NHS Hertfordshire Annual Report 2011/12 by NHS Herts Valleys CCG

Annual Report and Accounts 2011/2012

Published September 2012

Welcome Welcome to the 2011/12 annual report from NHS Hertfordshire ‐ the primary care trust. We write to you at the end of a year of significant change for the NHS. With the passage of the Health and Social Care Bill through Parliament, the eyes of the country have been on the health service – what it has achieved in its 60‐plus years and how it could change to meet ever increasing demands. The NHS has become a talking point for everyone, stretching far beyond those of us who are immersed in its work. With the spotlight focusing so firmly on health services, we are pleased to be able to present the real achievements of our organisation in this report. Before describing some of these changes, however, it is important to reflect on some of the positive current achievements that really matter to people. This year has seen some of the lowest rates of healthcare associated infections, for example, the highest numbers of people successfully quitting smoking (over 7,500), and patient satisfaction with care provided in local acute hospitals is higher than in previous years. Our staff continue to be a valuable asset and we would like to extend our sincere thanks to all of them for their continuing commitment and hard work during the year. They have more than exceeded our expectations of them during a year of significant change and new ways of working. Our staff survey results this year show many positive aspects and we are particularly pleased that staff feel that their individual contributions make a difference to patients. In turn, we have also been working hard to keep them informed about the future during this time of transition and to retain the skills needed to successfully launch the new organisations. In terms of implementing the NHS reforms, here in Hertfordshire, we have been working increasingly closely with our colleagues in GP practices to support the development of Clinical Commissioning Groups – which will formally take over commissioning responsibilities from Primary Care Trusts in April 2013. We expect Hertfordshire to have two large Clinical Commissioning Groups, known as CCGs, with Royston practices working with Cambridgeshire. These are Herts Valleys CCG (covering most of the west half of the county) and East and North Hertfordshire CCG (covering most of the other side of the county). These groups, led by GPs from across the areas they represent, are currently progressing well in their development towards full authorisation. Over recent months both these CCGs have been taking on further responsibility for commissioning budgets and we are now seeing local GPs at the forefront of decision making on key issues. You can read more about the progress each CCG is making on pages 8 to 10 of this report. Recent months have also seen us progress the development of a ‘commissioning support organisation’ that we expect will be providing services for Hertfordshire’s CCGs and the county’s ‘local office’ of the NHS Commissioning Board as the reforms are implemented. This proposal was drawn up in close consultation with the CCGs themselves and is now being worked up in more detail.

We have continued to work in partnership with colleagues in Hertfordshire County Council to prepare for the transfer of public health and health improvement functions to the authority from April 2013. The excellent relationship that health in Hertfordshire has with the county council is helping very much to make this transition as smooth as possible. A new Director of Public Health, jointly appointed between the council and the NHS, will strengthen these links and help to reduce any gaps between health and social care for the benefit of all patients and service users. In Hertfordshire, good progress has also been made in other aspects of joint working between local government and health. A shadow Health and Wellbeing Board was established in July 2011 and is already getting its teeth into key issues that affect our population. The board’s members are drawn from the county and district councils, the Local Involvement Network (LINk), CCGs as well as the PCT. One of the first tasks the board has undertaken is to propose a health and wellbeing strategy for the county that addresses the needs of the local population. Over the past few months we have been consulting the public and our colleagues in health and social care to ensure we reflect the real priorities for Hertfordshire. The CCGs will then be expected to ensure their own commissioning plans reflect what has been identified in the strategy. One of the key priorities for Hertfordshire is to tackle the ongoing rise in levels of obesity and help people take steps towards reaching and maintaining a healthy weight. In Hertfordshire, nearly 200,000 people (21% of all adults) are obese. The Hertfordshire CCGs, in partnership with the PCT, introduced a policy during January 2012 which aims to make sure that patients are in the best possible health before they have a routine operation. People who are very overweight are being asked to try and lose weight before they are booked in for routine surgery and additional resources have been provided to help people succeed. Patients who smoke are being asked to attend an appointment with a NHS stop smoking adviser before they are listed for surgery. As well as being immediately beneficial for patients going under anaesthetic, this policy is also intended to help people become healthier in the longer term. The PCT has also been working with a range of partners in a project to prevent older people from having a fall, to help them to maintain their independence and to improve the results for people who sustain hip fractures because of a fall. We know that having a fall is a significant risk for older people and that there are a range of preventative measures that can be taken. As well as doing lots to ensure we are well prepared for the future, the PCT is also focussed firmly on delivering its day to day responsibilities. These include establishing new annual contracts with healthcare providers and also financial management of the health care system in Hertfordshire. I am pleased to report that we end this year with a small surplus and with the local NHS in good financial shape to hand over to CCGs in the near future. The increase in activity we have experienced in our major acute hospitals has slowed down, partly due to the efforts of GPs to ensure all referrals are clinically appropriate. This aligns well with our strategic plans and is an important achievement. We are, however, still seeing a significant overspend on acute hospital activity and we are continuing to work with hospital trust colleagues and GPs to manage this. We continue to work with hospital and community trusts and GP colleagues to plan how best to meet patient expectations in the light of the funding available, focussing on good quality care and services, delivered more efficiently. The underlying theme of all this work is delivering more care outside of hospital in people’s homes and in places closer to where they live. Examples of projects we are undertaking can be found later in this report.

To help us successfully meet this challenge, we have been stepping up our efforts both to engage with patients about commissioning choices and supporting our GP colleagues to involve their patients in local surgery issues. East and North Hertfordshire CCG, in partnership with the PCT, have been running a series of ‘conversation cafés’ in recent months. These are events that bring together patients, doctors and others to hear about the work of the CCG and to discuss a particular topic that is relevant for that community. So, for example, we have held sessions to talk about access to primary care and the implementation of our intermediate care strategy. The cafés have been very popular and discussions have been helpful in developing strategies. Herts Valleys CCG will be holding their own events over the coming months. The past year has also seen significant progress in developing major new services. On the east side of the county, the PCT’s plans for the New QEII Hospital in Welwyn Garden City are progressing well and acute services are now being brought together at the Lister – including a new £16m maternity unit that opened in October 2011. And on the west of the county, the PCT and GP commissioners in Dacorum continue to drive forward plans for the development of the new local general hospital in Hemel Hempstead. As we look ahead to the coming year – the final year of primary care trusts – we expect the pace of change to accelerate as the emerging commissioning organisations develop the skills they need to become local leaders of the NHS. We hope this report gives you a flavour of the activities, achievements and issues that have contributed to our performance over the past year. If there are any items highlighted in the following pages that you would like to know more about, please don’t hesitate to contact us using the details listed on the back page of this document.

Dr Jane Halpin Chief Executive

Stuart Bloom Chair

Dr Mike Edwards Medical Director

About us Our history and background NHS Hertfordshire (the primary care trust) came into being on 1 April 2010 following the merger of NHS East and North Hertfordshire and NHS West Hertfordshire. Primary care trusts have existed since 2000. Our role as local leaders of the NHS We hold the vast majority of the NHS budget locally and are the lead health commissioning organisation in the county. Commissioning means that we assess the health needs of our population then use our resources to buy services from hospitals and other providers such as mental health trusts, GPs and dentists to meet those needs. By doing this we can have a positive impact on the health and wellbeing of the local population. We also fund the cost of medicines and treatments prescribed by GPs and nurse prescribers. We commission services in a number of different ways:  Directly with providers such as hospitals  Locality commissioning – where GPs and other clinical staff can design services that meet the needs of their patients in a particular area  Primary care commissioning – this involves services provided by GPs, community pharmacists, dentists and optometrists Sharing the commissioning of services ‐ this means that we join together with Hertfordshire County Council and we both contribute some of our budgets (a total of around £200m) to a partnership which then arranges mental health and learning disability services in the county. We use the majority of this money to commission services from Hertfordshire Partnership NHS Foundation Trust and from the county council’s Health and Community Services (previously known as Adult Care Services). Providing care NHS Hertfordshire is a commissioning organisation and does not directly provide care for patients. Community services are provided for our residents by Hertfordshire Community NHS Trust and the county has two trusts providing hospital services: East and North Hertfordshire NHS Trust and West Hertfordshire Hospitals NHS Trust. Mental health and learning disability services are provided by Hertfordshire Partnership NHS Foundation Trust. How we are managed We are managed by a Board of non executive and executive directors. The executive directors are employed by the PCT and the non executive directors are independent people who work on a part time basis, to make sure that we act in the best interests of the public. The Board is responsible for ensuring we meet our performance targets and also oversees the work of the Clinical Standards Committee. This committee is made up of GPs and other clinical staff who advise us on clinical matters. 4

Non executive directors:  Stuart Bloom, Chair  Mary Compton  Linda Farrant  Tracey Graily *  Mark Gainsborough (to July 2011)  Eliza Hermann  Paul Smith  Kate Watts  Dr Tony Kostick and Dr Mike Edwards, Joint Chairs of the Clinical Standards Committee (until October 2011) Executive directors:  Dr Jane Halpin, Chief Executive  Mike Edwards, Chair of the Clinical Standards Committee and Medical Director (from October 2011)  Alan Farmer, Director of Workforce Transformation  Beverley Flowers, Director of System Management  Heather Moulder, Director of Nursing (from September 2011)  Andrew Parker, Director of Primary Care Development and Corporate Services  Alan Pond, Director of Finance and Productivity. Alan is also Interim Chief Executive for Herts Valleys CCG (from September 2011)  Lesley Watts, Director of Operations. Lesley is also Interim Chief Executive for East and North Hertfordshire CCG (from September 2011)  John Webster ‐ Director of Strategy and Performance (from November 2011) Location and type of facilities provided Our head office is in the heart of Welwyn Garden City. The vast majority of our staff are based here although we still have a small number of staff based in other parts of the county. *

In February 2012 Tracey died suddenly following a road traffic accident. Tracey had been a member of the Board since early in 2010 and had made a very significant contribution to the work of the PCT, bringing energy, enthusiasm and a passion for improving health and health care to her role.

Key issues for NHS Hertfordshire during the year Our strategy for improving health in Herts (QIPP) All NHS organisations in Hertfordshire, together with GPs and Hertfordshire County Council have been working together to develop the strategy for how we plan and deliver health care in this area over the next five years. This strategy has been developed in the context of much lower increases in funding for the NHS than we have received in recent years together with an increasing and ageing population and the availability of new technologies and treatments. All this means that we need to make the money stretch further. We have calculated that unless we change the way we work, there will be a gap in our funding of £276m over the next four years. This amounts to about 17% of the money we get, or an average of 4% for each year. So we are going to make changes to focus resources where they can most make a difference. Our aim is to ensure that the quality of services improves and we are putting the money available for health services in the county to best use. We have produced a short leaflet to help the public understand the changes being made. This is available on our website: www.hertfordshire.nhs.uk Implementing the NHS reforms During 2011/12 the reforms to the NHS continued to make their way through Parliament. Good progress to implement the reforms is being made in Hertfordshire, some key highlights of which are:  Development of Clinical Commissioning Groups (CCGs) CCGs have been established in shadow format in preparation for the formal transfer of commissioning responsibilities from PCTs when they are abolished at the end of March 2013. Hertfordshire has two large shadow clinical commissioning groups (CCGs) – East and North Hertfordshire CCG and Herts Valleys CCG. In February 2012 the county’s smaller shadow CCG, The Red House Group, was advised by the strategic health authority cluster that it could not continue in its original configuration. The PCT continues to talk to Red House about the alternative options available to them, including becoming part of Herts Valleys Clinical Commissioning Group – the CCG surrounding their area. We will continue to offer support and guidance where needed to help Red House manage the transition to joining a new CCG. Both Hertfordshire CCGs are currently aiming to become “authorised” in the autumn of 2012. More information about their progress and achievements during 2011/12 can be found on pages 8 to 10.  NHS Commissioning Board The Board Authority has now been in place for several months and is leading on the development of the new commissioning system. The Board will begin life as an Executive Non‐ Departmental Public Body (ENDPB) in October 2012 when it will take on responsibility for the authorisation of CCGs and other responsibilities for preparing the new system. It takes on its full statutory responsibilities in April 2013. NHS Hertfordshire will form part of a 'local office’ of the NHS Commissioning Board from 2013. The NHS will continue to commission primary care health services ‐ those provided by 6

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GPs, dentists, community pharmacists and optometrists ‐ via the newly created NHS Commissioning Board. Development of a Commissioning Support Service The PCT continues to work on the development of a comprehensive commissioning support organisation – known as Hertfordshire Integrated Commissioning Support Service (HICSS) ‐ to provide managerial, contracting, finance, administration and other support to Clinical Commissioning Groups. It is expected that HICSS will also provide support to the local area team of the NHS Commissioning Board. An outline business plan for the service was submitted to the Department of Health at the end of March which was put together following detailed discussions with the two CCGs to ensure the service would meet expectations. Service specifications have been developed so that CCGs can confirm which services they wish to buy from HICSS and for them to tell us about other more bespoke services they may wish to buy in the future. Transfer of public health responsibilities to Hertfordshire County Council Preparations are well underway for this transfer and the outcome of an assurance visit from the SHA cluster has confirmed that we are making good progress, with the positive relationship between the county council and NHS Hertfordshire being particularly noted. More information can be found on page 15 of this report.

Within the PCT we have therefore rearranged some functions now so that staff are able to start to work towards the new arrangements and organisations that will be in place as the reforms take effect. East and North Hertfordshire Clinical Commissioning Group (CCG) East and North Hertfordshire CCG covers a population of around 568,000 people and is split into six local areas each with its own GPs elected to the CCG Board: North Herts; Stevenage; Welwyn Hatfield; Lower Lea Valley (covering Cheshunt, Waltham Cross and Broxbourne), Upper Lea Valley (covering Hertford, Ware and Hoddesdon) and Stort Valley and Villages (covering Bishop’s Stortford and Sawbridgeworth). Dr Tony Kostick, Chair of the CCG said: “It has been a busy and demanding year for clinical commissioning groups. Since first being granted pathfinder status just over 12 months ago, we have been keen to progress quickly with the new commissioning arrangements and establish new ways of working. We held elections for CCG board members and now have committed clinical leadership in place with each locality having a strong voice at board level. It has been, and will continue to be, a steep learning curve for many of us, as although most board members have been involved in commissioning at a local level before in some way, the new commissioning agenda is the most challenging one GPs have ever faced. GPs on the Board have embraced this challenge and set a number of priorities for the coming year, key to which are continuing to improve quality and access to GP services and reducing the number of people who go to A&E when there are more appropriate services available for their symptoms. For example, In response to a request from our CCG, Hertfordshire County Council and Hertfordshire Community NHS Trust have developed a pilot integrated point of access project for 7

GP referrals to help patients with complex care needs access the support which will prevent them being admitted into hospital when its not needed. The project allows any health care professional, usually a GP, to use one telephone number to contact a full range of health and social care organisations. A trained operator takes the call, and arranges the services needed in one step, enabling patients to be helped more quickly and taking up less time for the health professional making the call. The CCG’s first big policy decision – asking very overweight patients to try and lose some weight and try to give up smoking before having routine surgery ‐ attracted a great deal of interest from the public and the media. By introducing the policy our aim is to make sure that patients are in the best possible health before they have their operation. There is strong clinical evidence that surgery carries significantly higher risks for people who are very overweight. These patients are much more likely to suffer serious breathing problems and develop infections as well as heart, kidney and lung complications. When people are overweight it takes them longer to recover from surgery and they have a higher risk of dying under anaesthetic. The same is true for people who smoke. This policy has clear short term benefits for patients undergoing surgical procedures and it is also intended to help people here in Hertfordshire become healthier in the longer term. Being very overweight or a smoker means you have a higher risk of getting diabetes, heart disease, liver problems and certain types of cancer and of having a stroke. More and more people are becoming obese across the UK – including in relatively affluent counties like Hertfordshire ‐ and suffering from these debilitating conditions. We have produced materials for patients and as part of our efforts to explain the policy and encourage people to talk about the issues involved, we made it the subject of one of our conversation café events. These events held in each of our localities over the past year have been a really useful way for GPs to engage with local people and discuss the hot topics affecting their area. We hope to hold similar events over the next 12 months. Later this year we, alongside other CCGs around the country, will be submitting our application to become a fully authorised organisation. If successful, this would then enable us to take on additional commissioning responsibilities from the PCT ahead of the formal transfer in April 2013.” Dr Tony Kostick, Chair of East and North Hertfordshire CCG. Herts Valleys Clinical Commissioning Group (CCG) Herts Valleys Clinical Commissioning Group (HVCCG) covers a population of 583,000 – and comprises GPs from Dacorum, Hertsmere, St Albans and Harpenden, Watford and Three Rivers. HVCCG represents all the practices from these areas (except for the Red House Group (population 19,000) who at the time of writing have not yet formally joined a shadow CCG having previously planned to form a CCG to commission services solely for patients registered with them). GPs in Herts Valleys have experience of commissioning health services on behalf of their own patients as well as being GPs. The difference is that they are now working as a group to commission on behalf of a larger population.

HVCCG have an elected board and are making good progress towards achieving their goal of becoming fully responsible for commissioning health services on behalf of local people from April 2013. The board comprises two GP members from each local area including the Chair, Dr Nicolas Small. Dr Nicolas Small, Chair of HVCCG said: “We first gained approval to become a pathfinder CCG back in January 2011 and since then we have been working hard to make sure that we have the right arrangements in place to become a strong and effective commissioner of health services on behalf of local people. At the moment, like all other CCGs we are still in shadow form, and our focus has been on ensuring that local people and practices are represented and play a full role in our development. Recently we’ve taken a large step towards making sure that our patients are at the very heart of things when it comes to making decisions about local health services by becoming one of the first CCGs in the country to develop a patient and public involvement strategy. We are very keen to make sure that GPs, patients and other people interested in health can work together to identify local health priorities and the types of health services that are needed. We also want to encourage patients to get more involved when it comes to making decisions about the things that affect them. Our involvement strategy will help us to do this as the most important part of it is a plan of actions that we intend to take. These include electing a patient representative to join our Board, holding a series of conversations cafés over the summer when GPs, patients, voluntary organisations and others will sit down together in an informal setting to talk about local health issues. One of the topics that was widely discussed this year was our weight management before surgery policy. Although the detailed implementation of the policy itself was new, it has always been the case that doctors have explained to their patients the dangers of being overweight and of smoking; what the policy has done is take a further step to make this more formal and consistent and to reduce the variation between different GP surgeries in Hertfordshire. There is good evidence that a ‘medical trigger’ such as being told by your GP that you need to lose weight for an operation, can often provide the incentive people need to make changes to improve their own health. Our priorities for the coming year will be focused on improving care for patients: by bringing more care out of hospital and closer to home; streamlining patient pathways and redesigning services like cardiology and diabetes. We’ll also be looking to see how we can make urgent and maternity care better in our area.”

Dr Nicolas Small, Chair of Herts Valleys CCG Developing the New QEII Hospital, Welwyn Garden City The PCT continues to progress plans for building a new QEII Hospital in Welwyn Garden City. The new QEII, on the exiting Howlands site, will provide a wide range of local health services that patients use most often. When acute specialist care transfers to the Lister Hospital in Stevenage, the New QEII will continue to provide local health services for over 250,000 patients each year.

The new hospital, which will open in spring 2014, will include a Local A&E facility – available 24 hours a day, every day of the year – to look after the vast majority of people who currently use the A&E service at the QEII. Other services at the hospital will include:  General outpatients  GP services, including in the evenings and at weekends  Diagnostics – such as CT and MRI scans, x‐rays and ultrasound  Rapid Assessment Unit – for patients who need urgent assessment and diagnostics but do not need to be admitted into hospital  Endoscopy and day treatments  Ante and post natal services  A dedicated Children’s Centre  Therapy services, such as physiotherapy and occupational therapy  The Vicki Adkins Breast Unit Planning permission for the new hospital was granted by Welwyn Hatfield Borough Council in September 2011. Members of the public were also invited to view the latest plans and building designs at two drop‐in events held during December. GPs from the Welwyn Hatfield area and the wider project team were on hand to talk visitors through the displays and answer any questions. Similar events will be held during 2012/13 to keep local people up to date on progress with the development. Service changes at the Lister Hospital, Stevenage During 2011/12 a number of changes took place at the Lister Hospital in Stevenage as part of the Delivering Quality Health Care for Hertfordshire programme:  All inpatient heart and stroke services are now located at the Lister. Thrombolysis (clot‐ busting) treatment is available for stroke patients all day, every day so fewer patients will have to travel outside of Hertfordshire to receive their treatment.  A new £16m maternity unit opened in October 2011 and all the trust’s births now take place here, rather than at the QEII Hospital. The new unit combines midwife‐led care for women with lower‐risk pregnancies and consultant support on hand for those who need it. Although all hospital births now take place at the Lister Hospital, pregnant women can have all their ante and post natal care close to where they live, either at the QEII or Hertford County hospitals or in their GP surgery.  A new multi‐storey car park opened at the Lister in September 2011 providing over 650 spaces and is designed to provide sufficient spaces for when services are transferred up from the QEII Hospital by spring 2014.  As a result of some of the changes listed above, in January 2012, East and North Hertfordshire NHS Trust introduced some interim changes to the A&E service at the QEII Hospital. A new website, radio and media campaign was launched to explain the changes to patients. More information can be found at www.wheredoigo.org.uk

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By spring 2014, all remaining emergency and inpatient hospital services will be brought together at the Lister Hospital. This includes an expanded and redeveloped emergency department, new operating theatres and a new ward block to provide the very best, modern and specialist care for patients.

