Redevelopment of West Cumberland Hospital - Full Business Case

Transcription

1 Redevelopment of West Cumberland Hospital - Full Business Case North Cumbria University Hospitals NHS Trust June 2012

2 DOCUMENT CONTROL Author/Contact Suzanne Halsall, Head of Strategic Financial Planning Tel: ext Document Reference Refers to WCH Full Business Case dated June Equality Impact Assessed Yes, as part of redevelopment process. Version 21.4 Approved by: - Trust Board 14 February 2012 NHS Cumbria 21 February 2012 NHS North of England 8 March 2012 H M Treasury 27 July 2012 Statement of changes made Version Date Changes / comments received from 19 May 2011 Approved by Trust Board. Issued to the SHA March 2012 Updated Financials following agreement of plans with NHS Cumbria following agreed Clinical Strategy. Financial Plans agreed at both Trust and NHS Cumbria Boards June 2012 Following Department of Health review, includes latest information updates including: 21.4 September Supplemental Legal Agreement dated 15 th June Latest risk register - Gateway 3 recommendations and status - Procurement strategy as finalised with DH - Formal NHS Cumbria approval letters & minutes - Updated FB1 forms reflecting actual costs Updated to include Treasury and Department of Health Approval. Final update including Supplemental Legal Agreement final appendices.

3 I am pleased to offer the full support of Britain s Energy Coast West Cumbria for your redevelopment proposals in Whitehaven and also look forward to continuing to work closely together to further develop the vision of a health campus focused around the new hospital, in partnership with universities and the nuclear industry. Rt Hon Brian Wilson Chairman Britain s Energy Coast West Cumbria The sector is a significant contributor to the regional economy with GVA per worker at 63.7k, double the regional average of 32k. Total GVA for the nuclear sector is estimated at 1.5bn. NW Nuclear Sector Body The Cabinet Office The road to 2010 Addressing the nuclear Question in the 21st Century "The new hospital will play an important enabling role in supporting local communities through a period of economic transition and preparation for potentially very significant growth. Although the area starts off from a very low point in economic productivity terms, its potential to contribute to sub-regional, regional, national and Anglo- French growth (noting Areva hold part ownership of Sellafield Ltd) is I think unprecedented at this time" Philip Greatorex Head of Sustainability Sellafield Ltd

4 Contents Executive Summary. 7 1 Introduction Overview of Project Project Objectives Approvals and Support Trust Profile Introduction Health Needs in Cumbria Strategy and Objectives Financial Profile Staff Profile Estates Profile The West Cumberland Hospital: Services and Catchment Population Summary Strategic Case Introduction National Drivers of Change Regional Drivers of Change Local Drivers of Change Strategy for Change Demand & Capacity Model of Care Workforce Planning and Development Economic Case Introduction Strategic Aims of the Project Long-listed Options Identified in the OBC Short list of Options Identified at OBC Stage Preferred Option Capital Risks Conclusion Financial Case The Trust 2010/11 Baseline Income and Expenditure Costs Income Overview 2012/13 to 2016/ NHS Cumbria Commissioning Plans 2012/13 to 2013/ The Trust Turnaround Programme Clinical and Safety Assurance Emergency Flow... Error! Bookmark not defined. 5.9 Planned Care - Elective Flow... Error! Bookmark not defined The System Plan... Error! Bookmark not defined Key Assumptions used in Financial Modelling The Trust Financial Plan The West Cumberland Hospital Financial Plan West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 4

5 5.14 WCH Unscheduled and Scheduled Activity WCH Including the Re-Development WCH Excluding the Re-development The Cumberland Infirmary Carlisle Funding of Additional Capital Charges Overall Revenue Summary Overall Capital Summary Capital Charges Efficiencies delivered through the project Adjacencies and Flexibility Key Considerations and Sensitivities The Risks and Sensitivities Conclusions Commercial Case Introduction The Procurement Process NHS Procure Evaluation of PSCP Expressions of Interest Selection of PSCP Contract Arrangements Guaranteed Maximum Price Enabling Works Conclusion Management Case Introduction Timetable Project Structure, Skills and Resources Outline Arrangements for Risk Management Stakeholder, Public and Patient Involvement Benefits Realisation Plans Gateway Reviews Health Impact Assessment Regeneration, Environmental Sustainability and Corporate Citizenship Post-project Evaluation Design & Construction Introduction PCT and SHA Involvement Description of the Design Health Park and Health Cluster Infection Prevention/Control Planning Permission Achieving Excellence in Design Evaluation Toolkit (AEDET) Design Review Panel Energy Consumption Design Freeze Equipment West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 5

6 8.12 Environmental Standards Sustainability Facilities Management Services Facilities Management (FM) Service Strategy Cleaning: Microfibre Technology Catering (Patient Dining): Use of Steam Pressure cooking systems Portering & Materials Management: Streamlined logistics operation Linen: Telephony Services: Security: Information Management and Technology Introduction National Programme for IT Local IM&T Vision IM&T requirements at the redeveloped WCH Summary Appendices Appendix A - Approval Letters Appendix B - Project Risk Register Appendix C - Benefits Realisation Plan Appendix D - Health Impact Assessment Stakeholder Workshop Appendix E - Letter from Copeland Borough Council Appendix F - The Generic Economic Model Assumptions 299 Appendix G - NHS Cumbria Assurance Report - Attached Separately Appendix H - NHS Cumbria System Wide Plan - Attached Separately Appendix I - Trust Clinical Strategy - Attached Separately Appendix J - The Trust Workforce Plan - Attached Separately Appendix K - Procurement Strategy..305 Appendix L - Stage 4 Contract Amendment - Attached Separately Estates Annexes Part 1 - Attached Separately Part 2 - Attached Separately Estates Appendices - Attached Separately West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 6

7 Executive summary The redevelopment of West Cumberland Hospital as outlined in this Full Business Case is essential to sustaining secondary health care services in West Cumbria. It is consistent with national, regional and local health policy, and fully delivers the commitments set out in the Closer to Home consultation. The hospital redevelopment is a key component of economic regeneration through the Britain s Energy Coast Masterplan. A new acute hospital is considered an essential part of the infrastructure required to support the provision of new nuclear facilities in West Cumbria in line with national energy policy. The redevelopment supports the newly developed integrated Clinical Strategy for North and West Cumbria by incorporating new models of care and ways of working that improve the quality of patient experience. The project releases efficiencies that cover the consequences of the scheme and also make a positive contribution to the overall financial viability of the Cumbrian health economy. The project is demonstrated to be affordable within the capital funding available. The project is supported by and is consistent with the commissioning intentions of local GP commissioners. The proposed new hospital has been right-sized to deliver the agreed clinical strategy, is flexible to meet future service changes and provides significantly higher quality facilities for patients within a reduced and more efficient footprint The redevelopment provides a high proportion of inpatient beds in single, en-suite rooms, thereby making a major contribution to patient privacy and dignity and improved infection prevention The redevelopment project will make a major contribution to the wider economic well-being of West Cumbria through the creation of jobs, training opportunities and a significant boost to the economy through the use of the local supply chain The new hospital is key to the Trust delivering its environmental objectives as set out in its Carbon Management Plan, and is essential if carbon reduction targets in 2015 are to be achieved The plans have been subject to wide stakeholder consultation and are supported by local people, staff and commissioners. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 7

8 Introduction 1. North Cumbria University Hospitals NHS Trust (NCUHT) plans to create a modern, state of the art hospital facility, fit for the 21st century, on the site of the existing West Cumberland Hospital (WCH) in Whitehaven, Cumbria. Figure E 1-1. West Cumberland Hospital 2. This Full Business Case is for the redevelopment of the hospital and follows approval of the Outline Business Case (OBC) by NHS North West in November 2009 and the Department of Health and HM Treasury in August The West Cumberland Hospital is a vital facility for the catchment population of 167,000 people because of the area s remoteness from other secondary care services and poor access links. 4. The redevelopment consists of a 90 million investment ( 91.6 million at the current rate of VAT) in new facilities and replaces outmoded inefficient buildings which limit improvement in the quality and effectiveness of care. 5. The result of this investment will support the delivery of national, regional and local policies such as High Quality Care for All; Quality, Innovation, Productivity and Prevention (QIPP); the Britain s Energy Coast Masterplan and NHS Cumbria s Closer to Home strategy. 6. The scheme described in this Full Business Case is fully consistent with the agreed Clinical Strategy for North Cumbria and is fully supported by local GP Commissioners and NHS Cumbria. 7. The hospital redevelopment, together with the underpinning Closer to Home strategy, has undergone a review by the National Clinical Advisory Team (NCAT) and has demonstrated consistency with the Secretary of State for Health s four tests for service reconfiguration. 8. Following extensive stakeholder engagement, detailed design work has been completed which enables the introduction of a new, more appropriate and more efficient model of care. This has been costed in detail and is affordable in capital and revenue terms. 9. Full planning permission has been obtained and a developer appointed, using the NHS ProCure 21 framework, to commence construction once the full business case is approved. 10. This business case is supported by North Cumbria University Hospitals NHS Trust Board and NHS Cumbria Board. Approval was obtained from NHS North in March West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 8

9 Policy Context 11. The redevelopment of West Cumberland Hospital takes place against the backdrop of significant changes within the NHS over the coming years. Liberating The NHS: Equity And Excellence 12. The Government s White Paper on NHS reform, Liberating the NHS: Equity and Excellence was published in July 2010, with the aim of putting ownership and decision-making in the hands of healthcare professionals and patients. The reforms will focus on: putting patients and the public first improvement in quality and healthcare outcomes autonomy, accountability and democratic legitimacy cutting bureaucracy and improving efficiency 13. The key reforms described in the White Paper can be summarised as follows: Information to support choice and accountability 14. In future, there will be increasing amounts of information, comparable between similar providers, on: Safety: for example, about levels of healthcare-associated infections, adverse events and avoidable deaths, broken down by providers and clinical teams Effectiveness: for example, mortality rates (this could include mortality from heart disease, and one year and five year cancer survival), emergency re-admission rates; and patientreported outcome measures Experience: including information on average and maximum waiting times; opening hours and clinic times; cancelled operations; and diverse measures of patient experience, based on feedback from patients, families and carers Extending choice 15. The White Paper seeks to extend the ability of patients to choose the services they want. Patients will have choice of any provider, choice of consultant-led team, choice of GP practice and choice of treatment. This will include: Increase the current offer of choice of any provider significantly Create a presumption that all patients will have choice and control over their care and treatment, and choice of any willing provider wherever relevant Introduce choice of named consultant-led team for elective care by April 2011 where clinically appropriate. Extend maternity choice and help make safe, informed choices throughout pregnancy and in childbirth a reality Begin to introduce choice for diagnostic testing, and choice post-diagnosis Develop a coherent 24/7 urgent care service in every area of England that makes sense to patients when they have to make choices about their care. This will incorporate GP out-of-hours services and provide urgent medical care for people registered with a GP elsewhere. 16. A new NHS Outcomes Framework will provide direction for the NHS. It will include a focused set of national outcome goals against which the NHS Commissioning Board will be held to account. In turn, the NHS Outcomes Framework will be translated into a commissioning outcomes framework for GP consortia, to create powerful incentives for effective commissioning. The NHS Outcomes Framework will span the three domains of quality: the effectiveness of the treatment and care provided to patients the safety of the treatment and care provided to patients the broader experience patients have of the treatment and care they receive. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 9

10 17. The NHS will also accelerate the development of best-practice tariffs, introducing an increasing number each year, so that providers are paid according to the costs of excellent care, rather than average price. GP commissioning consortia 18. In order to shift decision-making as close as possible to individual patients, power and responsibility for commissioning services will be devolved to local consortia of GP practices. 19. Consortia of GP practices, working with other health and care professionals, and in partnership with local communities and local authorities, will commission the great majority of NHS services for their patients. They will not be directly responsible for commissioning services that GPs themselves provide, or the other family health services of dentistry, community pharmacy and primary ophthalmic services. These will be the responsibility of the NHS Commissioning Board, as will national and regional specialised services. 20. Commissioning by GP consortia will mean that the redesign of patient pathways and local services is clinically-led and based on dialogue and partnership with hospital clinicians. It will bring together responsibility for clinical decisions and for the financial consequences of these decisions. This will reinforce the role that GPs already play in committing NHS resources through their daily clinical decisions. 21. Consortia will hold contracts with providers and the NHS Commissioning Board will hold consortia to account for stewardship of NHS resources and for the outcomes they achieve. In turn, each consortium will hold its constituent practices to account. 22. GP consortia will have a duty of public and patient involvement, and will need to engage patients and the public in their neighbourhoods in the commissioning process. Through its local infrastructure, HealthWatch will provide evidence about local communities and their needs and aspirations. 23. Cumbria is at the forefront of many of the changes set out in the White Paper, in particular in the development of GP commissioning, which is well advanced locally with the formation of six locality groups within Cumbria. 24. The reforms proposed in the White Paper will take place against the backdrop of a very challenging financial position. Whilst NHS spending will increase in real terms in each year of the current Parliament, NHS organisations will need to achieve significant efficiency gains to meet the costs of demographic and technological changes, and to improve quality and outcomes. 25. There are several other national regional and local policies and plans resulting in the need for this development as illustrated in the figure below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 10

11 Figure E 2. National, Regional and Local drivers QIPP 26. The NHS has been through a decade of unprecedented growth in resources and capacity, but now faces an entirely new financial environment for all public services. The NHS must move from being geared for growth to being entirely focused on sustaining quality, improving services and meeting rising demand, within a shrinking resource envelope. 27. Despite the real-terms growth promised for the NHS in each of the next three years, demands on the NHS will inevitably outstrip the resources available. The growing gap between the demand for services and the resources available to provide them means the NHS will need to become much more efficient and productive to cope. 28. In addition, the NHS also faces rising costs and will need more cash to do the same amount of work each year because the costs of providing services, including staffing, will rise. Despite the commitment to real terms growth in funding, rising demand will mean that potential NHS spending will outgrow income, with the consequence that a gap will emerge and widen over years to come. 29. The NHS nationally has therefore been set a challenge of saving 20 billion over the next four years with the NHS in the North West region required to save 2.8 billion, and the NHS in Cumbria 165 million. 30. In order to meet this need for transformational change, the NHS launched the Quality, Innovation, Productivity and Prevention (QIPP) programme, as set out in the Department of West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 11

12 Health document Inspiring Change in the NHS. The key principles underlying the QIPP programme are: Effective engagement with clinicians and other key stakeholders through the adoption of the philosophy of co-production An ability to challenge established thinking and current practice The application of knowledge of national and international best practice A drive to share knowledge and learning Clear and honest communication at all stages of change Focus on benefits measurement and realisation Application of robust programme management and assurance arrangements 31. The implementation of QIPP has become a priority for the Trust and establishes the context for the future development and planning of services. The challenge for the Trust is to deliver high quality care as prices fall and inpatient activity is reduced in line with Closer to Home and QIPP implementation in the health community. The redevelopment of West Cumberland Hospital will enable wholesale re-engineering of the models of care and business model in line with the QIPP agenda to deliver long term gains in productivity and quality, as well as providing a hospital that is fit to meet future needs. 32. The Trust has put in place a robust internal QIPP programme as part of the Trust Turnaround programme, managed by a dedicated project office, which is developing and implementing the QIPP programme that includes: Theatre Efficiency Outpatient Follow-up Appointments Length of Stay Nursing Reconfiguration Estates Efficiency and Productivity IM&T Procurement Financial Controls & Non-Pay Pathology Reconfiguration Pharmacy Reconfiguration Radiology Midwifery Review Workforce Organisation Structure and Sickness SBS Finance and procurement Consultant Job Planning, Locums, additional sessions AHP Review Hospital at Night Emergency Care Pathway Closer to Home 33. Locally, NHS Cumbria has consulted widely on its Closer to Home strategy which outlined how services would become more localised where appropriate and confirmed the implications for secondary care services including those provided from WCH. 34. A key plank of the Closer to Home strategy was the retention and redevelopment of Cumbria s community hospitals, to provide an increasing range of services outside acute hospitals and closer to where people live. NHS Cumbria s Community Ventures programme has established an NHS LIFT arrangement and is well advanced in its proposals for its first two developments, which are both within West Cumbria, at Cockermouth and Cleator Moor. Both these developments are expected to come into operation in late 2012 / early The New Hospital Project and Community Ventures teams have worked closely together, supported by NHS North West, to ensure that all the proposed investments in West Cumbria are consistent with the agreed Clinical Strategy and provide a coherent and joined-up approach making best use of the available resources. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 12

13 Britain s Energy Coast 36. In addition to national and local health policies, the redevelopment of WCH is essential to plans to revitalise the local economy through the Britain s Energy Coast Masterplan for West Cumbria. This highlights the need for good secondary care services as a pre-requisite for attracting and retaining the highly skilled workforce that is needed for expansion of the energy industry. The delivery of a new acute hospital within West Cumbria is considered essential to service both the needs of an ageing population and to make the area a more attractive place to live for all age groups. A new facility is required to provide existing and potential residents with the levels of healthcare equal to that received by other UK residents and to reflect the contribution that West Cumbria s community makes to the UK s Nuclear Waste policy. Britain s Energy Coast A Masterplan for West Cumbria 37. The FBC describes in detail how the proposed re-development is supportive of all these national, regional and local plans. Estates Context 38. The West Cumberland Hospital site is predominantly of a single age, built between 1959 and 1964, with a number of smaller extensions and reconfigurations carried out piecemeal over the ensuing years. 39. A detailed six-facet survey of the site carried out on behalf of the Trust identified the following state of the buildings: 52% requires major repair or at serious risk of major breakdown due to poor physical condition 52% below acceptable functional suitability standards 34% overcrowded 18% not compliant with all statutory requirements West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 13

14 Figure E 1-3. Six-facet survey findings West Cumberland Hospital Physical Condition B - the element is sound, operationally safe and exhibits only minor deterioration. D 20% DX 4% A 6% C - the element is operational but major repair or replacement will be needed soon, that is, within 3 years for building and one year for an engineering element. C. 28% B 42% D - the element runs a serious risk of imminent breakdown. X a rating added to C or D to indicate that it is impossible to improve without replacement West Cumberland Hospital Functional Suitabilty A - the element is as new and can be expected to perform adequately to its full normal life. B - the element is sound, operationally safe and exhibits only minor deterioration. 16% 4% 4% C - the element is operational but major repair or replacement will be needed soon, that is, within 3 years for building and one year for an engineering element. 32% 44% D - the element runs a serious risk of imminent breakdown. West Cumberland Hospital Space Utilisation X a rating added to C or D to indicate that it is impossible to improve without replacement 1 - Empty. O% 34% 0% 6% 2 - Underused. 6% 3 - Adequate. 60% 60% 4 - Overcrowded. 34% West Cumberland Hospital Compliance with Standards 2% 0% 16% A - A new build which complies with all statutory requirements and Firecode Guidance B - Existing buildings which comply with Firecode Guidance and statutory requirements 82% C - Buildings which fall short of A and B D - Areas dangerously below A and B. 40. These deficiencies prevent the Trust from implementing its preferred model of care and have implications for the sustainability of clinical services at the hospital. In particular it is not an environment attractive to staff and there is evidence that recruitment of some staff groups is hampered by this. 41. In addition it is likely that patient choice will lead the more mobile residents to seek services elsewhere, affecting the financial and clinical viability of the hospital. Ultimately this could lead to the withdrawal of some services, affecting access for less mobile residents of West Cumbria and leading to a worsening of health inequalities. Geographic Context 42. Cumbria is the second largest county in England, accounting for 42% of the land mass of the North West region, yet is home to only 7% of the North West s population. The geographic scale of Cumbria is illustrated in the figure below: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 14

15 Scale of Cumbria 43. West Cumbria specifically occupies 14% of the region s land mass, but has only 2% of the region s population. Compared to a national average of 19%, over 60% of the population of Copeland and Allerdale districts live in rural areas. 44. A significant problem for the people of West Cumbria is the travel time to other parts of the region and requires that for the policy goals to be achieved, secondary care services must be available within the locality. 45. Travelling to Carlisle for acute care (which can take between 1:15 hours and 1:45 hours depending on how far down the West coast the patient lives, and traffic on the minor roads linking the sites) does not support the objectives of Closer to Home and would severely impact on the accessibility of care to the local population. 46. However, the current hospital site does not meet modern standards of quality and productivity. The building itself is unsustainable in the long term and does not support the model of care required to achieve efficiency and productivity in providing appropriate care to the population. Demographic Context 47. Health inequality is a national and regional priority, and providing local services through Closer to Home will result in gains in reducing these inequalities. 48. However, good health does not result from the provision of good health services in isolation, and health outcomes are largely related to economic outcomes, work status and deprivation. There are number of localities in West Cumbria that are affected by high levels of deprivation, and the economic outlook for the area is a challenging one. Unemployment will rise significantly if West Cumbria cannot attract and secure investment in the nuclear and energy industries, as well as in education and technology development. 49. Population projections for West Cumbria predict that the population will grow by 9.1% in Allerdale and 11.5% in Copeland by In line with projections for Cumbria as a whole, the main area of growth is predicted in the over 65 year olds (29.3% in Allerdale and 25.5% in Copeland), resulting in an increasingly ageing population with resulting higher dependence on healthcare services. Clinical Models Context 50. Substantial work has been undertaken across the local health economy to develop a clinicallyled integrated clinical strategy which is sustainable and financially viable. The model has been developed to support this business case for the redevelopment of West Cumberland Hospital demonstrating how the hospital plays a vital role in the sustainability of the local health economy. The key principle underpinning the Clinical Strategy is care provided right person, right skills, right time, right place. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 15

16 51. The clinical model is also aligned to capital investment in secondary care and local community developments in the health economy. It shares common assumptions in terms of the future locality commissioning intentions and the need to ensure that across the whole healthcare system we are efficient in how we deliver care and implement new ways of working. 52. The models described in the Clinical Strategy have been developed by senior clinicians and are based on an integrated approach to care pathways across primary, community and secondary care. The secondary care element of these pathways is also part of a north Cumbria integrated care network based on the one hospital two sites concept. 53. In addition to the integrated models of care the development of local services is aimed at repatriating out of area patient flows to hospitals in the north east and south Lancashire which place a major burden on families and patient transport systems. Local access will be improved for a range of services by re-utilising secondary care capacity to accommodate these patients. Objectives 54. The objectives of the WCH redevelopment are a consequence of the context faced by the hospital: To provide all the services mapped out in NHS Cumbria s Closer to Home strategy which received wide-spread public support during the primary care trust s consultation in 2007/08. This was to deliver a new healthcare facility in West Cumbria, together with significant investment into primary care services and community hospitals closer to people s homes. To provide a sustainable healthcare facility designed to modernise, improve and deliver care to all patients in West Cumbria. To move this development forward quickly as public capital is available now. To achieve a key milestone within Britain s Energy Coast Masterplan, including developing plans for a Health Campus. To enable the provision of safe, high quality, sustainable acute health services for the population of West Cumbria (in line with the integrated clinical strategy and service profile set out in Closer to Home). To improve the hospital facilities for patients and visitors (with particular emphasis on patient safety, privacy, dignity, flexibility and a therapeutic environment). To enable an increase in the efficiency, productivity and effectiveness of service delivery in line with the national, regional and QIPP priorities. To facilitate greater integration of primary/community care and acute hospital services as described in the Integrated Clinical Strategy To provide facilities that will contribute to the recruitment, retention, education and development of staff in West Cumbria. To provide the opportunity for co-locating related services and improving clinical synergies on the West Cumberland Hospital site, where possible. Stakeholder Involvement 55. The Trust has established a number of forums and websites to provide information and facilitate engagement on the proposed developments and to receive questions and feedback from patients, the public and local stakeholders. These forums and communication channels include: The West Cumberland Hospital Redevelopment newsletter, distributed to all stakeholders. Eight issues have been produced and circulated to date. A dedicated website launched in November 2009 and linked to the Trust s own website: providing regularly updated information on the project and offering visitors with the opportunity to post comments and questions about the hospital redevelopment. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 16

17 GP Brief monthly updates A monthly Project Board with membership from the Trust s key NHS partners including NHS North West, NHS Cumbria, Cumbria Partnership NHS Foundation Trust, a lead GP commissioner and the Community Ventures Project Director. Individual meetings with larger patient groups, Patient Panels and Cumbria LINk Utilising existing or planned events such as Neighbourhood Forums and Cumbria LINk meetings Regular meetings held by the Executive Team with NHS Cumbria and the Overview and Scrutiny Committee of Cumbria County Council, with a programme of meetings planned to take place throughout the duration of the project Chairman and Chief Executive individual meetings with the local MPs A front-of-hospital display providing information for patients, visitors and staff Production of a DVD once the project is underway Media updates through Chief Executive Media Briefings Regular press releases as the project progresses and at key points of the redevelopment Local fund-raising campaign to engender a sense of ownership of the redevelopment 56. The Trust has also established a project Stakeholder Group with representation from NHS Cumbria and the mental health trust, together with the university, local authorities and patient and public representatives. The group, established in May 2009, meets every two months to provide a strategic overview of the project with particular responsibility for: Ensuring that the project remains consistent with the expectations set out in Closer to Home. Ensuring patients, the public and local stakeholders are kept fully informed of progress. Ensuring that opportunities for sharing of sites, facilities and resources for mutual benefit to constituent organisations and the local community are identified and acted upon (particularly in relation to the health campus concept). Providing a formal means for the local community to engage with the project and ensuring that communication with patients and the public regarding the project is both timely and two-way. 57. A number of forums have been established to allow staff and internal stakeholders to engage in the redevelopment project. These include: A staff monthly magazine issued after each Trust Board meeting with project updates WCH newsletter issued bi-monthly and containing information about the project, updates, key moments, surveys, FAQ s and contact points A regular bulletin to communicate key and urgent information quickly to all staff at WCH Chief Executive question times monthly meeting with individual departments across both hospital sites Dedicated staff engagement sessions at WCH, open to all staff and led by members of the Project Board 58. Sessions that have been held to brief staff have been well attended. Some of the issues raised at the sessions have included car parking, bed numbers and the location of individual departments. 59. User groups, involving a large number of clinical and non-clinical staff from the hospital and primary care have worked closely with architects in the planning and design of the new hospital. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 17

