Report to Knowsley Clinical Commissioning Group Clinical Membership Group

Date of meeting: 5th April 2016

Report title: Operational Budget 2016/17

Report presented by: Paul Brickwood, Chief finance Officer

Purpose of the report: To seek approval of the 2016-17 Operational Budget from the Clinical Membership Group as required under the Scheme of Reservation & Delegation.

Recommendations: Action / Decision required

The Clinical Membership Group is recommended to: 1) Approve the high level budget including the plan to

deliver a 1% surplus and the challenging residual QIPP savings target of £9.8m.

2) Given the scale of the QIPP challenge, the Clinical Membership Group is recommended to charge the Finance & Performance Committee to produce regular reports to the Governing Body in relation to progress with the QIPP target for 2016/17 and to escalate any risk of delivery immediately via the Risk Register and Governing Body Assurance Framework.

3) The Clinical Membership Group is recommended to keep the achievement of the surplus under review and to approach NHS England at an early stage if the view is that that is not realistically achievable for 2016/17.

Delegated Powers:

For decision reports only

N/A

Commissioning Values Which area(s) does this support? Please insert ‘x’ that apply

1. Patient centred

2. Safe

3. High quality

4. Cost effective X

5. Outcome focused

6. Closer to home

7. Affordable X

KNOWSLEY CCG OPERATIONAL FINANCIAL BUDGET 2016-2017

1. INTRODUCTION

1.1 The Operational Financial Budget for 2016/17 requires approval at the Clinical Membership Group at the beginning of the financial year. This report proposes the Budget for 2016/17 which is based on current information available to the CCG. The financial information contained within this report is consistent with the 2nd cut of the activity planning return submitted to NHS England on 2nd March 2016 and is consistent with the latest financial information. A final finance and activity plan is due for submission in April however it is not envisaged that there will be any significant changes to the overall resource and expenditure budgets detailed within this report.

1.2 Assuming that the proposed budget is approved by the Clinical Membership Group

(CMG) it will allow the creation of a detailed Budget Book for the CCG which will be presented to the Finance & Performance Committee in April 2015. The Budget Book will show a clear reconciliation to the budget approved by the CMG and will identify any changes for example due to the impact of final contract agreements.

1.3 The report summarises the CCG’s resource allocation, spending plans, target

surplus and QIPP savings requirement. It will be the first year of a 5 year financial strategy for the CCG which has to be developed by June 2016. This will contribute to a Sustainability and Transformation Plan (STP) being developed across Cheshire and Mersey covering the period from 2016-2021.

1.4 GP Primary Care co-commissioning budgets delegated by NHSE are now included

within the confirmed notified allocations within this report. The arrangements for full inclusion of the financial transactions linked to these budgets within the CCG’s ledger have yet to be confirmed by NHSE for 2016/17.

1.5 The Budget includes the impact of funding the Better Care Fund (BCF) in 2016/17.

Work is on-going to provide detailed budget plans funded by the BCF linked to key outcomes. The BCF will be managed via a pooled budget arrangement hosted by the KMBC and the overall CCG contribution is £13.44m for 2016/17.

2. ALLOCATIONS

2.1 The starting point for CCG budget setting is the money provided by NHSE – the allocations that allow NHS services to be commissioned. CCG allocations for 2016/17 to 2020/21 were announced in early January. They consist of a 3 year fixed allocation and a further 2 years of indicative allocations, meaning the notified allocations for 2019/20 and 2020/21 are subject to change. NHS England (NHSE) has stated that it may review allocations where there are significant changes to populations, payment currencies and commissioning responsibilities.