The Lister Surgicentre The Lister Surgicentre also opened in the autumn of 2011. It provides specialist orthopaedic care, including hip and knee joint replacement and shoulder joint surgery, day case and short stay general surgery and gynaecology, head and neck and Ophthalmology (eye health) treatment. The Surgicentre also provides an Urgent Eye Clinic for adult patients. It is run by an independent sector organisation – Clinicenta – providing NHS services to NHS patients. On opening, the Surgicentre experienced initial problems which meant that fewer patients were seen and treated than was expected. The PCT, as commissioners of the service, have made clear our expectations and outlined the need for all elements of the service to meet required standards. We have worked very closely with Clinicenta to help them make improvements and try to overcome these initial problems. Opening of Cheshunt Minor Injuries Unit In October, a minor injuries unit opened at Cheshunt Community Hospital to replace the pilot urgent care centre. Pilot urgent care centres at Cheshunt Community Hospital and Hertford County Hospital opened in 2009 with the aim of relieving the pressure on A&E departments and giving people better local access to care and treatment for urgent conditions like fractures, bites, cuts and scalds which don’t need the skills of specialist A&E staff. The pilots were not re‐commissioned because evaluation showed they had not reduced attendances at A&E departments. The PCT Board instead agreed to open a minor injuries unit at Cheshunt and do some intensive work with GP practices in that area to improve access to primary care services. Since opening, the minor injuries unit at Cheshunt has seen around 1,200 patients each month and more than 90% have said that they are ‘highly satisfied’ with the treatment and care received. We are pleased that the transition from an UCC to a MIU went smoothly and that the vast majority of the patients attending the MIU are there to be treated for the right reason – for a minor injury. Routine surgery for people who are very overweight and for smokers In January, Hertfordshire’s two largest clinical commissioning groups, in partnership with the PCT, introduced a policy which means that people who are very overweight are being asked to try and lose weight before they are booked in for routine surgery and patients who smoke are being asked to attend an appointment with a NHS stop smoking adviser before they are listed for routine surgery. The aim is to make sure that patients are in the best possible health before they have their operation. There is strong clinical evidence that surgery carries significantly higher risk for people who are very overweight or who smoke and it takes them longer to recover. This policy is also intended to help people become healthier in the longer term. Being very overweight or a smoker means you have a higher risk of getting diabetes, heart disease, liver

problems and certain types of cancer and of having a stroke. More and more people are becoming obese and suffering from these debilitating conditions. This policy was trialled early in 2011 specifically for hip and knee surgery with preliminary findings showing that most people reached their target weight. For some, the weight loss has alleviated symptoms significantly and as a result they have chosen not to have joint replacement surgery. Twice as many people have attended a full stop smoking programme and many of those have successfully quit smoking altogether. Of course patients who need surgery will still get that surgery. GPs can make a case for a seriously overweight patient being treated for routine surgery as an exception even if they haven’t lost weight. An individual patient’s needs will always be the most important consideration. Developing the Hemel Hempstead local general hospital A group, made up of representatives from NHS Hertfordshire, West Hertfordshire Hospitals NHS Trust and GP commissioners in Dacorum continue to drive forward plans for the development of the new local general hospital in Hemel Hempstead. The group is examining a number of building and refurbishment options on the existing Hemel Hempstead Hospital site and we expect a report outlining a preferred option to be presented to the PCT board later in the year. New link road to Watford General Hospital In February, West Hertfordshire Hospitals NHS Trust secured £7m of funding to build a new road to Watford General Hospital, in addition to the Croxley rail link project. The new road will improve access to the hospital from the M1 and allow patients and visitors to get to the hospital without going into the town centre. Helping older people stay independent: preventing falls programme We have been working with a range of partners in a countywide project to prevent older people from having a fall, to help them maintain their independence and to improve the results for those who do, for example, sustain hip fractures because of a fall. We know that having a fall is a significant risk for older people and that there are a range of preventative measures that can be taken. Through the project we are identifying the over 65s who have already had one fall and carrying out individual patient assessments. This includes checking medication, reviewing people’s vision, looking out for balance problems and could also include making sure their home environment is as safe as it can be. Another element of the project is a training programme for care home staff to support them in preventing residents from suffering falls. We are also running strength and stability classes for the over 65s across the county. These 16‐week programmes are becoming increasingly popular, with around 170 people taking part so far. This is an accredited programme that could reduce falls by as much as 30% in those who attend the classes. Let’s Use it Right – public information campaign The past year has seen the expansion of the PCT’s Let’s Use It Right public information campaign, designed to help people make the right choice of which health service to use for their symptoms. We developed an ongoing programme of activities where we could have conversations with people to help them make informed decisions about using the right service depending on their health needs at the time.

Our promotional activities this year included:  A campaign focused on self care – to encourage people to consult their pharmacist and use over the counter medicines to treat minor illness instead of going to the GP or hospital;  Advice teams visited hospitals across the county to have conversations with patients and visitors about getting the best from health services and giving them information to take away explaining what is on offer and where;  Using our well established Twitter account (@NHSHerts) to get messages out to our 1,500+ followers and those of other partner organisations;  Using radio adverts to give clear, direct advice about using pharmacies, the GP out of hours service and A&E appropriately;  Local leaflets to give people details information about the services nearest them, including those in neighbouring counties.

Working with our partners Key to developing appropriate health and social care services are partnerships with the public, carers, other health service organisations (for example hospital, mental health and community trusts), county council, district councils, voluntary organisations, housing providers, colleges and employment services. It is now more important than ever that we continue to strengthen these partnerships so that we can commission joined up services for residents ensuring that we get good value for money and avoid duplication. It is also important that we continue to work closely with service users and their carers to ensure that they have an influence on the services we commission on their behalf. Some of our partnership activities during 2011/12 were:  Health and Wellbeing Board The shadow Health and Wellbeing Board has been in place in Hertfordshire since July 2011. The board is chaired by Hertfordshire County Council’s executive member for children’s services and has representation from NHS Hertfordshire, the two CCGs, LINk, and the district and borough councils. Work so far has focused on establishing the role and function of the board and identifying critical issues, such as obesity, where rapid action is required to ensure we are well placed to respond to the health and wellbeing needs of our population. This has led to the identification of two areas in the county, Stevenage (where the focus will be on children, young people and their families) and Watford (where the focus will be on BME communities), where a range of interventions are being trialled. The board considers obesity to be one of the county’s most pressing issues to address and has endorsed the policies developed by the CCGs and PCT to ask very overweight patients to lose weight and stop smoking before undergoing routine surgery. An outline Health and Wellbeing Strategy is being developed and the public were asked to contribute their views during spring 2012.  Transition of public health function to HCC As part of preparations for the transfer and integration of public health responsibilities to

Hertfordshire County Council, a Director of Public Health has been jointly appointed to the county council and PCT and will start in post in July 2012. The Director of Public Health will ensure that transferring the existing workforce and responsibilities from NHS Hertfordshire to the county council will build on the current expertise and ensure that the principles of public health are promoted across all of the departments within the council and that links are maintained with the relevant strategic partners. 

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Improving the health of carers NHS Hertfordshire works in partnership with colleagues from Carers in Herts to run Carers Health Forums. These forums provide a valuable opportunity for family carers to come together and discuss their experiences of health services directly with the health professionals that provide and commission them. The events take a ‘you said – we did’ approach and this, along with reports in Carers in Herts’ newsletter, Carewaves, provide ongoing feedback to carers on how their input has influenced the way in which services are provided. Implementation of intermediate care strategy In July 2010, the board agreed a new vision and strategy for delivering intermediate care. The strategy was developed in partnership with Hertfordshire County Council and focuses on looking after more patients at home and working with the county council to commission intermediate care beds for those who need them in local independent care homes, in a greater number of locations, rather than placing patients in facilities that may not be very close to where they live. The strategy is being implemented in phases across the county, one geographical area at a time. The first area and facility to be reviewed was Windmill House in Bushey. In May 2011, following a 12‐week public consultation the decision was made to transfer the majority of beds from Windmill House in Bushey to Langley House in Watford with the remainder of the beds purchased from an independent care home in the Bushey area. This decision meant that patients from the Bushey and Watford areas would be placed in facilities closer to where they live. A 12‐week period of engagement and consultation took place between November 2011 and February 2012 on proposals for the reprovision of intermediate care beds in Royston, Hitchin and Stevenage/Knebworth. The consultation also included proposals for the relocation of outpatient and community services in Royston. The board agreed to move forward with plans for Hertfordshire County Council to develop a new health and social care facility on the Royston Hospital site. Whilst a new building is being constructed, the intermediate care beds currently provided at the hospital will be provided in local care homes, with patients supported by the nurses and therapists from Hertfordshire Community NHS Trust who look after them at the moment. A decision was also made to move local outpatient services into a new purpose‐built extension at Royston Health Centre, in the heart of the town. Subject to planning approval, it is expected 14

that the new extension would be ready by February 2013, after which time outpatient services could move and work begin on redeveloping the Royston Hospital site. In Hitchin, the decision was made to buy intermediate care beds for patients in local care homes and to close Hitchin Hospital which is no longer a suitable environment to deliver good quality care. For Stevenage and Knebworth patients it was agreed that 13 intermediate beds would be commissioned in local care homes: this figure consists of the 8 beds currently provided at Bulwer Lytton House – which is due to close shortly – plus an extra 5 beds for the Stevenage area. 

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Improving patient engagement in clinical commissioning As well as the successful ‘conversation café’ format, this year NHS Hertfordshire has been working with its clinical commissioning groups to create a more vigorous system of citizen engagement to influence and shape the commissioning of services. Patient reference groups have been established in more than 90% of general practices in the CCG areas as part of a national scheme. These groups are key building blocks in getting people involved at the primary care coalface and improving quality and access to primary care services. To support practices requesting help, the PCT has produced guidance, held workshops, attended practice manager meetings and launched an individual practice mentoring scheme which has supported over 30 practices to develop their groups. During the coming year we will develop and refresh locality patient commissioning groups by seeking representatives from each practice reference group. We will also establish two CCG‐ wide stakeholder groups along similar lines to the existing NHS Hertfordshire forum which the PCT has run for the last four years. As well as patient representatives from the localities, the fora will include voluntary agencies and local authority representatives and local Health Watch. Tobacco Control NHS Hertfordshire engages with a wide range of stakeholders to reduce the impact of smoking through its leadership of the local tobacco control alliance Tobacco Free Hertfordshire. A countywide strategy has been agreed and is monitored by a core strategy group. Tobacco control action plans have been developed jointly for each local strategic partnership (LSP) covering all 10 district and borough council areas. Key actions include: an elected councillor tobacco control champion for each area; brief intervention training for frontline staff and communications activity to increase referrals to the Hertfordshire Stop Smoking Service; increased local intelligence on illegal tobacco and extending smokefree environments. North Herts Council, for example, launched the county’s first smokefree play area in March 2012. Other district councils have shown interest in doing the same. Hertfordshire was also one of 25 areas provided with Department of Health funding of £200,000 from 2009 to 2011 to develop innovative tobacco control interventions designed to reduce health inequalities. Five projects were funded in Hertfordshire ranging from a pilot smokefree homes and cars scheme in Stevenage to a lung age project to promote good lung health in smokers who do not regularly attend their GP. 15

Equality, diversity and human rights Equality delivery system During the year, the PCT worked with other NHS organisations in the county to implement a new Equality Delivery System (EDS) to improve the way in which people from different groups are treated as patients, carers and employees. With the help of local community groups, the following objectives were agreed for NHS Hertfordshire:  Data Collation, Analysis and Usage NHS Hertfordshire will continue to improve data collection across the protected characteristic groups and ensure that information is reviewed, analysed and used to inform the commissioning of services that meet the needs of the local population.  Partnership working NHS Hertfordshire will strengthen partnership and collaborative working enabling meaningful engagement to ensure patient pathways meet the needs of all protected characteristics.  Engaged, Empowered and supported staff To maintain organisational plans and processes to support the Equality and Diversity agenda and ensure evaluation systems are designed to provide assurance on effectiveness for all staff.  Leadership To demonstrate leadership by advancing the equality agenda internally to ensure equality and diversity is mainstreamed and embedded across the organisation. Key to the process so far has been the involvement of local communities, who have worked with all NHS partners providing valuable information and feedback on services. From April 2012, the EDS has been used in every NHS organisation in England which means that wherever patients go for NHS services they will find organisations working to the same set of goals around equality and human rights. Working with the transgender community NHS Hertfordshire has worked with Viewpoint and a member of the Transgender community to plan a health assessment for the Transgender community to help the NHS and its partners understand the particular needs of this community and how to ensure people have a positive experience of the health service. It is thought that this is the first piece of work of its kind in the country.

Environmental, social and community issues Sustainability report NHS Hertfordshire aims to reduce the total CO2 emissions from our activities by 20% from the 2008/9 baseline by December 2015. To meet this we have set a number of targets to reduce emissions from our buildings, transport, waste and procurement.

In 2008/9, the total carbon emissions produced by PCT activities was 9,483 tonnes. In 2010/11, the latest year for which figures are currently available, 7,984 tonnes of carbon was emitted on a like for like basis. It should be noted that the former provider arm of the PCT which was responsible for the majority of emissions, is now a separate Trust and is required to report its own emissions separately in future. The 16% reduction in emissions was largely achieved by the rationalisation and disposal of surplus buildings. The commissioning activities of the PCT are restricted to Charter and Fountain House in Welwyn Garden City and it is relevant to note that emissions from energy, particularly electricity, within these buildings has increased 35%. This can partly be explained by the increased usage of the building and upgrades to the network infrastructure. Emergency preparedness Activity this year has focused on preparations for London 2012. NHS Hertfordshire has been involved in a number of multi‐agency exercises designed to test resilience in the case of a major incident taking place in Hertfordshire during the Olympics. These include participation in exercises forming part of the Olympic 2012 testing and exercise programme, designed to ensure the delivery of a safe and secure games, supported by national Olympic and CBRN experts. NHS Hertfordshire has established an Olympic Planning Committee to manage the PCT responsibilities/responses in relation to health services in Herts during the Olympics, especially around the event taking place at Lea Valley White Water Centre, near Waltham Cross. Our Major Incident Plan is fully compliant with the requirements of the NHS Emergency Planning Guidance and all associated guidance. Social and community issues The PCT actively engages with local communities, patients and service users in planning, developing and making decisions about local health services. We do this in a number of ways including:  Consultation activities around proposed service changes  Patient representatives on PCT groups and committees  Community roadshows and events  Presentations to patient and community groups  Establishment of patient and stakeholder participation groups. We also work closely with local partners across the public and voluntary sector to both understand and meet the health and social care needs affecting our population. We regularly attend and make submissions to Hertfordshire County Council’s health scrutiny committee and health panel groups working at local authority level. We have also fostered good relationships with Hertfordshire Local Involvement Network (LINk) and this year have supported GPs across the county to develop patient groups which represent their practice populations. Persons with whom the PCT has contractual or other essential arrangements  133 GP practices  195 dental practices  238 community pharmacies 17

     

159 optician practices acute hospital providers (with the main ones set out in note 37 of the accounts) East of England Ambulance Service Trust Hertfordshire Partnership NHS Foundation Trust Hertfordshire Community NHS Trust and various voluntary and independent providers of health care.

Engaging with our staff We have a range of mechanisms that encourage conversation and good communications within the organisation. These include:  A monthly team brief that we call ‘HertBrief’ ‐ comprising key messages from the executive team ‐ that is cascaded throughout the organisation. HertBrief gives staff the opportunity to discuss the content at their team meeting and to feedback comments and questions to executive team that are answered in the subsequent brief;  Regular team meetings;  A well used staff intranet containing a wealth of information including events, summaries and explanations of national policy, local services changes, NHS news and social and community events;  Regular Chief Executive briefings, where all staff gather together to discuss key issues and ask questions;  Bi‐monthly director briefings – where staff meet in smaller groups that reflect emerging organisations. This is an additional chance for detailed discussion about common issues. NHS Hertfordshire is committed to being an organisation within which diversity, equality and human rights are valued. We will not discriminate either directly or indirectly and will not tolerate harassment or victimisation in relation to gender, marital status (including civil partnership), gender reassignment, disability, race, age, sexual orientation, religion or belief, trade union membership, status as a fixed‐term or part‐time worker, socio‐economic status and pregnancy or maternity. We are committed to supporting all staff to develop and enhance their skills ensuring they commission the best services for patients and to help prepare them for changes to their roles that the NHS reforms may bring about. We support our staff to have a healthy work‐life balance by offering a range of working patterns including part time hours, the opportunity to purchase additional annual leave, taking a career break and working annualised hours. And we offer a range of other staff benefits and activities as part of our staff wellbeing programme that includes:  access to NHS childcare coordinators who provide advice and support on childcare issues;  an Employee Assistance Helpline providing practical information, legal advice, telephone and face to face counselling to help cope with a variety of personal, family and workplace issues;  sessions with a nutritionist. Policies Our human resources policies include: 18

 Attendance Management Policy  Education, Training and Development Policy  Equality and Diversity in Employment Policy  Grievance Policy and Procedures  Induction Policy  Maternity, Adoption and Paternity Leave Policy  Organisational Change Policy  Performance Review, Appraisal & Personal Development Policy  Raising Concerns at Work (Whistleblowing) Policy  Recruitment and Selection Policy  Retirement Policy and Procedures  Smoke Free Policy  Work Life Balance Policy These and other human resources policies can all be downloaded from our website www.hertfordshire.nhs.uk/resource‐centre Policy in relation to disabled employees The PCT continues to use the two ticks – ‘Positive About Disabled’ award, which not only recognises good practice, but having policies and procedures in place to support equality of opportunity for people with disabilities. Consultation and communication with staff The PCT has a joint negotiating committee where representatives from staff side and the PCT management team meet regularly to consult and negotiate on issues concerning PCT staff. Absence due to staff sickness 2011/12 Total number of days lost = 3,099 Full Time Equivalents (FTE) Total staff years = 455 (FTE) Average working days lost = 6.81 (FTE) The sickness absence rate for Hertfordshire PCT in the 12 months to the end of March 2012 was 2.95%. The average for all PCTs for the 12 months to end of January 2012 was 3.96%, and 4.04%.for PCTs in the East of England. Comparative sickness figures to end of March will not be published until end of June Note: As per the Department of Health guidance, the figures disclosed are per calendar year (January to December).

How are we doing? Progress and outcomes on key performance targets Some areas of achievement in 2011/12 include:  Reducing healthcare associated infections – The number of cases of MRSA and CDiff have fallen within Hertfordshire’s hospitals and community facilities and are well within the maximum number set for the year.  Mental health services – around 97% of patients are starting their mental health treatment within the target of 18 weeks.  Satisfaction with GP – the percentage of people who would recommend their GP surgery to someone who has just moved to the local area. With 90% of all Hertfordshire’s GP practices having a patient participation group, we hope that this figure will continue to rise as each surgery uses its patient group to help improve access, quality and patient experience in primary care.  Waiting times in A&E – Despite severe pressures on A&E departments during the winter, both East and North Hertfordshire NHS Trust and West Hertfordshire Hospitals NHS Trust both achieved the national standard across the year to treat, transfer or discharge 95% of patients within 4 hours. Ensuring people only attend A&E if their condition is serious or life‐ threatening remains a key priority for the PCT.  Helping people to give up smoking – As smoking is one of the biggest causes of avoidable deaths in the county, we work hard to give Hertfordshire residents the support they need to quit. This year we met our challenging target and helped more than 7,500 people across the county become smokefree and have used initiatives such as a mobile health bus offering lung age tests and encouraging people to use their pharmacist to achieve our target.  Diabetic retinopathy screening – this year, all patients with diabetes have been screened for a condition called diabetic retinopathy and have received treatment if they have needed it. Retinopathy is the leading cause of blindness amongst people of working age so early detection of any problems is very important.  Cervical screening – Around 99% of women receive the results of their cervical screening (smear) test within 2 weeks.  Ambulance response times – The East of England Ambulance Service once again met its target to respond to category A calls (the most urgent) within 8 minutes and category B calls within 19 minutes.  Privacy and dignity – All patients being looked after in Hertfordshire acute and community hospitals are able to stay in same sex wards.  Cancer – Around 97% of patients were seen by a specialist within two weeks of being referred by their GP for suspected cancer

Some areas needing improvement during 2011/12 include:  Reducing the waiting times for psychological therapies – we know that talking therapies can be of great help to people suffering with mild to moderate depression or anxiety. This year around 60% of people who have used them class themselves as ‘moving to recovery’. This is above national expectations of 50%. Problems with training places and staff retention at Hertfordshire partnership NHS Foundation Trust which provides the service has led to waiting times for psychological therapies being longer than we would like and the PCT is working with the trust to improve the position.  The number of people aged 40‐74 who have received a health check – The NHS Health Check programme is being introduced across the country over the next few years. Once introduced, all people in this age group will be offered a routine health check (blood pressure, BMI, cholesterol and diabetes risk assessment) at their GP surgery once every five years. For 2011/12, our aim was for 18% of eligible patients to have received this check and this wasn’t quite achieved. We know that the Health Checks programme will remain a priority for public health teams when they transfer over to local authorities so work is being carried out through CCGs to increase awareness of the checks amongst GPs and ensure they are recording information about health checks properly.  Emergency re‐admissions within 30 days – The PCT has a target of no more than 10.7% of patients being readmitted to hospital within 30 days of being discharged. This year, there are still more patients being readmitted during this timescale than we would like. The PCT is working with hospital trusts to improve this figure and will adjust payments for hospitals where it has been identified that patients come back into hospital following a non‐elective admission.  Proportion of people at high risk of stroke who experience a TIA are assessed and treated within 24 hours – in Hertfordshire we have set ourselves a target of 70% of people who have a TIA (sometimes known as a mini‐stroke) being assessed and treated within 24 hours. At the moment only around 32% (March 2012) are doing so. This is partly because people may be unaware that they have experienced a TIA. We are also reviewing all patients who come to their GP or hospital with a TIA to identify where the pathway could be improved. For example, if the delay occurred within primary care a letter is sent to the individual practice outlining the importance of getting people referred and assessed quickly.  Prescribing of "self‐care" medicines – the amount of money spent on prescribing medicines that can be bought by individual patients 'over the counter' is still higher than we would like. We continue, through our public awareness campaigns, to encourage people to prepare for most common illnesses and ailments by keeping a selection of basic medicines at home. We are also working with GPs to help them better manage their prescribing budgets. In Hertfordshire, the NHS spends around £9 million each year providing medicines and treatments on prescription that can be bought easily and usually cheaply over the counter from a pharmacy, supermarket. This is money that cannot be spent on more complex treatments.

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End of life care – There are currently around 11,000 deaths per year in Hertfordshire. We know that most people would prefer to die at home, however in Hertfordshire only around 37% of patients died at home or in a care home – their usual place of residence. This percentage has been relatively static over the last three years. We are working to provide education to care homes and GPs to help encourage discussion about end of life care and increase the proportion of people able to die in their preferred place.

And we continue to work with all our providers on programmes designed to improve the patient experience. For example East and North Herts Trust has recently produced a Patient and Carer Experience Strategy. The strategy incorporates the views of patients and users and best practice national guidance. This strategy provides a framework for staff, patients, carers, patients' families and stakeholder groups to work together to ensure that patients have excellent experiences. It also explains how patient and carer experiences are measured and how feedback is used to monitor the Trust’s progress.

