What I asked for:
- Pro-forma balance sheets for each of the last 12 months
- Cash flow statements and cash flow predictions
- Your financial risk analysis and plans for dealing with the identified risks
- Detailed cost centre analysis for each hospital identifying how you have allocated overhead costs among the cost centres
- Internal communications clarifying when you knew there were cost overruns and identifying the mechanisms you put in place to manage them.
- Your quality manual: presumably ISO9001:2000 or equivalent.
- Details of your inventory control system
- It would also be helpful to know the computer software you use to manage the Trust’s affairs and how real-time it is.
The response:
Dear Mr Bennett,
Many thanks for your letter (dated 29th August 2006) addressed to Professor Colin Roberts, the Chairman of the Royal Cornwall Hospitals NHS Trust.
In response to your request for a number of documents and information, please find attached the following (in relation to your numbered requests in your letter):-
- Current year attached - Month 4 report with appendices.
- Current year attached - Month 4 report with appendices.
- Income & Expenditure Plan attached with appendices.
- No information available in detail.
- PriceWaterhouseCoopers Report & Public Interest Report attached.
- We have no such system in place and use external audit standards.
- There are many various systems in place.
- The computer software used is called AGGRESSO and it is a monthly accounting system.
I hope this is helpful. Please do not hesitate to contact me should you need further information or have any questions on the information I have attached to this response.
Best wishes.
Ethna McCarthy Director of Finance & Information
Royal Cornwall Hospitals NHS Trust 01872 252705
My comments:
I am still reviewing the documents but note that there is no response to item 4. This is an important issue because, by varying the way overhead costs are allocated, you can use it to 'prove' that a hospital is uneconomic.
There is no quality system in place (item 6.) and while this is no surprise quality systems are vital for complex businesses, in part because it requires processes to be properly thought through and then documented. The associated audit process also catches a lot of waste and inefficiency.
Item 7 is worrying mostly because of the implied fragmentary approach to inventory and the absence of any detail.
Finally, monthly accounting systems tell you at the end of the month (or later) that you are in trouble. More timely information is necessary for proper management response.
Other Files:
Report by the Audit Commission dated September 2006.
The introduction includes:
"I have been prompted to report publicly because of the recent dramatic
deterioration in the Trust's financial position, as a result of a failure to deliver its
2005/06 budget. The purpose of this report is to state publicly my views on:
- the seriousness of the Trust's financial position and the risk that it will breach
its statutory financial responsibilities;
- the reasons for the deterioration in the Trust's financial position;
- the adequacy of the Trust’s action taken to date and the further action
planned to improve the Trust’s financial position; and
- the action that the Trust now needs to take to meet its statutory financial
duties and to improve its financial position on a sustainable basis."