2.2 Appendix 1 shows Knowsley CCG’s allocations for the 5 year period. This shows

that the core allocation (excluding delegated co-commissioning) for 2016/17 will increase by 2.9% growth (£7.3m) then dropping to under 2% until 2019/20. Funding growth for 2016/17 is just below the average for CCG’s, as Knowsley is over its “fair shares” target allocation. The CCG’s core allocation of £261.6m is based on an estimated registered population of 162,471. NHSE has applied a weighting to this

figure to factor in morbidity, age and gender to arrive at a fair shares target allocation. Knowsley’s allocation has historically been in excess of this value. The relatively low level of growth received in 2015/16 has moved the CCG closer to its fair shares target allocation, so that by the end of 2016/17 the CCG is only 4.6% above target. The relatively low level of CCG funding growth over the rest of the 5 year planning period means that there is little scope for NHSE to adjust distances from target, therefore Knowsley’s core programme allocation ends 2020/21 5.4% above target.

2.3 Since the allocations were announced the CCG has learned that some budgets which were funded from additional in-year non-recurrent allocations in 2015/16 are effectively now to be funded from allocation growth. These are GP IT (£0.47m), the Enhanced Tariff Option (£0.79m) and transformational CAMHS funding (£0.27m). Taking these items into account, in real terms the growth in 2016/17 is less than 2.3% rather than the notified 2.9%. Funding for these items has been reflected in the budget.

2.4 Growth in delegated co-commissioning funding is 2.9% (£0.85m) for 2016/17, then reducing to 1.0% for the rest of the 5 years. This reflects the fact that the CCG is calculated to be 29% over target on primary care funding which explains the reduced level of growth going forward, significantly below the national average, so that by 2020/21 it is only 20.1% over target. The technical guidance on the primary care allocations has at the time of writing this paper not yet been published to fully understand the reasons for this position.

2.5 NHSE have also tried to identify the spending on specialised commissioning to each CCG. The figures are an estimate as only half of the specialised services spend can be allocated accurately on PbR activity back to GP practices and their CCG. This is a notional allocation and it is not therefore included in the CCG’s Annual Budget. However it understood that more of the funding and the costs associated with specialised services will transfer back to CCGs over time. The notional allocation of £47.64m suggests that the CCG is 4.1% over target on specialised services.

2.6 The final allocation is the Running Cost Allowance (RCA) provided to CCGs to fund their management and administrative functions. NHS England have decided that the amount spent on management and administration by commissioners should be fixed over the next 5 years at £1,211m. The amount each CCG receives is determined by its GP registered population constrained to the Office of National Statistics (ONS) population estimates for member GP practices. This means that over the 5 years the amount each CCG will get per head of population falls due to the growing number of people in the country. This means that where a CCG’s population grows more slowly than the national average (as in Knowsley) then the RCA received will fall. As a consequence over the 5 years to 2020/21, the CCG’s RCA will decline by 2.4% from £3.291m to £3.213m. CCG’s are expected to accommodate additional commissioning responsibility, pay awards and incremental drift from within this allocation so in real terms the reduction is more significant than it might first appear.

3. NHS ENGLAND GUIDANCE FOR CCGS

3.1 The planning guidance “Delivering the Forward View: NHS planning guidance 2016/17 – 2020/21” identifies the following key planning assumptions or “business rules” for CCGs in 2016/17: Commissioners (excluding public health and specialised commissioning) are required to deliver a cumulative reserve (surplus) of 1%. CCGs should plan to drawdown all cumulative surpluses in excess of 1% over the next three years. Currently Knowsley CCG is on track to generate a 1% surplus to carry forward into 2016/17. However recent planning guidance issued with the financial planning templates recognises that CCGs may not be able to deliver such a surplus and as a minimum should breakeven. Given the CCG’s plans and cost pressures expected to be faced in 2016/17 it currently expects to deliver a 1% surplus going forward.

3.2 Commissioners are also required to plan to hold 1% of their allocations non-

recurrently. Unlike in previous years CCGs cannot plan to spend this reserve as its use requires Treasury permission. This reserve (£2.9m) has been set aside within the budget. As in previous years commissioners are also required to hold a contingency of 0.5%, to meet unforeseen cost pressures. This means that Knowsley CCG holds a contingency reserve of £1.49m.