Disclosure of serious incidents involving data loss or confidentiality breaches In line with the Information Governance Strategy the PCT has assigned responsibility for information governance. Risks are managed, monitored and reviewed by the Information Governance Sub‐Committee which reports through the Risk and Assurance Sub Committee to the Board. We publish any personal data related incidents and breaches within our annual report in line with Department of Health directives. To help minimise the risk of data loss, all PCT laptops and portable devices such as memory sticks are encrypted. Policies and procedures incorporating information governance have been reviewed, ratified and approved. Established reporting lines with associated risk assurance measures are assigned which now incorporate a more stringent scoring mechanism. Mandatory staff training and internal campaigns on awareness of information security and data protection requirements have led to increased levels of reporting. There were nine personal data related incidents reported to the PCT classified as serious incidents. However, none of these required to be reported to the Information Commissioner on occurrence. Summary of personal data related incidents 2011/12 Category Nature of Incident I Loss of inadequately protected electronic equipment, devices or paper documents from secured NHS premises II Loss of inadequately protected electronic equipment, devices or paper documents from outside secured NHS premises III Insecure disposal of inadequately protected electronic equipment, devices or paper documents from outside secured NHS premises IV Unauthorised disclosure V Other

Total 1 0 0 8 0

Principles for remedy The PCT follows the six principles set down by the Parliamentary and Health Service Ombudsman in ‘Principles for Remedy’ (October 2007). The aim of these principles is to ensure that instances of injustice or hardship as a result of poor service or maladministration are redressed. The principles are:  Getting it right  Being customer focused  Being open and accountable  Acting fairly and proportionately  Putting things right  Seeking continuous improvement. How have we met these principles? Our complaints policy reflects the NHS complaints procedures  The Chief Executive takes a personal interest in all complaints and the quality of investigation and response  We have a responsive Patient Advice and Liaison Service (PALS) which can resolve many problems or concerns without the need for a formal complaint  We have in place a ‘losses and compensations’ procedure  Regular reporting to the Board of complaints received and PALS issues as part of the PCT’s performance monitoring  Applying Department of Health published best practice guidance on NHS Continuing Health care Redress, in response to the Parliamentary and Health Service Ombudsman’s report ‘Retrospective Continuing Care Funding and Redress’.

Financial Review An overview As set out in last year’s annual report, the financial outlook for 2011/12 was much tougher than in previous years. The increase in headline funding was much lower at just 2.9% and with this rate of increase likely to continue for a number of years, 2011/12 was the first year of the Quality Innovation Productivity and Prevention (QIPP) challenge. Under this QIPP challenge the PCT was predicted to need to make £100m of recurrent savings by 2014/15 in order to meet the shortfall between the increase in demand for services, the increase in cost of services and the increase in funding. The first £67m of those savings needed to be made in 2011/12. To help rise to the challenge the PCT committed 2% of its recurrent funding (£32m) to support service transformation across the health economy. In addition to mitigate the impact of demand and performance volatility, the PCT also set aside a contingency reserve of £18.5m. Whilst not necessarily successful in delivering every single aspect of the savings challenge, the PCT made substantial progress and achieved a small underspend of £513,000 for the year. This will be carried forward for investment in 2012/13.

The year ended 31 March 2012 was therefore another successful year, with further improvements in the range and quality of services provided, whilst also achieving financial balance for the fifth year in a row. Financial Duties and Targets PCTs have four main financial targets and performance on these in 2011/2012 is detailed below. 1) Costs not to exceed revenue resource limit The PCT’s revenue resource limit was £1,719.6m and net expenditure was £1,719.1m. The duty was achieved with expenditure being within the agreed resource limit by £513,000. This underspend will be returned to the PCT by the Department of Health, who will increase the PCT’s resource limit by £513,000 in 2012/13. (Accounts – Note 3.1)

To remain within cash limit All PCTs are set a cash limit. This is the amount of cash that can be drawn from the Department of Health. PCTs are not allowed to be overdrawn and are expected to end the year with minimal cash balances.

The PCT drew down its full cash limit and retained less than £1,000 at 31 March 2012. The duty was therefore achieved. (Accounts – Statement of Financial Position as at 31 March 2012) 3)

Capital costs not to exceed capital resource limit The PCT’s capital resource limit was set at £46.9m and capital expenditure incurred was £46.8m (including £44.0m associated with the Lister Surgicentre being brought on the PCT’s Statement of financial position). The PCT achieved this duty, underspending by £137,000. (Accounts – Note 3.2)

To recover the full cost of provider services As the PCT no longer has a Provider Arm, this duty does not apply to NHS Hertfordshire. (Accounts – Note 3.3)

Running costs The PCT’s running costs reduced by 0.3% compared to 2010/11, standing at £28.23 per weighted head of population for 2011/12. The Operating Framework for the NHS in England 2011/12 set out a target reduction for total NHS running costs of one‐third of existing spend. The expectation on running cost allowances for Clinical Commissioning Groups was in the range of £25 to £35 per crude head of population. This was subsequently updated to an expectation of £25 per crude head of population. The commissioning portfolio of PCTs exceed that which is planned to transfer to CCGs so one would expect PCTs’ running costs on commissioning services to currently be significantly higher than this £25 per head of crude population. By converting the PCT’s running costs on commissioning services (£26.219m) into cost per head of crude population (1.194m) gives a cost

per head in 2011/12 of £21.96. This demonstrates that the PCT’s current spend is already 12% below the allowance that is expected to be given to CCGs. The Government’s Emergency Budget in 2010 announced a two‐year pay freeze from 2011/12 for public sector workforces, except for those employees earning a full time equivalent of £21,000 or less. These staff received an increase of £250 in 2011/12. The pay for Very Senior Managers was frozen for the second year running in 2011/2012. (Accounts – Note 5.1) Public Sector Payment Policy The PCT has an obligation to pay non‐NHS creditors within 30 days of receipt of goods or a valid invoice (whichever is later), unless other payment terms have been agreed. This is monitored during the year. In 2011/12 the PCT paid 94.31% of invoices from non‐NHS organisations within this target, just short of good practice. By value, 96.91% of invoices were paid within target. On invoices from other NHS organisations, the PCT paid 81.60% of invoices (98.63% by value) within 30 days. (Accounts – Note 8.1) Related party transactions All Board and Clinical Standards Committee members are required to complete a declaration setting out any outside interests. Note 37 to the Accounts shows the value of transactions with organisations included in the register of interests. In the year to 31 March 2012, payments totalling £437,000 were made to one GP Practice, in their capacity as providers of primary care services, where a GP Partner was the partner of the Director of Finance. In addition payments totalling £11.2m were made to the Practices of local GPs who sat on the PCT’s Board or Clinical Standards Committee. These payments were also made in their capacity as providers of primary care services. Payments for similar services were made to other GP practices within the PCT and none had direct control over how these funds were allocated. The Department of Health is regarded as a related party. During the year, the PCT had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. Further details of the parties where the total amount exceeded £10m are included in the accounts. (Accounts – Note 37) Where the money was spent The majority of the PCT’s funding was spent on commissioning services from other NHS and non‐ NHS organisations. The majority of acute hospital activity is charged to PCTs under “Payment by Results” using a national tariff which is published each year by the Department of Health. To reflect unavoidable cost differences across the country, the Department of Health also publishes market forces indices, with providers being paid this percentage in addition to the tariff. The largest single element of spending was on general and acute services (46.5%). Next were primary care general medical services (9.2%), prescribing (8.9%), mental health (8.6%) and

community services (6.8%). Only 1.6% of costs were incurred on the administration or running costs of the PCT. A more detailed analysis of where the money was spent is shown in the following pie chart.

Analysis of 2011/12 Net Expenditure Other Healthcare 5.6%

Administration 1.6%

Community Services 6.8% Prescribing 8.9%

Mental Health 8.6%

General Medical Services 9.2%

Learning Disabilities 1.5%

Other Family Health Services 5.5% A&E 2.5%

General and Acute 46.5%

Maternity 3.3%

Financial Outlook Achieving financial balance in the last five years has been a major success. Growth in funding for the PCT in 2012/13 has been agreed at 3%, which is very similar to 2011/12, but significantly lower than in the few years previously. The expectation is that funding growth in the remaining years of the current Parliament will be at similarly low levels. The QIPP challenge referred to above remains, to deliver cost savings of something like £276m (17% of current costs) across the whole health system in the 4 years to 2014/15. If the PCT is to continue to meet the rising demand for services, the goal of improved quality and outcomes whilst staying in financial balance, the target savings for the PCT in 2012/13 are £29m. To PCT has again committed 2% of its recurrent funding (£33.3m) to support service transformation across the health economy. In addition to mitigate the impact of demand and performance volatility, the PCT has set aside a contingency reserve of £16.3m. So, whilst the PCT can still look forward with some confidence, the current economic climate is more challenging. For the PCT to maintain financial balance and its track record of continuous improvement in both services and the health of the people of Hertfordshire, it must continue to strive to achieve value for money across all of its spending. A summary of the budgets planned for 2012/13 is included in the table below.

Description £000 Expected Funding 1,749,037 Spending Plans:‐ Acute Services 909,373 Mental Health and Learning Disability Services 166,445 Community Services 108,352 Continuing Care 38,787 Other Non Acute Services 25,812 GP Services 160,063 Prescribing and Pharmacy Services 186,090 Dental Services 49,089 Ophthalmic Services 10,232 Social Care Grant 10,586 Corporate Costs 34,674 Transformation Reserve 33,268 Contingency Reserve 16,266 Planned Expenditure 1,749,037 Policy on managing principal risks The Assurance Framework provides a comprehensive method for the effective management of the principal risks that arise in meeting the key strategic objectives agreed by the PCT Board. It identifies objectives which are at risk, gaps in control and insufficient assurances. It also provides a structure for evidence to support the annual Governance Statement and facilitates reporting key information regularly to the PCT Board. Directors are responsible for the continual updating of the Assurance Framework including evaluation of the risk score, updates on progress and identification of actions against gaps in control and assurance. The Assurance Framework is monitored by the Audit Committee and PCT Board. Role of the Audit Committee The Committee’s principal function is to advise the Board on the adequacy and effectiveness of the PCT’s systems of internal control and its arrangements for risk management, control and governance processes. In order to fulfil this function, the audit committee prepares an annual report for the Board and accountable officer. This report includes information provided by internal audit, external audit and other assurance providers. The opinion of the audit committee was that adequate assurance can be given to the Board on the effectiveness of the risk management and control processes in place during 2011/2012.

Remuneration report Members of the Remuneration Committee are non executive directors only, and membership during the year was: • Stuart Bloom, Chair, NHS Hertfordshire • Linda Farrant, Non Executive Director, NHS Hertfordshire and • Mary Compton, Non Executive Director, NHS Hertfordshire. The remuneration of senior managers is determined by national terms and conditions – Very Senior Manager Pay Framework. The senior managers are employed under the nationally agreed contractual arrangements, all having been employed on permanent contracts which include a six month notice period. There is no provision in the contracts for termination payments save any contractual entitlements to redundancy compensation which would be calculated using the agreed NHS formula. Alan Pond Director of Finance and Productivity

Salaries and allowances Reporting bodies are required to disclose the relationship between the remuneration of the highest‐paid director in their organisation and the median remuneration of the organisation's workforce. The banded remuneration of the highest paid director in Hertfordshire PCT in the financial year 2011/12 was £160,000 – £165,000 (2010/11 £155,000 – £160,000). This was 5.6 times (2010/11 was 5.2) the median remuneration of the workforce which was £29,263 (2010/11 was £30,611) In 2011/12 no employees (2010/11, 1 employee) received remuneration in excess of the highest paid director. Total remuneration includes salary, non‐consolidated performance related pay, benefits in kind as well as severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

2011 ‐ 12 Salary/Fees (bands of £5,000)

2010 ‐ 11

Other Benefits in Other Benefits in Salary/Fees Remuneration kind (rounded Remuneration kind (rounded (bands of (bands of to the nearest (bands of to the nearest £5,000) £5,000) £000) £5,000) £000)

Name and Title Stuart Bloom, Chair Linda Farrant, Non Executive Member (Vice Chair) and Chair of the Remuneration Committee

£000 40‐45

£000 0

£000 40‐45

£000 0

5‐10

Paul Smith, Non Executive Member and Chair of the Audit Committee

10‐15

Mary Compton, Non Executive Member

5‐10

Mark Gainsborough, Non Executive Member (to July 2011)

0‐5

5‐10

Tracey Graily, Non Executive Member (to Feb 2012)

5‐10

Kate Watts, Non Executive Member

5‐10

Eliza Hermann, Non Executive Member Jane Halpin, Interim Chief Executive to April 2011, substantive from May 2011 Alan Pond, Director of Finance and Productivity (and Interim Chief Executive of Herts Valley CCG from Sept 2011)

5‐10

160‐165

155‐160

110‐115

110‐115 55‐60

0 0

110‐115 0

0 0

Andrew Parker, Director of Primary Care Development

90‐95

Beverley Flowers, Director of System Management

95‐100

100‐105

Alan Farmer, Director of Workforce Transformation ( from July 2011) *

60‐65

Lesley Watts, Director of Operations (and Interim Chief Executive of East & North Herts CCG from Sept 2011) Heather Moulder, Director of Nursing (from Sept 2011)

John Webster, Director of Performance & Operations (from Nov 2011) 40‐45 0 0 0 0 Mike Edwards, Chair of the Clinical Executive Committee and Medical Director (from Oct 2011) 65‐70 0 0 65‐70 0 * For the period April 2011 to June 2011 Alan Farmer was on secondment from The Princess Alexandra Hospital NHS Trust at no cost to NHS Hertfordshire

0 0

Real increase in pension at age 60 (bands of £2,500)

Lump sum at aged 60 related to real increase in pension ( bands of £2,500)

Total accrued pension at age 60 at 31 March 2012 (bands of £5,000)

Lump sum at age 60 related to accrued pension at 31 March 2012 (bands of £5,000)

Cash Equivalent Transfer Value at 31 March2012

Cash Equivalent Transfer Value at 31 March2011

Real increase in Cash Equivalent Transfer Value funded by PCT

Employer's contribution to stakeholder pension

Pensions Benefits

Name and title

£000

£00

Alan Pond, Director of Finance and Productivity (and Interim Chief Executive of Herts Valley CCG from Sept 2011)

0‐2.5

35‐40

110‐115

616

516

Jane Halpin, Interim Chief Executive to April 2011, substantive from May 2011

0‐2.5

5‐7.5

35‐40

115‐120

643

512

Beverley Flowers, Director of System Management

0‐2.5

20‐25

60‐65

314

254

Andrew Parker, Director of Primary Care Development

0‐2.5

30‐35

95‐100

572

500

Lesley Watts, Director of Operations (and Interim Chief Executive of East & North Herts CCG from Sept 2011)

0‐2.5

25‐30

80‐85

540

493

(2.5) ‐ 0

40‐45

120‐125

697

644

Alan Farmer ‐ Director of Workforce Transformation (from July 2011)

25‐30

85‐90

536

John Webster, Director of Performance & Operations (from Nov 2011)

15‐20

45‐50

276

Relating to the period 1 April 2011 to 31st March 2012

Heather Moulder ‐ Director of Nursing (from Sept 2011)

1. As Non Executive Members do not receive pensionable remuneration, there will be no entries in respect of pensions for Non Executive Members. 2. No disclosure was made in respect of Alan Farmer or John Webster in 2010‐11 therefore the figures reflect only those figures available for 2011/2012. 5. Cash Equivalent Transfer Values A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particularly point in time. The benefits valued are the member's accrued benefits and any contingent spouse's pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The CETV figures and the other pension details include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries. 6. Real Increase in CETV This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another scheme or arrangement) and uses common market valuation factors as at 31 March 2012. In the budget on 23 March 2011, HM Treasury confirmed its intention to review the basis for the calculation of CETVs payable from public service schemes, including the NHS Pension Scheme. The review was undertaken and revised guidance was issued on 26 October 2011. For the calculation of CETVs as at 31st March 2012, NHS Pensions have followed the revised guidance and have used the updated Government Actuary Department (GAD) factors in their calculations. The revised GAD factors are different to those used as at 31st March 2011 so direct comparison between financial periods is not possible. The new factors will have differing impacts of the CETVs of the individuals concerned depending on their age and normal retirement age. ( ) Denotes a decrease in pension and lump sum entitlements.

Board Expenses Name and Job Title

Parking at Office £

Official Mileage £

Regular Car User £

Parking £

Public Transport £

Telephone Costs £

Other £

Total £

Stuart Bloom, Chair

(292)

573

115

232

652

Linda Farrant, Non Executive Director

416

103

519

Paul Smith, Non Executive Director

Mark Gainsborough, Non Executive Director

Eliza Hermann, Non Executive Director

152

Mary Compton, Non Executive Director

Kate Watts, Non Executive Director

Tracey Graily, Non Executive Director

Jane Halpin, Chief Executive

(736)

1,665

854

146

381

(121)

2,217

Alan Pond, Director of Finance and Productivity

(736)

1,807

849

148

405

2,500

Lesley Watts, Director of Operations

(736)

697

496

538

Andrew Parker, Director of Primary Care Development

(736)

1,241

846

(55)

1,302

Alan Farmer, Director of Workforce Transformation

John Webster, Director of Strategic Planning (From Nov 2011)

(307)

571

317

113

537

1,232

Heather Moulder, Director of Nursing (From Mid Sept 2011)

(407)

502

116

247

Beverley Flowers, Director of System Management

(736)

1,103

285

692

Dr Mike Edwards, Medical Director (From July 2011)

( ) denotes items paid for by the individual.

Board members declarations of interests Board Member Stuart Bloom, Chair

Mary Compton, Non‐Executive Director (NED)

Kate Watts, NED

Linda Farrant, NED

Paul Smith, NED

Eliza Hermann, NED

NHS Hertfordshire Board members Declarations of pecuniary and other interests

Date Declared



7/4/2010 6/1/2011

Voluntary Co‐ordinator, Bushey Community Cares Welfare Group  Consultancy to support United Synagogues welfare groups  Provision of consultancy support on a self‐ employed basis with Mighty Oaks Consultancy, which provides marketing services to private and public sector organisations (including the NHS).  Senior Manager with BT Global Services. BT are delivering the Spine, a core part of the NHS Care Records Service and the N3 broadband network connecting all NHS locations in England. Husband is a Management Consultant with CSC an IT Consultancy which has been involved with the NHS National Programme for IT (NPfIT) and has worked closely with Connecting for Health, Norfolk and Norwich University Hospitals NHS Foundation Trust, Northumbria Healthcare NHS Foundation Trust and a number of Strategic Health Authorities including the East of England.  CFC – consultancy, advice and support to Hertfordshire charities (some of who receive PCT money)  MIND – Trustee. MIND receives money from DH. Local MIND receives PCT funding  Watford MENCAP – former trustee. Still have an interest in this marginalised group  Watford Grammar School – husband is headmaster. The school has a large special needs department and might receive health funding  Non Executive Board member of Metropolitan Housing Partnership  Board member of Ofsted (Office for Standards in Education)  Governor of Bishop’s Stortford College (co‐ educational independent school for 4‐18 year olds  Non Executive Director – Harpenden Building Society, Affinity Sutton Homes (social housing), MOD (Ministry of Defence and DFT (Department for Transport) None

6/4/2010

Updated 04/05/12

8/4/2010 30/8/2011 30/8/2011 Updated 04/05/12 31/3/2010

Board Member Alan Pond, Director of Finance and Productivity Dr Jane Halpin, Interim Chief Executive

NHS Hertfordshire Board members Declarations of pecuniary and other interests 

 

Andrew Parker, Director of Primary Care Development Alan Farmer, Director of Workforce Transformation Beverley Flowers, Director of System Management Lesley Watts, Director of Operations

Mike Edwards, Chair of the West Professional Executive Committee



Date Declared

Partner is a GP partner at Haverfield Surgery, Kings 11/9/2010 Langley, and does work for the PCT as from 30/8/2010 31/3/2010 Husband is a consultant employed by Luton and Dunstable Hospital NHS Trust, with whom the PCT has contracts Governor of SS Alban & Stephen Infant and Nursery School and Junior School Wife is Bone Marrow Transplant Quality Manager at 31/3/2010 Royal Free Hospital NHS Trust, (PCT has an Service Level Agreement with RFH)

None

7/3/2011

None

6/4/2010



22/2/2010

  

Husband is a cardiologist working at Luton and Dunstable, Bedford and Royal Brompton and Harefield NHS Trusts. The PCT holds contracts with all three providers Principal at Fairbrook Medical Centre, Borehamwood Director, Herts Health Limited since September 2006 Wife is a Trustee of Cherry Lodge Cancer Care Charity, Barnet (since October 2006)

7/4/2010

Governance Statement (March 2012) Name of Organisation Organisation Code NHS Hertfordshire (PCT) 5QV Scope of Responsibility The Board is accountable for internal control. As Accountable Officer, and Chief Executive of this Board, I have responsibility for maintaining a sound system of internal control that supports the achievement of the organisation’s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation’s assets for which I am personally responsible as set out in the Accountable Officer Memorandum. My responsibilities as Accountable Officer in respect of internal controls are supported by the Finance and Performance Committee and the Audit Committee. Both of these committees report to the Board. The Finance and Performance Committee is chaired by a Non Executive Director whilst the membership of the Audit Committee is entirely made up of Non Executive Directors. When appropriate, internal control issues feature at weekly meetings of the Executive Director Team and Programme Management Office (PMO) meetings. Controls are also reviewed by the PCT’s internal and external auditors. The PCT is held to account for its performance by the East of England Strategic Health Authority. It works closely with local authorities including:  Hertfordshire County Council  East Hertfordshire District Council  North Hertfordshire District Council  St Albans District Council  Three Rivers District Council  Welwyn Hatfield District Council  Broxbourne Borough Council  Dacorum Borough Council  Hertsmere Borough Council  Stevenage Borough Council  Watford Borough Council The organisation is subject to scrutiny by the Hertfordshire County Council Health Scrutiny Committee which consists of County and District Councillors. The PCTs primary role is one of a commissioning organisation with responsibilities for monitoring levels of standards, compliance and quality achieved by NHS healthcare organisations and independent health practitioners from which it commissions services. The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide

reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on‐going process designed to:  identify and prioritise the risks to the achievement of the organisation’s policies, aims and objectives,  evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place within the PCT for the year ended 31st March 2012 and up to the date of approval of the annual report and accounts. The Governance Framework of the Organisation A new committee structure came into effect in April 2010 to govern the single PCT following the merger of East and North Hertfordshire Primary Care Trust and West Hertfordshire Primary Care Trust. This committee structure was reviewed by internal audit in October 2010 and was rated ‘green’. During 2011/12 the Clinical Executive Committee was replaced by the Clinical Standards Committee and the Audit Committee is currently looking into how the two committees can work together more effectively to ensure appropriate assurance is provided whilst limiting duplication. (See attached Governance Structure diagram appendix A). In addition, attendance at the key committees, Audit, Finance & Performance and the Clinical Standards Committee, maintains a rate of 88%, 94% and 98% respectively. Audit Committee Key Issues The committee consists of three members, all non‐executive board directors. Meetings also are normally attended by the Chief Executive, Finance Director, Director of Primary Care Development, the Head of Internal Audit, and representatives from the Audit Commission. There also is a standing invitation for the CCG interim Chief Executives to attend. During 2011/12, the committee has supported the Chief Executive and the Board in reviewing the internal audit strategy, to ensure that there are effective systems for internal control, financial reporting, governance and risk management. The Committee conducts periodic self‐assessments of its effectiveness against this remit. The committee has focussed on the evolution of the Board assurance framework during the year, and the evaluation of controls and mitigation actions developed by management to address risks that could compromise delivery of key strategic objectives. At each meeting, the committee considers the progress of internal and external audit work, and ensures oversight of management follow up in implementing audit actions. The committee is broadly content with the progress made on this front. The committee also has received deep dives into two major strategic risks, prepared by management but also accompanied by an independent assessment by Internal Audit. The intention to is continue with this assurance based focus during 2012/13, with particular emphasis on the transition element.