18 60. The majority of comments from staff, patients and members of the public are very positive. Concerns and queries are actively addressed. Demand and Capacity 61. The planning horizon for the demand and capacity projections covers the first five years of operation of the redeveloped hospital, The methodology adopted to forecast future demand and capacity requirements is as follows: Start with baseline activity Apply predicted demographics changes to the baseline activity; Apply service growth in specific areas, but only where there is evidence to support an increase in intervention rates over and above demographic change; Adjust for key activity changes associated with commissioning intentions (Closer to Home); Add or remove activity to account for anticipated changes to the Trust s market share (including repatriation) for certain services; Add or remove activity according to known or planned service transfers; Apply performance and efficiency assumptions to the resultant activity estimates; Apply throughput and utilisation assumptions to the activity estimates in order to derive the capacity required to accommodate future activity volumes. 62. The aspects of admitted patient and outpatient care that are subject to improved performance and efficiency are day case rates, inpatient lengths of stay, outpatient did not attend (DNA) rates and outpatient new to review ratios. Performance in all of these areas has been benchmarked by comparing current levels at the Trust with performance at other providers. A peer group of all non-specialist acute providers in England (149 Trusts in total) has been used in the benchmarking analysis. 63. The demand analysis identified an overall reduction in A&E attendances of 9.7%. This is mainly due to an increase due to demographic changes offset by the implications of Closer to Home. Figure E 1-4. Demand 2014/15: A&E attendance type Attendance type 2008/09 Population projections Did not attend rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 All 28, , , The demand analysis has identified an overall reduction in outpatient attendances of 2.5%. This is mainly due to demographic changes and increased market share offset by the implications of Closer to Home. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 18

19 Figure E 1-5. Demand 2014/15: Outpatient appointment type Appointment type 2008/09 Population projections Did not attend rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 First 20,782 +1, ,467 Follow-up 48,737 +3, , ,288 All 69,519 +4, , , , The demand analysis has identified an overall increase in admissions of 3.4%. This is mainly due to demographic changes and increased market share offset by the implications of Closer to Home. Figure E 1-6. Demand 2014/15: admission type Admission type 2008/09 Population projections Daycase rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 Daycase 10, ,050 Elective inpatient Non-elective inpatient 2, ,438 16,538 +1, ,935 All 29,435 +2, , ,423 Validation of Activity Modelling against 2010/11 Actuals 66. The modelling set out in the tables above has been validated against the 2009/10 and 2010/11 actual out-turn. With the exception of A&E attendances, the actual performance is consistent with the planning assumptions. 67. The planned bed requirements are in line with commitments made in the Closer to Home consultation. The reduction from current numbers is achieved by moving some activity to day cases and reducing length of stay to the 75th percentile, which is facilitated by new integrated models of care and the innovative design of the re-development. Model of Care 68. The redevelopment of the hospital facilitates a new model of healthcare that supports the Closer to Home strategy and maximises critical mass at the hospital. The Closer to Home strategy explicitly recognises the need for high quality and sustainable acute services and this has been further underpinned by the recent development of an integrated Clinical Strategy West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 19

20 across the local health economy. Whilst reconfiguration of services to the new integrated model of care is currently under way, it cannot be fully realised without redevelopment of the hospital site. 69. The clinical strategy and models of care have been built on key QIPP principles particularly in relation to prevention or alternatives to admission and delivery of efficient and effective care pathways which provide right person, right skills, right time, right place. 70. The West Cumberland Hospital is a key vehicle for changing the way clinical services are delivered and this will be used to exploit the opportunity to attract patients to the West Cumberland Hospital for designated elective care procedures. 71. Integrated teams of primary and secondary care specialists will work together in the hospital and secondary care specialists will work across north Cumbria. There will be an emphasis on rapid senior assessment through an integrated emergency floor staffed by a range of clinicians to ensure rapid assessment and care planning for the most appropriate setting. This model will be for both children and adults and will result in a well managed and coordinated care pathway which spans across all aspects of the patient s care. 72. The new integrated model of care will result in a change of focus from inpatient care to patients being more proactively managed in the community, using assessment and treatment through new front of house services (Integrated Emergency Floor) and ambulatory care services to manage the demand for admission to hospital inpatient services where possible, as demonstrated below: Figure E 1-7. Model of care 73. Traditionally acute and primary care services have worked independently, with teams colliding at the interface, integrated and collaborative primary and secondary care teams will deliver the new model of care, with flexibility in staffing and consistent knowledge sharing. 74. The care delivery model set out in the Clinical Strategy consists of the following key streams: Ambulatory care Emergency floor West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 20

21 Non-elective care Critical care Elective care Elderly care Acute medicine Family services 75. Whilst significant work has been undertaken by senior clinicians to develop this new integrated model of care, redevelopment of the hospital site will facilitate a new model for healthcare to be fully realised in line with national policy direction. 76. It is essential that the future delivery of healthcare in west Cumbria takes into account the changing structures in healthcare and challenges in ensuring services are high quality, sustainable and financially viable. For a smaller acute service serving a largely rural area this means developing and maximising the contribution of the individual components of local services and professional groups in order to ensure services are safe and responsive. 77. Within the redeveloped hospital, a hot floor will provide urgent and ambulatory care to patients, minimising the number of admissions to the cold floor through appropriate assessment, treatment, discharge and step down care facilities. 78. On the cold floor, flexibility in bed numbers between surgery and medicine will enable beds to be effectively managed and generic staff to achieve efficiencies in workforce. Discharge is facilitated by primary and secondary care teams, and a primary care-managed step-down unit on site. 79. The introduction of cabins, co-located with theatres, will provide further staffing and bed number efficiencies for day case surgery and prevent bed blocking on the cold floor. 80. Family services will focus on assessment and discharge, enabled by strong links to community services. 81. Productivity and efficiency gains will be enabled throughout the hospital through significantly improved clinical adjacencies and workforce reconfiguration, enabling the move towards upper quartile performance. Workforce 82. NCUHT is one of the largest local employers in North Cumbria and the redevelopment will significantly assist in safeguarding the economic stability of the area, and the on-going employment at the Hospital site. 83. The West Cumberland Hospital workforce will make a unique and essential contribution to the redevelopment of the hospital, particularly in delivering the benefits of the new model of care. 84. Developments in primary and community services as part of the Closer to Home agenda represent a significant and transformational change to healthcare in North Cumbria. The way local services will be delivered needs to be reflected in future workforce strategies and staff profiles. 85. The model of care for WCH has been redesigned to improve quality, productivity and efficiency of patient care and to align with the Closer to Home agenda. It is essential the right staff mix is available to support the delivery of the new model and realise the planned benefits. 86. The new model of care will therefore necessitate changes in the staff profile. Currently, nursing and midwifery staff account for 35% of the workforce configuration and are the biggest staff group. 87. In the new model, with delivery of care segmented by length of stay rather than clinical condition in order to reduce artificial variation and maximise efficiency, there will be greater need for multi-skilled nursing staff, with lesser reliance on nursing specialists as is in the current model. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 21

22 88. To realise the model and associated workforce efficiency role redesign will be imperative. This will be supported in a large part by natural wastage from retirement and turnover. 89. As part of the Trust s Turnaround Programme, a detailed Workforce Plan has been developed and the hospital redevelopment is entirely consistent with that plan. This plan complements the Turnaround plans and provides the process to deliver and monitor workforce reconfiguration as the Trust strives to deliver services within an affordable financial envelope. The structure of the plan follows the NHS North West Workforce Planning template covering: Health Delivery Recruitment Retention Mutually Agreed Resignation Scheme Redundancy Re-Deployment Vacancies Turnover Sickness Absence and Quality Appraisal and PDP development Quality, Innovation, Productivity and Prevention (QIPP) Assumptions made in assessing affordability Bank and Agency cost reductions Sickness Apprenticeships Pay Terms and condition reviews Reduction in overtime usage Review of Out of Hours working AfC Benefits Realisation Workforce Modernisation, New Roles, Enhanced Roles Consultant and GP Development (New models of working emerging from Clinical Leaders forum where Acute Consultants work in Community to up-skill GP s/practitioners to reduce hospital admissions) Competency Based Management 10 high impact HR changes Energise for excellence New Roles required Non-Medical consultants Apprenticeships Volunteers/non-paid roles in the future Assistant Practitioners Night Outsourcing Implementing KSF 90. The Trust recognises that partnership working with staff representatives and other key stakeholders is essential if the workforce changes necessary to deliver the new model of care are to be realised in order to continuously improve and maintain the quality of care provided to patients. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 22

23 Economic Case 91. The economics of alternative options for delivering the scheme objectives were appraised in the OBC. These have been reviewed as part of the FBC process. The review confirmed that the proposed approach remains the best and most viable option available. 92. The re-development delivers the lowest net present cost of 119.2m over 60 years and represents an overall 60.9m lower net present cost against a Do minimum. This reduced cost is achieved from: 25.0m - lower capital lifecycle costs the existing buildings will require major upgrades over the next 20 years and capital requirements increase as the buildings get older. 28.4m - lower building running costs achieved from a reduction in space 9.9m - Efficiency savings achieved by better energy efficiencies and reduced floor space with improved clinical adjacencies. (2.4m) - Expected disruption costs as facilities are re-configured. 60.9m - TOTAL NPC IMPROVEMENT COMPARED TO OPTION 1 DO MINIMAL Financial Case 93. The Trust has undertaken a thorough financial review of the financial (capital and revenue) implications of the redevelopment. This includes a full assessment of the long-term financial sustainability of the West Cumberland Hospital excluding any supporting payments, and for activity in line with the latest Commissioning intentions based upon the 2011/12 out-turn. 94. The redevelopment of the hospital is essential for the long term sustainability as maintenance costs are increasing rapidly owing to existing backlog issues and the ageing estate. 95. The income is agreed with NHS Cumbria and reflects reductions in activity due to Closer to Home, the movement of activity to Carlisle for complex surgery and angiography, and the planned reduction in outpatient follow-up appointments. It also assumes tariff reduction until 2018/ The costs include the impact of the Turnaround programme plus 3.3 million of efficiencies delivered from the redevelopment and includes inflationary pressures. 97. The redevelopment project is therefore fundamental to the sustainability of the hospital and is also supported by the Economic Case that illustrates a 60.9m Net Present Cost benefit over 60 years. 98. The following income and expenditure trends show the West Cumberland Hospital both including and excluding the re-development. The plan including the re-development clearly shows a positive contribution to the Trust and Health Economy long term financial viability as shown in the following table. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 23

24 WCH Including the Re-Development 99. The Income and expenditure table below shows WCH with the re-development that shows the hospital making a positive contribution by 2017/18. WCH 2010/ / / / / / / / / /19 m m m m m m m m m m INCOME Baseline Subsequent movement in 2011/ Tariff deflator Impact of demographic change Changes in casemix/complexity New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN Commissioning intentions TOTAL INCOME EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies WCH project capital charges Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost Cost impact of New Services CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE NET CONTRIBUTION/LOSS Re-Development One-Off Taper Relief Transitional costs NET CONTRIBUTION/LOSS (Including Taper Relief) West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 24

25 WCH Excluding the Re-Development 100. The income and expenditure table below shows WCH excluding the redevelopment. This shows that WCH cannot make a positive contribution due to increasing maintenance costs caused by the age of the buildings. WCH 2010/ / / / / / / / / /17 m m m m m m m m m m INCOME Baseline Subsequent movement in 2011/ Tariff deflator Impact of demographic change Changes in casemix/complexity New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN Commissioning intentions TOTAL INCOME EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies Lifecycle & Maintenance Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost Cost impact of New Services CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE NET CONTRIBUTION/LOSS Re-Development One-Off Taper Relief NET CONTRIBUTION/LOSS (Including Taper Relief) West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 25

26 Capital 101. Capital costs of the redevelopment are 91.6 million. This represents a 90 million scheme adjusted for the change in the rate of VAT since OBC approval from 17.5% to 20%. A breakdown of the costs are shown in the figure below. Figure E 1-8. Capital Cost Option 4 FBC 000 Works cost 62,746 Provisional location adjustment - Sub-total 62,746 Fees 7,841 Non-works costs 2,500 Equipment costs 3,000 Planning contingencies 4,202 Inflation Adjustment to MIPS 469 (950) Optimism Bias 0 Total Costs (excl VAT) 79,333 VAT based on current rate 12,238 Project FBC Total 91, Sources of capital are expected as follows: Figure E 1-9. Sources of Capital k 2009/ / / / / / /16 TOTAL Cash flow requirement 7,300 1,899 10,334 32,966 26,949 9,406 2,718 91,571 Funded by: DH 1,000 5,532 31,216 24,199 6,928 2,718 71,593 SHA Capital 6,800 3,200 10,000 Trust 500 1,000 1,500 1,750 2,750 2,478 9,978 Total Funding 7,300 5,200 7,032 32,966 26,949 9,406 2,718 91,571 Difference 0 3,301-3, The figure shows that 71.6 million is sought from the Department of Health and 10 million each from the SHA and Trust internally generated resources. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 26

27 104. It is anticipated that the scheme will be funded by PDC and internally generated funds. No loans are anticipated. Revenue 105. The redevelopment will result in higher capital charges for the Trust. This is because low residual value estate is being replaced by modern and higher valued buildings and equipment. However, as the table below illustrates the new models of care and design of the new and refurbished areas facilitate cost efficiencies that more than offset the additional capital charges. Figure E Marginal Revenue Cost Implications SUMMARY k 2010/ / / / / / / / /19 Capital Charges Efficiencies Taper Relief Total Efficiency savings are released in nursing, critical care, estates, and administration costs. The total revenue savings have been adjusted to ensure no double counting with existing programmes already counted in the Trust s Turnaround plans An early benefit is achieved between 2010/11 and 2012/13 following the demolition of 2 blocks in March 2010 and the impairment of the remaining blocks to be demolished that will occur on FBC approval in line with accounting practices The net effect of the costs and savings requires transitional taper relief from 2013/14 to 2017/18. Thereafter the net savings outweigh the capital charges and taper relief is no longer required. Commercial Case 109. Having considered in detail the advantages and disadvantages of the available procurement routes, the OBC concluded that procurement objectives for the West Cumberland Hospital project were most likely to be met by adopting an NHS ProCure21 route. In line with a Department of Health requirement at OBC approval stage, the Trust has recently carried out a detailed review of its preferred procurement strategy and is currently awaiting DH approval to proceed through to construction stage using the NHS ProCure 21 route, subject to FBC approval Expressions of interest were received from seven NHS ProCure 21 partners. The result of a panel evaluation was to short list IHP and Laing O Rourke on the basis of their expressions of interest. Following further discussion the Evaluation Panel met on 14 th July 2009 and selected Laing O Rourke as the Trust s Principle Supply Chain Partner (PSCP.) 111. The Trust has entered into a standard NHS ProCure21 contract with Laing O Rourke. This is known as the New Engineering Contract (NEC), Option C (2nd Edition.) 112. A Not To Be Exceeded Price has been prepared by the PSCP for the construction works. It represents the maximum price that the Trust will pay for the works unless the scope of work is altered or an event occurs that would entitle to PSCP to compensation The NTBE is being verified by the Trust s cost advisors. The cost advisors will continue to monitor the PSCP s costs once the Phase 4 contract is signed and construction commenced. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 27

28 The Design 114. The redevelopment involves the demolition of certain existing buildings on a phased basis, with the replacement of key areas with new build blocks. Certain of the buildings are retained with refreshing of some of the existing elevations and some internal refurbishment Following OBC approval, the project underwent a redesign process resulting from a reduction in the available capital budget from 100 million to 90 million, and a revised requirement for the provision of inpatient mental health services The redesign has retained all the beneficial clinical adjacencies delivered under the previous scheme, within an overall gross internal area which has reduced by a further 7,800sqm a reduction of 16% from OBC stage and an overall reduction from the current site of almost 25% The revised design has also further reduced the proportion of retained estate within the scheme compared to new build accommodation, with significant on-going benefits in relation to operating costs and backlog maintenance The further reduction in backlog maintenance associated with additional demolitions is a major benefit to the Trust. As a result of the redevelopment, the West Cumberland Hospital site backlog will reduce by over 95%, from in excess of 200/sqm prior to the scheme to approximately 5/sqm on completion The proposals involve a mixture of new build and refurbishment, since some of the existing buildings do lend themselves to adaptation to modern use and are in sufficiently good condition to be economically refurbished and remodelled. Figure E Proposed new build and refurbishment 120. The new build areas involve the replacement of ward areas, plus the following departments: Emergency Floor Critical Care / Coronary Care Unit Acute Assessment Unit Ambulatory Care centre Surgery and Intervention Centre (including Operating Theatres, etc.) Diagnostics (including X-Ray etc.) Women and Children s Services Pathology Facilities Mortuary Medical Equipment Department Pharmacy FM and Catering facilities. Plant Rooms and Boiler House 121. The construction will be phased, with a decanting process that will enable the hospital to remain functional throughout the reconstruction process. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 28

29 Figure E Phasing of construction 122. The design is based on the model of care and patient flow described in the Strategic Case and has the following key features and benefits: Clinical adjacencies substantially improved. For example: CCU/HDU/ICU are together in one unit instead of being separated as present A 30-bedded assessment unit adjacent to A&E to avoid unnecessary inpatient admissions Family Services, including Maternity, Delivery, Paediatrics and SCBU brought together in one area 24 hour assessment unit is adjacent to ICU and CCU There is an integrated emergency floor including GP out of hours Outpatients are located together instead of their current dispersal around the site Ambulatory care services are located together i.e. outpatients, diagnostics and medical investigations Theatres are located together instead of in multiple blocks as current Flexible use of space to adjust capacity in line with changing requirements. For example: Single rooms can be opened and closed as needed Use of cabins for day surgery avoids use of inpatient beds 80% generic design generic rooms can be multi-purpose Cabins provided in the theatres can be used pre and post operatively Privacy and dignity is enhanced by the number of single rooms provided in the development ensuring that the requirements of mixed sex accommodation are met Close to 100% single en-suite inpatient rooms in the new accommodation improves infection prevention and management Navigation around the site is considerably enhanced for all users: Entrances: more than 20 reduced to 5 The main entrance visible immediately upon entering the site and has convenient car parking in front Single entrance for facilities management takes traffic away from patients and staff Patient parking on the same level as the entrance (currently below/different levels) Reduced travel distances between departments The footprint of site is reduced, thereby reducing maintenance and support costs West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 29

30 Building standards are brought up to meet all HBNs/HTMs for new builds Patient views optimised The design is open, light, welcoming unlike now. Natural light and ventilation are available throughout the redeveloped areas A multi faith room and haven is provided Layouts are standardised throughout the development which is better for staff familiarisation leading to efficiencies Bus and taxi routes are well planned throughout the site 123. Further details of the new design are contained in the Design and Access Statement and plans and elevations provided in the supporting Estates Annex The Trust has undertaken an AEDET evaluation of the design for the redevelopment of WCH. The outcome of the evaluation is summarised below with further details of the weighting and scoring provided in the Estates Annex. Figure E AEDET evaluation 125. The figure shows that the design scores very well in the AEDET evaluation. Only the Performance criteria scored below 75% of the maximum (4.5/6.0), due to the level of information available at this stage of the design. In fact, 6 of the 10 criteria scored 5.0 out of 6.0 or higher. The Trust is therefore confident it has secured a high quality design for the scheme The new West Cumberland Hospital will be one of the single biggest investments in West Cumbria, and it should therefore be a building of civic importance which acts as a clear symbol of well-designed healthcare for the area. A Design Review Panel was therefore undertaken for the West Cumberland Hospital project. The purpose of the review was to look at design proposals for the new development The Trust has taken the Design Review recommendations on board and is able to confirm that they can be met within the proposed design and available capital budget. Timetable 128. A detailed construction timetable and commissioning plan are detailed in the Estates Annex This shows main construction starting in July 2012, handover of the new build in December 2014 and remaining demolitions complete by April Benefits Realisation 130. The Trust has in place a plan to ensure that the expected benefits of undertaking the project are realised and the Benefits Realisation Plan (BRP) is a key part in assessing the success of the project. The full BRP is included at Appendix C of this FBC and sets out: The benefit criteria agreed for the project The expected business benefits associated with each criterion How achievement of each benefit will be measured West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 30

31 The data sources by which achievement will be measured At what point in the project the measurement will take place The individual(s) who will be responsible for the benefit 131. It is intended that benefits realisation will be measured at two key points six months post opening and again two years post opening to measure longer-term benefit realisation. These would be carried out in conjunction with Stages 3 and 4 of Post-Project Evaluation. Post Project Evaluation (PPE) 132. Capital projects in the NHS are required by the Department of Health, HM Treasury and the National Audit Office to evaluate and learn from their projects Evaluation is the process of assessing the impact of a project while it is in operation, or after it has come to an end. It is an essential aid to improving project performance, achieving value for money from public resources, improving decision-making and learning lessons The outcome of the PPE process will be an evaluation report The evaluation reports at each stage will as far as possible address the following issues: Were the project objectives achieved? Was the project completed on time, within budget, and according to specification? Are users, patients and other stakeholders satisfied with the project results? Were the business case forecasts (success criteria) achieved? Overall success of the project taking into account all the success criteria and performance indicators, was the project a success? Organisation and implementation of project did the Trust and wider team adopt the right processes? In retrospect, could the Trust and wider team have organised and implemented the project better? What lessons were learned about the way the project was developed and implemented? What went well? What did not proceed according to plan? Project team recommendations record lessons and insights for posterity. These may include, for example, changes in procurement practice, delivery, or the continuation, modification or replacement of the project. Conclusion 135. The redevelopment of West Cumberland Hospital as outlined in this FBC is essential to sustaining secondary health care services in West Cumbria, and delivery of the agreed Clinical Strategy and Turnaround Plan for North Cumbria It is consistent with national, regional and local health policy, and is a key component of economic regeneration in West Cumbria through the Britain s Energy Coast Masterplan. It has been estimated that the project will directly create in the region of 225 new jobs and 20 new apprenticeships during the four-year construction period, and lead to an additional 41 million being spent within the local economy over the same period The redevelopment incorporates the health economy-wide integrated Clinical Strategy with new models of care and ways of working that improve quality of patient experience and release efficiencies to fund the revenue consequences of the scheme and to make a contribution over and above this to the overall financial sustainability of the North Cumbrian health economy The plans have been subject to wide stakeholder consultation and are supported by local people, staff and commissioners. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 31

32 1 Introduction 1.1 Overview of Project North Cumbria University Hospitals NHS Trust (NCUHT) plan to create a modern, state of the art hospital facility, fit for the 21 st century, on the site of the existing West Cumberland Hospital in Whitehaven, Cumbria. This document constitutes the Full Business Case (FBC) for the 91.6 million redevelopment of this hospital The Trust Board examined all options for a new facility and has decided that the best option is to progress plans to redevelop the existing West Cumberland Hospital site and provide a new range of buildings that would create a modern and flexible health care facility that will benefit patient care now and in the future. 1.2 Project Objectives In reaching its decision to redevelop the existing West Cumberland Hospital site, the Trust Board took into account four objectives. These were: To provide all the services mapped out in NHS Cumbria s Closer to Home strategy which received wide-spread public support during the primary care trust s consultation in This was to deliver a new healthcare facility in West Cumbria together with significant investment into primary care services and community hospitals closer to people s homes. To provide a sustainable healthcare facility designed to modernise, improve and deliver care to all patients in West Cumbria. To move this development forward quickly as public capital is available now. To achieve a key milestone within the Energy Coast Masterplan including developing plans for a Health Campus The specific objectives of the redevelopment of West Cumberland Hospital are: To enable the provision of safe, high quality, sustainable and financially viable acute health services for the population of West Cumbria (in line with the service profile set out in Closer to Home ) To improve the hospital facilities for patients and visitors (with particular emphasis on patient safety, privacy, dignity, flexibility and a therapeutic environment). To enable an increase in the efficiency and effectiveness of service delivery. To facilitate greater integration of primary/community care and acute hospital services. To provide facilities that will contribute to the recruitment, retention, education and development of staff in West Cumbria. To provide the opportunity for co-locating related services on the West Cumberland Hospital site, where possible. Business Case Structure and Scope This FBC has been prepared according to the requirements of NHS North West using the Office of Government Commerce (OGC) Five Case Model, the recommended standard for the preparation of business cases. This model comprises the following key components: The Strategic Case: sets out the strategic context and the case for change, together with the supporting investment objectives for the scheme The Economic Case: demonstrates that the organisation has selected the choice for West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 32

33 investment which best meets the existing and future needs of the service and optimises VFM The Commercial Case: outlines the procurement strategy for the scheme The Financial Case: confirms funding arrangements and affordability and explains any impact on the balance sheet of the organisation The Management Case: demonstrates that the scheme is achievable and can be delivered successfully to cost, time and quality In addition to the above chapters, the structure of the Trust is outlined in the Trust Profile, and specific sections outline the WCH approach to: Design and Construction Facilities Management Equipment Information Management and Technology The Estates Annex, attached as a separate document, provides full detail of the current estate performance and the Trust s estate strategy, the scheme proposal, agreed plans and AEDET and BREEAM assessments This FBC follows approval of the Outline Business Case (OBC) and demonstrates that the most economically advantageous option is being procured and is affordable; and that the required outputs can be successfully achieved The FBC is structured as follows: Figure 1.1. Full Business Case document structure Executive Summary Introduction Trust Profile Strategic Case Economic Case Financial Case Commercial Case Management Case Design and Construction Facilities Management Equipment Information Management and Appendices Estates Annex West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 33

