Foundation for the FutureAnnual report 2007/08

2

Surrey and Sussex Healthcare NHS TrustMaple HouseCanada AvenueRedhillSurrey RH1 5RH

Contact details for all the hospital sites can be found on the back cover of this report.

Telephone: 01737 768511Fax: 01737 231769E-mail: enquiries@sash.nhs.ukwww.surreyandsussex.nhs.uk

1. Chairman and Chief Executive Reports 3

2. Profile of Surrey and Sussex Healthcare NHS Trust 5

3. Our achievements in 2007/08 9

4. Our performance in 2007/08 13

5. Governance and the assurance framework 15

6. Our plans for 2008/09 16

7. Partnerships and valuing people 21

8. Financial review 2007/08 24

1.1: Trust financial performance from 1998/99 24

1.2: ALE ratings 2005/06 to 2007/08 25

1.3: Loan repayment schedule 25

1.4: Planned EBITDA targets for the next 5 years 26

1.5: Detail of overall income & expenditure performance 2003/04 to 2008/09 27

1.6: Trust forecast income 2008/09 28

1.7: Trust forecast cost 2008/09 28

1.8: Liquidity ratio plan in 2008/09 30

9. Remuneration report 31

Appendices

Summary financial accounts 34

Glossary of financial terms 35

Independent auditors’ report 36

Statement of Internal Control 38

Primary financial statements 46

How to contact us 52

3

It is with great pleasure that I am able to report that

the Trust has made enormous progress in the past 12

months and is now looking forward to a stable and

promising future. We have achieved a very much

improved financial position earlier than planned,

reaching breakeven in 2007/08.

This turnaround in the Trust’s fortunes has been

achieved in less than two years and is due to the

commitment, hard work and dedication of the senior

management together with the professional attitude

of all our staff. The enormous progress we have

made has seen us dramatically reduce our in-year

deficit from £28m in 2005/06 and £12m in 2006/07,

to the breakeven in 2007/08 and surpluses expected

over the next few years.

In past annual reports the picture I gave of the

Trust’s performance was bleak. But thanks to the

restructure of the Trust and changing some of the

ways we do things we can see the results in our

improved performance. After being zero-rated

and then two years as a ‘Weak - Weak’ Trust in our

Annual Health Check ratings for our use of resources

and quality of services we are now forecasting a ‘Fair

- Fair’ rating for 2007/08.

The continued development of the Trust in the past

year has seen us meeting our targets for treating

patients in A & E, starting an ambitious expansion of

maternity services to cope with the rising numbers of

births and planning a significant growth in cardiology

services. In addition we have successfully integrated

the formerly independent Redwood facility into the

main hospital.

Our achievements in improving our financial position

have led to a financial solution being agreed that

will allow the repayment of the Trust’s loan in the

next three years. To do this the Trust must continue

to look at ways of saving money to ensure that our

sound financial position continues and the surpluses

necessary are delivered.

Now we are seeing stability in the way the Trust

is run the way is clear to start planning to achieve

Foundation Trust status in 2010. All Trust staff,

the Patients’ Council and the many volunteers who

support us in so many ways all have a part to play

in the considerable work that lies ahead to further

develop the Trust’s reputation for clinical excellence

and its financial soundness.

Thanks to our stronger financial base we have been

able to invest more in our services. Refurbishment of

East Surrey Hospital is continuing, new, clearer signs

are being installed and parking is being improved.

In May 2008 we signed the contract to provide new

staff accommodation at the East Surrey Hospital.

With a strong Board taking forward exciting

developments the Trust can look forward to a more

secure future.

Roy B. DaviesChairman

Chairman’s reportTrust success paves the way to Foundation for the Future

3

4

At the end of my first full financial year with the Trust

I can look back with great satisfaction on sustained

improvement in services, good quality of care for

our patients and the financial stability that has

been achieved.

This report gives a brief outline of some of these

significant improvements, and how our staff have

come through challenging times. Their commitment

and hard work have transformed the Trust’s fortunes

from being one of the weakest Trusts in the country

just a few years ago to one that we confidently

expect will gain a fair rating in our 2007/08 Annual

Health Check to be announced in October. The

tables on page 14 show just how far we have come

in a very short time.

By balancing the Trust’s clinical work with our

efforts to achieve financial stability we have made

tremendous advances. Changes have been clinically

led in all areas, involving members of different

medical teams.

At the heart of transforming the way we do things in

A & E has been improving patient flow throughout

the hospital. Changing the way patients are

managed and moved through the hospital together

with building relationships with our primary and

social care providers have been key. Since early

February we have been ranked as one of the top

performing A & E Trusts in the country, meeting and

exceeding the national standard of seeing, treating

and admitting or discharging 98% of patients within

four hours.

We have also met the challenges of improving

maternity care through an expansion of services with

a new ward, upgrading existing areas like the birthing

pool and recruiting more midwives. For the first time

we achieved a full establishment of midwives during

the year.

There are ongoing improvements in cardiology

helping to make East Surrey, one of three cardiac

centres in Surrey, a centre of excellence. Our

investment in the expansion of the service has

resulted in the appointment of two more specialist

consultants, and a five-day-a-week angioplasty

service available to a larger number of acute heart

attack patients.

Bringing the formerly independent Redwood Elective

Centre into the Trust after five years has given us

the opportunity to provide an important additional

resource for elective surgical beds.

One of our challenges this year has been a new

computerised patient administration system, Cerner

Millennium. I want to thank staff for the way they

have worked with us to resolve issues that arose

with the changeover to a new system. It also gave

us the opportunity to introduce PACS (picture

archiving and communications system), a much

quicker computerised diagnostic system of images.

Thanks go to the Friends of East Surrey Hospital for

all the work their volunteers do for the Trust. Their

largest ever donation enabled us to buy a state-of-

the-art 64-slice CT scanner which is giving a faster,

more effective service and aiding diagnosis.

I would also like to acknowledge the help and

support of all our partners and supporters. The voice

of our patients is being heard more strongly than ever

through the Patients’ Council, which is going from

strength to strength after its first full year supporting

and improving the Trust’s day-to-day activities.

Through ‘The Patient Experience’ action plan the

Trust is working with the Patients’ Council to improve

the experience of all our patients.

The Trust can look to the future with confidence

as we work towards achieving the 18

week referral to treatment pathway

for all our patients; and build on

our Foundation for the Future

by establishing better ways of

working and continuously

improving the quality and

efficiency of the services we

provide to our patients.

Gail WannellChief Executive

Chief Executive’s reportLooking ahead to a brighter future

5

Profile of Surrey and Sussex Healthcare NHS TrustWho we are, what we doSurrey and Sussex Healthcare NHS Trust was formed

on 1 April 1998. Today it provides a comprehensive

range of acute services at East Surrey Hospital in

Redhill and a range of services at Dorking, Oxted

and Caterham Dene Hospitals in Surrey, and at

Crawley and Horsham Hospitals in West Sussex,

in partnership with the respective Primary Care

Trusts (PCTs).

In the financial year 2007/08 the Trust employed

around 2,700 staff and spent around £171m on

providing services.

During the year the Trust:

• Had 41,000 Emergency Department attendances.

• Had 43,000 unplanned (non elective) admissions

and 22,000 planned admissions.

• Carried out 200,000 outpatient consultations and

500,000 pathology tests.

• Delivered more than 4,000 babies.

• Processed 180,000 x-ray, CT, MRI and

ultrasound scans.

• Had 501 beds plus 28 maternity beds.

Our communityThe Trust serves a population of around 350,000

people living in north-west Sussex and east Surrey,

including the major towns of Crawley, Reigate

and Redhill. Its proximity to the M25 and M23

motorways and Gatwick airport means that it also

treats many people from outside the area and

from overseas.

Services are supplied across Surrey and West Sussex

County Council areas and the Trust also works

with the district and borough councils of Crawley

and Reigate and Banstead to the centre and north,

Mole Valley to the west, Tandridge to the east, and

Horsham to the south. Our services are bought

mainly by West Sussex PCT and Surrey PCT.

Our missionSurrey and Sussex Healthcare NHS Trust’s Mission is

to provide excellent healthcare to our community

by responding to their needs. The Trust Board

reviewed and updated the organisation’s mission,

values and vision in November 2007.

A technical instructor in physiotherapy working with a patient in the Redwood Elective Centre

6

Our core valuesPersonal accountability. We believe that we

are all responsible for the success, performance and

future of our hospital and community, and for the

level of care experienced by our patients.

Pride. We are proud to be associated with our

hospital and community and are loyal and supportive

of its progress and achievements.

Responsiveness. We welcome new ideas and

are open to different perspectives — by listening,

questioning and challenging the conventional.

Respect. Everyone who comes into contact with

the Trust and its services is treated with the same

level of respect and dignity.

Quality and value. We are committed to

continually improving standards and providing the

highest of value by ensuring that every penny spent

provides the maximum benefit to our community.

Involvement. We believe that everyone has

something of value to offer, and is encouraged to

participate by contributing ideas and suggestions in

their area.

Trust visionThe Trust’s vision is that by 2010 the Trust will be a Foundation Trust with an established reputation for

clinical excellence.

An advanced high-speed CT scanner costing nearly £1/2million means 3-D reconstructions of the body can be carried out in seconds to aid diagnosis

Staff nurse Alice Joseph with Nicola Roberts from Oxted and her son Frankie who was born 13 weeks premature

7

The Trust BoardThe Board of Surrey and Sussex Healthcare NHS

Trust consists of seven executive directors and six

non-executive directors. The non-executive directors

act as ‘watchdogs’ to ensure that the executive

team carries out these responsibilities appropriately.

They also chair or sit on the top-level committees

within the Trust.

The Board is responsible and accountable for

everything that happens within the Trust. It

operates within a strict remit and is responsible

for setting the Trust’s strategic direction. It

receives reports and recommendations from

managers throughout the organisation,

approves changes to services and policies, and is

responsible for managing the Trust’s finances.

The Board represents the interests of the Trust at

the highest levels and works very closely with its

partner organisations - the local primary care trusts,

the strategic health authority, local councils and the

Department of Health – in developing policy and

implementing the NHS modernisation agenda.

The Board meets regularly in public, and its minutes

and papers are made freely available, including on

its website www.surreyandsussex.nhs.uk

Non-executive Directors (NEDs)

Non-executive directors are from all walks of life and

have a wide variety of experience in the voluntary,

public and private sectors. They are all part-time.

Details of their remuneration can be found on

pages 31 to 33.

Roy Davies, Chairman

No declarations

Michael Ormerod, Vice-chairman

Chair, Woodhatch Community Association;

Chair, Action of Life; Director, 34 Wray Park Road

Residents Association Ltd; Chair, Reigate Sixth

Form College Corporation

Stephanie Morgan

Director, Crosslight Management Ltd (change

consultancy)

Yvette Robbins Director, Guideon Ltd (management consultancy);

Company Secretary in Galaxy Ltd (company

operated by partner)

David Williams Director, Grove Consulting and Interim

Management Ltd (supplier of programme director

services to London Strategic Health Authority)

Graham Curtis (from 13 August 2007)

Executive committee member, Fetcham Residents’

Association

Executive Directors

The executive directors are all full-time employees of

the Trust. Details of their remuneration can be found

on pages 31 to 33.

