Long Term Financial Model User Guide - Improvement · takes following use of the model; ... in real prices (i.e. net of inflation) for future years. Assumptions are input on an

Long Term Financial Model User Guide To be read in conjunction with LTFM model issued by NHS Improvement

August 2018

We support providers to give patients

safe, high quality, compassionate care

within local health systems that are

financially sustainable.

1 | NHS Improvement LTFM User Guide: August 2018

Contents

1. Introduction ........................................................... 2

2. Objectives and High-Level Overview .................... 3

3. Scope and terms of use ........................................ 4

4. Model structure ..................................................... 7

5. Getting started ...................................................... 9

6. Key outputs ......................................................... 13

7. Sensitivities ......................................................... 14

8. Model cover sheets ............................................. 15

9. Input worksheets ................................................. 21

10. Memo worksheets ............................................... 42

11. Sensitivity ............................................................ 48

12. Output worksheets .............................................. 51

Appendices .................................................................................. 55


1. Introduction

To help perform its statutory duties, NHS Improvement maintains and uses financial

models for the purposes of assessing new Foundation Trust applications and

significant transactions undertaken by NHS providers, and templates consolidating

financial information across local healthcare systems.

NHS Improvement’s Long Term Financial Model (LTFM) is used to collect, analyse

and sensitise provider financial forecasts as part of a risk assessment process. It has

been in use since 2004 by NHS Improvement (previously Monitor) to risk rate and

assess Foundation Trust applicants and transactions between NHS providers. The

model was redesigned and rebuilt in 2018 and issued for use by the sector.

This document provides guidance on the methodology and workings of NHS

Improvement’s Long Term Financial Model (LTFM) used either:

– As part of the foundation trust application process in determining financial

viability. For further information on these requirements, refer to the Guide

for Applicants1,

– For use in a risk review of transactions (primarily mergers and

acquisitions) undertaken by NHS trusts and foundation trusts. For

simplicity, the model assumes acquisition of one (or more) provider by

another NHS provider. For further information on these requirements,

refer to the Transactions Guidance2, or

– To assess and appraise New Care Models (NCMs) as defined under the

Integrated Support and Assurance Process (ISAP). For Further

information on these requirements, refer to the Transactions Guidance2 or

the ISAP guidance3.

1 https://www.gov.uk/government/publications/applying-for-nhs-foundation-trust-status-guide-for-applicants 2 https://improvement.nhs.uk/uploads/documents/Transactions_guidance_2017_Final.pdf 3 https://www.england.nhs.uk/publication/integrated-support-and-assurance-process/

https://www.gov.uk/government/publications/applying-for-nhs-foundation-trust-status-guide-for-applicants

https://www.gov.uk/government/publications/applying-for-nhs-foundation-trust-status-guide-for-applicants

https://improvement.nhs.uk/uploads/documents/Transactions_guidance_2017_Final.pdf

https://www.england.nhs.uk/publication/integrated-support-and-assurance-process/


2. Objectives and High-Level Overview

The one single model can be tailored to suit any existing NHS provider trust type (i.e.

Acute, Mental Health, Community, Specialist providers) and used for any of the three

assurance processes defined above.

The overall objective of the model is to provide a set of fully integrated financial

statements (income and expenditure, balance sheet and cash flow) based on key

drivers and assumptions underpinning the trust’s financial projections.

For trusts with major Private Finance Initiatives (PFIs) or other major investments

opening in future years (such as New Care Models), there may be a need to

incorporate projections and assumptions over a nine-year period; the model has

been constructed to allow for this where necessary. Please check with

[email protected] if you are unsure how many years your model

requires.

When being used for review of a trust entering into a transaction with another trust,

the model is based on merger accounting whereby transactions are assumed to take

place on 1 April of the outturn year. Dates in the model must be set so that the

outturn year is the year in which the merger occurs. Please see section 4.1.2 for

worked examples on model dates.

The outputs are automatically generated using user input data and are consistent

with NHSI’s assessment process.

Users retain the functionality to run high level sensitivity and scenario analyses.

However, we expect the LTFM to be submitted to NHSI excluding any additional

scenario analysis performed by the Trust. These inputs should be removed using the

‘Clear all inputs from sensitivities’ macro on the Completion_Checklist sheet.

mailto:[email protected]


3. Scope and terms of use

The model has capacity to:

– Accommodate multiple providers (up to 8)

– Triangulate finance, workforce and activity data

– Accommodate NHSI policies e.g. SOF finance metrics

– Align with NHSI standardised financial outputs

– Provide visibility of new forms of income, NCM payment mechanisms and

contract arrangements

– Provide visibility of stranded costs (e.g. PFI) as a result of reconfiguration

– Model incremental impact of the NCM contract changes

– Provide comparison between ‘BAU’ and ‘do something’ scenarios for

counterfactual analysis

– Provide a flexible time period: 3 years historic, the current/out-turn year

and up to 9 future years

– Apply sensitivities to facilitate scenario analysis

3.1 Model Limitations

Prior to using the LTFM please ensure you have read and understood the terms of

use, limitations and disclaimer section on the cover of the LTFM.

The model limitations are outlined below;

– The model is an integrated strategic planning tool and not a detailed

budget setting tool. It requires information from the trust’s own detailed

income and activity/capacity-based modelling to form the basis of the

income analysis.

– The model is not designed for use with non-NHS providers and/or

commissioners. NHS Improvement will consider any amendments which

may need to be made to accommodate Integrated Care Organisations in

future model releases.

– The model has a maximum forward time period of 9 years


3.2 Terms of use, limitations and disclaimer

NHS Improvement does not give any warranty or any form of guarantee whatsoever

in relation to the model, including but not limited to whether the model is free from

errors or fit for purpose;

In working with and using the tool, the user bears full and exclusive responsibility

including (but not limited to) the financial information submitted in the model and the

use of, and outputs from, the model;

The user will update the model, in line with financial model best practice. In this

regard, the user will perform, or have performed on its behalf, reviewing procedures

to satisfy itself that the model fulfils its requirements;

The user, together with any relevant partners, is solely responsible for the

appropriateness of any commercial, strategic or other decisions it takes following it

takes following use of the model;

The user agrees that it will not disclose to any third party any information of a

confidential nature which is obtained by or which is made known to it as a result of

the provision by NHSI of the model; and

The user acknowledges that the model remains the intellectual property of NHSI.

Consequently, the user agrees that it will not disclose the model to any third party

without NHSI’s written permission and will not use the model for any purpose other

than that intended by NHSI.

3.3 Summary of Transaction Process and Model use

NHSI is responsible for approval of significant transactions of and between NHS

providers. Where we classify a transaction as significant, foundation trusts must, in

addition to the evidence requested for a material transaction, provide us with a

greater degree of assurance regarding the risk of breaching their licence conditions,

or for NHS trusts, the equivalent of these conditions.

