Finance Committee
26th August 2008
Agenda Item 6.3
Income and Expenditure Report – July 2008
The financial tables shown below are provided at the end of this report in support of the
commentary that follows.
Table
1.
Details
I and E 1
Summary Income and Expenditure Statement
I and E 2
Summary Income Statement
I and E 3a
Divisional Income and Expenditure Statement
I and E 3b
Subjective Analysis of Budget v Expenditure to Date
I and E 4a
Summary of CRES 2008/09 Programme
I and E 4b
CRES by Workstream 2008/09 Programme
I and E 4c
Summary of CRES 2007/08 Carried Forward
I and E 4d
CRES by Workstream 2007/08 Carried Forward
Division of Diagnostic and Therapies

Overview – The Division reports a favourable variance of £215k to the end of July, an
improvement of £55k in the month.

Pay reports a favourable variance of £197k, an improvement of £110k in the month.
Driving this improvement is the receipt of £90k budget reflecting an increase in the
issue of NICE drugs. This represents the Division’s share of issued budget, attributable
to Pharmacy pay budgets. In addition, there are reported vacancies totalling 23.70
whole time equivalents, offset to an extent by bank & agency expenditure. Within
Pharmacy in particular, agency expenditure remains high. An ongoing national
shortage of Pharmacists means the department continues to struggle to recruit to
permanent, vacant posts. The department is undertaking a recruitment review to ensure
that posts are banded correctly so as to remain competitive both locally and nationally,
and to reduce the risk of staff leaving existing posts.

Non Pay reports an adverse variance of £265k, a worsening of £119k in the month.
The under-achievement to date on the Division’s Non-Pay Cash Releasing Efficiency
Savings schemes is £65k. The equipment required to allow the production and
dispensing of pre-filled syringes has been delivered and installed. The savings
attributable to this scheme are expected to deliver with effect from August. Within
Radiology, software has been purchased (£24k) to allow the first PET-CT scans to
occur. Expenditure relating to the Health Protection Agency Microbiology contract has
also increased over and above budget (£10k). MRSA Screening, in particular, is
driving the additional work being sent to the Health Protection Agency. Non-pay
expenditure within Pathology has also increased as a result of tests referred from other
NHS Trusts. This is offset by an increased income stream.
G
.

Income from Activities reports a £176k overachievement, an improvement of £26k in
the month. The position reflects the Division’s share of Trust-wide over-performance
across Trauma & Orthopaedics (£26k), General Medicine (£68k), Adult & Paediatric
Cardiology (£56k), Paediatrics (£28k) and Radiology Direct Referrals (£23k). This
offsets, in part, increased Non-Pay expenditure.

Income from Operations reports an overachievement of £107k, a favourable movement
of £39k in the month. This is due primarily to income owing from other NHS Trusts in
respect of work already carried out by the MEMO department.

Cash Releasing Efficiency Savings Plans 2008/9 programme – the Division has
achieved savings of £372k against a target of £376k. This represents an improvement
of £44k in the cumulative variance compared with last month. The Division has
identified additional saving schemes to offset some of those forecast to under-achieve.
These include a reduction in the marginal costs, following negotiation, of microbiology
tests sent to the Health Protection Agency. Staffing shortages within Pharmacy have to
date restricted the ability to generate savings through the contracting process.
Recruitment plans are in place and full achievement of this scheme (£200k) by 31st
March 2009 is anticipated. It is anticipated that the Division will deliver its savings
target in full for the financial year 2008/09.

Cash Releasing Efficiency Savings 2007/8 carried forward – the Division has achieved
its target saving of £196k to date.
Risks – Anticipated risks in 2008/09 include the Division’s share of a Trust wide
inability to mitigate against the loss of Cardiac activity to North Bristol, a requirement
of further resources to support the ongoing achievement of the 18 week target,
including the replacement of failing Magnetic Resonance Imaging equipment and an
overspend on the Health Protection Agency contract as a result of potentially higher
activity.

2
Forecast Outturn – the Division is forecasting a surplus of £390k at the year-end.
Division of Medicine

Overview - The Division reports an adverse variance of £413k to the end of July, a
£92k worsening since last month.