Gail Wannell, Chief Executive

No declarations

Patricia Davies, Director of Clinical Services

Non-executive director/trustee Age Concern,

Hounslow

Catherine Greenaway, Medical Director

No declarations

Jenny Woollett, Director of Workforce and

Organisational Development

No declarations

Andrew Hines, Director of Business Development

No declarations

Paul Simpson, Finance Director

No declarations

Irene Scott, Director of Nursing (to March 2008)

Declarations: Non-executive Director/Trustee,

Royal Hospital for Neurodisability; Board Trustee,

Florence Nightingale Foundation; editorial board

member, Nursing Times; Honorary Professor of

Nursing: Wolverhampton University, South Bank

University, Kings College, London

Mona Walker, Interim Director of Nursing

(from March 2008)

No declarations

Board members and declarations of interest

8

Each director confirms that as far as he or she is aware there is no relevant audit information of which the

Trust’s auditors are unaware and he or she has taken all the steps that ought to be taken as a director in

order to make himself or herself aware of any relevant audit information and to establish that the NHS body’s

auditors are aware of that information.

Audit & Assurance Committee

Healthcare Governance Committee

Remuneration Committee

Charitable Funds Committee

Executive Committee

Chair:David Williams

Members:Graham CurtisYvette RobbinsStephanie WilliamsMichael Ormerod

Chair:Gail Wannell

Members:All Executive Directors

Chair:Roy Davies

Members:All NEDs

Chair:Roy Davies

Members:All NEDsAll Executive Directors

Chair:Gail Wannell

Members:All Executive Directors

Directors’ membership of core committees

The Trust has a structure of formal committees beneath the Trust Board,

the core of which is illustrated in the diagram below.

Key committees

The Board Remuneration Committee

Audit & Assurance Committee

Charitable Funds Committee

Executive Committee

Healthcare Governance Committee

9

Our achievements 2007/2008

An expansion and upgrading of maternity and

paediatric services has begun as the Trust invests

in accommodation for the growing number of

women choosing to have their babies at East

Surrey Hospital.

There are six more maternity inpatient beds, a new

transitional care baby unit and two extra delivery

rooms. A new acute gynaecology assessment unit is

being established for day patients. This is being led

by the newly appointed Matron for Gynaecology.

Additional beds for neonatal and postnatal patients

will give mothers more choice and flexibility, while the

transitional care baby unit means mothers can stay

with their premature babies giving 24-hour care just

before going home. This helps with the transition

from hospital to home life.

There have been improvements in rates for women

breastfeeding, mothers who stop smoking and

repeat pregnancies among teenagers. A successful

triage system has been introduced which means

pregnant women who may not be in labour have

better access to valuable advice and support. This

gives midwives in the delivery suite more time to

give dedicated one-to-one support to all women in

established labour.

Maternity services

Tara Unwin from Earlswood, Surrey who used the birthing pool at East Surrey Hospital pictured with her family and midwife Alison Price

10

After several years of poor performance, significant

improvements in the Trust’s A & E service are now

being recognised by patients, by Surrey and West

Sussex PCTs, and nationally.

In early 2008 the Trust has started to consistently

meet the 98% (of patients attending A & E) target

for seeing, treating, admitting or discharging

patients within four hours. This was the result

of months of hard work and effort. It has meant

patients being assessed more efficiently with a

minimum of moves to the correct point of care,

whether it is for treatment in the walk-in centres or

urgent treatment centre, admission to a ward or to

be seen by a specialist.

An emergency care taskforce continuously monitors

the four-hour wait for A & E patients and ensures it

is sustained. A new on-call medical consultant helps

to fast-track patients to the appropriate area and

facilitate early discharge, while other specialists give

additional day-time medical cover. A senior manager

is on duty seven days a week to manage patient flow.

The extension of the medical assessment unit from

20 to 48 beds, and the introduction of a 12-bed

surgical assessment unit, has meant GP referrals are

admitted to this unit rather than A & E. Working

through community matrons, patients are admitted

within 24 hours to the appropriate ward.

Bed capacity in the wards has been aligned to the

restructured A & E service; and with the opening

of a new acute medical unit and extended surgical

assessment unit, delays in admission into acute beds

has reduced.

Better working relationships with the PCTs who

manage the walk-in centre means ambulance

patients are diverted to the most appropriate point

of care, greatly improving patient flow throughout

the hospital.

Emergency Department

The Emergency Department at East Surrey Hospital

11

Redwood Elective Centre

With the enormous advances made in cardiology

in recent years both nationally and locally the Trust

agreed on a radical development of its service which

will make it one of the key heart attack treatment

centres in Surrey. To do this there will be investment

of £1m in 2008/09.

Two more specialist consultants were appointed

during the year bringing the number of cardiac

consultants to six which, together with more support

staff, will improve patient flow and provide them

with the highest level of care. Consultants will also

give round-the-clock cover for patients.

The pioneering work now going on in the Trust

includes the development of a diagnostic five-day-

a-week angioplasty service, which means the very

best treatment is available to many more acute heart

attack patients. The expanded service will make East

Surrey one of the first hospitals outside London to

offer this primary angioplasty service.

The new appointments will play a key part in

the development of the Trust’s progressive and

expanding department.

With the planned expansion, patients will also

have better access to cardiac investigations, to

exercise tolerance testing and echocardiography.

The increased use of the angiography laboratory,

expanded number of angioplasties carried out and

devices implanted will, importantly, mean patients

will not have to travel to more distant hospitals.

Cardiology

The reception area at Redwood Elective Centre

Consultant cardiologist Dr. Iqbal performing an angioplasty

The Trust’s decision to take over the running from

December 2007, of the formerly independent

Redwood Elective Centre after five years means

more surgical beds are now available to elective

patients and a reduction in waiting times.

The centre’s two wards, two theatres and three

endoscopy rooms are becoming a valuable extra

resource for day, evening and weekend surgery.

There is considerable throughput of patients in the

25-bed ward on the first floor, while the 11-bed

ground floor ward will become fully functioning in

the summer of 2008.

The Trust was able to reduce the list of patients

waiting for endoscopy (a diagnostic investigation

using internal cameras) by seeing them in the

Redwood treatment rooms. All patients are now

seen and investigated within six weeks.

12

The turnaround in Trust performance in 2007/08

resulted in our achievement of financial breakeven,

marking the end of five years of serious financial

problems where the Trust was spending far more

than it received.

To provide context, those five years of financial

problems meant that the Trust accumulated a debt

of £56m, breached the formal “breakeven duty” and

was one of 17 trusts identified by the Department of

Health as ‘financially challenged’.

The achievement is clearly significant and the

contribution of all the staff in the Trust, who have

worked so hard to deliver services meeting the

performance targets within the money available,

should be recognised.

Initially the Trust had to secure a 25 year loan to

cover the £56m debt but by breaking even and

delivering improved performance (notably the 98%

A & E four-hour waiting time target) it has been

possible to agree an early repayment, with £34m

covered by non-Trust funds - subject to delivering

performance targets.

Financially these are crucial first steps towards our

aim of becoming a Foundation Trust by 2010, which

will mean securing acute hospital services for East

Surrey and West Sussex and allowing us to focus on

delivering the financial surpluses needed to reinvest

in, and develop, those services.

Please see the financial review on page 24 for more

information on the Trust’s finances and repaying

the loan.

Finance

13

Our performance 2007/2008

The journey from ‘weak’ to ‘fair’ ratings for both

quality of services and use of resources in the Annual

Health Check has been a challenge but has been

achieved thanks to the hard work and commitment

of all staff.

These are measures of Trust performance against

the Standards for Better Health, and national targets

for quality of services and use of resources carried

out each year by the Healthcare Commission. Our

predicted forecast is for a ‘fair’ rating in both quality

of services and use of resources in the 2007/08

Health Check.

The need to improve performance and balance the

finances has been the focus of a two year turnaround

programme that began with a complete restructure

of the organisation from top to bottom, with a

reformed Trust board, new clinical directors and

strengthened nursing leadership.

By changing the way the Trust operates, and with

more stability in its leadership beginning with the

appointment of Chief Executive Gail Wannell in

November 2006, the Trust’s financial position and

overall performance has improved in a remarkably

short time.

This has been achieved by focusing on the

people, systems and processes needed to drive up

performance. Again the contribution of staff should

be recognised - everyone in the Trust has played a

part in exceeding the 98% A & E four-hour wait

target since February and in improving and expanding

our maternity and cardiology services.

The Trust did not meet two of the core standards

for better health, described below.

• Standard C4C is about ensuring that all reusable

medical devices are properly decontaminated.

We met this standard in all areas except one

- having taken the Redwood Elective Centre

back into direct management on 1 December

2007, detailed expert external audit showed non

compliance with the endoscope decontamination

standard. The Trust is preparing a fast track

business case with options, to ensure compliance.

• Standard C7E states Healthcare organisations

challenge discrimination, promote equality and

respect human rights.

The Trust has declared ‘not met’ with this

standard as further work is required to embed

equality and diversity, and supporting systems, in

the Trust. The Workforce Governance Committee

will monitor progress against an action plan.

In addition, the Trust did not meet the following

‘existing’ and ‘new’ targets:

• A & E 4-hour wait – the Trust has achieved this

target week on week since February 2008.

• Maximum 26 week wait for inpatients –

weaknesses in our waiting list management

processes have now been corrected.

• 18 Weeks referral to treatment – the Trust met

two out of the three national March 2008

milestones and has plans in place to deliver the

final December 2008 targets early.

The Trusts final performance ratings for 2007/08

will be confirmed by the Healthcare Commission in

October 2008.

How the Trust has improved performance

Performance areas the Trust is continuing to improve

14

Improving quality in 2007/08

Domain

Expected Compliance

2007/08

MetIn

yearNot met

Safety 8 0 1

Clinical & Cost Effectiveness

5 0 0

Governance 4 6 1

Patient Focus 9 1 0

Accessible and Responsive Care

2 0 0

Care Environment

and Amenities3 0 0

Public Health 4 0 0

Rating: “partly met”

35 7 2

Target Rating

Maximum 26 week wait for

inpatients0 (Failed)

Maximum 13 week wait for

outpatients3 (Achieved)

Cancer 62 day target

3 (Achieved)

Delayed transfers of care

3 (Achieved)

Thrombolysis 3 (Achieved)

31 day cancer target

3 (Achieved)

Booking 3 (Achieved)

Cancelled operations

2 (Under achieved)

Rapid access chest pain

3 (Achieved)

2 week cancer target

3 (Achieved)

A&E 4 hour wait

0 (Failed)

Rating: “partly met”

26 / 33

Target Rating

Infection prevention and

control

2 (Under-achieved)

Info, screening and referral for

drug misuse3 (Achieved)

Reducing health inequality

3 (Achieved)

Reduce obesity 3 (Achieved)

Improve patient experience

2 (Under achieved)

Reduce mortality from

heart disease & stroke

3 (Achieved)

Reduce mortality from

suicide 3 (Achieved)

18 weeks referral to treatment

0 (Failed)

Emergency bed days

3 (Achieved)

Rating: “fair” 22 / 27

Core standards Existing national targets New national targets

15

Governance is the process by which the Trust is led

and managed properly, delivers what it is expected

to do and manages the risk that might prevent that

delivery. These processes are integrated into the way

the Trust operates and define its internal control,

which is formally reported in the annual accounts

(the statement of internal control).

An external review of governance arrangements was

carried out during 2007/08 which restructured the

department and established a stronger framework of

risk managers in directorates delivering patient care.

The Trust’s robust board assurance framework is

the process for managing any risks that might arise

affecting staff, patients or services and to reduce

them as much as possible. The framework describes

and rates risks, and identifies control measures that

are in place to deal with risks.

Staff who make up the Governance Team are

responsible for risk management and governance

across the Trust, and nominated risk co-ordinators in

each care group who work with senior management

to identify and assess risk. There is a clearly defined

accountability for risk management led by executive

directors and overseen by non-executive directors.

