants at each site.

  12. Elective Care • Context (continued) • Orthopaedics • 85% compliance to #NOF best practice tariff, above national averages • 2 wards configured between Elective and Non Elective with 60 beds • 13 consultants • Daily dedicated trauma lists, weekly lists extended into the evening • Structure includes Orthotics, and recently integrated Podiatry services • Has lost income mainly attributed to EPR implementation difficulties. Since EPR implementation waits for outpatients increased from around 4 weeks to 12 resulting in lost referrals. This has also led to some 18ww breaches • General Surgery • Facilities cover breast, general, colorectal and satellites clinics provided by Sheffield for vascular conditions • 2 wards with 60 beds (including 6 surgical admission beds) • 9 consultants • Case mix issues on non-elective admissions (partly EPR related) • Urology • Recently completed a refurbishment, providing an integrated outpatient/inpatient (14 beds)/chemotherapy facility • 1 ward with 14 beds • 4 consultants • Has lost income mainly attributed to issues around EPR, both in volumes and capturing the activity done i.e. Outpatient procedures • Specialist Surgery (made up of ENT and OMFS & Orthodontics) • Has had issues surrounding EPR particularly around volumes in outpatients in PMFS and consequently in elective admissions, also had 18ww breaches • ENT • Day Case and Outpatients service provision, inpatient facility at Doncaster Royal Infirmary, but care provided by RFT consultant • 3 consultants • OMFS & Orthodontics • RFT provide inpatient facility for Doncaster Royal Infirmary • Inpatients for cancer patients treated at Chesterfield by RFT consultant • 5 consultants

  13. Urgent Care • Context • The Urgent Care division employs 981 WTE staff and encompasses a diverse range of services with main emphasis on the Non Elective pathway – A & E, assessment, admissions unit and specialty beds. Direct clinical support departments such as radiology, pathology labs and pharmacy are managed within Urgent Care. In addition, relevant Elective, Outpatient and Community care pathways are provided. • Urgent Care has 58 consultants and 225 beds across 12 wards. There are also 46 surge beds. • Overall, the division’s financial performance is close to plan, although additional Non Elective activity has triggered 70% threshold tariff loss and additional unfunded bed costs, whilst Outpatient activity has performed under plan since EPR system go-live. Specific issues are: • A & E • 77,000 attendances planned. Actual trend +3% more. • Spend budgets on plan, following previous investment. • Integrated Medicine (General & Elderly Medicine) • NEL activity 13,500 planned. Actual trend +10% more. • Devolved 70% NEL Threshold loss forecast at -£1m. • Outpatients 34,000 planned. Actual is -8% less (post-EPR). • Cost pressures – sustained unfunded beds open & locum medics. • Radiology & Medical Physics • Cost pressures in sustaining access times & 7 day working • Specialist Medicine Foundation Unit (Rheum, Dermatology, Haem) • Outpatients 35,000 plan. Actual Follow Ups -16% down (post-EPR)

  14. Community Revenue Context Community Services transferred to TRFT in April 2011 in response to the national Transfer of Community Services directive. Services are provided in a variety of locations including Health Centres, clinics, GP practices, Schools, Children’s Centres, Care Homes and patients’ own homes. These services are in the form of individual contacts, case management and ongoing care for patients which provide care closer to home and alternatives to a hospital admission. The division has a funded establishment of 969 WTEs (made up of 50 Medical Staff, 468 Nurses, 232 AHPs, 149 admin and clerical and 70 other). Following a programme of integration the overall Community Division now incorporates a number of Acute services, these being Children and Young People, Therapies, Dietetics, Audiology and Sexual Health. Adults-LTC/ Urgent Care and Re-ablement Mainly funded by NHSR and other PCTs which is mainly block income (estimated 96%). A number of services are jointly commissioned with the local authority RMBC, with c.£800k of income associated. 2 consultants Adults – Planned Care Includes Direct Access, Dental and Audiology plus £1m of RMBC funding. Activity contract delivery pressures in Physiotherapy both in the community and in the hospital. 1 Dental consultant Adults – Staying Healthy GUM made up of £1.3m PbR, £0.9m Non-PbR (Excluded Drugs). Out-Patient activity up 5% on plan. 2 consultants Children and Young People Made up of Child Health and Critical Care (Paediatrics) 14 Paediatric Critical Care Beds, 24 Ward Based Beds and 8 assessment beds. Out-patient activity down on plan linked to EPR and vacant Consultant post, but not anticipated to be an issue when vacancy filled. Still on-going issue with Medical staff Job Plans and future Clinical Service Model required going forward. 8 consultants

