LEICESTER CITY PRIMARY CARE TRUST - NHS

GOVERNANCEPaper YNHS Leicester City Board Meeting24 September 2009Headquarters is reporting an over spend of £206k, compared to an over spend of£92k for month 01. This includes 2 months of the £500k savings target allocatedto LCCHS for 2009/10.Human Resources is reporting an over spend of £12k, compared to £49k formonth 01. Managed Practices is reported in this area and is currently over spentby £58k, compared to £81k for month 01. With the assistance of the ServiceManager, Managed Practices budgets’ were reorganised for month 02.IT WAS RESOLVED:-- to note the year to date positionPS/09/83To Receive an Update Report on the Future of LCCHSPaul Miller updated the Board on progress to date:The exploration of the feasibility of LCCHS becoming a stand alone organisationhas largely focused on it becoming a social enterprise. However, NHS LeicesterCity did express an interest in Community Foundation Trust (CFT) status forLCCHS but this was not supported by the SHA. It has been reported previously tothe Board that although not published formally, the criteria for communityfoundation trusts indicate they will be significantly larger than LCCHS (in revenue,staff and geographical terms) and likely to cover two or more health communities.It is also worth noting that as yet there are no community foundation trusts inexistence and that none of the six pilot areas, which have been running for overtwo years, has achieved CFT status.In order to explore fully the feasibility of becoming a social enterprise organisation,three critical elements had to be in place before any consultation with staff:Reward packages for new starters; Members of the LCCHS seniormanagement team have been in regular contact with the Social Enterprise Unit atthe DoH and also met with the unit on two occasions. The unit has commissionedwork on reward packages for new starters and indicated the results would beavailable by the end of April 2009. The results are still awaited at the time ofwriting.Financial viability; LCCHS commissioned KPMG to conduct a financial viabilityexercise by taking the 2008/09 accounts and re-working them as a socialenterprise. KPMG were asked to identify additional costs incurred and savingsmade taking into account corporation tax, VAT, regulatory frameworks, overheadsetc. This exercise revealed a considerable input VAT liability in the region of 1.2 –1.5m, based on a 15% VAT rate. Therefore, a substantial part of any productivitygain generated by the social enterprise model would go to pay the VAT bill ratherthan for re-investment in health services.Service portfolio and length of contract; Outline discussions have taken placein respect of the LCCHS service portfolio and contract length. There is an inprinciple agreement on a contract of 3 – 5 years.6