Governance and the assurance framework

Information governance is a framework for managing

information, particularly personal information of

patients and employees. It should ensure that

personal information is dealt with legally, securely,

efficiently and effectively.

The Department of Health provides the standards

and a self assessment tool-kit and Trusts’ compliance

is measured as part of the Healthcare Commission

Annual Health Check as core standard C9, which the

Trust met in the year.

There is one serious untoward incident to report

in 2007/08. This is graded as a level 5 incident

according to recent guidance (this is the highest level

risk). Details are below.

Information governance

Summary of serious untoward incidents reported to the Information Commissioner’s Office in 2007/08

Date of incident (month)

Nature of incident Nature of data involved

No of people potentially affected

Notification steps

July 2007 Unauthorised disclosure – potential unauthorised access to the Trust’s computer network by a member of staff

Under investigation

Under investigation

To be reviewed in light of investigation outcome

Further action on information risk

Surrey and Sussex Healthcare NHS Trust will continue to monitor and assess its information risks in light of the incident reported above in order to address any weaknesses and ensure continuous improvement of its systems. This particular case is the subject of a police and internal investigation that is ongoing.Planned steps for the coming year include an audit of Trust information systems and processes.

16

Our plans for 2008/2009

The Trust’s vision is to become a top performing

organisation that will enable us to achieve

Foundation Trust status with an established

reputation for clinical excellence by 2010.

Plans to place the Trust among the highest

ranking Trusts in the country with more financial

independence and offering the very best level of

care to patients have been made possible by our

turnaround in performance.

The Trust board has agreed a 12-month delivery plan

of key strategies that will support the enormous

amount of work to be accomplished whilst

improvements in patient care are continued. The

clinical strategy, achieving the savings plan, patient

experience strategy, nursing and midwifery strategy

and workforce strategy are just some of the goals

that staff will seek to achieve.

Patients should notice the difference through

better services, improved processes and faster

treatment times.

For 2008/09, objectives have been set to reflect

the shift from financial turnaround to consolidation

and emphasise patient experience and our position

as the local hospital for our community.

Foundation for the Future

The diagram shows how our organisational culture and personality (Values and Mission) fit together with what we will deliver in terms of our Vision and Corporate Objectives and the tools we will use to achieve this. It also illustrates how the Assurance Framework underpins everything we do.

The way we work / who we are (Personality / culture and behaviours)

Trust values• Personal accountability

• Pride

• Responsiveness

• Respect

• Quality & value

• Involvement

Trust MissionTo provide excellent healthcare to

our community by responding to

their needs.

What we will deliver (what we exist to provide)

VisionBy 2010 the Trust will be a

Foundation Trust with an established

reputation for clinical excellence.

Corporate objectives• Improve the patient and carer

experience

• Achieve higher performance

ratings and meet legal and other

obligations

• Improve staff engagement, morale

and productivity

• Enhance education, training and

research

• Develop the Trust’s marketing

capability

• Maximise the benefits of new

technology

• Improve and sustain the Trust’s

financial position

How we will do it (enablers / drivers / tools)

Operational plan

(12month delivery plan)

Supported by:Clinical strategy

Marketing strategy

Patient experience strategy

Business planning (12 month cycle)

Delivering the savings plan

(previously Turnaround)

Workforce strategy

Finance plan

IT strategy

Communications & PR strategy

Estates strategy

Governance strategy

Nursing and midwifery strategy

Infection prevention and control

strategy and Action Plan

Assurance framework

17

The Trust has a zero tolerance approach to all

healthcare associated infection and has a dedicated

taskforce that focuses solely on driving down

infections, particularly MRSA and Clostridium difficile.

Importantly, the Trust met the government’s end of

March 2008 target for deep cleaning all clinical areas.

MRSA reducing

During 2007/08 the Trust continued to see a

reduction in the number of MRSA bloodstream

infections, achieving the national target of a 50%

reduction in MRSA infections compared with 2003/04

when recording began. The Trust did, however,

narrowly miss its locally agreed target with the SHA –

recording 22 MRSA bloodstream infections against a

target of 19.

Rapid action taskforce set up

The Trust continues to work on reducing its

Clostridium difficile rates, which has proved

challenging. Towards the end of 2007 incidences of

Clostridium difficile began to increase and a rising

trend was identified from our data collection and

analysis. In response to this we set up a Rapid Action

taskforce and rates are now reducing in line with our

zero tolerance policy for infection.

Work to further increase effective hand hygiene and

adherence to the Trust uniform policy of ‘bare below

the elbow’ have been key actions in the Trust’s vital

work to manage infection. In addition, the Trust’s

patented programme of Saving Lives Aseptic Skills

for Health (SLASH) is being re-launched to further

support the use of aseptic techniques for IV and

urinary catheter insertion by all clinical staff.

Audits, spot checks and training ensure that all staff

adhere to the appropriate infection prevention and

control measures in their day-to-day roles and results

of audits are published throughout the Trust.

Effective management of infection

Overall, the Trust recognises it needs to strengthen

its isolation facilities and plans are in place to create

a dedicated isolation ward. There are, however, clear

and effective processes to very quickly isolate an

outbreak of infection by ensuring access to affected

areas is restricted to essential staff only. This means

we need to work more closely with patients and

visitors to ensure they observe all hygiene procedures

so we can continue to reduce the risk of spread and

duration of an outbreak.

Training has provided an increased awareness of the

importance of antibiotic management in reducing

the risk of Clostridium difficile infections. A full

time pharmacist is being appointed to support this

through appropriate antibiotic prescribing.

If an area is affected by either MRSA or Clostridium

difficile the Trust has a Rapid Response cleaning team

that will immediately carry out a full and thorough

deep clean, often with sterinis, a revolutionary

decontamination system, that uses vaporised

hydrogen peroxide which eradicates Clostridium

difficile spores. Plans are also in place to create a

decant area that will further support this.

During 2008/09 a number of further measures will

also be reinforced, including the phased introduction

of disposable plastic curtains.

Infection prevention and control

18

The Trust is working hard to achieve the challenging

national 18 week targets for referral to treatment

for all patients. Most of the Trust’s patients are

already being seen quicker than they have in the

past. Nearly every member of staff is involved

in further streamlining and improving working

processes and practices and co-operating closely

with partners and patients to deliver this goal.

Why 18 weeks?

The 18 week referral to treatment pathway is about

ensuring all patients receive high quality elective

care without any unnecessary delay. It applies to

consultant-led care, setting a maximum time of 18

weeks from the point of initial referral up to the

start of any treatment for all patients where it is

clinically appropriate and in a location convenient

to them.

Benefits for patients

Unnecessary delays are not good for patients, or for

the Trust, so by delivering care within 18 weeks and

closer to home patients will receive faster access

to treatment and care. Less time will be spent in

hospital for tests and treatments as more services

are provided in community settings and by GPs.

Benefits to staff

Our staff will also benefit as ultimately there will be

a greater flow of better informed patients. Faster

provision of treatment and care should also result

in less emergency activity caused by long waits, and

there will be the opportunity to carry out more day

case surgery.

The Trust has achieved two of the three national 18

week referral to treatment milestones. The March

2008 milestone for delivering 18 week pathways

for 90% of non-admitted patients was met,

also the six-week maximum wait for diagnostic

treatment. The milestone for delivering 18 week

pathways for 85% of in-patients was missed,

and the Trust achieved the pathway for 50% of

patients. It is a key aim for the year ahead that the

18 week target for all patients will be delivered by

December 2008.

18 weeks

Orthopaedic surgeon, Dr. Ram performing knee surgery at Crawley Hospital’s day surgery unit

19

Estates

The new Chemotherapy Day Suite at East Surrey Hospital

During 2007/08 the Trust spent £18m on

capital projects, including the purchase back of

the Redwood Elective Centre and a significant

refurbishment programmes. The programme

of clinical area improvement will gather more

momentum in 2008/09, including a concentrated

effort to improve bathrooms and toilets.

This supports the Trust drive to control infection, a

key priority in the estates strategy, which also sees

plans being developed for an isolation facility.

Major access improvements to East Surrey Hospital

are underway, including the new chemotherapy

day-suite and refurbished Godstone ward for

cancer patients. The bus stop area at the west

entrance is being changed to allow larger and

faster buses and make it easier for passengers

getting on and off. Repairs to access roads have

been carried out and repairs and remarking

to the public and staff car parks will continue

during 2008. External signs at the hospital have

been upgraded.

Refurbishment of the main walkways in East Surrey

Hospital is being completed and new, clearer signs

will be installed throughout the hospital during

summer 2008.

In May the Trust agreed the contract to provide

new staff accommodation at East Surrey Hospital

with A2 Housing Solutions Ltd, a leading registered

social landlord. The contract will see significant

new build and complete refurbishment of existing

accommodation to convert what is largely an

outdated hostel configuration into one and

four-bedroom flats at affordable rents and Trust

staff getting first choice.

The contract is a “sale and leaseback” so the

Trust receives a significant capital receipt and, in

35 years, the return of the accommodation to

the Trust.

20

Delivering the Trust Savings Plan

Note: John Horan is not a Board member and is not listed in the remuneration report.

Executive Committee

Savings Delivery Group

Workstream 1

Workstream 2

Workstream 3

Workstream 4

Workstream 5

Workstream 6

ProcurementNursing

Productivity

Specialty

Productivity

IT

Transformation

Infrastructure

and Support

Marketing

& Strategic

Development

Paul Simpson

- Director of

Finance

Mona Walker

-Director of

Nursing

Patricia Davies

– Director of

Clinical Services

John Horan -

Director of IT

Jenny Woollett

- Director of

Workforce &

OD

Andrew Hines

- Director

of Business

Development

Achieving the financial surpluses over the next three years which will be needed to make our loan

repayments will be a major challenge. We believe savings of £8.7m can be found in the year ahead

and to achieve them a comprehensive savings plan has been drawn up across the organisation.

A steering group chaired by the Chief Executive will monitor progress weekly against this huge

challenge. Additionally, staff across the Trust are committed to finding further savings and prove

the Trust is a leading provider of ‘patient choice’ and acute services.

21

Partnerships and valuing people

Over the past year the Trust has continued to work

closely with patients, the public, community groups,

stakeholders and staff.

The Patients’ Council has gone from strength to

strength since it was set up in January 2007. The

members and three Trust representatives meet monthly

and the chairman has a seat on the Trust Board.

Members have contributed to the improvement and

decision-making of ongoing services.

Through close working with the Trust plans to make

the patient experience better have been achieved and

members are now actively involved in developing the

Patient Experience action plan.

Among the issues they are looking at are:

• The environment

• Customer care

• Communication

• Recruitment

• Monitoring and measuring

• Standards of care

• Volunteers

The Patients’ Council initiatives include running

regular hand-washing exercises in the entrance

areas of East Surrey Hospital to demonstrate

the importance of correct hand washing in the

prevention of infection.

A group of members have started ward observation

exercises, when patients are asked for their views

on what their stay in hospital has been like and

information fed back to the Trust. As a result of

information gained from the Patient Experience

Seminar, the Patients’ Council is keen to see an

e-tracking system piloted that will allow patients to

provide their own feedback.

Patients’ Council and Patient Experience Group

Patients’ Council

Roger Alexander (Chair of the Patient’s Council in 2007/08) with Patients’ Council members Barbara Harling and Frank McNamara

22

Working with partners Closer partnership working with social care and

Primary Care Trust teams has resulted in better

management of the number of emergency

admissions and a big increase in patients being

discharged to continue their care in a more

appropriate community setting.

