16 November 2006 Draft for Board consideration

1
Brent Teaching Primary Care TrustTurnaround Plan

• 16 November 2006 Draft for Board consideration

2
Executive summary

• Context and background
• Brent PCT serves a diverse population of some
  278,000 with marked variations in deprivation and
  health.
• The Healthcare Commission Annual Health Check
  2005/06 rated Brent tPCT as fair for quality of
  services and fair for use of resources.
• Although the PCT enjoyed carried forward
  surpluses up to 31 March 2006, management are
  projecting a significant deficit in 2006/07 as a
  result of
• 11.3 million of top-slices relating to London
  SHA strategy reserves
• 6.5 million of one-off financial adjustment
  pressures relating to 2005/06
• 7.3 million of operational overspends
• 2.6 million of resource allocation and other
  pressures
• Within this context, the PCT has voluntarily
  entered Turnaround arrangements including the
  appointment of KPMG as external advisors and,
  more recently, the appointment of a Turnaround
  Director.
• As part of these arrangements, a Turnaround Plan
  has been developed with the following key
  objectives
• Achievement of monthly run rate balance by
  March 2007.
• Achievement of in-year financial balance as soon
  as practicable including paying off the deficit
  from 06/07. The current plan shows this being
  achieved in February 2008.
• A sustainable long term financial position for
  Brent Teaching PCT.
• Delivery of core health services and priority
  health needs for the Brent population.

• Financial overview
• The table above summarises the PCTs projected
  final position for 2006/07 and 2007/08. The PCT
  will need to make total savings of 28.9 million
  in 2007/08 to achieve recurring balance on the
  assumption it incurs a 10.9 million deficit in
  2006/07. This represents some 7 of the forecast
  recurring 2007/08 spend.
• Current financial position
• The PCT reported a 16 million deficit as at 30
  September 2006. This includes the effect of some
  5 million of one-off pressures brought forward
  from 2005/06.
• Performance during Q3 and Q4 2006/07 is forecast
  to be more positive as the impact of savings
  plans with back-loaded benefits are felt and
  control measures are enhanced in some areas
  following analysis in October and November. The
  PCT is forecasting run-rate break-even in March
  2007.

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Executive summary (cont.)

• Developing the Plan
• Initially the PCT developed its own Financial
  Recovery Plan and agreed this with the SHA as
  part of the LDP process. Ongoing monitoring and
  external review has identified those schemes
  which were unlikely to deliver and these have
  been removed from the plan or re-phased where
  appropriate. With the support of KPMG, the PCT
  has reviewed all internally developed schemes and
  the plans underpinning their delivery. Management
  have now agreed the phasing of savings plans and
  risk ratings for them with the directors and
  managers who will be responsible for their
  implementation.
• Identification of savings
• Benchmarking performed internally and by KPMG has
  identified a number of areas where savings in
  relation to existing PCT capacity, demand and
  operational efficiency are potentially available.
  
• GP and Consultant to Consultant referral rates
• Excess follow-up appointments
• Learning Disability and long term placements
  spend
• Primary care spend
• AE attendances
• Various provider reference costs, staffing and
  activity
• Working Groups comprising Commissioning, Demand
  Management, Provider Services and Internal PCT
  were established with service managers and
  executive sponsors. The savings plans generated
  by these Groups were subject to challenge by KPMG
  as well as peer challenge by directors and
  management. The groups were tasked with
  stretching existing savings plans, generating new
  opportunities and providing challenge and review
  of all schemes. This included exploring the cost
  and benefits of existing service models and
  configurations, service costs, known best
  practice and alternative approaches.
• Additions to 2006/07 savings
• The extent to which savings can be delivered in
  2006/07 is limited by a number of factors
  including the nature of the contracts with main
  providers and the inability to reopen existing
  SLAs with some of the PCTs acute providers the
  fact that the 2006/07 year is already well
  advanced and the need for consultation periods
  in some instances.

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Executive summary (cont.)

• The need for clinical and other stakeholder
  engagement
• There is a crucial need for appropriate clinical
  engagement in the continued development and
  effective delivery of this plan to be able to
  drive delivery of schemes through the PEC and PBC
  groups within the timescales set. This need is
  factored into the relevant workstreams in the
  Plan.
• Further, appropriate communications and
  consultations will need to be undertaken with
  relevant stakeholders.
• Key risks
• The key risks associated with the Plan include
• As detailed savings plans are developed further,
  there may be downward pressure on the assumed
  savings totals.
• Implementation risk there is still considerable
  work needed to develop many of the individual
  savings plans to the implementation stage.
• Further, there have been significant changes in
  the PCTs management team (particularly in the
  finance function), with an interim finance
  director starting on 14 November 2006 to cover
  the vacancy since 29 September 2006.
• The recent appointment of both a Turnaround
  Director and Interim Director of Finance are key
  to the continued development and implementation
  of the Plan.

5
Development of the Turnaround PlanObjectives
and approach

• Key objectives
• In identifying savings targets, it is recognised
  that the PCTs function is that of a commissioner
  of all services
• To meet the priority health needs of its
  population within the resource allocation
• To ensure access to services, as locally as
  possible where viable and sustainable
• To ensure good quality healthcare provision
• To ensure services provided represent best value
  for public money.
• The savings targets have been developed to
  achieve the key objectives set out in the table
  opposite.
• Financial objectives of Plan
• The PCT Turnaround Plan has been developed to
  meet the following key financial objectives
• Achievement of monthly run rate balance to be
  achieved March 2007.
• Achievement of in-year financial balance as soon
  as practicable the current plan shows this
  being achieved in February 2008.
• A sustainable long term financial position for
  Brent Teaching PCT.
• Delivery of core health services to meet priority
  health needs for the Brent population.

6
Financial savings identifiedMonthly profile
Baseline phasing

• Baseline phasing
• It is assumed in the baseline budgets that
  revenue is spread evenly throughout the financial
  year. The analysis right shows overall balance
  being reached in February 2008 on the basis of
  risk weighted savings.
• Run rate
• The monthly run rate analysis below right
  illustrates the PCT will achieve a positive
  monthly run rate in March 2007.

Note Revenue is assumed to occur evenly over the
year. Plan savings weighted to 14.1 million for
2006/07 and 31.0 million for 2007/08 .
Monthly run rate
Note Revenue is assumed to occur evenly over the
year. Plan savings weighted to 14.1 million for
2006/07 and 31.0 million for 2007/08 .
7
The Turnaround PlanSummary of commissioning
initiatives
8
The Turnaround PlanSummary of commissioning
initiatives
9
The Turnaround PlanSummary of demand management
initiatives
10
The Turnaround PlanSummary of provider services
initiatives
11
The Turnaround PlanSummary of internal
initiatives