Pay budgets show an adverse variance of £241k at the end of July, compared to £211k
last month. This relates in the main to nursing staff budgets which shows an adverse
variance of £335k due to Ward 22 Overflow Ward being kept open without funding
since May, the premium of using agency nursing staff instead of bank, and the
continued need to use additional bank and agency nursing staff to support a long stay
highly dependent patient on Ward 10.
A
G
Income for the additional activity seen in the Division with Ward 22 being open is only
partly offsetting the costs – for the months of May and June the Trust saw an increase
in total income of £166k of which the Division received £92k directly to offset costs of
£104k, leading to a loss to the Division of approximately £12k for 2 months from
having Ward 22 open.
File: 533574828
Page 2 of 9
Medical staffing budgets show a favourable variance of £83k due to vacant consultant
PAs being held for the recruitment of the Acute Physicians. The vacancy factor cost
pressure remains at £64k for month 4.
G
3.

Non-pay budgets show an adverse variance of £580k compared to £348k last month,
due to in the main the SLA Performance Fines, for which the Division was charged
£238k in month 4 compared to £178k last month. A further reason for the adverse
position on non pay relates to the drugs budgets which show an adverse variance of
£299k compared to £141k last month.

Income from Activities budgets show a favourable variance of £406k overachieved
compared to £239k last month.

Cash Releasing Efficiency Savings 2008/9 programme – the Division’s savings are
currently reporting an under-achievement of £93k due to savings not made in the
William Lloyd Unit, the delay in the voice recognition technology scheme, and the
inability to hold nurse vacancies with the current activity targets and pressures. It is
anticipated that the Division will under-achieve by £285k by the end of the year if no
other schemes can be identified to offset the nursing slippages by the end of the year.

Cash Releasing Efficiency Savings 2007/08 carried forward - the Division has
achieved savings to date of £62k against a target of £57k, the Division is forecasting an
outturn of £16k ahead of plan.

Forecast Outturn – the Division is forecasting an adverse outturn variance of £173k
excluding penalty fines. The Division is working up mitigating plans in order to
address this and deliver a breakeven position.

Risks – the risks to the forecast outturn include the requirement of further resources to
support the ongoing achievement of the 18 week target and 4 hour A&E target,
changes to the costed plan to achieve 13 weeks, and further SLA Performance Fines
allocated to the Division for under achievement of C Difficile targets (which could
amount to a total annual cost pressure of £700k at the current rate).
Division of Specialised Services

Overview - The Division reports an adverse variance of £214k to the end of July
compared to £55k last month; a deterioration of £159k.

Pay budgets show an adverse variance of £186k compared to £170k adverse last month.
Allied Health Professional budgets such as radiotherapy staff and cardiac perfusion
staffing budgets show adverse variances of £75k and £44k respectively due to staff
regradings and over establishments. In addition there has been a locum perfusionist
appointment in adult perfusion this month part of which is reclaimable from the MOD for
Territorial Army duty. These issues will be addressed in the coming months. Cardiac
anaesthesia remains £91k overspent due to high level waiting list initiative payments.

Non-pay budgets show an adverse variance of 749k compared to £565k adverse last
month; a deterioration of £184k. As reported last month, cardiac services shows adverse
variances on blood of £75k and transport costs of £43k due to the cardiac shuttle. In
addition catering shows an adverse variance of £45k, these support budgets are being
carefully monitored. Cardiac surgery costs include charges from private hospitals of
File: 533574828
Page 3 of 9
£256k which is recovered through income from activities. Blood costs, cytogenetics and
stem cell costs remain significant cost pressures in Haematology. Oncology drugs shows
an adverse variance of £117k compared to £91k favourable last month. This is being
investigated.

The SLA performance fine for the Division is £129.6k to month 04.

Income from Activities budgets show a favourable variance of £774k. Service level
agreements for cardiac surgery and cardiology have favourable variances of £182k and
£222k respectively; clinical haematology and oncology have favourable variances of
£118k and £105k respectively. The Division has also received the difference between
actual and estimated income relating to 2007/08 totalling £142k. Private patient income
is under achieving in cardiac surgery showing an adverse variance of £60k in month 04;
however, this is offset by overachievements in cardiology, oncology and haematology.