Our major efforts during the year to improve A & E

performance resulted in it being among the top

performing Trusts in the country from February. This

was achieved through working with Surrey PCT, who

run the walk-in centre at East Surrey Hospital’s A & E

department, and West Sussex PCT, who manage the

urgent treatment centre at Crawley Hospital, to

assess patients on arrival and if possible give them

treatment on the spot. The co-operation of

ambulance colleagues to bring patients to the right

locations was also key.

Through the support of social care teams more

patients, such as those patients needing treatment

following falls, are sent home to be cared for.

Working together with ward multi-disciplinary

teams and PCT and social care partners the Trust has

also dramatically reduced the number of delayed

discharges from 80 to 20 a day. Patients medically

fit to be discharged but needing ongoing care and

support now leave hospital as soon as that care and

support has been organised for them in their home

or community setting.

Primary Care Trust

Surrey

Primary Care Trust

West Sussex

NHS Trust

South East Coast Ambulance ServiceNHS Foundation Trust

Surrey and Borders Partnership

ThamesDoc

23

The Trust is proud of its skilled and knowledgeable

workforce. During the year we have focused on

ensuring that each member of staff has a constructive

discussion with his or her manager and that each has

a personal development plan.

Providing training and ongoing professional

development for staff has also been a high priority.

Many more staff responded to the 2007 national

staff survey and gave a more positive feedback

than they did in 2006. Areas of improvement

were training, with 81% of staff receiving training,

learning or development to help them do their jobs

better, a score that put us among the top performing

acute trusts in the country. The Trust also scored

well in staff saying they worked well in a structured

environment, had completed performance appraisals

and had well designed jobs.

Although the Trust was not compliant with

the Annual Health Check standard in 2007/08,

there has been significant progress on equality

and diversity.

With the formation of the new national Equality

and Human Rights Commission during the year

we published an Equality, Diversity and Human

Rights Strategy for 2008 – 2011, and incorporated

human rights into all our policies. We also

published our Gender Equality Scheme and have

made significant progress with both the Disability

and Race agendas.

Developing staff

Equality and diversity

In 2007/08 the Trust received a total of 566

complaints, an increase of 20% on the previous year.

We also received 131 written compliments, a small

increase on the previous year, plus many others that

went unrecorded.

The proportion of responses to complaints sent on

time decreased slightly, from 49% to 48%. Five

complaints were referred for review to the Healthcare

Commission.

As a result of some of these complaints the Trust has:

• Increased the number of doctors, matrons/senior

nurses on duty over weekends.

• Improved the layout and access routes for patients

in A & E.

• A senior doctor or consultant holds daily ward

discussions on all patients with a senior nurse

to give a more joined-up and regular clinical

assessment.

• The ante-natal day unit is now open seven days a

week, staff numbers have doubled, an appointment

system is in place and the unit is staffed by a

dedicated team.

The Trust offers the support of the Patient Advice

and Liaison Service (PALS), where concerns may be

resolved informally. If this is not possible the Trust

ensures that advice and support is available from the

Independent Complaints Advocacy Service (ICAS),

offers a local resolution and independent review

and the right for the complaint to be referred to the

Healthcare Commission.

Complaints and compliments

Staff on the Trust’s patented Saving Lives Aseptic Skills for Health (SLASH) training course

24

Financial review 2007/08

2007/08 saw a turning point in the Trust’s finances,

breaking even for the first time in five years. Coupled

with its service performance and forward financial

plan this has allowed the Department of Health to

agree terms for the early repayment of the amount

outstanding on our £56 million long-term loan.

This loan from the Department of Health has arisen

in 2006/07 following five years of serious financial

problems and was required for us to remain viable.

The Trust has also breached its statutory breakeven

duty because it had not balanced past deficits with a

matching surplus in the last five years. This led to the

external auditors issuing a section 19 report to the

Secretary of State in March 2008.

The Trust’s income and expenditure (I&E) position

(expressed as the net reported position (the line)

and the recurrent underlying position (the bars)) is

illustrated in the chart below.

As part of its Forward Financial Plan the Trust will now

generate matching surpluses over several years, helping

to meet part of the loan repayment agreement.

The establishment of a stable Trust management

team and the appointment of a permanent finance

director in 2007/08 have also contributed to the Trust’s

improving financial position.

This improvement is also shown in the ratings used

by auditors (the Auditor’s Local Evaluation or ALE) to

judge how the Trust uses its resources (which provides

the basis of the “use of resources” rating in the Annual

Health Check). These ratings are shown on page 25.

The year in context: financial turning point

1.1: Trust financial performance from 1998/99

Income & Expenditure Position (Recurrent & net)

1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Recurrent surp/(def) 0.9 (5.0) (4.6) (0.2) (0.0) (12.8) (26.4) (27.8) (12.2) (2.6) 8.5

Net surp/(def) 0.9 (5.0) (4.6) (0.2) 6.7 (4.1) (26.4) (10.8) (12.2) 0.0 7.0

10.00

5.0

0.0

(5.0)

(10.0)

(15.0)

(20.0)

(25.0)

(30.0)

(35.0)

(£m

)

adverse

Net surp/(def)

Recurrent surp/(def)

25

These describe a combination of performance measures, such as achieving breakeven, and measures of how the

Trust manages itself financially, such as how it sets and manages its budgets and what it does to deliver better

efficiency from the way it runs itself. The improvement from past years is described in the table below.

1.2: ALE ratings 2005/06 to 2007/08

1.3: Loan repayment schedule

* subject to final Healthcare

Commission confirmation in

October 2008.

ALE uses a rating of “1”

(inadequate) to “4”

(performing strongly).

“2” is adequate.

Auditors local evaluation (ALE) ratings

2005/06 2006/07 2007/08*

Financial reporting 1 1 2

Finanancial management 1 1 2

Financial standing 1 1 2

Internal control 1 1 2

Value for money 1 1 2

Overall use of resources weak weak fair

Loan repayment plan2007/08

(£m) 2008/09

(£m) 2009/10

(£m)2010/11

(£m) 2011/12

(£m)

Loan outstanding (55.9) (53.7) (20.7) (4.8) 0.0

Conversion to PDC 26.0 8.0 0 0.0 0.0

Trust repayment 2.2 7.0 7.9 4.8 0.0

Loan carried forward (53.7) (20.7) (4.8) 0.0 0.0

Surrey and Sussex Healthcare was one of 17

trusts formally described in 2007/08 as ‘financially

challenged’ by the Department of Health because

of its past deficits and the amount of debt it owed.

Depending on performance that categorisation

is expected to be lifted in 2008/09 and the Trust

is one of several trusts that now has a proposed

solution to achieve this, notified in march 2008.

This covers (a) the loan repayment and (b) the

Trust’s overall financial plan. The loan will be repaid

through a combination of cash from the Trust and

from the Strategic Health Authority (SHA).

A ‘financially challenged trust’ and repaying the loan

The loan is not being written off as that would be unfair to other Trusts living within their means or coping

with smaller debts. The transactions take place on the balance sheet with Trust surpluses providing cash to

reduce the loan and the external payments seeing the loan (debt) replaced with public equity capital (called

public dividend capital).

26

The Trust is now moving out of Turnaround and must consolidate its position.

The Trust’s five year Financial Plan is based on delivering EBITDA (earnings before interest, tax, depreciation

and amortisation – the operating surplus that is the engine generating the Trust’s financial strength) of around

8% of income consistently over 5 years by maintaining current levels of efficiency. The step change required is

illustrated in the chart below.

Looking forward

With the Trust breaking even in 2007/08 it can deliver

this level of EBITDA because it will have the benefit of

an extra £6.5m income as the final year of transition

to “payment by results” ends, and by covering cost

pressures with an £8.7m savings plan the benefit can

be rolled forward as a surplus. That will then be used

as the Trust’s contribution to its loan repayment.

The Financial Plan takes into account relevant service

changes, additional 18 week target income/costs,

expected PCT demands and provides a contingency

reserve of £2m in 2008/09, reducing in future years.

The Financial Plan’s aims are:

• Efficiency: doing more for less – emphasis on

reducing corporate overheads – not operational

clinical services;

• Maximising income: getting paid for all the

work done;

• Planning: looking forward.

EBITDA = earnings before interest, tax, depreciation and amortisation PDC = public dividend capital

1.4: Planned EBITDA targets for the next 5 years

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

(2.1) 12.7 15.3 17.6 16.7 16.8 17.1

20.00

15.0

10.0

5.0

0.0

(5.0)

(£m

)

EBITDA

Earnings before interest, tax, depreciation and amortisation (EBITDA) performance

27

Analysis of financial data

EBITDA = earnings before interest, tax, depreciation and amortisation PDC = public dividend capital

RAB = resource accounting and budgeting – this adjust corrects I&E positions after RAB was withdrawn for Trusts

Income & Expenditure:EBITDA presentation

2003/4(£m)

2004/5(£m)

2005/6(£m)

2006/7 (£m)

2007/8 (£m)

2008/9 (forecast)

(£m)

Income from activities reported 131.3 129.6 121.6 143.5 153.4 158.0

RAB adjustment (prior years) 4.2 29.5

Net income from activities 131.3 133.8 151.1 143.5 153.4 158.0

Other operating income 13.2 24.1 22.1 19.8 18.1 16.5

Operating expenses (139.1) (173.8) (171.4) (166.2) (158.9) (157.1)

EBITDA (operating surplus/(deficit))

5.4 (15.9) 1.8 (2.9) 12.6 17.4

Net interest and other items (0.1) (0.1) 0.6 (2.2) (1.1)

Depreciation (5.4) (6.5) (7.0) (6.8) (5.1) (5.4)

Impairments (0.9) (3.9) (2.0)

PDC dividends payable (4.0) (4.1) (4.6) (3.0) (1.4) (1.8)

NET SURPLUS/(DEFICIT) (4.1) (26.5) (10.8) (12.1) 0.0 7.0

Non recurrent income adjustments (8.7) (17.0) (2.6)

Underlying surplus/(deficit) (12.8) (26.5) (27.8) (12.1) (2.6) 7.0

1.5: Detail of overall income & expenditure performance 2003/04 to 2008/09

The key financial statements from the 2007/08 accounts are in the appendix.

The table below provides a fuller summary of the Trust’s income and expenditure performance since 2003/04,

and the plan for 2008/09.

28

In 2008/09 the Trust’s income is forecast to total £174m and is described below.

The vast majority of Trust income comes from NHS

contracts for clinical care – including the market

forces payment which provides the local adjustment

to cover economic costs in Surrey. Together, this

totals over 90% of Trust income.

The Trust gets this contract income from the

main PCTs, with Surrey and West Sussex PCTs

contributing the majority.

Other income includes funding for training and

recharges between local NHS organisations for

services provided by the Trust to them (such as

pharmacy and pathology services).

Costs in 2008/09 are forecast to total £167m, split

as described in the table and chart below.

Income and costs forecast in 2008/09

1.6: Trust forecast income 2008/09

1.7: Trust forecast cost 2008/09

Income: 2008/09 Forecast (£m)

NHS contract income

Surrey PCT 67.1

Sussex PCTs 67.1

Croydon PCT 1.6

Other PCTs 2.5

Market Forces Factor (MFF) 19.7

Sub total: contract income 158.0

Impairment funding 2.0

Other operating income 14.5

Total Income 174.4

Cost: 2008/09 Forecast (£m)

Operating costs

Pay costs 107.5

Non pay costs 49.6

Sub total: operating costs 157.1

Capital charges 7.3

Impairment 2.0

Interest paid 1.5

Interest received (0.4)

Total costs 167.5

NHS contract

income 79.28%

Other income

8.28%

Impairment

funding 1.15%Market Forces

Factor 11.29%

Pay costs 64.22%

Non-Pay costs

29.60%

Capital charges 4.34%

Impairment 1.20%

Net interest

paid 0.65%

29

The majority of Trust costs are for staff pay, as in

other acute NHS Trusts.