The committee notes the Head of Internal Audit’s [substantial] assurance opinion, which is consistent with its own observations. Finance and Performance Key Issues During 2011/2012 the Finance & Performance Committee of the Board continued to provide assurance and oversight of certain high‐priority areas of the PCT's performance. Specifically this included a monthly review of the Quality, Innovation, Productivity & Prevention (QIPP) plans, tracking overall delivery of recurrent savings (£53m for the year) as well as periodic "deep dive" reviews into such areas as unplanned care, elective care and primary care. The Committee reviewed and approved proposals from a wide variety of healthcare service providers for Transformation funds, i.e. funding for non‐recurrent investments that would help improve patient care and patient experience. Total spend for the year in this category was £32m. The Committee also monitored the larger investment commitments made from this fund to ensure the intended changes were being implemented and outcomes delivered. The Committee also periodically reviewed implementation progress of several major healthcare service redesign initiatives, such as Intermediate Care, the new Falls Service, and the previously‐approved MSK service. Finally, the Committee monitored overall PCT financial performance on a monthly basis to ensure delivery of statutory commitments in this regard. Clinical Standard Committee Key Issues The Clinical Standards Committee has responsibility for assuring Patient Safety and Quality Standards are monitored and assured in our commissioned providers. In addition the Clinical Standards Committee has oversight of the development of primary care services and the performance of independent contractors. During the time of transition the nationally recognised risk that the monitoring quality and safety of resources is reduced has been mitigated by the committee’s representation from evolving clinical commissioning groups and local providers. At each Board meeting the “Board Tracker” is reviewed. This document details outstanding issues and reviewing timescales, actions and receives assurances when work how work is to be completed. The Board has a “Business Cycle” which is reviewed prior to each board meeting ensuring items of business are discussed in accordance with that cycle. The Board has continued to oversee the implementation of NHS reforms and has formally recognised developing clinical commissioning groups as committees of the Board and receives at each Board meeting a report on progress. Risk Assessment The Board Assurance Framework is the method by which the Board receives assurance that its strategic objectives will be met. Over the past year the Board Assurance Framework has been updated regularly and reviewed by the PMO on a regular basis in addition to reporting every two months to the Risk and Assurance Sub Committee and reported to the Board as part of the business cycle.

The Board Assurance Framework is currently being re structured to reflect the following emerging organisations: 2 Clinical Commissioning Groups, the local office of the NHS Commissioning Board and the Commissioning Support Organisation. Risk Registers See Appendix B Review of the Effectiveness of Risk Management and Internal Control The PCT’s risk registers contain information relating to operational risks. At the beginning of 2011/12 the Risk Management Policy was re written following consultation with the PMO; the Risk and Assurance Sub Committee, Audit Committee and members of the Board. The new policy includes:  an agreed risk appetite statement for the PCT  a revised risk scoring matrix tailored to the PCT  risk tolerance levels for each of the risk categories  a new escalation procedure and a revision of the roles and responsibilities of risk leads. All risk leads have been trained to use the Datix software package to manage their risks and are now expected to update their own risk registers in real time. Each risk register is assigned to a committee which monitors the risks on the risk registers and participate in identifying new risks, assessing the severity of the risks (i.e. the risk score) and monitoring the implementation of action plans put in place to mitigate the risks. Committees are responsible for identifying risks that need escalation to the Board for their consideration. The Corporate Governance Facilitator completes the necessary reporting ensuring that risk register reports are supplied to the relevant committees as per their business cycles. High level risks (i.e. those that breach the tolerance levels set out in the PCT’s Risk Management Policy) are reported to the Risk and Assurance Sub Committee; Audit Committee and Board. Additionally, the Audit Committee has instructed a process where it undertakes a “deep dive” into one area of the BAF with the responsible Director. This provides assurance of BAF effectiveness. On an annual basis a risk maturity audit is undertaken to confirm that the controls which the organisation relies on to manage risk are suitably designed and consistently applied. Significant Issues  The PCT’s Information Governance (IG) Strategy and Management Framework were based on the Department of Health’s guidance and the requirements of the Information Governance toolkit. Data security risks were managed in line with the Information Governance Strategy and the PCT’s risk management policy. The Senior Information Risk Owner (SIRO) at board level was the Director of Finance and Productivity until December 2011, and the Director of Workforce Transformation from December 2011. The SIRO continues to be a member of the PCT’s Information Governance Sub committee (IGSC), which has responsibility for the monitoring and management of the Information Governance arrangements and any associated risks (including preparation for transition of commissioning to Clinical Commissioning Groups) and data security incidents. There were 41



no significant IG incidents requiring reporting to the Information Commissioner’s Office during 2011/2012. The PCT achieved full compliance in version 9 of the IG toolkit in 2011/2012. Information Governance training continues to form part of the corporate induction. In addition, Information Governance e‐learning modules continue to be made available to all staff alongside specially tailored Information Governance workshops.



In 2012 general practices, pharmacies and dental practices were required to submit IG toolkits. The overall compliance rate was over 75% for 2011/2012. IG audits have been performed on a selection of third party, pharmacy, dental and general practice organisations providing assurance as the commissioning organisation that levels claimed are legitimate. The Quality Assurance Committee oversees and performance manages components of Quality and Clinical Governance throughout the PCT, including the four main providers and independent contractors. The Quality and Patient Experience Team has responsibility for ensuring that all aspects of quality, patient experience, patient safety and clinical effectiveness are built in to the vision, strategy, systems and structures of a commissioning organisation. Further assurance is provided through the PCTs internal audit programme. The Governance Statement supports the key issues identified in the Annual Report 2011/2012, along with the issues facing the clinical commissioning groups.

Review of Effectiveness As Accountable Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed in a number of ways. The Head of Internal Audit provides me with an opinion on the overall arrangements for gaining assurance through the Assurance Framework and on the controls reviewed as part of the internal audit work. Executive managers within the organisation who have responsibility for the development and maintenance of the system of internal control provide me with assurance. The Assurance Framework itself provides me with evidence that the effectiveness of controls that managed the risks to the organisation achieving its principal objectives have been reviewed. My review is also informed by  Value for Money Conclusion  A risk‐based programme of internal audits  Care Quality Commission’s monitoring visits  The QIPP (Quality, Innovation, Productivity & Prevention) plan for NHS Hertfordshire was presented to the Board and published in September 2011 and contains a comprehensive strategy for delivering high quality health and social care to the population of Hertfordshire up to 2014/15, in the context of financial challenges and NHS restructuring. A key part of QIPP is “Delivering Quality Healthcare in Hertfordshire”, a country‐wide multi‐agency approach to health and social care provision agreed between local authorities, NHS and other stakeholders in 2007. I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the following: 42



 



The PCT Board ‐ The Board placed reliance upon the Audit Committee, Finance and Performance Committee and the Risk and Assurance Sub Committee for assurances on the extent to which the system of internal control was sound. The Audit Committee – The Audit Committee’s primary role was to independently oversee the governance and assurance process on behalf of the PCT and to report to the Board on the soundness and effectiveness of the systems in place for risk management and internal control. The Finance and Performance Committee ‐ The board needs to ensure focus on key issues underpinning the performance of the organisation, especially confirming delivery of key strategic initiatives which are linked to delivering financial balance. The Finance and Performance Committee is designed to provide this detailed input and has delegated responsibilities from the Board to include this function. The Risk and Assurance Sub Committee – The Risk and Assurance Sub Committee is responsible for overseeing the identification and management of risks facing the PCT, including the development and monitoring of the PCT’s Assurance Framework. Executive Directors – the Executive Directors meet weekly. Risk‐related items featured as agenda items for those meetings. All directors have signed and returned Stewardship Statements to me confirming that as far as they are aware, there was no relevant audit information of which the PCT’s auditors were unaware. They have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the PCT’s auditors were aware of that information. Programme Management Office – The PMO is a meeting that is used to monitor the organisations performance on key areas, test out new ideas and agree next steps on major projects and areas of work. Internal Audit – Internal Audit reviewed the system of internal control and reported their findings to the Audit Committee. This includes specific reports on areas relevant to controls, risk and governance and also a Head of Internal Audit Opinion, which informs this Annual Governance Statement.

 External Audit – Value for Money conclusion. The PCT will continue to maintain and sustain continuity of services, coupled with a high level of performance through a period of transition. Accountable Officer: Dr Jane Halpin Organisation: NHS Hertfordshire (PCT) Signature: Date: 6 June 2012 43

Board

Networks

Joint Committees with External Bodies

Executive Team

PMO

Networks:  Cancer  Heart  Stroke  Neo‐Natal  Children’s Trust Board Joint Committees with External Bodies  East Midlands Specialist Commissioning Group  Joint Commissioning Team for Mental Health  DQHH  Herts Forward

Finance and Performance Committee

SLA and Contract Monitoring Meetings

Continuing Care Redress Panel

Audit Committee

Individual Funding Request Panel

Business Continuity and Resilience Sub Committee

Herts EP Network

Risk and Assurance Sub Committee

Information Governance Sub Committee

Olympic Planning

Clinical Standards committee

Safeguarding Children Whole Systems Committee

Corporate Policy Sub Committee

Safeguarding Adults Whole Systems Committee

Mental Capacity Act Committee

Health Care Acquired Infections Whole Systems Committee

Performance Decision Making Committee

Patients Safety Whole Systems Committee

Patient Experience Whole Systems Committee

Remuneration and Terms of Service Committee

Joint Bedfordshire and Hertfordshire Partnership Advisory Group

Quality Assurance / Clinical Governance

Equality and Diversity Sub Committee

BME Staff Network

CCG Boards CHV CCG ENH CCG

Disability Staff Network

ANNUAL REPORT RISK & ASSURANCE HIGH RISK REGISTERS APRIL 2011 – MARCH 2012 Appendix B REF RISK CONTROL BAF001 Activity shift not taking place. Potential System wide performance review process for insufficient capacity in acute through Programme Board. Reports to PMO, hospitals and excess capacity in other Board and Executive Team Service redesign settings cases considered by Finance & Performance Committee. BAF002 Demand Management not being Various initiatives to manage demand, delivered. Activity remains at including service redesign to enable services to unaffordable levels in acute hospitals be delivered in primary care setting where appropriate, prior approvals for low priority elective treatment and public information campaigns. BAF003 Clinical Commissioning Groups (CCGs) Early engagement of CCGs as formal sub‐ do not develop engagement with GPs committees of the Board with decision‐making in their locality. QIPP is not seen as a authority. Recruitment and assignment of staff priority for CCGs and financial stability to CCGs to develop leadership and is threatened management who are able to engage with individual practices. BAF004 Capacity and capability of the PCT's Realignment of resources to focus on key workforce to deliver the QIPP plan areas. Regular reporting especially in light of PCT management to County Workforce Group on delivering reductions and reconfiguration workforce change and to QIPP programme board to obtain assurance on controls. BAF005 Capacity or competencies within Workforce planning. alternative settings prevents shifts of Contract and SLA discussions highlighting areas care closer to home for development and setting outcome Inability to deliver QIPP plan. Financial measures. balance may be jeopardised Reports to the County Workforce Group on delivering workforce change Contract Monitoring meetings feed into the Finance and Performance Committee meetings. BAF006 Performance information is not Systems Management Team available or presented in a timely way Contract levers which provide incentives to to enable effective monitoring of plans Providers to supply performance information Inability to manage the business of the Invoice validation PCT. QIPP programme board reviews. PMO challenge and have overview of activity, work of the contact team and tactics going 45

forward. BAF008 Failure to reach agreement with Trusts Commissioning intentions for each year are around activity and financial levels. sent to providers at least six months before Could lead to inconsistency with trust the beginning of the year giving advanced plans and financial risks to the PCT and warning to trusts and being the focus of trusts negotiations. Formal contract monitoring meetings are held monthly, where activity and finance is reviewed. Contract Information Group reviews data recording and data quality. Ad hoc meetings are held as necessary to deal with issues arising that needs swift resolution. Monthly forecasts to year end are prepared and discussed with the Hertfordshire trusts. Appendix B

The Accounts

Hertfordshire PCT - Annual Accounts 2011-12

Statement of Comprehensive Net Expenditure for year ended 31 March 2012 NOTE Administration Costs and Programme Expenditure Gross Employee benefits Other costs Income Net operating costs before interest Investment income Other (Gains)/Losses Finance costs Net operating costs for the financial year Of which: Administration Costs Gross Employee benefits Other costs Income Net administration costs before interest Investment income Other (Gains)/Losses Finance costs Net administration costs for the financial year

Programme Expenditure Gross Employee benefits Other costs Income Net programme expenditure before interest Investment income Other (Gains)/Losses Finance costs Net programme expenditure for the financial year

2011-12 ÂŁ000

2010-11 ÂŁ000 (restated)

7.1 5.1 4

21,096 1,749,518 (55,174) 1,715,440

22,439 1,733,052 (41,818) 1,713,673

9 10 11

(25) (15) 3,735 1,719,135

(3) 19 1,248 1,714,937

7.1 5.1 4

19,455 26,955 (18,242) 28,168

9 10 11

(25) (15) 199 28,327

7.1 5.1 4

1,641 1,722,563 (36,932) 1,687,272

9 10 11

0 0 3,536 1,690,808

Other Comprehensive Net Expenditure Impairments and reversals put to the Revaluation Reserve Net (gain)/loss on revaluation of property, plant & equipment Net (gain)/loss on revaluation of intangibles Net (gain)/loss on revaluation of financial assets Net (gain)/loss on other reserves Net (gain)/loss on available for sale financial assets Net actuarial (gain)/loss on pension schemes Reclassification adjustment on disposal of available for sale financial assets Total comprehensive net expenditure for the year

694 (1,279) 0 0 0 0 0 0 1,718,550

0 (4,461) 0 0 0 0 0 0 1,710,476

SOCNE P

1 54

Hertfordshire PCT - Annual Accounts 2011-12

Statement of financial position at 31 March 2012 31 March 2012 31 March 2011 Merger 31 March 2011 31 March 2010 (restated) adjustments (restated) (restated) NOTE £000 £000 £000 £000 £000 Non-current assets: Property, plant and equipment Intangible assets investment property Other financial assets Trade and other receivables Total non-current assets

12.1 13 15 21 19

140,900 0 0 439 964 142,303

101,236 960 0 439 1,612 104,247

0 0 0 0 0 0

101,236 960 0 439 1,612 104,247

93,343 487 0 439 1,707 95,976

Current assets: Inventories Trade and other receivables Other financial assets Other current assets Cash and cash equivalents Total current assets

18 19 21 22 23

919 23,743 0 0 0 24,662

561 25,231 0 0 0 25,792

0 0 0 0 0 0

561 25,231 0 0 0 25,792

591 12,440 0 0 0 13,031

Non-current assets held for sale

800

25,462 167,765

25,792 130,039

0 0

25,792 130,039

13,031 109,007

(103,564) 0 (6,716) (5,567) 0 (115,847)

(116,038) 0 (556) (929) 0 (117,523)

0 0 0 0 0 0

(116,038) 0 (556) (929) 0 (117,523)

(99,481) 0 (940) (944) 0 (101,365)

51,918

12,516

7,642

0 0 (3,224) (45,540) 0 (48,764)

0 0 (4,833) (7,614) 0 (12,447)

0 0 0 0 0 0

0 0 (4,833) (7,614) 0 (12,447)

0 0 (4,810) (8,263) 0 (13,073)

3,154

(5,431)

(21,145) 24,299 0 3,154

(23,645) 23,714 0 69

0 0 0 0

(23,645) 23,714 0 69

(24,684) 19,253 0 (5,431)

Total current assets Total assets Current liabilities Trade and other payables Other liabilities Provisions Borrowings Other financial liabilities Total current liabilities

25 26 32 27 28

Non-current assets plus/less net current assets/liabilities Non-current liabilities Trade and other payables Other Liabilities Provisions Borrowings Other financial liabilities Total non-current liabilities

25 28 32 27 28

Total Assets Employed: Financed by taxpayers' equity: General fund Revaluation reserve Other reserves Total taxpayers' equity: The notes on pages 5 to 45 form part of this account.

The financial statements on pages 1 to 4 were approved by the Board on 6 June 2012 and signed on its behalf by

Chief Executive:

Date: 6 June 2012

SOFP P

Hertfordshire PCT - Annual Accounts 2011-12

STATEMENT OF CHANGES IN TAXPAYERS' EQUITY For the year ended 31 March 2012 General fund

Revaluation reserve

Other reserves

Total reserves

£000

(23,645) 0 0 (23,645)

Balance at 1 April 2011 Opening balance adjustments Merger adjustments Restated balance at 1 April 2011

Changes in taxpayers’ equity for 2011-12 Net operating cost for the year Net gain/(loss) on revaluation of property, plant, equipment Net gain/(loss) on revaluation of intangible assets Net gain/(loss) on revaluation of financial assets Net gain/(loss) on revaluation of assets held for sale Impairments and reversals Movements in other reserves Transfers between reserves* Release of reserves to Statement of Comprehensive Net Expenditure Transfers to/(from) other bodies within the group Reclassification adjustment on disposal of available for sale financial assets Net actuarial gain/(loss) on pensions Total recognised income and expense for 2011-12 Net Parliamentary funding Balance at 31 March 2012

* including transfers from the revaluation reserve to the general fund in respect of impairments as follows:

Changes in taxpayers’ equity for 2010-11 Restated balance at 1 April 2010 Net operating cost for the year Net gain/(loss) on revaluation of property, plant, equipment Net gain/(loss) on revaluation of intangible assets Net gain/(loss) on revaluation of financial assets Net gain/(loss) on revaluation of assets held for sale Impairments and reversals Movements in other reserves Transfers between reserves Release of Reserves to Statement of Comprehensive Net Expenditure Transfers to/(from) other bodies within the group Reclassification adjustment on disposal of available for sale financial assets Net actuarial gain/(loss) on pensions Total recognised income and expense for 2010-11 Net Parliamentary funding Balance at 31 March 2011 * including transfers from the revaluation reserve to the general fund in respect of impairments

23,714 0 0 23,714

0 0 0 0

(1,719,135) 1,279 0 0 0 (694) 0 0 0 0

0 0 0 0

0 0

0 (1,719,135) 1,721,635 (21,145)

585

0 0

24,299

(24,684) (1,714,937)

19,253

0 0

(1,719,135) 1,279 0 0 0 (694) 0 0 0 0 0 0 (1,718,550) 1,721,635 3,154

4,376 0 0

0 0

69 0 0 69

0 85 0 0 0

0 0

0 (1,714,937) 1,715,976 (23,645)

4,461

0 0

23,714

(5,431) (1,714,937) 4,376 0 0 0 0 0 85 0 0 0 0 (1,710,476) 1,715,976 69

SOCITE P

3 56

Hertfordshire PCT - Annual Accounts 2011-12

Statement of cash flows for the year ended 31 March 2012 2010-11 (restated) ÂŁ000

2011-12 ÂŁ000 Cash Flows from Operating Activities Net Operating Cost Before Interest Depreciation and Amortisation Impairments and Reversals Other Gains / (Losses) on foreign exchange Donated Assets received credited to revenue but non-cash Government Granted Assets received credited to revenue but non-cash Interest Paid Release of PFI/deferred credit (Increase)/Decrease in Inventories (Increase)/Decrease in Trade and Other Receivables (Increase)/Decrease in Other Current Assets Increase/(Decrease) in Trade and Other Payables (Increase)/Decrease in Other Current Liabilities Provisions Utilised Increase/(Decrease) in Provisions Net Cash Inflow/(Outflow) from Operating Activities

(1,713,673) 4,046 0 0

(1,715,440) 5,921 1,930 0 0 0 (3,591) 0 (358) 2,136 0 (12,337) 0 (2,777) 7,224 (1,717,292)

30 (12,561) 0 17,608 0 (514) 17 (1,706,311)

Cash flows from investing activities Interest Received (Payments) for Property, Plant and Equipment (Payments) for Intangible Assets (Payments) for Other Financial Assets (Payments) for Financial Assets (LIFT) Proceeds of disposal of assets held for sale (PPE) Proceeds of disposal of assets held for sale (Intangible) Proceeds from Disposal of Other Financial Assets Proceeds from the disposal of Financial Assets (LIFT) Loans Made in Respect of LIFT Loans Repaid in Respect of LIFT

0 (2,924) 0 0 0 0 0 0 0 0 0

0 (8,399) (602) 0 0 0 0 0 0 0 0

Rental Revenue Net Cash Inflow/(Outflow) from Investing Activities

0 (2,924)

0 (9,001)

(1,720,216)

(1,715,312)

(1,419) 1,721,635 0 0 0 1,720,216

(664) 1,715,976 0 0 0 1,715,312

Net increase/(decrease) in cash and cash equivalents

Cash and Cash Equivalents ( and Bank Overdraft) at Beginning of the Period Opening balance adjustment - TCS transactions Restated Cash and Cash Equivalents ( and Bank Overdraft) at Beginning of the Period Effect of Exchange Rate Changes in the Balance of Cash Held in Foreign Currencies Cash and Cash Equivalents (and Bank Overdraft) at year end

0 0 0 0 0

Net cash inflow/(outflow) before financing Cash flows from financing activities Capital Element of Payments in Respect of Finance Leases and On-SoFP PFI and LIFT Net Parliamentary Funding Capital Receipts Surrendered Capital grants and other capital receipts Cash Transferred (to)/from Other NHS Bodies (free text note required) Net Cash Inflow/(Outflow) from Financing Activities

SCF P

(1,264)

0 0 0

Hertfordshire PCT - Annual Accounts 2011-12

1. Accounting policies The Secretary of State for Health has directed that the financial statements of PCTs shall meet the accounting requirements of the PCT Manual for Accounts, which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the 2011-12 PCTs Manual for Accounts issued by the Department of Health. The accounting policies contained in that manual follow International Financial Reporting Standards (IFRS) to the extent that they are meaningful and appropriate to the NHS, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the PCT Manual for Accounts permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the PCT for the purpose of giving a true and fair view has been selected. The particular policies adopted by the PCT are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. The PCT is within the Government Resource Accounting Boundary and therefore has only consolidated interests in other entities where the other entity is also within the resource accounting boundary and the PCT exercises in-

1.1

Accounting Conventions

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities Acquisitions and Discontinued Operations Activities are considered to be acquired only if they are acquired from outside the public sector. Activities are considered to be 'discontinued' only if they cease entirely. They are not considered to be 'discontinued' if they transfer from one NHS body to another. Critical accounting judgements and key sources of estimation uncertainty In the application of the PCT’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors, that are considered to be relevant. Actual results may differ from those estimates. The estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the Statement of Financial Position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year

Prescription Services Hertfordshire PCT receives financial information from NHS Prescription Services who process prescription items to reimburse and remunerate pharmacy contractors. In addition they supply the PCT with information relating to the cost of drugs prescribed by Independent GP’s, PCT run Practices and other PCT Services. Information is available 2.2 months in arrears and therefore the PCT must estimate February and March costs using the PPA estimated cumulative profile to provide the total expenditure in the year. The estimate for 2011/12 was £28,267,190 and was based on information provided by NHS Business Services Authority, and included in

The Quality and Outcomes Framework (QOF) The Quality and Outcomes Framework (QOF) is a voluntary annual reward and incentive programme for all GP surgeries in England, detailing practice achievement results. There are two elements to the payment made to GP’s. The Aspiration element - this is an upfront payment paid in equal instalments during the financial year, based on 70% of previous years total payment and is paid as an incentive for practices to adhere to QOF. The second element is Achievement - this payment is the difference between what the practices actually achieve and The qualifying period for QOF runs 1st April to 31st March. As a consequence of this time period final QOF information is not known until May/June of the following financial year. For the purposes of Annual Accounts the estimate for projected QOF outturn for 2011/12 was £22,033,000. Aspiration payments of £19.448,000 based on the minimum 88% of 10-11 final Achievement were made during the year ending in March 2012. The difference between the projected outturn and the payments made in year are included in Trade and Other Payables.

