YO037 Annual Audit Letter - Final
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audit 2003/2004 Annual Audit Letter East Yorkshire Primary Care Trust INSIDE THIS LETTER PAGES 2 - 15 • The purpose of this Letter • Background to our audit • Key messages • Audit objectives • Financial aspects of corporate governance • Performance management • Accounts • Future audit work • Closing remarks PAGES 16 - 17 Appendices • Appendix 1 - Reports issued during the year • Ax 2 - Audit fee Reference: YO037 Annual Audit Letter Date: November 2004 audit 2003/2004 ANNUAL AUDIT LETTER In addition to the work carried out by the Audit Commission, the Commission for Health The purpose of this Letter Improvement (now the Healthcare Commission) carried out a full inspection of the PCT during This Annual Audit Letter to the Board 2003/04. Its overall conclusions were: summarises the significant issues and ‘The PCT is making good progress establishing conclusions from our 2003/04 audit, together its clinical governance strategies and with our comments on other current issues. implementation plans. It has invested time in More detail can be found in the separate reports making the principles of clinical governance we have issued this year which are listed in known to staff and has adopted an innovative Appendix 1 for information. These reports are approach to engaging them, although not all discussed and agreed with officers and general practices are signed up to this. While the presented ...
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| Publié par | Astlio |
| Nombre de lectures | 10 |
| Langue | English |
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audit 2003/2004 Annual Audit Letter East Yorkshire Primary Care Trust
I N S I D E T H I S L E T T E R
P A G E S 2 - 1 5 • The purpose of this Letter • Background to our audit Key messages • • Audit objectives • Financial aspects of corporate governance Performance management • • Accounts • Future audit work • Closing remarks
P A G E S 1 6 - 1 7
Appendices • Appendix 1 - Reports issued during the year • Appendix 2 - Audit fee
Reference: YO037 Annual Audit Letter Date: November 2004
audit 2003/2004 ANNUAL AUDIT LETTER In addition to the work carried out by the Audit Commission, the Commission for Health The purpose of this Letter Improvement (now the Healthcare Commission) carried out a full inspection of the PCT during This Annual Audit Letter to the Board 2003/04. Its overall conclusions were: summarises the significant issues and conclusions from our 2003/04 audit, together i‘tTsh cel iPniCcTa li sg omvaekrinnagn gcoe osdt rpartoeggireess sa ensdtablishing with our comments on other current issues. implementation plans. It has invested time in More detail can be found in the separate reports making the principles of clinical governance we have issued this year which are listed in known to staff and has adopted an innovative Appendix 1 for information. These reports are approach to engaging them, although not all discussed and agreed with officers and general practices are signed up to this. While the presented to the Audit Committee. patient is placed at the centre of the PCT’s The Audit Commission has circulated to all clinical governance principles, active patient, audited bodies a statement that summarises the user, carer and public involvement needs to be key responsibilities of auditors. Our audit has improved’. been conducted in accordance with the principles set out in that statement. What we say about the results of our audit should be viewed in the context of that more formal background. Key messages Appendix 2 provides information about the fee charged for our audit. Financial aspects of corporate governance The PCT has the expected corporate governance Background to our audit arrangements in most key areas. Most notably its arrangements to promptly identify and deal There has been a rapid pace of change within with financial risks were good. There are, the health service, and the demands placed on however, key areas to which the PCT will need its managers. In particular 2003/04 was more to place close attention. challenging than ever. The major challenges the • The financial standing of he PCT remains a PCT has faced since my last Letter include: t risk, and close monitoring of the financial • achieving demanding NHS Plan targets position, together with close working across within its financial resources; the health community, will be required to • implementing the new three year planning ensure breakeven is achieved in 2004/05. system; • It still has work to do to embed an anti fraud • with its partners in the health community, and corruption culture. Due to long-term the need to redesign services to improve the sickness, in 2003/04 the LCFS programme effectiveness of the services provided to it was not completed and furthermore only a patients; and small proportion of proactive work was • preparing for the introduction of long-term carried out. For the LCFS role to be effective national initiatives such as patient choice, it is critical that there is enough time the new GP contract, payments by results, available to carry out proactive reviews and and the National Programme for IT (NPfIT). raise awareness. In 2003/04 the PCT has maintained the two stars rating it received in the previous year. Annual Audit Letter Audit 2003/2004 East Yorkshire Primary Care Trust Page 2