This will comprise a high-level review at the strategic options case (SOC) stage

focusing on strategic rationale and identification of red flags, with the majority of the


detailed work undertaken at the full business case (FBC) stage. At the business case

stage, trusts must prepare financial plans in a suitable long-term financial model

(LTFM) and should contact NHSI using [email protected] to confirm the

most suitable model to use.

The detailed review considers how the proposed transaction may affect the risk

profile of the ongoing trust, or the new trust in the event of a merger.

For further information please refer to NHS Improvement’s Transactions guidance4.

4 https://improvement.nhs.uk/uploads/documents/Transactions_guidance_2017_Final.pdf





4. Model structure

4.1 High level model structure

The model is structured to capture a trust’s baseline underlying “as is” business with

any service/strategic developments layered on the top of this. Inputs for income and

expenditure are entered in actual / nominal prices for historical and outturn years and

in real prices (i.e. net of inflation) for future years. Assumptions are input on an

annual basis.

Service developments/New Care Model contract elements are input separately

using the sheets allocated, the model will combine these (post service

development) with the base input information (baseline) and inflation assumptions

to deliver nominal aggregated outputs in the output sheets.

The model assumes that the baseline is the counterfactual position and that this

would reconcile with the Trust’s business case. Service Developments are applied at

a Trust level for assessments and New Care Models and at an aggregated Trust

level for Mergers. Merger Service developments should include any merger

synergies and any service developments not included in the baseline for individual

Trusts.


Inflation assumptions are applied annually from the first forecast year and are

assumed to occur evenly throughout the year. Each Trust can input organisational

specific assumptions.

The model has been constructed in a modular fashion split into input or sensitivity

sheets, (denoted by an “I”), calculation sheets (denoted by a “C”), and output sheets

(denoted by an “O”). Users should not attempt to insert extra rows or sheets in the

model.


5. Getting started

When completing the model use this guidance, and the ‘i’ pop up boxes that show in

the model.

You should also use the principles and definitions found in the Department of Health

and Social Care (DHSC) group accounting manual and accounting standards.

5.1 Excel Set up

The LTFM has been designed for use in Microsoft Excel 2013 onwards.

For the model to work efficiently - the auto calculation functionality should be

switched on. This will ensure that any updates to inputs are always reflected in the

model calculations and outputs.

To enable NHSI to rely on the integrity of the model outputs, all calculation and

output cells are password protected, and should not be tampered with under any

circumstance. The model is password protected to maintain the integrity of model

calculations. Only the modelling team in NHS Improvement’s Transactions and

Sustainable Solutions team will have the password to unlock the model once it has

been configured. If you need any changes making to an existing model, please

contact the model queries team [email protected] and they will advise.



5.2 Model Configuration

Worksheet: Control Sheet

The model will be configured for use by NHS Improvement’s Transactions and

Sustainable Solutions team before being sent out to trusts for completion and return.

Configuration is carried out in the ‘Control sheet’ worksheet of the model using VBA

code. See section 8.1 for more details.

5.3 Worksheet Structure

The naming of the worksheets follows a set convention:

– Input worksheets are named “I_<short description of inputs>”. These are

the key sheets for data input.

– Calculation worksheets are named “C_<short description of workings>”.

The engine of the model, the build-up of calculations.

– Output worksheets are named “O_<short description of presentation>”.

Outputs representing financial statements, graphs, sensitivities, charts

etc.

Worksheets follow a standard structure and set formatting rules:

– Cells available for user inputs are shaded in yellow. The input cells are

split by year. All units should be input in £000’s unless otherwise stated.

– All calculation and output cells are password protected.


Worksheet: Guidance

5.4 Key Definitions used

– “Actual” years should be inputted with audited financial accounts data.

– “Outturn” year should be inputted with operational planning data.

– “Forecast” years should be input into the model in Real terms i.e.

excluding inflation.

– The model will calculate a post-inflation position (i.e. including inflation)

when inflation assumptions are input.

5.5 Non-recurring and Normalising (Exceptional) items

Non-recurrent or one-off items are those one-off income or costs that are incurred

as a normal part of operating the business. Examples of non-recurrent income or

costs could include Winter Pressures funding, CQUIN, Non-recurrent CIPs and

contingency.

Normalising items are those items which are normalising and are used to ascertain

each trust’s ‘underlying financial position’. Examples of normalised income and costs

include exceptional items such as:

– Profit or loss on termination of an operation

– Costs of a fundamental reorganisation or restructuring

– Profit or loss on disposals (automatic in the model)

– Impairments (automatic in the model)

– NHS “irregularities” such as:

• Impairment funding

• I&E brokerage

• Capital to Revenue transfers


NHSI will investigate and challenge the nature of normalised items modelled and

agree the normalised position with the trust. Any non-recurring or normalising

income included in historical and forecast results should be outlined. These are

assumed to be included within the actual and forecast years.

Where non-recurring or normalising income is matched by a non-recurring or

normalising cost – the income detail should be provided in this section and the cost

details in the non-recurring and normalising cost section in the I_I&E sheet (rather

than netted off).

Normalising income and costs are reversed (“normalised”) in the I_Norm worksheets

to provide an underlying position. See section 7.2 in this guidance.

A glossary of useful terms is included in Annex 1:.

5.6 Accounting Principles

Further guidance on the completion of NHS accounts including the FT Annual

Reporting Manual and the Department of Health (DH) Group Accounting Manual

(GAM) can be found here5.

5.7 Detailed Model Map

The model has been constructed in modular fashion split into input sheets (denoted

by an “I” yellow), calculation sheets (denoted by a “C” orange), and output sheets

(denoted by an “O” purple).

Each of the sheets is covered in more detail in section 8 of this guidance.

5 https://improvement.nhs.uk/resources/financial-reporting/

https://improvement.nhs.uk/resources/financial-reporting/



6. Key outputs

The key outputs contained within the model are designed to show the key

information. Users may want to perform additional analysis outside of these outputs.

In summary these comprise:

– A full set of ‘baseline’ financial statements (Balance Sheet, I&E and Cash

Flow) for each input provider, a ‘post service development’ full set of

financial statements and in the event of a merger or acquisition, a full

consolidated set of financial statements.

– Separate analysis on service developments modelled by the user along

with any operational impacts (activity and workforce).

– Single Oversight Framework metrics calculating the finance metrics

contained within NHS Improvement’s Single Oversight Framework.

Further information can be found here6.

– Output to summarise and sensitivity analysis carried out.

– Ability to review any assumed efficiencies in the model and allow users to

triangulate workforce/activity/finance as a sense check.

– Data for use by external organisations to perform working capital reviews.

– The outputs provide a condensed view which can be used to feed into a

system overview if this is required.