  15. Management Structure – 1st Jan 2012 Observations • TRFT has, in recent years, had an outdated Management structure with unclear accountabilities and responsibilities. It is likely that the complexity of the structure has directly impacted the ability of the organisation to deliver to its plans. Evidence: • Failure to synthesize community services with the acute organisation; • Failure to deliver savings plans; • Failure to successfully implement EPR and then to respond to the challenges faced; and • A poor consultation process around proposed redundancies. • Features of the structure were numerous reporting lines into the CEO (19), a very heavy executive level (9 direct non clinical reports into the CEO) and a very fragmented approach to managing • Actions have already been taken to simplify the top level structure (included later).

  16. Financial Performance – Recent Years Observations • In each of the last 3 years including FY 2013, TRFT has made a net loss (i.e. spent more than it has received in revenue). In the last 2 years, the loss has been in excess of £6m. • In FY 2012, TRFT significantly expanded its size through the acquisition of Community Services (remunerated on a “block” basis of ~£29m). One of the key challenges facing TRFT is assessing the scope of community services that it currently provides and the relationship of these services to acute. • Operating expenditure has been stable over the past 2 years at ~£218m (comprising £152m of pay costs and £66m of non-pay costs). While costs have not increased (which would have been expected given inflation and incremental drift), no significant progress has been made on cost reduction or improvement of clinical productivity. • Impairments in FY 2014 mainly relate to EPR, the Mental Health Unit together with other items such as the Mortuary.

  17. Financial Performance – Current Year Observations • In the current financial year (FY 2013), as at month 10, TRFT had lost £4.9m vs a planned loss of £0.9m (i.e. £4m worse than planned). • The following observations can be made: • The poor financial performance is a cost issue – operating expenditure is £6.4m higher than planned with £2.9m restructuring costs on top. This partly reflects the failure of the organisation to deliver its cost saving plans. Costs in total are £9.3m higher; and • Commissioners have been supportive – revenue is £4.9m higher than plan, and while this has included significant non-recurrent support (as PbR income has fallen short), indications are that commissioners are attempting to support RTFT through a difficult period.

  18. Income analysis (Month 10 YTD) Observations • The mix of income / activity is in-line with a typical DGH with a concentration around large specialties such as Medicine, T&O, and General Surgery. There does not appear to be any reason why such a mix of business could not be delivered on an economically viable basis from a one-site acute provider, without PFI commitments. • There are a few specialties which do appear to be larger than average for a Trust this size. These include: • Ophthalmology; and • Rheumatology. • In Phase 2 of the Recovery Plan, detailed service by service reviews (based on SLR) will be conducted to assess the productivity and quality improvement initiatives potentially available in each specialty. • It will also be necessary to review in detail the community services provided to understand their linkage with acute services and to understand the best manner in which to manage patient pathways.

  19. Activity analysis (Month 10 YTD) Observations • In respect of activity levels, clearly the “non-elective excess beddays” is a major operational issue for the Trust (as identified by PwC). • In Phase 2 of the Recovery, a major target will be ensuring an appropriate bed base is established for the Trust so that elective activity does not continue to be “crowded out” by non-elective activity. • In addition, as specialty by specialty reviews are conducted and as EPR is stabilised, outpatient attendances and capacity will need to be reviewed (again identified by PwC).

