Evidence submitted by University Hospital
for North Staffordshire (Def 58)
TRUST PROFILE
The University Hospital North Staffordshire
NHS Trust is a large acute Trust based in the West Midlands. The
Trust provides a full range of district hospital services to the
local North Staffordshire population of around 470,000, and specialised
acute services to a population of some 3 million across the local
and wider communities of Staffordshire, Shropshire, Cheshire and
Derbyshire.
| Organisational Characteristic
| |
| Acute Total Beds (incl Maternity) as of June 06
| 1,184 |
| Sites operated | 1. Royal Infirmary Hospital
2. City General Hospital
3. Outpatients Department and Pathology Laboratory
|
| Services provided | Accident and Emergency services.
Intensive care, Critical care, Neonatal and Paediatric intensive care.
Full range of district services plus Cardiothoracic surgery; Neurosciences; specialist Cancer and Renal services.
|
| Staff as at 30 April 2006 | 6,167.48 full time equivalent
|
| Trust Total Income 2005-06 and deficit |
£296.9 million with a deficit of £14.98 million
|
| Total Deficit to be recovered through the Service and Financial Recovery Plan
| £21.9 million 2006-07
£21.9 million 2007-08
|
| Star Rating prior to new Health Care Commission rating
| Two Star Rating |
| Teaching Status since 2002-03 | Keele University
|
| |
LOCAL HEALTH
COMMUNITY
| Organisation | 2005-06 outturn
| 2006-07 Cost Saving
to be delivered
|
| £000 | £000
|
| North Stoke PCT | 10,758 |
16,632 |
| South Stoke PCT | -87 | 8,330
|
| Staffordshire Moorlands PCT | 4,893
| 8,196 |
| Newcastle under Lyme PCT | 1,584
| 7,374 |
| Combined Healthcare NHS Trust (mental health and elderly)
| -505 | 4,464 |
| Staffordshire Ambulance NHS Trust | 0
| 449 |
| UHNS | 14,980 | 21,900
|
| TOTAL | 31,623 | 67,345
|
| | |
BACKGROUND, CAUSE
AND EXTENT
OF THE
TRUST FINANCIAL
PROBLEM
The Trust for a number of years has successfully achieved
the vast majority of its clinical targets, maintained a two star
rating and achieved financial breakeven.
However, the underlying financial position of the Trust had
been deteriorating since at least 2003-04. The breakeven position
had been supported by short term non-recurrent savings and additional
income from activity to ensure delivery of the waiting times target.
Historically the majority of past efficiencies had been found
from the Trust's non-pay budgets whilst the workforce had continued
to grow.
The productivity at the Trust had worsened during this period
of staff growth.
During 2005-06 additional pressures added to the difference
between income and expenditure. These included:
— reduced income from commissioners not matched
by reductions in costs; and
— costs of implementation of national initiatives
(including the New Consultant Contract, Working Time Directive
for Junior Doctors and Agenda for Change) which were not contained
within available resources.
The Public Interest Report issued by the Audit Commission[35]
concluded that the problems in 2004-05 were compounded by:
— The Trust budget setting process was inadequate
and contained material errors.
— The Trust continued to implement internally funded
developments during this period without a firm basis for assuming
additional income.
— The lack of adequate challenge and scrutiny of
the financial assumptions by the Board.
— The lack of evidence of detailed planning to deliver
savings and to monitor delivery of the financial plan.
— The Trust had weak corporate governance and control.
