Item 5 - Finance Report
North Lanarkshire Council · 21 September 2022
Back to Health and Social Care Integration Joint Board — 21 September 2022 and its agenda
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1 REPORT Item No: 5 1. PURPOSE OF REPORT 1.1 This paper is coming to the Integration Joint Board (IJB): For approval For endorsement For noting 1.2 This report provides a summary of the financial position of the North Lanarkshire Health and Social Care Partnership (HSCP) for the period from 1 April 2022 to 31 July 2022 (Health Care Services) and 22 July 2022 (Social Work and Housing Services). 2. ROUTE TO THE INTEGRATION JOINT BOARD 2.1 This paper has been: Prepared By; Chief Financial Officer Reviewed By; Chief Officer 3. RECOMMENDATIONS 3.1 The IJB is asked to agree the following recommendations: (1) Note the contents of the report; (2) Note that the financial position in July 2022 is an underspend of £3.801m (NHSL - £2.313m; NLC - £1.487m). This excludes the impact of further recruitment challenges and staff turnover and any potential new Scottish Government funding. 4. VARIATIONS TO DIRECTIONS SUBJECT: Financial Monitoring Report 2022/2023 TO: Integration Joint Board Lead Officer for Report: Ross McGuffie, Chief Officer North HSCP Author(s) of Report Amanda Kilburn, Chief Financial Officer DATE: 21st September 2022 Yes No N/A
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2 5. BACKGROUND/SUMMARY OF KEY ISSUES 5.1 This report is based on the financial monitoring reports received from the Director of Finance of NHS Lanarkshire (NHSL) and the Head of Financial Solutions of North Lanarkshire Council (NLC). The position detailed in these reports is therefore based on the information contained in each partner’s respective financial systems and includes accruals and adjustments in-line with their financial policies. 6. CONCLUSIONS 6.1 The financial position as at July 2022 is summarised as follows: there is a net underspend of £2.313m on the core budgets within Health Care Services there is a net underspend of £1.487m on the core budgets within Social Care and Housing Services The total underspend of £3.801m represents approximately 0.5% of the total financial envelope available. 6.2 The Covid-19 pandemic has created significant financial management and financial planning challenges for both partners and the IJB. These challenges have centred around the difficulties in predicting the costs associated with the recovery from the Covid-19 pandemic. 6.3 In 2021/22 a ring-fenced reserve was created from uncommitted Covid-19 funding received from Scottish Government and will be used to support the continuation of costs as a direct result of Covid-19. This funding meets in full the 2022/23 Covid- 19 costs included in the Lanarkshire Remobilisation Plan for both partners. 6.4 Any proposed utilisation of the earmarked reserves to meet new expenditure that had not been funded in 2022/2023 will require the prior agreement of the Scottish Government in advance of the expenditure being incurred. It also remains important that reserves are not used to fund recurring expenditure, given the non- recurring nature of Covid-19 funding. The Covid-19 financial position is being closely monitored. 6.5 The budget variance is analysed by care services at appendix 1 and the main factors contributing to the financial position are summarised below. 7. REASONS FOR MAJOR VARIANCES – HEALTH CARE SERVICES 7.1 Locality and Other Services 7.1.1 There is a net underspend of £0.739m. 7.1.2 The net underspends on pay costs totals £1.066m and is mainly due to vacancies across Nursing Services and Administration and Clerical staff within Mental Health and Children’s services totalling 132.5 WTE. There are incremental pay increases and unfunded enhancements across many services however these cost pressures are being offset in-year by the vacancies. 7.1.3 In respect of non-pay costs, there is a net overspend totalling £0.327m. The overspend is mainly due to payments in respect of Strathcarron Hospice