audit 2003/2004 • It needs to ensure that it has adequate governance arrangements relating to partnerships. • It needs to ensure that the progress which has been made in the strengthening of financial systems provided via shared services continues throughout 2004/05, and that any outstanding system weaknesses are addressed. Performance management The PCT has further developed its overall performance management framework during the year. It has also made progress in achieving NHS Plan targets, and in prescribing. Key issues that it will need to address are: • successfully implementing the changes in service design required to achieve and sustain NHS Plan targets; • ensuring that its information systems are able to meet the challenging IT agenda it faces, and adequately support the performance management framework; • developing effective systems for improving the accuracy of recording community services activity; and • ensuring the performance management tool relating to Personal Medical Services (PMS) contracts is fully implemented. Accounts We gave an unqualified opinion on the accounts on 15 July 2004. Action • Closely monitor the financial position for the PCT during 2004/05. • Ensure that there is adequate time available for the Local Counter Fraud Specialist (LCFS) to carry out proactive reviews and raise awareness. Ensure adequate governance arrangements • are in place regarding partnerships.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
• Ensure that the progress which has been made in the strengthening of financial systems provided via shared services continues throughout 2004/05, and that any outstanding system weaknesses are addressed. • Ensure the changes in service design required to achieve and sustain NHS Plan targets are fully implemented. • Ensure that IT systems are able to meet the challenging IT agenda the PCT faces, and adequately support the performance management framework. • Develop effective systems for accurately recording community services activity. Fully implement the performance • management tool for PMS practices. Audit objectives Our main objective as your appointed auditor is to plan and carry out an audit that meets the requirements of the Code of Audit Practice. We adopt a risk-based approach to planning our audit, and our audit work has focused on your significant risks that are relevant to our audit responsibilities. Central to our audit are your corporate governance arrangements. Our audit is then structured around the three elements of our responsibilities as shown below. Accounts • Whether the accounts give a true and fair view of the financial position of East Yorkshire PCT. • The expenditure and income have been properly applied (known as the regularity opinion ).
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audit 2003/2004 Financial aspects of corporate governance • How well the PCT manages its finances . • Whether the PCT has effective financial systems and internal controls . • How the PCT ensures that its financial decisions remain within its legal powers. • How well the PCT works to stop or find fraud and corruption . Performance management • Does the PCT have adequate arrangements to ensure the best use of the resources at its disposal? Financial aspects of corporate governance The PCT has the expected corporate governance arrangements in most key areas. The achievement of financial balance, however, remains challenging. The PCT still has work to do to develop an anti fraud and corruption culture, and in particular it needs to ensure that there is a more proactive approach by the Local Counter Fraud Service. Financial standing The arrangements to monitor the financial position in 2003/04 were good. The financial standing of the PCT, however, remains a risk, and close monitoring of the financial position, together with close working across the health community, will be required to ensure breakeven is achieved in 2004/05. NHS primary care trusts have a number of key statutory financial duties (summarised in the following exhibit) all of which were met for last year.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
EXHIBIT 1 Financial performance 2003/04 Target Performance Tar et met? Achieve financial Net operating costs balance by of £128,356k remaining within giving a small revenue resource surplus of £2k at limit of £128,358k the year-end. Remain within Charge of £1,011K capital resource therefore slightly limit of £1,069k underspent against the capital resource limit. Recovery of full There was full costs on provider recovery on activities provider activities. Financial performance The PCT has good systems to monitor its financial standing. The financial position is reported to the Board on a monthly basis. The report is comprehensive and timely and there is a clear audit trail to the underlying budgetary control system. It also has systems in place to try to alleviate financial risks as they arise. In particular when a potential risk of £1.2 million was identified during the year due primarily to the pressures around the achievement of secondary care access targets, the PCT developed an internal recovery plan to generate the necessary savings to achieve financial balance. It has also worked with its partners in the health economy to achieve access targets within the overall resources available to them. Although, the PCT achieved a balanced financial position, and most key targets were met, this was the result of a significant shift of £1.2 million into the acute sector which had to be offset by a combination of freezing development plans, utilising slippage and taking specific management action to reduce costs.
