Minutes of the Twenty First Meeting of the Board of NHS Leicester ...

Paper CNHS Leicester City Board Meeting12 May 20115. The Department of Health (DH) has changed the accounting policy in reportingcost of capital (cost of capital was an interest charge of 3.5% on the averagenet relevant assets employed by the PCT). The DH has removed reporting ofthis cost and therefore the resources associated with this have also beenremoved. As our statement of financial position (previously known as theBalance Sheet) is a net liability, the cost of capital incurred is not a charge buta credit. We are awaiting a final letter from the Department of Healthconfirming this along with the final impairment adjustment (another financialtechnical adjustment), both of these values are known to the DH and this is aformality that affects most NHS organisations.End of year Position6. The end of year income and expenditure position is detailed in the OperatingCost Statement at Appendix 1.7. The operational position has deteriorated in month by £1.594m to £4.188madverse variance from budget. This deterioration is outlined in table 3:Table 3 - Movement in forecast operational variance£mPrimary Care -1.267Acute Commissioning -0.235Non Acute -0.498Infrastructure 0.405Total adverse movement -1.594Primary Care8. The majority of the movement relates to the end of year prescribing accrual.Following a review of our prescribing accrual methodology, we have adjusted itfrom 2 months to 2.2 months. This is a more accurate reflection of the end ofyear accrual required and is consistent with comments made by the AuditCommission during previous end of year audits. The result of this was anincrease in accrual of £0.814m. The rest of the movement on prescribingresulted from the final position provided by the PPA.9. GP commissioning improved by £0.170m due to lower costs relating to Qualityoutcomes framework, enhanced service payments and other monthly GPpayments.10. Dental and Ophthalmology combined position improved by £0.180m, howeverthis was offset by deterioration in the Pharmacy contract of £0.469m.Joel Martin 3Head of Corporate Finance