Paper 23

NHS Ayrshire & Arran

Meeting: Ayrshire and Arran NHS Board

Meeting date: Monday 29 March 2021

Title: Revenue Plan

Responsible Director: Derek Lindsay, Director of Finance

Report Author: Derek Lindsay, Director of Finance

1. Purpose

This is presented to the Board for:  Discussion

This paper relates to:  Annual Operational Plan

This aligns to the following NHSScotland quality ambition(s):  Effective

2. Report summary

2.1 Situation

The Board is asked to consider the draft 2021/2022 budget and approve the proposed budget increase of £3.3 million for 2021/2022 to delegate to Integration Joint Boards (IJB) to reflect the 1.5% general allocation uplift for the year.

2.2 Background

The allocation letter dated 28 January 2021 from the NHS Scotland Director of Finance set out the approach that should be taken to uplift IJB baseline funding. The funding proposal which sees baseline budgets for the three IJBs uplifted by 1.5% which equates to £3.3 million is in line with the direction in the allocation letter. It should be noted that this approach differs from that set out in the Integration Scheme.

2.3 Assessment

Cost pressures of £26.2 million have been identified for 2021/2022. The funding uplift available is £12.7 million. New efficiency savings (excluding partnerships operational savings) of around £13.5 million would be required to fill this gap in funding for 2021/2022. In addition there are unachieved CRES from 2020/2021 amounting to £4.8 million. To date the Board has identified around £9.3 million of CRES for 2021/22 and in addition has the £13.2 underlying deficit from 2016/17, so if no further CRES is identified is facing a £22.2 deficit in 21/22.

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2.3.1 Quality/patient care Section 6 lists medicines cost pressures and section 4 clinical cost pressures.

2.3.2 Workforce Section 3 lists the pay cost pressures.

2.3.3 Financial Section 9 sets out planned cash releasing efficiency savings for 2021/2022.

2.3.4 Risk assessment/management Section 8 lists the main additional estimated costs in 2021/2022 related to covid-19 and it is expected that these will be funded by Scottish Government.

2.3.5 Equality and diversity, including health inequalities An impact assessment has not been completed because individual cost pressures and savings schemes will consider and this paper is an overview.

2.3.6 Other impacts Best value - Governance and accountability - Use of resources - Performance management

2.3.7 Communication, involvement, engagement and consultation The Board has carried out its duties to involve and engage external stakeholders where appropriate:

 The pay and supplies group includes IJB chief finance officers.  The effective prescribing group includes clinicians.  The revenue plan has been discussed at various Board workshops.

2.3.8 Route to the meeting The Performance Governance Committee received detailed papers at their 12 January 2021 meeting on pay and supplies cost pressures for 2021/2022 and details of additional Trauma and Orthopaedics costs. The draft revenue plan was then considered at their meeting on 2 March.

2.4 Recommendation

Members are asked to approve a £3.3 million increase in the amount delegated to IJBs and approve a rollover of other recurring budgets into 2021/2022 to allow cost pressures to be further challenged and savings plans to develop further, with an update of this revenue plan to be brought to the next Board meeting for approval.

3. List of appendices

 Appendix 1, 2021/2022 revenue plan

2 of 9 Glossary of Terms PFI Private Finance Initiative CRES Cash Releasing Efficiency Savings EME Electro Medical Equipment SLA Service Level Agreement IJB Integrated Joint Board HPV Human Papilloma Virus UHA University Hospital UHC University Hospital AfC Agenda for Change

3 of 9 Appendix 1

1. Earmarked allocations

1.1 NHS Ayrshire & Arran receives baseline recurring funding of £762 million. The general allocation funding uplift for 2021/2022 of 1.7% amounts to £12.7 million.