34 1.3 Approvals and Support Formal Approvals The OBC was approved at the NHS North West Board in November , subject to a number of caveats. These caveats were fully satisfied and the OBC was subsequently approved by both the Department of Health and HM Treasury in August The FBC was first approved by the Board of North Cumbria University Hospitals NHS Trust on 10 May Since then a significant amount of clinical planning and financial work has been done involving NHS Cumbria, The Clinical Commissioning Group, and the Trust. This work was focussed upon detailed planning of clinical models, the financial sustainability and affordability of clinical models, the Trust turnaround programme, and the National Clinical and Advisory Team (NCAT) reviews. This resulted in an addendum report that was then approved by the Trust and NHS Cumbria Boards in March This FBC combines the original FBC approved by the Trust in May 2011 and the Addendum report approved in March The FBC and Addendum report was approved by NHS North of England on 8 th March 2012 and a formal letter of approval was received on 15 th June This FBC also incorporates final comments received from the Department of Health in May This FBC was approved by H M Treasury and the Department of Health on 27 th July NHS North West Board Meeting 4 November 2009, North Cumbria University Hospitals NHS Trust developments at West Cumberland Hospital in Whitehaven outline business case approval West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 34

35 2 Trust Profile 2.1 Introduction This chapter sets the context for the redevelopment of West Cumberland Hospital (WCH) at Trust level: Within the population served by the Trust, deprivation contributes to widening health inequalities between the most and least affluent, with significant resources required to tackle and reverse this. The population is ageing at a rate faster than the rest of the UK, and pressure on local health services will increase dramatically over the next 20 years as a result. The development of a modern healthcare facility fit for the 21st century has therefore been defined as a key objective by the Trust, in order to meet the above issues. Redevelopment of the hospital at Whitehaven contributes to achieving the strategic aims of the Trust: growth, quality and safety, consolidation, and disinvestment. The current hospital at Whitehaven is no longer fit for purpose, as a result of minimal investment since the original build was completed in Access and the hospital environment are poor for patients, visitors and staff; and maintenance costs are ever increasing as the site continues to age. Redevelopment of West Cumberland Hospital will improve the care and working environment for patients and staff, contributing to better health and wellbeing, as well as helping the Trust achieve financial objectives in reducing backlog maintenance and creating a sustainable estate. 2.2 Health Needs in Cumbria Population Demographics Cumbria is the second largest county in England, accounting for 48% of the land mass in the North West, yet is home to only 7% of the North West s population. West Cumbria specifically occupies 14% of the regions land mass, with only 2.4% of the population. Compared to a national average of 19%, 52% of the Cumbrian population live in rural areas, with a considerable proportion of the population of West Cumbria living in rural areas. Seventy percent of Allerdale residents and 62% of Copeland residents live in rural areas 2. 2 Britain s energy coast/a Masterplan for West Cumbria executive summary, July 2007 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 35

36 Figure 2.1. Cumbria and North West England Cumbria Lancashire Greater Manchester Mersey Cheshire Cumbria has an older population than the rest of England, with approximately 16,000 more over 65s than would be expected based on UK averages. Population projections estimate that by 2031, Cumbria s over 65 population will have increased by 50%, and the over 85 population will have increased by nearly 150%. Figure 2.2. Predicted population growth of people aged 65 and over, Source: Cumbria Joint Strategic Needs Assessment Population projections for West Cumbria predict that the population will grow by 9.1% in Allerdale and 11.5% in Copeland by In line with projections for Cumbria as a whole, the main area of growth is predicted in the over 65 year olds (29.3% in Allerdale and 25.5% in Copeland), resulting in an increasingly ageing population. Population projections for West Cumbria are presented in Figure 2.3. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 36

37 Figure 2.3. Population in Allerdale and Copeland in 2008 and predicted population in 2031 Allerdale 2008 Male 2008 Female 2031 Male 2031 Female Population (Percent) Copeland 2008 Male 2008 Female 2031 Male 2031 Female Population (Percent) This much larger older population will create a greater demand for personal health and social care with fewer people of working age to deliver it. There will similarly be a qualitatively different level of need, with a likely 82% increase in dementia over the coming 20 years, and a 60% increase in hospital admissions for stroke Ethnic population levels in Cumbria are, at 0.7%, much lower than the average for West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 37

38 England and Wales of 8.7%. There is an even spread of minority groups across the county, with no particular concentration in any geographical area. Figure 2.4. Estimated resident population by ethnic group, ONS 2007 England North West Cumbria All Groups 51, % 6, % % White: British 42, % 6, % % White: Irish % % % White: Other White 1, % % % Mixed: White and Black Caribbean % % % Mixed: White and Black African % % % Mixed: White and Black African % % % Mixed: Other Mixed % % % Asian or Asian British: Indian 1, % % % Asian or Asian British: Pakistani % % % Asian or Asian British: Bangladeshi % % % Asian or Asian British: Other Asian % % % Black or Black British: Black Caribbean % /37% % Black or Black British: Black African % % % Black or Black British: Other Black % % % Chinese or Other Ethnic Group: Chinese % % % Chinese or Other Ethnic Group: Other % % % There has been significant immigration into Cumbria from non-uk nationals, primarily from Poland. This immigration is predominantly associated with the tourist sector in the Lake District, agriculture in rural areas and the sea food industry on the coast. Aside from this immigration, population forecasts do not show a significant increase over the next five years There are estimated to be around 3200 people in Allerdale and 2400 people in Copeland in Black and Minority Ethnic Groups, which includes Eastern Europeans, Gypsy Travellers, Irish people, Black African and Black Caribbean people, Asian people and people of mixed race. Approximately 2% of the population in Copeland and 1.6% of the population in Allerdale are non-white. This compares with 2.1% across Cumbria and 11.7% in England. The largest non-white group in both Copeland and Allerdale is Asian and Asian British people The small percentage of Black and Minority Ethnic (BME) communities in Cumbria makes it statistically difficult to assess whether there is an adverse impact on ethnic minorities from any particular aspects of ill health. Health of people in Cumbria Tackling health inequality is a key priority for Cumbria 3. Average life expectancy across 3 Cumbria Joint Strategic Needs Assessment 2009 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 38

39 Cumbria at birth is 78.4 years, slightly higher than the figure for England which is 78.3 years. Life expectancy in men is 76.9 years in Allerdale and 76.6 years in Copeland compared with 77.7 years in England. In women it is 80.7 years in both Copeland and Allerdale, compared with 81.8 years in England However, there are major differences in life expectancy between areas in Cumbria, and a 20 year gap has been identified between some communities. Comparing life expectancy between different wards in the districts of Allerdale and Copeland highlights differences in health within West Cumbria, with people in most affluent areas having an average life expectancy of around eight more years than those in the most disadvantaged areas. The below map highlight differences in mortality ratios across Cumbria. Figure 2.5. Standardised mortality ratios in Cumbria, all causes, under 75 (premature mortality) The main conditions causing the difference in life expectancy between West Cumbria and the rest of England are heart disease and strokes, cancer and lung diseases. Accidents and suicides also account for a considerable part of the difference, especially in men Early deaths (deaths in people under 75 years old) from heart disease and strokes are decreasing in both Allerdale and Copeland with only Copeland now being above the national average. However early deaths from heart disease and strokes are increasing in the most disadvantaged wards in both areas, widening the gap in health between the well off and less well off Although early death rates from cancer are decreasing in Allerdale, and to a lesser extent 4 Office of National Statistics 2008 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 39

40 in Copeland in comparison with national rates, they too are increasing in the least well off areas of both districts Similarly, adult obesity, binge drinking, deaths from smoking, hospital stays for alcohol related harm and teenage pregnancy are generally significantly worse than the rest of England 5. Determinants of Health in Cumbria Health is determined by a wide range of factors beyond the direct provision and accessibility of health services. These include income, education, and living environment as well as individual lifestyle factors. Figure 2.6 describes the interrelationships between these determinants of health. Figure 2.6. Dalhgren and Whitehead s Rainbow Model (1991) of the wider determinants of health The living and working conditions of the Cumbrian population reflects the inequalities in health and health outcomes There are 24 specific communities that are in the 10% most deprived in England and Wales, of which seven are in the worst 3%. Approximately 16% of the Cumbrian population lives in areas which are officially rated as among the most deprived in England. Figure 2.7 maps the Indices of Multiple Deprivation (IMD) scores for the different areas of Cumbria. This is a combined range of measures of deprivation related to health, unemployment, income, education, environment and crime. Areas with the highest levels of deprivation are centred on Carlisle in North Cumbria and Whitehaven and Workington in West Cumbria, as well as Barrow in the South. Copeland is ranked 78th most deprived ward out of 354 in England compared with Allerdale which is ranked 119th. 5 Inequalities and health in Cumbria 2009 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 40

41 Figure 2.7. Deprivation in Cumbria Copeland has significantly less 16 years olds achieving five or more GCSEs than the national average (38% compared to 48.3%) (10.9%) of the working population in Allerdale are estimated to have no qualifications and 4400 (10.3%) in Copeland West Cumbria also has lower than average levels of year olds still in education and lower than national average levels of working-aged people who get degrees (20% compared to 26%) As described above, people living in these poorer socio-economic areas suffer more chronic disease and disability, with more severe consequences than for those in more affluent areas. They will also suffer poorer outcomes from health and social care services It is estimated that 29.7% of adults smoke in Copeland and 27% in Allerdale compared with 24.1% in England. Smoking is highest in the most deprived areas of West Cumbria with the Local Area Agreement target being to reduce smoking prevalence from 34% to 26% in the fifth most deprived areas Binge drinking is significantly higher than the national average in both Copeland and Allerdale, as are hospital stays for alcohol-related harm. Copeland has the highest levels of binge drinking in Cumbria These facts combined denote that there needs to be a greater investment in services provided for the most disadvantaged groups, and NCUHT needs to develop and deliver accessible services to people on low incomes. North Cumbria University Hospitals NHS Trust The Trust came into being in April 2001 with the merging of Carlisle Hospitals NHS Trust West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 41

42 and West Cumbria Healthcare NHS Trust. It became a University Hospital Trust in August The main commissioner for acute services is currently NHS Cumbria, with commissioned services provided from two hospital bases located in Carlisle (The Cumberland Infirmary) and Whitehaven (West Cumberland Hospital). In addition, a wide range of outreach services are provided in community hospitals, as well as maternity services at Penrith Hospital. Acute and community services are mapped in Figure 2.8. Secondary care is provided by a whole time equivalent of 3,148 staff. Annual turnover is 216 million and the Trust treats around 68,000 inpatients and 210,000 outpatients each year from its two hospitals. Figure 2.8. Location of acute and community hospitals in Cumbria Acute Hospitals 1 West Cumberland Hospital 2 Cumberland Infirmary 3 West Morland Hospital 4 Furness General Hospital Workington Whitehaven Carlisle 9 Community Hospitals 1 Wigton 2 Victoria Cottage Hospital 3 Workington 4 Cockermouth 5 Mary Heweston Cottage Hospital 6 Penrith 7 Millom 8 Brampton 9 Ruth Lancaster James Penrith Keswick Kendal Barrow-in-Furness Figure 2.9, below, describes trends in activity levels. Figure 2.9. Trends in Activity 2007/ / /10 Change A&E Attendances 70,949 68,779 72,353 +3,574 Day Cases 25,856 26,729 28,543 +1,814 Elective Admissions 9,227 8,733 9, West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 42

43 Non-Elective Admissions 36,929 36,858 37, New Outpatients 82,291 85,670 85, Follow-Up Outpatients 179, , , Strategy and Objectives Source: NCUHT Annual Business Plan for 2009/ The Trust has five principal aims that have shaped the strategy and objectives. These are detailed in Figure 2.10 below. The principals define how services will be reshaped, modernised, developed and improved across the Trust. Figure NCUHT principal aims Our 5 key strategic aims have been revised to reflect the latest changes in policy and local market dynamics. The key challenges over the next 12 months. To develop and implement a successful merger of acquisition plan that enables the Trust to become part of an existing Foundation The proposed redevelopment of West Cumberland Hospital in Whitehaven specifically meets the fifth principal aim of the Trust, to develop a sustainable healthcare facility in West Cumbria that is fit for the 21 st century. This reflects the poor state of the current facilities and highlights the significance of reconfiguring the existing hospital services in West Cumbria to provide quality acute services that meet the needs of the local population To deliver these principal aims, the plan identified four key strategies. These strategies are detailed in Figure 2.11 below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 43

44 Figure Key Strategies: GROWTH - Targeted repatriation of out of area activity - Services with lower than national average referral rates - Services associated with future demographic changes - Sub-specialisation - Vertical integration - Improved access - Patient choice QUALITY AND SAFETY - Continuous improvement faster than competitors - Delivering core standards and reputation for excellence - Delivering quality improvement through Advancing Quality - Maximising CQUIN performance and Quality Account - Continuous improvement in preventing HCAIs - Improvement through Divisional governance - Developing a quality culture - Incorporating quality and safety in service design - New and innovative approached to evaluating patient experience CONSOLIDATION - Review core business - Achievement of hospital at night and EWTD requirements - Maximise bed utilisation (quality and efficiency) - Best value clinical and non-clinical support services - Increase productivity and efficiency - Estate rationalisation and cost reduction - Utilisation of technology DISINVESTMENT: CLOSER TO HOME - Delivering step up/step down service model - Developing Primary Care Assessment Services (PCAS) - Transferring Diabetic services to Cumbria Diabetes - Developing new service models for long term chronic diseases - Reduce capacity as a result of fewer emergency admissions - Reduce capacity as a result of higher day case rates and ADOS The redevelopment of West Cumberland Hospital cuts across all of these strategies: Growth: Quality and Safety: New facilities and reconfiguration of the site will result in improved access and enable patient choice to be maintained. Residents of West Cumbria will not have to travel out of the area to receive quality health care. Flexibility in the design of the hospital will enable the hospital to adapt to future demographic changes Quality and safety have been incorporated into the design of the new hospital, for example in the increased number of single rooms to reduce HCAIs. Design supports quality initiatives such as Advancing Quality through the application of a systematic approach to care. The redevelopment enables redesign of the model of care, improving clinical adjacencies and thereby resulting in greater efficiency, quality of care and patient safety, in line with the programmes objectives. Patient experience will be improved through receipt of care in a more pleasant and user friendly environment West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 44

45 Consolidation: A quality culture will result from the redevelopment. Investment in WCH reflects a commitment to the future of the hospital and will enable the Trust to attract the highest quality staff to the area. Redevelopment supports quality and efficiency in bed utilisation through reconfiguration of the model of care and the patient journey through the hospital, improving productivity on wards and in theatres, as well as reducing the number of emergency admissions Estate rationalisation and cost reduction achieved through the demolition of hospital buildings no longer fit for service, replacing them with modern, sustainable facilities, significantly reducing maintenance backlog Disinvestment: Closer to Home 2011/12 Annual Business Plan The major challenge for the Trust is associated with two-site working, with the acute hospitals at Whitehaven and Carlisle 42 miles apart (equating to a one hour and 15 minute journey on minor roads); and the provision of services to a mixture of relatively small and dispersed urban populations and small, remote, rural communities. There are wide ranging health needs and health inequalities within the population served, and the financial impact of sustaining the existing model of secondary care has contributed to significant historical deficit. The redevelopment will deliver a step up/step down model and services are being reconfigured as part of the Closer to Home strategy. Residents of West Cumbria will have accessible, local acute services supported by community and primary care to ensure people receive the right care in the right location NHS Cumbria has made significant investment plans of 90 million to realise the Closer to Home strategy and address health inequalities within the population, with close working and detailed planning of services between NCUHT and NHS Cumbria to prevent duplication of costs and maximise benefits to the health service users. The redevelopment of WCH was identified as key to the delivery of Closer to Home during the consultation phase of the strategy The Trust s 2011/12 Annual Plan reflects the key national drivers set out in the NHS Operating Framework and national QIPP agenda as well as local drivers including the integrated Clinical Strategy for North Cumbria and locality commissioning priorities. In addition the Trust has a robust internal Turnaround programme which includes a wide range of projects for efficiency and productivity as well as contributing to four health economy wide workstreams for planned care, unplanned care, diagnostics and repatriation All workstreams have a comprehensive detailed plan and are clinically led to enhance engagement at a clinical and operational level. Each plan has phased cost savings and a comprehensive dashboard for monitoring delivery and benefit realisation in terms of the impact on performance and productivity Many of the workstreams have a direct impact on the key assumptions in this Full Business Case for example, reducing length of inpatient stay, theatre efficiency, outpatient services, workforce redesign and support service reconfigurations In addition to the workstreams described above the Trust will implement key aspects of the integrated clinical strategy across all Divisions focusing initially on the Integrated West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 45

46 Emergency Floor and Paediatric Assessment model Our key Service Developments are: Deliver the nursing reconfiguration programme and develop the role of nurse leaders at ward level Improve Consultant job planning to ensure resources and priorities are aligned to commissioning intentions and the contract for acute services Deliver improved value for money for non-pay expenditure through key development in our procurement processes from product standardisation to use of framework contracts Redevelop the Hospital at Night service model Ensure consistency in the roll out of the Productive Ward programme across all inpatient areas Complete the programme for redesigning and rightsizing outpatient services Implement key IM&T programmes starting with real time ADT and E-rostering Improve value for money from estates and facilities including switchboard, space utilisation and outsourcing Our key 2011/12 Divisional service developments are: Division Surgery 2011/12 Priorities Develop the surgical pathway to maximise patient experience and efficiency Implement the Theatre Efficiency programme Develop pre-assessment to minimise loss and cancellations Develop the day case model/pathway Consultant job planning to reflect clinical priorities Vascular service review future status of service Medicine Child and Family Clinical Support and Cancer Review stroke pathway and implement telemedicine Consolidate cardiology and Implement PCI Develop community cardiology service model Implement integrated Emergency care model Develop hub and spoke model for specialist services Implement the Trauma Unit Plus model Reconfigure midwifery services Redesign gynaecology pathways implement OP hysteroscopy Introduce epidural service Develop and implement paediatric assessment model Pathology and pharmacy reconfiguration Implement Cancer Reform Strategy developments e.g. IMRT Improve radiology capacity through job planning and service redesign AHP service level agreement for West Cumberland Hospital The Trust will be disinvesting in community services such as community neurology and Sexual Health services which will transfer to Cumbria Partnership NHS Foundation Trust West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 46

47 as part of the Transforming Community Services (TCS) Strategy The Trust will also continue to develop of internal systems, and quality and performance monitoring in line best practice and regulatory compliance requirements. The Trust has developed governance and clinical service strategies, and will continue to focus on quality and clinical performance. The Trust continues to demonstrate very strong performance across a range of clinical and performance indicators The Trust Board is currently developing a plan to complete a merger or acquisition process with an established NHS Foundation Trust before October The process will fully engage the clinical and support teams in particular ensuring there are robust criteria for identifying the most appropriate partner. 2.4 Financial Profile The Trust delivered all its statutory financial duties in 2009/10, with a headline Income and Expenditure deficit of 10.1 million less adjustments for impairments and dual accounting resulting in a 0.3m contribution towards the statutory breakeven duty. This includes repaying 856,000 of the outstanding loans to the Department of Health. Figure 2.12, below, shows Trust performance against key financial targets for 2009/10 6. Figure Financial Targets for 2009/10 Duty Status Result Break-even (in year) Achieved surplus of 327,000 Break-even (cumulative) Cumulative deficit reduced to 4.9 million Rate of Return Achieved 3.5% Capital Resource Limit External Financing Limit Achieved Achieved During the year 2009/10 the Trust fully funded all local and national cost pressures, including changes to the middle grade doctors contracts, increases for NICE (National Institute for Health and Clinical Excellence) approved patient treatments together with price increases for energy and food. Further investments were made throughout the year with increasing levels of investment going into information technology to improve efficiency and help clinicians spend more time dealing with patients A breakdown of Income and Expenditure is detailed below in Figure North Cumbria University Hospitals NHS Trust Annual Accounts 2009/10 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 47

48 Figure Income and Expenditure INCOME & EXPENDITURE 2007/ / /10 Revenue from patient care activities 187, , ,420 Other operating revenue 10,069 12,629 14,098 Operating expenses (excluding impairments) (195,571) (200,405) (205,590) Operating surplus before impairments 2,253 11,805 10,928 Finance costs: Investment revenue Other gains and (losses) (50) (336) 0 Finance costs 88 (8,148) (6,751) Surplus for the financial year before impairments 2,291 3,825 4,216 Public dividend capital dividends payable (2,240) (2,695) (2,026) Retained surplus for the year before impairments 51 1,130 2,190 Net impairments 0 0 (12,320) Retained surplus/(deficit) for the year 51 1,130 (10,130) Adjustments for Impairments 4,992 Adjustments for Dual Accounting under IFRIC12 5,465 Current Year Breakeven position The performance in 2009/10 was under-pinned by the achievement of an 12.8 million efficiency savings target helping the overall cost base of the organisation to be reduced in real terms. This was in addition to 8.2m achieved in 2008/ The impairments included the phase 1 demolition of the re-development and a revaluation of Trust assets in line with accounting practices /10 also included a change in accounting practice under International Financial Reporting Standards (IFRS) where PFI schemes were brought back onto the Trust balance sheet Figure 2.14 breaks down the Trust s income for the financial year. Figure Sources of Income % 2% 2% 2% 3% 91% Primary care trusts Injury Cost Recovery Non-patient care services to other bodies Education, training and research Non-NHS Other West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 48

49 2.4.8 The primary source of Trust income for patient related activities is from PCTs/localities in England, most notably NHS Cumbria. Additional income is generated though provision of services to patients from Dumfries and Galloway and Borders Health Boards in Scotland. Significant, non-patient related income is generated through education, training and research, and non-patient care services provided to other bodies Figure 2.15 details expenditure across Staffing costs comprised 65% of operating expenses, with clinical supplies and services the next biggest cost. In-year capital expenditure included 7.3 million relating to the redevelopment of the West Cumberland Hospital. This included the development of the design and plans, decanting some wards, refurbishment costs and some early demolition costs. The Trust also invested in new medical equipment, spending 3 million. The most significant items were the replacement of the angiography suite in radiology and investment in new monitoring equipment in all theatres, The Trust continued to invest in information technology, spending 1.3 million on clinical systems and the development of infrastructure. Figure Expenditure 21% 3% 7% 2% 2% 65% Staff Clinical Negligence Premesis & Establishment Depreciation Supplies & Services Other In 2009/10 under the Healthcare Commission s Annual Health Check, the Trust scored 2 for Financial Reporting, meeting minimum requirements. Whilst the overall rating was constant to 2008/09, there were improvements in financial reporting which improved from 1 to 2 during the year, reflecting a solid improvement. 2.5 Staff Profile Workforce Demographics In 2009/10 NCUHT spent 65% of the budget on staffing. A significant proportion of funding in recent years has been invested in workforce expansion and new pay systems. The Trust employs 3200 full time equivalents (FTE), of which approximately 1200 are in post at the West Cumberland Hospital, compared to 2000 at the Cumberland Infirmary. Figure 2.16 depicts the number of FTE staff by AFC band at WCH In 2010/11, the Trust submitted a workforce plan to NHS North West which showed a 16% reduction in overall staffing levels. This was primarily due to the development of healthcare closer to people s homes under NHS Cumbria plans to develop community services. This has allowed the hospitals to right-size and has led to a number of bed reconfigurations at both hospitals. A number of schemes were put in place to protect staff during this change including transferring to community posts, holding back vacant posts that could be filled by existing staff and offering a Voluntary Severance Scheme. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 49

50 Figure FTE staff at West Cumberland Hospital Nb. Full time equivalent = total staff numbers expressed as full time positions (e.g. two half time positions are counted as one full time) As with the general Cumbrian population, NCUHT has an ageing staff population with fewer younger members of staff, even in lower band roles. Only 13.5% of the staff members employed at WCH are under the age of 30, and almost 50% are aged 45 or over. Figure 2.17 shows the profile of staff by age group and Agenda for Change (AFC) band level at WCH. Figure WCH workforce age by AFC band No. of employees a 8b 8c 8d 9 Not AFC AFC Band < The Trust has a Single Equality Scheme which reflects the statutory requirements defined for a Public Organisation in relation to age, gender, sex, race and disability. A core component within the scheme is to collate, monitor and publish information that demonstrates policies are implemented across the organisation. In line with these requirements, data on ethnic origin of staff members has been collected. As depicted in Figure 2.18, over 91% of staff members are white British, reflecting the makeup of the West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 50

51 general Cumbrian population. Figure Staff by ethnic group A White - British B White - Irish C White - Any other White background CB White Scottish CH White Turkish CW White Other Ex-Yugoslav CX White Mixed D Mixed - White & Black Caribbean E M ixed - White & Black African F M ixed - White & Asian G Mixed - Any other mixed background H Asian or Asian British - Indian J Asian or Asian British - Pakistani K Asian or Asian British - Bangladeshi L Asian or Asian British - Any other Asian background LK Asian Unspecified M Black or Black British - Caribbean N Black or Black British - African P Black or Black British - Any other Black background R Chinese S Any Other Ethnic Group SC Filipino SE Other Specified Z Not Stated Workforce Metrics The vast majority of staff at the West Cumberland Hospital are employed on a permanent basis, with 86% of staff on a permanent contract. A further 7% are bank staff, with the remainder on fixed term/locum contracts. The below figure demonstrates the make-up of staff at West Cumberland Hospital by contract type. Figure WCH staff by contract type Permanent Locum Fixed Term Bank No. of staff Sickness absence rates for the year to date are on target against the final position required, as shown in Figure 2.20 below. The Trust performance is better than the North West, the health economy, and its reference group. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 51