  20. Consolidating analysis (Month 10 YTD)

  21. Balance sheet (Month 10 FY 2013) Observations • The Recovery Plan is based on the balance sheet as presented (i.e. it assumes no significant further provisions / write-offs are required in relation to fixed assets, stocks or debtors / accrued income); • Fixed assets currently includes £12.6m relating to EPR; • Trade and other debtors / accrued income have significant accruals in relation to other NHS bodies including a outstanding £0.4m owed by Doncaster and Bassetlaw; • Trade and other creditors / accruals includes £1.6m owed to Doncaster and Bassetlaw of which £0.3m is in dispute. Other than Doncaster and Bassetlaw there are no significant arrears of any creditors; • FTFF loans are being paid over 10 and 20 years ending in 2019 (EPR £20m) and 2029 (general estates £10m) - no arrears at present; • Provisions are mainly restructuring of £2.6m.

  22. Liquidity – weekly cash flow to August

  23. EPR Context • Short term remedial actions: • Postponed different module implementation within EPR until options appraised. • Redirection of resources to data validation and analysis. • Targeted training for end users – specifically in relation to 18 week validation. • Review of Contact Centre systems and processes, new leadership and introduction of new Standard Operating Procedures. • Comprehensive data quality analysis, including financial impact. • Current outcomes in relation to the Contact Centre: • Call times from an average of 9 minutes in December 2012, reduced to an average of 1 minute in February 2013. • Duplicate entries reduced from 50 per week in November 2012, to 2 per week in February 2013 (lower than pre go-live levels). • Additional clinic sessions, to reduce backlog, have positively influenced 18 week targets, cancer targets are now being met – GP referrals also reflect an increase (see page 25). • Data Quality validation (see pages 26-27): • Data quality benchmarking is comparable with peers, both Nationally and Regionally. • Review of user error origins has resulted in focussed training, financial impact assessed and meeting with commissioners suggest some re-imbursement – to be agreed. • The Trust has made a significant investment in EPR, both capital and revenue costs that are now forecast to be in the order of £40m (compared to the original forecast of £30m). • The project ran late but went live on 1 July 2012. There have been difficulties with implementation leading to inaccurate coding of case mix and data recording, duplication and possibly lost activity. This has impacted financial performance through lost referral activity and income (estimated at £2.2m for YTD). Detailed financial impact analysis is incorporated on page 28. • Root causes of financial and data quality impacts: • Impacts – remediable in the short term • Merging of data files from Choose & Book to Contact Centre, affecting patient referrals, patient call response times, clinic bookings, duplicate entries. This impacted on 18 week and cancer targets; and • Data quality issues - relating to activity reduction, backlog of coding cases, cross mapping error in relation HRG assignment. Thus creating significant validation workload within specialties and the Information Team.

  24. SUS Data Quality Dashboard for Apr-Nov Data – All data items Rotherham compared to other SHA trusts

  25. SUS Data Quality Dashboard for Apr-Nov Data – Inpatient data items

  26. SUS Data Quality Dashboard for Apr-Nov Data – Outpatient data items

  27. Financial Impact of EPR (in addition to planned spend) Observations • Excludes £2.16m of deferred capital invoice payments, these are planned to be paid in FY 2014. • Re-validation of data impacted on both corporate teams and also CSU service managers. This equated to approximately £0.8m additional overtime and implementation costs. • Due to the additional time taken to log information into the system, the number of patients in clinics had to be reduced, this led to loss of income due to the drop in activity levels. • Commissioner fines were also incurred due to missing 18 week targets (£0.3m). • Financial impact of data quality recording issues currently being reviewed by commissioners, it is hoped we will recover at least half of the £1.3m in lost income. • Options appraisal of training needs plus additional staff resource has been estimated at £350k to cover the next six months of the Recovery Plan. Any further cost requirements will be considered as part of the April report. • These figures relate to known costing – it is unlikely that we can calculate confidently all costs but we feel we have captured the vast majority.