1.2 In addition, earmarked funding for specific purposes is outlined in the table below: Earmarked Allocations 2020/2021 2021/2022 £million £million Primary care 7.5 11.0 Mental health action 15 1.5 2.0 Mental health bundle 1.5 1.5 Outcomes framework 4.4 4.4 Waiting times (including winter) 5.5 8.3 e-Health 1.9 1.9 Family nurse partnership 1.0 1.0 Public dental service 2.0 1.8 GPST 100 0.3 0.0 Alcohol and Drug Partnerships 1.3 5.0 Weight management (diabetes) 0.3 0.3 Primary Medical Services 61.6 63.0 New Medicines Fund 5.8 3.7 Non-core DEL 5.9 3.0 District nursing 0.3 0.5 COVID-19 70.9 60.3 Total 171.7 167.7

2. Prior commitments

2.1 Service changes with additional costs include vascular service redesign, trauma and orthopaedic changes and a new service for rape and sexual assault victims. The former two will not be implemented until August therefore only show two thirds of full year costs in 2021/2022. Staff wellbeing is hoped to be funded from covid funding in 2021/2022 but would have a cost of £515,000 in 2022/2023.

Service Changes £000 Vascular service 400 Trauma and orthopaedics 675 Rape and sexual assault 147 Robot assisted surgery 50 GPST reduction 270 Staff wellbeing 0 HR staffing 71 Whistleblowing coordinator 52 Ophthalmology consultant 0.4 WTE 52 Lone worker protection system 27 Total 1,744

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2.2 Scottish Government provided non-recurring funding in 2018/2019 and 2019/2020 for investment in Office 365. In 2020/2021 the Board funded Office 365 non- recurringly, however it has been implemented during that year and is now a recurring cost.

2.3 Digital investment £000 e-rostering system 200 Office 365 and Windows 10 1,500 Consultant job planning (VAT) 9 Total 1,709

3. Pay

3.1 Pay budgets were increased by 4% in 2020/2021, however AfC Band 2 moved to having only two points on the incremental scale results in a 9% -12% increase for all AfC Band 2 staff who were not on the top point or bottom point of the scale.

Pay related £000 Pay budget increase for AfC staff 4,199 1% pay award for medical and dental 770 First assistants 140 Discretionary points 200 AfC Band 2 posts 865 Acute Physicians consultants 405 Endoscopy technicians (Crosshouse) 90 Acute medicine ANPs 107 General surgery specialty doctor (Crosshouse) 90 Acute medicine clinical development fellows 120 Radiographers and support 110 Total 7,096

3.2 Junior doctor input to theatres reduced which necessitated the employment of three “first assistants” at a cost of £140,000.

3.3 There are long standing vacancies for acute physicians and high cost agency doctors. In 2020 the medical director proposed the recruitment of three acute physician consultants above budget at a cost of £405,000.

3.4 Crosshouse converted some budget for specialty doctors into several advanced nurse practitioners (ANP), however there is a 1.7 WTE shortfall at a cost of £107,000.

3.5 The acute medicine rota at Crosshouse requires five middle grades to be viable, however only three are recurringly funded therefore there is a need to invest in two additional posts which will be filled by Clinical Development Fellows.

3.6 IJBs will receive a pass through increase of 1.5% on their budget which is a cost pressure to the Board of £3.3 million.

5 of 9 4. Clinical

4.1 Inflation uplift on service level agreements (SLA) is likely to be in line with general allocation uplift. A 1.5% cash increase after 3% efficiency saving therefore 4.5% cost pressure on about £66 million is £2.97 million. Private sector, voluntary sector and charity SLA inflation adds another £0.24 million taking the cost pressure to £3.21 million.

4.2 New national services include laboratories for Human Papilloma Virus testing, colorectal cancer testing and a national burns unit in Glasgow. There is also a national risk share for new orphan drugs where the costs are increasing giving a cost pressure of £0.5 million.

4.3 Some inflationary or activity increase supplies pressures are shown in the table below. For many areas, there are increased numbers of patients needing endoscopy, lab tests etc.

Supplies demand increase pressures £000 Endoscopy 60 EME service contracts 67 Blood gas analyser consumables 78 Total 205

4.4 Some purchased services from outwith Ayrshire are seeing activity and cost increases. The budget for NHS Lothian is around £900,000, however costs in 2019/2020 were £1,045,000 therefore £145,000 is required. The number of oncology outpatients seen in Ayrshire by Glasgow visiting oncologists has increased over the last three years resulting in a £100,000 increased charge from Greater Glasgow and Clyde.