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audit 2003/2004 For 2004/05 the PCT has set a financial plan designed to deliver financial balance. It is, however, expecting that the financial position will be as tight as in 2003/04. The plan contained the following assumptions at the start of the year: • a Cost Improvement Programme (CIP) of £0.4 million in respect of PCT provider services; and • unaddressed risk of £2.0 million. As at 31 August the PCT reported an overspend of £247,000. This was consistent with its financial plan, however, and it is still forecasting year-end financial balance. There remains a risk however that the PCT will not secure financial balance at the year-end despite the actions that it has put in place to address the situation. The PCT’s performance in previous years suggests that it is capable of managing this risk successfully but delivering the financial plan must remain a key area of focus for the Board. The Executive Team is now reviewing the risk matrix with a view to identifying further actions to deal with the financial risks by the end of the financial year. As at August, unaddressed financial risk had reduced to some £1.3 million through the identification and agreement of actions that dealt with £0.7 million of the risks identified. Furthermore, the PCT has continued to develop its internal systems for demand management and for achieving NHS Plan targets. Local Delivery Plan 2003/04 saw a significant change in the planning process with the introduction of Local Delivery Plans (LDPs). This involved a move from an annual to a three year planning round and with nationally set targets of performance based upon the NHS Plan. There was also a more explicit expectation that plans would be consistent between partners in a health community. In autumn 2003 we assessed the relative strengths and weaknesses of aspects of the LDP process in its first year across the health community. The report commented upon the level of risk of achieving targets, including the capacity of health bodies to sustain or improve upon performance.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
For the Health Community as a whole we found that progress was being made in the following areas. • The direction of travel was good, as shown by how it had adapted its patch-wide structures to deal with issues emerging during 2003/04. • There had been progress against community objectives such as emergency care and services for older people. Regarding the PCT’s own approach to developing the LDP we found that the PCT had embraced the LDP process and had made an important contribution to the improvement agenda in a difficult financial climate. We also found that the PCT has established a strong internal management framework, with the LDP seen as a vehicle for delivering local as well as national priorities, whilst it was supported by robust performance management mechanisms which enabled it to monitor progress effectively against most NHS Plan targets and take appropriate action to resolve reported problems. There were a number of key areas, however, that needed to be addressed by both the PCT individually and the health economy as a whole. • The development of a shared vision for the future of health services in Hull and East Riding. • Partnership working needed to be improved. • Capacity planning identified gaps which were not filled in the LDP. • Financial constraints meant there was a need to address the gap by other means, such as a shift to primary care, modernisation, efficiency improvements, but there were was a lack of robust plans, supported by resources and action plans, to achieve this. • The failure to address gaps led to ‘firefighting’ in order to achieve activity targets such as additional clinics and extra theatre sessions that were unsustainable in future years.
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audit 2003/2004 An LDP refresh was carried out the PCT, and its partners in the Health Community, for 2004/05. We have reviewed the extent to which the Health Community had developed its approach towards capacity planning. We found that the Health Community has put in place a number of improvements in its procedures to plan and monitor the LDP. In particular significant improvement has been made, across the health community, in assessing the potential demand and activity to deliver access targets. We have, however, identified a number of potential improvements to planning processes that the health bodies collectively need to take. Furthermore there is still a high risk that the health economy as whole will not achieve its LDP targets. As at June 2004 unaddressed risk across the health economy was £5 million, and it is assumed that not only will this unaddressed risk be managed but also that all cost improvement plans will be achieved. To achieve financial balance the health community may again require short term fire fighting measures, a redistribution of resources and a distortion of priorities. Throughout 2004/05 we will be reviewing the financial position, and assessing how the health bodies collectively deal with financial challenges as they arise. Audit Commission report on financial management in the NHS The Audit Commission recently issued a report ‘ Achieving First Class Financial Management in the NHS’. The briefing that accompanied the report poses some detailed questions which Board Members may wish to ask their organisations. On 14 October we provided the Audit Committee with a presentation highlighting the key issues contained in the report.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
Payment by results One major issue that will impact on the finances of the PCT next year will be payment by results (PBR). We have found that the patch is introducing the new regime in line with the national timetable, although there were issues initially around achieving engagement in the process beyond the finance staff directly involved. The Local PBR Group and the appointment of a patch-wide project accountant has ensured that the health economy has been working well together to develop a common approach to PBR and to try to minimise the business risks associated with its implementation. Better Payments Practice Code The code requires all valid invoices to be paid within 30 days. During 2003/04 the Trust paid 73.6 per cent by number and 82.8 per cent by value within 30 days. This represents a relatively poor performance, and the PCT has been examining the reasons why delays are occurring. Systems of internal financial control The PCT’s overall control framework continues to develop, though there are some gaps it will need to address. It will need to ensure the assurance framework is embedded throughout the organisation. Although there have been control weaknesses relating to systems provided via shared services, arrangements relating to them have been strengthened during 2003/04. Overall arrangements Some progress has been made in developing procedure notes for business critical systems although the transfer in of the therapy staff from Hull and East Riding Community Health Trust and the impact of Agenda for Change could mean that further significant work is required to harmonise Human Resource policies.