3.3 The planning guidance sets out 9 “must do’s” for each health economy. These are

where possible reflected in the Budget but additional investment to meet the targets – such as the growth in CAMHS spending is challenging - if the second “must do” about achieving aggregate financial balance is to be achieved by Knowsley CCG.

3.4 The consultation on the tariff proposes a 2% efficiency deflator and 3.1% inflation uplift for 2016/17 (although some tariffs will also reflect a 0.7% increase for Clinical Negligence Scheme for Trusts (CNST) subscription rises). This reflects Monitor and NHS England’s assessment of cost inflation including the effect of employer pension contribution increases. HRG4 PbR grouper will be retained for a further year and there will also be no changes to specialist top-ups in 2016/17; the specialised service risk share is also being suspended for 2016/17.

3.5 A large part of the additional resources committed to the NHS is being used to

create a Sustainability and Transformation Fund. In 2016/17 the bulk of this money (£1.8 billion) will be passed to NHS Trusts if they deliver plans to achieve key NHS Constitution targets on A&E 4 hour waits and 18 week waiting times, whilst meeting financial out-turn control totals. The following Sustainability Funds are being offered to the local Trusts used by the CCG. Looking to the longer term the STP’s are expected to develop plans to show how health economies can become financially sustainable.

NHS TrustSustainability

Fund Offer £m

Fin. Control Total

-ve = deficit £m

St Helens & Knowsley Hospitals 10.1 3.3

Aintree University Hospitals FT 9.5 1.2

Royal Liverpool University Hospitals 9.7 15.9

Five Boroughs Partnership FT 0.2 0.0

4. BUDGET SUMMARY

4.1 A summary of the proposed 2016/17 Budget, using the guidance and latest contract negotiation positions as at the 2nd March 2016, is set out in the table below. It shows that the CCG is able to achieve a 1% surplus assuming its QIPP target is achieved and cost pressures do not exceed the reserves set aside to meet them. The CCG’s position could be improved if the ring-fenced 1% reserve is released to address a potential deficit. Appendix 2 provides a more detailed breakdown of budgets at cost centre level.

Recurrent

Non

Recurrent Total

£000's £000's £000's

Allocations

Core Programme Base Allocation 253,537 253,537

Co-Commissioning Primary Care Base Alloc 30,140 30,140

Running Cost Allowance 3,291 3,291

Growth Core (2.9%) 7,355 7,355

Growth Co-commissioning (2.9%) 851 851

Return of Surplus 2,788 2,788

Total Programme Resources Available 295,174 2,788 297,962

Programme Expenditure

Acute 137,673 30 137,703

Mental Health 24,518 19 24,537

Community 28,314 50 28,364

Continuing Care 23,857 5 23,862

Primary Care (inc Prescribing) 38,073 270 38,343

Primary Care Co-Commissioning 29,688 - 29,688

Other Programme 7,408 700 8,108

Other Reserves 6,523 249 6,772

QIPP target 5,266- 4,526- 9,792-

Total application of funds (Programme) 290,787 3,203- 287,585

Running costs 3,252 39 3,291

Total Application of spend (inc running costs) 294,039 (3,164) 290,876

Contingency

1% Ringfenced Headroom National Directive 2,919 2,919

Contingency Reserve (0.5%) - 1,490 1,490

Planned in year Surplus/(Deficit) 1,135 1,544 2,678

1.0%

3.3%

Draft 2016/17 Annual

Budget

Planned in year Surplus/(Deficit) %

QIPP as a % of Programme Resources 4.2 Acute budgets have been based primarily on the most recent forecast out-turn for

each trust plus the effect of the new tariff prices for 2016/17. Whilst contract values have yet to be agreed a prudent approach has been taken of adding net inflation of 1.8% for most acute providers and 1.1% for providers operating under non-PbR arrangements. The impact of this inflation is an approximate additional cost to the CCG of £2.4m. In addition, 1.2% (£2m) has been added for growth being approximately 1.3% demographic growth and 0.2% non-demographic growth based on the Indicative Hospital Activity Monitoring (IHAM) data published by NHSE and

local analysis of growth trends observed over recent years. Currently this is held in the acute budget line as an activity reserve.