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3 (£0.190m). This cost is being managed on a non-recurring basis. A recurring funding solution requires to be identified. 7.2 Prescribing 7.2.1 A break-even position is reported at this stage. 7.2.2 The prescribing budget has reduced by £0.657m since 31 March 2022. The majority of the budget reduction relates to an agreed savings target and a change in Scottish Government tariff prices. The budget reductions have been partly offset by a 2% inflation uplift. 7.2.3 Prescribing activity figures for the period from April 2022 to May 2022 have been received. Prescribing cost per item reflects a lower value when compared to the same period last year, however, activity level is 1.47% higher. There continues to be significant risk in respect of prescribing activity and the costs, and it is highly likely that the uncertainty and volatility experienced throughout 2021/22 will continue for the foreseeable future. Prescribing costs will continue to be closely monitored. 7.3 Area Wide Services 7.3.1 There is a net underspend of £0.044m mainly in respect of Pharmacy Services. 7.3.2 Area Wide Services include central nursing services, corporate services, health promotion services, pharmacy services and winter planning services. 7.4 Hosted Services Led by North Lanarkshire 7.4.1 The hosted services which are led by the North Lanarkshire HSCP are outlined at Appendix 2. There is a net underspend of £1.426m which includes the following significant variances: Mental Health and Learning Disability Services £0.354m underspend Children and Adolescents Mental Health Services £0.705m underspend Speech and Language Therapy Services £0.329m underspend Immunisation Service (£0.216m) overspend 7.4.2 The net underspends of £0.354m within Mental Health and Learning Disability Services is due to 65.57 WTE vacancies mainly in nursing posts with some vacancies in psychology and administration. The underspend has been partly offset by an overspend in locum costs across Medical Services and the use of bank aide across the inpatient areas and incremental increases within the community areas. 7.4.3 The net underspend within Children and Adolescents Mental Health Services is £0.705m and is due to vacancies (£0.691m) across nursing and administration posts (39.03 WTE). 7.4.4 There is an underspend of £0.329m within Speech and Language Therapy Services which is mainly due to 28.65 WTE posts (£0.293m) and an underspend across non-pay costs of £0.036m.
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4 7.4.5 There is an overspend within Immunisation Services of £0.216m which is partly due to an overspend on pay costs (£0.070m) but mainly due to an overspend on non-pay costs in respect of the cost of drugs (£0.146m). 7.4.6 In line with the Integrated Resource Advisory Group Finance Guidance, the lead partner for a hosted service is responsible for managing any overspends incurred. With the exception of ring-fenced funding, the lead partner can also retain any underspends which may be used to offset the overspends. This arrangement has been in place since 1 April 2016. 7.4.7 The IJB was previously advised that the hosted services principal is currently being reviewed. The outcome of the review will be reported to future meetings of both the North Lanarkshire IJB and the South Lanarkshire IJB for approval. 7.5 Hosted Services Led by South Lanarkshire 7.5.1 The hosted services which are led by the South Lanarkshire HSCP are outlined at Appendix 3. In-line with the hosted services agreement, a break-even position is reported. 7. REASONS FOR MAJOR VARIANCES – HEALTH CARE SERVICES (CONT.) 7.5.2 Primary Care Services are a hosted service which is led by the South Lanarkshire IJB. The Primary Care and Mental Health Transformation Fund and the Primary Care Improvement Fund are ring-fenced funding allocations. Any underspend is therefore retained for use across Lanarkshire and is not used to offset other overspends incurred by the South Lanarkshire IJB. 7.5.3 A breakeven position is reported in respect of the Primary Care and Mental Health Transformation Fund and the Primary Care Improvement Fund. 7.6 Covid-19 Pandemic – Additional Health Costs 7.6.1 The additional health costs which have been incurred in response to the Covid-19 pandemic continue to be reported to the Scottish Government through the Lanarkshire Mobilisation Plan. The year-to-date costs of £1.263m are included within the financial position reported and will be met by the existing IJB Covid-19 reserve. 7.7 Average Vacancy Factor 7.7.1 The vacancy position against the funded establishment at 31 July 2022 is summarised as follows: Establishment Actual Variance 2,796 WTE 2,629 WTE 167 WTE vacancies 100% 94% 6% 7.7.2 To help cover the current vacant posts, additional hours are worked through bank aide, overtime and excess part time hours, the cost of which is included within the financial position reported.