Note 1

Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

Dental Services The PCT receives financial information from NHS Dental Services who process FP17s and remunerate dental contractors. Each dental contractor has a contract to perform a certain amount of activity (Units of Dental Activity (UDAs)) at an agreed price per UDA. The dental contractors are then paid 1/12 of the total contract value each month. As actual year end activity information will not be known until mid June, estimations of performance have been calculated. If dental practices under perform against their activity target the practice will be asked to either make up the under performance in the following financial year or repay the PCT. The estimated value of underperformance treated as a prepayment (dentists make up the under performance in the following financial year) is ÂŁ86,546. The estimated value of the underperformance to be repaid is ÂŁ230,322. These amounts are included in accruals and prepayments. In addition to prepayments, the PCT also has estimated the level of patient charge revenue that has not been credited to the PCT's cash limit by 31st March. This estimate of ÂŁ1,004,457 is based on receipts for the year to date adjusted for the average time lag in the reporting of dental activity for the PCT.

Secondary Healthcare Secondary care activity reports are received from providers monthly, but activity information for the final month of the year is not available in time for the accounts and estimates are made in agreement with providers. A full reconciliation is undertaken once actual activity is agreed which is at the end of the first quarter of the following year. Any increase or decrease in activity (if any) becomes a charge or credit in the next financial year. Historically, when these estimates have been compared to the subsequent actual data, they have not been materially different. Estimation techniques are used to ensure that the correct levels of income and expenditure due relating to current year are included through the inclusion of accruals based on known commitments and local knowledge.

1.2

Revenue and Funding

The main source of funding for the Primary Care Trust is allocations (Parliamentary Funding) from the Department of Health within an approved cash limit, which is credited to the General Fund of the Primary Care Trust. Parliamentary funding is recognised in the financial period in which the cash is received. Miscellaneous revenue is income which relates directly to the operating activities of the Primary Care Trust. It principally comprises fees and charges for services provided on a full cost basis to external customers, as well as public repayment work. It includes both income appropriated-in-aid of the Vote and income to the Consolidated Fund which HM Treasury has agreed should be treated as operating income. Revenue in respect of services provided is recognised when, and to the extent that, performance occurs, and is measured at the fair value of the consideration receivable. Where revenue has been received for a specific activity to be delivered in the following financial year, that income will be deferred.

1.3 Pooled budgets The PCT has entered into a pooled budget with Hertfordshire County Council. Under the arrangement funds are pooled under S75 of the NHS Act 2006 for Mental Health, Learning Disabilities and certain other services. The pool is hosted by Hertfordshire County Council. The PCT makes contributions to the pool for services to be provided as part of its commissioning role. In accordance with IAS31, the PCT's share of the assets and liabilities of the pool will be accounted for in the books of accounts as determined in the pooled budget agreement.

1.4 Taxation The PCT is not liable to pay corporation tax. Expenditure is shown net of recoverable VAT. Irrecoverable VAT is charged to the most appropriate expenditure heading or capitalised if it relates to an asset.

1.5 Administration and Programme Costs Treasury has set performance targets in respect of non-frontline expenditure (administration expenditure). From 2011-12, PCTs therefore analyse and report revenue income and expenditure by "admin and programme" For PCTs, the Department has defined "admin and programme" in terms of running costs. The broad definition of running costs includes any cost incurred that is not a direct payment for the provision of healthcare or healthcare related services. Expense incurred under NHS transition redundancy programmes is however classified to "programme" under Treasury budgetary control arrangements and so is recorded as such in the financial statements. Note 1 cont1

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.6 Property, Plant & Equipment Recognition Property, plant and equipment is capitalised if: ● it is held for use in delivering services or for administrative purposes; ● it is probable that future economic benefits will flow to, or service potential will be supplied to, the PCT; ● it is expected to be used for more than one financial year; ● the cost of the item can be measured reliably; and ● the item has cost of at least £5,000; or ● Collectively, a number of items have a cost of at least £5,000 and individually have a cost of more than £250, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control; or ● Items form part of the initial equipping and setting-up cost of a new building, ward or unit, irrespective of their individual or collective cost. Where a large asset, for example a building, includes a number of components with significantly different asset lives, the components are treated as separate assets and depreciated over their own useful economic lives. Valuation All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used for the PCT's services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows: ● Land and non-specialised buildings – market value for existing use ● Specialised buildings – depreciated replacement cost Until 31 March 2008, the depreciated replacement cost of specialised buildings has been estimated for an exact replacement of the asset in its present location. HM Treasury has adopted a standard approach to depreciated replacement cost valuations based on modern equivalent assets and, where it would meet the location requirements of the service being provided, an alternative site can be valued. In view of this change in approach, NHS Hertfordshire Primary Care Trust instructed Boshier & Company an independent firm of chartered surveyors (RICS), to provide advice in accordance with IAS 16 in respect of various freehold properties forming part of the PCT's estate as at 31 March 2010. From the 1st April 2011 the PCT used the services of Boshier & Company (Chartered Surveyors) to research land values locally (Hertfordshire) over the previous 12 months. There was no change in valuation as at 31st March 2012. For buildings, the advice of our Surveyors is to use BCIS (Building Cost Information Services) RICS indices. According to these indices building values increased by £1,279,000 an 2.71% increase and was applied for the year ending 31st March 2012. These are long and established indices which have been used by the DOH for many years and are industry recognised. Properties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Cost includes professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS 23 for assets held at fair value. Assets are revalued and depreciation commences when they are brought into use. Until 31 March 2008, fixtures and equipment were carried at replacement cost, as assessed by indexation and depreciation of historic cost. From 1 April 2008 indexation ceased. The carrying value of existing assets at that date will be written off over their remaining useful lives and new fixtures and equipment are carried at depreciated historic cost as this is not considered to be materially different from fair value. An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment for the same asset previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive net expenditure in the Statement of Comprehensive Net Expenditure Subsequent expenditure Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is capitalised. Where subsequent expenditure restores the asset to its original specification, the expenditure is capitalised and any existing carrying value of the item replaced is written-out and charged to operating expenses. Note 1 cont2

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.7 Intangible Assets Recognition Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the PCT’s business or which arise from contractual or other legal rights. They are recognised only when it is probable that future economic benefits will flow to, or service potential be provided to, the PCT; where the cost of the asset can be measured reliably, and where the cost is at least £5,000. Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, for example an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is not capitalised: it is recognised as an operating expense in the period in which it is incurred. Internally-generated assets are recognised if, and only if, all of the following have been demonstrated: ● the technical feasibility of completing the intangible asset so that it will be available for use ● the intention to complete the intangible asset and use it ● the ability to sell or use the intangible asset ● how the intangible asset will generate probable future economic benefits or service potential ● the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use it ● the ability to measure reliably the expenditure attributable to the intangible asset during its development Measurement The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the criteria above are initially met. Where no internally-generated intangible asset can be recognised, the expenditure is recognised in the period in which it is incurred. Following initial recognition, intangible assets are carried at fair value by reference to an active market, or, where no active market exists, at amortised replacement cost (modern equivalent assets basis), indexed for relevant price increases, as a proxy for fair value. Internally-developed software is held at amortized historic cost to reflect the opposing effects of increases in development costs and technological advances.

1.8 Depreciation, amortisation and impairments Freehold land, properties under construction and assets held for sale are not depreciated. Otherwise, depreciation and amortisation are charged to write off the costs or valuation of property, plant and equipment and intangible non-current assets, less any residual value, over their estimated useful lives, in a manner that reflects the consumption of economic benefits or service potential of the assets. The estimated useful life of an asset is the period over which the PCT expects to obtain economic benefits or service potential from the asset. This is specific to the PCT and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year end, with the effect of any changes recognised on a prospective basis. Assets held under finance leases are depreciated over their estimated useful lives At each reporting period end, the PCT checks whether there is any indication that any of its tangible or intangible non-current assets have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are tested for impairment annually. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no initial impairment loss. The reversal of the impairment loss is credited to expenditure to the extent of the decrease previously charged there and thereafter to the revaluation reserve. Impairments are analysed between Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME) from 2011-12. This is necessary to comply with Treasury's budgeting guidance. DEL limits are set in the Spending Review and Departments may not exceed the limits that they have been set. AME budgets are set by the Treasury and may be reviewed with departments in the run-up to the Budget. Departments need to monitor AME closely and inform Treasury if they expect AME spending to rise above forecast. Whilst Treasury accepts that in some areas of AME inherent volatility may mean departments do not have the ability to manage the spending within budgets in that financial year, any expected increases in AME require Treasury approval.

Note 1 cont3

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.9 Donated assets Following the accounting policy change outlined in the Treasury FREM for 2011-12, a donated asset reserve is no longer maintained. Donated non-current assets are capitalised at their fair value on receipt, with a matching credit to Income. They are valued, depreciated and impaired as described above for purchased assets. Gains and losses on revaluations, impairments and sales are as described above for purchased assets. Deferred income is recognised only where conditions attached to the donation preclude immediate recognition of the gain. This accounting policy change has been applied retrospectively and consequently the 2010-11 results have been restated.

1.10 Government grants Following the accounting policy change outlined in the Treasury FREM for 2011-12, a government grant reserve is no longer maintained. The value of assets received by means of a government grant are credited directly to income. Deferred income is recognised only where conditions attached to the grant preclude immediate recognition of the gain. This accounting policy change has been applied retrospectively and consequently the 2010-11 results have been restated.

1.11 Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met when the sale is highly probable, the asset is available for immediate sale in its present condition and management is committed to the sale, which is expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Fair value is open market value including alternative uses. In order to determine this, the PCT instructed Boshier & Company, an independent firm of Chartered Surveyors (RICS), to provide a valuation. As a result of this, non-current assets held for sale were valued at ÂŁ800,000. The profit or loss arising on disposal of an asset is the difference between the sale proceeds and the carrying amount and is recognised in the Statement of Comprehensive Net Expenditure. On disposal, the balance for the asset in the revaluation reserve is transferred to retained earnings. Property, plant and equipment that is to be scrapped or demolished does not qualify for recognition as held for sale. Instead, it is retained as an operational asset and its economic life is adjusted. The asset is de-recognised when it is scrapped or demolished.

1.12 Inventories Inventories are valued at the lower of cost and net realisable value.

1.13 Cash and cash equivalents Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and that form an integral part of the PCTâ&#x20AC;&#x2122;s cash management.

1.14 Losses and Special Payments Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the health service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different categories, which govern the way each individual case is handled. Losses and special payments are charged to the relevant functional headings including losses which would have been made good through insurance cover had PCTs not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure).

1.15 Clinical Negligence Costs From 1 April 2000, the NHS Litigation Authority (NHSLA) took over the full financial responsibility for all Existing Liabilities Scheme (ELS) cases unsettled at that date and from 1 April 2002 all Clinical Negligence Scheme for Trusts (CNST) cases. Provisions for these are included in the accounts of the NHSLA. Although the NHSLA is administratively responsible for all cases from 1 April 2000, the legal liability remains with the PCTs. The NHSLA operates a risk pooling scheme under which the PCT pays an annual contribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged to expenditure in the year that it is due. The total value of clinical negligence provisions carried by the NHSLA on behalf of the PCT is disclosed at Note 32. Note 1 cont4

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.16 Employee benefits Short-term employee benefits Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees. The cost of leave earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carry forward leave into the following period. Retirement benefit costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to expenditure at the time the PCT commits itself to the retirement, regardless of the method of payment.

1.17 Research and Development Research and development expenditure is charged against income in the year in which it is incurred, except insofar as development expenditure relates to a clearly defined project and the benefits of it can reasonably be regarded as assured. Expenditure so deferred is limited to the value of future benefits expected and is amortised through the Statement of Comprehensive Net Expenditure on a systematic basis over the period expected to benefit from the project. It should be revalued on the basis of current cost. The amortisation is calculated on the same basis as depreciation, on a quarterly basis.

1.18 Other expenses Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable.

1.19 Grant making Under section 256 of the National Health Service Act 2006, the PCT has the power to make grants to local authorities, voluntary bodies and registered social landlords to finance capital or revenue schemes. A liability in respect of these grants is recognised when the PCT has a present legal or constructive obligation which occurs when all of the conditions attached to the payment have been met.

1.20 EU Emissions Trading Scheme EU Emission Trading Scheme allowances are accounted for as government grant funded intangible assets if they are not expected to be realised within twelve months, and otherwise as other current assets. They are valued at open market value. As the NHS body makes emissions, a provision is recognised with an offsetting transfer from deferred income. The provision is settled on surrender of the allowances. The asset, provision and deferred income are valued at fair value at the end of the reporting period.

Note 1 cont5

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.21 Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the PCT, or a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation or the amount of the obligation cannot be measured sufficiently reliably. A contingent liability is disclosed unless the possibility of a payment is remote. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the trust. A contingent asset is disclosed where an inflow of economic benefits is probable. Where the time value of money is material, contingencies are disclosed at their present value.

1.22 Leases Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. The PCT as lessee Property, plant and equipment held under finance leases are initially recognised, at the inception of the lease, at fair value or, if lower, at the present value of the minimum lease payments, with a matching liability for the lease obligation to the lessor. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate on interest on the remaining balance of the liability. Finance charges are recognised in calculating the PCT’s net operating cost.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred. Where a lease is for land and buildings, the land and building components are separated and individually assessed as to whether they are operating or finance leases. The PCT as lessor Amounts due from lessees under finance leases are recorded as receivables at the amount of the PCT’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the PCT’s net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straightline basis over the lease term.

1.23 Foreign exchange Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction, except where rates do not fluctuate significantly, in which case an average rate for a period is used. Resulting exchange gains and losses are taken to the Statement of Comprehensive Net Expenditure.

1.24 Provisions Provisions are recognised when the PCT has a present legal or constructive obligation as a result of a past event, it is probable that the PCT will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HM Treasury’s discount rate of 2.2% (2.8% in respect of early staff departures) in real terms. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursements will be received and the amount of the receivable can be measured reliably. Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the PCT has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. A restructuring provision is recognised when the PCT has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arsing from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with ongoing activities of the entity. Note 1 cont6

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Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued)

1.25 Financial Instruments Financial assets Financial assets are recognised when the PCT becomes party to the financial instrument contract or, in the case of trade receivables, when the goods or services have been delivered. Financial assets are derecognised when the contractual rights have expired or the asset has been transferred. Financial assets are initially recognised at fair value. Financial assets are classified into the following categories: financial assets ‘at fair value through profit and loss’; ‘held to maturity investments’; ‘available for sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets at fair value through profit and loss Embedded derivatives that have different risks and characteristics to their host contracts, and contracts with embedded derivatives whose separate value cannot be ascertained, are treated as financial assets at fair value through profit and loss. They are held at fair value, with any resultant gain or loss recognised in the Statement of Comprehensive Net Expenditure. The net gain or loss incorporates any interest earned on the financial asset. Held to maturity investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity, and there is a positive intention and ability to hold to maturity. After initial recognition, they are held at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method. Available for sale financial assets Available for sale financial assets are non-derivative financial assets that are designated as available for sale or that do not fall within any of the other three financial asset classifications. They are measured at fair value with changes in value taken to the revaluation reserve, with the exception of impairment losses. Accumulated gains or losses are recycled to the Statement of Comprehensive Net Expenditure on de-recognition.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. After initial recognition, they are measured at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method. Fair value is determined by reference to quoted market prices where possible, otherwise by valuation techniques The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to the initial fair value of the financial asset. At the Statement of Financial Position date, the PCT assesses whether any financial assets, other than those held at ‘fair value through profit and loss’ are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset. For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the revised future cash flows discounted at the asset’s original effective interest rate. The loss is recognised in the Statement of Comprehensive Net Expenditure and the carrying amount of the asset is reduced directly, or through a provision for impairment of receivables. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the Statement of Comprehensive Net Expenditure to the extent that the carrying amount of the receivable at the date of the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Note 1 cont7

12 65

Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued) Financial liabilities Financial liabilities are recognised on the Statement of Financial Position when the PCT becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are derecognised when the liability has been discharged, that is, the liability has Financial liabilities are initially recognised at fair value. Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or other financial Financial liabilities at fair value through profit and loss Embedded derivatives that have different risks and characteristics to their host contracts, and contracts with embedded derivatives whose separate value cannot be ascertained, are treated as financial liabilities at fair value through profit and loss. They are held at fair value, with any resultant gain or loss recognised in the Statement of Comprehensive Net Expenditure. The net gain or loss incorporates any interest earned on the financial asset. Other financial liabilities After initial recognition, all other financial liabilities are measured at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments through the life of the asset, to the net carrying amount of the financial liability. Interest is recognised using the effective interest

1.26 Private Finance Initiative (PFI) and NHS LIFT transactions HM Treasury has determined that government bodies shall account for infrastructure PFI schemes (including NHS LIFT) where the government body controls the use of the infrastructure and the residual interest in the infrastructure at the end of the arrangement as service concession arrangements, following the principles of the requirements of IFRIC 12. The PCT therefore recognises the PFI asset as an item of property, plant and equipment together with a liability to pay for it. The services received under the contract are recorded as operating expenses. The annual unitary payment is separated into the following component parts, using appropriate estimation techniques where necessary: a) Payment for the fair value of services received; b) Payment for the PFI asset, including finance costs; and c) Payment for the replacement of components of the asset during the contract ‘lifecycle replacement’. a) Services received The fair value of services received in the year is recorded under the relevant expenditure headings within ‘operating expenses’. b) PFI and LIFT assets, liabilities, and finance costs The PFI assets are recognised as property, plant and equipment, when they come into use. The assets are measured initially at fair value in accordance with the principles of IAS 17. Subsequently, the assets are measured at fair value, which is kept up to date in accordance with the PCT’s approach for each relevant class of asset in accordance with the principles of IAS 16. LIFT assets are recognised as property, plant and equipment, when they come into use. The assets are measured initially at fair value in accordance with the principles of IAS 17. Subsequently, the assets are measured at fair value, which is kept up to date in accordance with the PCT’s approach for each relevant class of asset in accordance with the principles of IAS 16. A PFI liability is recognised at the same time as the PFI assets are recognised. It is measured at the present value of the minimum lease payments, discounted using the implicit interest rate. It is subsequently measured as a finance lease liability in accordance with IAS 17. A LIFT liability is recognised at the same time as the PFI assets are recognised. It is measured initially at the same amount as the fair value of the PFI assets and is subsequently measured as a finance lease liability in accordance with IAS 17.