52 Figure NCUHT sickness absence rates Source:NHS EwIN A revised sickness absence policy has been implemented and a reduction programme designed which features training for managers, case conferences on long-term sickness, and a consistent approach to return to work interviews. The revised policy also emphasises that excessive sickness absence should be taken into account in decisions on redeployment and redundancy, and that fraudulent sickness absence is a serious disciplinary offence The new programme was trialled in two areas and, following evaluation, rolled out to the whole Trust during late 2009/2010 with a view to reducing the overall rate to 4% or below. The programme will also ensure robust workplace risk assessment and prevention of sickness absence The Trust is traditionally a low user of agency nursing staff. However, expenditure on locum agency medical staff has been high recently due to European Working Time Directive compliance and vacancies in hard to fill posts. In 2010/11 the cost of overtime, bank and agency staff was 9.0 million. There will always be a need for some temporary staff but the Trust aims to significantly reduce this so that the temporary staffing bill comes down to no more than 3 million In the financial year to January 2012, the Trust overspent on pay by 2.1 million, with 4.6 million expenditure on agency costs by the end of month 10. The below figure details agency expenditure since 2009/10. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 52

53 Figure Agency expenditure by division as at January 2012 Total Agency Expenditure Trends 2009/ /12 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total Consultant Medical ,156 Other Medical ,489 Admin & Clerical All Other TOTAL ,242 Consultant Medical ,252 Other Medical ,628 Admin & Clerical All Other TOTAL ,339 Consultant Medical ,437 Other Medical ,506 Admin & Clerical All Other TOTAL , / / / / / /12 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar % of agency costs are for medical staff, 53% of which are consultant costs. These have resulted in a large part from recruitment difficulties relating to a combination of national shortages of available medical staff in some specialties and recruitment problems experienced by the Trust as a result of its geographical location. Staff turnover within the Trust is relatively low, at 0.97% for the year to date, in line with the Trust final target of 1% The Trust acknowledges that this level of expenditure cannot be sustained and actions have been taken as part of the Trust Turnaround programme to reduce agency expenditure during the final months of this financial year that are now trending downwards. The Trust is targeted to reduce agency spend. All non-essential spending must be reduced, including minimising overtime payments to staff and reduction of discretionary non-pay expenditure such as expenses The main challenges for medical staff recruitment are in the specialties of anaesthetics and radiology. This is related to the geographical isolation of North Cumbria and the development and changes to commissioning plans. However, the situation has improved and efforts are currently being directed at continuing improvements. Consultant recruitment is being made as attractive as possible and includes educational packages The long term commitment demonstrated through investment in redevelopment will attract high quality staff to open vacancies, resulting in decreased agency spend over the long term. In line with this, the Trust plans to develop an employer brand linked to a major organisational development programme that aims to maximise employee engagement and positions the Trust as the Employer of Choice in North Cumbria. The employer brand will be designed to make the Trust more attractive in the job market, especially in the areas of shortage, attracting workforce talent to Cumbria where there are skills gaps and developing key programmes to grow our own talent The Trust has introduced a range of measures to improve the working lives of staff. These have included putting in place improved feedback mechanisms; recognising staff achievements with an annual award ceremony, and developing education and training in the transition to a University Hospital Trust. The Trust also implemented improvements based on the results of the annual staff survey and started to introduce detailed workforce West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 53

54 planning in line with future models of care Redevelopment of West Cumberland Hospital will further contribute to improving the working environment for the 1,700 staff members based at the site, creating a better and more productive workplace. An improvement in sickness absence rates is expected as a result. Training and Development The Skills Escalator, developed in partnership between the Trust and the University of Cumbria, is the overall Learning and Development Strategy for the Trust, with an overall need to align individual staff development and career progression with the business needs of the Trust. Competencies: Agenda for Change ties pay progression to the acquisition of competencies. Education and Training is now designed to deliver competencies and to assess them as a measure of satisfactory completion of training and the proposed regulatory regime is designed to ensure that staff are fit to practise by demonstrating up to date and properly trained competencies. The Trust Strategy is to use the National Library of Competencies held by Skills for Health and to embed them in the Trust s systems of Job Design and Knowledge and Skills Frameworks. This will support the Clinical Governance systems by rigorously ensuring and demonstrating that staff are safe and competent to practise. It will also enable the Trust to anticipate the new regime for non-medical regulation without incurring significant extra costs. Knowledge and Skills Framework (KSF) and Appraisal: The robustness of delivering the benefits of Agenda for Change depends upon thorough operation of the KSF and its proper integration with appraisal. The Trust objective is to create a virtuous cycle of: a) Preparing a job description built around organisational and patient needs. b) Supporting this with a KSF outline describing the competencies required to do the job and how the individual will acquire further and higher levels of competencies as they gain experience. c) A regular process of appraisal to ensure that individuals are progressing satisfactorily and to identify their training needs. This system is still only in embryonic form in the Trust with a need to ensure that it operates effectively, regularly and that it reaches 100% of staff. Widening Participation: The Trust employs very large numbers of people and can use its employment influence to widen participation both in the workforce and in learning. This means finding ways of recruiting people who would not readily find work and of attracting people to learning whose needs are less likely to be met. Unemployment and poor educational attainment are invariably inextricably linked with poor housing, poverty, drug taking, crime and ill health. Thus widening participation can help both meet the needs of the Trust and contribute to health improvement in the local population. The Trust encourages all staff to be a good corporate citizen. Existing schemes include secondment of Healthcare Assistants to undertake training to become Registered Nurses and integrating these staff back into the workplace in a qualified role. There are clear opportunities to expand learning internally and to collaborate with other agencies to enhance employees learning and career development opportunities The Trust is also in the process of developing an Academic Development Strategy 8 with 7 North Cumbria University Hospitals NHS Trust, Trust Board Work Force Strategy November University of Cumbria and North Cumbria University Hospitals NHS Trust New West Cumberland Hospital Academic Development Strategy (Draft) November 2009 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 54

55 the University of Cumbria for the redeveloped West Cumberland Hospital. The aim of the strategy is to create a learning hospital which encourages and enables a culture of learning to develop and thrive. A key part of this is to bring education, research and R&D into the heart of the hospital, close to clinical practice. Facilities need to be conducive to learning, readily available and with areas for quiet, personal study. The Trust s design proposals for the new hospital facilities have taken into account the needs of education, training and research The Trust s key objectives in developing this strategy are: Improving recruitment and retention of skilled staff in West Cumbria to support the ongoing sustainability of clinical services Expanding the scope of R&D carried out at West Cumberland Hospital and contributing to improved clinical outcomes through R&D Providing appropriate and flexible future facilities to encourage the ongoing development of education, training and R&D Maximising the use of IT in the delivery of education and training Bringing education and research into everyday clinical practice Enabling knowledge transfer and innovation between health and other sectors of the economy to the benefit of West Cumbria Meeting external accreditation standards and quality requirements The provision of modern, fit for purpose academic facilities is central to ensuring that a high quality workforce is attracted and retained in West Cumbria. Recruitment to all posts, especially medical and other specialist professions, is challenging, with strong competition from other parts of the country. An inability to recruit will threaten the sustainability of the redeveloped hospital. 2.6 Estates Profile The Trust s premises comprise two hospital sites, The Cumberland Infirmary and West Cumberland Hospital. The Cumberland Infirmary is located in Carlisle. It was redeveloped in April 2000 under the Private Finance Initiative (PFI) and was one of the first PFI hospitals to be completed. The hospital has modern buildings and patient accommodation, and is set to the west of Carlisle city centre. It currently occupies a site of almost 12 hectares and has a gross internal floor area of 62,000 square metres The West Cumberland Hospital site is predominantly of a single age, built between 1959 and 1964, with a number of smaller extensions and reconfigurations carried out piecemeal over the ensuing years. The existing West Cumberland Hospital was the first new hospital in England to be built following the inception of the National Health Service. It was officially opened in 1964 and currently occupies a site of 11.2 hectares (see Figure 2.24) with a gross internal floor area of approximately 55,500 metres Of the gross floor area, around 12% is occupied by external organisations. NHS Cumbria provides a GP Out of Hours service from the site and Cumbria Partnership NHS Foundation Trust (CPNHST) provides a range of mental health services from the site including an inpatient ward The Net Book Value of the existing estate at West Cumberland Hospital is 56.7 million as at December 2008 comprising Land ( 4.3m), Buildings and Hard Services ( 46.9m), and Equipment 5.5m A detailed six-facet survey of the site carried out on behalf of the Trust identified the following state of the buildings. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 55

56 52% requires major repair or at serious risk of major breakdown due to poor physical condition 52% below acceptable functional suitability standards 34% overcrowded 18% not compliant with all statutory requirements Figure West Cumberland Hospital Maintenance Condition West Cumberland Hospital Physical Condition B - the element is sound, operationally safe and exhibits only minor deterioration. D 20% DX 4% A 6% C - the element is operational but major repair or replacement will be needed soon, that is, within 3 years for building and one year for an engineering element. C. 28% B 42% D - the element runs a serious risk of imminent breakdown. X a rating added to C or D to indicate that it is impossible to improve without replacement West Cumberland Hospital Functional Suitabilty A - the element is as new and can be expected to perform adequately to its full normal life. B - the element is sound, operationally safe and exhibits only minor deterioration. 16% 4% 4% C - the element is operational but major repair or replacement will be needed soon, that is, within 3 years for building and one year for an engineering element. 32% 44% D - the element runs a serious risk of imminent breakdown. West Cumberland Hospital Space Utilisation X a rating added to C or D to indicate that it is impossible to improve without replacement 1 - Empty. O% 34% 0% 6% 2 - Underused. 6% 3 - Adequate. 60% 60% 4 - Overcrowded. 34% West Cumberland Hospital Compliance with Standards 2% 0% 16% A - A new build which complies with all statutory requirements and Firecode Guidance B - Existing buildings which comply with Firecode Guidance and statutory requirements 82% C - Buildings which fall short of A and B D - Areas dangerously below A and B Total backlog maintenance costs are almost 12 million for the site. A breakdown of the risk adjusted backlog maintenance is presented in Figure Essentially, this indicates that an investment of 12 million would be required simply to bring all existing buildings up to Estate Condition B (sound, operationally safe and with only minor deterioration.). Figure West Cumberland Hospital Risk Adjusted Backlog Maintenance Quality of Buildings High Risk Backlog Cost 0 Significant Risk Backlog Cost 101,332 Moderate Risk Backlog Cost 746,645 Low Risk Backlog Cost 10,852,238 Risk Adjusted Backlog Cost 496, These costs would not address any space utilisation or functional suitability issues, nor would they provide any improvement to quality of the patient environment. The West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 56

57 expenditure required to maintain and refurbish the existing building stock is expected to grow significantly over time The deficiencies prevent the Trust from implementing its preferred model of care and have implications for the sustainability of clinical services at the hospital. In particular it is not an environment attractive to staff and there is evidence that recruitment of some specialists is hampered by this In addition it is likely that patient choice will lead the more mobile residents to seek services elsewhere affecting the financial and clinical viability of the hospital. Ultimately this could lead to the withdrawal of some services affecting access for less mobile residents of West Cumbria and worsening of health inequalities This information has informed the Trust s capital investment programme in the last three years and will continue to do so for the remaining life of the site. There is general acceptance that the current facilities at the West Cumberland Hospital are no longer suitable for the provision of modern acute healthcare and that there is a requirement for replacement or significant reconfiguration in the near future. The image below captures the West Cumberland Hospital site. Figure West Cumberland Hospital Site Redevelopment of the West Cumberland Hospital Site The implementation of the new West Cumberland Hospital project will result in a very significant rationalisation of the existing estate, with demolition of over 60% of the existing floor area. Those limited buildings retained in clinical use (primarily Blocks E, F and J) will be refurbished to meet current standards as far as is possible within the constraints of the existing structures. 2.7 The West Cumberland Hospital: Services and Catchment Population The West Cumberland Hospital is situated on the outskirts of Whitehaven, the largest town in West Cumbria. It serves a total West Cumbrian population of approximately 167,000 people. West Cumbria is remote from large settlements and major transport infrastructure, being more than 40 miles from the M6 motorway and the West Coast West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 57

58 Mainline rail network Access to the hospital is on a slope through a residential housing estate and there is currently parking provision for around 500 patients/visitors. These arrangements are problematic: at busy times, parking is at a premium and spaces are hard to find, with visitors and patients having to park off-site or use grass verges Much of the available parking is taken up by staff, due to the rural nature of the Trust s catchment area, and the relatively poor timing of public transport for shift start and finish times. Whilst the site is on a bus route, with stops close to the entrance, the West Cumberland Hospital is relatively poorly served by public transport compared to the Cumberland Infirmary with fewer buses arriving at longer intervals. The timetable of the buses is not allied to convenient visiting hours or appointments, and buses do not enter the hospital sites, creating difficulty for patients and visitors with limited mobility The geographical isolation of West Cumbria makes the provision of acute health services in the local area essential if access is to be equitable for all and health inequalities minimised in line with local and national objectives. Redevelopment of WCH will enable continuation of high quality acute services locally, which are at risk given the current state of the facilities. Redevelopment will result in improved access to the site for patients, visitors and staff Services offered at the hospital include: Accident and Emergency Maternity Unit Stroke Unit Cardiology Unit Nurse led Dermatology Endocrinology ENT Gastroenterology General Surgery Geriatric Medicine Nephrology Ophthalmology Oral Surgery Paediatric Medicine Paediatric Surgery Pain Management Plastic Surgery Rehabilitation Services Rheumatology Cancer Services Breast Screening GUM Pathology Radiology Dietetics Diabetes Services Medical Physics Trauma and Orthopaedics Vascular Surgery Thoracic Medicine Cumbria Partnership NHS Foundation Trust provides an inpatient mental health ward on the site, together with a base for community teams and various administrative services The site also provides complementary and administrative services including Education and Training, Staff Accommodation, Procurement Services, Pharmacy and Sterile Services. 2.8 Summary The Trust has set itself a clear vision and strategy for change. This has been underpinned by a financial turnaround and the introduction of new processes as the Trust works towards a merger or acquisition with an established Foundation Trust The redevelopment of West Cumberland Hospital is a key aspect of the strategy and essential in achieving a modern, first class healthcare facility that will provide safe, quality care for all residents and visitors to West Cumbria: The hospital redevelopment is an essential part of the integrated Clinical Strategy and Closer to Home strategy in Cumbria, and will complement developments in primary care and community health services, including redeveloped community hospitals, to West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 58

59 improve the health of the people of West Cumbria. The geographical isolation of West Cumbria, combined with the deprivation experienced by a significant proportion of the local population means the provision of general acute services locally is essential if health inequalities are to be tackled and life expectancy increased. The redevelopment of WCH will enable better quality and safer care to be delivered to patients, resulting in improved outcomes and patient experience. Patient access and choice will be maintained and improved. Redevelopment of the site is enabling complete reconfiguration of the integrated model of care resulting in improved co-locations and clinical adjacencies which will deliver real benefits in productivity and efficiency, as well as contributing to better patient and employee experience. The redevelopment will create a modern, attractive environment to assist in raising employees expectations and attracting and retaining key skills in the area. Demolishing the surplus estate and replacing it with high quality materials will enable future backlog and maintenance to be substantially avoided and reduced. The redevelopment will also achieve BREEAM objectives, particularly in reducing the carbon footprint of the hospital. The new hospital provides the opportunity to realise financial efficiencies by redesigning the whole system, and hence establishing a financially sustainable hospital for the future. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 59

60 3 Strategic Case 3.1 Introduction This chapter sets out the national, regional and local drivers for change that underpin the redevelopment of the West Cumberland Hospital (WCH). It highlights the importance of the new development as part of the Britain s Energy Coast Masterplan that focuses on the economic development of West Cumbria linked primarily to the nuclear industry and hence the health needs of a currently deprived region of Cumbria These drivers do not exist in isolation from one another and a number of complex relationships exist which illustrate the significance of the redevelopment of WCH. Figure 3.1 highlights the key drivers and the relationships that exist between the three levels. Figure 3.1. Relationships between national, regional and drivers of redevelopment of West Cumberland Hospital At a national level, the NHS is challenged with making gains in quality and productivity, while providing patients with a choice of where to receive care, and a pledge that individuals will have access to appropriate care, close to home The geography and relative isolation of West Cumbria determine that for these goals to be achieved, secondary care services must be available within the locality travelling to Carlisle for acute care (which can take between 1:15 hours and 1:45 hours depending on how far down the West Coast the patient lives, and traffic on the minor roads linking the sites) does not support the objectives of Closer to Home and would severely impact on the accessibility of care to the local population. However, the current hospital site does West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 60

61 not meet quality and productivity standards. The building itself is unsustainable in the long term and does not support the model of care required to achieve efficiency and productivity in providing appropriate care to the population Similarly, health inequality is a national and regional priority, and providing local services through Closer to Home should result in gains in reducing these inequalities. However, good health does not result from the provision of good health services in isolation, and health outcomes are largely related to economic outcomes, work status and deprivation. There are number of localities in West Cumbria that are affected by high levels of deprivation, and the economic outlook for the area is a challenging one. Unemployment will rise significantly if West Cumbria cannot attract and secure investment in the nuclear and energy industries, as well as in education and technology development The Government s national energy policy, and target to reduce carbon emissions, is dependent on the development of new nuclear power stations, and West Cumbria is a prime site for this investment, with the skills and expertise in the region currently. If West Cumbria can secure this investment, employment and economic output will rise. Health outcomes will improve and inequalities will be reduced However, in order to attract investment to the area, modern health facilities in West Cumbria have been determined as essential. Without first investing in acute services, West Cumbria will be unable to attract the people and investment needed to achieve economic redevelopment, with enduring negative consequences for the health and wellbeing of the local population. 3.2 National Drivers of Change National legislation, policy and guidance have a significant impact on the delivery of health services locally and will shape the delivery of health care in West Cumbria. Key policies and legislation are considered in this section, with particular emphasis on the need to meet service user expectations in delivering appropriate and safe care close to home while making quality and productivity gains to provide better and more cost effective care for patients and the public. Liberating the NHS: Equity and Excellence The Government s White Paper on NHS reform, Liberating the NHS: Equity and Excellence was published in July 2010, with the aim of putting ownership and decisionmaking in the hands of healthcare professionals and patients. It is expected that the reforms will focus on: putting patients and the public first improvement in quality and healthcare outcomes autonomy, accountability and democratic legitimacy cutting bureaucracy and improving efficiency The reforms proposed in the White Paper will take place against the backdrop of a very challenging financial position. In the Coalition Agreement, the Government said that the single greatest priority for the next Parliament will be to reduce the deficit. Whilst NHS spending will increase in real terms in each year of the current Parliament, NHS organisations will need to achieve unprecedented efficiency gains to meet the costs of demographic and technological changes, and to improve quality and outcomes. All of this means that the NHS has a responsibility to ensure that funding is used as efficiently as possible The key aspects of the White Paper s proposals are set out below: Information to support choice and accountability In future, there will be increasing amounts of information, comparable between similar providers, on: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 61

62 Safety: for example, about levels of healthcare-associated infections, adverse events and avoidable deaths, broken down by providers and clinical teams Effectiveness: for example, mortality rates (this could include mortality from heart disease, and one year and five year cancer survival), emergency re-admission rates; and patient-reported outcome measures Experience: including information on average and maximum waiting times; opening hours and clinic times; cancelled operations; and diverse measures of patient experience, based on feedback from patients, families and carers Extending choice The White Paper seeks to extend the ability of patients to choose the services they want. Patients will have choice of any provider, choice of consultant-led team, choice of GP practice and choice of treatment. This will include: Increase the current offer of choice of any provider significantly Create a presumption that all patients will have choice and control over their care and treatment, and choice of any willing provider wherever relevant Introduce choice of named consultant-led team for elective care by April 2011 where clinically appropriate. Extend maternity choice and help make safe, informed choices throughout pregnancy and in childbirth a reality Begin to introduce choice for diagnostic testing, and choice post-diagnosis Develop a coherent 24/7 urgent care service in every area of England that makes sense to patients when they have to make choices about their care. This will incorporate GP out-of-hours services and provide urgent medical care for people registered with a GP elsewhere A new NHS Outcomes Framework will provide direction for the NHS. It will include a focused set of national outcome goals determined by the Secretary of State, against which the NHS Commissioning Board will be held to account, alongside overall improvements in the NHS. In turn, the NHS Outcomes Framework will be translated into a commissioning outcomes framework for GP consortia, to create powerful incentives for effective commissioning. The NHS Outcomes Framework will span the three domains of quality: the effectiveness of the treatment and care provided to patients the safety of the treatment and care provided to patients the broader experience patients have of the treatment and care they receive The NHS will also accelerate the development of best-practice tariffs, introducing an increasing number each year, so that providers are paid according to the costs of excellent care, rather than average price. GP commissioning consortia In order to shift decision-making as close as possible to individual patients, power and responsibility for commissioning services will be devolved to local consortia of GP practices Consortia of GP practices, working with other health and care professionals, and in partnership with local communities and local authorities, will commission the great majority of NHS services for their patients. They will not be directly responsible for commissioning services that GPs themselves provide, or the other family health services of dentistry, community pharmacy and primary ophthalmic services. These will be the responsibility of the NHS Commissioning Board, as will national and regional specialised services, although consortia will have influence and involvement Commissioning by GP consortia will mean that the redesign of patient pathways and local services is clinically-led and based on dialogue and partnership with hospital clinicians. It West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 62

63 will bring together responsibility for clinical decisions and for the financial consequences of these decisions. This will reinforce the crucial role that GPs already play in committing NHS resources through their daily clinical decisions. The NHS Commissioning Board will calculate practice-level budgets and allocate these directly to consortia. The consortia will hold contracts with providers and the NHS Commissioning Board will hold consortia to account for stewardship of NHS resources and for the outcomes they achieve as commissioners. In turn, each consortium will hold its constituent practices to account against these objectives GP consortia will have a duty of public and patient involvement, and will need to engage patients and the public in their neighbourhoods in the commissioning process. Through its local infrastructure, HealthWatch will provide evidence about local communities and their needs and aspirations GP commissioning is already very well-advanced in within Cumbria, with the formation of six consortia covering the county. The primary commissioners for the new West Cumberland Hospital will be the consortia covering the districts of Copeland and Allerdale. Closer to Home The redevelopment of WCH supports NHS Cumbria s Closer to Home strategy by establishing a sustainable, affordable, appropriate facility that fully delivers the commitments made at public consultation The development of services closer to home emerged as a priority in the Department of Health report Keeping the NHS Local (2003) and was developed more fully in the White Paper Our Health, Our Care, Our Say (2006), born out of two consultations held in These were Independence, Wellbeing and Choice, a Green Paper that asked for views on how social care services could be improved, and a listening exercise, Your health, your care, your say. The listening exercise allowed the public to speak directly to ministers, health professionals, and each other about how improvements could be made to their local services Nearly 143,000 people contributed their views on what they expected from their local social care and NHS services. People wanted their local services to: Understand how they live and support them to lead healthier lives Help them to live independently if they have on-going health or social care needs Be easy to get to and convenient to use Be nearer to where they live, or easily available in the areas they work The paper recognises how NHS and social care services need to work together and identifies how the delivery of these services could adapt to provide individuals with the health and social care services they need closer to their homes The proposals in Our health, Our care, Our say aim to : Change the way these services are provided in communities and make them as flexible as possible Provide a more personal service that is tailored to the specific health or social care needs of individuals Give patients and service users more control over the treatment they receive Work with health and social care professionals and services to get the most appropriate treatment or care for their needs The provision of a full range of services at WCH, with the exception of some paediatric, complex elective and emergency surgery, which will transfer to the Cumberland Infirmary, was deemed the preferred option in meeting the strategic aims of the PCT in providing West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 63

64 more care closer to home. The practical difficulties of travelling in West Cumbria mean the concentration of resources and expertise at the Cumberland Infirmary is incompatible with providing local, accessible hospital services to the population of West Cumbria. As such, the redevelopment of WCH is supported by NHS Cumbria, alongside the development of primary and community health services, to meet the health needs of the area in line with the wider social and economic vision The implementation of Closer to Home across Cumbria is treated in more detail below. High Quality Care For All - NHS Next Stage Review Final Report In June 2008 Lord Darzi presented his final report High Quality Care For All - NHS Next Stage Review. This review built on the previous NHS reforms, which were designed to generate capacity, with a renewed emphasis on quality. Specific initiatives announced in the review which would be supported by the WCH development are as follows in Figure 3.2. Figure 3.2. West Cumberland Hospital: High Quality Care for All Next Stage Review Initiative Creating an NHS that helps people to stay healthy Introducing a new right to choice in the first NHS Constitution Seeking improvements in safety and reductions in healthcare associated infections Making funding for hospitals that treat NHS patients reflect the quality of care that patients receive Developing new best practice tariffs focused on areas for improvement; Ensuring that clinically and cost effective innovation in medicines and WCH response WCH redevelopment is a key part of the Closer to Home strategy which is about keeping people healthy Maintaining and enabling choice for the population of West Cumbria by sustaining the range of services offered at WCH and the Cumberland Infirmary Research has proven that patient safety is improved in terms of infection rates by the introduction of single rooms as proposed in this scheme. Rooms are also designed to minimise slips, trips and falls and other risks. Consolidation of operating theatres close to ward areas significantly reduces movement and handover of patients. The introduction of CQUINN results in payments to hospitals for delivering specific quality targets. This is in addition to the NHS NW Advancing Quality initiative which provides payment incentives for following specific quality protocols. The WCH redevelopment will facilitate quality improvements and enhance the hospital s ability to benefit from such payments. Providing purpose designed facilities which allow best practice care pathways and top quartile performance to be achieved IM&T strategy is to implement West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 64