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5 7.8 Notional Set-Aside Allocation 7.8.1 The set-aside budget is a notional budget which represents the consumption of hospital resources by North Lanarkshire residents. Based on the 2020/2021 activity data from the Information Services Division (ISD) at the 2021/2022 prices, the budget was restated to £65.164m. 7.8.2 In respect of the financial year 2022/2023, the notional set-aside budget is restated to reflect the 2% inflationary uplift on the recurring baseline (£1.303m) and National Insurance uplift (£0.391m). The notional set-aside budget for 2022/2023 is therefore £66.858m. 7.8.3 In line with the accounting policy previously agreed, this notional set-aside budget will be included in the IJB Annual Accounts 2022/2023 as an estimate of expenditure. It is recognised that this will not necessarily reflect the actual usage of these hospital services by the IJB however it has been endorsed as an acceptable approach pending further updates from Information Services Division (ISD). 8. REASONS FOR MAJOR VARIANCES – SOCIAL CARE SERVICES 8.1 Employee Costs 8.1.1 Additional staff and overtime costs are being incurred due to the Covid-19 pandemic. Demand for Home Support Services has also increased. These additional employee costs however are being offset by Covid-19 funding and also underspends as a result of vacancies. A net underspend across employee costs of £0.929m is therefore reported. 8.2 Administration Costs 8.2.1 An underspend of £0.284m is reported in respect of administration costs. The underspend is mainly due to the additional funding received from the Scottish Government for carers pressures in 2022/2023 which as at 22 July 2022 remains unallocated. As pressures become evident within Social Care budgets, the funding will be moved to the relevant care package. 8. REASONS FOR MAJOR VARIANCES – SOCIAL CARE SERVICES (CONT.) 8.3 Payments to Other Bodies 8.3.1 There is an underspend of £0.382m across payments to other bodies. The underspend is primarily due to the staff shortages and vacancies within the Care at Home sector who provide services to individuals via the Self-Directed Support commissioning framework. It is anticipated that these are in-year underspends only and these budgets will be required in full in 2023/2024. 8.3.2 A breakeven position is reported in respect of independent care home at this stage of the financial year.
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6 8.4 Income 8.4.1 Income is under-recovered by £0.113m. This is partly due to the under-recovery of income from the community alarm charge, Home Support Services and Integrated Day Care Services which is lower than anticipated as a result of the Covid-19 pandemic. The implementation of the charge for community alarms was delayed due to the impact of the Covid-19 pandemic. The charge is now in place. Social Care Services continue to closely monitor the changes in the uptake of this essential service and are pro-actively responding to enquiries. The previously agreed NHS Lanarkshire partner contribution to the Integrated Equipment and Adaptations Service is also less than the actual cost of the service. This is currently being monitored. 8.5 Covid-19 Pandemic – Additional Social Care Costs 8.5.1 The additional social care costs which have been incurred in response to the Covid-19 pandemic are also continuing to be reported to the Scottish Government through the 2022/2023 Lanarkshire Mobilisation Plan. Based on the information available as at July 2022, the projected cost for 2022/2023 is expected to be £2.838m. This forecast will continue to be funded by Scottish Government support. 8.5.2 The main factors contributing to the projected Covid-19 outturn are as follows: 9. 2022/2023 SAVINGS 9.1 Financial Strategy 2022/2023 9.1.1 On 23 March 2022, the IJB approved the financial strategy for 2022/2023. The funding gap of £5.504m will be addressed by various measures, summarised as follows: 9.2 Health Care Savings 9.2.1 No health care savings have been agreed for 2022/2023. Description Projected Outturn £m Personal Protection Equipment (PPE) 0.396 Sustainability Payments to Care Providers 2.106 Loss of Income from Closure of Day Services 0.250 Expected Unachievement of Savings 0.086 Total 2.838 Description £m £m 2022/2023 Funding Gap 5.504 Budget Realignments 3.264 Recurring Prescribing Underspend 1.493 Prescribing Efficiency Saving 0.387 Drawdown of Reserves 0.36 5.504 2022/2023 Revised Funding Gap -
