HomeAbout UsPatientsVisitorsClinical ServicesNewsCareersUseful LinksContact Us
 
Contents
 
:: Contents page
:: A Year of Challenge and Change
:: Performance Standards
:: Our Services
:: Putting Patients First
:: Our Future
:: Our Staff
:: Administration
:: The Board
:: Financial Review
:: Summary Financial Statement and Auditor's Report


Download a copy of the Trust's Annual Report:
2005/2006 Annual Report

 

Investors in People NHS Direct
Positive about disabled people



Annual Report 2005-2006: Financial Review
 
  Introduction
 
Audit Commission Report
 
Turnaround Plan
 
Statement of the Chief Executive's Responsibilities
  Statement of Directors' Responsibilities

Introduction
The Trust like others in the NHS continues to face many and varied challenges, the most notable of which are the balancing of the financial position and the achievement of long term financial stability, meeting the ever growing needs, demands and expectations of patients, the delivery of high quality healthcare and the implementation of government initiatives to drive forward improvements in current performance standards, the delivery of healthcare and the reformation of funding flows within the NHS.

As in previous years the local Primary Care Trusts continued to be the prime funders of the services provided by the Trust, however the previous Ďblockí contracts arrangements were partly changed in 2005/06 which saw the further extension of the Payment by Results (PbR) regime with virtually all planned elective procedures being paid for on a cost per case basis using a nationally set tariff. Next year will see a further extension of PbR and a switch to Practice Based Commissioning which will provide an additional challenge to the Trust.

The financial difficulties facing the Trust and the wider Hertfordshire health economy are widely recognised and for 2005/06 the Bedfordshire and Hertfordshire Strategic Health Authority (SHA) set a target of a £19.3m control total, Ďauthorised overspendí, for the Trust. Every effort was made by the Trust to meet this control total, however, as reported in the Income and Expenditure account on the following page, the Trust ended the year with a deficit of £26.8m.

[ top ]

Whilst this represents a continued worsening of the financial position, and results in an accumulated deficit of £41m which at some point must be repaid, it should be noted that the 2005/06 deficit includes the effects of an Ďincome lossí of £10m arising from the 2004/05 financial year as a result of the Resource Accounting and Budgeting system employed by the Department of Health and that the actual operational deficit for the year was £16.3m. (£9.97m 2004/05).

Audit Commission Report
In April 2006 the Audit Commission issued a Report in the Public Interest for the West Hertfordshire Health Economy Ė this reviewed the financial standing of the four local Primary Care Trusts in the health economy as well as West Hertfordshire Hospitals NHS Trust and it identified that there has been historic weaknesses in financial management arrangements in all bodies.

Whilst the Auditorís report presents an accurate picture of the situation, since the initial messages were shared with the Trust this has been the main focus of attention, underpinning current strategic thinking with financial stability remaining the key to progress and along with continued quality provision of services to patients, will be the measure of the Trustís future success.

[ top ]

Turnaround Plan
It is important to note that in respect of the above, improvements have been made within the last 12 months and that most notably in October 2005 the SHA paid for a consultancy firm, PricewaterhouseCoopers (PwC), to work with the Trust in preparing a Turnaround Plan to impact on 2005/06 financial position where possible, but more particularly to look at taking out targeted savings of in excess of £15m in 2006/07. This Turnaround Plan is now being implemented and the Trust continues to work with all partner bodies to address the issues raised through a raft of measures including service reconfiguration. 

In addition to the above, in January 2006, the Trust undertook a 10 week process known as the Foundation Trust (FT) Diagnostic; this process involved developing an historic financial position and forecasting it five years in to the future. The intention of the process was to see how near the Trust was to applying for FT status. With the Trustís historic and current financial difficulties it was not surprising that the outcome was that the Trust would not be in a position to apply for FT status within the next two years.

However, the process provided the Trust with a five year financial forecast, the development of a strategic plan, and an activity/finance baseline that will be used to take the Trustís financial management, position and stability forward.

[ top ]

The Trust recognise that there remains room for improvement and that there are many difficult decisions to be taken in the future to achieve its desired position. 

The Trust continues to work hard and collaboratively with the SHA and PCTs in implementing cost savings targeted at reducing the Trustís month on month deficit, and making plans to get back into monthly balance before 2008.


Carolyn Hughes, Director of Finance
28 June 2006


David Law, Chief Executive
28 June 2006

Statement of the Chief Executive's Responsibilities as the Accountable Officer of the Trust
The Secretary of State for Health has directed that the chief executive should be the accountable officer to the Trust. The relevant responsibilities of accountable officers, including their responsibility for the propriety and regularity of the public finances for which they are answerable, and for the keeping of proper records, are set out in the Accountable officers' memorandum issued by the Department of Health. To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an accountable officer.

[ top ]


David Law, Chief Executive

Statement of Directors' Responsibilities in Respect of the Accounts
The directors are required under the National Health Service Act 1977 to prepare accounts for each financial year. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fair view of the state of affairs of the Trust and of the income and expenditure of the Trust for the period. In preparing those accounts, the directors are required to:

- apply on a consistent basis accounting policies laid down by the Secretary of State
with the approval of the Treasury

- make judgements and estimates which are reasonable and prudent

- state whether applicable accounting standards have been following, subject to any material departures disclosed and explained in the accounts.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible steps for the prevention and detection of fraud and other irregularities.

The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts.

By order of the Board


Carolyn Hughes, Director of Finance
5 July 2006


David Law, Chief Executive
5 July 2006


[ top ]

 

Download a copy of the Trust's Annual Report:
2005/2006 Annual Report