65 Next Stage Review Initiative medical technologies is adopted WCH response electronic patient records reducing cancelled appointments, and allowing clinicians to spend more time with the patient. Creating new partnerships between the NHS, universities and industry; a clear focus on improving the quality of NHS education and training Development of an Academic Development Strategy for the site in partnership with the University of Cumbria Quality and Productivity The publication of NHS : from good to great introduced a five-year plan to reshape the NHS to meet the challenge of delivering high quality health care in a tough financial environment. The report describes practical measures to meet the demands of an aging population and the increased prevalence of lifestyle diseases. The vision is for an NHS that is organised around patients whether at home, in a community setting or in hospital. There will be a renewed focus on prevention with the ambition of delivering costeffective high quality care across the service The NHS s funding growth has averaged 5.6% a year since 1991, but by 2016/2017 there will be a real term reduction in the resources available of between 15bn and 20bn for the UK as a whole. The NHS must move from being geared for growth to being entirely focused on sustaining quality, improving services and meeting rising demand, within a static resource envelope This requires a transformation in the way healthcare services are delivered. The simplistic cuts of previous difficult times will not be sufficient, nor will the consequences be tolerated under new national targets including 18 weeks and four hour emergency care. In order to meet this need for transformational change, the NHS launched the Quality, Innovation, Productivity and Prevention (QIPP) programme, as set out in the DH document Inspiring Change in the NHS The key principles underlying the QIPP programme are: Effective engagement with clinicians and other key stakeholders through the adoption of the philosophy of co-production An ability to challenge established thinking and current practice The application of knowledge of national and international best practice A drive to share knowledge and learning Clear and honest communication at all stages of change Focus on benefits measurement and realisation Application of robust programme management and assurance arrangements The implementation of QIPP has become a priority for SHAs and PCTs and establishes the context for the future development and planning of service providers. The process of simultaneous quality and productivity improvement has to become embedded, leading to continuous performance improvement through the systematic adoption of best practice. Using known and proven technologies and methodologies, the NHS can achieve the necessary savings whilst developing a step change in service and clinical quality. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 65

66 The challenge for secondary care providers is to deliver high quality care as prices fall and inpatient activity is reduced in line with Closer to Home and QIPP implementation in the community. The redevelopment of West Cumberland Hospital will enable wholesale re-engineering of the models of care and business model in line with the QIPP agenda to deliver long term gains in productivity and quality, as well as providing a hospital that is fit to meet future needs. For example, there is a shared aspiration between the Trust and its local partners to maximise the benefits of the proposed investment in new acute hospital facilities by creating a health campus, bringing together health, social care, educational, training and research uses on the same site. At present, the West Cumberland site is too congested to allow complementary developments to take place and thus the development of the health campus concept is constrained. Operating Framework The new coalition government published the health white paper Equity and excellence Liberating the NHS in July This document set out the plan for a new direction and system which represents the most significant change to the NHS since its creation. The priorities set out in the NHS Operating Framework need to be planned in conjunction with the NHS Constitution, the CQC assurance framework and Monitor s Compliance Framework The Operating Framework set out the transition arrangements for national and local systems covering the NHS Commissioning Board, the economic regulator, GP Commissioning Consortia and the development of the Foundation Trust pipeline for providers. It is expected that the four year transition period outlined in the Framework will enable the new arrangements to be tested and refined using models for early adopters such as GP Consortia Pathfinders (including the locality commissioning groups in Cumbria). The focus on extending patient choice and information continues through quality standards and outcomes continue and the impact of the changes on workforce, training and education and informatics will be outlined in greater detail in the future The quality and performance priorities will be underpinned by the NHS Outcomes Framework which will include key measures and new quality standards (around 31 in total) will be published by the National Quality Board. Both developments will form the basis of the first mandate for the national NHS Commissioning Board A brief summary the key changes which will impact on local systems is shown below; West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 66

67 Commissioners Providers NHS Finance Key Developments 2011/12 GP consortia pathfinders to be extended with delegated responsibilities Consortia will not be responsible for PCT debt Commissioning support units to be developed including SEs and JVs 2 per head of population allocation for commissioning consortia AWP introduced for community providers Clearer separation of providers and commissioners Revised standard contracts to support AWP Contract to include FUNs and sanctions applied to data quality and completeness Marginal rate for emergency admissions retained (30%) National efficiency requirement of 4% Best practice tariffs extended and new tariffs introduced National priority is VTE Quality framework with 31 new standards from NICE Baselines for Outcomes Framework established Choose and Book revised to reflect contract requirements SHAs continue to support FT pipeline until 2012/13 Guidance on application of Right to Provide to NHS Reporting MSA breaches from April 2011 No reimbursement for readmissions within 30 days Aggregate surpluses carried over for 2011/12 excl. capital Average growth in PCT allocations is 2.2% PCTs to secure post discharge support using 150m re-ablement investment 648m separate allocation to support health and social care integration 2% PCT budgets allocated for non-recurrent investments and risk Two year pay freeze for staff earning above 21k Potential freeze for pay increments Tariff changes for Designated Major Trauma Centres from April % efficiency requirement embedded in tariff, HRG4 for A&E, new trim point and local reduced tariffs West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 67

68 PCTs remain statutorily responsible until April 2013 forming clusters by June 2011 to consolidate capacity (managed consolidation) and reduce running costs during this period SHAs remain accountable for leading transition and operational delivery during 2011/12 Other System Developments The NHS Commissioning Board (NHSCB) will be established in shadow form during 2011/12 The model for Health and Wellbeing Boards will be developed based on pathfinders with the aim having shadow arrangements in place nationally by the end of 2011/12 All PCTs will divest community services by April 2011 Running costs of the NHS will be reduced from 5.1bn to 3.7bn (45%) during the period of the spending review including anticipated savings on functions transferred to the NHSCB Gradual removal of controls on existing FTs with the staged introduction of the new regulatory regime Relationship between NHS Commissioning Board, Monitor and CQC will be set out in greater detail with CQC key role in maintaining quality and safety during the transition period MARS will be extended and include pre-authorised MARS to ensure capacity during the transition period The key changes beyond 2011/12 include; 2012/13 SHAs abolished when the NHS Commissioning Board takes on formal statutory functions and authorises GP Consortia from April 2012 PCTs abolished on 31 March 2013 when GP consortia are authorised and commissioning support units move to social enterprise and joint venture arrangements Choice will be extended to GP practice from April 2012 The new system of economic regulation will be introduced from April 2012 with Monitors new licensing role which will extended further to price setting by 2013/14 onwards 2012/13 the dedicated Provider Development Agency will be established to oversee completion of the FT pipeline which is scheduled for April 2014 Health and Wellbeing Boards will assume statutory responsibilities from April 2013 Shadow allocations for Public Health for Local Authorities from 2012/13 Final budget for running costs for Commissioning Consortia is expected to be per head of population by 2014/ Delivering change while maintaining performance against the QIPP challenge will be dependent on the flexibility of local systems and their ability to work across boundaries. This will be essential if local changes are to achieve the low running costs in the new system expected at the start and ensure they remain low in line with national projections There is an expectation that plans are integrated at a local level (reflecting QIPP requirements) and are geographically based rather than functionally based. Each locality is therefore expected to have a clear strategic vision for improvements in quality and productivity and plans to ensure they support the transition to the new system and delivery of the NHS Operating Framework. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 68

69 These factors are taken into account in the income modelling described in the Financial Case of this FBC. National Energy Policy In Britain, fossil fuel reserves in the North Sea are in decline, and reducing carbon emissions has become a priority. The government has pledged to deliver emission cuts of 18% on 2008 levels by 2020 (and over a one third reduction on 1990 levels), and a key step in achieving this target is to facilitate the building of new nuclear power stations Currently, three quarters of UK electricity comes from coal and gas, but by 2050 virtually all electricity will need to come from renewable sources, nuclear or fossil fuels where emissions are captured and safely stored for the long term. Electricity is likely to be used more extensively for heat and transport, so we will probably need more than today The White Paper on Nuclear Power 10 set out the UK s policy on nuclear power. It states that new nuclear power stations should have a role to play in this country s future energy mix alongside other low carbon sources of electricity. The White Paper also states that it would be in the public interest to allow energy companies the option of investing in new nuclear power stations; and that the Government should take active steps to facilitate this. The Government is streamlining the planning and regulatory approvals processes for new nuclear power stations. It is currently assessing sites where developers would like to bring new nuclear power stations into operation by This assessment is detailed in a draft National Policy Statement for nuclear power, published in Ten potential sites have been proposed for the construction and operation of new nuclear power stations, of which three are situated in West Cumbria at Sellafield, Braystones and Kirksanton. These sites have been assessed by Government as potentially suitable for the operation of nuclear power stations and for the safe and secure storage of spent fuel and intermediate level waste produced from operation and decommissioning of the station until it can be sent for disposal in a geological disposal facility A consortium comprising GDF Suez, Iberdrola and Scottish and Southern Energy plc have formed a joint venture company, NuGeneration Ltd (NuGen), which aims to develop a new generation nuclear power station of up to 3.6 GW on land in West Cumbria NuGen is a partnership with extensive experience of operating nuclear power stations across Europe, as well as developing and operating thermal and renewable power stations in the UK. The consortium partners own and operate almost 10,000 MW of nuclear capacity across Spain, Belgium, Germany and France, and have more than 250,000 employees worldwide, with almost 40,000 employees in the UK In October 2009, the consortium announced that it had been successful in securing an option to purchase a site of approximately 200 hectares for the development of a new nuclear power station near Sellafield from the Nuclear Decommissioning Authority (NDA) In October 2010, the Government confirmed through its draft National Policy Statement that NuGen s site was suitable for a new nuclear power station. The consortium will now prepare detailed plans for developing the site, which will be submitted for consideration by the relevant planning authorities with the aim of a final investment decision being taken around The expectation is that the new power station would be commissioned around It is expected that up to 5,000 jobs will be created during the construction 9 The UK Low Carbon Transition Plan: National strategy for climate and energy. Presented to Parliament pursuant to Sections 12 and 14 of the Climate Change Act Amended 20 th July 2009 from the version laid before Parliament on 15 th June Meeting the Energy Challenge: A White Paper on Nuclear Power, January 2008, CM 7296, URN 08/525, p7 11 Draft National Policy Statement for Nuclear Power Generation (EN-6): Planning for new energy infrastructure. Department of Energy and Climate Change, November West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 69

70 phase of the plant and between 700 and 1,000 permanent staff once operational The government recognises that West Cumbria is host to the largest concentration of nuclear facilities in the UK, representing some 60% of the total industry, with a continuing focus on developing skills and education. The sub-regional regeneration plan supports new nuclear generation in West Cumbria as well as the building of a low carbon economy in areas such as renewable energy. However, as the National Policy Statement outlines: In common with other major industrial processes, the construction, operation and decommissioning of new nuclear power stations could affect healthcare provision. For example, the facility could increase demand on health monitoring services It is therefore considered that adequate provision of health care facilities is a supporting factor in obtaining planning permission for the construction and operation of new nuclear power stations in West Cumbria. The implications of the re-development of WCH in line with this are discussed in more detail below. 3.3 Regional Drivers of Change NHS Northwest Healthier Horizons As part of the NHS Next Stage Review and in response to High Quality Care for All, the Lord Darzi publication geared towards improving service quality and access across the NHS, each SHA formulated a local vision. Healthier Horizons is the vision for health and health care in the North West, developed from the recommendations of eight clinical pathway groups that met during the review process The guiding principles of the vision are: Better care - people in the North West should have access to excellent standards of care, irrespective of where they live Better health - the NHS needs to focus on preventing ill health Better life - we want citizens of the North West to be partners in improving their health and be active in shaping their local NHS services In order to deliver against these principles, groups of front-line staff across the North West looked at different areas of care, and established a number of common themes: Preventing ill health and promoting wellbeing Everyone should have access to the best standards of care possible The best standards of treatment should be available to everyone, regardless of where West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 70

71 they live Doctors, nurses and other front-line staff need the right to take decisions about services NHS, social care and voluntary organisations need to work closely to develop and provide services Health and social care staff should be able to refer people to the best services possible regardless of organisational boundaries Information and data needs to be shared securely across all organisations involved in patient care to keep them safe Care tailored to the needs of people will help to break down barriers between professions Treatments need to change to keep pace with the progress of new technologies The past 10 years have focused on pumping more resources into the NHS. Funding in the North West has risen by 5.5 billion since 1997, but financial investment is not the complete answer. A number of solutions are proposed through Healthier Horizons and will be delivered through the redevelopment of WCH. These are detailed below. Figure 3.3. WCH delivering Healthier Horizons Solutions proposed through Healthier Horizons Raise our game - improve safety, care and treatment, by implementing the recommendations from the clinical pathway groups Shift the focus in the NHS to preventing ill health and promoting good health Create a partnership with citizens of the North West to enable them to improve their health and prevent illhealth, to manage their conditions; listen to them and engage them in decisions about their local services WCH implementation Provide timely and effective diagnosis and treatment of illness and disease in high quality facilities with the latest equipment. Service provision in line with a new model of care for North Cumbria. Major improvement to healthcare facilities including greater privacy and dignity via single rooms, simplified patient flows and integrated emergency care facilities. Modern, purpose designed buildings allow for ideal clinical adjacencies to be achieved improving the efficiency of clinical services. Particular improvement in patient flows and less movement. Contribute with partners in the health campus to promoting healthy lifestyles. Early detection of disease will reduce morbidity. Work with partners via the Stakeholder Group to realise the vision of a health campus in West Cumbria centred around the acute hospital and including health and social care provision, teaching, training, education and research capability. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 71

72 North West SHA Expectations of QIPP Delivery In line with the national Quality, Innovation, Productivity and Prevention (QIPP) agenda outlined above, NHS North West has defined clear expectations for the implementation of QIPP across the region. A framework of accountability was set out, describing five levels of action, from individual and organisations to national work, as detailed in figure 3.4 below. Figure 3.4. QIPP levels of action Accountability Framework Each level does what only itcan do L1 Individuals & Individual Organisations Efficiency Clinical Quality Imp Sale of Assets Level of reserve Int pathway management LA / NHS Efficiency Primary care L4 Region wide / SHA Level Economies of Scale Standardisation of pathways Regional Commissioning Residual workstreams I Manage IT / Education spend Set direction / rules (intervention) Manage Up L3 Footprint Group Acute Configuration Distribution of specialist business Collective Commissioning Piloting innovation Standardisation of Pathways R & D L2 Health Economy PCT & Preferred Supplier Care Pathway Community services Level of reserve Civic Leadership Demand Mngt L5 National Work Pay Tariff Financial Planning Central budgets Policy change NHS organisations in the North West are challenged with delivering efficiencies in the region of 2.25 billion to 3 billion, with Cumbria specifically required to deliver efficiency and productivity savings of 165 million. It is expected that these gains will be achieved at levels 1, 2 and 3 in the accountability framework (as above). The SHA expectations, and the impact of redeveloping WCH in achieving the required efficiencies, are outlined below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 72

73 Figure 3.5. Meeting SHA QIPP expectations SHA Expectation Level 1: Individual organisations - Pay - Staff levels - Agency Costs - Sickness absence rates - Efficiency within organisational processes Level 2: Key bilateral relationships within health economies - Monthly meetings between Trusts and relevant LA s to discuss risks, performance, and plans to meet / manage activity schedules - Accurate assessment of risk of failure through shared financial performance between NHS Trusts and PCTs - Undertake work to implement clinically and cost effective care pathways - Development of more effective joint commissioning to drive up efficiency - Coherence between partners and between short and medium term commitments Level 3: Sub-regional footprints - Enable at least a 10% reduction in demand on acute services by March 2011, including implications for managing and redeploying the WCH Contribution Efficiencies in pay expenditure, staffing levels and organisational processes will be achieved through implementation of the new model of care enabled by the redevelopment. Commitment to the long term future of the hospital and the related economic impact will enable WCH to become an employer of choice, reducing agency expenditure on hard to fill posts. Improved working environments will contribute to employee wellbeing and reduced sickness absence. Redevelopment of WCH in line with Closer to Home and the Clinical Strategy has necessitated the discussion of risks, performance and plans to ensure that services are not duplicated and efficiencies are realised across the whole health economy. Key stakeholders in the health economy meet regularly to ensure the clinical, financial and timing interdependencies of partners are fully addressed. A Clinical Demand Management meeting is held monthly with primary care and acute trust clinical input. While reviewing the cost effectiveness of care pathways and sharing responsibility for targeting inefficiencies, the group has ensured the reconfiguration of care pathways within the redeveloped WCH is consistent with productivity, efficiency and value for money. The Trust and PCT are engaged in joint reviews of services to ensure no duplication. The WCH redevelopment includes facilities designed to facilitate joint working with other providers on the integrated emergency floor and integrated step up / step down facility Agreed commissioning plans have reduced demand on acute services and the activity projections underpinning the new hospital show further reductions are planned in future years. The Trust already has an aggressive cost improvement programme in place to West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 73

74 SHA Expectation workforce - Reduction in expenditure of 10% in all sectors, while maintaining quality and access for patients by March Exposing and tackling the variability of care pathways WCH Contribution achieve 46m reduction in expenditure between 2010/ /15 New pathways will be introduced as described in the Model of Care section. Nb. Level 2 and 3 are the same in Cumbria Advancing Quality To achieve the promises made in the Healthier Horizons vision, NHS North West is implementing a number of programmes. Advancing Quality is one of these programmes and complements the national QIPP agenda. It aims to ensure patients have an overall better experience in NHS hospitals across the North West, with improved patient care and patient experience. By improving quality, the programme aims to save lives, reduce readmissions, reduce complications and decrease the length of stay in hospital for patients. It will also help hospitals significantly reduce costs, allowing the NHS to reinvest savings back into improving care and facilities The programme measures and incentivises improvement in the quality of patient care by measuring treatment across Clinical Process and Outcome Measures, Patient Reported Outcome Measures, and Patient Experience in five clinical areas: heart attack, heart failure, heart bypass operation, pneumonia, hip and knee replacement. Providers compare themselves against others and are rewarded for the improvement they make. The first public results show month on month improvements between October and December in the regional scores for heart attack, heart failure and hip and knee replacement, with scores for individual trusts to be released in Spring Redevelopment of WCH will support Advancing Quality through redesign of the model of care, improving clinical adjacencies and thereby resulting in greater efficiency, quality of care and patient safety, in line with the programme s objectives. Health Inequalities and the Economy in the North West The economy, employment and built environment have a crucial role to play in tackling poor health in the region. Creating economic conditions that transform the life and working opportunities for people in the North West is recognised by NHS North of England as a significant driver in delivering the Healthier Horizons vision Improving health and tackling inequalities within the region is one of the underpinning values and principles of the new Integrated Regional Strategy, RS2010, which is being developed by regional partners. Health and wellbeing feature strongly in the strategy, in line with the growing body of evidence that shows that health and economic goals are mutually re-enforcing and vital to sustain economic wellbeing and inclusion within communities In recognition of the widening gap in health inequalities across England, the Government has taken steps to tackle health inequalities and some of the underpinning lifestyle causes such as smoking and childhood obesity. These are reflected locally across the SHA through measures for the NHS and for partnerships through local area agreements where indicators for some of the wider social determinants are also included The overall national target is to reduce health inequalities by 10 per cent, as measured by infant mortality and life expectancy at birth, by Between 1997 and 2007 there has been substantial improvement in infant mortality, life expectancy and premature mortality for cancer and circulatory diseases, but the overall improvement in the North West has been relatively lower than counterpart improvement for England as a whole. In addition, West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 74

75 64% of the North West population live in local authorities designated within the Spearhead Group 12 and the relative degree of improvement in these areas has lagged marginally behind the overall regional average Health inequality gaps have consequently widened over the past 10 years. However, the focus on health outcomes has detracted from the social determinants of health inequality, with growing evidence that reducing the differential in health is influenced more by social determinants than medical or preventative interventions There has been some improvement through better care, and the NHS has taken a key part in properly meeting the needs of people. However, evidence shows that services are not consistently available and delivered to all at the same standard. In order to ensure that services are accessible and meet every person s needs, NHS North West has published the Equity and Diversity Plan for Action, complemented by NWDA s Single Equality Scheme The Regional Strategy, RS2010, promotes the sustainable economic development and regeneration of the region. The vision for the North West set out in the strategy is detailed below in Figure 3.6. Figure 3.6. The Regional Strategy: Vision for the North West by 2021 By 2021 we will see a region that has acted to deliver sustainable development, leading to higher quality of life for all, and reduced social, economic and environmental disparities. Development will be seen in a global context and the region will contribute to the reduction of carbon dioxide and other greenhouse gas emissions. The economy of Cumbria will be improved through the provision of appropriate sites and premises, infrastructure and clustering to help strengthen the economy, increased business formation, productivity, diversification away from purely tourism based economy, establishing the University of Cumbria and the development of the nuclear industry and workforce. The regions towns and cities will offer strong and distinctive centres for their hinterlands, with attractive, high quality living environments that meet the needs of their inhabitants. Rural communities will enjoy increased prosperity and quality of life while respecting the character of their surroundings and the natural environment In line with the North West Regional Strategy, the redevelopment of West Cumberland Hospital is inextricably linked to the economic development of the region and reducing health inequalities. Investment in new hospital facilities in West Cumbria is considered 12 The Spearhead Group consists of 70 local authorities mapped onto Primary Care Trust boundaries consisting of the fifth of areas with the worst health and deprivation indicators in life expectancy, cancer, heart disease, stroke and related diseases. The Government has set Public Service Agreement targets to address these geographical inequalities and aims to see faster progress compared to the national average in these areas. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 75

76 essential to secure investment in the development of the nuclear industry and to provide existing and potential residents with the levels of healthcare received by other UK residents. This is covered in more detail below. 3.4 Local Drivers of Change Economic Performance West Cumbria s historic economic performance is driven by the dominance of the nuclear industry and the restructuring of older manufacturing industries such as steel and shipbuilding There is a higher than average representation of employment in manufacturing (including nuclear) and research & development. Between 2000 and 2005 manufacturing declined by 28% and public administration by 13%, with growth focused in business services and tourism-related activities. Growth in economic output has been slow, reflecting a decline in manufacturing output and the relatively low representation of financial and professional services. Between 1999 and 2004, West Cumbria had the lowest growth of any local area in the UK, at just 12.1%. The North West s growth rate for the same time period was 27% Economic output per head is also lower than the North West average. However more recent economic data suggests that things are improving, not least due to considerable public investment over a sustained period. The latest data shows that Gross Value Added (GVA) 13 in West Cumbria grew by 5.3% (2003-4) compared to 5.7% in the North West as a whole. However, figures published in December 2009 show that GVA for West Cumbria is still in the bottom 10 of 133 local areas Economic activity rates and employment rates are slightly higher than the regional average. Benefits counts for West Cumbria are lower than for the region as a whole. Information on average earnings and average income levels gives a mixed picture, reflecting high earnings within the nuclear sector, but low earnings elsewhere, together with the presence of higher than average numbers of relatively wealthy older people who have chosen to live or retire near the Lake District The cluster of nuclear and related manufacturing and engineering activity at and around Sellafield in Copeland has earnings and output levels closer to the regional average. But the historic long term nature of contracts in the sector, and the only very recent opening up of new opportunities and markets, has meant that skill levels, wages and output have not yet grown in the same way as the wider region and UK In the latter part of the 20th century the perception that the nuclear industry, manufacturing and engineering did not provide attractive employment prospects led to a significant exodus of young people, although there is some more recent evidence that this exodus is slowing down. West Cumbria s population declined by 2.8% between 1991 and 2001, with a disproportionate loss of 30% of young people over the same period. Social Determinants: Employment Employment and enterprise in West Cumbria is concentrated in four sectors. Three quarters of the workforce are employed in manufacturing, distribution, hotels and restaurants, and public services. Compared to UK averages, West Cumbria is underrepresented in the higher value added sectors of banking, finance and insurance. Employment in these sectors is only 11% compared to 21% in the UK. 13 Gross Value Added (GVA) refers to the difference between the value of goods and services produced (output) and the cost of raw materials and other inputs which are used up in production (intermediate consumption), i.e. the value added by any unit engaged in production. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 76

77 Figure 3.7. Employment by sector in Great Britain, North West and West Cumbria Source: Britain s Energy Coast: Masterplan for West Cumbria Manufacturing and engineering is dominated by the civil nuclear sector and has been so for many years with West Cumbria the home to 36% of the UK s civil nuclear industry. This accounts for 40% of the local area s GVA, directly employs 12,000 people and supports a further 2,600 jobs. This is a relatively well skilled sector, with 32% of all businesses in Copeland defined as knowledge based enterprises compared to 20% in the North West and 21% in the UK. There are also a relatively high number of advanced engineering businesses within West Cumbria Hidden unemployment is a problem in parts of West Cumbria, with high numbers claiming incapacity benefits. In other areas, local residents face the challenge of a lack of affordable housing Communities with the highest and the lowest household income per capita in Cumbria lie side by side around the main urban centres. Some communities are amongst the most disadvantaged in the country and there are pockets of disadvantage in health, employment and income, and access to housing and other services This concentration of nuclear-related assets, also including University of Central Lancashire s Westlakes Research Institute and the Nuclear Decommissioning Authority, has clear economic potential and is already a strong cluster showing recent growth. Its ongoing development is in line with UK policy to create the conditions that encourage internationally competitive clusters. In the next 5 to 10 years, decommissioning will be the major business opportunity. The Nuclear Decommissioning Authority will spend 43 billion within West Cumbria on its decommissioning programme. Globally, decommissioning represents a 300 billion market. This presents major opportunities for new and established West Cumbrian businesses to win contracts in decommissioning and to expand into national and international markets Sellafield is a large, complex nuclear facility that has supported the UK s nuclear power programme since the 1940s. Operations at Sellafield include reprocessing of fuels removed from nuclear power stations; MOX fuel fabrication; and storage of nuclear materials and radioactive wastes. Also located on the Sellafield site is Calder Hall. It was the world s first commercial nuclear power station and started generating electricity in Generation ceased in The Port of Workington is the largest port in Cumbria and one of the main hubs in the North West. It serves the region's industry and agriculture, including most of the major manufacturing and processing businesses in the area. The port has recently secured a 5.7m socio-economic investment from the Nuclear Decommissioning Authority (NDA) West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 77