Note 1 cont8

13 66

Hertfordshire PCT - Annual Accounts 2011-12 1. Accounting policies (continued) An annual finance cost is calculated by applying the implicit interest rate in the lease to the opening lease liability for the period, and is charged to ‘Finance Costs’ within the Statement of Comprehensive Net Expenditure. The element of the annual unitary payment that is allocated as a finance lease rental is applied to meet the annual finance cost and to repay the lease liability over the contract term. An element of the annual unitary payment increase due to cumulative indexation is allocated to the finance lease. In accordance with IAS 17, this amount is not included in the minimum lease payments, but is instead treated as contingent rent and is expensed as incurred. In substance, this amount is a finance cost in respect of the liability and the expense is presented as a contingent finance cost in the Statement of Comprehensive Net Expenditure. c) Lifecycle replacement Components of the asset replaced by the operator during the contract (‘lifecycle replacement’) are capitalised where they meet the PCT’s criteria for capital expenditure. They are capitalised at the time they are provided by the operator and are measured initially at their fair value. The element of the annual unitary payment allocated to lifecycle replacement is pre-determined for each year of the contract from the operator’s planned programme of lifecycle replacement. Where the lifecycle component is provided earlier or later than expected, a short-term finance lease liability or prepayment is recognised respectively. Where the fair value of the lifecycle component is less than the amount determined in the contract, the difference is recognised as an expense when the replacement is provided. If the fair value is greater than the amount determined in the contract, the difference is treated as a ‘free’ asset and a deferred income balance is recognised. The deferred income is released to the operating income over the shorter of the remaining contract period or the useful economic life of the replacement component. Assets contributed by the PCT to the operator for use in the scheme Assets contributed for use in the scheme continue to be recognised as items of property, plant and equipment in the PCT’s Statement of Comprehensive Net Expenditure. Other assets contributed by the PCT to the operator Assets contributed (e.g. cash payments, surplus property) by the PCT to the operator before the asset is brought into use, which are intended to defray the operator’s capital costs, are recognised initially as prepayments during the construction phase of the contract. Subsequently, when the asset is made available to the PCT, the prepayment is treated as an initial payment towards the finance lease liability and is set against the carrying value of the liability. 1.27 Accounting Standards that have been issued but have not yet been adopted The Treasury FReM does not require the following Standards and Interpretations to be applied in 2011-12. The application of the Standards as revised would not have a material impact on the accounts for 2011-12, were they applied in that year: IAS 1 Presentation of financial statements (Other Comprehensive Income) - subject to consultation IAS 12 - Income Taxes (amendment) - subject to consultation IAS 19 Post-employment benefits (pensions) - subject to consultation IAS 27 Separate Financial Statements - subject to consultation IAS 28 Investments in Associates and Joint Ventures - subject to consultation IFRS 7 - Financial Instruments: Disclosures (annual improvements) - effective 2012-13 IFRS 9 Financial Instruments - subject to consultation - subject to consultation IFRS 10 Consolidated Financial Statements - subject to consultation IFRS 11 Joint Arrangements - subject to consultation IFRS 12 Disclosure of Interests in Other Entities - subject to consultation 1.28 Going Concern As a consequence of the Health and Social Care Act 2012, Hertfordshire PCT will be dissolved on 31 March 2013. Its functions will be transferred to various new or existing public sector entities. The Secretary of State has directed that, where Parliamentary funding continues to be voted to permit the relevant services to be carried out elsewhere in the public sector, this is normally sufficient evidence of going concern. Note 1 cont9

14 67

Hertfordshire PCT - Annual Accounts 2011-12

3. Financial Performance Targets 3.1 Revenue Resource Limit

2010-11 £000

2011-12 £000

The PCTs' performance for the year ended 31 March 2012 is as follows: Net Operating Cost for the Financial Year Adjusted for prior period adjustments in respect of errors Revenue Resource Limit Under/(Over)spend Against Revenue Resource Limit (RRL)

1,719,135 1,719,648 513

Prior period adjustments in respect of errors In respect of expenditure attributable to a prior period In respect of (income) related to a prior period Net PPA related to errors

1,714,937 1,715,520 583

0 0 0

3.2 Capital Resource Limit

2010-11 £000

2011-12 £000

The PCT is required to keep within its Capital Resource Limit. Total Gross Capital Expenditure Loss in Respect of Disposals of Donated Assets less: Net Book Value of Non-Current Assets Disposed of to NHS Bodies less: Net Book Value of Non-Current Assets Disposed of to non-NHS Bodies less: Net Book Value of Financial Instruments (Investments) Disposed Of to NHS bodies less: Net Book Value of Financial Instruments (Investments) Disposed Of to Non-NHS bodies less: Capital Grants Received less: Donations Charge Against the Capital Resource Limit (CRL) Capital Resource Limit (CRL) (Over)/Underspend Against CRL

3.3 Provider full cost recovery duty

46,770 0 0 0 0 0 0 0 46,770 46,907 137

2010-11 £000

2011-12 £000

The PCT is required to recover full costs in relation to its provider functions. The performance for 2011-12 is as follows: Provider gross operating costs Provider Operating Revenue Net Provider Operating Costs Costs Met Within PCTs Own Allocation Under/(Over) Recovery of Costs

3.4 Under/(Over)spend against cash limit Total Charge to Cash Limit Cash Limit Under/(Over)spend Against Cash Limit

3.5 Reconciliation of Cash Drawings to Parliamentary Funding (current year) Total cash received from DH (Gross) Less: Trade Income from DH reported on AoB form 98 Inc Exp Less/(Plus): movement in DH drs on AoB form 98 Cr Dr Sub total: net advances (Less)/plus: transfers (to)/from other resource account bodies (free text note required) Plus: cost of Dentistry Schemes (central charge to cash limits) Plus: drugs reimbursement (central charge to cash limits) Parliamentary funding credited to General Fund

7,950 0 0 0 0 0 0 0 7,950 10,506 2,556

0 0 0 0 0

2011-12 £000 1,721,635 1,721,635 0

2010-11 £000 1,715,976 1,715,976 0

2011-12 £000 1,497,263 0 (2) 1,497,261 0 49,006 175,368 1,721,635

Note 3P

Hertfordshire PCT - Annual Accounts 2011-12 4 Miscellaneous revenue

Fees and Charges Dental Charge income from Contractor-Led GDS & PDS Dental Charge income from Trust-Led GDS & PDS Prescription Charge income Strategic Health Authorities NHS Trusts NHS Foundation Trusts Primary Care Trusts Contributions to DATs Primary Care Trusts - Other Primary Care Trusts - Lead Commissioning English RAB Special Health Authorities Other English Special Health Authorities Department of Health - SMPTB Department of Health - Other Recoveries in respect of employee benefits Local Authorities Patient Transport Services Education, Training and Research Non-NHS: Private Patients Non-NHS: Overseas Patients (Non-Reciprocal) NHS Injury Costs Recovery Other Non-NHS Patient Care Services Charitable and Other Contributions to Expenditure Receipt of donated assets Receipt of Government granted assets Contingent Rental Income from Finance Leases Rental Income from Operating Leases Other Income Total miscellaneous income

2011-12 Total

2011-12 Admin

2011-12 Programme

2010-11 (restated)

£000

0 15,866 0 7,807 7,960 6,375 1,669 0 3 1,404 0 0 0 691 0 492 0 0 0 0 0 0 14 0 0 0 525 12,368 55,174

219 2,451 1,669 0 941 0 0 0 0 0 76 0

0 14

0 525 12,347 18,242

0 15,866 0 7,807 7,741 3,924 0 0 3 463 0 0 0 691 0 416 0 0 0 0 0 0 0 0 0 0 0 21 36,932

0 14,647 0 8,095 6,732 7,721 1,793 0 10 1,104 0 0 0 260 0 362 0 0 0 0 0 0 0 0 0 0 980 114 41,818

Other income includes £12.1m of rental income previously netted down against the premises cost shown in note 5.1. (£1.1m received from GP’s with a further £11m from the Hertfordshire Community Trust)

Note 4 P

16 69

Hertfordshire PCT - Annual Accounts 2011-12

5. Operating Costs 5.1 Analysis of operating costs:

2011-12

2010-11

Total £000

Admin £000

Programme £000

Total £000

Goods and Services from Other PCTs Healthcare Non-Healthcare Total Goods and Services from Other NHS Bodies other than FTs Goods and services from NHS Trusts Goods and services (other, excl Trusts, FT and PCT)) Total Goods and Services from Foundation Trusts Purchase of Healthcare from Non-NHS bodies Social Care from Independent Providers Expenditure on Drugs Action Teams Non-GMS Services from GPs Contractor Led GDS & PDS (excluding employee benefits) Salaried Trust-Led PDS & PCT DS (excluding employee benefits) Chair, Non-executive Directors & PEC remuneration Executive committee members costs Consultancy Services Prescribing Costs G/PMS, APMS and PCTMS (excluding employee benefits) Pharmaceutical Services Local Pharmaceutical Services Pilots New Pharmacy Contract General Ophthalmic Services Supplies and Services - Clinical Supplies and Services - General Establishment Transport Premises Impairments & Reversals of Property, plant and equipment Impairments and Reversals of non-current assets held for sale Depreciation Amortisation Impairment & Reversals Intangible non-current assets Impairment and Reversals of Financial Assets Impairment of Receivables Inventory write offs Research and Development Expenditure Audit Fees Other Auditors Remuneration Clinical Negligence Costs Education and Training Grants for capital purposes Grants for revenue purposes Other Impairments and reversals for investment properties Total Operating costs charged to Statement of Comprehensive Net Expenditure

803,030 94 803,124 96,419 249,811 0 4,572 6,804 66,508 0 207 0 669 152,825 152,551 1,936 0 39,388 10,328 1,017 545 2,432 531 15,690 1,188 0 5,703 218 742 0 24 0 17 277 60 0 937 1,734 0 2,153 0 1,749,518

Employee Benefits (excluding capitalised costs) Employee Benefits associated with PCTMS Trust led PDS and PCT DS PCT Officer Board Members Other Employee Benefits Total Employee Benefits charged to SOCNE Total Operating Costs

129,988 200 130,188

138,753 1,060 139,813

0 409 2,335 90 15,530 0 0 4,241 218 0 0 0 0 17 277 60 0 676 0 0 932 0 26,955

802,942 78 803,020 96,149 249,811 0 4,572 6,804 66,508 0 0 0 0 152,825 152,551 1,936 0 39,388 10,328 1,017 136 97 441 160 1,188 0 1,462 0 742 0 24 0 0 0 0 0 261 1,734 0 1,221

800,903 225 801,128 81,958 259,640 0 4,908 1,406 63,317 0 407 0 711 155,965 153,895 3,835 0 35,506 10,129 375 107 2,304 362 3,071 0 0 3,917 129 0 0 129 0 5 293 24 0 2,110 2,630 0 4,978

1,722,563

1,733,052

121 0 608 20,367 21,096 1,770,614

0 0 608 18,847 19,455 46,410

121 0 0 1,520 1,641 1,724,204

368 0 423 21,648 22,439 1,755,491

1,011 723 0 0 0 1,734

0 0 0 0 0 0

1011 723 0 0 0 1,734

1773 833 24 0 0 2,630

0 0 0 0 1,734

0 0 0 0 0

0 0 0 0 1,734

0 0 0 0 2,630

129,988 1,120 131,108

Analysis of grants reported in total operating costs For capital purposes Grants to fund Capital Projects - GMS Grants to Local Authorities to Fund Capital Projects Grants to Private Sector to Fund Capital Projects Grants to Fund Capital Projects - Dental Grants to Fund Capital Projects - Other Total Capital Grants Grants to fund revenue expenditure To Local Authorities To Private Sector To Other Total Revenue Grants Total Grants

920 920 88 16 104 270

207 0 669 0

Commissioning Services PCT Running Costs 2011-12 Running costs (£000s) Weighted population (number in units) Running costs per head of population (£ per head)

26,219 1,003,610 26.12

PCT Running Costs 2010-11 Running costs (£000s) Weighted population (number in units) Running costs per head of population (£ per head)

25,515 978,338 26.08

Public Health

2,108 1,003,610 2.10

2,169 978,338 2.22

Total

28,327 1,003,610 28.23

27,684 978,338 28.30

Note 5.1 P

Hertfordshire PCT - Annual Accounts 2011-12 2011-12

2010-11

£000

152,551 152,825 66,508 0 10,328 0 1,881 0 39,388 6,804 1,091 431,376

154,263 155,850 63,317 0 10,129 0 3,950 0 35,506 1,406 197 424,618

Purchase of Secondary Healthcare Learning Difficulties Mental Illness Maternity General and Acute Accident and emergency Community Health Services Other Contractual Total Secondary Healthcare Purchased Grants for capital purposes Grants for revenue purposes

25,865 147,713 55,973 795,792 42,515 124,009 93,691 1,285,558 1,734 0

66,754 141,627 58,224 780,462 43,966 122,045 74,692 1,287,770 2,630 0

Total Healthcare Purchased by PCT

1,718,668

1,715,018

0 0 96,419

0 0 81,958

5.2 Analysis of operating expenditure by expenditure classification Purchase of Primary Health Care GMS / PMS/ APMS / PCTMS Prescribing costs Contractor led GDS & PDS Trust led GDS & PDS General Ophthalmic Services Department of Health Initiative Funding Pharmaceutical services Local Pharmaceutical Services Pilots New Pharmacy Contract Non-GMS Services from GPs Other Total Primary Healthcare purchased

Included above: Secondary healthcare commissioned by the PCT itself Social Care from Independent Providers Healthcare from NHS FTs included above

In 2011/12, the PCT’s allocation of £38m for social care for adults with a learning disability transferred to the local authority under the Valuing People Now programme. Responsibility for the commissioning of social care for adults with a learning disability transferred at the same time.

Note 5.2 P

18 71

Hertfordshire PCT - Annual Accounts 2011-12

6. Operating Leases

The PCT has arrangements with contractors that under IFRS must be accounted for as leases. Hertfordshire PCT has entered into certain financial arrangements involving the use of GP premises. This under IFRIC 4 and IAS 17 has determined that those operating leases must be recognised, but, as there is no defined term in the arrangements entered into, it is not possible to analyse the arrangements over financial years. The financial value included in the Operating Cost Statement for 2011/12 is £10.2m (£10.3m in 2010/11). 2011-12 Total £000

6.1 PCT as lessee Payments recognised as an expense Minimum lease payments Contingent rents Sub-lease payments Total Land £000 Payable: No later than one year Between one and five years After five years Total

Buildings £000 97 258 0 355

1,239 2,051 3,821 7,111

Total future sublease payments expected to be received:

2010-11 £000

1,489 0 0 1,489

1,861 0 0 1,861

1,395 2,330 3,821 7,546

1,348 3,251 4,155 8,754

Other £000 59 21 0 80

2,433

6.2 PCT as lessor The PCT has a number of premises that it obtains rental income from. Of these, the terms of the leases range from 1 to 20 years. 2010-11 £000

2011-12 £000 Recognised as income Rents Contingent rents Total Receivable: No later than one year Between one and five years After five years Total

525 0 525

980 0 980

529

459

1,817 3,257 5,603

1,520 2,823 4,802

Note 6 P

19 72

Hertfordshire PCT - Annual Accounts 2011-12

7. Employee benefits and staff numbers 7.1 Employee benefits Admin £000

Total £000

Programme £000

Permanently employed Total Admin £000 £000

Programme £000

Other Total £000

Admin £000

Programme £000

Employee Benefits 2011-12 - gross expenditure Salaries and wages Social security costs Employer contributions to NHS Pensions scheme Other pension costs Other post-employment benefits Other employment benefits Termination benefits Total employee benefits

17311 1532 2247 0 0 0 6 21096

15967 1412 2070 0 0 0 6 19455

1344 120 177 0 0 0 0 1641

16227 1460 2141 0 0 0 6 19834

14883 1340 1964 0 0 0 6 18193

1344 120 177 0 0 0 0 1641

1084 72 106 0 0 0 0 1262

0 0 0 0 0 0 0 0

Less recoveries in respect of employee benefits (table below) Total - Net Employee Benefits including capitalised costs

0 21096

0 19455

0 1641

0 19834

0 18193

0 1641

0 1262

0 0

Employee costs capitalised Net Employee Benefits excluding capitalised costs

0 21096

0 19455

0 1641

0 19834

0 18193

0 1641

0 1262

0 0

Recognised as: Commissioning employee benefits Provider employee benefits Net Employee Benefits excluding capitalised costs

21096 0 21096

0 0 0 0 0 0 0 0

Employee Benefits 2011-12 - income Salaries and wages Social Security costs Employer Contributions to NHS BSA - Pensions Division Other pension costs Other Post Employment Benefits Other Employment Benefits Termination Benefits TOTAL excluding capitalised costs

19834 0 19834

0 0 0 0 0 0 0 0

Permanently employed £000

Total £000 Net expenditure - 2010-11 Salaries and wages Social security costs Employer contributions to NHS Pensions scheme Other pension costs Other post-employment benefits Other employment benefits Termination benefits Total employee benefits

18,511 1,432 2,261 0 0 0 235 22,439

Employee costs capitalised Net Employee Benefits excluding capitalised costs

22,439

Recognised as: Commissioning Employment Benefits Provider Employment Benefits TOTAL - excluding capitalised costs

22,439 22,439

0 0 0 0 0 0 0 0

1262 0 1262

0 0 0 0 0 0 0 0

Other £000

16,569 1,432 2,261 0 0 0 235 20,497

1,942 0 0 0 0 0 0 1,942

7.2 Staff Numbers 2011-12

2010-11 Permanently employed Number

Total Number Average Staff Numbers Medical and dental Ambulance staff Administration and estates Healthcare assistants and other support staff Nursing, midwifery and health visiting staff Nursing, midwifery and health visiting learners Scientific, therapeutic and technical staff Social Care Staff Other TOTAL Of the above - staff engaged on capital projects

Other Number

Permanently employed Number

Total Number

9.06 0 419.56 0.31 21.53 0 25.98 0 2.06 478.50

8.55 0 398.57 0.31 19.83 0 25 0 1.25 453.51

0.51 0 20.99 0 1.7 0 0.98 0 0.81 24.99

10.59 0 426.22 0.58 22.73 0 29.12 0 4.31 493.55

2011-12 Number 3,099 455 6.81

2010-11 Number 4,169 490 8.51

9.15 0 394.31 0.00 18.84 0 27.28 0 3.50 453.08

Other Number 1.44 0 31.91 0.58 3.89 0 1.84 0 0.81 40.47

7.3 Staff Sickness absence and ill health retirements Total Days Lost Total Staff Years Average working Days Lost

As per the Department of Health guidance, the figures disclosed are per calendar year (January to December).

Note 7.1-3 P

Hertfordshire PCT - Annual Accounts 2011-12

7.4 Exit Packages agreed 2011-12 2011-12

Exit package cost band (including any special payment element)

*Number of compulsory redundancies

*Number of other departures agreed

Number

2010-11

Total number of exit packages by cost band Number

*Number of compulsory redundancies

*Number of other departures agreed

Number

Total number of exit packages by cost band Number

Lees than £10,000 £10,001-£25,000 £25,001-£50,000 £50,001-£100,000 £100,001 - £150,000 £150,001 - £200,000 >£200,000

1 0 0 0 0 0 0

0 0 0 0 0 0 0

1 0 0 0 0 0 0

0 0 0 0 0 0 0

5 7 2 1 0 0 0

Total number of exit packages by type (total cost

£000s

235

Total resource cost

*Redundancy and other departure costs have been paid in accordance with the provisions of the NHS Scheme. Where the PCT has agreed early retirements, the additional costs are met by the PCT and not by the NHS pensions scheme. Ill-health retirement costs are met by the NHS pensions scheme and are not included in the table. This disclosure reports the number and value of exit packages taken by staff leaving in the year. Note: The expense associated with these departures may have been recognised in part or in full in a previous period.

Note 7.4 P

Hertfordshire PCT - Annual Accounts 2011-12

7.5 Pension costs Past and present employees are covered by the provisions of the NHS Pensions Scheme. Details of the benefits payable under these provisions can be found on the NHS Pensions website at www.nhsbsa.nhs.uk/pensions. The scheme is an unfunded, defined benefit scheme that covers NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS Body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period. In order that the defined benefit obligations recognised in the financial statements do not differ materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that “the period between formal valuations shall be four years, with approximate assessments in intervening years”. An outline of these follows: a) Full actuarial (funding) valuation The purpose of this valuation is to assess the level of liability in respect of the benefits due under the scheme (taking into account its recent demographic experience), and to recommend the contribution rates. The last formal actuarial valuation undertaken for the NHS Pension Scheme was completed for the year ending 31 March 2004. Consequently, a formal actuarial valuation would have been due for the year ending 31 March 2008. However, formal actuarial valuations for unfunded public service schemes have been suspended by HM Treasury on value for money grounds while consideration is given to recent changes to public service pensions, and while future scheme terms are developed as part of the reforms to public service pension provision. Employer and employee contribution rates are currently being determined under the new scheme design. b) Accounting valuation A valuation of the scheme liability is carried out annually by the scheme actuary as at the end of the reporting period. Actuarial assessments are undertaken in intervening years between formal valuations using updated membership data are accepted as providing suitably robust figures for financial reporting purposes. However, as the interval since the last formal valuation now exceeds four years, the valuation of the scheme liability as at 31 March 2012, is based on detailed membership data as at 31 March 2010 updated to 31 March 2012 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used. The latest assessment of the liabilities of the scheme is contained in the scheme actuary report, which forms part of the annual NHS Pension Scheme (England and Wales) Pension Accounts, published annually. These accounts can be viewed on the NHS Pensions website. Copies can also be obtained from The Stationery Office. c) Scheme provisions The NHS Pension Scheme provided defined benefits, which are summarised below. This list is an illustrative guide only, and is not intended to detail all the benefits provided by the Scheme or the specific conditions that must be met before these benefits can be obtained: The Scheme is a “final salary” scheme. Annual pensions are normally based on 1/80th for the 1995 section and of the best of the last three years pensionable pay for each year of service, and 1/60th for the 2008 section of reckonable pay per year of membership. Members who are practitioners as defined by the Scheme Regulations have their annual pensions based upon total pensionable earnings over the relevant pensionable service. With effect from 1 April 2008 members can choose to give up some of their annual pension for an additional tax free lump sum, up to a maximum amount permitted under HMRC rules. This new provision is known as “pension commutation”. Annual increases are applied to pension payments at rates defined by the Pensions (Increase) Act 1971, and are based on changes in retail prices in the twelve months ending 30 September in the previous calendar year. From 2011-12 the Consumer Price Index (CPI) will be used to replace the Retail Prices Index (RPI). Early payment of a pension, with enhancement, is available to members of the scheme who are permanently incapable of fulfilling their duties effectively through illness or infirmity. A death gratuity of twice final year’s pensionable pay for death in service, and five times their annual pension for death after retirement is payable. For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to the employer. Members can purchase additional service in the NHS Scheme and contribute to money purchase AVC’s run by the Scheme’s approved providers or by other Free Standing Additional Voluntary Contributions (FSAVC) providers.

Note 7.4a-c

22 75

Hertfordshire PCT - Annual Accounts 2011-12

8. Better Payment Practice Code 8.1 Measure of compliance

2011-12 Number

2011-12 £000

2010-11 Number

2010-11 £000

Non-NHS Payables Total Non-NHS Trade Invoices Paid in the Year Total Non-NHS Trade Invoices Paid Within Target Percentage of Non-NHS Trade Invoices Paid Within Target

27,516 25,950 94.31%

255,946 248,043 96.91%

26,768 25,388 94.84%

255,334 235,883 92.38%

NHS Payables Total NHS Trade Invoices Paid in the Year Total NHS Trade Invoices Paid Within Target Percentage of NHS Trade Invoices Paid Within Target

4,157 3,392 81.60%

1,030,981 1,016,895 98.63%

4,001 3,245 81.10%

978,437 942,308 96.31%

The Better Payment Practice Code requires the PCT to aim to pay all valid invoices by the due date or within 30 days of receipt of a valid invoice, whichever is later.

8.2 The Late Payment of Commercial Debts (Interest) Act 1998 No payments were made in respect of claims under this legislation in 2011-12 or 2010-11.