2005-06 FINANCIAL POSITION
| Year | Description
| Recurrent | Non-recurrent
| Net |
| | £M
| £M | £M
|
| 2004-05 | Opening Underlying Deficit
| 16.0 | | 16.0
|
| Savings Achieved | (6.5)
| (9.5) | (16.0) |
| 2004-05 Year End Position
| 9.5 | (9.5) |
Nil |
| | |
| |
| 2005-06 | Opening Underlying Deficit
| 9.5 | 9.5 |
|
| PbR Tariff Efficiency |
4.0 | | 4.0 |
| PbR Transitional Relief (75%)
| | (3.5) | (3.5)
|
| Market Forces Factor Adjustment
| | (3.0) | (3.0)
|
| Shortfall in Income Recovery Due to High Reference Costs (equal to 100% transitional relief)
| 4.7 | | 4.7
|
| Loss of contracted income
| 4.5 | | 4.5
|
| Excess costs of national initiatives (Agenda for Change; Consultant Contract; Working Time Directive for Junior Doctors; increased CNST premium) Includes Agenda for Change Project Costs
| 4.2 | 0.8 | 5.0
|
| Internally funded developments
| 1.2 | 2.8 | 4.0
|
| Trust Contribution to impairments
| | 0.1 | 0.1
|
| Cost Improvement Plan |
(6.0) | | (6.0)
|
| Non-recurring savings and income
| | (4.3) | (4.3)
|
| 2005-06 Year End Position
| 22.1 | (7.1)
| 15.0 |
| | |
| |
TURNAROUND AND
RECOVERY
The Trust, supported by Ernst and Young, produced an initial
Service and Financial Recovery Plan during January and February
2006. This focused on the improving the Trusts productivity and
eliminating inefficiencies.
The schemes were grouped into four principle categories:
— Improving Service Productivity
— Reducing the Trusts length of stay to the
average for that specialty.
— Increasing the day case procedures to 80%.
— Improving Theatre productivity and utilisation.
— Eliminating unnecessary outpatient follow-ups.
— Reducing inefficiencies of spilt site working
for emergency care.
— Ensuring best practice service efficiencies
are realised through delivering the 10 High Impact Changes.
— Workforce Redesign to improve Productivity:
— Matching consultant job plans to agreed activity
as part of planning capacity.
— Move as much out of hours work to normal working
hours as possible.
— Standardise working practices to more effectively
match patient and service needs eg shift start and finish times.
— Reduce the need for agency staffing to save
costs.
— Reduce clinical staff time spent on non-direct
patient care activities and move these to support or administrative
staff.
— Aligning staffing and skill mix within teams
to better meet patient and service needs.
— Introduce more flexible working to ensure
a match between workforce and demand for services.
— Exploit the opportunities presented by new
technology eg Electronic Patient Record; outsourced transcription
services to manage peak demand; e recruitment.
— Reduced management costs.
— Redesign Back Office Functions and reduce costs:
— Explore the opportunity for shared service
savings.
— Reduce the costs of Procurement.
— Ensure that all activity is coded correctly
and counted.
— Identify opportunities to increase income
by delivering additional activity at marginal cost.
The Trust commenced immediate action and implemented:
— A stop on all non-essential non pay and capital
expenditure.
— Limited to the minimum levels spend on bank and
agency staff, and overtime spend, reducing expenditure by £787,000
in the second half of 2005-06.
— Instigated robust management of vacancies created
by staff turnover, and only appointing to vacant posts where clinical
services would otherwise be compromised. The Trust have already
achieved savings of 173 FTE posts through vacancy management between
October 2005 and April 2006.
DEPARTMENT OF
HEALTH APPOINTED
TURNAROUND TEAM
The Department of Health commissioned KPMG to review all
Trusts with a deficit during December 2005. The report on UHNS
identified the Trust as one the 18 requiring further intervention
and support.
Deloitte's were appointed as the Trust Turnaround Team in
March 2006. They helped support in various areas:
— Developed a monitoring and reporting system for
the Service and Financial Recovery Plan.
— Identified additional substantial savings to be
made on the Trusts procurement, increasing the initial target
from £1 million to £2.4 million.
— Set up a method to capture staff ideas for productivity
improvements and savings.
— Validated the savings to be made from the four
clinical turnaround schemes in the Service and Financial Recovery
Plan.
Overall the Trusts view is that the Team have provided some
added value, particularly by creating the opportunity for greater
savings on procurement, and doubling the original target.