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7 9.3 Social Care Savings 9.3.1 This financial year is the last year of the three-year Efficiency Programme approved by the IJB and NLC partner in March 2020. The gross savings target is £2.025m. 9.3.2 To date £0.653m has been achieved (32%) against the target, with £1.372m currently outstanding in relation to changes to LA services. The remaining balance will be funded from reserves this financial year until anticipated closure in 2023/2024. 10. RESERVES 10.1 The reserves balances as at 31 March 2022 were as follows: 10.2 As at 31 July 2022 £16.133m has been drawn down from reserves, leaving a remaining balance of £103.319m. The 2022/2023 IJB Reserves Strategy will continue to be monitored and an updated version presented to the December board. 11. RISK 11.1 Risk management arrangements are in place for the IJB and each partner. The IJB risk register has been reviewed and updated. The reassessment of the strategic financial risks is included in a separate report to the IJB. The main risk associated with the in-scope budget is that either or both partners may overspend. However as detailed within this report the financial outturn for this year is projected to be an underspend. 11.2 Although a non-recurring underspend is being reported, health and social care services continue to face demand pressures including home support, self-directed support, direct payments, independent care home placements, hospice care and health care services recovery plans. 11.3 The operational and financial impact of the response to the Covid-19 pandemic is being monitored by the IJB and both partners in line with their agreed emergency response arrangements and also the recovery, redesign and remobilisation work to reinstate services. The whole system approach continues to be adopted by NHSL, NLC and South Lanarkshire Council. 11.4 Risk management arrangements are in place for the IJB and each partner. The respective risks are managed by both NHSL and NLC through their detailed budget management processes. In addition to these mitigating actions, the IJB Financial Plan 2022/2023 is closely monitored and the IJB Medium to Long Term Financial Plan is being updated. Description £m % Ring-fenced Reserves 45.718 38% Earmarked Reserves 70.05 59% Contingency Reserves 3.684 3% TOTAL 119.452 100%
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8 12. IMPLICATIONS 12.1 NATIONAL OUTCOMES The effective management of financial resources contributes to the achievement of the national outcomes. 12.2 ASSOCIATED MEASURE(S) Each partner is required to remain within their approved budgetary provision. 12.3 FINANCIAL This paper has been reviewed by Finance: Yes No N/A 12.4 RISK ASSESSMENT/RISK MANAGEMENT The financial risks are detailed at section 11. The strategic financial risks detailed in the IJB Risk Register have also been updated and are included in a separate report to the IJB. 12.5 PEOPLE None 12.6 STAKEHOLDER ENGAGEMENT The Director of Finance of NHSL and the Head of Financial Solutions of NLC both continue to be consulted on the financial position of the North Lanarkshire IJB. 12.7 INEQUALITIES & FAIRER SCOTLAND DUTY Equality and Diversity Impact Assessment Completed & Fairer Scotland Impact Assessment Form Completed: Yes No N/A 12.8 CARBON MANAGEMENT IMPLICATIONS Yes No N/A 13. BACKGROUND PAPERS None.
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9 14. APPENDICES North Lanarkshire Health and Social Care Partnership Budget 2022/2023 Appendix 1 Hosted Services Led by North Lanarkshire Appendix 2 Hosted Services Led by South Lanarkshire Appendix 3 ........................................... CHIEF OFFICER (or Depute) Members seeking further information about any aspect of this report, please contact Amanda Kilburn on telephone number 07816 126363.