78 and Nuclear Management Partners (NMP), the parent body for Sellafield Ltd, which will fund a massive improvement programme. The Port will undergo major regeneration and the implementation of new and improved services. The investment will have a major impact on Cumbria's infrastructure by opening up a regular trade route for local businesses with the rest of Europe. The investment is a key project of Britain's Energy Coast, with the funding provided by the Nuclear Decommissioning Authority (NDA and Nuclear Management Partners (NMP). It comes in addition to the 4m being spent on repairing the port's infrastructure, which was damaged in the floods of November A new container handling facility will be created, including the installation of a new harbour crane to enable the port to handle large shipping containers from all over Europe. The arrival of the crane, extensive improvements to the Port's facilities and the introduction of a weekly scheduled feeder container service, will provide a sustainable logistics option for businesses in Cumbria and beyond. Skills Development Within West Cumbria, 20% of working age people are educated to degree level, compared to 25% for the North West and 26% nationally. There are a smaller proportion of individuals with no qualifications in West Cumbria (10%) lower than the North West (17%) or the national average (14%) West Cumbria also has lower than average levels of educational participation amongst young people. Whilst skills at level 1 and 2 (GCSE and NVQ level) in the existing workforce are higher than the North West average, low participation amongst year olds due to a perceived lack of opportunity, suggests that this advantage could be lost in the future workforce. Increasing effective enterprise training in schools and enabling children to understand the opportunities within local enterprise will be important West Cumbria has a number of high value science and research assets and skills, including the British Technology Centre laboratories at Sellafield West Cumbria s current skills base is driven largely by the nature and long term dominance of the nuclear sector and a small number of major manufacturing employers West Cumbria has to meet two fundamental skills challenges to enable it to take advantage of the opportunity presented by its own assets and UK policy objectives: Ensuring that its existing workforce adapts and develops the skills required to take advantage of a more commercial civil nuclear sector requiring new skills and techniques, so that they can take advantage of contract opportunities at Sellafield and also diversify into new markets. Developing a future workforce with the levels of business, technical and management skills required to play a full role in the future civil nuclear sector and associated supply chains and markets, particularly in the global decommissioning market and environmental technologies and remediation Fundamental to achieving both these goals is the need to attract and keep young talent in the area, tackling progression and low participation at and addressing some of the deep seated issues around aspirations of young Cumbrians. The long term nature of contracts in the nuclear industry, together with a lack of competitive structure has also led to lower levels of business start-up and associated enterprise skills. As the sector becomes more competitive companies will need these skills to succeed and will need to move up the value chain to remain competitive The current decommissioning programme at Sellafield will require new skills and techniques over at least a 25 year period. Potential solutions to nuclear waste and new generation would also require new skills and techniques, providing opportunities for a skilled future workforce West Cumbria s existing working population has internationally competitive skills in nuclear waste management, storing and packing, together with associated engineering. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 78

79 Whilst specific techniques are highly specialised, many of the skills required are readily transferable to wider industrial markets such as environmental remediation, demolition, construction and mechanical engineering. New adjacent areas within health research are also now being considered Significant actions are already underway, based on linking existing and new provision with population centres, business and research locations: The new University of Cumbria has been designed specifically to address the challenges of: The poor economic performance of the county over the past decade. The current and historic low level of higher education participation in significant parts of Cumbria, especially West Cumbria, and poor progression post 16. Geographical barriers limiting access to higher education, which are especially acute in West Cumbria. Low graduate level skills and retention The National Skills Academy for Nuclear (NSAN) is tasked with providing appropriate skills for the nuclear industry as it evolves and moves into decommissioning phase, and to offset the declining skills base as the sector s current workforce retires. Energus will be a world class centre for the provision of vocational skills excellence, spanning both further and higher education in the nuclear, carbon-free and environmental restoration industries. It will be a dedicated centre of excellence and innovation, with a range of training, education and business support services geared to providing and enhancing skills within both the local and national workforce, and making the most of the opportunities these industries hold Energus has been built on a 7.3ha site at Lillyhall, West Cumbria. It will be a delivery arm for NSAN and an integral part of the University of Cumbria's Energy Coast campus. The project was funded through European Regional Development Fund, The Learning and Skills Council via National Skills Academy for Nuclear, North West Development Agency, Northern Way, Nuclear Decommissioning Authority, Sellafield Sites and West Lakes Renaissance. Donations have also been received from other organisations The Nuclear Academy North West is being established as the regional delivery arm of the NSAN on the Lillyhall site alongside existing further education provision. This will ensure the technical skills exist to realise the benefits from decommissioning Westlakes Science and Technology Park provides a major location outside the Sellafield site for research and technology activity and will form the key location for future growth in this area. It incorporates the Westlakes Research Institute (WLRI) providing major commercial research and scientific services. The University of Manchester and Nuclear Decommissioning Authority are also constructing the Dalton Cumbria Facility at Westlakes. This facility, part of the Dalton Institute at the University of Manchester will offer fully equipped world class laboratories with state of the art teaching and education facilities. Westlakes Science and Technology Park is also the site of the NDA headquarters and key organisations in the supply chain. It provides a major innovation ecosystem and is the centre for the interaction between research, enterprise and knowledge transfer that is a vital component of the Energy Coast cluster It is this drive for better skills development that has raised the prospect of establishing a health campus on the existing West Cumberland Hospital site. These plans are embryonic but do indicate opportunities to develop research activities into health related areas. The Health Campus vision enables health, social care and education to be brought together, building on West Cumberland s unique position as the centre of the UK nuclear industry. Joint development of expertise in nuclear and related areas, including radiation, epidemiology, nanotechnology and toxicology are currently being explored. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 79

80 Infrastructure and Connectivity West Cumbria s geography presents some of its greatest challenges. The physical barrier of the mountains and lakes proves a major obstacle to land-based transport. West Cumbria is perceived by many as being remote and difficult to get to, providing the area with a set of barriers for investment and inward-migration. Its location on the periphery of the main markets and centres of population in the North West, the North East and Scotland mean that it needs to develop its own economy to fulfil local need Improvements need to be made to the infrastructure of the area to facilitate inward investment and to aid businesses to expand and access regional, national and international markets Away from the main urban core of West Cumbria are some of the most deeply rural communities in the country, with very low population density and real problems in accessing services. Past decisions about the location of housing and services have also contributed to problems of accessibility, particularly in communities on the periphery of towns West Cumbria s assets and skills are required to provide solutions to national policy requirements for decommissioning, nuclear waste handling and storage and the research skills required for the UK to maintain its civil nuclear expertise Connectivity to markets, global research and academic networks are core to West Cumbria maximising this opportunity, as is the infrastructure to attract and retain highly skilled people and businesses This will require effective transport connectivity within West Cumbria, to ensure the interaction of research, business and academia both inside and close to nuclear and research sites and continued improvements to connections to the UK and global markets The unique role that West Cumbria can play in delivering future energy and environmental policy justifies a small number of future infrastructure improvements that are currently above and beyond existing priorities identified through the Regional Funding Allocation process. There has already been major investment in schools and road networks, making the area more attractive. The hospital needs to follow to ensure that the geography of West Cumbria does not continue to be a barrier to economic development and health outcomes in the area. Britain s Energy Coast a Masterplan for West Cumbria The West Cumbria Partnership, a strategic partnership between Cumbria County Council and Allerdale and Copeland Borough Councils has developed a vision for West Cumbria by The vision describes that: By 2027, West Cumbria will be a confident place that prides itself on its strong economy, providing opportunities for all and offering a lifestyle of choice West Cumbria's economy is heavily dependent upon the nuclear industry and benefits derived from activities undertaken within the Sellafield plant. The site currently accounts for 40% of West Cumbria s economic added value. The economy has in recent years under-performed and the decline is likely to continue unless significant actions are implemented. In 2002, the government announced plans to commence decommissioning at Sellafield. With decommissioning at Sellafield underway, West Cumbria faces major job losses over the next 10 to 15 years. A key challenge for West Cumbria is to manage the transition from nuclear re-processing to decommissioning at Sellafield and to diversify its economy away from dependence on a small number of industries, to ensure it is sustainable in the long term Work to investigate the potential impact on West Cumbria of different business plan scenarios for the industry related to decommissioning was carried out in 2001 (the West West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 80

81 Cumbria Socio-Economic Study). In the light of proposed increased expenditure on decommissioning activities, this was revisited in 2003 to explore the economic impacts of a further scenario, that is, maximum expenditure on decommissioning This work indicated that West Cumbria faced severe economic challenges in the years ahead, no matter which business scenario was adopted. By the year 2012 employment in the industry in West Cumbria was predicted to fall by 8,000 people. The overall economic prospects for West Cumbria were bleak, with an overall 17,000 job losses predicted by It should additionally be considered here that health services are the second largest employer in West Cumbria, supporting the case that services at WCH should be maintained in order to retain and develop skills within the local workforce This situation will be superimposed on a sub-region that is already suffering severe economic stress. Gross Value Added (GVA) per head growth in West Cumbria is the worst in England. This is set within a county context that also has the worst economic performance in the UK The update of the European Union's Third Cohesion Report identified Cumbria as one of only four sub-regions in the EU25 showing absolute decline in GDP. There are significant barriers to securing resurgence in West Cumbria s economy due to its population sparsity and peripheral location within the UK and Europe. Cumbria comprises 48% of the geographic area of the North West yet holds only 7% of its population. Its economy remains heavily reliant on sectors such as manufacturing. It is under-represented in the sectors such as business, finance and professional services, which have shown a growing trend The unique challenges faced by West Cumbria were recognised by central government through the Whitehall based West Cumbria Strategic Forum and the region was asked to produce a Masterplan that would achieve a transformation. The resulting Masterplan, Britain s Energy Coast, provided coherence to a series of actions to tackle the problems facing the area and was also a key lobbying document to secure investment in the area Six working groups were established consisting of representatives of the public and private sectors to discuss the key issues and topics that the Masterplan must take into consideration. These working groups were organised along the following thematic lines: Energy and Technology Business and Enterprise Skills and Knowledge Physical Infrastructure (included a new hospital in West Cumbria) Tourism Social Infrastructure The Government s report Britain s Energy Coast a Masterplan for West Cumbria was subsequently published and a memorandum of agreement signed between the Government and Cumbrian partners 14 in The report describes how West Cumbria, working in partnership with the Government, has the potential to deliver critical elements of a national strategy that meets the imperatives of both combating climate change and securing the nation s energy supply. 14 The Cumbria Partners of the West Cumbria Strategic Forum are the Nuclear Decommissioning Authority, Northwest Regional Development Agency, North West Regional Assembly, Northwest Universities Association, Cumbria Vision, Cumbria Learning and Skills Council, Business Link Cumbria, Cumbria Tourism, Cumbria County Council, Allerdale Borough Council, Copeland Borough Council, The Private Business Sector, Sellafield Trade Unions, West Cumbria Strategic Partnership, West Cumbria Business Cluster, West Industry Group, Professor John Fyfe, Tony Cunnighman MP, Jamie Reed MP. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 81

82 The Masterplan Vision The vision for West Cumbria recognised the strengths of the nuclear industry and that they are of national and international importance. The concentration of expertise in West Cumbria, coupled with its coastal location, provides good opportunities for energy generation in the area, including renewable energy. It also enables the UK to make an important contribution to European Energy Policy The Masterplan asserts that West Cumbria will: Be globally recognised as a leading nuclear, energy, environment and related technology business cluster, building on its nuclear assets and its technology and research strengths Be a strong, diversified and well-connected economy, with a growing, highly skilled population with high employment Project a positive image to the world, and be recognised by all as an area of scientific excellence, outstanding natural beauty and vibrant lifestyle, which attracts a diverse population and visitor profile Provide opportunities for all its communities, where geography is not a barrier to achievement and where deprivation, inequality and social immobility have been reduced The Masterplan is a 2 billion initiative to transform West Cumbria into Britain s Energy Coast. Projects within the plan include a new generation of power reactors to the Sellafield site, developing a national nuclear laboratory and Energus training facilities, together with significant investment in transport links, housing, education, health, leisure, culture and sporting facilities. In total the Masterplan aims to create 16,000 jobs and boost the Cumbria economy by 800 million New nuclear power stations are proposed in West Cumbria which would improve job prospects and potentially attract an increased population over a ten year period. Britain s Energy Coast West Cumbria Britain s Energy Coast West Cumbria (BECWC) was established in April 2009 to act as the lead body for economic development and regeneration in Allerdale and Copeland. BECWC s role is to implement the programme set out in the Energy Coast Masterplan West Cumbria is at the forefront when it comes to the global nuclear industry, and boasts considerable expertise in energy, including offshore wind farms, oil and gas. Britain s Energy Coast West Cumbria Masterplan and the Investment Plan ( ) set out a vision and detailed proposals to build on West Cumbria s strengths in the energy sector, to capitalise on recent developments in national policy on climate change, and build on West Cumbria s growing reputation as a place for innovation in renewable energy, which will assist in meeting CO 2 emissions targets. The renaissance in the nuclear industry is at the heart of the strategy, both in attracting significant overseas inward investment to build new reactors for power generation at Sellafield, and addressing the needs of successful decommissioning and nuclear waste management. This in turn will help diversify the local economy, significantly improve the prospects of local communities, and raise the area s profile Existing projects identified in the Masterplan range from the establishment of pioneering centres for nuclear skills and enterprise support for businesses to transport improvements and the development of West Cumbria as a tourism destination. Significant transport and infrastructure interventions will be also be crucial to delivering transformational change Whilst these projects remain important for the economic transformation of the area, the BECWC Board will refresh the Masterplan during This will lead to the creation of an economic blueprint which will support the vision outlined in the Masterplan and create clear priorities for investment. The delivery mechanisms for the Masterplan have also been reviewed during 2011 and have led to a number of changes. The BECWC Board will West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 82

83 merge with the West Cumbria Development Fund and West Cumbria Development Agency to create a single entity that will lead to improved delivery. Health Services and Britain s Energy Coast The current changes in the nuclear sector, from immediate opportunities in the 300 billion global decommissioning market to longer term solutions for waste and new build, provide West Cumbrian businesses and people with the opportunity to transform economic performance. To achieve this, skills and techniques must be attracted and developed to enable West Cumbria to engage in new markets successfully West Cumbria faces a number of key challenges with regards to the demographic profile, health, education and entrepreneurialism if the area is to have a long term sustainable community. The area needs to lessen its reliance on external factors, including investment from large, mobile, corporate investors and this dictates that a high quality of services is required right across the public sector provision. This will require the provision of quality services to support families as well as both young and old people, building on the recently agreed Local Area Agreement for Cumbria, which Government has chosen as one of two North West pilots for new style LAAs. Alongside education, which is dealt with elsewhere, the most important issue locally is the provision of health care Accessible health provision for both the existing population and potential future residents is a key infrastructure issue raised in the Masterplan. Poor access to services, notably hospitals, makes some parts of the area unattractive to new residents due to the remoteness of the major towns of Workington and Whitehaven from major transport links and the District General Hospital at Carlisle, which is the nearest hospital offering a full range of acute facilities An acute care facility within West Cumbria is considered essential to provide residents and visitors with levels of healthcare comparable to that of the rest of the UK, and to attract potential residents to the area to aid regeneration and continued future development. It is asserted that: The delivery of a new acute hospital within West Cumbria is considered essential to service both the needs of an ageing population and to make the area a more attractive place to live for all age groups. A new facility is required to provide existing and potential residents with the levels of healthcare equal to that received by other UK residents and to reflect the contribution that West Cumbria s community makes to the UK s Nuclear Waste policy. Britain s Energy Coast A Masterplan for West Cumbria NHS Cumbria Closer to Home The key over-arching strategy for healthcare services in Cumbria is set out in NHS Cumbria s Closer to Home proposals, which were publicly consulted upon during 2007 / The consultation process set out how a new model of care would operate and how the proposals would be developed and implemented in Allerdale, Carlisle, Copeland and Eden. Importantly, it explained how hospital services in North and West Cumbria would need to change as certain services moved into the community. Comments were received on the proposals from the public, staff in the NHS, partners such as the other NHS trusts and local authorities, and other stakeholders, such as community and voluntary groups Under the proposals, more health care would be provided in the community and local health services would be managed by family doctors creating professional-led services which meet the needs of local people. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 83

84 As well as being more effective, efficient and convenient for local people, moving health services closer to people's homes would mean: Health services designed to meet the needs of each local area, making them more responsive to patients People with long-term conditions would have more control over their lives and spend less time in hospital New and updated facilities in the community which are easy to access More care and treatment at home and in community settings would reduce travel times and reduce anxiety of being treated away from home as well as making it easier for friends and family to visit Less disruption to people's home and social lives as a result of shorter stays in hospital and more local services Better and faster access to specialised hospital care More highly-trained healthcare teams to provide support in the community NHS Cumbria has prioritised Closer to Home initiatives that will reduce reliance on secondary care services. These include: Delivery of Primary Care Assessment services (PCAS) in Carlisle, Whitehaven and Penrith to reduce emergency admissions. Delivery of step up/step down units in Carlisle and Whitehaven to reduce acute admissions and length of hospital stay. Delivery of integrated health and social care community teams to support patients and prevent admission In order to prevent duplication and ensure value for money in moving appropriate care closer to home and the Trust is working with NHS Cumbria to deliver an integrated Clinical Strategy as the next stage of implementing Closer to Home initiatives. This will include implementation of the following priorities: Delivering the final stage of step up/down services across North Cumbria Developing the operating model for the integrated emergency floor Implementing a new model for paediatric assessment Transferring outpatient neurology and Sexual Health services to an integrated Cumbria-wide community service These initiatives have been clinically led in terms of developing the integrated clinical service models. The business process underpinning the Closer to Home implementation plan is based on overall value for money, financial viability and appropriate ownership of risk across the health economy The next steps in the development of the integrated Clinical Strategy is to refine the operating and financial models of each key component More detailed work on service specific models is also in progress for: Chronic Obstructive Pulmonary Disease (COPD) and other respiratory conditions such as Breathlessness and Asthma Dermatology Gynaecology Community Cardiology The shift in clinical activity and resources from acute services has required detailed West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 84

85 integrated planning between NHS Cumbria and the Trust, underpinned by appropriate financial and workforce arrangements, with detailed consideration of these in the redevelopment of West Cumberland Hospital Despite the planned shift from acute to community services, the consultation process defined the preferred option for implementing the Closer to Home strategy was for two acute hospitals in north Cumbria, one in Carlisle and one in West Cumbria. These two hospitals would have specific clinical responsibilities and be supported by redeveloped community hospitals, with agreement that the number of beds at WCH would be reduced in line with increasing efficiency within the hospital It was recognised through the consultation that whilst the size of the catchment area and volume of activity supported arguments for a reduction in hospital services in West Cumbria, with resources concentrated on the in Carlisle, the practical difficulties created by the geography of West Cumbria meant this was not compatible with the strategic aim of providing more care closer to home. Thus, redevelopment of the WCH to provide modern, high quality health services in conjunction with community and primary care is the only option that fulfils the criteria for hospital services that meet the health needs of the area. Figure 3.9 outlines changes to the clinical services provided at Cumberland Infirmary and WCH to meet the Closer to Home Objectives NHS Cumbria, Closer to Home: An NHS consultation on providing more healthcare in the community in North Cumbria 27 September 2007 to 1 February West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 85

86 Figure 3.8. Acute Services: Meeting the objectives of Closer to Home Cumberland Infirmary Carlisle (CIC): Retain current bed base and facilitate: - The provision of complex elective and emergency surgery along with a Emergency Treatment Centre/Trauma Centre providing 24 hour assessment by senior clinicians; this would also provide emergency cover for gastro-intestinal bleeds and cardiology; - The further development of CIC s role as a sub-regional centre for the population of Cumbria and the Solway Basin for certain specialities. - All other current services continue to be provided at CIC. West Cumberland Hospital (WCH): Reduced in size, with general medical wards to treat medical emergencies, but any complex medical patients, such as those with gastro-intestinal bleeds, would be stabilised and transferred to CIC. WCH would provide: - An Integrated Emergency Floor (ETC), Primary Care Assessment Service (PCAS) and Clinical Assessment Unit, a short-stay treatment paediatric unit, adult assessment and treatment beds (up to 72 hours stay); backed up by medical and elderly wards for longer inpatient spells - Critical care beds (Intensive Treatment Unit/High Dependency Unit) - in line with patient demand - Maternity and obstetric services - Special Care Baby Unit facilities for low complexity cases retained on a nurse-led unit, with more complex cases transferring to Carlisle or as now to Newcastle - Paediatric Assessment and Treatment Services (PATS), alongside PCAS/ETC staffed by paediatric trained specialists offering short-stay rapid assessment and support for children - Acute stroke beds (stroke rehabilitation beds would be re-provided within the community hospitals) - Elderly care wards, which would reduce their bed numbers as patients are treated closer to home - Palliative care beds would be transferred to the community, ideally in a community setting or a hospice - Uncomplicated elective surgery would be maintained on this site; however patients requiring complex elective surgery (for example vascular, and gastrointestinal surgery) would be transferred to the CIC, in line with clinical governance recommendations - 20 intermediate care beds In achieving the Closer to Home objectives, the WCH is developing as a new model for healthcare, enabled through the redevelopment of the hospital site. The new model for healthcare is described in detail in section 3.7. National Clinical Advisory Team (NCAT) Review In May 2010, the new Secretary of State for Health identified four key tests for service change, designed to build confidence within the NHS, with patients and communities. The tests require all service reconfiguration proposals to demonstrate: support from GP commissioners strengthened public and patient engagement clarity on the clinical evidence base consistency with current and prospective patient choice An NCAT review of NHS Cumbria s Closer to Home proposals and the plans for a new hospital in West Cumbria was carried out in September 2010 by Dr Chris Clough, Chair of NCAT. In relation to the Secretary of State s four tests, this initial review concluded that the proposals: Met the requirement for local public support West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 86

87 Met the requirement to support patient choice However, the review concluded that further evidence was required to demonstrate that the proposals: Were based on best clinical evidence Enjoyed the support of GP commissioners A follow-up visit by Dr Clough, accompanied by Dr Mike Cheshire, the Medical Director of NHS North West, was carried out in March The follow-up report from this visit concluded that NHS Cumbria and North Cumbria University Hospitals NHS Trust had responded appropriately to the NCAT report and had made substantial progress, in particular in developing the Clinical Strategy. It also concluded: When reviewing the Secretary of State s criteria it can be judged that these plans do now have the support of their local general practitioners. The clinical strategy can be supported and the plans continue to support patient choice. The coming months will prove to be fraught and tricky as the PCT and Trust together try to see their way through some difficult decisions. The coming together of the PCT and the acute trust to develop clinical work streams has given me the assurance that both trusts are doing all they possibly can to ensure that patients in North Cumbria receive high quality services now and sustainable for the future The report made the following further recommendations: The PCT and NCUHT proceed with their clinical strategy and response to NCAT s input. NCAT is kept informed of progress and is asked to review if significant changes in the clinical plans emerge following review of the PCT and NCUHT financial position. If there are continuing concerns about the safety and sustainability of the Whitehaven site, NCAT should again visit, focussing on West Cumberland Hospital A further review of progress was done by Dr Clough in February 2012 that highlighted 11 points, particularly around the sustainability of paediatric and obstetric services. These were reviewed in detail and concluded with SHA support for the business case but recognition that further work would continue regarding obstetrics over the next few months. North Cumbria University Hospitals Trust North Cumbria Acute Hospitals NHS Trust gained formal approval to become a University Hospital Trust from 1 August This approval was supported by the Universities of Cumbria and Newcastle, the Privy Council and the Department of Health. The award involved a formal change of name and the Trust became known as North Cumbria University Hospitals NHS Trust from 1 August University Hospital Trust approval was achieved through the development of close links with providers of tertiary and post-graduate education for healthcare staff. Examples of this enhanced role as a teaching hospital include: Partnership with the University of Newcastle which has seen the development of undergraduate medical student teaching in the Trust The development of a Dental Education Centre at the Cumberland Infirmary which admitted its first students in September 2008 The recent creation of the University of Cumbria and the development of close working relationships between the Trust and the new university in the delivery of educational programmes NCUHT is continuing in its development to become an NHS Foundation Trust through a merger or acquisition with an existing NHS Foundation Trust. The process for taking this forward is based on undertaking an open transparent and competitive process and West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 87