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audit 2003/2004 The Head of Internal Audit is required to annually provide the PCT with an ‘Opinion on the effectiveness of the system of internal control’. He concluded that ‘for that for the identified principal risks covered by Internal Audit work the Board has significant assurance that there is a generally sound system of control designed to meet the organisation’s objectives’. Risk management Our work included a high level assessment of your risk management processes and assurance framework . The PCT continues to develop its risk management system. The ongoing work to populate the Corporate Risk Register will be key in assisting the PCT to identify and manage risks and to enable it to successfully implement the Board Assurance Framework. Priority should be given to completing this work as soon as possible. Internal Audit Internal Audit, provided by the East Coast Internal Audit Consortium, is a key element of financial control. In 2003/04 the Internal Audit programme consisted of 90 days. We reviewed a large proportion of Internal Audit’s work and found it to be of satisfactory standard. We also found that in line with the new Code, the 2004/05 draft plans included greater narrative concerning the purpose and scope of the individual job assignments contained in the plan. We identified, however, a number of areas that the Director of Finance and the Audit Committee needed to consider. • Determining whether there is sufficient Internal Audit coverage for the Chief Executive and the Director of Finance to discharge their statutory duties around systems of internal financial control. • Ensuring that Internal Audit has the necessary skill mix to carry out the audit plan as it becomes increasingly involved in non-financial areas.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
Shared services Some of the PCT’s business critical systems are provided on its behalf by other organisations. • Some accountancy functions, such as the payment of invoices and cash management, and payments relating to Family Health Services, are provided by the Primary Care Agency hosted by Eastern Hull Primary Care Trust. • Payroll and facilities are provided by Hull and East Riding Community Trust. In 2002/03 we reported that the PCT, and its partners, had been working hard to improve governance arrangements relating to shared services. We reported, however, that there were some key issues which needed to be addressed, in particular: • the timeliness of the production of the shared service agreements needed to be improved; • further clarification of roles and responsibilities; • risk sharing arrangements needed to be clarified; and • greater performance monitoring, by the customers, of the quality of the services provided. From April 2004 the FHS shared service (primary care agency) was reconfigured and a different model of delivering these services was adopted. Consequently it has become clearer amongst the partners that ultimate accountability lies with the host provider. During the year the partners have made progress in addressing the issues raised in previous years. • Shared service agreements have been produced earlier in the year, and there is evidence of more customer involvement in developing their content. • Roles and responsibilities are more tightly defined in the agreements. • The PCT has been involved in developing and monitoring performance indicators related to the finance SLA.
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audit 2003/2004 The areas where progress still needs to be made are: • updating of terms of reference to reflect new arrangements post 1 April 2004; • the formalisation of risk sharing arrangements; • the further development and monitoring of performance indicators relating to the Services Agreement with the Community Trust; and • ensuring the Services Agreement with the Community Trust contains detailed costs. The changes in the delivery of shared services have led to improvements in the operation of systems provided during 2003/04. For instance in our opinion audit we noted improvement in the timeliness and completeness of control account reconciliations. The full year impact of the new arrangements, however, is only likely to be fully felt in 2004/05. This is consistent with the Internal Audit’s findings. In his opinion statement the Head of Internal Audit stated ‘Our financial systems work at (the PCA), carried out during 2003/04 identified a number of weaknesses although significant improvement was noted compared to the previous year. Despite the improvements noted we are only able to offer limited assurance that the Agency has had a generally sound system of internal control throughout the year 2003/04’. Standards of financial conduct and the prevention and detection of fraud and corruption Although the PCT has been putting procedures in place to strengthen its arrangements to prevent and detect fraud and corruption, it still has work to do to embed an anti fraud and corruption culture throughout the organisation. In particular it needs to ensure that there is a more proactive approach by the Local Counter Fraud Service, and ensure that documentation relating to personnel files is fully up to-date. -We have reviewed your arrangements to maintain proper standards of financial conduct, and to prevent and detect fraud and corruption. We reported our findings in our interim audit memorandum. Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
The PCT has been putting arrangements in place to develop an anti-fraud and corruption culture. There is still work to do in this area, however, the key issues to address include: • further improving the awareness of staff, specifically by being more proactive in reminding them of their responsibilities on a regular basis; • ensuring adequate time is set aside for the role of the Local Counter Fraud Specialist (LCFS). Due to long-term sickness, in 2003/04 the LCFS programme was not completed and furthermore only a small proportion of proactive work was carried out. For the LCFS role to be effective it is critical that there is enough time available to carry out proactive reviews and raise awareness; and • carrying out a fraud risk assessment. This would allow it to ensure that the LCFS’s proactive reviews are targeted on areas were the potential risk is greatest. We also found that there have been issues around recruitment since the Human Resources function was transferred from the Community Trust in July 2003. In particular, new starters have not been given contracts although we understand that the PCT is currently rectifying this. The PCT has taken part in the national fraud initiative, whereby data matching is used to identify transactions that may be fraudulent. No such transactions have been identified. Legality of transactions The PCT has strengthened its arrangements for dealing with legal issues. It still has some work to ensure compliance with wide ranging legislation, such as the Human Rights Act and the Race Relations Act. The PCT will need to ensure that it has adequate governance arrangements relating to partnerships.