Services purchased outwith Ayrshire £000 NHS Lothian 145 SAS paediatrics 21 Visiting oncologists 100 Total 266

4.6 Unavoidable clinical cost pressures £000 External service level agreement 3,210 National services 497 Supplies pressures 205 Services outwith Ayrshire 266 Total 4,178

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5. Non-clinical Cost Pressures

5.1 Most gas and electricity has been advance purchased for 2021/2022 through national pan public sector arrangements. The expected new cost pressure in 2021/2022 is £103,000.

5.2 Water charges and council tax bills are expected to rise in 2020/2021, water and trade effluent costs will also rise– a total cost pressure of £20,000.

5.3 The contract for non-clinical waste disposal includes an annual increase in cost per tonne. The 2021/2022 increase will cost £17,000 extra.

5.4 Significant capital investment was made in 2020/21 in additional equipment including ventilators, imaging equipment and laboratory equipment. The depreciation costs on these increase the capital charges for the Board by around £0.66 million.

5.5 Most maintenance agreements and service contracts have a built in inflationary increase. The increased cost pressure for 2021/2022 are: £000 Maintenance agreements and services contracts IT service contracts (including WellSky EPMA at £14,000) 59 Estates (including table, lights, lifts) 7 Total 66

5.6 Laundry services are delivered by NHS Lanarkshire on behalf of three Boards. An increase of £56,000 represents an increase in 2021/2022 to reflect pay increases.

5.7 Inflationary increases built into three Private Finance Initiative contracts will cost an extra £87,000 in 2021/2022.

Non-clinical supplies cost pressures £000 Energy related 103 Water, council tax rates etc 20 Non-clinical and clinical waste 17 Food/provisions 33 Maintenance agreements inflation 66 Capital charges 661 Laundry 56 Private Finance Initiative inflation 87 Postages 25 Total 1,068

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6 Prescribing Cost Pressures

6.1 Primary care prescribing is projected to overspend in 2020/21. A further increase in use of anticoagulant drugs and freestyle libre for diabetic patients is expected to increase costs by £0.85 million and other volume and price increases are projected, giving a £4.7 million cost pressure.

6.2 A £0.5 million cost increase is projected in acute drugs for monocloncal antibodies for rheumatology and gastroenterology. This is offset by reduces cost for other acute drugs.

6.3 The New Medicines expenditure is largely defined by drugs approved through the Scottish Medicines Consortium, some of which are very expensive. Scottish Government also provided some funding for this, however it is reducing by £2.2 million in 2021/22.

Prescribing cost pressures £000 Primary care prescribing 4,700 Acute prescribing 100 New Medicines Fund 2,300 Total 7,100

7. Resource implications and identified source of funding

7.1 Summary of recurring cost pressures £000 Service changes 1,744 Digital investment 1,709 Pay related 7,096 Unavoidable clinical cost pressures 4,178 Non-clinical cost pressures 1,068 Prescribing cost pressures 7,100 IJB budget uplift 3,300 Total 26,195

8 of 9 Cash releasing efficiency savings

8.1 The acute directorate brings into 2021/2022 historic efficiency savings of £4.3 million unachieved in 2020/2021 which require to be delivered in-year and therefore it is unrealistic for acute services to deliver any further savings in 2021/2022. They have identified areas to target delivery of £2.2 million of cash releasing efficiency savings which leaves £2.1 million.

8.2 Acute drugs and primary care prescribing cash releasing efficiency savings are robustly managed and have delivered year on year. A £3.2 million savings is shown in the financial plan for 2021/22.

8.3 There are large underspends on travel costs in 2020/2021 due to covid restrictions, but also the use of electronic technology such as Teams and Near Me. It is envisaged that there will be a new normal which will reduce travel costs by around £0.4 million which will partially offset the additional costs of Office 365.

CRES Programme

£million Acute operational (2.2) Acute Prescribing (1.2) External SLAs (2.0) Primary Care Prescribing (2.0) Human Resources (0.1) Information and support services (0.4) Recombinant blood products (0.3) Energy (0.2) Estates Rationalisation (0.1) Travel costs (0.4)

Directorate CRES (0.4)

The above CRES plans amount to £9.3 million and further work is ongoing to try to achieve savings, however these are not yet firmed up. Over the next six weeks it is hoped to increase the CRES plans which have been hampered due to responding to the covid-19 pandemic.

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