Income from Operations budgets show an adverse variance of £53k; this variance reflects
an under achievement of income for commercial trials in oncology.

Cash Releasing Efficiency Savings 2008/09 programme - the Division has achieved
savings to date of £376k against a plan of £506k; 75% achieved. Schemes which are not
achieving savings are drugs, consultants, sickness absence and private patient income.
The Division is forecasting full achievement of the plan.

Cash Releasing Efficiency Savings 2007/08 carry forward – the Division has achieved
savings of £141k to date through slippage on appointments and additional procurement
savings.

Forecast Outturn – the Division is forecasting a favourable variance of £226k.

Risks


4.
Division of Surgery, Head and Neck

G
The major risk for the Division is ensuring that sufficient cardiology activity is
achieved to mitigate the loss if the North Bristol transfer.
A further risk would be a continued worsening of the adverse variance on
Oncology drugs.
Overview – The Division reports an adverse variance of £110k to the end of July. The
deterioration in the month is £114k. The key adverse variances in the month are
waiting list initiative payments and private sector invoices £237k, payments to
Consultant Eye Surgeons Partnership £55k, Drugs £101k (Ophthalmology – Lucentis
and Uveitis), Anaesthesia Consultants and Juniors £81k, recharges from Medical
Equipment Management Organisation £36k (Divisional contract renegotiated –
backdated to April), St Michaels/BRI/Ophthalmology wards £43k and theatre non pay
£85k.
File: 533574828
Page 4 of 9
These adverse variances are offset by favourable variances within income from
activities £498k and energy £77k (effect of additional funding added)

Pay budgets show an adverse variance of £322k to the end of July. The key areas
causing this position are consistent with previous months and are clearly linked to the
substantial over achievement in variable contract income. These key areas are
Anaesthesia Consultant budgets £136k (cost of Locum Consultants due to inability to
recruit to clinical fellow vacancies) and payments made to the Consultant Eye
Surgeons Partnership £159k.

Non Pay budgets show an adverse variance of £1195k to the end of July. Theatre non
pay budgets £219k (increased cost to reflect contract income over achievement), share
of Service Level Agreement fine, £65k, energy £69k, Drugs £266k, payments for
activity in private sector £231k, ward and Intensive Therapy Unit non pay £111k and
blood £44k are the key areas contributing to this position The current position on drugs
is broadly in line with last year’s bearing in mind the significant over achievement in
contract income. The Division is actively looking to reduce the drug over spend in the
coming months with actions such as the introduction of a revised antibiotic policy. The
non pay position in the Division will improve once the additional 13 week funding
allocation is agreed and added to the budget.

Income from Activities budgets show a favourable variance of £1465k. Variable
contract income is the key reason, in particular Ophthalmology (including work done
by the Consultant Eye Surgeons Partnership) £559k, Intensive Therapy Unit £186k,
Dental Hospital day cases and out patients £179k, Trauma and Orthopaedics £120k,
ENT £74k, Urology £56k, Illizarov Frames £130k, General Surgery £71k and the
difference between the estimated variable contract income reported to the end of
2007/8 and the actual final year end contract income position £95k. The contract
income over achievement reflects the work the Division is doing to achieve the 13
week target. Once the additional 13 week funding is agreed, additional non recurring
funding will be added to the Division with a corresponding increase in the targets and
an equivalent deterioration in the income variance.

Income from Operations budgets show an adverse variance of £58k. This is due to the
reduced level of income from the Primary Care Trust resulting from the re
commissioning of the Personal Dental Service offset by additional income from the
Orthodontic Therapy course within Dental and Commercial trials income.

Cash Releasing Efficiency Savings Plans 2008/9 programme – The Division has
achieved savings of £619k to date against a plan of £714k. The year end projection is
an under achievement of £61k.

Cash Releasing Efficiency Savings Plans 2007/8 carried forward- The Division has
achieved savings to date of £319k compared to a plan of £319k, the year end projection
shows savings fully achieved.

Forecast Outturn – the Division is forecasting an adverse variance of £55k at the year
end.