Interest is the only aspect of the Trust loan that

appears as a cost to the income and expenditure

account. The core principal appears on the balance

sheet and reduces as the repayments are made.

Interest charged to I&E reduces accordingly, and

there is a £1m reduction in interest because of the

new loan repayment plan in 2008/09 compared to

2007/08.

The Trust had no cash problems in 2007/08 and does

not expect any in 2008/09.

However, the cash balance does not provide the

best description of the Trust’s financial strength and

the amount of working capital is a better indicator.

Working capital describes the resources available

in the balance sheet to cover forward costs – the

difference between money due into the Trust and the

debts the Trust owes, and includes available cash. On

the balance sheet working capital is described as “net

current assets/(liabilities)”.

With the substantial deficits of past years, the Trust’s

balance sheet has been losing working capital.

To survive financially in 2006/07 the Trust had to

borrow cash totalling £56m as it could not pay

its costs any other way. This helped the Trust to

control its balance sheet better but the loan did not

allow any improvement in working capital. With

cash payments for interest and loan principal being

made and no surplus to provide new cash, that cash

has had to come from reducing working capital

still further.

The most useful judgement of the amount of

working capital is a liquidity ratio – liquidity describes

those balance sheet resources that are easily

accessible quickly and so excludes anything that

requires complicated action to sell, like fixed assets

or stock. The ratio used by the Trust removes stocks

from the working capital total and is calculated as

follows:

{Working capital / spend in next period} x

days in that period

This describes the Trust’s capacity to cover its forward

liabilities, as measured by estimated spend in the next

period. A ratio >5 days (ie: five days of forward costs

can be covered from the balance sheet) is the base

standard used by the Trust.

Balance sheet aspects - working capital and cash

30

In summary, the Trust is remaining solvent because

of the loan and through tight control of its

payments. Apart from avoiding interest payments,

a key reason for repaying the loan as quickly as

possible is to allow the surpluses to be used sooner

rather than later to improve working capital and

therefore give the Trust back the balance sheet

strength it requires.

The Trust’s payment of bills within 30 days (the

Better Payment Practice Code target) has improved

during the year because this cash support avoids

managing working capital through delayed

payments quite as strictly as before, but overall the

Trust is performing below the target of 95% with an

average of about 74% of its (total, NHS and non-

NHS) bills paid in this time.

CapitalThe improved financial position of the Trust allows

increased investment.

In 2006/07 the gross capital expenditure was

£7.6m. In 2007/08 the Trust’s gross expenditure

totalled £18.3m (which it should be noted

included the purchase back, for £4m of the

Redwood Elective Centre) and in 2008/09 the

intention is to spend at least £13m.

The section earlier on estates set out the thrust

of the Trust’s capital programme in terms of the

works required (investing in measures to improve

infection control, refurbishing wards, improving

the fabric of the hospital and making the site

accessible).

The Trust has also contracted with A2 Housing

Solutions Ltd, a leading registered social landlord,

to re-provide staff accommodation at East Surrey

Hospital. As part of the deal, Fairfield House at

Crawley has been sold to A2 and Canada House

transferred on a sale and leaseback arrangement

securing an additional capital receipt. These

capital receipts form the basis of the Trust’s capital

budget in 2008/09.

Day

s C

ove

r

Liquidity ratio - days cover

benchmark targetadverse

10

0

-10

-20

-30

-40

M01

M02

M03

M04

M05

M06

M07

M08

M09

M10

M11

M12

The chart below shows how far below the target the Trust will be in 2008/09,

but with a small but discernible improvement as the year passes.

1.8: Liquidity ratio plan in 2008/09

Months

31

This report includes details regarding senior managers’ remuneration in accordance with Section 234b and

Schedule 7a of the Companies Act.

The Trust has established an Appointments and Remuneration Committee to advise and assist the Board in

meeting our responsibilities to ensure appropriate remuneration, allowances and terms of service for the

Chief Executive, Directors and other senior managers. Membership of the committee consists of the Trust

Chair, all Non-Executive Directors and also the Chief Executive (except in relation to her own terms and

conditions). The Chief Executive and Directors remuneration is determined on the basis of reports to the

remuneration committee taking account of any independent evaluation of the post, national guidance on

pay rates and market rates. Pay rates for other senior managers is determined in accordance with Agenda for

Change job evaluations and central NHS review body pay awards. Pay rates for the Chair and Non-Executive

Directors of the Trust are determined in accordance with national guidance. The committee is advised on

these matters by the Chief Executive, Director of Workforce and Organisational Development or external

advisors as appropriate.

The Trust does not operate any system of performance related pay and no proportion of remuneration is

dependant on performance conditions. The performance of Non-Executive Directors is appraised by the

Chair. The performance of the Chief Executive is appraised by the Chair. The performance of Trust Executive

Directors is appraised by the Chief Executive. Annual pay increases are implemented in accordance with

national pay awards for all other NHS staff.

The Chief Executive and all substantive Directors, excluding the Director of Nursing who is on an interim

contract, are on permanent contracts as at 31 March 2008 and subject to six months notice period.

Termination arrangements are applied in accordance with statutory regulations as modified by national NHS

conditions of service agreements (specified in Whitley Council/Agenda for Change), and the NHS pension

scheme. Specific termination arrangements will vary according to age, length of service and salary levels.

The Appointments and Remuneration Committee will agree any severance arrangements. Recruitment for a

substantive Director of Nursing will be completed during summer 2008.

Tables attached show details of salaries, allowances and any other remuneration and pension entitlements of

senior managers. No significant awards have been made in the past to senior managers.

Gail Wannell

Chief Executive

20 June 2008

Remuneration report

32

Remuneration report tablesSalaries and allowances of senior staff

Executive Directors 2007-2008 2006-07

Salary (bands of £5000)

Otherremuneration

(bands of £5000)

Benefits in

kind(rounded

tonearest £000)

Salary (bands

of £5000)

Other remuneration

(bands of £5000)

Other remuneration

(bands of £5000)

Gail Wannell - since 6 November 2006

Chief Executive 135-140 - - 50-55 - -

Catherine Greenaway - since 1 April 2007

Medical Director 25-30 135-140 - - - -

Jennifer Woollett - since 1 August 2006

Director of Workforce & OD 85-90 - - 55-60 - -

Andrew Hines - since 16 April 2007

Director of Business Dev 80-85 - - - - -

Patricia Davies - since 4 June 2007

Director of Clinical Services

60-65 - - - - -

Paul Simpson - since 5 December 2007

Director of Finance 30-35 - - - - -

Mona Walker - since 18 February 2008

Interim Director of Nursing 15-20 - - - - -

Timothy Bolot - from 12 March 2007 to 4 December 2007

Ex-Interim Director of Finance 195-200 - - 245-250 - -

Irene Scott - from 1 September 2005 to 27 February 2008

Ex-Director of Nursing 90-95 - - 90-95 - -

Gary Walker - from 1 September 2005 to 6 October 2006

Ex-Chief Executive - - - 65-70 - -

Katrina Percy - from 14 November 2005 to 31 March 2007

Ex-Chief Operating Officer - - - 90-95 60-65 -

Malcolm Dennett - from 2 January 2006 to 18 January 2007

Ex-Director of Finance - - - 75-80 - -

Annie Carr - from 8 January 2007 to 31 March 2007

Ex-Director of Finance - - - 20-25 - -

Anthony Gordon-Wright - left 31 March 2007

Ex-Medical Director - - - 75-80 70-75 -

Non Executive Directors

Roy Davies - Interim Chairman from 8 March 2005 and Chairman since 1 October 2005

Chairman 20-25 - - 15-20 - -

Michael Ormerod- since 1 July 2005

Non Executive Director 5-10 - - 5-10 - -

Yvette Robbins- since 1 December 2005

Non Executive Director 5-10 - - 5-10 - -

Stephanie Morgan- since 1 December 2005

Non Executive Director 5-10 - - 5-10 - -

David Williams- since 1 January 2007

Non Executive Director 5-10 - - 0-5 - -

Joyce Drummond-Hill- left 31 May 2006

Ex-Non Executive Director - - 0-5 - -

David Bailey- from 1 December 2005 to 28 February 2007

Ex-Non Executive Director - - 0-5 - -

Graham Curtis- since 6 August 2007

Non Executive Director 0-5 - - - - -

33

Remuneration report tablesPension benefits

Real increase

in pensionat age 60(bands of£2500)

£000

Real increase

in pension lump

sum at age 60

(bands of£2500)

£000

Total accruedpension atage 60 at 31 March

2008(bands of£5000)

£000

Lump sum at

age 60 related

to accrued pension at31 March

2008(bands of£5000)

£000

Cash EquivalentTransferValueat 31 March 2008

£000

Cash EquivalentTransferValueat 31 March 2007

£000

Real increasein Cash

EquivalentTransfer Value

£000

Employers contribution

tostakeholder

pension

£000

Gail Wannell Chief Executive 0-2.5 0-5 30-35 100-105 506 412 94 -

Catherine Greenaway Medical Director 0-15 0-15 35-40 110-115 651 - 651 -

Patricia DaviesDirector of Clinical Services

0-5 0-15 10-15 30-35 116 - 116 -

Andrew HinesDirector of Business Dev

0-5 0-17.5 10-15 40-45 151 - 151 -

Paul SimpsonDirector of Finance

0-2.5 0-7.5 5-10 15-20 90 - 90 -

Jennifer WoollettDirector of Workforce & OD

0-2.5 0-5 20-25 65-70 349 291 58 -

Mona WalkerInterim Director of Nursing

- - - - - - - -

Timothy BolotEx-Interim Director of Finance

- - - - - - - -

Irene ScottEx-Director of Nursing

12.5-15 35-37.5 40-45 120-125 655 598 57 -

Gary WalkerEx-Chief Executive

- - - - - 49 - -

Katrina PercyEx-Chief Operating Officer

- - - - - 99 - -

Malcolm DennettEx-Director of Finance

- - - - - - - -

Annie CarrEx-Director of Finance

- - - - - 6 - -

Anthony Gordon-Wright

Ex-Medical Director

- - - - - - - -

34

The following financial statements are merely a summary of the

information in the full accounts, which are available on demand (free

of charge). If you would like a copy please write to Paul Simpson,

Director of Finance, Surrey and Sussex Healthcare NHS Trust, Trust

Headquarters, Maple House, East Surrey Hospital, Canada Avenue,

REDHILL, Surrey, RH1 5RH.

The Trust’s external auditors are

PricewaterhouseCoopers (PwC) LLP.

The cost of the auditor’s audit work during the

reporting period was £366k.

Non-audit services (costing £178k) were provided

covering the following areas: Income recovery

project, advice on financial model, South East Coast

Procurement Hub work, mini-audit / assurance

review, secondment of staff into performance team

and related advisory work.

Non-audit work has been secured within Trust

policies to ensure no conflict with the auditor’s

responsibilities in auditing the Trust. In summary,

the work commissioned has been analytical and

advisory and does not involve employment of

PwC to implement actions in the Trust’s name.

The work has been cleared in all cases with the

Audit Commission.