6 https://improvement.nhs.uk/resources/single-oversight-framework/

https://improvement.nhs.uk/resources/single-oversight-framework/



7. Sensitivities

As part of NHSI’s detailed review of the Trust business case, we examine the trust’s

base case LTFM and present an adjusted case that tests the assumptions to ensure

the case is sufficiently stretching but realistic in terms of delivery. It typically

incorporates several generic sensitivities (reflecting our annually published views of

cost inflation and efficiency) and any specifically identified sensitivities. This case is

the main basis for NHSI’s assessment of the trust’s post-transaction financial viability

and sustainability.

NHSI also present a downside case (which adjusts the trust’s base case for a

reasonable set of downside risks) to help assess whether the trust has effectively

mitigated the transaction’s key risks by articulating plans to address them and

demonstrating the capability to deliver these plans.

For further detail on sensitivities see section 11.


8. Model cover sheets

8.1 Control Sheet

The control sheet allows the NHSI team to set the model configuration and allows

trusts to input basic information about which trust is completing which parts of the

model and configure the model time frame.

This worksheet contains the basic information about model version, who has

completed the model and the date.

Options to configure the model include:

Model Version number (NHSI team use only):

– Prepopulated to ensure NHSI can track model versions

Transaction type (NHSI team use only):

– FT Assessment

– Merger or Acquisition

– NCM


Number of trusts (NHSI team use only):

– FT Assessment – only 1 Trust will be visible in the model

– Merger or Acquisition – option to select 2-8 Trusts for input into the model

– NCM – option to select 1-8 Trusts for input into the model

– Based on which Transaction type is chosen, a dependent dropdown will

change the number of trusts which are able to be selected.



Organisation

– Insert Trust name

– Insert Trust code

– Corresponding trust number will be aid reference in the model (T1-T8)

– In a merger or acquisition scenario, T1 is always the acquiring Trust

– Contractor set up – (only applicable for NCMs – please contact NHSI for

further guidance when using

– Name of reviewer and job title should be completed to ensure that NHSI

has assurance that the model has been signed off at an appropriate level

within the Trust prior to submission


Date configuration

– Latest Year End Actual Date

– Transaction Date

– Opening Balance Sheet Date (always 1 April following Latest Year End

Actual Date)

– The opening balance sheet date on the “Control” sheet will automatically

be set to the day following the ‘latest year-end actual sheet date’ chosen

on the Control_Sheet.

– To do this – Go to the “Control” sheet and:

– Choose the desired latest year-end actual date by clicking on the

dropdown box. This should be the year end date of your last audited

accounts.

Illustrative Example


Worksheet: Control sheet

When Trusts enter into a transaction which is to be completed / executed on a date

other than 1 April (i.e. a mid-year transaction), the process for the NHSI review will

remain as described. The NHSI team may request additional information from the

Trust to understand their current trading performance (forecast) and if necessary will

apply sensitivities to the model to adjust for this.

If the transaction takes place on 1 June 2018 then the model would require:

– Three years of annual historical information (for years ended 2015/16,

2016/17 and 2017/18)

– Outturn annual information covering the current year (2018/19)

– Forecast annual information for all subsequent years (for 2019/20

onwards)

If the transaction takes place on 1 April 2018 then the model would require:

– Three years of annual historical information (for years ended 2015/16,

2016/17 and 2017/18)

– The figures input for 2017/18 will need to the latest trading position (latest

year end forecast)

– Outturn annual information for 2018/19

– Forecast annual information for all subsequent years (for 2019/20

onwards)

Number of years to forecast

The number of forecast years to be input will be agreed with NHS Improvement’s

Transactions and Sustainable Solutions team prior to model completion.

– Users can change this selection to control the number of columns (years)

visible in the model worksheets

– Option to select from 1 to 9 future years beyond the current/out-turn year


– Will depend on when Service Developments are fully implemented as

these may be phased and will require at least 3 full years of forecast data

after go live date.

– The NHSI team will advise Trusts on how many years should be modelled

where applicable.

Unlock Workbook (NHSI team use only):

– Unlocks the workbook down to allow changes

– Trusts will not have the facility to unlock the workbook


Clear sensitivities

– Choosing this button will run a macro which clears any input on the I_Sen

sheets.

– Trusts must ensure this this is done prior to submission to NHSI.

Service Developments

– This section records the names of service developments.

– Users should choose ‘Yes’ or ‘No’ in the drop downs to show where

service developments are applicable and which Trusts(s) they apply to.

– When users are completing the model for a merger or acquisition, there

will only be 1 service development sheet available. This will be by default

attached to the acquiring Trust – Trust 1 in the model. See further details

in section 9 for further information on completion of service developments.

– Where the default label is ‘[Input service development label n]’, users can

enter bespoke names to identify each of the 10 service developments.

These names will be pulled through onto the I_Serv_Dev sheets.



Apply Service Developments above to ‘Serv_Dev’ sheets

– Selecting this button will run a macro which will hide any rows on

‘Serv_Dev’ worksheets where ‘No’ is selected in the drop-down box under

Service Developments above.


Calculate worksheets

– Option to Hide/Unhide Calculations worksheets in the model

– To activate this, users should select hide/Unhid in the drop down then

click the blue button to apply the macro for this choice. This will

hide/unhide all the calculation 'C_' or orange worksheets in the model.

– This can be a useful option to reduce the number of workbooks visible in

the model to aid completion


8.2 Guidance

This worksheet gives high level instruction on model completion and highlights a

suggested approach for completion.

8.3 Navigation

This worksheet provides a table with all model sheets on to allow quick navigation

via hyperlinks (a denotes where the worksheet is relevant and denotes where

the worksheet is not relevant).


Worksheet: Navigation

The accompanying model map shows the structure of the model. Each box

represents different elements in the model. The boxes coloured yellow represent

input worksheets. Boxes coloured orange represent the calculation worksheets and

the purple boxes represent output worksheets. The information contained within the

calculation and output worksheets is generated from the input sheets. The sheets on

the model match this colour coding.

8.4 Completion_Checklist

This worksheet contains a dashboard showing common errors in completing the

model and should be reviewed before submission to NHSI. The sheet contains links

to the worksheet where checks originate to allow users to double check

inputs/assumptions.

Worksheet: Completion_Checklist

Please ensure the checklist and LTFM have been reviewed at an appropriate level

within your organisation (FD or Deputy FD) and that the model has been signed off

in the Control worksheet before submission to NHSI.


9. Input worksheets

The structure of the I&E, Balance Sheet and Cash Flow statements used in the

model are aligned with the central reporting templates used by Trusts to submit data

to NHS Improvement (TACs, FTCs, FPR). Further guidance can be found in the

NHSI planning technical guidance here7.

Further guidance on the completion of NHS accounts including the FT Annual

Reporting Manual and the Department of Health (DH) Group Accounting Manual

(GAM) can be found here8.

9.1 I_I&E

In these sheets users should outline their historical and projected Income and

Expenditure for the underlying/ normalised business of each trust. The ‘actual’

historical figures should reconcile to the published financial accounts.