Risks – the risks to the forecast outturn include SLA fines, failure to achieve Cash
Releasing Efficiency Savings, service disinvestments as a result of service re
File: 533574828
Page 5 of 9
design(such as the Practice Based Commissioning Urology proposal) and the
availability of space and capital funding to expand the Pre Operative Assessment and
Day of Surgery Admission facility to further specialties. This lack of space and capital
funding could affect the achievement of the Division’s CRES plan to reduce the
number of pre operative bed days.
Division of Women’s and Children’s
5.
R

Overview – The Division has a deficit of £1,115k, a deterioration of £313k.

Pay budgets show an adverse variance of £145k, a deterioration of £28k. The adverse
position is primarily due to Medical staffing £99k adverse and Nursing & Midwifery
£43k adverse. The Medical staffing position is primarily due to Waiting List Initiative
payments of £88k to date. The Nursing & Midwifery position has improved by £64k in
July primarily due to the closure of Ward 33 during July.

Non Pay budgets show an adverse variance of £1,278k, a deterioration of £360k. The
adverse position is primarily due to Services received from NHS and Non NHS Bodies
now £391k adverse, a deterioration of £80k. This includes Bone Marrow Transplant
donor charges and tissue typing charges, clinical genetics and cytogenetic test charges
and Spire Healthcare charges. Clinical supplies are £378k adverse, a deterioration of
£146k. Drugs are £221k adverse, a deterioration of £102k primarily in Paediatric
Oncology.

Income from Activities show a favourable variance of £226k, an improvement of £32k.
The favourable variance is mainly due to over performance on Bone Marrow
Transplants of £171k.

Income from Operations budgets show a favourable variance of £82k. This is primarily
due to income received from other NHS Trusts for Consultant peripheral clinics.

2008/09 Cash Releasing Efficiency Savings programme – the Division’s savings plan
totals £2,659k. Savings of £626k (74%) have been achieved to date compared with the
target of £849k. The Division is currently forecasting full achievement of the savings
plan.

Cash Releasing Efficiency Savings 2007/8 Plans carried forward – Savings of £408k
were achieved non-recurrently in 2007/08 and must be delivered again in 2008/09.
Savings of £136k have been achieved to date in line with target. The Division is
currently forecasting full achievement of the £408k.

Forecast Outturn – The Division is currently forecasting an adverse outturn variance of
£1million. The Division has implemented the closure of Ward 33 but further and
significant mitigation plans of approximately £1.4million are required to deliver this
outturn.

Risks – The underlying adverse non pay position is driving the Division’s overall
adverse position. The Division is drawing up plans to mitigate the non pay over spend.
The Cash Releasing Efficiency Savings under achievement to date will require the
identification of additional saving schemes in order to recover the under achievement
File: 533574828
Page 6 of 9
to date and deliver the 2008/09 target. This and the delivery of the forecast outturn will
require significant and challenging mitigation plans on the part of the Division.
6
G
7
Division of Estates & Facilities

Overview – The Division reports an adverse variance of £37k at the end of July, a
deterioration of £9k during the month.

Pay budgets show a favourable variance of £77k at the end of July. This is due to
vacancies within Senior Managers and Estates Staff. Existing vacancies amongst
Ancillary staff are being covered primarily by the use of agency staff.

Non Pay budgets show an adverse variance of £55k. This is primarily due to
increasing Linen and Clinical Waste costs, which is subsequently linked to the increase
in clinical activity across the Trust. These costs are offset by additional Income from
Activities

Income from Operations budgets are underachieved by £70k. This is due to an
underachievement of University of Bristol income in Estates, which is offset by the
reduction in Maintenance expenditure combined with a reduction in the value of the
Community Cleaning SLA following the loss of Central Health Clinic and Whitchurch
Health Centre cleaning contracts.

Income from Activities budgets are overachieved by £11k, an improvement of £3k
during the month. This is the Division’s share of the Trust position.

Cash Releasing Efficiency Savings Plans 2008/9 programme – the Division has
achieved savings of £154k to date against a plan of £172k. The forecast for the year is
an under-achievement of £19k (3%) on the £632k plan.

Cash Releasing Efficiency Savings 2007/8 carried forward – The Division has
achieved savings of £28k, which is in line with the plan. The forecast outturn is the full
achievement of the £83k target.

