7Aug 12

Dear Andy I am pleased to report that the Trust fully delivered on the savings plan outlined in the chairman’s letter in December 2011. The £45.6m of savings were achieved, as detailed in our plan, by driving productivity, reducing length of stay and limiting all non-clinical non-pay spend and temporary staff expenditure. The need to deliver efficiency savings has continued in 2012/13 requiring a significant cost improvement plan targeting a 7 per cent cost reduction in clinical areas and 10 per cent in non-clinical areas equating to a full year effect of £62million. The key themes for delivery include reduced length of stay, theatre utilisation improvements and reviews of clinical pathways. There will also be a focus on workforce productivity and a number of non-clinical reviews, particularly on procurement with product rationalisation and reduced unit prices. In your email you make reference to a subsidy from our commissioners. To clarify there is no subsidy. The Trust has agreed a block contract for the 2012/13 financial year with NHS North West London, totalling £500m, which includes a risk premium to secure a block contract of £9m. This was mutually agreed to mitigate any significant changes in activity during the year, due to the efficiency programmes in both organisations. I would also like to reiterate, as mentioned in my letter of 27 July, that the Trust’s medium term financial strategy sets a course for a modest surplus in the current year before delivering surpluses of 1% of turnover in 2013/14 and 2% in 2014/15. These surpluses will be delivered, in the main, through a comprehensive cost reduction programme and are not dependent on asset disposals arising from the Shaping a healthier future proposals. I would welcome the opportunity to meet you and your elected colleagues to discuss the programme of change proposed by NHS North West London and the potential impact on our Trust and I have asked my office to set this up at the earliest convenience.

Yours sincerely

Mark Davies Chief Executive Imperial Healthcare Trust