Introduction to UHB Bristol NHS Trust
UHB Bristol NHS Trust is a dynamic and one of the most fast growing groups of hospitals, located in the heart of Bristol, which in itself is a culturally vibrant city. They are one of the pioneers in the arena of medical services. They provide clinical services across nine different sites and have a dedicated number of staffs, aggregating to a total of 9000 in number.
They also provide various kinds of services ranging from neonatal intensive unit care to treatment of the elderly to the children right from their birth, UHB takes into account all kinds of cases. Such kinds of services, are provided to all the local communities in Bristol and the kind of services range from general diagnostics, medical or even surgical services are also provided by them (Indeed.co.uk. 2018). The Core strategies are divided into clinical services, Research and Development and training and learning. Some of the strategies of the core strategies of UHB has been provided below:
- Clinical services: – Providing efficient and effective services which are desired by the patients and prescribed by the clinicians, providing quick and easily accessible services and to be the major supplier of specialist services and equipment’s.
- Research & Development: – Development of collaborative research partnerships with patients, development of a Clinical Research portfolio in line with its service strategy. , development of research activities in partnership with healthcare and academic organisations and to develop the Trust’s research portfolio in line with its service strategies and to further develop research governance.
- Teaching and Learning: Ensuring rendering of quality services to patients, pursuing teaching and learning partnerships with educational providers, encouraging a culture based on innovation and maximising recruitment and retention of employees.
The financial plan of any company has a significant impact of the strategies undertaken by it. The amount of funds, which needs to be allocated by the trust on any of its activities, depends on the strategy itself. The financial plan of UHB has been showing a net surplus ranging from £6.6 million in 2009/10 to £18.7 million in 2015/16 (Indeed.co.uk. 2018). Any change to the budget of UHP, requires a re-evaluation of the current strategies in place and the ones in the process of formulation would be stopped. When there is a dip in the cash flow of the trust, or any other financial parameters, the core strategies must be looked into in details, if necessary some of them must be revised and new strategies must be created. Each of the strategies creates an impact on the key finance sources, such as shares, sales and cash inflow.
PART. 1.3:
The issues of risk within a financial plan are varies in accordance with the financial plans, which are chalked up by the respective organisations. Some of the financial risks associated with the financial plan of UHB are as follows:
- Cost pressure: Unforeseen cost pressure have been taking place, with cost increasing well beyond 0.5%, in the case of the long term financial plan.
- Under-achievement of the annual savings by the trust: There have been slippage in terms of savings, which have been reflected in the monthly financial reviews.
- Drop in activities: There have been a wide range of variation in the activities, which might be of temporary nature. Although, drop in the demand for acute activity below the plan is alarming.
Mitigation plans:
- Cost Pressure: In case of non-recurring nature of risks, alternative solutions can be created to mitigate the effects and in case of a recurring cost pressure case, the risk can be mitigated by taking actions of various kinds. In other cases, a re-re-arrangement of strategic commitments can also be done, in any adverse cases of non-recurring cases.
- Under achievement of annual savings: Slippage of savings is a crucial problem, which needs to be solved, as early as possible. In short term cases, more centralised control of vacancies must be done, in the medium term cases, future savings plan must be brought up and created and in the case of long term cases, operational efficiency must be looked after in detail and the adoption of lean practices must be brought into the picture (Alhenawi 2013).
- Acute fall in activities: A strategic review of the commitments related to the different adopted strategies and their activities must be undertaken in such kind of circumstances.
- Task 2:
- PART 1.2:
The financial plan is one of the most important aspects of any organisation for any time period (Wright 2014). It classifies and puts in record the different aspects and components of the financial plan, which needs to be implemented for better financing of the organisation or the trust involved. Some of the major components of the financial plan of UHB are as follows:
- Income and Expenditure projections: The Income and expenditure plan shows a normal surplus with an excess of 2% of the turnover and it has remained the benchmark. The strong income and expenditure of the trust is a direct contribution of effective cost control, use of internal depreciation to fund important capital schemes, thereby decreasing the charges of capital nature on the current assets, interests’ receivable on the balances of cash. It is the very heart and soul of the entire trust.
- Savings Plans: Savings plan plays a crucial role in the success of each and every organisation. As a result of which it is important to ensure the ways of initiating the savings and the objectives for which the savings had been initiated. With regards to the savings plan, a four year Cash Releasing Efficiency Savings (CRES) has been created by Divisions and Corporate Services. These savings targets have been created for the purpose of meeting the forecasted efficiency needs and requirements, which was 2% for 2013 onwards. It is one of the most pivotal aspects of the trust, as it ensures the operational efficiency of the trust.