Note 8 P

Hertfordshire PCT - Annual Accounts 2011-12

9. Investment Income

2011-12

2010-11

Total £000

Admin £000

Programme £000

£000

Rental Income PFI finance lease revenue (planned) PFI finance lease revenue (contingent) Other finance lease revenue Subtotal Interest Income LIFT: equity dividends receivable LIFT: loan interest receivable Bank interest Other loans and receivables Impaired financial assets Other financial assets Subtotal

0 0 0 0

0 25 0 0 0 0 25

0 0 0 0 0 0 0

0 3 0 0 0 0 3

Total investment income

10. Other Gains and Losses

2011-12

2010-11

Total £000

Admin £000

Programme £000

£000

Gain/(loss) on disposal of property, plant and equipment Gain/(loss) on disposal of intangible assets Gain/(loss) on disposal of financial assets Gain/(loss) on foreign exchange Change in fair value of financial assets carried at fair value through the SoCNE Change in fair value of financial liabilities carried at fair value through the SoCNE Change in fair value of investment property Recycling of gain/(loss) from equity on disposal of financial assets held for sale

0 0 0 0 0 15 0 0

0 0 0 0 0 0 0 0

0 0 0 0 0 (19) 0 0

Total

(19)

11. Finance Costs

2011-12

2010-11

Total £000

Admin £000

Programme £000

£000

Interest Interest on obligations under finance leases Provisions - unwinding of discount Interest on obligations under PFI contracts: - main finance cost - contingent finance cost Interest on obligations under LIFT contracts: - main finance cost - contingent finance cost Interest on late payment of commercial debt Other interest expense Total interest expense Other finance costs Total

77 104

0 0

88 136

2,854 682

0 0

2,854 682

415 468

0 0 0 0 3,717 18 3,735

0 0 0 0 181 18 199

0 0 0 0 3,536 0 3,536

0 0 0 0 1,107 141 1,248

Note 9-11

Hertfordshire PCT - Annual Accounts 2011-12

12.1 Property, plant and equipment Land

Buildings excluding dwellings

Dwellings

£000

Assets under construction and payments on account £000

2011-12 Cost or valuation: At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Additions Purchased Additions Donated Additions Government Granted Reclassifications Reclassifications as Held for Sale Disposals other than for sale Upward revaluation/positive indexation Impairments/negative indexation Reversal of Impairments Transfers (to)/from NHS Bodies Cumulative dep'n adjustment following revaluation At 31 March 2012

40,368 0 0 40,368 0 0 0 3,749 (800) 0 0 (692) 0 0 0 42,625

64,190 0 0 64,190 38,293 0 0 (3,714) 0 0 1,256 (2) 0 0 0 100,023

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2,777 0 0 2,777 0 0 0 1,146 0 0 0 0 3,923 38,702

12,270 0 0 12,270 0 0 0 0 42 0 2,488 0 0 14,800 85,223

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Purchased Donated Government Granted Total at 31 March 2012

38,702 0 0 38,702

83,556 1,667 0 85,223

Asset financing: Owned Held on finance lease On-SOFP PFI contracts PFI residual: interests Total

38,702 0 0 0 38,702

35,715 110 49,398 0 85,223

Depreciation At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Reclassifications Reclassifications as Held for Sale Disposals other than for sale Upward revaluation/positive indexation Impairments Reversal of Impairments Charged During the Year Transfers to NHS Bodies Cumulative dep'n adjustment following revaluation At 31 March 2012

Revaluation Reserve Balance for Property, Plant & Equipment Land

At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Movements At 31 March 2012

£000's 9,949 0 0 9,949 (1,024) 8,925

Buildings £000's 13,745 0 0 13,745 1,276 15,021

Transport equipment

Information technology

Furniture & fittings

Total

£000

1,270 0 0 1,270 6,163 0 0 0 0 0 0 0 0 0 0 7,433

20 0 0 20 0 0 0 0 0 0 0 0 0 0 0 20

15,565 0 0 15,565 1,805 0 0 0 0 0 0 0 0 0 0 17,370

3,935 0 0 3,935 0 0 0 (35) 0 0 0 0 0 0 0 3,900

126,213 0 0 126,213 46,770 0 0 0 (800) 0 1,279 (694) 0 0 0 172,768

0 0 0 1,397

379 0 0 379 0 0 0 0 0 0 703 0 0 1,082 6,351

20 0 0 20 0 0 0 0 0 0 0 0 0 20 0

8,744 0 0 8,744 0 0 0 0 0 0 2,012 0 0 10,756 6,614

787 0 0 787 0 0 0 0 0 0 500 0 0 1,287 2,613

24,977 0 0 24,977 0 0 0 0 1,188 0 5,703 0 0 31,868 140,900

0 0 0 0

1,397 0 0 1,397

6,343 8 0 6,351

0 0 0 0

6,614 0 0 6,614

2,604 9 0 2,613

139,216 1,684 0 140,900

0 0 0 0 0

1,397 0 0 0 1,397

728 47 5,576 0 6,351

0 0 0 0 0

6,614 0 0 0 6,614

2,613 0 0 0 2,613

85,769 157 54,974 0 140,900

0 0 0 0 0 0

Information technology £000's 0 0 0 0 0 0

Dwellings £000's 0 0 0 0 0 0

865 0 0 865 509 0 0 0 0 0 23 0 0 0 0 1,397

Plant & machinery

0 0

Plant & machinery £000's 11 0 0 11 0 11

Transport equipment £000's

Furniture & fittings £000's

Total

9 0 0 9 0 9

£000's 23,714 0 0 23,714 252 23,966

Note 12.1 P

Hertfordshire PCT - Annual Accounts 2011-12

12.2 Property, plant and equipment Land

Buildings excluding dwellings

Dwellings

£000

Assets under construction and payments on account £000

2010-11 Cost or valuation: At 1 April 2010 Additions - purchased Additions - donated Additions - government granted Reclassifications Reclassified as held for sale Disposals other than by sale Revaluation & indexation gains Impairments Reversals of impairments In-year transfers to/from NHS bodies At 31 March 2011

38,577 0 0 0 0 0 0 1,790 0 0 1 40,368

58,433 2,585 0 0 0 0 0 3,172 0 0 0 64,190

0 0 0 0 0 0 0 0 0 0 0 0

2,777

0 0 0 0 0 0 0 0 0 0 0

0 821 0 0 0 0 0 44 0 0 0 865

Plant & machinery

Transport equipment

Information technology

Furniture & fittings

Total

£000

917 353 0 0 0 0 0 0 0 0 0 1,270

20 0 0 0 0 0 0 0 0 0 0 20

12,631 2,934 0 0 0 0 0 0 0 0 0 15,565

3,280 655 0 0 0 0 0 0 0 0 0 3,935

113,858 7,348 0 0 0 0 0 5,006 0 0 1 126,213

0 0 865

292 0 0 0 0 0 0 87 0 379 891

20 0 0 0 0 0 0 0 0 20 0

7,237 0 0 0 0 0 0 1,507 0 8,744 6,821

370 0 0 0 0 0 0 417 0 787 3,148

20,515 0 0 0 545 0 0 3,917 0 24,977 101,236

Depreciation At 1 April 2010 Reclassifications Reclassifications as Held for Sale Disposals other than for sale Upward revaluation/positive indexation Impairments Reversal of Impairments Charged During the Year Transfers to NHS Bodies At 31 March 2011 Net book value

0 0 0 0 0 0 0 2,777 37,591

9,819 0 0 0 545 0 0 1,906 0 12,270 51,920

Purchased Donated Government Granted Total at 31 March 2011

37,591 0 0 37,591

50,241 1,679 0 51,920

0 0 0 0

865 0 0 865

881 10 0 891

0 0 0 0

6,821 0 0 6,821

3,139 9 0 3,148

99,538 1,698 0 101,236

37,591 0 0 0 37,591

40,097 139 11,684 0 51,920

0 0 0 0 0

865 0 0 0 865

824 67 0 0 891

0 0 0 0 0

6,821 0 0 0 6,821

3,148 0 0 0 3,148

89,346 206 11,684 0 101,236

Asset financing: Owned Held on finance lease On-SOFP PFI contracts PFI residual: interests

0 0

Note 12.2 P

26 79

Hertfordshire PCT - Annual Accounts 2011-12 12.3 Property, plant and equipment For assets held at revalued amounts state Asset Description

Valuation Date

Victory Road Windmill House Elms Clinic Hitchin Hospital Tring Queensway Medical Centre

31/03/2012 31/03/2012 31/03/2012 31/05/2011 31/03/2010 31/03/2010

Amount Asset Type 350,000 3,000,000 450,000 1,500,000 251,000 525,000

Land & Buildings Land & Buildings Land & Buildings Land & Buildings Buildings Land & Buildings

The above property valuations were carried out by independent Chartered Surveyors Brown & Lee and Boshier & Company. The method of the change is from modern equivalent assets (MEA) to market value (MA). In 2011/12 the impact of this change was impairment £1.9m of which £0.7m was charged against the Revaluation Reserves and £1.2m to the Statement of Comprehensive Net Expenditure (SoCNE – AME)

12.4 Open Market Value of Assets at balance sheet date

Land

Open Market Value at 31 March 2012 Open Market Value at 31 March 2011

£000s 5,825 0

Buildings excl. dwellings £000s 251 0

Dwelling s £000s 0 0

Total £000s 6,076 0

12.5 Economic Lives of Non-Current Assets Min Life Years Intangible Assets Software Licences Licences and Trademarks Patents Development Expenditure Property, Plant and Equipment Buildings exc Dwellings Dwellings Plant & Machinery Transport Equipment Information Technology Furniture and Fittings

Max Life Years 0 0 0 0

0 0 0 0

3 0 2 0 2 1

60 0 15 0 5 25

Note 12.3-12.5 P

Hertfordshire PCT - Annual Accounts 2011-12

13.1 Intangible non-current assets 2011-12

Softwareinternally generated £000

Softwarepurchased

Licences & trademarks

Patents

Development expenditure

Total

£000

Cost or valuation: At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Additions - purchased Additions - internally generated Additions - donated Additions - government granted Reclassifications Reclassified as held for sale Disposals other than by sale Revaluation & indexation gains Impairments Reversal of impairments In-year transfers to/from NHS bodies Cumulative amortisation adjustment following revaluatio At 31 March 2012

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

78 0 0 78 0 0 0 0 0 0 0 0 0 0 0 0 78

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1,089 0 0 1,089 0 0 0 0 0 0 0 0 0 0 0 0 1,089

1,167 0 0 1,167 0 0 0 0 0 0 0 0 0 0 0 0 1,167

Amortisation At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Reclassifications Reclassified as held for sale Disposals other than by sale Revaluation or indexation gains Impairments charged to operating expenses Reversal of impairments charged to operating expenses Charged during the year In-year transfers to NHS bodies Cumulative amortisation adjustment following revaluatio At 31 March 2012

0 0 0 0 0 0 0 0 0 0 0 0 0 0

78 0 0 78 0 0 0 0 0 0 0 0 0 78

0 0 0 0 0 0 0 0 0 0 0 0 0 0

129 0 0 129 0 0 0 0 742 0 218 0 0 1,089

207 0 0 207 0 0 0 0 742 0 218 0 0 1,167

NBV at 31 March 2012

Net book value at 31 March 2012 comprises: Purchased Donated Government Granted Total at 31 March 2012

0 0 0 0

Revaluation reserve balance for intangible non-current assets £000's At 31 March 2011 Opening balance adjustments At 1 April 2011 restated Movements (specify) At 31 March 2012

0 0 0 0 0

£000's

£000's 0 0 0 0 0

0 0 0 0 0

Note 13.1 P

Hertfordshire PCT - Annual Accounts 2011-12

13.2 Intangible non-current assets 2010-11

Softwareinternally generated £000

Softwarepurchased

Licences & trademarks

Patents

Development expenditure

Total

£000

Cost or valuation: At 1 April 2010 Additions - purchased Additions - internally generated Additions - donated Additions - government granted Reclassifications Reclassified as held for sale Disposals other than by sale Revaluation & indexation gains Impairments Reversal of impairments In-year transfers to/from NHS bodies At 31 March 2011

0 0 0 0 0 0 0 0 0 0 0 0 0

78 0 0 0 0 0 0 0 0 0 0 0 78

0 0 0 0 0 0 0 0 0 0 0 0 0

487 602 0 0 0 0 0 0 0 0 0 0 1,089

565 602 0 0 0 0 0 0 0 0 0 0 1,167

Amortisation At 1 April 2010 Reclassifications Reclassified as held for sale Disposals other than by sale Revaluation or indexation gains Impairments charged to operating expenses Reversal of impairments charged to operating expenses Charged during the year In-year transfers to NHS bodies At 31 March 2011

0 0 0 0 0 0 0 0 0 0

78 0 0 0 0 0 0 0 0 78

0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 129 0 129

78 0 0 0 0 0 0 129 0 207

Net book value at 31 March 2011

960

Net book value at 31 March 2011 comprises: Purchased Donated Government Granted Total at 31 March 2011

0 0 0 0

960 0 0 960

13.3 Intangible non-current assets The PCT no longer considers the integrated Electronic Patient Record (EPR) as an Intangible non-current asset.

Note 13.2-13.3 P

Hertfordshire PCT - Annual Accounts 2011-12

14. Analysis of impairments and reversals recognised in 2011-12

Property, Plant and Equipment impairments and reversals taken to SoCNE Loss or damage resulting from normal operations Over-specification of assets Abandonment of assets in the course of construction Total charged to Departmental Expenditure Limit Unforeseen obsolescence Loss as a result of catastrophe Other Changes in market price Total charged to Annually Managed Expenditure Property, Plant and Equipment impairments and reversals charged to the revaluation reserve Loss or damage resulting from normal operations Over Specification of Assets Abandonment of assets in the course of construction Unforeseen obsolescence Loss as a result of catastrophe Other Changes in market price Total impairments for PPE charged to reserves Total Impairments of Property, Plant and Equipment Intangible assets impairments and reversals charged to SoCNE Loss or damage resulting from normal operations Over-specification of assets Abandonment of assets in the course of construction Total charged to Departmental Expenditure Limit Unforeseen obsolescence Loss as a result of catastrophe Other Changes in market price Total charged to Annually Managed Expenditure Intangible Assets impairments and reversals charged to the Revaluation Reserve Loss or damage resulting from normal operations Over-specification of assets Abandonment of assets in the course of construction Unforeseen obsolescence Loss as a result of catastrophe Other Changes in market price Total impairments for Intangible Assets charged to Reserves Total Impairments of Intangibles

2011-12

Total

Admin

Programme

ÂŁ000

0 0 0 0

0 0 4 1,184 1,188

0 0 0 0 0

0 0 4 1,184 1,188

0 0 0 0 0 0 694 694

0 0 0 0 0 0 0 0

0 0 0 0 0 0 694 694

1,882

0 0 0 0

0 0 742 0 742

0 0 0 0 0

0 0 742 0 742

0 0 0 0 0 0 0 0

742

Note 14 P cont1

Hertfordshire PCT - Annual Accounts 2011-12

14. Analysis of impairments and reversals recognised in 2011-12 (continued) 2011-12 Total £000

2011-12 Admin £000

2011-12 Programme £000

Financial Assets charged to SoCNE Loss or damage resulting from normal operations Total charged to Departmental Expenditure Limit

0 0

Loss as a result of catastrophe Other Total charged to Annually Managed Expenditure

0 0 0

Financial Assets impairments and reversals charged to the Revaluation Reserve Loss or damage resulting from normal operations Loss as a result of catastrophe Other TOTAL impairments for Financial Assets charged to reserves

0 0 0 0

Total Impairments of Financial Assets

Non-current assets held for sale - impairments and reversals charged to SoCNE. Loss or damage resulting from normal operations Abandonment of assets in the course of construction Total charged to Departmental Expenditure Limit

0 0 0

Unforeseen obsolescence Loss as a result of catastrophe Other Changes in market price Total charged to Annually Managed Expenditure

0 0 0 0 0

Total impairments of non-current assets held for sale

Investment Property impairments charged to SoCNE Loss as a result of catastrophe Other Changes in market price Total charged to Annually Managed Expenditure

0 0 0 0

Total Investment Property impairments charged to SoCNE

694 0 1,930 2,624

0 0 0 0

694 0 1,930 2,624

Of which: Impairment on revaluation to "modern equivalent asset" basis

Donated and Gov Granted Assets, included above Donated Asset Impairments: amount charged to SOCNE - DEL Donated Asset Impairments: amount charged to SOCNE - AME Donated Asset Impairments: amount charged to revaluation reserve Total Donated Asset Impairments

0 0 0 0

Government Granted Asset Impairments: amount charged to SoCNE - DEL Government Granted Asset Impairments: amount charged to SoCNE - AME Government Granted Asset Impairments: amount charged to revaluation reserve Total Gov Granted asset Impairments. TOTAL DONATED/GOVERNMENT GRANTED ASSET IMPAIRMENTS

0 0 0 0 0

Total Impairments charged to Revaluation Reserve Total Impairments charged to SoCNE - DEL Total Impairments charged to SoCNE - AME Overall Total Impairments

Hitchin Hospital At the PCT Board meeting dated 28th March 2012 Hitchin Hospital was declared surplus with all services ceasing in June 2012. The property which is currently partially vacant was subject to a valuation by Brown & Lee on 31 st May 2011. The valuation of £1.5m has produced an impairment of £555k of which £400k was charged SoCNE-AME. As the Hospital is still operational we have been prudent in carrying the lower value (MV) and will revalue at the point the property is vacant and ready for disposal. Windmill House This is a vacant property which was declared surplus to the requirement of the PCT on the 28 th March 2012. At that Board meeting permission was given for the disposal of the site. A valuation was undertaken by Boshier & Company in March of this year. The subsequent value of £3m has resulted in an overall impairment of £1.2m, of this £727k has been charged to SoCNE-AME. Intangible non-current assets The PCT no longer considers the integrated Electronic Patient Record (EPR) as an Intangible non-current asset as the main beneficiary of this asset is Hertfordshire Community NHS Trust. From 1st April 2011 no additional development was capitalised. The resulting change in management policy is an impairment of £742k charged to the Statement of Comprehensive Net Expenditure (SoCNE – DEL).

Note 14 P cont2

Hertfordshire PCT - Annual Accounts 2011-12

15 Investment property The PCT does not have any investment property.

16 Commitments There are no capital or other financial commitments for 2011-12 or 2010-11.

17 Intra-Government and other balances Balances with other Central Government Bodies Balances with Local Authorities Balances with NHS Trusts and Foundation Trusts Balances with Public Corporations and Trading Funds Balances with bodies external to government

Current receivables £000s 2,695 231 11,814 0 9,003

Non-current receivables £000s 0 0 0 0 964

Non-current Current payables payables £000s £000s 2,365 0 1,320 0 18,162 0 0 0 81,717 0

At 31 March 2012 prior period: Balances with other Central Government Bodies Balances with Local Authorities Balances with NHS Trusts and Foundation Trusts Balances with Public Corporations and Trading Funds Balances with bodies external to government

23,743

964

103,564

1,736 2,599 13,132 0 7,764

0 0 0 0 1,612

5,750 123 30,596 0 79,569

0 0 0 0 0

At 31 March 2011

25,231

1,612

116,038

Notes 15-17 P

Hertfordshire PCT - Annual Accounts 2011-12

18 Inventories Balance at 1 April 2011 Prior period adjustment Merger adjustment Restated at 1 April 2011 Additions Inventories recognised as an expense in the period Write-down of inventories (including losses) Reversal of write-down previously taken to SoCNE Transfers (to)/from other bodies Balance at 31 March 2012

Drugs £000

Consumables £000

Work in progress Loan Equipment £000 £000

0 0 0 0 0 0 0 0 0 0

31 March 2012 £000

31 March 2011 £000

31 March 2012 £000

31 March 2011 £000

NHS receivables - revenue NHS receivables - capital NHS prepayments and accrued income Non-NHS receivables - revenue Non-NHS receivables - capital Non-NHS prepayments and accrued income Provision for the impairment of receivables VAT Current part of PFI and other PPP arrangements prepayments and a

13,908 0 0 974 0 8,256 (56) 596 0

14,331 0 499 3,230 0 5,944 (160) 537 0

0 0 0 0 0 964 0 0 0

0 0 0 0 0 1,612 0 0 0

Interest receivables Finance lease receivables Operating lease receivables Other receivables Total

21 0 0 44 23,743

0 0 0 850 25,231

0 0 0 0 964

0 0 0 0 1,612

Total current and non current

24,707

26,843

19.1 Trade and other receivables

Included above: Prepaid pensions contributions

0 0 0 0 0 0 0 0 0 0

Energy £000

Current

0 0 0 0 0 0 0 0 0 0

561 0 0 561 358 0 0 0 0 919

Other £000

Total £000 0 0 0 0 0 0 0 0 0 0

561 0 0 561 358 0 0 0 0 919

Non-current

The great majority of trade is with other NHS bodies, including other Primary Care Trusts as commissioners for NHS patient care services. As Primary Care Trusts are funded by Government to buy NHS patient care services, no credit scoring of them is considered necessary.

19.2 Receivables past their due date but not impaired By up to three months By three to six months By more than six months Total

19.3 Provision for impairment of receivables

31 March 2012 £000

31 March 2011 £000

4,881 25 530 5,436

1,717 118 247 2,082

2011-12 £000

Balance at 1 April 2011 Adjustments Restated balance at 1 April 2011 Amount written off during the year Amount recovered during the year (Increase)/decrease in receivables impaired Balance at 31 March 2012

(160) 0 (160) 128 21 (45) (56)

2010-11 £000 (120) (120) 89 7 (136) (160)

In determining the level of provision for the impairment of receivables the PCT carried out an objective review of its receivables. Of the £56k provision £42k relates to a single customer which has been referred to the PCT's solicitors.

Note 18-19 P

Hertfordshire PCT - Annual Accounts 2011-12

20 NHS LIFT investments

Loan £000

Share capital £000

Total £000

Balance at 31 March 2011 Additions Disposals Loan repayments Revaluations Loans repayable within 12 months Balance as at 31 March 2012

439 0 0 0 0 0 439

0 0 0 0 0 0 0

439 0 0 0 0 0 439

Balance as at 1 April 2010 Additions Disposals Loan repayments Revaluations Loans repayable within 12 months Balance as at 31 March 2011

439 0 0 0 0 0 439

0 0 0 0 0 0 0

439 0 0 0 0 0 439

On 1st July 2008, the PCT acquired loan notes and shares to the value of £27,570 and £400 respectively. This is in respect of the Assemble Community Partnership, the name of the newly formed partnership company between East & North Hertfordshire PCT, Bedfordshire PCT, Milton Keynes PCT, Guildhouse (a private developing company) and local public sector authorities covered by the three participant PCT areas. On the 24 th March 2010 East and North Hertfordshire PCT board agreed to provide additional debt financing of £411,000 to Assemble Community Partnership Limited. In return for reduced Partnering Services Fees, resulting in a return on capital of over 30% plus rolled up interest at 3.1% per annum, calculated daily.

