Brigid Stacey, Acting Accountable Officer, and Donna McGrath, Chief Finance Officer, will attend the meeting to explain the current financial status of the CCG, provide a presentation on financial recovery and answer questions, so that the Committee is able to understand any implications for health and social care in Shropshire.

Donna McGrath, Chief Finance Officer, Shropshire Clinical Commissioning Group, was welcomed to the meeting. She explained that Brigid Stacey, Acting Accountable Officer, was unable to attend the meeting as she was due to meet the Turn Around Team which was about to commence its work.

She gave a presentation entitled ‘Explaining Shropshire CCG Finances’. The presentation covered:

·       The forecast deficit for 2015/16

·       The main causes of the deficit

·       The underlying position

·       Actions in place to control expenditure in year

·       What this would mean for 2016/17 planning round

·       The CCG approach to 2016/17

She explained that the year had started with a plan to deliver a £3.6 million surplus and that this had been recognised as high risk both by the CCG and by NHS England.  The CCG had overspent against three key lines of expenditure: Continued Health Care; Acute Contracts, and preparing for turnaround and winter. This had created a deficit of £7.9 m, which was £11.5 m adverse to the 2015/16 plan. This was a change from the widely publicised £10.6 m deficit caused, largely, by preparing for financial turnaround.  It was confirmed that the total budget was

£350 m.

In discussion of the main causes of the deficit, Members asked about the invoices for Continuing Health Care totalling £2.2m relating to 2014/15, and why they had not been known about and factored in.   The Chief Finance Officer explained that there was variability in invoice timing and sometimes decisions were made after the care had been delivered. External advice received had suggested that the CCG had been paying for patients that it should not have been paying for, but this advice had turned out to be not as realistic and legally sound as it could have been.

Members referred to £9m of unexpected costs incurred during the year and asked about the likelihood of this happening again the following year. The unexpected costs related to £4.4m Continuing Health Care and £6m of unplanned costs. Members also referred to Telford and Wrekin CCG which was predicting a surplus and asked why there was such a difference between the two CCGs.

The Chief Finance Officer explained that Telford and Wrekin CCG were advantaged by the Fair Share Target and had received extra funding in November and an uplift which Shropshire had not. If it was funded in the same way as Telford and Wrekin CCG, Shropshire CCG would be £8m better off.

Members asked why Telford and Wrekin had received this uplift but not Shropshire. They learnt that it had been around five years since the last calculation was made. Last year Telford and Wrekin had been deemed to be underfunded, but Shropshire CCG deemed to be over target as the rurality adjustment had been removed.  The sparsity adjustment currently only applied to four areas in the country.

The Chairman enquired about brokerage, NHS England had approved the CCG obtaining loans from other organisations to achieve a 1% surplus. Not all of this would be repayable, although £3.2m would need to be paid back this year. The CCG had been told not to obtain brokerage for this year.

NHS England had informed the CCG that it needed only to balance the budget and that the deficit need not be repaid next year. The Turn Around Team would add capacity and expertise to support the pace of change needed and assist with planning for the future.

In terms of Acute contracts and activity levels, the CCG had to pay hospitals based on activity levels incurred and this had caused a forecast overspend against those contracts of £4m. Robert Jones and Agnes Hunt Hospital and Shrewsbury and Telford Hospital Trust had not met 18 week waiting targets and had needed to put in extra activity to address this. The CCG did have the ability to award a penalty for failing to meet these targets, but this was not enough to cover the extra activity needed.

The headline deficit which the CCG had identified for 2015/16 contained a significant amount of non recurrent costs. Had these one offs not occurred then the CCG would have had a deficit of £2.9m this year which needed to be addressed as part of the bigger challenge in arriving at a balanced budget for 2016/17.  This £2.9m recurrent deficit from 2015/16 would be carried across into the 2016/17 planning round. The total efficiency requirement for 2016/17 would be £13m which was 3.5% of the budget.

The presentation went on to cover actions in place to control expenditure in year. A number of measures had already been taken and were listed in the presentation.

Areas of focus were likely to be high cost services with little outcomes, high cost services for a small number of patients and integration of services.  There was a possibility that some services might be decommissioned, but not for the next year and this would require consultation.

Members asked for examples of money saving schemes and heard about the constant review of GP prescribing and changes to NICE guidance. ‘Script Switch’ was a system flagging up cheaper alternatives for GPs, and had saved around £1m. 

The Portfolio Holder for Adult Social Care referred a recent Idea Generation workshop with Executives, Governing Body and Providers and asked what areas were being looked at and whether these were being discussed with Shropshire Council.  The Chief Finance Officer confirmed that these would be discussed with Council colleagues.

Members discussed educating patients to avoid inappropriate use of ambulances. and heard that the Health and Wellbeing Board were tackling this with the Department of Health and NHS.  The Committee was informed of an ambulance frequent user scheme whereby frequent callers of ambulances received a telephone call every day from a paramedic.  Blackpool CCG had used this approach and it had proved to avoid unnecessary ambulance call out.

Members asked who had appointed the Turn Around Team and heard that it had been procured by the CCG itself. It would help with the deficit position and putting systems in place to address this. It would also help with planning for next year and the medium term future.

Members enquired about who would identify the impact on other organisations of any changes the CCG might make. The Turn Around Team would facilitate discussions with other providers, partners and stakeholders.

The Portfolio Holder for Adult Social Care reported that the Council’s Chief Executive had asked if the Council could contribute to the work of the Turn Around Team, particularly in light of its involvement in admission avoidance, and Integrated Community Services. He also asked about any impacts on primary care and their role in admission avoidance.

The Chief Finance Officer referred to Primary Care provision through Shropdoc, the Community Fit element of Future Fit, the Urgent Care Recovery Plan, Team around the Practice, and links with ICS.  NHS England would be delegating some primary care commissioning to the CCG from this year onwards which would help.

Members considered whether it was the funding of Shropshire CCG or spending patterns which had caused the problem.  It was acknowledged that there was always room for efficiencies, but the level of efficiencies providers had been asked to deliver was unrealistic.  Benchmarking showed that Shropshire residents were relatively healthy which caused disadvantage in funding. The Chief Finance Officer felt the campaign to get rurality to be acknowledged fairly needed to be reinvigorated and Members asked what could be done to help achieve this.   Councillor C Motley reported on campaigning by the Rural Services Network regarding the allocation formula used for Clinical Commissioning Group funding.     

The Committee asked how much warning would be given if services were potentially going to be decommissioned, and what consultation would take place and where. 

Although a number of ideas had been considered, there were no plans yet to decommission in any areas. Full public engagement and a consultation would need to be conducted properly to understand the consequences if there was such a proposal. A full review would then be undertaken to identify if, for example, services were perceived to be not good value for money, whether costs might emerge elsewhere instead.

At the conclusion of discussions, the Committee requested:

·       that Shropshire Council be included in any discussions around proposals which would impact on services provided by the Council at an early stage. 

·       that the Council be involved in the Recovery Plan in any way possible

·       that quarterly reports on progress and proposals be made to the Committee

·       that lobbying for fair funding for Shropshire and recognition of the rural, sparse nature of the county be continued

The Committee thanked the Chief Operating Officer for attending the meeting.