Appendices Summary financial accounts

35

Formal accounts statementsGlossary of some financial terms used in the Annual Report and Accounts

Income & expenditure

(I&E)

Income received less costs incurred in a period. Primary financial statement.

Net current assets

Current assets less creditors - a positive number is favourable

SurplusIncome exceeds costs (favourable)

Working capital

Net current assets, less stocks and other adjustments - describes resource available that can be used to manage the cash availableDeficit Costs exceed income (adverse)

Operating surplus/(deficit)

Surplus/deficit before accounting for financing and exceptionals like interest and dividends

Liquidity (1)

Adjective - Describes ease of converting to cash - fixed assets are not very liquid, debtors are more so.

Net surplus/(deficit)

Overall surplus/deficit including financing etc

Liquidity (2)

Measure - Often stated as a measure based on the working capital figure and describing the amount of cash that can be quickly made available at a moment in time.

Recurrent surplus/(deficit)

Underlying position - deduct one-off income or costs from the net surplus/deficit (nb: does not mean repayable)

EBITDA – earnings

before interest, tax,

depreciation & amortisation

The operating surplus in the accounts excluding non-cash payments (depreciation and impairments). Not currently part of formal Trust accounts format, but will be in future.

Taxpayer’s equity

The Trust is a public body and its assets belong to the taxpayer - this appears at the foot of the balance sheet and describes PDC and all other resources accumulated by the Trust

PDC – public dividend

capital

Tax payer’s ongoing investment in the Trust - appears on balance sheet and the annual 3.5% return mimicking a “shareholder” dividend payment is on I&E

Capital

Spend that buys things that have a life over 1 year and a value above £5k (includes grouping items together). Not I&E spend - pays for fixed assets.

Balance sheet

Accumulated resources available to the Trust at a point in time and where they have been sourced. Primary financial statement.

RevenueAny spend that is not capital - appears on I&E statement

Cashflow

Statement showing cash in vs cash out - includes capital and revenue - Primary financial statement

Fixed assets

Buildings and equipment - paid for by capital spend. Long term - cannot be quickly converted back to cash

Statement of recognized gains

and losses

Pulls together I&E and balance sheet items that are increasing or reducing the Trust’s financial strength - Primary financial statement

Current assets

Cash, stocks or money owed to the Trust - short term and more easily converted to cash to spend

Creditors Less than a year - current liabilities - money the Trust owes others - debts

ProvisionsCash to be paid in the future - expenditure recorded on I&E in the past

DebtorsLess than a year - current asset - money owed to Trust

36

Opinion on the financial statements

We have audited the financial statements of Surrey

and Sussex Healthcare NHS Trust for the year ended

31 March 2008 under the Audit Commission Act

1998. These comprise the Income and Expenditure

Account, the Balance Sheet, the Cashflow Statement,

the Statement of Total Recognised Gains and Losses

and the related notes. These financial statements

have been prepared in accordance with the

accounting policies directed by the Secretary of State

with the consent of the Treasury as relevant to the

National Health Service set out therein. We have also

audited the information in the Remuneration Report

that is described as having been audited.

This report, including the opinion, has been prepared

for and only for the Board of Surrey and Sussex

Healthcare NHS Trust in accordance with Part II of

the Audit Commission Act 1998 and for no other

purpose, as set out in paragraph 36 of the Statement

of Responsibilities of Auditors and of Audited Bodies

prepared by the Audit Commission. We do not, in

giving this opinion, accept or assume responsibility

for any other purpose or to any other person to

whom this report is shown or into whose hands it

may come save where expressly agreed by our prior

consent in writing.

The directors’ responsibilities for preparing the

financial statements and the Remuneration

Report in accordance with directions made by the

Secretary of State are set out in the Statement of

Directors’ Responsibilities.

Our responsibility is to audit the financial statements

and the part of the Remuneration Report to be

audited in accordance with relevant legal and

regulatory requirements and International Standards

on Auditing (UK and Ireland).

We report to you our opinion as to whether the

financial statements give a true and fair view, and

whether the part of the Remuneration Report to be

audited has been properly prepared, in accordance

with the accounting policies directed by the Secretary

of State as being relevant to the National Health

Service in England. We report to you whether, in

our opinion, the information which comprises the

commentary on the financial performance included

within the Operational and Financial Review,

included in the Annual Report, is consistent with the

financial statements.

We review whether the directors’ statement of

internal control reflects compliance with the

Department of Health requirements “Statement

of Internal Control 2007/08 – Disclosures”, issued

on 7 April 2008 and 20 May 2008. We report if

it does not meet the requirements specified by

the Department of Health or if the statement is

misleading or inconsistent with other information

we are aware of from our audit of the financial

statements. We are not required to consider,

nor have we considered, whether the directors’

Statement of Internal Control covers all risks and

controls. We are also not required to form an

opinion on the effectiveness of the Trust’s corporate

governance procedures or its risk and control

procedures.

We read other information contained in the Annual

Report, and consider whether it is consistent

with the audited financial statements. This other

information comprises only the unaudited part of

the Remuneration Report, the Chairman’s Statement

and the remaining elements of the Operating and

Financial Review. We consider the implications for

our report if we become aware of any apparent

misstatements or material inconsistencies with the

financial statements. Our responsibilities do not

extend to any other information.

Respective responsibilities of Directors and Auditors

Independent auditors’ report to the Directors of the Board of Surrey and Sussex Healthcare NHS Trust

37

Basis of audit opinion

We conducted our audit in accordance with the

Audit Commission Act 1998 and the Code of Audit

Practice issued by the Audit Commission, which

requires compliance with International Standards

on Auditing (UK and Ireland) issued by the Auditing

Practices Board. An audit includes examination, on

a test basis, of evidence relevant to the amounts

and disclosures in the financial statements and the

part of the Remuneration Report to be audited.

It also includes an assessment of the significant

estimates and judgments made by the directors in

the preparation of the financial statements, and of

whether the accounting policies are appropriate to

the Trust’s circumstances, consistently applied and

adequately disclosed.

We planned and performed our audit so as to

obtain all the information and explanations which

we considered necessary in order to provide us with

sufficient evidence to give reasonable assurance

that the financial statements are free from material

misstatement, whether caused by fraud or other

irregularity or error; and the financial statements

and the part of the Remuneration Report to be

audited have been properly prepared. In forming

our opinion we also evaluated the overall adequacy

of the presentation of information in the financial

statements and the part of the Remuneration Report

to be audited.

Opinion

In our opinion:

• the financial statements give a true and fair

view, in accordance with the accounting policies

directed by the Secretary of State as being

relevant to the National Health Service in England,

of the state of the Trust’s affairs as at 31 March

2008 and of its income and expenditure for the

year then ended;

• the financial statements and the part of the

Remuneration Report to be audited has been

properly prepared in accordance with the

accounting policies directed by the Secretary of

State as being relevant to the National Health

Service in England; and

• information which comprises commentary

on the financial performance included within

the Operating and Financial Review, included

within the Annual Report, is consistent with the

financial statements.

PricewaterhouseCoopers LLP

23 June 2008

38

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.

I report to the Chair of the Trust and ensure

appropriate systems exist to support the work of

the Trust and the Board. I manage the executive

team who have clear accountabilities and annual

objectives, drawn from the annual plan of the Trust.

The Trust works in partnership with other health and

social care organisations in the area, but notably

Surrey Primary Care Trust as lead commissioners,

and West Sussex Primary Care Trust. The contract

between us provides clarity on our shared

priorities and officers of the Trust meet regularly

with both Primary Care Trusts to take forward

developments and monitor the delivery of our shared

healthcare plans.

I also account to South East Coast Strategic Health

Authority for performance of the Trust in regular

meetings.

I attend the Health and Social Care Overview and

Scrutiny Committee to account for the performance

of the Trust to the local community and oversee the

work of executive officers in the work programme of

the Overview and Scrutiny Committee. I also ensure

the Trust is represented and is an active partner on

the Health Partnership Board.

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 ongoing 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

in Surrey and Sussex Healthcare NHS Trust for the

year ended 31 March 2008 and up to the date of

approval of the annual report and accounts.

Statement of Internal Control 2007/08

1. Scope of responsibility

2. The purpose of the system of internal control

39

The Trust’s capacity to handle risk is based around

a clear Board approved Risk Management Strategy,

effective leadership of the risk management process

and staff trained and equipped to manage risk in a

way appropriate to their authority. The key elements

of the Trust’s capacity to handle risk are as follows:

• Leadership is provided by executive directors

overseen by non executive directors. The Chief

Executive has overall responsibility, the Director of

Nursing is responsible for ensuring the risk strategy

is implemented throughout the Trust.

• A body of staff under the Head of Governance

and Quality has Trust wide responsibility for

development and support of risk management and

governance. This includes the identification of

good practice outside the Trust, its incorporation

into policies and procedures, and providing training

and support.

• The Trust has nominated risk coordinators within

each Directorate to work with General Managers,

Heads of Nursing and Governance, Clinical and

Assistant Directors to identify and assess risk.

• Staff are trained and equipped to manage risk in a

way appropriate to their authority and duties:

– all staff receive risk management information

and training at mandatory corporate induction

days, ongoing training as part of a mandatory

programme and through distribution of relevant

documents. The Medical Director presents to

all junior doctors on induction risk guidance on

prescribing and other practice relevant to their

discipline.

– Managers and specialist staff (eg risk managers)

have training from internal and external

providers as determined by local needs

assessment.

– Executives, Associate Directors and Risk

Coordinators are trained to assess risk using

standardised tools based upon the AS/NZS 4360:

1999 Risk Management Standard.

• The risk management strategy is reviewed annually

and promulgated throughout the Trust. The

strategy describes the risk management training

schedule which is mandatory for all staff including

at Board level.

• Organisational learning is communicated internally

through a structure of committees (covering clinical

and non-clinical risk) that penetrate throughout the

organisation down to local management teams.

• Learning is supported by the consistent application

of root cause analysis (RCA) of problems and

incidents and the avoidance of blaming and

“scape-goating” of individuals for systematic

failures as described in various Trust policies,

including the organization wide policy on

investigating adverse events.

• A range of problem resolution policies and

procedures, including whistle blowing, harassment,

capability, disciplinary and grievance are designed

to identify and remedy problems at an early stage.

• A range of individual support mechanisms to

encourage individuals to raise concerns about their

own performance in ways which will not threaten

their security or livelihood, e.g. appraisal, alcohol

use / abuse policies, professional counselling and

occupational health services.

3. Capacity to handle risk

40

Risk, or change in risk is identified, evaluated

and controlled as described in the Trust’s Risk

Management Strategy. That document describes the

following:

1. Statement of Intent

2. Scope and objectives of the strategy

3. Accountability and Reporting Structures

4. Organisation of governance agendas

5. Risk Management Process

6. Risk Management Training and support

7. Key performance indicators

8. Approval, Monitoring, review and audit

mechanisms

9. The key elements of the framework, covering

details of: Risk Management Groups,

Committees (including Health and Safety) and

Processes; the hierarchy for risk management

and governance, and; a guide to Risk

Quantification and acceptability.

Risk management is embedded in the activity of the

organisation through:

• A structure of permanent committees receiving

inputs based around risk registers and reporting

and management processes from all parts of the

organisation; which are encompassed in the Trust

wide risk register.

• The Board’s Assurance Framework.

• The Integrated Governance Framework.

• Compliance with NHSLA and RPST risk

management standards.

• Compliance with Standards for Better Health and

performance against the key lines of enquiry in

the Auditor’s Local Evaluation.

• The work of Directorate governance leads.

• The system of local risk co-ordinators and

Directorate Risk Managers.