Use the drill downs on the left of the worksheet to expand the sheet to give more

granular detail for completion.

7 https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/ 8 https://improvement.nhs.uk/resources/financial-reporting/

https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/





Worksheet: I_I&E

Outturn and forecast year figures should be input including Efficiency/CIP

programmes. This is so that the model can determine a baseline position. The

baseline assumes that the Trust(s) continue to trade as is which will include

achievement of efficiency programmes.

Forecasts should be presented on annual basis in real terms (i.e. excluding inflation).

9.2 Income from patient care activities

Income from patient care activities can be broken down by up to 8 specialities and

point of delivery (POD). Guidance on the use of this will be provided by the NHSI

team on a case by case basis. Where a Trust has more than 8 specialities, please

report the top 7 and include the remainder under the 8th line.


Worksheet: I_I&E

High cost drugs income

– Should be match funded in expenditure (Operating Expenditure - Drug

costs- drug inventory consumed and purchase of non-inventory drugs).

– This is consistent with the FPR planning forms.

– The model does not allow an automatic check of these figures so the

NHSI team may ask for further information on this as part of the

assessment process.

– The model allows users to apply different inflation assumptions to high

cost drugs than other types of income.

– Pass through bloods and devices should be included as part of the overall

supplies and services categories.

9.3 Other Clinical Income

Private patient income (PPI)

– This is income arising from the treatment of private patients. Legislation

now requires that the majority of a trust’s income comes from the

provision of NHS services in England.

9.4 Other Operating Income


Worksheet: I_I&E

Research & Development

– Income which is received for the purposes of undertaking Research &

Development.

Education & Training Includes income from:

– SIFT – Service Increment for Teaching

– MADEL – Medical and Dental Education Levy

– NMET – Non-Medical Education and Training

Charitable income

– To be disclosed on the relevant lines. There is no separate charity

financial statement. If further details are required, this will be advised by

the NHSI team.

Non-patient services to other bodies

– Income resulting from the provision of non-patient services to other bodies

e.g. laundry, ambulance services, and laboratory services.

Provider Sustainability Fund (PSF) income

– Should be disclosed on the relevant line.

CNST (Clinical Negligence Scheme for Trusts)

– This is included within ‘other operating expenditure’ but is not separately

identified within inputs.

– The transaction review team will request further information on CNST

costs and will consider whether sensitivities on the associated inflation

rate are required as this is often significant.


9.5 Operating Expenditure

Staff and executive director costs

The model asks for workforce expenditure by staff group in line with the workforce

groups identified in the NHS Occupational codes, further guidance here9.

Worksheet: I_I&E

9.6 Other operating Expenditure

Non-Operating Expenditure

– Finance income, finance expenditure, PDC dividend receivable/payable

and gains/losses on disposal are calculated automatically from Balance

Sheet inputs, and therefore include inflation in forecast years.

– There are 3 non-operating expenditure lines that require manual input:

• Share of profit/(loss) of associates/joint ventures (value entered impacts

NBV of JV investments on the I_BS)

• Corporation tax expense (value entered impacts NBV of tax payable on

the I_BS)

• Other non-operating expenditure (this is a catch all line in the actual and

outturn years so that the I&E is aligned with audited accounts and

operational plans)

Worksheet: I_I&E

9 http://content.digital.nhs.uk/article/2268/NHS-Occupation-Codes

http://content.digital.nhs.uk/article/2268/NHS-Occupation-Codes


9.7 VAT (memo) Input

– To be used to break down the VAT expense included in total expenditure

in the I&E.

– This is a memo input only and will not be used for any forward calculation

in the model. VAT figures do not have inflation applied.

– This memo is to enable NHSI to understand the overall implications of any

new contracts on the VAT charges.

Worksheet: I_I&E

9.8 Inflation Assumptions input

– Note that Capital inputs have been ‘greyed out’ in the model; this is

because no inflation is applied to capital in the model.

– The national provider inflation assumptions have not changed since the

assumptions published by Monitor in March 201610. We recommend that

Trusts apply these assumptions when planning and forecasting, while also

taking account of local circumstances, opportunities and pressures.

– Inflation inputs are only required for the baseline inputs and there are no

separate inflation rates applied for service developments.

– If the model is being used for a NCM review, Trusts should ensure they

align inflation assumptions across providers where possible. Where this is

not possible, the calculation of O_NCM _Contract will not depict an

accurate representation of the aggregated NCM position.

10 https://www.gov.uk/government/publications/economic-assumptions-201617-to-202021/economic-

assumptions-201617-to-202021

https://www.gov.uk/government/publications/economic-assumptions-201617-to-202021/economic-assumptions-201617-to-202021




Worksheet: I_I&E

9.9 Efficiency (memo) input

– Designed to capture historical CIP information and any additional CIP

savings which can be identified going forward - which should be already

identified within the base input I&E above (i.e. this section is memo only).

– There is provision for up to 10 key schemes to be input. Schemes are

required to be broken down by Efficiency programme area (with reference

to the Carter work streams). This is consistent with the central NHS

finance templates.

– Trusts will need to aggregate any remaining schemes to complete the

template within the available inputs.

– The NHSI team may request further detail on CIP schemes from Trusts as

part of the review process.

– Historical efficiencies that do not map to the Carter categories should be

included in the ‘Other’ category. Further detail will be requested on these

schemes from the review team.

– Efficiencies should be input including inflation as the model will not apply

inflation to these values.

– For further information on efficiency work streams can be found in section

2.4 and appendix 3&4 of the 2018/19 technical planning guidance here11.

The efficiency work streams can be found in Annex 2:.

11 https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/




Worksheet: I_I&E

9.10 Merger adjustments

– This section will only be visible when merger or acquisition is

selected in the Control sheet.

– Any figures entered in this section will be deducted from the base income

and/or base expenditure for the ‘acquiring trust’ to remove the effect of

intra-trust transactions which will no longer apply once a merger takes

place.

– All inputs in this section should be entered pre-inflation.

– The LTFM assumes that the date of transaction is the first day of the

financial year in the ‘outturn’ year of the model and from this point

onwards, assets and liabilities will be aggregated together in the merged

entity. As such the ‘Transaction date’ provided in the Control_Sheet is

memo only and does not drive date settings in the model.

Worksheet: I_I&E


9.11 Normalising Adjustments

– Any significant normalising adjustments should be included at the bottom

of the sheet. It is not expected that baselines will require significant

normalising adjustments in the later years, but NHSI recognise that some

organisations will want to reflect a normalised position in prior and outturn

years to ascertain the trust’s ‘underlying financial position’.

– Normalising adjustments should be restricted to:

• significant non-recurrent income or expenditure

• significant impairments, asset sales or investments

• These should be agreed with the NHSI team prior to submission of the

LTFM.