88 evaluation of criteria as part of an option appraisal to identify a preferred partner. The development of the West Cumberland Hospital is integral to the future financial viability of the service provided and reflects service configuration plans agreed with commissioners It is also recognised that the future will need to be flexible and adaptable as service needs develop, and hence the new facilities have been designed accordingly In agreement with the NHS North of England and the DH a revised application timetable has been agreed that will see the Trust becoming part of an existing Foundation Trust by late Financial management will continue to be developed throughout 2011/12 as the organisation prepares itself for a merger or acquisition. Investment has been made in the finance team with procurement of new financial systems and recruitment to additional posts. Monthly financial reporting will continue to incorporate a financial risk rating, a 3 year cash flow forecast and dashboard style reporting. Further developments and refinements will take place which will include: New electronic versions of budget reports which will have a drill down facility for managers. Additional information on staffing for managers. Further development of Service Line Reporting. Further development of the Fixed Asset Register. Increased use of the Long Term Financial Model. A move to automate as many processes as possible. Benchmarking exercises to ensure all our financial systems are fit for purpose The Trust is monitoring its Financial Risk Rating (FRR) under the Monitor Compliance Framework. The Trust currently has an overall score of 2 due to its liquidity position. The Trust currently has loans of 10.3 million outstanding. This position will not change significantly until the loans are repaid The Trust has been working with Deloitte and a health economy-wide Turnaround Board to deliver a turnaround programme which will result in a sustainable financial future. A Corporate Recovery Board has been established which is chaired by the Trust Chief Executive. A performance management framework for the Cost Improvement Programme (CIP) has been developed and has been implemented, which tracks savings. The framework has nominated project leaders for each project and tracks the progress of the schemes against the plans. Key themes for 2011/12 include the following; Elective Flow Integrated Emergency Floor Pathology, pharmacy, radiology and AHP reviews. Estates and Facilities rationalisation. Procurement Workforce Nursing reconfiguration All of these areas have been addressed and are considered in the design of the new facilities at West Cumberland Hospital, with real achievements in bed rationalisation. The Pathology review is underway and a strategy is developing. An optimum model for theatres is also being developed As a future NHS Foundation Trust, NCUHT will need to develop partnership networks and West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 88

89 governance processes for patient and public engagement. In particular, the Trust is developing the following approaches in 2011/12: NHS Constitution the Trust will develop mechanisms to ensure that the implications of the NHS Constitution, for both staff and patients, are built into all activities, including staff and public engagement. Patient/Public Engagement the priority for 2011/12 will be to capitalise on the existing relationships established through our Patient Panels and to enhance relationships with Cumbria LINk. This approach will be fully integrated into the stakeholder engagement in the merger or acquisition process. Consultation and Scrutiny - including continued and increased engagement with the County Council OSC particularly in relation to the continuing impact of the Closer to Home implementation plan as well as the proposed development of the new healthcare facility in West Cumbria. Engagement will also need to be continued with the scrutiny committees in both Allerdale and Copeland over both these areas. Developing our partnerships the Trust will significantly enhance its contribution to the public sector economy agenda in 2011/12 through a more proactive involvement in the Cumbria Health and Well Being Board, the Cumbria Strategic Partnership and the local strategic partnership across the north of the county. The Trust is now also taking a proactive role in partnership with the NHS Cumbria Community Ventures programme in ensuring best value is obtained from all NHS capital investment proposed within West Cumbria. Local QIPP Plans The SHA has required the Cumbria health economy to develop coordinated plans in response to the national QIPP agenda. This is being led by nursing staff at NCUHT with plans to role out programmes to achieve the 8 High Impact Actions identified through national consultation with nursing staff 16. Figure 3.9. QIPP High Impact Actions Action Problem Benefits No avoidable pressure ulcers in NHS provided care. Reduced quality of life, psychologically and physically challenging for patient; increases burden of care on staff and costs of acute care, resulting in increased length of stay and risk of secondary infections Better quality of life for patients, reduced length of stay and early discharge; workforce efficiency, reduced costs of acute care Demonstrate a year on year reduction in the number of falls sustained by older people in NHS provided care. Highest volume patient safety incident reported in hospital trusts England; major cause of disability and mortality for older people in the UK and the problem is likely to increase with an ageing Improved comfort and maintained independence; Reduced length of stay and overall cost of inpatient care 16 NHS Institute for Innovation and Improvement. High Impact Actions for Nursing and Midwifery, West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 89

90 Action Problem Benefits population Stop inappropriate weight loss and dehydration in NHS provided care. Increase the normal birth rate and eliminate unnecessary caesarean sections Avoid inappropriate admission to hospital and increase the numbers of people who are able to die in the place of their choice. Reduce sickness absence in the nursing and midwifery workforce to no more than 3%. Increase the number of patients in NHS provided care Malnutrition is associated with poor recovery from illness and surgery; Dehydration increases length of hospital stay and is linked to a number of serious conditions, such as coronary heart disease (CHD) and stroke; dehydration increases the mortality of patients admitted to hospital with a stroke two-fold. Poorer outcomes and increased risk of morbidity for the mother when deliver by CS compared to normal delivery; 40% of patients who die in hospital do not have medical needs which require them to be in an acute setting; hospital care expensive, inappropriate and often preventable Sickness levels in the NHS of between 2.8% and 7%, 5.5% in Whitehaven. Reduced continuity of care for patients and greater spend on staffing in Trust to provide agency, bank and locum cover. Delayed discharge impacts on patient flow and bed capacity utilisation Reduced length of stay and cost of inpatient care; lower infection rates; faster recovery and discharge, improved quality of life Improvements in morbidity rates and a quicker return home to their families. The reduction in the level of unnecessary interventions also results in a reduction of unnecessary complications; reduced length of stay at decreased cost Improved quality of end of life care, fewer complaints to the Trust, reduced spend in the acute setting Reduced sickness absence results in increased continuity of staff which leads to increased continuity of care and has a positive impact on the experience of patients and their relatives. Sickness absence also has a major impact on the stress levels of those staff who are working to cover absent colleagues; reduced Trust spending on agency and bank staff Nurse led discharge results in a more timely planned discharge for the patient West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 90

91 Action Problem Benefits who have their discharge managed and led by a nurse or midwife where appropriate. with fewer delays leading to a more positive patient (and family) experience as well as a lower risk of healthcare associated infections. Demonstrate a dramatic reduction in the rate of Urinary Tract Infections (UTIs) for patients in NHS provided care. Urinary tract infections are the second largest single group of healthcare associated infections in the UK and make up 20% of all hospital acquired infections; 80% of urinary tract infections occurring in hospital can be traced to indwelling urinary catheters. Leads to longer patient stays, pain, hospital costs up to 3x higher and higher subsequent costs in primary care Improved quality of life for patients, reduced spend on inpatient care and fewer ongoing primary care needs These initiatives are not wholly dependent on the redevelopment of WCH, with a number of programmes to improve quality and productivity already in place. However, the redevelopment of WCH supports this agenda in the following ways: Nurse led discharge will be supported by multi-disciplinary acute and community care teams sharing knowledge to reduce the length of patient stay in hospital. While joint working is currently developing at WCH, the new model of care will strengthen these relationships with greater impact on patient discharge. Step down facilities on the hospital site will facilitate discharge, in particular for patients in the end stages of life but for whom acute care is not necessary. Triage and assessment by multi-disciplinary teams in urgent care will facilitate admission avoidance and hence contribute to reduced rates of healthcare acquired infections, trips and falls in hospital and inappropriate weight loss and dehydration in acute care. Improvements in health and wellbeing of staff linked to the redevelopment of WCH will contribute to reduced sickness absence rates. Investment in the working environment of staff and long term commitment to the future of acute care in West Cumbria will increase motivation in the workforce. The new model of care and workforce changes will result in new roles and on-going education for staff, supported by on-site learning centres, linked to both quality of care and staff satisfaction The redevelopment scheme has been reviewed in the light of the QIPP agenda and the local health economy turnaround work has confirmed that the redevelopment is a key element of the overall QIPP plans for North Cumbria. 3.5 Strategy for Change West Cumberland was the first NHS hospital to be built in the UK in 1957, opening in Since then, there has been limited development at the site aside from piecemeal extensions and internal reconfigurations. Backlog maintenance costs of in excess of 11 million for the site have been identified. Simply resolving these backlog issues will not West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 91

92 address any space utilisation or functional suitability issues, nor would there be any improvement to the quality of the patient environment. The expenditure on maintenance and refurbishment is predicted to grow significantly over the next 20 years if no action is taken to redevelop the site. There is therefore general acceptance that the current facilities at the West Cumberland Hospital are no longer suitable for the provision of modern acute healthcare and that there is a requirement for replacement or significant reconfiguration of the site The implementation of the new West Cumberland Hospital project will result in a very significant rationalisation of the existing estate, with demolition of over 60% of the existing floor area. Those buildings retained for clinical use will be refurbished to meet current standards as far as is possible within the constraints of the existing structures Estate rationalisation and redevelopment will enable NCUHT to address the Quality, Innovation, Productivity and Partnership (QIPP) agenda through wholesale reconfiguration of the model of care and business model to deliver long term gains in productivity and quality, as well as providing a hospital that is fit to meet future needs. There is significant potential for partnership working with the potential future development of a health campus, bringing together health, social care, educational, training and research uses on the same site to maximise the benefits of the proposed investment in new acute hospital facilities The West Cumberland Hospital is situated in one of the most deprived areas in the UK. The physical barriers created by the lakes and mountains to the East and the sea to the West, and poor transport infrastructure and connectivity mean an acute facility is essential in West Cumbria to support the Closer to Home agenda. The Trust is working with NHS Cumbria to ensure duplication is minimised while service users receive the highest quality care in the most appropriate and cost effective locations. Maintaining and upgrading secondary care provision in Whitehaven will allow health inequality to be tackled locally in West Cumbria The redevelopment of the West Cumberland Hospital forms part of the wider agenda to regenerate the Cumbrian economy, which is currently performing at one of the worst levels in Europe. The region is faced simultaneously with both a unique challenge and opportunity with the decommissioning of Sellafield. Potentially 8,000 jobs will be lost over the coming years, but the forewarning has enabled planning to take place to counter the impact, with the development of the Masterplan Britain s Energy Coast, that will see increased investment in new nuclear technology and related businesses, and skills development However, the Energy Coast Masterplan recognised that it was essential to provide quality services for both existing and potential residents in order to maintain and repatriate young talent within the region and attract new residents with the necessary skills to drive regeneration. The development of modern, acute hospital facilities that can meet the needs and expectations of the population in West Cumbria, alongside other public and private investment, is therefore necessary to make West Cumbria a more attractive place to live and work The redevelopment of WCH supports the principal aims of both the Trust and wider stakeholders by enabling a sustainable healthcare facility that contributes to the long term economic prosperity of the region to be delivered. The redevelopment will enable: The provision of high quality, safe care for all patients by supporting the Closer to Home agenda The development and implementation of sustainable and efficient clinical models through comprehensive service reconfiguration A sustainable financial balance to be achieved by facilitating the realisation of financial efficiencies The contribution of the redevelopment of West Cumberland Hospital to the long term West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 92

93 sustainability of the Trust, environment and local economy is outlined below. Figure Sustainability and the Redevelopment of WCH Sustainability Present WCH Redeveloped WCH Financial Estates Workforce Environment Economic Inefficiencies embedded in current hospital as a result of minimal investment and modernisation historically. Financial efficiencies cannot be wholly realised in current facilities. Unsustainable - 11million maintenance backlog with capital maintenance costs increasing into the future; majority of current facilities unsuitable for provision of modern, quality health care. High levels of sickness absence; difficulty in recruiting staff to some roles as a result of little investment in recent years and poor facilities. Current building does not support environmental sustainability targets and will prevent realisation of CO2 emissions targets. Without investment in acute services in West Cumbria, the Energy Coast Masterplan is unlikely to be realised, with serious economic implications for the area. The new hospital provides the opportunity to realise financial efficiencies by redesigning the whole system, and hence establishing a financially sustainable hospital for the future. Significantly reduced maintenance backlog with health care provided in new and refurbished facilities fit for future demands. Improved employer branding as a result of investment and commitment to WCH increases ability to attract and retain best quality employees, and improve health and wellbeing of current staff through improved working environment. The redevelopment will achieve BREEAM objectives, particularly in reducing the carbon footprint of the hospital. Redevelopment of WCH will bring significant economic investment in West Cumbria, improving GVA, employment opportunities, education and training facilities and reducing health inequalities. 3.6 Demand & Capacity The purpose of this section is to document the methodology and assumptions that have been used in projecting future capacity requirements for the redeveloped West Cumberland Hospital, and to present the results of the analysis undertaken The planning horizon for the projections covers the first five years of operation of the redeveloped hospital, though the modelling allows activity and capacity projections to be West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 93

94 calculated for each financial year up to 2028/29. Capacity requirements for the first year of operation, 2014/15, are presented here, and then the implications of accommodating future levels of activity within the fixed capacity of the redeveloped hospital are explored The activity projections presented in this section cover admitted patients (day cases and elective and non-elective inpatients), accident and emergency and outpatients (first and follow-up appointments and attendances). The capacity projections cover normal care beds (day case and inpatient), critical care beds, operating theatres, endoscopy facilities and outpatient clinic sessions. Capacity planning methodology At a high-level, the methodology adopted to forecast future demand and capacity requirements is as follows: Start with baseline activity i.e. the activity actually provided at West Cumberland Hospital in 2010/11; Apply predicted demographics changes to the baseline activity; Apply service growth in specific areas, but only where there is evidence to support an increase in intervention rates over and above demographic change; Adjust for commissioning intentions; Add or remove activity to account for changes to the Trust s market share for certain services; Add or remove activity according to known or planned service transfers; Apply performance and efficiency assumptions to the resultant activity estimates; Apply throughput and utilisation assumptions to the activity estimates in order to derive the capacity required to accommodate future activity volumes. Performance and efficiency The aspects of admitted patient and outpatient care that are subject to improved performance and efficiency are day case rates, inpatient lengths of stay, and outpatient did not attend (DNA) rates Performance in all of these areas has been benchmarked by comparing current levels at the Trust with performance at other providers. A peer group of all non-specialist acute providers in England (149 Trusts in total) has been used in the benchmarking analysis. Throughput and utilisation of capacity In order to derive future capacity requirements, assumptions relating to the following areas have been made: Number of available bed-days per bed per year; Inpatient bed occupancy; Throughput for day case beds; Provision, availability and utilisation of theatre and endoscopy sessions; Provision, availability and utilisation of outpatient clinic sessions. Baseline activity 2008/ A summary of the activity provided at West Cumberland Hospital in 2008/09 is shown in Figure West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 94

95 Figure /09 baseline activity Service Patient type 2008/09 actual A&E attendances All 28,964 Outpatient appointments 17 New 22,147 Follow-up 55,101 All 77,248 Day case 10,179 Admitted patient spells Elective inpatient 2,718 Non-elective inpatient 18 16,538 Population projections Population projections have been sourced from the latest Office for National Statistics (ONS) figures, and Welsh, Scottish and Northern Irish equivalents. Specific data has also been collected for Jersey, Guernsey and the Isle of Man. These are 2006-based subnational population projections. Projections are specific to individual local authorities (e.g. Allerdale, Carlisle, Copeland, Eden etc.), five-year age bands and gender The projections have been applied to the Trust s outturn activity according to age, gender and postcode of patients to ensure that their impact is accurately modelled, including the impact of a stable but ageing population The ONS population projections for Cumbria predict little or no growth in the number of women of childbearing age. However, because local and national figures indicate that the birth rate is rising, particularly for older age groups, additional growth in births and deliveries has been factored into activity projections. Waiting time targets The impact of maintaining the national waiting time target of 18 weeks from referral to treatment has been factored into the analysis. No further reductions in waiting times have been assumed in future years. Closer to Home commissioning intentions Significant reductions in activity have been factored into the models to reflect commissioning intentions specified by NHS Cumbria Activity reductions have been planned in the following areas (see below): Minor and standard A&E attendances Outpatient consultations, mainly follow-up Elective procedures cancelled on the day of surgery for non-clinical reasons High-volume routine elective surgery 17 Includes ward attenders 18 Excludes well babies West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 95

96 Emergency admissions for long-term conditions and ambulatory care sensitive conditions Post-acute bed-days for stroke, fractured neck of femur, primary hip and knee replacements, pneumonia and COPD Cancer screening As a result of extending the age range of national screening programmes for bowel and breast cancer, it has been assumed that additional activity will be generated. This means additional demand for colonoscopy (though not necessarily colorectal surgery), and additional demand for breast surgery (though not necessarily major surgery for advanced disease). Market share and repatriation In accordance with the NHS Cumbria commissioning strategy, some residents of Allerdale and Copeland who currently travel outside Cumbria for certain services are assumed to be repatriated to West Cumberland Hospital in the future. This affects routine elective procedures currently provided at hospitals in Hexham and the north-east of England. Each repatriated procedure has been assumed to generate one first and one follow-up outpatient consultation. Reconfiguration of sites and services Single-site delivery of some key services has been modelled and factored into demand and capacity projections. All angiography and complex elective surgery is assumed to be centralised at Cumberland Infirmary in Carlisle, and this activity has therefore been excluded from capacity requirements for the redeveloped West Cumberland Hospital. Reduction in outpatient did-not-attend rates Outpatient DNA rates have been assumed to reduce to achieve the national upper quartile benchmark for each specialty. Specialties with DNA rates already at or better than the national upper quartile are assumed to maintain those rates in future years. Increase in day case rates Day case rates have been assumed to increase to achieve the national upper quartile benchmark for 170 procedures identified by the British Association of Day Surgery. Procedures with day case rates already at or better than the national upper quartiles are assumed to maintain those rates in future years. Reduction in average length of stay Inpatient lengths of stay have been assumed to reduce to achieve the national upper quartile benchmark for each HRG, elective and non-elective. HRGs with lengths of stay already at or better than the national upper quartile are assumed to maintain those lengths of stay in future years Lengths of stay for day cases and regular attenders have been assumed as follows: 1.5 cases per bed per day for day surgery; 2.0 for medicine, endoscopy, haematology, oncology and dialysis; 1.0 for children. Operational days per year Inpatient beds are assumed to be available 365 days per year, day case beds 252 days per year (five days per week less bank holidays), and dialysis stations 312 days per year (six days per week). Bed occupancy Occupancy of inpatient beds is assumed to remain relatively unchanged on 2008/09 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 96

97 levels. The redeveloped hospital has therefore been planned on the following occupancies: 84% overall; 88% for general medical and surgical beds; 69% for children; 59% for neonatal special care; 75% for maternity; 66% for adult critical care. Operating theatre availability and utilisation Use of scheduled theatre capacity has been assumed as follows: 4 hours per session; 10 sessions per theatre per week; 48 weeks per year; 7.5% session cancellation rate; 90% utilisation of scheduled time; 92% of utilised time actually spent operating % utilisation accounts for the fact that operations will not always exactly fill a session and hence sessions will under-run on average. The 92% assumption accounts for 8% of utilised time being spent between cases Use of non-scheduled session time has been assumed as follows: 40% for obstetrics; 60% for emergency; 88% for trauma % of emergency and trauma operations and 50% of emergency sections are assumed to take place in-hours. Projected activity 2014/ Combining the assumptions described above, the impact on accident and emergency attendances at West Cumberland Hospital in 2014/15 is shown in Figure Figure A&E attendances 2014/15 Attendance type 2008/09 Population projections Did not attend rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 All 28, , ,162 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 97

98 Combining the assumptions described above, the impact on outpatient appointments at West Cumberland Hospital in 2014/15 is shown in Figure Figure Outpatient appointments 2014/15 Appointment type 2008/09 Population projections Did not attend rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 First 20,782 +1, ,467 Follow-up 48,737 +3, , ,288 All 69,519 +4, , , , Combining the assumptions described above, the impact on admitted patient spells at West Cumberland Hospital in 2014/15 is shown in Figure Figure Admitted patient spells 2014/15 Admission type 2008/09 Population projections Daycase rates Closer to Home Cancer screening Market share Reconfiguration 2014/15 Daycase 10, ,050 Elective inpatient Non-elective inpatient 2, ,438 16,538 +1, ,935 All 29,435 +2, , ,423 Validation of Planned Activity against 2010/11 Actual performance The Trust continues to validate actual performance against the activity projections used to support the re-development. Since the preparation of the detailed capacity plan, out-turn data has become available for years 2009/10 and 2010/ The trends identified from this analysis show: Daycase Activity has increased above plan but is offset by a decrease in elective in-patient admissions. This demonstrates improved performance in day surgery and hence reduced use of inpatient beds. Emergency Floor The plan assumed earlier achievement of significant West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 98

99 reductions in attendances. However it is acknowledged that planning assumptions were understated and this is taken account of in the re-development. Outpatient First and Follow Up Appointments are in line with the plan and reducing as expected. Non-Elective Inpatients have reduced below the plan level however some of this movement is due to the reclassification of data capture between 2008/09 and 2009/10. Excluding this, the activity is in line with plan. Elective Inpatients Elective inpatients are reducing in line with the day surgery increases and also include a reduction caused in 2010/11 by the cessation of elective surgery for a 4-6 week period during the flu pandemic. The result of these changes is an income level at the lowest point in 2010/11 in accordance with original plans. This is also complemented with a bed reduction from 353 to 233 in March 2011 that is ahead of original plans The following charts summarise the movement in activity from the 2008/09 starting point of the modelling against the actual 2009/10 and 2010/11 out-turn. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 99

100 WCH Daycase - Activity Actuals compared to Plan WCH Emergency Floor - Activity Actuals compared to Plan 11,600 11,400 11,200 11,000 10,800 10,600 10,400 10,200 10,000 9,800 9,600 9, / / / / / / /15 31,000 30,000 29,000 28,000 27,000 26,000 25,000 24,000 23, / / / / / / /15 Actuals Plan excluding waiting times plan Actuals WCH Outpatient First Appointments - Activity Actuals compared to Plan WCH Outpatient Follow Up Appointments - Activity Actuals compared to Plan 25,000 60,000 24,000 50,000 23,000 22,000 21,000 40,000 30,000 20,000 20,000 19,000 10,000 18, / / / / / / / / / / / / / /15 Actuals Plan Excluding Waiting Times" Actuals Plan Excluding Waiting Times" WCH Non-Elective - Activity Actuals compared to Plan WCH Elective Inpatient - Activity Actuals compared to Plan 18,000 3,000 16,000 14,000 2,500 12,000 2,000 10,000 8,000 1,500 6,000 1,000 4,000 2, / / / / / / / / / / / / / /15 Plan Actuals Actuals Plan Excluding Waiting times" Projected bed requirements 2014/ The total inpatient beds of 220 compares with 353 historically. The reduction is achieved by moving some activity to day cases and reducing length of stay to the 75% percentile which is facilitated by new models of care and the innovative design of the redevelopment. Projected operating theatre and endoscopy room requirements 2014/ Combining the projected activity in Figure 3.14 with the availability and utilisation assumptions described above, theatre and endoscopy room requirements for the redeveloped West Cumberland Hospital in 2014/15 are shown in Figure West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 100

101 Figure 3.15: Operating theatre and endoscopy room requirements 2014/15 Theatre type 2014/15 requirement Dedicated emergency 1 Non-emergency and orthopaedic trauma 5 Obstetrics 1 Minor operations 2 Endoscopy 2 Capacity requirements to 2019/ The capacity planned in the redeveloped West Cumberland Hospital will be sufficient to accommodate anticipated growth in day surgery, endoscopy, chemotherapy, dialysis, operating theatres and outpatients to 2019/20 and beyond, without the need to increase throughput, availability or utilisation of capacity Assuming that occupancy of inpatient beds is not increased beyond the original 84% planning assumption, a reduction in average lengths of stay is required each year in addition to the upper quartile benchmarks assumed to be achieved in 2014/15. In order to offset the anticipated growth in demand for inpatient beds, upper decile length of stay benchmarks would need to be achieved by 2019/20. This would allow additional activity to be accommodated without the need for additional beds. Average lengths of stay at West Cumberland Hospital would therefore change as follows: 3.64 days actual in 2008/09; 3.54 days in 2014/15; 3.44 days in 2019/ Model of Care The Closer to Home strategy explicitly recognises the need for high quality and sustainable acute services in West Cumbria and this has been further underpinned by the recent development of an integrated Clinical Strategy across the local health economy. Whilst reconfiguration of services to the new integrated model of care is currently under way, it cannot be fully realised without redevelopment of the hospital site The clinical strategy and models of care have been built on key QIPP principles particularly in relation to prevention or alternatives to admission and delivery of efficient and effective care pathways which provide right person, right skills, right time, right place The new West Cumberland Hospital is a key vehicle for changing the way clinical services are delivered. Integrated teams of primary and secondary care specialists will work together in the hospital and secondary care specialists will work across north Cumbria. There will be an emphasis on rapid senior assessment through an integrated emergency floor staffed by a range of clinicians to ensure rapid assessment and care planning for the most appropriate setting. This model will be for both children and adults and will result in a well-managed and coordinated care pathway which spans across all aspects of the patient s care The size of the catchment area served and the volume of activity in West Cumbria is to some extent supportive of arguments that hospital services in West Cumbria should be reduced and concentrated in Carlisle. However, as described, regeneration of the region is dependent on the provision of acute healthcare in the locality, and the geographical West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 101

102 isolation of the area means that travel to Carlisle to receive care is unrealistic for patients and visitors, particularly in light of levels of deprivation, and does not support the Closer to Home principles These combined factors have led to the development of the new model of care that supports the Closer to Home strategy and maximises critical mass at the hospital. Whilst reconfiguration of services to the new model is currently underway, it cannot be fully realised without redevelopment of the hospital site The new model of care will result in a change of focus from inpatient care to patients being more proactively managed in the community using assessment and treatment through new front of house services and ambulatory care services to manage the demand for admission to hospital inpatient services where possible, as demonstrated in the figure below. Figure Current and New Model of Care The care delivery model described in the Clinical Strategy consists of the following segments of care: Maternity There will be one consultant-led service delivered across two sites with a dedicated anaesthetist in support such to ensure emergencies can be responded to within 30 minutes. The implementation of cross-site rotas, to maintain standards, given the small number of deliveries at both sites will be required. SCBU services will be at both sites, with increased use of nurse practitioners particularly at WCH Anaesthetic cover at WCH will also be utilised to support other on site anaesthetic needs, prioritising obstetric care but not constrained only to obstetric care given the low levels of anaesthetic obstetric activity The models of care for obstetrics in North Cumbria have been the subject of a number of external reviews. This future model has been based on the conclusions of these reviews and additional clinical enquiry by local GP commissioners, Public Health consultants and secondary care consultants. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 102