  28. EPR Medium to long term issues • Medium to long term actions, already in place include: • Implementation of clinical engagement strategy, we are already seeing increased clinical engagement; • Governance processes reviewed, strengthened and aligned to corporate governance structures with agreed Terms of Reference; • Change control process reviewed and strengthened via weekly Change Advisory Board meetings, sign off and agreement prior to actions; • Financial governance has been reviewed and strengthened – with regular budgetary reporting; • Reconfiguration and integration of IT, Information teams and EPR staff into Health Informatics Directorate – to be complete by April 2013; • Informatics Project Management Team aligned to chosen options, going forward – this will include provision of appropriate training resource; • Implementation using a phased approach, will be piloted and fully integration tested within the clinical setting, prior to application in the live environment; • System configured to acknowledge mandatory (CDS) and operational reporting needs is currently under review; and • Clinical sign off of usability - for any new developments, will be made prior to going live, via the Clinical User Group (CUG). • System and implementation specific root causes: • Configuration of system not based on clinical user needs; • Training limited, insufficiently proximate to go-live so as to ensure effective use; • Testing was a unit based approach, failing to assess ‘whole system’ efficacy; • Configuration and architecture overly complex, not tailored to meet mandatory reporting functions; • Clinical engagement limited; • Implementation was not phased in as granular fashion as might have been - thereby reducing risk; • Financial governance – systems and processes – weak; • Change management controls were not administered effectively; • IT, Information and EPR project teams working in silos, not coordinating activities; and • Purchased a development system with inherent issues, implemented based on a time frame rather than functional outcome.

  29. Further medium to longer term actions / developments • Integration of the Health Informatics Directorate will provide a more stream lined and integrated services with savings of approximately £1m. • Following systems options appraisal, a further financial impact will be costed (excluding the training costs already highlighted). • Immediate training programmes will focus on data quality impact that also affect financial activity payments i.e. • Not creating follow-up attendances accurately; • Outpatient summary, day case incompletion - means activity not logged; • Failing to record co-morbidity, cross mapping errors SNOWMED; and • Procedures not recorded. • Specific programmes of work that will bring immediate resolution to quality of data and activity will be: • Single sign off process for clinicians, currently time consuming; • De-construct some of the functionality, ambulatory orders to reduce the time for clinicians data entering in clinics; and • Time to complete discharge summaries to be reduced. • Additional options appraisal currently underway via external expert, this report will be completed by April 2013.

  30. Contents I Executive summary 2 II The Current Realityand Context 9 III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality 63 Appendices Forecast assumptions Monthly board scorecard

  31. The Plan - Overview 12 months Phase 1 - Key Activities • Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. • Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: • Corporate overhead of £21m. Target reduction of £5m in Year 1; • Tactical control areas. Target reduction of £4m in Year 1; and • CSU and divisional plans of £4m in Year 1. • Establish underlying EPR position and options. Develop plan for rectification with costings. • Build infrastructure to drive clinical productivity. Phase 2 - Key Activities • Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. • Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. • Work on synthesizing community and acute services and review divisional linkages. • Review and initiate larger scale opportunities (e.g. outsourcing). • Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities • Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). • Prepare and submit detailed 3 year plan to Monitor. • Review longer term strategic opportunities for the Trust. • Recruitment of permanent CEO.

  32. Phase 1 – Summary of savings target FY 2014

  33. Phase 1 – Corporate Overhead Reduction Overview • RFT corporate overheads (excluding facilities and estates and financing costs) are currently running at £21.9 m per annum (as per the table opposite). This represents ~10% of revenue and excludes a significant amount of overhead that is included at the CSU level. • A rapid and significant reduction in corporate overheads has been targeted for the following reasons: • Low risk to clinical quality and patient safety - given the impact of EPR and the operational challenges currently being faced by TRFT, Management believe that there is significant operational risk attached to some of the previous CIPS schemes (e.g. ward closures, outpatient clinic capacity). By contrast a reduction in corporate overhead is seen as possible in the short term with relatively little impact on clinical quality or patient safety; • Practically achievable – significant progress on reducing the corporate structure has already been made. Over the past 3 months, 6 senior executives have departed TRFT and there has been a consolidation to 5 direct reports to the CEO. The next level of corporate restructuring is well-advanced (detail next page); and • Improving governance and accountability – the streamlining of corporate functions is seen as an important step in improving accountability and governance in the Trust. The absence of clear reporting lines and overlapping responsibilities is seen as a key reason for some of the failures in governance in recent years. • The cost of restructuring corporate overhead is estimated at £2-2.5m. This cost is included in the £4m restructuring cost for FY 2013 and has been agreed with commissioners. Given timings, it is assumed that, on average, 10 months benefit will be obtained in FY 2014.