- Projections of Balance Sheet: Balance sheet is one of the most important part of the financial plan of any organisation, as it helps in showing the true financial state of affairs of the business. It helps the investors in judging the financial condition of the business (Forbes.com. 2018). A healthy balance sheet is a good sign for the financial health of the business. Thus, in this regard, ensuring proper projections of the balance sheet is very important. The fixed assets increased from £358m in 2007/08 to £511m in 2016/17(co.uk. 2018).
- Projections of the Cash Flow: the cash flow projections is one of the most important aspects of any organisation, as it helps in ascertaining the correct amount of cash transactions which has taken place in a current financial year. In the case of UHB, the following assumptions regarding the management of the cash position has been used. A working capital facility has been set up, the surplus balances of cash have been assumed to be invested on a short term basis. The cash position helps in assessing the short term liquidity of the organisation and in this regard UHB, is in a safe position.
- Financial Ratings: Financial ratings consists of two parts, one which is the overall risk rating and the other one, which is the prudential borrowing limit. Both help in assessing the credit worthiness of an organisation and tells its creditors, how successfully the organisation is going to pay off the loans and credit. The financial ratings of UHB, has been provided below:
- PART 2.1:
Each component of the financial plan is an asset to the concerned organisation in itself. Each of these components helps in summarising the financial activities of the concerned business entity. Their level of importance has been summarised as below:
- Income & Expenditure: For any organisation, the summarisation of the income and expenditure helps in finding about the surpluses and the deficit, which in turn helps in assessing and forecasting the trend of the finances of the organisation.
- Savings Plans: The savings plan is one of the biggest results of the income and expenditure account, it helps in preparing an efficient savings plan, where the sources of savings, the amount of savings and the forecasts of the savings can be chalked out. The amount of savings would then help the hospitals in taking over many kinds of operations.
- Balance Sheet: The balance sheet of any business tells about the assets and the liabilities of the business. It helps the investors and the other stakeholders in assessing the true financial condition of the business. The assets and the liabilities helps in assessing the financial standing of the businesses, the hospitals, or any other kind of business or service providing commercial entity.
- Cash Flow: Cash flow statement helps an organisation, be it any hospital organisation or any kind of business entity in many different manners. It helps in providing a closer look into the financial transactions of the business and consequently helps in preventing and monitoring the debts of the business entity or the particular organisation (Uhbristol.nhs.uk 2018). It also assists the entity in ensuring timely payment of the expenses and the incomes and most of all, it helps in looking into the areas, where expenses needs to be reduced by looking into the areas where unnecessary expenses take place. In this way, it keeps up the cash efficiency of the concerned entity.
- Financial Ratings: Credit and financial ratings are an important tool for the business entity and for other organisations for the borrowers, which helps them in borrowing credit. If the financial ratings of the company are good, it helps them in receiving credit from various investors and borrowers. It also helps the entity in assessing the risk factors and check their performance efficiencies, which helps in keeping a track of the loan or credit defaulting facilities (Hilscher and Wilson 2015). The greater the credit worthiness, the better it is for the borrowers to receive various kinds of loans from the lenders.
Task 3: - PART 3.1:
The financial plan for UHB has been provided below:
- The income and expenditure projections for the year ahead: The income and expenditure account’s projections helps in forecasting the future trend of business in an efficient manner. The income and expenditure projections of the 10 year period, which forms the crux of the present financial plan has been provided below. It would help in assessing the different aspects of the costs and the expense which is presently being incurred by the UHB Bristol hospital trust.
- The cash flow projections of UHB has also been provided below. The cash flow position would help the hospital trust in meeting its different objectives and strategies.
- The balance sheet position an d the projections has been provided below. It forms an all important part of the financial plan, as it helps in assessing the assets and the various kinds of liabilities of the hospital of UHB.
In the next section, the main contribution factors have been provided, which majorly contribute towards the cash flow balance over the entire period of the plan, for the period of ten years, ranging from 2007-08 to 2016-17. One of the most important aspects of this section is that loan repayment and all the necessary supplementary funding for all the capital programmes are financed through all the surpluses of the income and expenditure account, in addition to the improvements of the working capital. Here an important which is worth to be noted is the
Impact of organisational strategy on financial planning
PART 4.1
The capital programme is the key enabler for the strategic services which has been planned by the hospital trust. The capital programme is managed by a group of extremely dedicated group of individuals. They are managed by a capital review group and after all these reviews the reports are regularly sent to the finance committee. The salient features of the capital plans have been discussed below:
- Schemes are funded primarily by the cash which has been generated internally and through the sale of properties. All the matters related to the dividend capital of the public is discussed with the Department of Health and the cardiac Centre.