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10 Expenditure Annual Budget Budget Actual General Ring-Fenced Total 2022/2023 July 2022 July 2022 July 2022 July 2022 July 2022 £m £m £m £m £m £m Health Care Services Locality and Other Services 48.165 16.101 15.362 0.739 0.000 0.739 Addiction Services 3.063 0.926 0.816 0.110 0.000 0.110 Medical and Nursing Directorate 4.455 1.485 1.452 0.033 0.000 0.033 Prescribing 69.582 23.194 23.194 0.000 0.000 0.000 Out of Area Services 4.571 1.524 1.563 (0.039) 0.000 (0.039) Area Wide Services 10.359 3.081 3.037 0.044 0.000 0.044 Hosted Services 157.322 50.118 48.692 1.426 0.000 1.426 Family Health Services 106.882 38.425 38.425 0.000 0.000 0.000 Set-Aside Budget 66.858 22.286 22.286 0.000 0.000 0.000 Covid-19 1.263 1.263 1.263 0.000 0.000 0.000 IJB Operating Costs 0.000 0.000 0.000 0.000 0.000 0.000 Total Expenditure - NHSL 472.521 158.404 156.090 2.313 0.000 2.313 Social Care Services Social Care Services Gross Expenditure 241.482 52.314 50.713 1.601 0.000 1.601 Social Care Services Gross Income (Including Covid-19 Income) (2.539) 1.385 1.499 (0.113) 0.000 (0.113) Social Care Services Net Expenditure 238.943 53.699 52.212 1.487 0.000 1.487 Housing Revenue Account Expenditure 1.870 0.683 0.683 0.000 0.000 0.000 Transport Services Expenditure 0.551 0.169 0.169 0.000 0.000 0.000 Social Care, Housing and Transport Services Net Expenditure 241.364 54.552 53.064 1.487 0.000 1.487 IJB Operating Costs 0.000 0.000 0.000 0.000 0.000 0.000 Social Care and Housing Services Sub-Total 241.364 54.552 53.064 1.487 0.000 1.487 Total Expenditure - NHSL and NLC 713.885 212.956 209.155 3.801 0.000 3.801 Year To Date Year To Date Variance North Lanarkshire Health and Social Care Partnership Budget 2022/2023 Appendix 1
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11 North Lanarkshire Health and Social Care Partnership Budget 2022/2023 (Cont.) Appendix 1 (Cont.) Funded By: Annual Budget 2022/2023 £m NHS Lanarkshire Funding (456.388) Social Care Funding (22.964) Resource Transfer (23.421) Commissioned Services (6.799) Scottish Government Funding - Covid-19 and Remobilisation (1.263) Transfer from Reserves (Approved) (14.870) Total Funding - NHSL (525.705) NLC Funding - Social Care Services (185.759) NLC Funding - Housing Services (1.870) NLC Funding - Transport Services (0.551) Transfer from Reserves (Approved) 0.000 Total Funding - NLC (188.180) Total Funding - NHSL and NLC (713.885)
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12 Hosted Services Appendix 2 Led by the North Partnership Annual YTD July 2022 YTD July 2022 YTD July 2022 Annual YTD July 2022 YTD July 2022 YTD July 2022 Annual YTD July 2022 YTD July 2022 YTD July 2022 Budget Budget Actual Variance Budget Budget Actual Variance Budget Budget Actual Variance 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 £m £m £m £m £m £m £m £m £m £m £m £m Sexual Health Services 2.763 0.934 0.906 0.028 1.409 0.476 0.448 0.028 1.354 0.458 0.458 0.000 Continence Services 2.361 0.787 0.789 (0.002) 1.204 0.401 0.403 (0.002) 1.157 0.386 