  34. Phase 1 – Simplification of Top Level Structure New Corporate Structure Overview • Following a Board decision in February 2013, the top level executive structure is in the process of being greatly simplified. There has been a reduction in 4 senior executives (from 9 to 5) reporting directly to the CEO. • Management of several corporate functions has been merged to reduce the number or executives (e.g. HR and corporate affairs; Finance and PMO). As a result of this activity, 4 executives have or are in the process of being exited with no replacement. This will bring to 6, the number of senior executives that have left the organisation since October 2012. • The new Executive team have been working through the corporate budget areas in detail over February and March with a view to reducing the overall cost of this structure from £21.8m (outturn in FY2013) to £16.7m in FY 2014. This will be achieved through the following actions: • Elimination of “one-off” spend incurred in FY 2013 relating to professional fees, staff in post, agency usage. This figure is estimated to be in excess of £2m (details are currently being finalised); • A restructure of staff within Corporate (with proposed consultation by the end of March) which will result in additional staff leaving the organisation; and • Re-negotiation and tighter control over other non-pay categories (e.g. audit fees, graphics, legal fees). • The new budgets will be finalised over the coming weeks and the consultation will commence prior to 31 March 2013.

  35. Phase 1 – Tactical controls - Pay Progress on Spend on Locum and Agency (Medical)

  36. Phase 1 – Tactical controls – Headcount

  37. Phase 1 – Tactical controls – Non-pay

  38. Non-pay tactical controls - examples Actions • Interpreting • New control in place to move from face to face interpreting to telephone interpreting. • Negotiated a rates reduction on both telephone and face to face interpreting. • Access to online records system to reduce staff cost of managing service. • Taxis • New Standard operating procedure to reduce use of taxis. • New agreement to move some services to alternative transport suppliers. • IT expenditure • New control process to monitor IT expenditure trust wide requiring executive level approval. • On going program to renegotiate cost of software licences and maintenance contracts as they fall due or find alternative suppliers. • Switch from colour to black and white printing as a default. • Double sided printing as default wherever possible. • Process underway to replace desktop printers with communal print devices. • New software to manage and reduce printing outputs costs. • Program of recycling existing equipment more efficiently.

  39. Phase 1 – CSU cost reductions Observations • As part of the normal budgeting process, CSUs are requested to identify CIPs as a saving against prior year budget (which are then removed from the CSU budget for the following year). • The items opposite are a summary of the 10s of individual savings schemes for the CSUs and are a mixture of WTE or PA reductions together with specific non-pay savings identified. • These schemes have been QIA’d and signed off by the Nursing and Medical Directors. • The Recovery Plan is based on current cost run rates and therefore only recognises the element of cost reduction which is incremental (i.e. no vacancy releases). As shown the second column, an assessment has been made of the truly incremental savings as opposed to cost budgets that are already underspending.

  40. The Plan - Overview 12 months Phase 1 - Key Activities • Build functioning executive team and cohesive board with appropriate clinical input and with transparent provision of information. • Focus on rapidly driving cost reduction from targeted “lower-risk” non patient facing areas, with overall target of £13m in Year 1: • Corporate overhead of £21m. Target reduction of £5m in Year 1; • Tactical control areas. Target reduction of £4m in Year 1; and • CSU and divisional plans of £4m in Year 1. • Establish underlying EPR position and options. Develop plan for rectification with costings. • Build infrastructure to drive clinical productivity. Phase 2 - Key Activities • Work through key operational areas to improve patient processes and efficiency (e.g. theatre utilisation, length of stay, admissions, delayed discharges), patient safety and QIA. • Review clinical productivity by specialty and individual and work with clinical leadership to drive improved operational and financial performance. • Work on synthesizing community and acute services and review divisional linkages. • Review and initiate larger scale opportunities (e.g. outsourcing). • Set-up savings and productivity opportunities for Years 2/3 of the plan (target £13 - £15m). Phase 3 - Key Activities • Work through strategic planning issues (e.g. estates; portfolio of services; alliances and JVs). • Prepare and submit detailed 3 year plan to Monitor. • Review longer term strategic opportunities for the Trust. • Recruitment of permanent CEO.