NHSI defines the underlying position in the technical planning guidance for 2018/19 as follows12.

– Underlying position is the recurrent financial position which is derived from

the income and consequent expenditure that a trust can reasonably

expect to consistently occur in future years.

– The recurrent position is calculated, starting with the baseline year, by

removing any income and expenditure that on the balance of probability

will not occur in future years and adding any income and expenditure

(including balance to full year effect) that it expects to consistently reoccur

in future years.

– The underlying position should not be adjusted for any future planning

assumptions (for example, inflation or tariff change), nor should it include

any expectations regarding growth in activity or service/quality

developments, except where such changes occurred part way through the

baseline year and an adjustment is required to reflect the full year impact

of them in future years.

12 https://improvement.nhs.uk/uploads/documents/2018-19_Financial_Planning_Technical_Guidance_final_v3_February_2018.pdf

https://improvement.nhs.uk/uploads/documents/2018-19_Financial_Planning_Technical_Guidance_final_v3_February_2018.pdf

https://improvement.nhs.uk/uploads/documents/2018-19_Financial_Planning_Technical_Guidance_final_v3_February_2018.pdf


Worksheet: I_I&E

9.12 I_BS

This worksheet has a summarised balance sheet view at the top and beneath this a

series of ‘notes to the balance sheet’ with detailed workings and inputs which need

to be completed. These ‘notes’ are then link back to the summarised balance sheet.

Before population, ensure that all the cells are ungrouped so that all inputs can be

populated.

Please note that ALL balance sheet items are to be input at nominal value (that

is EXCLUDING inflation).


Worksheet: I_BS

The model assumes there are 360 days in a year. This assumption allows the model

to be equally split into 12ths for monthly analysis and is consistent with other

financial models used within NHSI (and the previous LTFM).

9.13 Fixed Asset Disposals

Fixed asset disposals are driven by the net book values of disposal input in the

summary balance sheet section at the top of the I_BS sheet. Cash Receipts from asset

sales input here are linked to the cash flow sheet in the outturn and forecast years.

Cash receipts for fixed asset disposals are assumed to be in the same year of the

sale.

9.14 Capital expenditure by programme (memo)

Capital expenditure by programme should reconcile to all the additions made in the

summary balance sheet section at the top of the I_BS sheet. This includes intangibles,

PFIs, PPE and Investment Property. The Capex Check will alert users if these items

do not reconcile.


Worksheet: I_BS

9.15 Other Investments / financial assets

Asset

– Cash payments of other investments / financial asset additions are

assumed to be in the year of purchase.

– Gains / (losses) taken to the I&E are automatically taken to Impairments

net of (reversals) in the I_I&E.

– Cash receipts on disposal are linked to the fixed asset disposal section

(above this section on I_BS).

– Other investments/financial assets are assumed to be non-current unless

they are being disposed of in the following year.

Interest receivable

– Assumed to be applicable to the average of the current and prior year

closing balance for the assets, and the prior year closing balance of the

interest receivable value. In the outturn year, provider operational plans

will be known, and user inputs will calculate the interest receivable, in

forecast years, interest receivable is input to calculate the receivable.


Worksheet: I_BS

Cash payments for capital additions are be input in the capital payable sections of

trade and other payables.

Where there are cash donations given for the purchase of assets, the model

assumes that:

– the assets are purchased in the same period as the cash is received -

there is no working capital effect considered for any timing difference.

– the cash given for the asset is the exact amount of the asset's value (i.e.

what gets added to assets on the balance sheet). Grants / cash cannot be

used in part payment.

– the donated income entered in I_I&E, after inflation, pre-populate donated

additions in the I_BS

Assets held for sale

Not modelled in the forecast years. Any asset sold in the outturn or forecast year

should be inputted through its relevant asset category e.g. PPE.

9.16 Working Capital

Trade and other receivables and payables

For Outturn & Forecast periods, all trade receivables and payables are assumed to be

Current (even if 'receivable days' is more than one year). This is a simplifying

assumption in the model as non-current trade receivables and payables are historically

trivial (as they are generally provided for).

Trade Receivables, Non-Trade Receivables, and Trade Payables

The working capital balances are derived based on an ageing debt/payment schedule.

Key drivers are:


– For NHS Trade Receivables is patient care income

– For Non-NHS Trade Receivables is other operating income

– For Trade Payables is total non-pay costs

Other receivables and payables can be input as current and non-current.

9.17 Borrowings

Includes facility for disclosure of multiple debt structures.

Worksheet: I_BS

Drawdowns, repayments, interest payable and interest paid are input into the model.

The implied interest rate is calculated by dividing interest payable by the sum of the

average of the opening and closing balance and the opening interest payable balance.

This enables different interest rates to be applied in service developments and

sensitivities sheets.

Current borrowings

Any which are due to be repaid in the following year.


Interest payable

Flows back into the I_I&E as finance expenditure in the non-operating expenditure

section.

9.18 PFI

The model assumes that PFIs are on the balance sheet of the Trust.

Worksheet: I_BS

The forecast unitary charge payable should be provided in nominal terms in all years.

Provide all inputs for unitary payment as negative amounts. The following elements in

unitary payment are linked to the I_I&E sheet:

– Service Element

– Revenue Lifecycle Maintenance

– Contingent Rent

– Additional to lifecycle prepayment

– Other revenue charges

The following elements in unitary payment are driven by the calculations in I_BS sheet:

– Repayment of Finance Lease Liability (see Borrowings section)

– Interest expense (see Borrowings section)

– PFI Lifecycle prepayment (see Receivables section)

Capital Lifecycle Maintenance

Cash flows related to PFI are calculated through the model’s interaction with the I&E

and BS, and not directly from inputs in the PFI section.


9.19 PDC dividend

Calculated based on the average net relevant assets multiplied by the dividend rate

(3.5%).

Worksheet: I_BS

To avoid the circularity of the dividend payable in the I&E and cash flow, the closing

net asset employed balance is the sum of:

– Closing PDC reserve

– Closing Revaluation reserve

– Closing AFS reserve

– Closing Other reserves,

– Closing Merger Reserve,

– Closing NCI reserve,

– Opening I&E reserve + in year operating surplus/(deficit) + non-opex

items (except the PDC dividend)

Users can adjust the net relevant assets through inputs for the average cash balance

held with the Government Banking Service (GBS), to arrive at the appropriate

dividend payment. Since 2013, the Department of Health has calculated the dividend

on the investment in NHS providers using the average balance over the financial

year held in commercial accounts, rather than the year-end balance, will contribute

towards the calculation of the dividend charge. This provides an extra incentive for

NHS providers to hold cash balances at GBS, rather than commercial accounts,

throughout the year and prevent unnecessary movements between GBS and

commercial accounts at year-end.


In a merger, PDC is recalculated for the combined entity using the opening balance

sheet position, as the transaction is assumed to occur at the start of the year.