- The cash which has been generated from the income and the expenditure surpluses and the changes in the working capital are to be used for the purpose of supplementing the capital expenditure.
- Another important point, which needs attention is that the prudential borrowing throughout the period of the plan is not to be used. It is generally regarded as a contingency plan, which is not to be used, unless absolutely necessary. One more thing, which must be looked into is that, it must be ensured that there is a criteria for the usage of the prudential borrowing, which is that it must be affordable in terms of revenue and it should not be compromised in any way, while achieving or executive the strategic objective (Jenson et al 2013).
- The Capital Financing Plan which has been set out above is intended to avoid any kind of private finance initiative funding of any kind, for the schemes and the plans. The programme, has been completely summarized below:
Here the sources of the funds, have been provided, from which all the funds for the execution of the plans and strategies of the trust would take place. In association with this, how these sources of funds would be spent, has also been provided in association with it.
Task 4:
The agreement with the different stakeholders is one of the most important aspects of the implementation of any financial plan. The different stakeholder’s right from the owners, employees and various others, put their time, money and hard work and expect better performance from their companies at the minimal cost. The attention of the stakeholders must be brought into the different aspects of the financial plan, where the sources of the plans and their application must be explained in detail (Brooks and Mukherjee 2013). The capital programme, needs to be explained, the different sources and their advantages needs to be explained. After careful explanation, when they are satisfied with the way, the project is moving forward, they would provide their node to the project.
In this case, the different aspects of the various components of the financial plan would be explained along with their benefits. The income and expenditure account is expected to be grow at a rapid pace and for the period it was 530 million. In the same way, the cash flow statement is also proving to have a positive balance of 98.3 million in the year of 2016-17 (Evans and Borders, 2014.). The stakeholders must be provided a complete authentic and transparent report regarding the financial plans and their various components in a regular basis. The reports must be personally communicated to them through the use of the meetings on a periodic basis. When the stakeholders are properly communicated about the merits of the financial plan, then in this case, the stakeholders can be addressed.
PART 4.3:
One of the most important parts of implementation of any financial plan is the evaluation of the said plan. It is only after correct evaluation and measurement of the financial plan, the validity and the authenticity of the plan can be evaluated in detail (FPSB.com 2018). There are a number of parameters which can be effectively employed for the purpose evaluation of the financial plans. In this case of the UHB trust, the very same series of measures must be brought in, for the purpose of evaluating the different the authenticity of the financial plan, of UHB. The various evaluative measures are as follows:
Growth rate: One of the most important parameters for successfully evaluating the worthiness of a given financial plan, is the employment of numbers. In this case, it is recommended that the management must measure the projected growth rate of the different incomes and expenditure, cash flow items and the items of the balance sheet. Only when they would be compared, the authenticity of the projections could be dealt with. This would help in correctly evaluating the worthiness of the plan.
Keeping an eye on the business environment: One of the most important aspects of any business’s environment is the kind of business environment, where it operates. In this case, it becomes very important to keep an eye on the impact which the financial plan creates on the environment of the business. It helps to correctly estimate the different aspects of the financial plan and the impact which it creates on the market, customers, suppliers, government and the other aspects of the business.
References:
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Bristolpost.co.uk. 2018. University Hospitals Bristol NHS Foundation Trust – Bristol Post.
Brooks, R. and Mukherjee, A.K., 2013. Financial management: core concepts. Pearson.
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Evans, J. and Borders, A.L., 2014. Strategically surviving bankruptcy during a global financial crisis: The importance of understanding chapter 15. Journal of Business Research, 67(1), pp.2738-2742.
FPSB. 2018. About Financial Planning | FPSB.
Hilscher, J. and Wilson, M.I., 2015. Credit ratings and credit risk: Is one measure enough?.
Jenson, J., Ledson, M., Lipinski, P.P., Moran, W.J., Ostrem, L., Vanney, B.M., Brose, G. and Scarlato, P., Ameriprise Financial Inc, 2013. System and method for providing financial planning and advice. U.S. Patent 8,407,125.
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Nhs.uk. 2018. Overview – University Hospitals Bristol NHS Foundation Trust – NHS Choices.
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Why Cash Flow Analysis Is an Important Metric for Your Business.
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