4.3 Prescribing budgets have been based on the 2015-16 budget plus 5% inflation less

4% QIPP (£1.3m). An additional £1m will be held in reserve to manage the risk of over spend to the level experienced in 2015-16. Changes in category M drugs prices and the work plan being implemented by the medicines management team to reduce waste and unnecessary repeat prescribing is expected to reduce the need to utilise the £1m reserve in 2016-17.

4.4 The recent national GP contract negotiations, which resulted in a 3.2% uplift in

contract values is expected to cost £0.77m leaving an insufficient £0.08m for other budget pressures, including the RPI inflation on GP leases for CHP buildings and GP IT cost increases. As a result the anticipated saving from the discontinuation of APMS Options contract of £2.1m has been used to cover this shortfall as well as put in place the alternative services and GP contract increases which have been needed. In addition a non-recurrent contribution of £0.8m has been added to the 2016/17 QIPP. These funds will be available for re-investment in 2017/18 to support the primary care transformation programme. The CCG is required to hold a 0.5% contingency to cover unforeseen cost pressures in year. There is no requirement to deliver a 1% surplus on primary care delegated budgets.

4.5 Continuing care which is largely made up of the BCF and Pooled Budgets with the

Council is at present set at the 2015/16 forecast out-turns plus the increase in the minimum contribution for BCF. There is uncertainty regarding the potential increase in spend from new bed prices under the NHS framework contract and increases due to the national living wage. Work is underway with KMBC to understand the risk. At present an estimated impact of £1.0m has been added to the budget as a reserve. A revised Section 75 agreement which includes indicators on the performance of the Pooled Budgets and BCF is expected to be finalised and signed off shortly.

5. CONTRACT SIGN-OFF

5.1 At the time of writing, the report contract negotiation is on-going. The tariffs for 2016/17 have now been released by Monitor, and their impact is being assessed based on the relevant activity plans and forecasts. At this stage it is not possible to determine the overall impact on the sums set aside in the draft budget for NHS contracts. However, our local provider St Helens and Knowsley Teaching Hospital NHS Trust has provided initial workings that show an impact of 2.14% increase in the cost of the activity based on forecast outturn. Significant emphasis has been placed on CCGs and Trusts to ensure that activity planning assumptions are consistent. However whilst some activity growth has been built into CCG budgets it is likely that Trust proposed activity growth will not be affordable for many CCGs. The CCG has requested that no growth beyond the 2015/16 out-turn should be included in contracts. This is likely to make contract negotiations challenging – particularly to get sign off for the end of March. However if contracts continue to be based on cost and volume Payment by Results (PbR) it will be the actual levels of activity rather than the contracted levels of activity that will be critical for CCG financial balance. Restraining activity growth is a key element in the CCG’s financial and operational plans.

5.2 NHS Trusts are receiving a significantly better financial uplift than in the previous 3 years with a tariff inflator rather than deflator as well as the proposed sustainability payment. However the difficult financial position faced by CCGs has made it much harder for CCGs to provide the same level of support on urgent care and delivery of the A&E targets. This work has been progressed through local Sustainability and Resilience Groups (SRG). Due to the growing financial pressures and the requirement to set aside 1% of the allocation non-recurrently, the CCG is unable to allocate an SRG budget in 16-17 and remain within the business rules. It is proposed instead that acute trusts will need to find equivalent SRG funding from their Sustainability Fund in 2016/17 as this is given on the basis they to deliver the A&E wait targets.

6. QIPP

6.1 The plans as presented require the CCG to deliver £10 m of QIPP savings. Essentially this represents the residual current shortfall between the allocation and the CCGs realistic expenditure plans. The key drivers in relation to the QIPP gap have been the inflation uplift built into tariffs and the need to provide for activity growth as well as the impact of investment needed to deliver the “must do’s”.