Taxpayers' and others' equity

The model assumes there are no movements in the following reserves in the outturn

or forecast years and these reserves stay static at the last Actual period values; no

other adjustments are made:

• Other reserves

• Merger reserves

• Available for sales investment reserves and;

• Non-controlling Interest.

For other equity in the model:

• PDC reserve – calculated as sum of opening balance and “PDC received” and

“PDC paid” inputs.

• I&E reserve – calculation as sum of opening balance, plus any surplus / (deficit)

in year

• Revaluation reserve – calculated from revaluation movements in fixed assets.

Merger adjustments

For the merged balance sheet in the outturn year, PDC - opening balance is the sum

of the acquiring trust (T1) PDC, plus for each of the merging entities (T2-T8), the

minimum of Net Assets employed and PDC closing balance for that individual trust.

The opening balance for the I&E reserve is treated in a similar way.

9.20 I_Cash

The only inputs required in this worksheet are for prior year results. All other years are

driven by I&E and B/S.

9.21 I_Op

The template asks for activity by income category and point of delivery (elective

admissions, outpatients etc).

The model asks for workforce numbers by staff group in both the ‘do nothing’ and ‘do

something’ scenarios. Numbers should be entered as whole-time equivalents (WTEs)


in line with the workforce inputs in I_I&E. These can be input with up to 1 decimal

place, however the formatting of the cells will round to the nearest whole number.

Further guidance on workforce and activity can be found in the planning guidance

here13. Detailed guidance on the categorisation of staff can be found here14.

Further guidance on data definitions can be found in the KH03 guidance15, daily

SITREP16 and monthly SITREP17.

9.22 C_Infl

Inflation assumptions should be input on the I_I&E_T1-8 worksheets.

Annual inflation numbers are compounded up on the C_Infl_T1-8 sheet. The

compounded inflation values are applied to the pre-inflation income and expenses to

calculate post inflation values.

Trusts are expected to make reference to NHS Improvement’s published economic

assumptions found here18. Where trusts deviate from national assumptions they will

be expected to be able to articulate their reasoning.

Note that Capital items have no inflation applied in the model.

9.23 I_Serv_Dev and I_Serv_Dev_Merger

These worksheets are similar in layout to the I_I&E worksheets, with the additional of

further information on additional assets and borrowings. These should be used to

show only changes resulting from the implementation of either: an FT creation,

merger synergies or NCM service developments.

13 https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/#technical 14 http://content.digital.nhs.uk/article/2268/NHS-Occupation-Codes 15 https://www.england.nhs.uk/statistics/statistical-work-areas/bed-availability-and-occupancy 16 https://www.england.nhs.uk/statistics/statistical-work-areas/winter-daily-sitreps/winter-daily-sitrep-2017-18-data/ 17 https://www.england.nhs.uk/statistics/statistical-work-areas/critical-care-capacity/critical-care-bed-

capacity-and-urgent-operations-cancelled-2017-18-data/ 18 https://www.gov.uk/government/publications/economic-assumptions-201617-to-202021/economic-assumptions-201617-to-202021


https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/#technical

http://content.digital.nhs.uk/article/2268/NHS-Occupation-Codes

https://www.england.nhs.uk/statistics/statistical-work-areas/bed-availability-and-occupancy

https://www.england.nhs.uk/statistics/statistical-work-areas/critical-care-capacity/critical-care-bed-capacity-and-urgent-operations-cancelled-2017-18-data/

https://www.england.nhs.uk/statistics/statistical-work-areas/critical-care-capacity/critical-care-bed-capacity-and-urgent-operations-cancelled-2017-18-data/




I&E inputs on the I_Serv_Dev sheet should be entered excluding inflation

(except for non-operating items), whereas balance sheet inputs should be

entered including inflation.

Worksheet: I_Serv_Dev

Note – donations and impairments cannot be modelled through service development

worksheets.

Inputs entered on I_Serv_Dev and I_Serv_Dev_Merger are marginal (additions or

subtractions) to the baseline values input in the I_I&E and I_BS input sheets.

Any additional CIPs which Trusts expect to identify and deliver over and above those

in the base line counter factual position should be entered as a service development.

Users can enter revised NHS Trade Receivables, Non-NHS Trade Receivables and

Trade Payables days which will override original assumptions from I_BS which will

allow Trusts to reflect changes which may arise from revised contracting arrangements

resulting from service developments.

Note: that when revised interest rates are entered for additional borrowings in

I_Serv_Dev sheets, this will override the original interest rates on the input balance

sheets (I_BS) rather than applying a marginal interest rate to new borrowings. The

model assumes that all original borrowings can be refinanced. If borrowings will not

be refinanced, then either the existing rate will apply to the new borrowings (no input

needed on I_Serv_Dev sheets) or Trusts completing the LTFM model will have to

calculate weighted average interest rates and enter this on the I_Serv_Dev sheets (in

the relevant borrowings rows).



Inputs in I_Serv_Dev only should be used for changes which are incremental to the

baseline figures input in the I_I&E and I_BS worksheets. Only developments which

have a significant impact on the plan should be outlined here, smaller immaterial

developments should be incorporated into the I_I&E and I_BS worksheets.

There is facility to input up to 10 Service Developments or Contract Elements across

the model. ‘Service Development/Contract Element 1’ must be the same across all

trusts inputting into the model. It is possible that individual Trusts may not complete all

Service Development/Contract Elements. It is expected that these are agreed across

Trusts in the scenario of a Merger/Acquisition or New Care Model.


On the Control_sheet, the default label is ‘[Input service development label n]’. Users

can enter bespoke names to identify each of the 10 service developments. These

names will be pulled through onto the I_Serv_Dev worksheet rows to ease completion.

This is particularly useful when using a multi provider model.


Capital and PFI expenditure are calculated based on the balance sheet and PFI inputs

sections with the I_Serv_dev sheet. The impact of these should be split between the

relevant service developments.

Non-Operating Expenditure cannot be input onto the I_Serv_Dev worksheets as on

the I_I&E worksheets, this is calculated by the model (except for “share of profit/(loss)

of associates/joint ventures and corporation tax expense). This calculates the change

in non-operating expenditure, deducting the pre-service development I&E (C_I&E_T1-

8 and C_I&E_Merger) from the post-service development I&E (C_I&E_SD_T1-8 and

C_I&E_SD_Merger). As a result, in the calculation of service developments on

C_Serv_Dev, no inflation is applied to any non-operating expenditure items as this has

already indirectly been applied through balance sheet inputs on I_BS. The impact of

changes in non-operating expenditure should be split between the relevant service

developments.

For the post-service development calculations, adjustments to net assets are taken

from the baseline inputs. The model allows for an adjustment to the 'Average Daily

Cleared Balances' for service developments, but not to the other adjustments.