Forecast Outturn – the Division is forecasting breakeven position.

Risks - In House Cleaning, which covers the BRI precinct, is £100k overspent at the
end of July. Vacancy levels remain high, leading to increased use of agency, £242k
spent to date.
Division of Trust Services

Overview – The Division reports a deficit of £164k at the end of July, an improvement
of £13k during the month.

Finance – has an adverse variance of £41k at the end of July, a deterioration of £16k.
Continuing high levels of expenditure on Overtime and Agency Staff within Payroll
are partly offset by vacancies elsewhere within the Finance Department.
G
File: 533574828
Page 7 of 9
8.
G
9

Trust Headquarters – has an adverse variance of £2k at the end of July, an
improvement of £40k during the month.
The improvement during July is
predominately due to the allocation of Training and Education funding.

Corporate Human Resources – has a favourable variance of £6k at the end of July.
Occupational Health is currently £44k adverse following the loss of income from a
number of contracts at the start of 2008/09. This is offset by vacancies within Training
and Recruitment.

Information Technology – has a favourable variance of £5k at the end of July.

Central Services – has an adverse variance of £145k at the end of July, a deterioration
of £29k during the month. The Bank Office is currently £70k adverse. Following a
review of the Bank Office a number of work streams are now in place looking at
models of funding and procedures.

Community – has a favourable variance of £13k at the end of July.

Forecast Outturn - the Division is forecasting an adverse variance of £346k.

Cash Releasing Efficiency Savings Plans 2008/9 programme – the Division has
achieved savings of £126k to date against a plan of £206k, the Division is forecasting
full achievement of its target.

Cash Releasing Efficiency Savings 2007/8 carried forward - The Division has achieved
savings of £22k to date against a plan of £41k, the Division is forecasting full
achievement of its target.
Skills for Health

Overview – Skills for Health is reporting a favourable variance of £409k at the end of
July.

Pay budgets show a favourable variance of £132k.

Non-Pay budgets show a favourable variance of £402k compared to a favourable
variance of £199k at the end of last month the change is due to additional project spend
in month 4.

Income budgets show an under achievement of £125k compared to a favourable
variance of £1k last month.

Forecast Outturn - Skills for Health is forecasting a favourable variance of £1 million
at the end of the year.
Miscellaneous Support Services

Miscellaneous Support Services reports a favourable variance of £360k, this compares
to a favourable variance of £175k in the previous month. Key reasons for the
File: 533574828
Page 8 of 9
favourable variance are favourable variances on VAT savings £57k, interest receivable
£98k and research costs £53k and a reduction in the provision for bank staff advance
allowances £90k.
10.
Depreciation and Public Dividend Capital

11.
Depreciation and Public Dividend Capital budgets show a favourable variance of £45k
at the end of July.
Subjective Analysis of Income and Expenditure to date. (See Table I and E 3b)

Income budgets show a favourable variance of £4,478k, income from activities reports
a favourable variance of £4,279k this is due to an overachievement on service level
agreement income of £4,527 offset by an adverse variance on private patient income
and other non protected income of £248k.Income from operations reports a favourable
variance of £199k this consists of various small variances on all types of operating
income.

Pay budgets show an adverse variance of £360k significant factors within this include
favourable variances on executives and senior managers £239k, other medical staff
£106k,dental medical staff £55k,other clinical Staff £366k,healthcare assistants £431k,
administrative and clerical staff £184k, pay recharges £212k and pay reserves £746k,
these favourable variances are offset by adverse variances on nurses and midwives
£21k,consultants £98k, agency staff £1333k and vacancy factor £1247k.

Non-Pay budgets report an adverse variance of £4,069k, significant factors within this
include adverse variances on drugs and blood £929k, clinical supplies and services
£342k, general supplies and services £271k,premesis and fixed plant £5k,
establishment expenses £254k, services from non NHS bodies £601k, services from
NHS bodies £728k and other expenditure £939k.

Financing costs show a favourable variance of £57k this is made up of Favourable
variances on Interest receivable £90k, PDC Dividend £46k and interest payable £7k
offset by an adverse variance on depreciation and amortisation of £86k.
File: 533574828
Page 9 of 9