6.2 The scale of this challenge should not be underestimated. The high level QIPP

schemes are listed in the table below. These savings do not include the 2% efficiency savings netted off the tariff price increases for providers. They do however include the prescribing QIPP programme of £1.3 m which will be overseen by the Medicines Management Committee. They also include the part year achievement of referral management proposals. Some non-recurrent slippage savings on the CCGs proposed investments during the year have also been included. At the time of writing this report, the QIPP programme includes £2.7m unidentified; work is on-going to establish further opportunities in referral management, reductions in nursing home urgent care activity and exploring the right care opportunities to reduce this further. Any changes in these assumptions will be reflected in the next version of the plan submitted in April and will reduce the unidentified QIPP value only.

2016/17 QIPP PlansRecurrent

£000's

Non

Recurrent

£000's

Gross

Saving

£000's

Start DatePart Yr

Effect

Prescribing Efficiency (1,273) - (1,273) Apr-16 N

Prescribing Price Change From October (227) (227) Apr-16 Y

MH Out of Borough Savings (295) - (295) Apr-16 N

Block Contract Review (200) - (200) Sep-16 Y

Non Identified QIPP - St Helens & QP Income - (526) (526) Apr-16 N

APMS Options Decommissioning (1,378) (800) (2,178) Apr-16 N

Referral Management Scheme (including T&O MCAS) (606) - (606) Jul-16 Y

Nursing Home Admission Avoidance (417) (417) Jul-16 Y

Care Home Liaison - review to be part of NH Locality Service (70) - (70) Sep-16 Y

CVD Activity Savings (530) - (530) Apr-16 N

Respiratory Activity Savings (270) - (270) Apr-16 N

Project Managemnt Support (50) (50) Apr-16 N

Intermediate Care Redesign (200) (200) Apr-16 N

BCF (225) (225) Apr-16 N

Non Identified QIPP - (2,725) (2,725)

(5,266) (4,526) (9,792)

6.3 The Finance & Performance Committee received a paper outlining the scale of the QIPP challenge for 2015-16 which emphasised the need for a greater focus on QIPP delivery to ensure the long term financial stability of the CCG. The CCG intends to strengthen the focus on QIPP delivery during 2016-17 and will establish a QIPP delivery group to oversee the development and delivery of QIPP schemes. The CCG will continue to regularly communicate to NHSE (both through the planning returns and in informal discussions) the scale of the QIPP challenge in 2016-17 and the cost pressures that the CCG will strive to manage.

7. RESERVES

7.1 A detailed breakdown of recurrent and non-recurrent reserves can be found in appendix 3. There are currently £6.5m of recurrent reserves and £4.6m of non-recurrent reserves (including the required 0.5% contingency reserve and the ring-fenced 1%)

7.2 The reserves reflect commissioning plans and developments, as well as the need to

put aside specific sums to mitigate cost pressures and risks. It should be noted that the uncommitted reserve balances are comparatively low in relation to previous years leaving the CCG much less resilient to unexpected cost pressures. Currently the reserves do show that the CCG has been able to demonstrate investment in Mental Health budgets that meet the requirement around Parity of Esteem agenda through a mix of funding cost pressures and national “must do’s”.

8. RUNNING COSTS

8.1 The CCG must ensure that its management costs remain within the specified Running Cost Allocation (RCA). Within that allocation, the CCG must budget for all management and administrative costs not deemed to be about clinical quality including those services provided by the Midlands and Lancashire Commissioning Support Unit (MLCSU) or shared with other CCGs.

8.2 CCG staff budgets have been based on 2015/16 salary levels and relevant

increments. The recently announced 1% pay award together with employer’s pension contribution increases will need to be met from the RCA general reserve of £0.2m.

