NHS Trusts are financed in two main ways:
- revenue financing for the day to day running of the NHS Foundation Trust
- capital funding, to fund the purchase of assets (building and equipment) to enable the service to be provided.
Salisbury NHS Foundation Trust receives revenue income via four main sources:
- through the commissioning of services by Primary Care Trusts, Strategic Health Authorities and other NHS Trusts (this accounts for 80% -90% of total income)
- through training levies for medical and non-medical staff and nurse education services
- through the levy for research and development activity
- other income activities e.g. charges to staff, visitors or patients for services provided such as catering, car parking or accommodation.
Based on the above information, the Trust compiles an annual Financial Plan which is approved by the Trust Board and submitted to Monitor, the Independent Regulator, as part of the Trust's Service Plan for the year. The Service Plan demonstrates how expenditure is to be contained within income whilst undertaking activity at the required level. The Service Plan reflects the risks faced by the organisation in the coming year.
From information contained within the Service Plan, annual budgets are compiled for all departments in the Trust. The Trust exercises tight financial control through a system of daily/monthly monitoring of expenditure and investigation into variances from budget. The budget reports form part of the papers submitted to the Finance Committee on a monthly basis and the Trust Board on a bi-monthly basis.
Trust Board Papers
The funding of the Trust's annual capital programme is based on the estimated depreciation charge for the year. This can be supplemented by either, re-investing revenue surpluses generated in previous years, re-investing receipts from the sale of surplus assets or through the receipt of funds from the Department of Health for centrally funded national schemes.
Prior to the commencement of each financial year, the Trust Board approves the Capital Programme.
Capital expenditure proposals are based on business cases, which meet the following criteria:
reasonable benefits have been evaluated and compared with known costs;
the proposal demonstrates the most cost effective way of achieving the service objective;
identifies whether commissioning organisations are able and willing to meet the net cost consequences of the development of major schemes.
Financial controls are in place to ensure that approved capital schemes are progressed effectively and that budgets, phasing and cash flows are properly monitored. Formal monitoring of the Capital Programme takes place each month and the position forms one of the papers submitted to the Trust Board on a bi-monthly basis.
Link required to Trust Board Papers (should be under J Williams's section 4)
(Whilst the Trust also receives donations, gifts and bequests, these monies are managed by the Charitable Trustees and are not used to fund the day to day running of the hospital.)
The financial/budgetary framework of the Trust includes:
The Standing Orders and Standing Financial Instructions (including the Financial Scheme of Delegation) are the rules and guidelines of how the Trust operates.
As mentioned earlier, one of the main sources of income is through the commissioning of services by Primary Care Trusts. Most of this income is based on a national tariff known as Payment By Results (PbR). The Trust receives approximately 65% of its total income from services provided under the PbR tariff. Other income received f
The remaining sources of funding are included under the Revenue Funding heading above.
Funding is allocated across the Trust to provide Directorate and Departmental Budgets. The following information is avialable through the Trust's budget book:
- Source and Application of Funds
- Directorate and Departmental Budgets
- Activity Forecasts
- The Capital Programme
- Key Risks To The Trust
The Budget Book is available upon request, a summary of the budget book can be found at following link, please see file SFT 1839