THE PCTS
FUNDING FORMULA
The four local PCTs distance from the target allocations
remain below target -£798,000 in 2006-07 and, -£721,000
in 2007-08.
The national average recurrent growth in allocation for 2006-07
is 9.2%, and for 2007-08 9.4%. North Stoke PCT and South Stoke
PCT will soon reconfigure to become one PCT for the population
of the City of Stoke on Trent. This PCT is expected to receive
significant growth in funding over the next two years.
Staffordshire Moorlands PCT and Newcastle under Lyme PCT
are already above their target allocations, the distance above
target will reduce next year.
FINANCIAL POSITION
MOVING FORWARD
The table below illustrates the Trusts planned financial
position for 2006/07 and beyond, taking into account the anticipated
savings from the recovery plan.
| Year | Description
| Recurrent | Non-recurrent
| Net |
| | £M
| £M | £M
|
| 2006-07 | Opening Underlying Deficit
| 22.1 | | 22.1
|
| PbR Tariff Efficiency |
5.9 | | 5.9 |
| PbR National Tariff Adjustments
| 5.9 | | 5.9
|
| PbR Transitional Relief (50% but incorporates additional services)
| | (5.2) | (5.2)
|
| Gain from Market Forces Factor
| (4.1) | | (4.1)
|
| Lost Income Due to Commissioner Downsizing
| 17.6 | | 17.6
|
| Variable Cost Savings as a result of Commissioner Downsizing
| (6.1) | | (6.1)
|
| Savings from Recovery Plan
| (21.9) | | (21.9)
|
| Implementation Costs of Recovery Plan
| 1.1 | 7.3 | 8.5
|
| Cost pressures (inc Agenda for Change, impairments etc)
| 0.7 | 0.3 | 1.0
|
| Non-recurrent Measures (various)
| | (6.1) | (6.1)
|
| RAB adjustment from 2005-06
| | 15.0 | 15.0
|
| Bank Support for RAB |
| (15.0) | (15.0)
|
| Interest Payable on Bank Support for RAB
| | 0.6 | 0.6
|
| West Midlands Bank Support (incl redundancy costs support)
| | (19.0) | (19.0)
|
| Interest Payable on West Midlands Bank Support
| | 0.9 | 0.9
|
| | |
| |
| 2006-07 Year End Position
| 21.2 | (21.2)
| Nil |
| 2007-08 | Opening Underlying Deficit
| 21.25 | | 21.2
|
| PbR Tariff Efficiency (assumed 1.5%)
| 3.5 | | 3.5
|
| PbR Transitional Relief |
| (2.6) | (2.6)
|
| Savings from Recovery Plan
| (21.9) | | (21.9)
|
| Implementation Costs of Recovery Plan
| 1.0 | 2.2 | 3.2
|
| Interest Payable on Bank Support
| | 1.5 | 1.5
|
| Semi-fixed Cost Removal as a Result of Commissioner 2006-07 downsizing
| (6.1) | | (6.1)
|
| Additional Bank Support |
| (2.2) | (2.2)
|
| Loan Repayment |
| 3.0 | 3.0 |
| 2007-08 Year End Position
| (2.3) | 1.9 |
(0.4) |
| | |
| |
CONSEQUENCES OF
THE DEFICITS:
STANDARD OF
CARE AND
JOB LOSSES
The main aim of the recovery plan is to continue to deliver
the same levels and quality of activity but using fewer resources
than currently. If the Trust provides health care in accordance
with other NHS acute hospitals, some patient services will certainly
change but patient safety will not be compromised.
As the Trust reduces lengths of stay, and as a consequence
the number of beds, fewer staff will be required. These changes
have been planned using proven activity and workforce models.
For nursing, the recommendations of the Audit Commission ward
Staffing Audit 2004 will be taken into account, in particular
the need to maintain core levels of very experienced staff.