21 Other financial assets Current 31 March 2012 31 March 2011 £000 £000 Financial assets carried at fair value through SoCNE Embedded Derivatives at Fair Value through SoCNE Financial assets carried at fair value through SoCNE Subtotal Held to maturity investments at amortised cost Available for sale financial assets carried at fair value Loans carried at amortised cost Total

0 0 0 0 0 0 0

439

31 March 2012 £000 0 0 0 0 0 0

31 March 2011 £000 0 0 0 0 0 0

Made up of Cash with Government Banking Service Commercial banks Cash in hand Current investments Cash and cash equivalents as in statement of financial position Bank overdraft - Government Banking Service Bank overdraft - Commercial banks Cash and cash equivalents as in statement of cash flows

0 0 0 0 0 0 0 0

Patients' money held by the PCT, not included above

Total other financial assets (current and non-current)

Non-current 31 March 2012 31 March 2011 £000 £000 0 0 0 0 0 439 439

0 0 0 0 0 439 439

22 Other current assets There are no other current assets for 2011-12 and 2010-11.

23 Cash and Cash Equivalents Opening balance Opening balance adjustment Merger adjustments Restated Net change in year Closing balance

Notes 20-23 P

Hertfordshire PCT - Annual Accounts 2011-12

24 Non-current assets held for sale

Land

Buildings, excl. dwellings

Dwellings

Asset Under Construction and Payments on Account

Plant and Machinery

Transport and Equipment

Information Technology

Furniture and Fittings

Intangible Assets

Total

£000

0 0 0 800 0 0 0

0 0 0 0 0 0 0

0 0 0 800 0 0 0

0 800

0 0

0 800

Liabilities associated with assets held for sale at 31 March 2012

Balance at 1 April 2010 Plus assets classified as held for sale in the year Less assets sold in the year Less impairment of assets held for sale Plus reversal of impairment of assets held for sale Less assets no longer classified as held for sale, for reasons other than disposal by sale Balance at 31 March 2011

0 0 0 0 0

0 0

Liabilities associated with assets held for sale at 31 March 2011

Balance at 1 April 2011 Merger adjustments Restated at 1 April 2011 Plus assets classified as held for sale in the year Less assets sold in the year Less impairment of assets held for sale Plus reversal of impairment of assets held for sale Less assets no longer classified as held for sale, for reasons other than disposal by sale Balance at 31 March 2012

Revaluation Reserve Balance for Non-current assets held for sale D

Land £000's At 31 March 2011 Prior period adjustments Merger adjustments At 1 April 2011 restated Movements At 31 March 2012

0 0 0 0 333 333

Non-current Assets Held For Sale comprise of: Victory Road – Single storey building, beyond economic repair. Valued at £350k (MV) disposal imminent. Offered for sale on the open market and currently under negotiation. Expectation that the property will be sold in 2012/13 financial year The Elms – Single storey building, beyond economic repair. Valued at £450k (MV) disposal imminent. Offered for sale on the open market and currently under negotiation. The expectation is that the property will be sold in 2012/13 financial year.

Note 24 P

Hertfordshire PCT - Annual Accounts 2011-12

25 Trade and other payables

Current 31 March 2012 31 March 2011 £000 £000

Interest payable NHS payables - revenue NHS payables - capital NHS accruals and deferred income Family Health Services (FHS) payables and accruals Non-NHS payables - revenue Non-NHS payables - capital Non_NHS accruals and deferred income Social security costs VAT Tax Payments received on account Other Total

0 9,154 0 10,533 53,494 4,761 888 22,581 229 90 246 0 1,588 103,564

0 3,078 59 32,459 51,378 3,459 966 22,646 211 0 250 0 1,532 116,038

Total payables (current and non-current)

103,564

116,038

0 0

1,588

1,511

Non-current 31 March 2012 31 March 2011 £000 £000 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0

Included above: to buy out the liability for early retirements over 5 Years (£000s) number of cases Involved (number) Outstanding pension contributions at year end (£000s)

26 Other liabilities There are no current or non current other liabilities for 2011-12 and 2010-11.

27 Borrowings

Current 31 March 2012 31 March 2011 £000 £000

Bank overdraft - Government Banking Service Bank overdraft - commercial banks PFI liabilities: Main liability Lifecycle replacement received in advance LIFT liabilities: Main liability Lifecycle replacement received in advance Finance lease liabilities Other (describe) Total Total other liabilities (current and non-current)

Non-current 31 March 2012 31 March 2011 £000 £000

0 0

5,443 0

807 0

45,306 0

7,268 0

0 0 124 0 5,567

0 0 122 0 929

0 0 234 0 45,540

0 0 346 0 7,614

51,107

8,543

Note 25-27 P

Hertfordshire PCT - Annual Accounts 2011-12

28 Other financial liabilities There are no current or non current other financial liabilities for 2011-12 and 2010-11.

29 Deferred income There is no current or non current deferred income for 2011-12 and 2010-11.

30 Finance lease obligations The PCT has five finance leases; the four properties are at Crossbrook Street, Cheshunt and 1, 3 and 4 George Street, Hemel Hempstead. The remaining lease is for the Danwood contract and is for the supply of multifunctional photocopying devices exclusively for the use of the PCT. The property leases have an unexpired term of between 1 and 5 years and is a full repairing and insuring lease, whilst the Danwood lease has an unexpired term of 2 years. Amounts payable under finance leases (Buildings)

Within one year Between one and five years After five years Less future finance charges Present value of minimum lease payments

Minimum lease payments

Present value of minimum lease payments

31 March 2012 £000

31 March 2011 £000

31 March 2012 £000

59 179 0 (14) 224

59 212 21 (21) 271

56 168 0

55 197 19

224

271

56 168 224

55 216 271

Included in: Current borrowings Non-current borrowings

Amounts payable under finance leases (Land)

Within one year Between one and five years After five years Less future finance charges Present value of minimum lease payments

Minimum lease payments

Present value of minimum lease payments

31 March 2012 £000

31 March 2011 £000

31 March 2012 £000

0 0 0 0 0

0 0 0

Included in: Current borrowings Non-current borrowings

Amounts payable under finance leases (Other)

Within one year Between one and five years After five years Less future finance charges Present value of minimum lease payments

31 March 2011 £000

Minimum lease payments

31 March 2011 £000

Present value of minimum lease payments

31 March 2012 £000

31 March 2011 £000

31 March 2012 £000

70 69 0 (5) 134

70 136 0 (9) 197

68 66 0

67 130 0

134

197

68 66 134

67 130 197

Included in: Current borrowings Non-current borrowings

31 March 2012 £000 0 0

Finance leases as lessee Future Sublease Payments Expected to be received Contingent Rents Recognised as an Expense

31 March 2011 £000

31 March 2011 £000 0 0

31 Finance lease receivables as lessor The PCT does not have any finance lease receivables for 2011-12 and 2010-11.

Note 28-31 P

Hertfordshire PCT - Annual Accounts 2011-12

Comprising:

32 Provisions

Balance at "01/04/11" Prior period adjustment Merger adjustments Restated Balance 01/04/11 Arising During the Year Utilised During the Year Reversed Unused Unwinding of Discount Change in Discount Rate Balance as at "31/03/12" Expected Timing of Cash Flows: No Later than One Year Later than One Year and not later than Five Years Later than Five Years Amount Included in the Provisions of the NHS Litigation Authority in Respect of Clinical Negligence Liabilities: As at "31/03/12" As at "31/03/11"

Total

Admin

£000s 5,389 0 0 5,389

£000s

7,454 (2,777) (230) 104 0 9,940

Programme 0 0 0 0

£000s 5,389 0 0 5,389

0 0 0 104 0 104

7,454 (2,777) (230) 0 0 9,836

6,716 1,967 1,257

Pensions to Former Directors

Pensions Relating to Other Staff

£000s 7 0 0 7

£000s 4,157 0 0 4,157

0 0 0 0 0 7

0 7 0

Legal Claims

Restructuring

Continuing Care

Equal Pay

Agenda for Change

Other

£000s

Redundancy £000s

21 0 0 21

0 0 0 0

275 0 0 275

0 0 0 0

929 0 0 929

0 0 0 0

28 (2,714) (118) 68 0 1,421

0 0 (4) 0 0 17

5,558 0 0 0 0 5,558

1,075 0 (42) 0 0 1,308

0 0 0 0 0 0

793 (63) (66) 36 0 1,629

0 0 0 0 0 0

155 618 648

0 17 0

5,558 0 0

187 1,121 0

0 0 0

816 204 609

0 0 0

529 203

Pensions relating to other staff are the estimated at the full amount of the PCT's liability for the additional cost to the NHS Pensions scheme of employees retiring early. The liability has been calculated following actuarial advice, but is by its nature only an estimate. The reduction in the provision has been brought about by the PCT 'buying-out' its liability with Hertfordshire Partnership NHSFT. The other provisions relate to injury benefits (£880k) arising out of long standing back-to-back arrangements with local Trusts. Restructuring provision of £5.6 comprises of £2.9m with Hertfordshire Partnership NHSFT and a further £2.7m with st Hertfordshire Community NHST. £529k is included in the provisions of the NHS Litigation Authority at 31 March 2012 in respect of clinical negligence liabilities of the PCT (£203k as at 31 March 2011). 33 Contingencies Contingent liabilities Other Net Value of Contingent Liabilities

31 March 2012 £000

31 March 2011 £000

3,619 3,619

1,225 1,225

The contingent liability relates to claims for the reimbursement of continuing care expenditure, following the decision of the Health Service Ombudsman. Where a reasonable estimate of the PCT's liability can be made, based on experience to date, it has been included as a provision (Note 32). However, given the uncertainty regarding the final outcome of individual cases, a contingent liability has been included to reflect the potential cost of those claims to the PCT.

Note 32-33 P

Hertfordshire PCT - Annual Accounts 2011-12

34 PFI and LIFT - additional information Herts & Essex Hospital On 4 May 2001, Royston, Buntingford & Bishop’s Stortford PCT, a predecessor organisation to East & North Hertfordshire PCT entered into an agreement under the Private Finance Initiative (PFI) with Ryhurst (Essex & Herts) Ltd The PFI arrangement was for the construction of a new community hospital at the existing Herts & Essex Hospital site at Haymeads Lane, Bishops Stortford Hertfordshire. The capital value of the scheme was £13.2m. The construction of the hospital was completed on 28 March 2003. Full services started from 28 April 2003 and from that date, the PCT was committed to a unitary payment of £1.9m per annum (subject to annual RPI indexation movement based on the April RPI index each year) for a period of 30 years. Herts & Essex Hospital has a net book value of £16.7m (£11.7m building, £5m land) at the statement of financial position date. Arrangement: The contract is for the provision of services for maintenance, domestics and catering for the hospital. The ownership of the equipment between the parties is specified in the PFI Agreement. The arrangement works on the basis of reduction in the payments for failure to deliver to the agreed Service Levels. The provision of services is managed through service level agreements which have measurable targets and are subject to regular monitoring. Terms of Arrangement: The unitary payment is comprised of two elements, a Financing fee and a Service fee which is subject to indexation based on the movement in the Retail Prices Index (RPI). At the end of the project term the Agreement will terminate with no compensation payable. Lister Independent Sector Treatment Centre An integral part of Investing in Your Health and Delivering Quality Healthcare for Hertfordshire was to develop a Surgi centre at the Lister hospital. This was delivered through the Department of Health’s Independent Sector Treatment Centre programme. This project was labelled GC9 by the Department of Health’s Commercial Directorate with a preferred bidder identified and contract awarded to Clinicenta The operator (Clinicenta) constructed the new centre for approximately £52.5m including development and interest cost. Clinicenta provides treatments to patients for the next five years and at the end of this operating period, the DoH will pay a sum £33.3m which is substantially equal to the infrastructure’s net book value. The scheme which started in April 2009 built a new elective care centre on the Lister site providing a linked walkway through to the main building. The capital value of the scheme is £43.9m. The land on which the elective care centre is located has been leased from the East & North Hertfordshire Trust to Clinicenta. The provision of healthcare elective services provided by Clinicenta commence from 27th September 2011. The services are managed through a contract which has measurable targets and is subject to regular monitoring. The unitary payment is comprised of two elements, a Financing fee and a Service fee which is subject to indexation.

Note 34

92 39

Hertfordshire PCT - Annual Accounts 2011-12

34 PFI and LIFT - additional information

2010-11 £000

2011-12 £000

34.1 Charges to operating expenditure and future commitments in respect of ON and OFF SOFP PFI Total charge to operating expenses in year - OFF SOFP PFI Service element of on SOFP PFI charged to operating expenses in year Total Payments committed to in respect of off SOFP PFI and the service element of on SOFP PFI No Later than One Year Later than One Year, No Later than Five Years Later than Five Years Total

0 3,041 3,041

0 768 768

19,899 75,486 17,342 112,727

786 3,334 18,226 22,346

0 0 0

7,806 60,188 4,668 72,662 (21,913) 50,749

965 3,425 5,266 9,656 (1,581) 8,075

The estimated annual payments in future years are expected to be materially different from those which the PCT is committed to make during the next year. The likely financial effect of this is: Estimated Capital Value of Project - off SOFP PFI Value of Deferred Assets - off SOFP PFI Value of Reversionary Interest - off SOFP PFI

34.2 Imputed "finance lease" obligations for on SOFP PFI contracts due No Later than One Year Later than One Year, No Later than Five Years Later than Five Years Subtotal Less: Interest Element Total

35 Impact of IFRS treatment - current year

Admin £000

Total £000

Revenue costs of IFRS: Arrangements reported on SoFP under IFRIC12 (e.g LIFT/PFI) Depreciation charges Interest Expense Impairment charge - AME Impairment charge - DEL Other Expenditure Revenue Receivable from subleasing Total IFRS Expenditure (IFRIC12) Revenue consequences of LIFT/PFI schemes under UK GAAP / ESA95 (net of any sublease income) Net IFRS change (IFRIC12) Capital Consequences of IFRS : LIFT/PFI and other items under IFRIC12 Capital expenditure 2011-12 Average net assets relating to IFRIC12 schemes - IFRS Average net assets relating to IFRIC12 schemes - UKGAAP UK GAAP capital expenditure 2011-12 (Reversionary Interest)

Capital consequences of IFRS all other expenditure associated with IFRS Capital expenditure 2011-12 Net assets relating to non-IFRIC12 IFRS - IFRS basis Net assets relating to non-IFRIC12 IFRS - UKGAAP basis UK GAAP capital expenditure 2011-12 (Reversionary Interest)

Programme £000

1,179 3,536 0 0 3,041 (691) 7,065 (4,259) 2,806

0 0 0 0 0 0 0 0 0

1,179 3,536 0 0 3,041 (691) 7,065 (4,259) 2,806

44,120 0 0 0

0 0 0 0

44,120 0 0 0

0 0 0 0

Note 34-35 P

Hertfordshire PCT - Annual Accounts 2011-12

36 Financial Instruments Financial risk management Financial reporting standard IFRS 7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. As the cash requirements of the PCT are met through Parliamentary Funding, financial instruments play a more limited role in creating risk than would apply to a non-public sector body of a similar size. The majority of financial instruments relate to contracts for non-financial items in line with the PCT’s expected purchase and usage requirements and the PCT is therefore exposed to little credit, liquidity or market list.

Currency risk The PCT is principally a domestic organisation with the great majority of transactions, assets and liabilities being in the UK and Sterling based. The PCT has no overseas operations. The PCT therefore has low exposure to currency rate fluctuations. Interest rate risk PCTs are not permitted to borrow. The PCT therefore has low exposure to interest-rate fluctuations Credit Risk Because the majority of the PCT’s income comes from funds voted by Parliament the PCT has low exposure to credit risk. Liquidity Risk The PCT is required to operate within limits set by the Secretary of State for the financial year and draws down funds from the Department of Health as the requirement arises. The PCT is not, therefore, exposed to significant liquidity risks.

36.1 Financial Assets

Embedded derivatives Receivables - NHS Receivables - non-NHS Cash at bank and in hand Other financial assets Total at 31 March 2012 Embedded derivatives Receivables - NHS Receivables - non-NHS Cash at bank and in hand Other financial assets Total at 31 March 2011

36.2 Financial Liabilities

At ‘fair value through profit and loss’ £000

Loans and receivables

Available for sale

Total

£000

0 0

13,908 918 0 661 15,487

800 800

0 13,908 918 0 1,461 16,287

0 0 0 0 0 0

0 14,331 3,070 0 1,387 18,788

0 0 0 0 0 0

0 14,331 3,070 0 1,387 18,788

Other

Total

£000

£000 0 19,687 28,230 0 51,107 55,647 154,671 0 35,596 26,876 0 8,543 53,566 124,581

At ‘fair value through profit and loss’ £000

Embedded derivatives NHS payables Non-NHS payables Other borrowings PFI & finance lease obligations Other financial liabilities Total at 31 March 2012

0 0

19,687 28,230 0 51,107 55,647 154,671

Embedded derivatives NHS payables Non-NHS payables Other borrowings PFI & finance lease obligations Other financial liabilities Total at 31 March 2011

0 0 0 0 0 0 0

35,596 26,876 0 8,543 53,566 124,581

Note 36 P

41 94

Hertfordshire PCT - Annual Accounts 2011-12 37 Related party transactions Hertfordshire PCT is a body corporate established by order of the Secretary of State for Health. During the year, other than that declared below, none of the Board Members or members of the key management staff or parties related to them has undertaken any material transactions with the PCT. The partner of the Director of Finance is a GP partner at Haverfield Surgery, which has a GMS contract with the PCT. In addition, she does additional work for the PCT, including but not limited to being a Quality & Outcomes Framework and IM&T assessor. The total paid to the surgery in 2011/12 was £436,667. Neither individual had direct control over how the PCT allocated these funds. During the year local GP's sat on the Board and Executive Committee of the PCT. Payments are made to all practices in the PCT under the GP contract for the provision of GP services and re-imbursement expenses for premises and computing. The GP's on the Board and Clinical Standards Committee had no direct control over how the PCT allocated these funds. Details of payments during the year to the Practices of GP's on the Board and Clinical Standards Committee were as follows

Dr M Edwards Dr M Sandler Dr H Pathmanathan Dr R Walker Dr M Andrews Dr A Davies

Partner at Fairbrook Medical Centre Partner at Davenport House Surgery Partner at Bridge Cottage Surgery Partner at Manor Street Surgery Partner at Dr Henderson and Partners Partner at Maltings Surgery

£000 2,010 1,711 2,609 1,264 1,320 2,247

The Department of Health is regarded as a related party. During the year the PCT has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. The PCT has adopted a disclosure level of £10million from its perspective, or greater than 5% of the related entity's turnover for 2010/11. These entities are listed below;

Payments to Related Party £000 Barnet & Chase Farm Hospital NHST Buckinghamshire Healthcare NHS Trust Cambridge University Hospitals NHS Foundation Trust East and North Herts NHS Trust East of England Ambulance Services NHS Trust Hertfordshire Community NHS Trust Hertfordshire County Council Imperial College Healthcare NHS Trust Luton & Dunstable NHS Foundation Trust Royal Free Hampstead NHS Trust Royal National Orthopaedic Hospital NHS Trust South East Essex PCT The Princess Alexandra Hospital NHS Trust University College London NHS Foundation Trust West Hertfordshire Hospitals NHS Trust

65,145 14,656 25,777 239,086 31,732 113,773 157,252 14,915 20,312 18,746 11,950 130,672 50,569 24,407 220,349

Receipts from Related Party £000 11 3

15,720 447 1

683

Amounts owed to Related Party £000 81 521 343 2,840 399 7,831 1,320 284 133 673 210 367 2,053 2,177

Amounts due from Related Party £000 95

1 9,667 231 25 192

26 20

Note 37

Hertfordshire PCT - Annual Accounts 2011-12

37A. Related Party Transactions 2010-11 Hertfordshire PCT is a body corporate established by order of the Secretary of State for Health. During the year, other than that declared below, none of the Board Members or members of the key management staff or parties related to them has undrtaken any material transactions with the PCT. The partner of the Director of Finance is a GP partner at Haverfield Surgery, which has a GMS contract with the PCT. In addition, she does additional work for the PCT, including but not limited to being a Quality & Outcomes Framework and IM&T assessor. The total paid to the surgery in 2010/11 was £400,974. Neither individual had direct control over how the PCT allocated these funds. During the year local GP's sat on the Board and Executive Committee of the PCT. Payments are made to all practices in the PCT under the GP contract for the provision of GP services and re-imbursement expenses for premises and computing. The GP's on the Board and Professional Executive Committee had no direct control over how the PCT allocated these funds. Details of payments during the year to the Practices of GP's on the Board and Clinical Executive Committee were as follows

Dr T Kostick Dr M Edwards Dr M Sandler Dr H Pathmanathan Dr R Walker Dr M Andrews Dr A Davies

£000 1,538 1,822 1,877 2,681 1,181 1,151 2,089

Partner at Dr Baxani and Partners Partner at Fairbrook Medical Centre Partner at Davenport House Surgery Partner at Bridge Cottage Surgery Partner at Manor Street Surgery Partner at Dr Henderson and Partners Partner at Maltings Surgery

Dr M Edwards is also a director of Herts Health Ltd to which the PCT paid £139,000 for patient diagnostic services. The Department of Health is regarded as a related party. During the year the PCT has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department. The PCT has adopted a disclosure level of £10million in 2010/11 These entities are listed below;

Payments to Related Party £000 Barnet & Chase Farm Hospital NHST Buckinghamshire Healthcare NHS Trust Cambridge University Hospitals NHS Foundation Trust East and North Herts NHS Trust East of England Ambulance Services NHS Trust Hertfordshire Community NHS Trust Hertfordshire County Council HM Revenue & Customs Imperial College Healthcare NHS Trust Luton & Dunstable NHS Foundation Trust NHS Pension Scheme Royal Free Hampstead NHS Trust Royal National Orthopaedic Hospital NHS Trust South East Essex PCT The Princess Alexandra Hospital NHS Trust University College London NHS Foundation Trust West Hertfordshire Hospitals NHS Trust

67,088 15,407 26,081 238,735 31,523 113,952 123,062 5,738 14,125 18,717 3,489 19,529 10,940 136,028 49,213 20,594 215,269

Receipts from Related Party £000

79 7,318 362

298

Amounts owed to Related Party £000

Amounts due from Related Party £000

1,052 340 2,117 463 879 13,670 123 461 977 24 289 738 777 4,375 298 543 3,951

35 2 102 15 12,300 2,599 537

172 32

In addition, the PCT has had a significant number of material transactions with other Government Departments and other central and local Government bodies. Where appropriate, these transactions have been reflected in the above table. The PCT has also received revenue and capital payments from a number of charitable funds, all of the Trustees for which are also members of the PCT Board.

Note 37A

Hertfordshire PCT - Annual Accounts 2011-12

38 Losses and special payments The total number of losses cases in 2011-12 and their total value was as follows:

Losses - PCT management costs Special payments - PCT management costs Losses in respect of the provision of family practitioner services Special payments in respect of he provision of family practitioner services Total losses Total special payments Total losses and special payments

Total Value of Cases ÂŁs 371 0 0 0 371 0 371

Total Number of Cases 2 0 0 0 2 0 2

The total number of losses cases in 2010-11 and their total value was as follows:

Note 38

Total Value of Cases ÂŁs 90 0 0 0 90 0 90

Total Number of Cases 1 0 0 0 1 0 1

Hertfordshire PCT - Annual Accounts 2011-12 39 Third party assets The PCT held no third party assets at balance sheet date.

40 Cashflows relating to exceptional items There were no cash flows relating to exceptional items.

41 Events after the end of the reporting period On 27 March 2012, the Health and Social Care Bill gained Royal Assent to become the Health and Social Care Act (2012). Under the Act, Primary Care Trusts will be abolished on 31 March 2013. From April 2013, responsibility for commissioning health services will transfer from Primary Care Trusts to the NHS Commissioning Board, Clinical Commissioning Groups (CCGs) and others. CCGs will be clinically driven by local General Practitioners to commission services on behalf of their patients. It is widely expected that the NHS Commissioning Board will host the majority of NHS commissioning support services from 2013 until 2016.

Note 39-40 P

45 98

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