8.3 Historically, the CCG has operated well within the running cost allowance. However

the 10% reduction of £0.39m in 2015-16 and small drop over the coming 5 years will make this significantly more challenging. Nevertheless it is hoped that there will be a small contribution from an underspend on running costs to the CCG’s QIPP requirements if only non-recurrently.

9. RISK ASSESSMENT & MITIGATION

9.1 There are a number of very significant financial risks to the CCG inherent in this Budget particularly given the level of CCG reserves. There is the uncertainty over the final value of NHS contracts most of which have yet to be signed off. The delivery of the CCG’s QIPP plans is also a risk as these are based upon the successful delivery of cash releasing savings (which proved challenging in 2015/16) and include a unidentified QIPP of £2.7 m. In addition there are the usual threats to financial balance where spending is driven by variable levels of activity - PbR, prescribing and CHC being the main ones.

9.2 Appendix 4 details risks and mitigations identified during the financial planning development. Should no risks materialise and uncommitted reserves remain unused then the CCG’s best case scenario would see a £2.5 m surplus on operational budgets in addition to the delivery of the 1% planned surplus. Alternatively should all risks fully materialise and all reserves were deployed to mitigate the associated costs, then the CCG would suffer a reduction in the 1% surplus of £3.1 m, thus being in breach of its business rules.

10. CONCLUSION AND RECOMMENDATIONS

10.1 The budget for 2016/17 allows delivery of a 1% surplus if the CCG is able to meet the QIPP programme set out in 6.2. The Budget that has been set is based on the most recent information available at the time; however there are a number of risks and uncertainties which may cause the budgets to change once contracts have been agreed with NHS providers.

10.2 The Clinical Membership Group is requested to approve the high level budget

including the plan to deliver a 1% surplus based on the challenging QIPP savings target of £9.7 m. A final iteration of the plan is due for submission to NHSE in April 2016. A full, detailed, version of the Budget Book will be presented to the Finance and Performance Committee in April. Should any adjustments be required to these draft budget proposals, a full reconciliation to this plan will be provided.

10.3 Given the scale of the QIPP challenge the Clinical Membership Group is

recommended to charge the Finance and Performance Committee to produce regular reports to the Governing Body on progress with delivery of the 2016/17 QIPP target and to escalate any risk of delivery immediately via the risk register and Governing Body Assurance Framework.

10.4 In the light of final contract agreements and budgets for 2016/17 the Clinical

Membership Group is recommended to keep the achievement of a surplus under review and to approach NHSE at an early stage if it does not look to be realistically achievable for 2016/17.