It is clear that the Trust need to catch up with other Trusts
on productivity and deliver redesigned services to achieve best
use of hospital resources. Examples of some of the ways that the
Trust plans to change service delivery are set out below.
— At the moment hundreds of patients come into hospital
as an emergency each year with a relapse of an ongoing condition
such as chronic bronchitis and emphysema. The plan is to change
the way we care for these patients so they have more help to cope
with their condition at home, many of them will not reach the
relapse stage and so will not need to be rushed into hospital.
The Trust will therefore not need as many beds, or staff to manage
these beds.
— Another area where there are inefficiencies compared
to other hospitals of a similar size is on the number of operations
we do as day cases, where the patients come in, have their operation
and go home again on the same day.
— One of the areas where the Trust are not as good
as similar hospitals around the country is on the length of time
patients stay in hospital. The Trust will reduce the length of
stay to the national average which, again, will mean we need fewer
beds.
— Reducing patients' length of stay is not about
sending people home before they are fit, but there are a number
of patients in our hospital who simply no longer need the type
of care we provide.
— The Trust are working with community healthcare
providers and Social Care to make sure community services are
in place for these patients.
— The Trust are also changing some ways of working
to be more efficient during the time that patients are with us.
For instance, improving the patients' journey by faster access
to diagnostic testing so that patients are not lying in bed simply
waiting for tests.
THE JOB
LOSSES IN
THE SERVICE
AND FINANCIAL
RECOVERY PLAN
(SFRP)
The Trust have confirmed that the reductions will be achieved
through a number of methods namely, management of vacancies and
agency usage followed by voluntary redundancies, and finally compulsory
redundancies.
The latest forecast of numbers of full time equivalents expected
in each category is shown below.
| Staff Group | Planned Reduction
(FTE)
| Current Position
(SFRP Identified)
(FTE)
| Deficit against
Planned (FTE)**
|
| Consultants* | 15.0 | 0.00
| 15.00 |
| Other Medical Staff | 11.03
| 7.52 | 3.51 |
| Nursing and Midwifery (Qual) | 371.13
| 240.99 | 130.14 |
| Other Clinical Staff | 322.30
| 75.40 | 246.90 |
| Non-clinical Support, Estates | 60.00
| 42.47 | 17.53 |
| Clerical and Admin and Managers | 242.93
| 111.32 | 131.61 |
| Totals | 1,022.38
| 477.70 | 544.68
|
| *The SFRP for this staff group will be delivered via a reduction in Programmed Activities (PA's) rather than the removal of posts.
| | | |
| **Plans to deliver the remaining workforce changes are to be finalised by the end of June 2006.
| | | |
| |
| |
Vacancy management is an ongoing element of the Trusts workforce
strategy. The Trust are about to undertake a second round of asking
for voluntary redundancies before making further decisions on
compulsory redundancies.
A comparison of the workforce post delivery of the Service
and Financial Recovery Plan has been modelled and compared with
the workforce modelled for the Fit for the Future PFI project,
this is illustrated below.
| Staff Group | Planned Staff in Post
position (post-SFRP)
| Planned FftF Staff In Post
position (2012-14)
|
| Consultants* | 194.29 | 235.41
|
| Other Medical Staff | 423.68
| 382.54 |
| Nursing and Midwifery (Qual) | 1,567.71
| 1,502.68 |
| Other Clinical Staff | 1,399.93
| 1,555.98 |
| Non-clinical Support, Estates | 673.15
| 673.15 |
| Clerical and Admin and Managers | 954.66
| 921.82 |
| Totals | 5,213.43
| 5,271.58 |
| | |
ACHIEVEMENT OF
FINANCIAL BALANCE
The Trust plan is to achieve a small surplus of £2.3
million by the end of the financial year 2007-08, and to achieve
target run rate (monthly income matching expenditure) six months
before this.
University Hospital of North Staffordshire
June 2006
35
A copy of the Public Interest report is available from the Audit
Commission or from Shropshire and Staffordshire SHA. Back
| 