9.24 I_NCM

This worksheet is for Trusts to provide more information around the contractual

arrangements agreed as part of a New Model of Care. Further guidance will be

provided by your assessment team on the use of this worksheet.

Terminology used in this sheet is consistent with that used in the guidance issued by

NHS England and NHSI on the set up of NCMs. Further information can be found

here19.

Additional information on the suggested application of Gain/Loss share in NCM

contracts can be found here20.

19 https://www.england.nhs.uk/new-business-models/publications/ 20 https://www.england.nhs.uk/publication/whole-population-models-of-provision-establishing-integrated-budgets-document-7b/

https://www.england.nhs.uk/new-business-models/publications/

https://www.england.nhs.uk/publication/whole-population-models-of-provision-establishing-integrated-budgets-document-7b/

https://www.england.nhs.uk/new-business-models/publications/




10. Memo worksheets

10.1 I_WC_Memo

This worksheet is a memo only and used when trusts require a working capital review.

The NHSI team will advise when this is required.

The model will prepopulate Annual amounts from the I_I&E, I_BS and I_Cash sheets.

Inputs on the I_WC_Memo sheet should be entered monthly and reconciled back to

the annual position. Trusts should take care to provide the split of receivables and

payables days by 30/60/90 days to ensure more realistic cash flow phasing.

Worksheet: I_WC_Memo

The model always uses the final month in the year as a balancing period for cash

received, to ensure the yearly amount reconciles. This applies to all receivables /

payables items where the monthly cash is calculated. As such movements in current

and non-current ‘Other Receivables’ is apportioned evenly across the 12 periods in

each year.

Sensitivities can be run on the working capital memo utilising Case 1 and Case 2 in

the I_WC_Memo sheet.


Worksheet: I_WC_Memo

10.2 I_Activity_Memo

This worksheet is for NHSI to understand the key drivers of changes in activity

throughout the model. The information provided here is memo only and will not drive

any forecasts in the model.

Worksheet: I_Activity_Memo

The worksheet will prepopulate activity changes for each activity category as a result

of any service developments entered onto the I_Serv_Dev sheets. Trusts should

review and complete the worksheet and ensure that any additional activity changes

(either growth or decline) are fully explained.

Please complete this worksheet and ensure that the total activity change (including

any resulting from I_Serv_Dev worksheets) for each income category reconciles to the

total activity growth on C_Op_SD.


10.3 I_Inc_Source

This worksheet is memo only and can be used by Trusts to break down any NHS

income entered on I_I&E and I_Serv_Dev. The worksheet will automatically bring

through ‘Total income from patient care activities’ from the relevant I_I&E (under

Patient Care Income by source – Baseline) and I_Serv_Dev (under Patient Care

Income by source – Service developments) sheets.

Worksheet: I_Inc_Source

This income by source breakdown will be used to inform the NHSI system template.

NHSI will advise if completion of the system template is necessary.

10.4 I_Norm

This enables Trusts to provide a breakdown of normalising income and expenditure

items. This worksheet shows the normalised surplus for the trust. That is, it removes

items such as impairments, to ascertain the trust’s ‘underlying financial position’. Items

included the normalising sections in the I_I&E will also be considered in calculating

the normalised position. This sheet is for memo only and is intended to enhance users

understanding of the underlying position.


Worksheet: I_Norm

10.5 I_SOF

This worksheet details the Finance Score for the Trust based on criteria and metrics

as outlined in the Single Oversight Framework (available from NHSI’s website here21).

The financial metrics (liquidity ratio, capital servicing capacity, I&E margin, variance

from plan and agency spend) that feed into deriving the Finance Score are calculated

here. All metrics are assigned an equal weighting, which enables an average Finance

Score to be calculated.

This worksheet allows NHSI to adjust the risk rating for an investment adjustment or

exceptional, one-off income and costs. Please note that this worksheet contains some

input cells (denoted by yellow boxes) which need to be completed by Trusts before

submission to NHSI.

21 https://improvement.nhs.uk/resources/single-oversight-framework/




Worksheet: I_SOF

Inputs are available on this worksheet to enable SOF metrics to be calculated for any

scenarios used in the template in I_Sen.

Worksheet: I_SOF

A simplifying assumption in the model assumes where and Charitable & other

donations/grants income are received, the cash receipt occurs in the same year that

income is recognised in I&E.

Performance against control total metric


Control Total and Provider Sustainability Funding inputs have been greyed out into

forecast years. This is a simplifying assumption as, at the point of model release, the

future of CTs and STF is/was uncertain in years beyond 2018/19.

Worksheet: I_SOF

Note

Significant items of other operating income that are not part of normal business may

distort the SOF metrics and Trusts should be prepared to provide further detail on

these to the NHSI review team. Donated asset income, cash donations, support from

DH for mergers and STF funding is included in ‘Other operating income’. These items

affect the calculation of the capital service cover metric. Normalising items are

included in the SOF metric calculation. This is consistent with the way the metric is

calculated across NHSI.


11. Sensitivity

NHSI test provider’s models using sensitivities which are applied to the model and

create a revised set of outputs (O_Sen) which display the impact that any changes

would have on the I&E, BS or Cash.

11.1 Sensitivity_Control

Each sensitivity input can be selected in the sensitivity control to ‘switch on’ the

sensitivity calculations. Users can select either one case only or a mixture of cases for

different sensitivities. This allows bespoke scenarios to be created simply.

Worksheet: Sensitivity Control

In addition, users have the functionality to create a bespoke scenario (‘dynamic case’)

using a combination of the post service development, case 1 and case 2. These can

be selected in the drop downs for each element of the I+E and balance sheet.

Worksheet: Sensitivity Control


11.2 I_Sen_T1-8 and I_Sen_Merger

These worksheets will be populated by NHSI during the assessment process with the

income and cost amounts (in monetary terms) reflecting the sensitivities that are to be

included in each of the two scenario cases (case 1 and case 2).

Any inputs should be in real terms (excluding inflation) unless otherwise stated.

Worksheet: I_Sen

Assessors will discuss with the trusts what scenario analysis they have performed.

The sensitivity sheets can be used by the trust to facilitate high level scenario analysis.

Any inputs to this worksheet should be blank when the model is submitted to

NHSI. To clear all sensitives in the I_Sen sheets, navigate to the Control Sheet and

select ‘Clear sensitivities’ to run the macro.


Inputs to this worksheet will be used to overlay on the post service development

outputs to create new scenarios. Inputs may either be entered in £’000s, % or days

(where applicable).


Worksheet: I_Sen

Where users need to test inflation assumptions, any inputs on the I_Sen will override

the original inflation assumptions in the base model.

Non-operating expenditure items

These are not sensitised in the model inputs on I_Sen. They will instead be sensitised

through the C_BS_Sen calculations which will update the non-operating expenditure

items in C_I&E_Sen based on the inputs on I_Sen.