• Regular and ad hoc training events.

The Board’s assurance framework is a key support

to the Trust’s system of internal control. In 2007/08

it listed the risks against the Trust’s key business

objectives, providing a clear method for the focused

management of risks that may arise from any aspect

of the Trust’s business. It does that by describing

and rating risks, setting out the controls in place and

providing evidence of assurance of the effectiveness

of those controls. Wherever appropriate and possible

the assurance is independent.

The Healthcare Governance Committee oversees

(through the Head of Integrated Governance

and Quality) the maintenance of and reviews the

assurance framework, and that in turn is overseen by

the Audit and Assurance Committee. The assurance

framework is reported and reviewed regularly at

the Board.

The Trust’s risk management process takes into

consideration the need to manage all types of risk as

relevant to key stakeholders.

Assurance framework

The final assurance framework presented to the

Board in 2007/08 describes two areas with limited

assurance. These are not disclosed in the “significant

control issues” section recognising their different

classification as risks but are disclosed here for

completeness below:

Business continuity – there is a risk that the Trust

could fail to ensure continuity of services due to a

lack of robust, tested and proportionate business

continuity management arrangements.

The major incident plan, IT and estates continuity

plans are in place. However, there were gaps

in controls to ensure that all of the Trust’s wider

arrangements are in place, fit for purpose and

maintained. The key control is now in place through

a business continuity steering group with an allocated

director (the Finance Director) and senior manager

support.

18 weeks referral target – there is a risk that the Trust

may fail to achieve the December 2008 18 weeks

referral to treatment target and the March 2008

milestones.

4. The risk and control framework

41

The Trust did not fully meet the March 2008

milestones in respect of one aspect (admitted patients

pathway). Controls were developed in the latter

part of 2007/08 and have been strengthened going

forward, with clearer director accountability and

reporting, including to the Executive Team, SHA and

to each monthly Board meeting as a separate item.

Senior managerial input has been reviewed and

strengthened (including external support) and a

detailed, costed operational action plan is in place

and being monitored.

The recent announcement (in May 2008) of changes

to the provision of the Trust’s Care Records Service

information technology system provide a material

risk (the extent of which is being scoped) that will

be recorded and monitored in the 2008/09 Trust

Assurance Framework.

Information governance

Information governance is a framework for managing

information, particularly personal information of

patients and employees. It should ensure that

personal information is dealt with legally, securely,

efficiently and effectively.

The Department of Health provides the standards and

a self assessment tool-kit and the Trusts’ compliance

is measured as part of the Healthcare Commission

Annual Health Check as core standard C9, which the

Trust met in the year.

Issues over information security have been

highlighted across the public sector and, as part of

additional work under the Department’s Information

Governance Assurance Programme (IGAP) launched

in December 2007, further review and tightening

of information security has taken place in the Trust.

That programme is ongoing and will see audit of

Trust systems and processes in early 2008/09.

There is one serious untoward incident to report in

2007/08. This is listed below as a “significant control

issue” on page 45.

NHS Pension Scheme

As an employer with staff entitled to membership

of the NHS Pension Scheme control measures are in

place to ensure all employer obligations contained

within the scheme regulations are complied with.

This includes ensuring that deductions from salary,

employer’s contributions and payments to the

Scheme are in accordance with the Scheme rules, and

that member Pension Scheme records are accurately

updated in accordance with the timescales detailed in

the regulations.

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 manage the risks to the organisation

achieving its principal objectives have been

reviewed.

My review is also informed by comments made by

external auditors.

The main points from my review are as follows:

Use of Resources

In 2006/07 the Trust scored as “weak” in the Use of

Resources part of the Annual Health Check.

5. Review of effectiveness

42

KLOE Detail 06/07 Actual 07/08 Actual*

Fin

anci

al r

epo

rtin

g

1.1 Statutory and professional reporting standard 1 2

Timeliness of accounts production 1 2

Working papers 1 1/2

Audit opinion 2 2

1.2 Production of the annual report 1 2

Availability and transparency of public reporting 1 2

Fin

anci

al m

anag

emen

t

2.1 Medium-term financial strategy 1 2

Linking corporate and financial planning 1 2

Budget setting 1 2

Plans to repay loan N/A 2

Savings plans and cost improvements 2 2

2.2 Budget monitoring process 1 2

Budget monitoring information 1 2

Planned savings 2 2

2.3 Estate strategy 1 2

Asset register 1 1

Asset management 1 2

Fin

anci

al

stan

din

g

3.1 Financial targets 1 2

Breakeven duty 1 2

Financial projections 1 2

Addressing underlying deficits 1 N/A

Inte

rnal

co

ntr

ol

4.1 Assurance framework 1 2

Risk management process 1 2

Embedding risk management 1 2

Risk management training 1 2

4.2 Statement of Internal Control (SIC) 2 2

Systems of Internal Control - general 1 2

Systems of control - meeting laws 1 2

Audit Committee 1 2

Internal audit 2 2

4.3 Codes of Conduct 2 2

Counter fraud policy and culture 2 2

Local counter fraud specialist (LCFS) 2 2

Auditors Local Evaluation 2007/08: Action Plan Status

The Trust completed the corrective actions described in the 2006/07 statement of internal control concerning

its performance against the “Use of Resources” criteria and is hoping to be scored, using the Auditor’s Local

Evaluation (ALE) as illustrated in the diagram below:

* subject to final Healthcare Commission confirmation in October 2008

43

• One individual key line of enquiry (KLOE) was rated

as “inadequate” (5.3, data quality) which is disclosed

under “significant control issues” on page 45.

• The Trust achieved breakeven within 2007/08

therefore achieving a score of 2 under the ALE

assessment. However, as noted previously the Trust did

not achieve its statutory breakeven duty as disclosed

under ‘significant control issues’ on page 44.

• The other item, KLOE 2.3 – (arrangements for

managing assets) was rated adversely because the

Trust did not have a fully functioning asset register

in place for the full year, but achieved an adequate

position in January 2008. This will be maintained

for 2008/09 and further improvements in asset

control and audit implemented.

Standards for Better Health (SfBH)

In 2006/07 the Trust failed overall to comply fully

with the Annual Health Check

In 2007/2008 the Trust completed corrective actions

described in the 2006/07 statement of internal

control that mean the Trust has declared “partly

met” compliance with the core standards. Two

standards were not met within the SfBH declaration

and are disclosed under “significant control issues”

on page 45.

The position on the core standards compared to

2006/07 is described below.

Note: ALE ratings run from “1” to “4”, where “1” is low (inadequate). “2” is “adequate”.

Core Standards 06/07 Core Standards 07/08

KLOE Detail 06/07 Actual 07/08 Actual*V

alu

e fo

r m

on

ey

5.1 Setting objectives 2 2

Reviewing objectives 2 2

Implementing objectives - workforce 1 2

Implementing objectives - IT & estates 1 2

5.2 Communication 2 2

Monitoring: Patient feedback 2 2

Partnerships with voluntary sector/user groups 2 2

5.3 Performance management process 1 2

Data quality 1 1

5.4 Efficiency plans 2 2

Corporate back office functions 1 2

Clinical services 1 2

Key NHS reforms 1 2

Efficiency and productivity metrics 1 2

Reference costs 1 2

Procurement 1 2

Board development 1 2

DomainDeclared Compliance

Met In year Not met

Safety 7 2 0

Clinical & Cost Effectiveness 5 0 0

Governance 3 1 7

Patient Focus 9 0 1

Accessible and Responsive Care 2 0 0

Care Environment and Amenities 0 3 0

Public Health 4 0 0

Rating: “not met” 30 6 8

DomainDeclared Compliance

Met In year Not met

Safety 8 0 1

Clinical & Cost Effectiveness 5 0 0

Governance 4 6 1

Patient Focus 9 1 0

Accessible and Responsive Care 2 0 0

Care Environment and Amenities 3 0 0

Public Health 4 0 0

Rating: “not met” 35 7 2

44

Governance

• After the significant governance failings described

in the 2006/07 SIC, the Trust has invested

considerable effort to maintain and build on the

actions begun at the end of the last year to ensure

a robust and effective governance framework is

in place, including the Risk Management Strategy.

This substantial process of review and improvement

has delivered very visible outputs as recorded in the

regulatory assessments and will continue as part

of the operation of the governance framework in

2008/09, overseen by the Healthcare Governance

Committee.

• The Trust has risk management, control and review

processes in place, appropriate to its circumstances

and business. The Board last approved the Trust’s

Risk Management Strategy in December 2007.

• Delivery of the criteria required for the Standards

for Better Health declaration and the Auditor’s

Local Evaluation are managed through an action

planning and monitoring process reported regularly

to the Executive Committee, the Healthcare

and Governance Committee and the Audit and

Assurance Committee.

• Internal audit reviews the existing system of internal

control and the overall arrangements to gain

assurances that the controls are designed to meet

the objectives and are consistently applied.

• The Head of Internal Audit’s opinion states that an

Assurance Framework has been established which

meets the requirements of the 2007/08 Statement

of Internal Control and provides significant

assurance that there is an effective system of

internal control.

• The Board Assurance Framework including the

principal risks to the achievement of the Trust’s

principal objectives was in place for the whole

of the year 2007/08 and provided the basis for

monitoring the effectiveness of the management

of the Trust’s principal risks. It was refreshed and

reported to the Board throughout the year with

the latest version reflecting the position at 25th

March 2008.

• The Audit and Assurance Committee and the

Healthcare Governance Committee have overseen

the process of reviewing and refreshing the

governance structure and have reported to the

Board that assurance is adequately provided and

the structure is fit for purpose.

• During the year the Audit and Assurance

committee has been strengthened, Workforce

Governance Committee consolidated and

the Business Continuity Management Group

established.

Finance:

The Trust is now emerging from a five year period

of deficit and financial recovery is now manifest

in its 2007/08 income and expenditure breakeven

performance.

The Trust has met the two main financial targets

set by the Department of Health in the letter from

David Nicholson received on 4 December 2007,

having delivered a breakeven position in the month

of January 2008 (and through to March). Against

its approved Annual Plan for the full year the

overall breakeven means the Trust has exceeded the

performance (a £2.6m deficit) stated there.

However, in 2007/08 the Trust failed its Breakeven

Duty as it has not delivered the surplus necessary to

cover the accumulated deficit over the last 5 years.

A letter will be issued by the external auditor to the

Secretary of State advising of this.

The Trust secured a £56m loan in 2006/07 and has

agreed a revised repayment plan with the Strategic

Health Authority that will, if the deliverables

expected are met, see the loan repaid in the next

three years. At the same time the Trust has agreed

a medium term financial plan with the Strategic

Health Authority that sees it delivering surpluses in

future years.

6. Significant control issues

45

The ALE key line of enquiry (KLOE) that was rated as

inadequate was as follows:

– KLOE 5.3 (arrangements for monitoring and

reviewing performance including arrangements

to ensure data quality) – the Trust meets the first

part of this dimension but cannot demonstrate

that it could meet the data quality aspects

for the full year because of the significant

problems experienced with the implementation

of the Cerner care records system. The Trust

commissioned a detail report from its External

Auditors in Autumn 2007 and has since been

successfully implementing its recommendations.

That continues and is subject to a formal action

plan reviewed by the Audit and Assurance

Committee.

The rating on KLOE 5.3 is the reason for the auditors’

“except for” qualification in their statement on

compliance with the “Use of Resources” criteria.