0.386 0.000 Immunisation Services 1.898 0.464 0.680 (0.216) 0.968 0.237 0.453 (0.216) 0.930 0.227 0.227 0.000 Speech and Language Therapy Services 6.078 2.029 1.700 0.329 3.100 1.035 0.706 0.329 2.978 0.994 0.994 0.000 Children and Adolescents Mental Health Services 16.448 3.753 3.048 0.705 8.388 1.914 1.209 0.705 8.060 1.839 1.839 0.000 Childrens Services 11.565 3.859 3.816 0.043 5.898 1.968 1.925 0.043 5.667 1.891 1.891 0.000 Integrated Equipment and Adaptations Store 0.567 0.189 0.183 0.006 0.289 0.096 0.090 0.006 0.278 0.093 0.093 0.000 Dietetics Services 3.737 1.250 1.216 0.034 1.906 0.638 0.604 0.034 1.831 0.613 0.613 0.000 Podiatry Services 4.315 1.449 1.393 0.056 2.201 0.739 0.683 0.056 2.114 0.710 0.710 0.000 Prisoner Healthcare Services 1.698 0.566 0.563 0.003 0.866 0.289 0.286 0.003 0.832 0.277 0.277 0.000 Blood Borne Viruses Services 1.529 0.510 0.461 0.049 0.780 0.260 0.211 0.049 0.749 0.250 0.250 0.000 Hospital at Home 2.225 0.736 0.699 0.037 1.135 0.375 0.338 0.037 1.090 0.361 0.361 0.000 Mental Health and Learning Disability Services 71.887 23.810 23.456 0.354 36.662 12.143 11.789 0.354 35.225 11.667 11.667 0.000 TOTAL 127.071 40.336 38.910 1.426 64.806 20.571 19.145 1.426 62.265 19.765 19.765 0.000 TOTAL South Lanarkshire IJB - 49% ShareNorth Lanarkshire IJB - 51% Share
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13 Hosted Services Appendix 3 Led by the South Partnership Annual YTD July 2022 YTD July 2022 YTD July 2022 Annual YTD July 2022 YTD July 2022 YTD July 2022 Annual YTD July 2022 YTD July 2022 YTD July 2022 Budget Budget Actual Variance Budget Budget Actual Variance Budget Budget Actual Variance 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 £m £m £m £m £m £m £m £m £m £m £m £m Community Dental Services 6.894 2.368 2.182 0.186 3.516 1.208 1.208 0.000 3.378 1.160 0.974 0.186 Brain Injury Unit 1.638 0.538 0.635 (0.097) 0.835 0.274 0.274 0.000 0.803 0.264 0.361 (0.097) Out of Hours Services 8.961 2.866 2.822 0.044 4.570 1.462 1.462 0.000 4.391 1.404 1.360 0.044 Palliative Care Services 6.958 2.343 2.393 (0.050) 3.549 1.195 1.195 0.000 3.409 1.148 1.198 (0.050) Physiotherapy Services 10.132 3.390 3.145 0.245 5.167 1.729 1.729 0.000 4.965 1.661 1.416 0.245 Primary Care Services 0.748 0.253 0.230 0.023 0.381 0.129 0.129 0.000 0.367 0.124 0.101 0.023 Occupational Therapy Services 7.852 2.659 2.658 0.001 4.005 1.356 1.356 0.000 3.847 1.303 1.302 0.001 Diabetic Services 4.937 2.428 2.384 0.044 2.518 1.238 1.238 0.000 2.419 1.190 1.146 0.044 Sub Total 48.120 16.845 16.449 0.396 24.541 8.591 8.591 0.000 23.579 8.254 7.858 0.396 Ring Fenced Funding Primary Care Improvement Fund 11.196 2.336 2.336 0.000 5.710 1.191 1.191 0.000 5.486 1.145 1.145 0.000 Primary Care Transformation Fund 0.000 0.000 0.002 (0.002) 0.000 0.000 0.000 0.000 0.000 0.000 0.002 (0.002) Sub Total 11.196 2.336 2.338 (0.002) 5.710 1.191 1.191 0.000 5.486 1.145 1.147 (0.002) TOTAL 59.316 19.181 18.787 0.394 30.251 9.782 9.782 0.000 29.065 9.399 9.005 0.394 TOTAL South Lanarkshire IJB - 49% ShareNorth Lanarkshire IJB - 51% Share