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audit 2003/2004 Overall arrangements The appointment of a Corporate Services Manager provides the PCT with an additional resource when dealing with legal issues. A legal protocol has been developed to give guidance to staff on accessing advice from the PCT’s external legal advisor. In genera l we found that progress on implementing new legislation has been slow with the exception of the Freedom of Information Act. The Human Rights Act and the Race Relations Act are both significant and far reaching pieces of legislation and it is important that the PCT ensures it is not in breach of them. Partnerships Partnership working is a major element of the modernisation agenda for public services. Increasingly the PCT is involved in partnership arrangements with other organisations both in the public and private sector. For example it is developing a Children’s Trust with East Riding of Yorkshire Council, and Yorkshire Wolds and Coast PCT. There are areas of risk that are higher where there is a partnership than if the same functions were fulfilled by a single organisation. These include: • ambiguity about where decisions are taken and ratified; • difficulty in obtaining accountable representation from the wide range of potential stakeholders, and avoiding conflicts of interest; • different expectations and cultures in statutory, voluntary and business sector partners; and • ad-hoc procedures for key resource decisions (such as recruitment of staff, allocation of contracts). As yet the PCT’s partnership arrangements are not fully developed. One of its first key steps will be to determine whether the governance arrangements for each of the partnerships it is involved in are adequate. In particular there is no single definition of ‘partnership’, and therefore it needs to be clear as to how it uses the word ‘partnership’ in its corporate policies and procedures. In January 2005 we will provide a presentation to the Audit Committee highlighting the potential risks around partnership working. Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
Performance management The PCT has further developed its performance management framework during the year. In 2002/03 we reported that the PCT was making good progress in developing an effective performance management framework that promotes continuous improvement . During 2003/04 the PCT has further developed its performance framework. The PCT has been concentrating on embedding the framework throughout the organisation, and is in the process of amending its management structures to help facilitate this. As part of our 2002/04 audit plan we agreed to carry out the following work on your performance management arrangements: • implementation of the NHS Plan; • data quality year review on HRG/reference costs; • commissioning; prescribing; • • review of the Health Informatics Service; and • IT in primary care. Our main findings and conclusions for each piece of work are summarised below. Implementation of the NHS Plan The PCT continues to make progress towards achieving its NHS Plan targets but it still faces major challenges particularly around service design and modernisation. The NHS Plan provided a radical re-think of the way that health services should look over the next ten years. It set out a vision of a health service designed around the patient, recognising that this will require investment and major reform. The new planning framework recently announced for 2005/06 will requir e additional targets to be met over and above the current ones. Reviews of progress in implementing the NHS Plan have been carried out by local auditors at all NHS Trusts and PCT’s, focussing on input to the local delivery plan (LDP) process and achievement of key national targets. East Yorkshire Primary Care Trust Page 9
audit 2003/2004 • access to primary care • health inequalities • PCT contributions to secondary care Our conclusions on the LDP process are summarised in the financial standing section of this Letter. At the time of our review in late 2003, we identified a number of achievements, including: • significant improvements in access to primary care; the PCT was working hard to manage GP • referral rate; and • the development of a Choice Implementation, including the establishment of a project team and information packs being sent to GPs setting out the patient choice ‘menu’. We found, however, that the Health Community faced challenges in delivering improvements in some areas. • Development of the booking and choice agenda was hampered by secondary access problems, and the lack of ownership by clinicians in some specialties. • GP referrals have generally been kept at 2002/03 levels, but problems remain in ‘hot spot’ specialties such as orthopaedics and ENT. • Progress has been slow on a number of initiatives to manage demand and reduce waiting. The results of individual reviews at PCTs and trusts were used to draw out common themes across the health economy at Strategic Health Authority level and we prepared SHA briefings in March 2004. We also provided a briefing specifically for the Chief Executives in the Hull and East Riding Health Community. Data quality HRG/reference costs The PCT needs to develop effective systems for accurately recording community services activity to ensure the reference costs in future years are accurately stated.
Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
For a number of years the DoH has used reference costs to compare the cost of hospital services. Trusts and PCTs are required to produce these annually, for the Department of Health, analysing costs and activity data based on individual specialties. These costs produce an index, which demonstrates how the PC’s costs compare nationally. Reference costs are of increasing importance, as tariffs for paying for hosp ital services under the new payments by results arrangements are to be based on them. PCTs will not only need to understand how their costs compare in relation to individual areas of activity to other PCTs, but also how the costs of the local acute provider compare to the national average. Our review of reference costs relating to the PCT’s 2002/03 reference cost submission found that the costing element of the process was reasonably robust, but there were issues around the reliability of the activity data used. We subsequently assessed whether these issues had been adequately addressed by the PCT for its 2003/04 reference costs return. We found that the PCT have made good progress in implementing the recommendations. However, the PCT still needs to improve data collection processes to allow activity undertaken by health visitors and school nurses to be submitted at the levels currently required by the DoH. Commissioning The PCT has strengthened its arrangements for commissioning during 2003/04. Ensuring its strategic approach is underpinned with robust plans setting out how services will be improved, and the development of commissioning for non-acute services should be key priorities in future years. During the year we have undertaken a review of the PCTs commissioning and contracting processes. This assessed the PCTs arrangements for discharging a range of responsibilities including determining local health needs; the strategic planning of services and the process of agreeing the detail of service delivery with providers. We have also looked at the PCTs preparations for implementing the Choice initiative.
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audit 2003/2004 East Yorkshire PCT is ahead of others in having a strategic approach to commissioning in place, and has set out clearly its aims, objectives and priorities. The approach however, is not yet underpinned by robust plans in all of the ten commissioning programmes setting out how the PCT will achieve improved services for patients and how success will be measured. Until this is in place, there is the potential for the strategic intentions in these commissioning programmes to remain aspirational. We have found that the PCT has developed its commissioning processes. For example it: • recognised that in the light of the its size, plus the complexity and variety of services which it commissions for its patients, it is unlikely to have the skills and capacity needed to commission in isolation and therefore is pursuing a collaborative approach; • used this collaborative framework to find alternatives to emergency admission, and to commission new community mental health services; • improved contracting and risk sharing arrangements with the main Acute Trust, including better quality demand and capacity information; written agreement to minimise the impact of using the independent sector; greater clarity in the event of an over-trade and where the responsibility for funding would lie; and has been preparing for the implementation • of Choice at Referral (Choose and Book). In particular, we are pleased to note that overall arrangements are being co-ordinated on a patch-wide basis and the approach is generally one of collaboration between the local health organisations. There are areas however, where the PCT needs to further develop the effectiveness of its commissioning arrangements in bringing about long-term sustainable change in the way services are planned and delivered in priority areas. For example: • increasing public involvement in the strategic approach; ensuring progress is made in addressing • some of the most challenging areas for the PCT, such as orthopaedics and ENT; Annual Audit Letter Audit 2003/2004
ANNUAL AUDIT LETTER
• there is scope for using the new financial framework to move towards commissioning on a quality and outcomes basis, rather than just activity levels; • improving contracting for non-acute services. In particular, addressing the issu es of poor quality information and moving towards the development of robust service specifications and performance management arrangements; and • formalising and clarifying collaborative structures, to enable existing groups and networks to operate as effective commissioners of services. Prescribing The PCTs approach to commissioning contains examples of noted practice. Prescribing continues to account for a significant proportion of the PCT’s expenditure. The challenge for PCTs is to manage the impact of increased levels of prescribing due to NICE guidelines and National Service Frameworks (NSFs) by achieving savings in areas where drugs are often over prescribed. Drawing on Audit Commission research we applied a software package to establish prescribing indicators for the PCT and calculate any potential savings. This built upon work we carried out at the PCT in 2001/02. The PCT has made good progress towards the promotion and implementation of cost-effective prescribing. Examples of noted practice include: • efforts to connect prescribing activity with other areas of PCT activity; proactive initiatives to ensure high-quality • prescribing in line with NICE guidance and National Service Frameworks; and • monthly prescribing reports are used to examine cost growth areas.
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