Standards for Better Health

The Board, in its Declaration in April, reported that

the Trust had not met two of the core Standards

for Better Health (C4C and C7E) These are outlined

below:

• C4C states that healthcare organizations keep patients, staff and visitors safe by having systems to ensure that all reusable medical devices are properly decontaminated prior to use and that risks associated with decontamination facilities and processes are well managed

The Trust met this standard in all areas except

one - having taken the Redwood Elective Centre

back into direct management on 1st December

2007, detailed expert external audit showed non

compliance with the endoscope decontamination

standard. The Trust is preparing a fast track

business case with options, to ensure compliance.

• C7E states Healthcare organizations challenge discrimination, promote equality and respect human rights

The Trust has declared not met with this standard

as further work is required to embed equality and

diversity, and supporting systems, in the Trust. A

detailed action plan is in place monitored by the

Workforce Governance Committee.

Information governance

There is one serious untoward incident to report

in 2007/08 involving an allegation of a member of

staff’s unauthorised access to the Trust’s computer

network. This is graded as a potential level 5 incident

according to recent guidance (this is the highest level

risk) and is disclosed in the Trust’s annual report.

This case is the subject of criminal and internal

investigation. The Trust will assess its information

risks in light of the incident in order to address any

weaknesses and ensure continuous improvement

of its systems. Planned steps for the coming year

include an audit of Trust information systems and

processes.

I have been advised on the implications of the result

of my review of the effectiveness of the system of

internal control by the Healthcare Committee and

Audit and Assurance Committee. Plans to address

weaknesses and ensure continuous improvement of

the system are in place.

Gail Wannell

Chief Executive

12 July 2007

46

NOTE2007/08

£0002006/07

£000

Income from activities 3 153,432 143,521

Other operating income 4 17,550 19,776

Operating expenses 5 (167,252) (172,155)

OPERATING SURPLUS/(DEFICIT) 3,730 (8,858)

Cost of fundamental reorganisation/restructuring 0 0

Loss on disposal of fixed assets 8 (168) (917)

SURPLUS/(DEFICIT) BEFORE INTEREST 3,562 (9,775)

Interest receivable 633 743

Interest payable 9 (2,737) (68)

Other finance costs - unwinding of discount 16 (50) (53)

SURPLUS/(DEFICIT) FOR THE FINANCIAL YEAR 1,408 (9,153)

Public Dividend Capital dividends payable (1,381) (3,002)

RETAINED SURPLUS/(DEFICIT) FOR THE YEAR 27 (12,155)

All income and expenditure is derived from continuing operations.

Note numbers listed above are those used in the full accounts.

31 March 2008£000

31 March 2007£000

Retained surplus for the year 27 (12,155)

Financial support included in retained surplus

for the year - internally generated2,600 0

Retained deficit for the year excluding financial support (2,573) (12,155)

NOTE TO THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 March 2008

Financial support is income provided wholly to assist in managing the NHS Trust’s financial position. Internally

generated financial support is financial support received from within the local health economy, consisting of the

area of responsibility of South East Coast Strategic Health Authority. A local pricing agreement was agreed with

Surrey PCT (£1.3m) and West Sussex PCT (£1.3m) to resolve income disputes allowing the breakeven position.

Primary financial statementsINCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 March 2008

47

BALANCE SHEET AS AT 31 March 2008

NOTE31 March

2008£000

31 March 2007£000

FIXED ASSETS

Intangible assets 10 190 0

Tangible assets 11 121,210 109,579

Investments 14.1 0 0

121,400 109,579

CURRENT ASSETS

Stocks and work in progress 12 1,333 1,020

Debtors 13 9,922 15,498

Investments 14.0 0 0

Cash at bank and in hand 18.3 559 495

11,814 17,013

CREDITORS: Amounts falling due within one year 15 (20,795) (26,566)

NET CURRENT ASSETS/(LIABILITIES) (8,981) (9,553)

TOTAL ASSETS LESS CURRENT LIABILITIES 112,419 100,026

CREDITORS: Amounts falling due after more than one year 15 (51,520) (53,760)

PROVISIONS FOR LIABILITIES AND CHARGES 16 (2,465) (3,909)

TOTAL ASSETS EMPLOYED 58,434 42,357

FINANCED BY:

TAXPAYERS’ EQUITY

Public dividend capital 22 81,675 71,575

Revaluation reserve 17 43,696 39,262

Donated asset reserve 17 1,702 1,458

Income and expenditure reserve 17 (68,639) (69,938)

TOTAL TAXPAYERS’ EQUITY 58,434 42,357

The financial statements on pages 46 and 47 were approved by the Board on 20th June 2008 and signed on its

behalf by:

Gail Wannell

Chief Executive

20 June 2008

Note numbers listed above are those used in the full accounts.

48

2007/08£000

2006/07£000

Surplus/(deficit) for the financial year before dividend payments 1,408 (9,153)

Fixed asset impairment losses 0 (8,567)

Unrealised surplus on fixed asset revaluations/indexation 5,913 10,298

Increases in the donated asset and government grant reserve due

to receipt of donated and government grant financed assets486 213

Defined benefit scheme actuarial gains/(losses) 0 0

Additions/(reductions) in “other reserves” 0 0

Total recognised gains and losses for the financial year 7,807 (7,209)

Prior period adjustment 0 0

Total gains and losses recognised in the financial year 7,807 (7,209)

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 March 2008

49

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 March 2008

2007/08£000

2006/07£000

OPERATING ACTIVITIESNet cash inflow/(outflow) from operating activities 10,362 18,381

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE:Interest received 633 743

Interest paid (2,693) 0

Interest element of finance leases 0 0

Net cash inflow/(outflow) from returns on investments and servicing of finance

(2,060) 743

CAPITAL EXPENDITURE(Payments) to acquire tangible fixed assets (17,515) (7,165)

Receipts from sale of tangible fixed assets 3,040 38,035

(Payments) to acquire intangible assets (200) 0

Receipts from sale of intangible assets 0 0

(Payments to acquire)/receipts from sale of fixed asset investments 0 0

Net cash inflow/(outflow) from capital expenditure (14,675) 30,870

DIVIDENDS PAID (1,381) (3,002)

Net cash inflow/(outflow) before management of liquid resources and financing

(7,754) 46,992

MANAGEMENT OF LIQUID RESOURCES(Purchase) of investments with DH 0 0

(Purchase) of other current asset investments 0 0

Sale of investments with DH 0 0

Sale of other current asset investments 0 0

Net cash inflow/(outflow) from management of liquid resources

0 0

Net cash inflow/(outflow) before financing (7,754) 46,992

FINANCINGPublic dividend capital received 10,100 0

Public dividend capital repaid (not previously accrued) 0 (103,255)

Loans received from DH 0 56,000

Other loans received 0 0

Loans repaid to DH (2,240) 0

Other loans repaid 0 0

Other capital receipts 0 0

Capital element of finance lease rental payments 0 0

Cash transferred to/from other NHS bodies 0 0

Net cash inflow/(outflow) before financing 7,860 (47,255)

Net cash inflow/(outflow) before financing 106 (263)

50

The Trust met all of its administrative duties except for the Better Payments

Payments Practice Code. It did not meet its single statutory duty, the breakeven

duty, as disclosed in the Statement of Internal Control and as referred to in the

body of the annual report.

Note numbers listed below are those used in the full accounts

Notes from the accounts relating to administrative duties

6.4 Management costs 2007/08

£0002006/07

£000

Management costs 8,384 8,881

Income 170,982 155,895

Management costs are defined as those on the management costs website at

www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/FinanceAndPlanning/NHSManagementCosts/fs/en

7. Better Payment Practice Code 7.1 Better Payment Practice Code - measure of compliance

2007/08 2006/07

Number £000 Number £000

Total Non-NHS trade invoices paid in the year 45,417 64,842 41,413 42,616

Total Non NHS trade invoices paid within target 34,335 46,126 31,672 32,615

Percentage of Non-NHS trade invoices paid within target 76% 71% 76% 77%

Total NHS trade invoices paid in the year 2,031 22,290 2,076 18,051

Total NHS trade invoices paid within target 799 9,212 1,092 9,195

Percentage of NHS trade invoices paid within target 39% 41% 53% 51%

The Better Payment Practice Code requires the Trust to aim to pay all undisputed invoices by the due date or

within 30 days of receipt of goods or a valid invoice, whichever is later.

The relatively low performance in 2007/8 in NHS payments is due to queries raised with other organisations

before payments can be made. There were also issues in the earlier part of the year in terms of invoice

authorisation flows as trust was in its first year of implementation of the Trust’s new financial system with a

shared service provider.

51

23.2 Capital cost absorption rate

The Trust is required to absorb the cost of capital at a rate of 3.5% of average relevant net assets.

The rate is calculated as the percentage of dividends paid on public dividend capital, totalling £1,381,000 bears to

the average relevant net assets of £43,502. On that basis the Trust has absorbed the capital costs at a rate of 3.2%.

This is within the materiality range of 3%-4% as set by the Department of Health.

23.3 External financing

The Trust is given an external financing limit which it is permitted to undershoot.

£0002007/08

£0002006/07

£000

External financing limit 7,958 (46,988)

Cash flow financing 7,754 (46,992)

Finance leases taken out in the year 0 0

Other capital receipts 0 0

External financing requirement 7,754 (46,992)

Undershoot 204 4

23.4 Capital Resource Limit

The Trust is given a capital resource limit which it is not permitted to overspend.

2007/08£000

2006/07£000

Gross capital expenditure 18,294 7,622

Less: book value of assets disposed of (3,208) (38,063)

Plus: loss on disposal of donated assets 0 0

Less: capital grants 0 0

Less: donations towards the acquisition of fixed assets (486) (213)

Charge against the capital resource limit 14,600 (30,654)

Capital resource limit 14,947 (19,460)

Underspend against the capital resource limit 347 11,194

Surrey and Sussex Healthcare NHS TrustSurrey and Sussex Healthcare NHS Trust provides services on the following hospital sites:

East Surrey Hospital

Canada Avenue

Redhill

Surrey RH1 5RH

Telephone: 01737 768511

Surrey and Sussex Healthcare NHS Trust continues to provide a range of services at Crawley Hospital which is

managed by West Sussex Primary Care Trust. We also provide a number of services at four community hospitals:

Crawley Hospital

West Green Drive

Crawley

West Sussex RH11 7DH

Telephone: 01293 600300

Dorking Hospital

Horsham Road

Dorking

Surrey RH4 2AA

Telephone: 01306 887150

Oxted Health Centre

10 Gresham Road

Oxted RH8 0BQ

Telephone: 01883 734000

Caterham Dene Hospital

Church Road

Caterham

Surrey CR3 5RA

Telephone: 01883 837500

Horsham Hospital

Hurst Road

Horsham

West Sussex RH12 2DR

Telephone: 01403 227000

need help or advice?The Patient Advice and Liaison Service (PALS) focuses on improving

services for NHS patients.

It aims to:

•advise and support patients, their families and carers

•provide information on NHS services

•listen to your concerns, suggestions or queries

•help sort out problems quickly on your behalf.

You can contact PALS by:

telephone: 01737 768511

extensions 6922 or 6831 (for all sites)

e-mail: pals@sash.nhs.uk

writing to: PALS, c/o East Surrey Hospital (address left).

You can also ask a member of staff to contact PALS on your behalf.

This publication can be made available in other languages and text

formats. Please call 01737 768511 ext 6831 for help.

Surrey and Sussex Healthcare NHS Trust

Maple House

Canada Avenue

Redhill

Surrey RH1 5RH

Telephone: 01737 768511

Fax: 01737 231769

Email: enquiries@sash.nhs.uk

www.surreyandsussex.nhs.uk

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