Appendix 1 Knowsley CCG Allocations

Cost

Centre

Number

Cost Centre Description

2016-17

Annual

Budget

541001 Mental Health Contracts 22,656,850

541031 Mental Health Services – Adults 1,778,899

541061 Mental Health Services - Specialist Services 100,806

24,536,555

541071 Acute Commissioning 123,261,620

541076 Acute Children's Services 5,781,060

541086 Ambulance Services 6,066,212

541091 Clinical Assessment and Treatment Centres 1,138,169

541106 Acute High Cost Drugs 205,208

541116 NCAs/OATs 1,250,632

137,702,902

541141 Central Drugs 961,229

541146 Commissioning Schemes 135,335

541151 Local Enhanced Services 2,554,855

541178 Co-Commissioning 29,687,900

541156 Medicines Management - Clinical 753,126

541161 Out of Hours 725,742

541166 Oxygen 340,162

541171 Prescribing 32,472,868

541176 Primary Care IT 400,078

68,031,296

541182 CHC Adult Fully Funded 20,691,879

541186 Continuing Healthcare Assessment & Support 468,886

541187 CHC Children 1,257,507

541191 Funded Nursing Care 1,444,000

23,862,272

541211 Community Services 22,501,106

541216 Carers 85,418

541221 Hospices 1,092,063

541226 Intermediate Care 696,001

541231 Long Term Conditions 3,989,108

28,363,695

CONTINUING CARE

Appendix 2 NHS Knowsley CCG Budget Setting 2016-17

Income and Expenditure Budgets

MENTAL HEALTH

ACUTE

Sub-Total

PRIMARY CARE

Sub-Total

Sub-Total

Sub-Total

COMMUNITY HEALTH

Sub-Total

APPENDIX 2 continued

541276 Non Recurrent Programmes 82,949

541291 Programme Projects 1,437,872

541296 Reablement 1,015,000

541301 Recharges NHS Property Services Ltd 4,852,000

541308 Safeguarding 229,580

541309 NHS 111 490,350

8,107,751

606261 Commissioning Reserve 6,771,800

606281 0.5% Contingency 1,489,810

606281 1% Non-Recurrent Headroom 2,918,830

606261 QIPP savings target (9,791,659)

1,388,781

291,993,252

542766 Business Informatics 601,281

542771 CEO/ Board Office 433,323

542776 Chair and Non Execs 217,994

542796 Commissioning 681,550

542811 Contract Management 145,782

542816 Corporate Costs 309,458

542831 Education & Training 34,266

542846 Estates and Facilities 28,500

542851 Finance 475,434

542856 General Reserve 199,895

542866 Human Resources 53,332

542871 IM&T 65,000

542916 Procurement 45,185

3,291,000

295,284,253295,284,253

Planned Surplus (1%) 2,678,221

CORPORATE SERVICES - RUNNING COSTS

Sub-Total

Sub-Total Programme Budgets

Sub-Total Running Cost Budgets

Grand Total I & E

COMMISSIONING - OTHER

Sub-Total

RESERVES

APPENDIX 3

Financial Risks and Mitigations

Risks

Full Risk

Value 15

£'000

Probability of

risk being

realised 15

%

Potential

Risk Value

15

£'000

Proportion

of Total 15

%

CCGs

Acute SLAs 929 55.0% 511 34.3%

Community SLAs 250 50.0% 125 8.4%

Mental Health SLAs 300 65.0% 195 13.1%

Continuing Care SLAs 1,200 50.0% 600 40.3%

QIPP Under-Delivery 3,459 85.0% 2,940 197.3%

Performance Issues - - 0.0%

Primary Care 500 60.0% 300 20.1%

Prescribing 1,200 50.0% 600 40.3%

Running Costs 150 30.0% 45 3.0%

BCF 500 50.0% 250 16.8%

Other Risks 100 60.0% 60 4.0%

TOTAL RISKS 8,588 66% 5,626 377.6%

Mitigations

Full

Mitigation

Value 15

£'000

Probability of

success of

mitigating

action 15

%

Expected

Mitigation

Value 15

£'000

Proportion

of Total 15

%

Uncommitted Funds (Excl 1% Headroom)

Contingency Held 1,490 100.0% 1,490

Reserves 929 55.0% 511

Investments Uncommitted 1,000 50.0% 500

Uncommitted Funds Sub-Total 3,419 73% 2,501 0.0%

Actions to Implement

Further QIPP Extensions -

Non-Recurrent Measures -

Delay/ Reduce Investment Plans 1,367 60.0% 820

Mitigations relying on potential funding - -

Actions to Implement Sub-Total 1,367 60.0% 820 0.0%

TOTAL MITIGATION 4,786 69.4% 3,321 0.0%

NET RISK / HEADROOM (3,802) 60.6% (2,305)

BEST CASE IMPACT 3,419 73.1% 2,501

WORST CASE IMPACT (5,169) 60.5% (3,125)