  41. Phase 2 Overview Issues to be reviewed • Divisional structure and linkage with community services • Specialty productivity opportunities based on solid KPIs • Excess bed-days, bed base • Outpatient capacity • Outsourcing and re-contracting opportunities • Development of comprehensive strategic plan working with all key stakeholders, including: • Governors • Board (Execs and Non Execs) • Clinical and Non Clinical Leadership (CDs, Consultants, Specialists, Matrons) • Commissioners (CCG, NCB) • Other key external stakeholders (Local Authorities, Social Services, etc)

  42. Phase 2 – Illustrative Operational Efficiency Analysis (1)

  43. Phase 2 – Illustrative Operational Efficiency Analysis (2)

  44. Restructuring costs

  45. Contents I Executive summary 2 II The Current Realityand Context 9 III The Plan – Overview 31 IV Financial plan 46 V Governance 61 VI Quality 63 Appendices Forecast assumptions Monthly board scorecard

  46. Financial Performance – 3 year forecast summary Observations • The Trust plans to return to surplus over a 2 year period. • Other than further non-recurrent support for restructuring of £5m in FY 2014, income reflects a gradual phasing out of non-recurrent support from NHSR. • Costs are based on current underlying run rates of expenditure adjusted for cost pressures and cost reduction plans. • In addition to inflationary pressures, specific cost pressures include the ongoing resource for EPR and additional nurses in light of the Francis report recommendations. • Forecast includes cost reductions over the 3 years of £36m phased £13m, £13m and £10m in FY 2014 – FY 2016. Restructuring costs associated with the delivery of cost reductions are estimated to be £5m in FY 2014 in addition to the £4m in FY 2013.

  47. Financial Performance – Current underlying performance Observations • The forecast outturn for FY 2013 of deficit £6.5m has been adjusted for non-recurrent items that should not occur in perpetuity and also run rate cost changes that have already implemented in FY 2013 to assess the current underlying performance of the Trust (as a basis for comparison with its future forecast). • Non-recurrent income, Recovery Plan costs (e.g. Bolt Partners and PwC), Restructuring costs and the proposed EPR impairment have been removed. To the extent any of these may re-occur, they have been added back as non-recurrent income or cost pressures in FY 2014 (next page). • The run rate adjustments reduce the cost base to the ongoing level of expenditure seen in Q3 and Q4 (i.e. reflecting run rate savings (CIPs) that were achieved in Q1 / Q2). No run rate adjustment has been made in relation to lost income attributed to EPR issues. • This suggests that the underlying level of underperformance is currently c. £7.5m deficit.

  48. Financial Plan FY 2014 Analysis of specific cost pressures included in the plan are set out on the next page.

  49. Financial Performance – FY 2014 Observations • The contract income adjustments are based on the 3 year framework agreement with NHSR together with non-recurrent support including £5m for Restructuring purposes and the re-investment of FY 2014 tariff deflation. • Inflationary pressures have been included at 1% for pay and 2% for non-pay. Incremental drift is based on the last actual % calculated in March 2012. • Specific cost pressures totalling £2.8m are set-out opposite and a further 2% contingency against current costs has been included. • Other includes: • An element of recovery of underperformance against contract in FY 2014 (due to EPR); • A more prudent assessment of other income for FY 2014; and • Reduced depreciation on a reducing NBV and (depreciation and impairment exceeding capex).