Worksheet: I_Sen

Receipt of cash donations to purchase capital assets

This item cannot be sensitised specifically (nor be affected by service delivery

elements) in the model.

11.3 C_I&E_Sen

Sensitivity calculations take the base I_I&E inputs, and sum together the I_Serv_dev,

I_Sen and applies sensitised inflation assumptions from C_Infl_Sen_T1. Calculation

of the sensitised balance sheet and cash flow use the same calculation basis.


12. Output worksheets

Once the relevant input assumptions have been entered – users should then spend

some time analysing the outputs to ensure they reflect their business plans

appropriately.

Output worksheets are dynamic and in the case of a multiple trust model, will allow

selection of the trust in a drop-down box, which will then update outputs for the

selected trust. In the merger scenario, the Merger outputs will be populated but the

individual trust outputs will also be visible on the relevant outputs.

Worksheet: O_I&E

12.1 O_I&E, O_BS and O_Cash

Contain the three primary financial statements in output form on an annual basis. They

are also used to calculate information for the SOF metrics.

12.2 O_SD

Shows an I&E summary across all trusts of a user selected service development /

contract element.

Worksheet: O_SD


12.3 O_SD_All

Shows an I&E summary of all service developments across all trusts.

12.4 O_Op

This worksheet provides a summary of activity, workforce and KPI inputs for the

selected Trust.

12.5 O_SOF and O_SOF_Merger

This worksheet provides a summary of the Finance Score (Fin Score) for the Trust

based on criteria and metrics as outlined in the Single Oversight Framework (available

from NHSI’s website).

Normalising adjustments are not currently taken into account for the purpose of the

SOF metric calculations. Liquidity is calculated using closing balances. This is

consistent with how the metrics are calculated across NHSI.

12.6 O_Sen

This worksheet provides a summary of the sensitised outputs for the selected scenario

(Base, Case 1, Case 2 or Dynamic). There is a summary I+E, cash and net assets

employed. Graphs are populated for all cases showing surplus/deficit and Cash

balance for each of the years entered in the model. This worksheet also allows simple

comparison between scenarios in the model.


Worksheet: O_Sen

12.7 O_NCM_Contract

This worksheet provides a summary of any New Care Model contracts along with a

summary by contract element. It presents the aggregated financial impact of the new

care model before sensitivities. Any sensitivity which the NHSI team want to run on

the gain/loss share will be carried out at an organisational level and the impact on

specific providers can be seen in the O_Sen output.

12.8 O_Efficiency

This worksheet calculates an indicative efficiency modelled by the Trust, based on

pressures modelled through inflation and growth assumptions.

Note that Capital items have been greyed out in the model, this is because no inflation

is applied to capital in the model.

12.9 O_Triangulation

This worksheet provides an indicative triangulation between the following data points

in the model: Income against Activity, Staff expenditure against Workforce and Activity

against Workforce. This will allow NHSI teams to sense check model inputs and

assumptions.


Worksheet: O_Triangulation

Note that the triangulation worksheet provides an indication of significant variances

only and further detailed analysis of activity and income may be required.


Appendices


Annex 1: Definition of key terms used in the model

Acronym Definition

5YFV Five Year Forward View

ACC Acute Care Collaborations

ACO Accountable Care Organisation

ACS Accountable Care Systems

CCG Clinical Commissioning Group

CIP Cost Improvement Plans

DEL Departmental Expenditure Limits (the amount government departments have been allocated to spend)

DH Department of Health

FPR Financial Planning Return

FT Foundation Trust

GBS/NLF Government Banking Service/National Loans Fund

ISAP Integrated Support and Assurance Process

LIFT Local Improvement Finance Trust (Department of Health (DH) sponsored partnership between the public and private sectors)

LTFM Long Term Financial Model

MCP Multispecialty Community Providers

NCM New Care Model

NHSE NHS England

NHSI NHS Improvement

PACS Primary and Acute Care Systems

PDC Public Dividend Capital

PFI Private Finance Initiative

Service Development Transformational change or change resulting from a transaction (merger synergies)

SIP Strategic Information Platform

SOF Single Oversight Framework

PSF Provider Sustainability Fund

STP Sustainability and Transformation Partnership

UEC Urgent and emergency care

UP Unitary Payment (PFI contract payment to the private sector as a single ('unitary') charge for both the initial capital spend and the ongoing maintenance and operation costs)

WTE Whole Time Equivalent


Annex 2: Efficiency Programme Areas

Taken from Appendix 4 of the Technical Guidance for NHS Financial Planning 2018/1922.

22 https://improvement.nhs.uk/resources/nhs-shared-planning-guidance/

Category Description (mostly based on description used in 2017/18 form)

Workforce (Nursing) Efficiency Savings arising from Nursing productivity including worker deployment, efficient rostering and improved enhanced care.

Workforce (Medical) Efficiency savings from improved medical productivity including worker deployment, use of e-rostering and job planning.

Workforce (AHP) Efficiency savings from improved Allied Health Professional productivity including worker deployment, use of e-rostering and job planning.

Workforce (Other)

Efficiency savings from other workforce groups or cross cutting themes such as reducing sickness rates, reduced staff turnover, improved

succession planning etc.

Procurement

Efficiency savings arising from more efficient procurement including use of the PPIB and procurement transformation plans and the National

Catalogue of Products etc.

Hospital Medicine and Pharmacy

Efficiency savings arising from a more efficient use of the pharmacy workforce or more efficient use of hospital medicine arising from trust

Hospital Pharmacy transformation programmes including the benefit from adopting the top 10 medicine saving opportunities.

Pathology Efficiency savings and cost reduction in pathology, including pathology transformation and consolidation plans.

Estates and Facilities

Savings and cost reductions in estates and facilities services and costs. Please include the profit on any disposals arising from estates

rationalisation expected in the financial year.

Corporate and Admin

Savings arising from efficiency improvements and cost reductions in corporate and admin functions including corporate function consolidation

plans.

Imaging Efficiency savings and cost reduction in imaging , including transformation and consolidation plans.

Urgent and Emergency Care (UEC) Savings arising from implementing Urgent and Emergency Care Reviews.

New Care Models (NCM) Savings arising from implementing New Care Models.

Rightcare Savings arising from implementing the outcomes from NHS Rightcare reviews.

Specialised Commissioning Savings arising from national specialised services policies.

Fleet

Savings arising from efficiency improvements and cost reductions in fleet, including annual and running maintenance, fuels costs, lease or

purchase costs, reviews of fleet, extending life of fleet, electric car trials, SOPs, reconfiguration, accident reduction, rebates, etc’

Other Savings Plans Any savings not covered by the above. Savings in this category will be reviewed.



© NHS Improvement 2018

Contact us:

NHS Improvement [email protected] improvement.nhs.uk


Documents

Long Term Financial Model User Guide - Improvement · takes following use of the model; ... in real prices (i.e. net of inflation) for future years. Assumptions are input on an