Appendix 4

Reserves Recurrent Non-Recurrent

Acute Hospitals

Acute Demographic/Non Demographic Growth 1,958,000

Mental Health

MH CAMH's 223,000

PICU 65,000

Continuing Care

S75 Budget Pressures 370,000

CHC Assessment Team Pressures 150,000

CHC Risk Share 169,000

Community

AQP 90,000

Nursing Home MDT 300,000

Community Equipment Store 350,000

Primary Care

Prescribing 1,000,000

Options Service Redesign 1,378,000

Other

Referral Management 330,000

Interim Programme Management 79,800

Anticipated Resource limit adjustments

Charge Exempt Overseas Visitors 309,000

Sub-total 6,523,000 248,800

Business Rules

Contingency Reserve (0.5%) 1,489,810

1% Ringfenced Headroom National Directive 2,918,830

Grand Total 6,523,000 4,657,440

Appendix 5 Glossary 5BPT 5 Boroughs Partnership Trust AHCH Alder Hey Children’s Hospital Foundation NHS Trust AQP Any Qualified Provider – DH initiative to increase patient choice by allowing all providers who meet the necessary standards to offer a specified service

within a CCG area. BCF Better Care Fund – a joint fund with the Local Authority intended to provide better integrated care for vulnerable people in the community – helping to

reduce emergency hospital admissions. CCG Clinical Commissioning Group – made up of GP Practice Members responsible for commissioning most hospital and community services and GP

prescribing budgets. CHC Continuing Health Care – payments made by the NHS for on-going support post hospital discharge where the patient’s medical condition meets certain

criteria. CMCSU Cheshire and Mersey Commissioning Support Unit – it will provide certain back office support functions to CCGs across the area. COPD Chronic Obstructive Pulmonary Disease – a respiratory disease with high incidence reflecting high smoking levels. CQUINS Contract Quality Incentive Scheme – payment to providers conditional on delivery of specific quality metrics. CSR Comprehensive Spending Review – process by which the Government sets it spending plans for the next normally 3 years. CVD Cardiovascular Disease – the biggest cause of early death in the CCG. DH Department of Health HRG Health Resource Groups – codification of hospital procedures and activities against which national tariffs are paid by CCGs to hospitals under PbR. IAPT Improving Access to Psychological Therapies – DH initiative to set up these services to help people with low level mental health problems and potentially

preventing more serious mental illness from developing. IR Identification Rules – software algorithm used to determine specialist from non-specialist HRG activity. JEG Joint Executive Group – meeting between senior officers of the CCG and Knowsley MBC which is oversees s75 agreement. JSNA Joint Strategic Needs Assessment – A document jointly produced by CCGs and Local Authorities to assess the health and social care needs of their

population. LIFT Local Interest Finance Trust – mechanism set up to privately finance new NHS buildings for primary care and community services. MCAS Musculoskeletal Assessment Service – physiotherapy triage for orthopaedic problems. MFF Market Forces Factor – an addition to national tariffs which reflects unavoidable cost differences between different areas. Each NHS Trust has its own

MFF calculated using a formula which takes account of local variances on pay and estates costs like rates. MLCSU Midlands and Lancashire Commissioning Support Unit – it will provide certain back office support functions to CCGs across the area. NHSE NHS England (formally the NHS Commissioning Board) which manages the NHS, holding CCGs to account as well as commissioning primary care

services (e.g. dentists and GPs) and specialised services. The local branch or Area Team of NHSE is called NHS Merseyside. NHSI NHS Improvement – national body set up in 2016 (from merger of Monitor and Trust Development Agency) to oversee NHS Trust and NHS Foundation

Trust performance. PbR Payment by Results is a system by which acute hospitals get paid for patient activity on a cost per case basis from a national price list (tariff) depending

on what is done. PICU Psychiatric Intensive Care Unit QIPP Quality Innovation Productivity Prevention - DH initiative to ensure that NHS will improve care and do more given the anticipated reduction in NHS funding. s75 or s256 Section 75 NHS Act 2006 – legislation which allows NHS bodies to enter into partnerships with local authorities and set up joint “pooled” budgets with

which to deliver health improvement. SRG Sustainability Resilience Group – meeting between commissioners and local providers about delivery of urgent care performance standards

StH&K Knowsley and Knowsley Hospitals NHS Trust SUS Secondary User Service – name of the national computer system which counts the PbR activity