103 Gynaecology The vast majority of Gynaecology emergencies are not severely ill and relate to early pregnancy bleeding. The numbers are small and they could be sent home after an assessment to return for a procedure on the following day. More severe episodes e.g. ectopic pregnancy should follow the complex surgery principles. Children Most children and young people will experience illness at some time. Most of their health needs will be met in the home and only a small number should need rapid access to a full hospital admission. In Cumbria 17% of all attendances are by 10 to 19 year olds compared with 14% nationally. Of those attending A&E, 10% (almost 3,500) were admitted for treatment. Hospital services contain some of the most critical skills and the model is therefore based on deploying these skills more widely within local community based services. The aim of this service is to contribute to the health and wellbeing of all children in Cumbria, and particularly where they relate to acute and severe health need. Acute illness or injury will be managed outside hospital where safe and efficient to do so The hospital element of an integrated local service will be provided at both hospital sites (WCH and CIC). It will include robust assessment, rapid response and hospital at home services supported by the paediatricians working in the community, in-reaching into the hospital assessment services and working as part of the Emergency Floor. Senior A&E practitioners will have advanced paediatric life support skills The Cumberland Infirmary will provide a full range of inpatient, outpatient and paediatric assessment and treatment services. At West Cumberland Hospital there will be a senior paediatrician presence as part of the Emergency floor team at peak times to reduce the need for hospital admissions. There will be a paediatric assessment and treatment service (PATS) acting as the front end of the hospital, supported by paediatric beds. The purpose of the beds is to support the assessment area. The Emergency Floor There will be an Emergency Floor and integrated assessment service on both hospital sites which has three key components: Single call handling and triage Integrated assessment and treatment services Community based urgent care service The Emergency Floor will integrate all the services currently delivered by CHoC, PCAS, the A&E department, Nurse Practitioners and some of those delivered on paediatric wards Community hospital-based minor injury services will continue to be integrated with Community Teams however the new service will provide clinical leadership, common standards, outcome measures and common pathways as part of a single governance framework The model provides appropriate senior clinical assessment using facilities for imaging, assessment and treatment. There will be rapid access to diagnostics and specialist support which may at times be provided at distance (e.g. by phone and telemedicine, most usually to WCH from CIC). This must be available 24/7 in order to support the Hospital at Night team The Emergency Floor will be staffed to provide an appropriate senior assessment from a mix of consultant, primary care and middle grade doctors working shifts and sharing skills. The team will include A&E consultants, acute physicians, surgeons, GPs and nurse practitioners. Out of hours services should consider any doctors in training at F2 level as trainees. Non Elective Care There will be a range of skills and facilities available 24/7 to provide stabilisation, initial West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 103

104 treatment and on-going care in the place most appropriate to the clinical needs of the patient. This will involve transferring patients from West Cumberland Hospital to the Cumberland Infirmary and from both hospitals to other specialist units when and if required due to the severity and complexity of their problems. Elective Care Elective care will be provided at both hospital sites. The aim will be to develop West Cumberland Hospital as a site which provides sophisticated operating techniques in relatively fit patients requiring brief or day case admission, such as orthopaedic care. This model would be attractive to medical trainees in the future. Sustainability of services will rely on the local services offered and attracting patient flows from a wider catchment area An ambulatory care model for elective care will increase the work undertaken in primary care for pre-operative assessment and follow up as well as the development of one stop shop services. GPs trained in surgical techniques could reduce the need for junior doctors. Hospital at Night A Hospital at Night system will be implemented on both hospital sites. The evidence is that it is efficient and can improve outcomes. A team led by Nurse Practitioners with senior medical support which could include primary care doctors who are working on-site at night in the Emergency Floor. Acute Medicine Both sites will have a team of consultants operating as Acute Physicians working in the A&E and the assessment areas as part of the Emergency Floor. Acutely ill adults will be assessed either from a GP call or an A&E attendance. The Acute Physician will have no other commitments. A key role will be close liaison with the community STINT and other admission avoidance services and ensuring patients requiring admission are placed on the most appropriate pathway with access to sub-specialty services, not all of which may be on-site There may be support from middle-grade, primary care and some juniors in training but the early senior assessment is crucial. This service will require shift based rotas for senior clinical staff which will represent a significantly different way of working It is expected that all admitted patients will be reviewed the following morning by a senior physician (consultant or middle-grade) from the team for that ward to confirm the on-going care pathway and to ensure a predicted length of stay is established prompt intervention or discharge. Acute Specialist Medicine The full range of Acute General Medical Services will be available 24/7 and will be delivered in the most cost effective and clinically appropriate setting. Specialist rotas, for cardiology, gastroenterology, respiratory medicine, GI bleeding and stroke will be established on a single north Cumbria basis but serving both hospital sites. In particular the model for cardiology will concentrate expertise on the Cumberland Infirmary site in order to facilitate the development and delivery of PCI and other interventions In relation to stroke services, the Telestroke initiative will provide local scanning, remote reading and assessment followed by thrombolysis as appropriate. Of equal or greater importance is the ability to ensure that patients with acute stroke are triaged rapidly to an acute stroke bed where there is a concentration of skills and to develop further the rehabilitation phase in community settings including community hospitals. Acute stroke services will be provided on both sites. Elderly Care The model of integrated working will include a rapid assessment service, led by Elderly Care Physicians as part of the development of the Emergency Floor. The Physician will work as the clinical lead of an integrated secondary and primary care assessment West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 104

105 pathway for elderly care patients. This will ensure that GPs and community teams have access to rapid advice for the on-going care of older people at home (reducing hospital admissions) as well as agreed care plans for patients at the earliest stage Elderly Care Physicians will also support primary care teams in General Practice, Community Hospitals and other community services. Long Term Conditions The future model of care for people with long term conditions will be based on a community-based model similar to the one already established in Cumbria for diabetes care. Extending this model to other long term condition groups will be based on Consultant Physicians for common long term conditions working in the community with designated capacity for inpatient admissions, at both hospital sites. Outpatient clinics which do not require fixed or complex diagnostics will also be delivered in community settings, in line with the ambulatory care model. Where applicable, Consultant Physicians will be included in the acute medicine rotas For less common long term conditions, for example aspects of neurology, Consultant Physicians may need to work as a network across sites and potentially across other NHS trusts These new care pathways, together with the significantly improved clinical adjacencies within the new hospital, with enable much shorter and more efficient patient pathways to be implemented The figures below show how the current patient journey for obstetric emergency admissions, as an example, will be dramatically streamlined by implementing the new model of care in a redeveloped WCH. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 105

106 Figure 3.17: Current Obstetric Emergency Admissions Pathway Emergency Admission admission Ambulance to via L2 ambulance to L1 Maternity A&E Unit Exit Maternity Maternity Theatre Theatre LRecovery3Recovery Exit Communal lift L3 Exit communal lifts Enter Communal L6 Lifts L6 Pass through Endoscopy Pass through Unit Endoscopy Unit Public circulation Zone Resus L1 enter lift Exit lift L2 Maternity Assess Unit public circulation zone Cross public corridor Porter/ns/midwife to Labour ward trolley transfer Enter Labour Travel Ward up long ramp ramp Enter Recovery Enter Maternity Anaesthetic Room Enter Exit Recovery Maternity Theatre Pass through Labour Ward Enter Corridor Maternity Discharge Home Recover Or Or If If requiring requiring ITU Intensive Care Care Midwifery Transfer - Exit Maternity Ward Pass through Exit communal lift public L6 circulation space L6 Pass through Endoscopy Unit Pass through Endoscopy Enter public Unit circulation Zone Pass through Endoscopy Enter Public lift L6 Enter delivery Pass room through Radiology Dept Resuscitation / Travel Assessment down long / temporary Theatre public prep Theatre Cross decision corridor I into Maternity Theatre Exit Enter Recovery bedroomto circulation area Midwife Transfer to Maternity Ward Midwife Transfer to Maternity Ward Enter public Enter circulation communal zone Travel down temporary public corridor to Maternity Exit Lift L2 Ward Enter Maternity Enter public circulation Ward area Travel down long temporary public corridor corridor Await lift in public zone outside porters lodge Enter ITU Treatment Transfer to ward Pass through Endoscopy Exit Public lift Unit L2 Pass through Endoscopy Pass Porters Unit lodge and travel down long temporary public corridor Pass through Endoscopy Enter Maternity Unit Ward Anaesthetic s Enter L2 lift Enter communal lifts Surgery / Delivery Pass through Endoscopy Enter bedroom Exit communal lift L3 L3 Pass through Recovery Endoscopy HOME West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 106

107 Figure 3.18: New Obstetric Emergency Admissions Pathway Ambulance admission Admission L3 to L2 Emergency Ambulance Entrance A&E Enter Labour Ward Meet Midwife and transfer to patient bed lift Resus (Non-public zone) Resuscitation / Assessment / Theatre prep Enter ITU Exit lift L3 (One floor) Clinical corridor Assess (non public) Cross corridor into internal Maternity Treatment Pass through Enter Endoscopy Maternity Unit Pass down clinical Porter/ns/midwife trolley corridor transfer L3 Surgery / Delivery Pass through Enter Endoscopy bedroom Enter Or If requiring Intensive Care Transfer to ward Pass through Recovery Endoscopy er bedroom Enter bedroom Midwife / ODP Transfer Exit Maternity Unit Exit Emergency Floor HOME Internal corridor to post natal Pass down clinical corridor L3 (non- Enter patient bed lift L3 Exit patient bed lift L4 HOME Enter patient bed lift (non public) Exit lift L3 (one floorto controlled West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 107

108 The figures below show how the current patient journey for suspected acute stroke, as a further example, will be dramatically streamlined by implementing the new model of care in a redeveloped WCH. Figure 3.19: Current Suspected Acute Stroke Pathway Ambulance admission Ambulance A&E admission L2 A&E L2 Up long ramp Up long ramp Enter CCU Enter CCU Pass administrative Pass administrative offices offices Enter public circulation Enter public area circulation area Resus Resus Through Radiology Through AreaRadiology Area Treatment Treatment Enter public circulation Enter public area circulation area Enter communal Enter lift communal L4 lift L4 Travel up long ramp Travel / public up long corridor ramp / public to radiology corridor to radiology Pass through Radiology Pass through to Rad Radiology Waiting area to Rad Waiting area Enter public circulation Enter public area circulation area Transfer to Medical Transfer bedto Medical bed Enter Medical Enter Ward Medical L4 Ward L4 Exit lift L2 into public/ Exit lift staff L2 into circulation public/ space staff circulation space Enter CT room Enter CT room Enter lifts L2 Enter lifts L2 Treatment Treatment Pass porters lodge Pass and staff porters union lodge and office staff union office Enter A&E Enter A&E Exit CT into Radiology Exit CT waiting into Radiology area waiting area Through Radiology Through Radiology Down long ramp Down long ramp Exit communal lifts Exit communal L4 lifts L4 Pass administrative Pass administrative offices offices Exit Medical Ward Exit Medical L4 Ward L4 Enter Stroke Unit Enter Stroke Unit Travel down basement Travel corridor down L2 basement (pass vascular corridor L2 laboratory (pass vascular / medical laboratory physics / / secretarial medical physics offices) / secretarial offices) Travel down staff corridor Travel to down J Block staff corridor to J Block Decision to admit Decision to admit Pass NP assessment Pass NP area / public assessment other pts area / public other pts Rehabilitation care/treatment Rehabilitation care/treatment Pass offices /seminar Pass room offices / consultant /seminar offices room / and consultant Research offices and offices Research offices HOME/Residential care/nursing HOME/Residential home care/nursing home Figure 3.20: New Suspected Acute Stroke Pathway Ambulance admission Ambulance L3 A&E admission L3 A&E Through double doors Through into A&E double Resus doors / Cubicle into A&E Resus / Cubicle Decision to admit Decision to admit Resus Resus Through double Through doors into double Radiology doors into Radiology Cross patient / staff Cross corridor patient / staff corridor Enter ACVU single Enter room ACVU single room Direct access into Direct CT access into CT Treatment Treatment Exit CT Exit CT Enter dedicated bed Enter lift dedicated L3 bed lift L3 Exit ACVU Exit ACVU Exit bed lift L4 Exit bed lift L4 Enter acute medical Enter acute bed medical bed Enter short ramp to Enter stroke short unit ramp L4 to stroke unit L4 Treatment Treatment Rehab treatment Rehab treatment Exit medical Exit ward medical ward Home / Nursing Home Home / Nursing / Residential Home Care / Residential Care West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 108

109 The figures below show how the current patient journey for day cases under general and local anaesthetic will be dramatically streamlined by implementing the new model of care in a redeveloped WCH. Figure 3.21: Current Day Case Operation under GA / LA Pathway Walk in or Ambulance Walk in or Admission Ambulance L3 MAIN Admission ENTRACE L3 MAIN (public ENTRACE zone) (public zone) Exit M Ward Exit M Ward Enter communal lift Enter L2 Maternity communal lift L2 Unit Maternity Unit Enter Theatre Enter Suite Theatre Suite Enter M Ward Enter M Ward Through to lifts in public Through circulation to lifts in public area circulation L3 area L3 Pass through public Pass circulation through public arena circulation L6 arena L6 Exit Lift L3 (Obs/Gynae Exit Lift L3 (Obs/Gynae theatre theatre Enter Anaesthetic Enter room Anaesthetic room Recovery Recovery Exit communal lifts Exit communal at L6 lifts at L6 Pass through public Pass circulation through public area circulation area Enter Pre-op (M Enter Ward) Pre-op (M Ward) Admit to 4 bed cubicle Admit to assess 4 bed by cubicle consultant assess / Anaesthetist by consultant / Anaesthetist Enter Theatre Suite Enter L6 (General Theatre Suite Theatres) L6 (General Theatres) OR Enter communal Enter lifts communal lifts Exit Communal lift Exit L5 (General Communal lift Theatres L5 (General Theatres OR Long route to Orthopaedic Long route to Theatre Orthopaedic from M Theatre wardfrom M ward OR Long route to Ophthalmology Long route to Theatre Ophthalmology from M ward Theatre from M ward Enter Operating Enter Theatre Operating Theatre Enter Recovery Enter Area Recovery Area Home of Admit Home of Admit Wait to be called Wait for theatre to be called for theatre Pass porters lodge Pass porters lodge Transfer to theatre Trolley Transfer (Ns to Porter) theatre Trolley (Ns Porter) Pass Radiology Pass public/staff Radiology entrance public/staff entrance Travel down long temporary Travel down public long temporary corridor public corridor Figure 3.22: New Day Case Operation under GA / LA Pathway Walk in or Ambulance admission Walk in or directly Ambulance into Ambulatory admission Care directly Medical into Investigations Ambulatory Complex Care Medical L3 Investigations Complex L3 Admit to own cabin Admit or directly to own into cabin Minor directly Op Room into Minor Op Room Procedure undertaken Procedure undertaken Return round corner Return to own round cabin corner waiting to own area cabin for short waiting recovery area for short recovery Home Home West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 109

110 The figures below show how the current patient journey for orthopaedic trauma will be streamlined by implementing the new model of care in a redeveloped WCH. This example is selected as it illustrates the cross over from hot to cold areas. Figure 3.23: Current Orthopaedic Trauma Pathway Ambulance admission Ambulance A&E admission A&E Into A& E Into A& E Exit lift L3 PUBLIC Exit ZONE lift L3 PUBLIC ZONE Resus or Cubicle Resus or Cubicle Decision to admit Decision allocate to bed admit allocate bed Through Cons office Through suite Cons and public office waiting suite area and public waiting area Overwater Ward Overwater Ward To X-Ray (trolley or To chair) X-Ray with (trolley Porter/Nurse chair) with Porter/Nurse Through A&E public Through waiting A&E area public waiting area Through public waiting Through area public to L2 LIFT waiting (in area public to L2 LIFT area) (in public area) Exit lift at L3 Exit lift at L3 Through cons office Through suite and cons public office waiting suite area and public waiting area To daily Physiotherapy To daily (chair Physiotherapy or trolley) (chair or trolley) Up long corridor via Up ramp long access corridor via ramp access Overwater Ward Overwater Ward Through public waiting Through area public and cons waiting office area suite and cons office suite Public zone lift L3 Public zone lift L3 Through Radiology Through to waiting Radiology area to waiting area Into X-Ray Into X-Ray To theatre (trolley) To with theatre ODP and (trolley) with nurse ODP and nurse Through public waiting Through area public and cons waiting office area suite and cons office suite Exit lift public zone Exit lift L4 public zone L4 Travel along public Travel corridor along public corridor Enter Physiotherapy Enter Physiotherapy Dept Dept Out to Rad Waiting Out to area Rad Waiting area Public zone Lift L3 Public zone Lift L3 Stairs training on public Stairs staircase training on public level staircase 4/5 level 4/5 Through Radiology Through Radiology Orthopaedic Anaesthetic Orthopaedic Room Anaesthetic Room Staff zone Lift L5 Staff zone Lift L5 Return to ward via Return public corridor to ward via public corridor Down long corridor via Down ramp long access corridor via ramp access Orthopaedic Orthopaedic Theatre Theatre Overwater ward Repeat Overwater physio ward journey Repeat daily physio journey daily Through Cons office Through suite/public Cons office waiting suite/public area waiting area Orthopaedic Recovery Orthopaedic Recovery Lift (staff zone) L5 Lift (staff zone) L5 HOME HOME Figure 3.24: New Orthopaedic Trauma Pathway Ambulance admission Ambulance A&E admission A&E Resus or Cubicle Resus or Cubicle To X-Ray (trolley or To chair) X-Ray with (trolley Porter/Nurse chair) with Porter/Nurse Return through double Return doors through directly double into doors A&E directly cubicle into A&E cubicle Direct access via double Direct doors access to via waiting double doors area to waiting area Into X-Ray room Into X-Ray room Daily Physiotherapy Daily in own Physiotherapy room/therapy in own Room room/therapy in ward Room areain ward area Stairs training on Stairs non-public training on staircase non-public level 4/5 staircase level 4/5 Repeat physiotherapy Repeat in physiotherapy ward in area ward daily therapy area daily Decision to admit Decision allocated to hot admit allocated bed hot bed HOME HOME Cross patient corridor Cross to patient L3 dedicated corridor patient to L3 dedicated bed lift patient bed lift Exit lift L4 into patient/staff Exit lift L4 into corridor patient/staff corridor Into cold surgical ward Into cold singlesurgical en ward suite single room en suite room Cross patient Cross corridor patient corridor To theatre (trolley) with To theatre ODP / nurse (trolley) with ODP / nurse Direct access into Orthopaedic Direct access Theatre into Orthopaedic (patient Theatre anaesthetised (patient in anaesthetised theatre in theatre Recovery Suite Recovery Suite West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 110

111 Summary West Cumberland Hospital is in the process of radically revising its model of care in line with the agreed Clinical Strategy, in order to continue to provide high quality, accessible care for the population of West Cumbria while achieving maximum productivity, efficiency and value for money Whilst significant work has been undertaken to develop this new model of care, redevelopment of the hospital site will facilitate a new model for healthcare to be fully realised in line with national policy direction A hot floor will provide urgent and ambulatory care to patients, minimising the number of admissions to the cold floor through appropriate assessment, treatment and discharge and step down care facilities On the cold floor, flexibility in bed numbers between surgery and medicine will enable bed numbers to be effectively managed and generic staff to achieve efficiencies in workforce. Discharge is facilitated by primary and secondary care teams, and a primary care managed step down unit on site The introduction of cabins, co-located with theatres will provide further staffing and bed number efficiencies for day case surgery and prevent bed blocking on the cold floor Family services will focus on assessment and discharge, enabled by strong links to community services Productivity and efficiency gains will be enabled throughout the hospital through improved clinical adjacencies and workforce reconfiguration, enabling the move towards upper quartile performance. 3.8 Workforce Planning and Development The West Cumberland Hospital workforce will make a unique and essential contribution to the redevelopment of the hospital, particularly in delivering the benefits of the new model of care. Structure The executive team established a new operational structure in September This new structure is intended to enhance capacity and capability to deliver the extent of organisational change and development required in the coming years The structure consists of three distinct clinical units covering key business areas: Medicine Surgery Family Services and Clinical Support Each division has a management board which acts as the assurance, performance management and decision making forum for service improvements and developments, with devolved autonomy, including management of budgets Clinical divisions are managed by a Divisional General Manager, Associate Medical Director and Head of Nursing. Workforce Strategy Developments in primary and community services as part of the Closer to Home agenda represent a significant and transformational change to healthcare in North Cumbria. The way local services will be delivered needs to be reflected in future workforce strategies and staff profiles. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 111

112 Social care staff/other Scientific, therapeutic and technical staff Nursing, midwifery and health visiting learners Nursing, midwifery and health visiting staff Healthcare assistants and other support staff Administration and estates Medical and dental / / / / / Since 2008 the Trust has strategically managed workforce numbers and is one of only three Trusts in the North West region that did not increase workforce numbers in 2009/10. The following chart shows the key staff groups and also demonstrates a 15% reduction in Administration and estates partly offset by an increase in Healthcare assistants The model of care for WCH has been redesigned to improve quality, productivity and efficiency of patient care and to align with the Care Closer to Home agenda. It is essential the right staff mix is available to support the delivery of the new model and realise the planned benefits In the new model, with delivery of care segmented by length of stay rather than clinical condition (in order to reduce artificial variation in the delivery of care and maximise efficiency) there will be greater need for multi-skilled nursing staff, with lesser reliance on nursing specialists than in the current model The new proposals combine existing wards and create a configuration that allows for flexibility of staffing in line with occupancy. Additionally, specific benefits will be achieved through improved adjacencies from theatres to wards. Currently, transfer times can take up to ten minutes as staff navigate lifts and corridors, and each transfer must be accompanied by a qualified nurse, with a minimum of 2 qualified nurses maintained on the ward. The new design puts all theatres next to ward areas, significantly reducing travel times and the associated costs To realise the model and associated workforce efficiency, role redesign will therefore be imperative. This will be supported in a large part by natural wastage from retirement and turnover, and supported moves into community and primary provided care Not only will the workforce be multi-skilled, it will additionally be multi-organisational, with GP input to the emergency assessment unit, and joint working between primary and secondary care in nurse-led triage and discharge. These changes will necessitate the movement of some existing staff between organisations, and is facilitated by partnership with other Cumbrian Trusts. Flexibility around pensions will allow for more efficient workforce changes and also to allow for more flexible promotion and development opportunities for employees between organisations Organisations will need to work in partnership in order to redesign the workforce to deliver the Closer to Home strategy. This will require a shift in capacity and workforce delivering in primary care and community based services e.g. community hospitals. This will be a key driver for our workforce changes together with specific service developments driven by commissioning intentions and market analysis. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 112

113 Implementation of Workforce Strategy This plan complements the existing Trust Turnaround workstream plans and provides the process to deliver and monitor workforce reconfiguration as the Trust strives to deliver services within an affordable financial envelope. The structure of the plan will follow the NHS North West Workforce Planning template covering: Health Delivery Recruitment Retention Mutually Agreed Resignation Scheme Redundancy Re-Deployment Vacancies Turnover Sickness Absence and Quality Appraisal and PDP development Quality, Innovation, Productivity and Prevention (QIPP) Assumptions made in assessing affordability Bank and Agency cost reductions Sickness Apprenticeships Pay Terms and condition reviews Reduction in overtime usage Review of Out of Hours working AfC Benefits Realisation Workforce Modernisation, New Roles, Enhanced Roles Consultant and GP Development (New models of working emerging from Clinical Leaders forum where Acute Consultants work in Community to up-skill GP s/practitioners to reduce hospital admissions) Competency Based Management 10 high impact HR changes Energise for excellence New Roles required Non-Medical consultants Apprenticeships Volunteers/non-paid roles in the future Assistant Practitioners Night Outsourcing Implementing KSF The Trust has developed a detailed workforce turnaround plan that includes the following: The workforce profile will significantly change over the next five years in terms of head count and profile (pay band), reflecting the shift in patient care from acute to community services and also taking account of the Clinical Strategy which is currently being developed with the GP s. The workforce profile will be actively project managed once the outcome of the clinical strategy is known. The Trust s Workforce Strategic Aims are to deliver the following: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 113

114 Well trained, highly motivated, competent staff; excellent people management; excellent leadership; patient and customer-centred care A culture which thoroughly engages all staff in the modernisation, quality improvement and delivery of services Maximum Productivity; efficiently run services; cost and waste reduction; patient satisfaction; customer care Highly trained staff using modern techniques in an appropriate state of the art setting will deliver excellent patient outcomes The age profile of our workforce provides some flexibility for reducing workforce costs over the next five years through natural wastage, i.e. retirements. The future profile will place greater emphasis on developing new roles. Increases in workforce performance and productivity are also expected with a significant reduction in sickness absence and the consequent current flexible workforce costs (aiming for a sickness target of 3% versus the QIPP regional target at 3.5%. Currently 13% of the workforce is aged 56 years and over. Many of these employees may be in a position to retire in the near future, as nurses and some other health professional terms and conditions currently allow retirement at 55 years with immediate pension benefits. This presents both an opportunity, in terms of reducing workforce costs in line with our workforce plans, and a threat, in terms of losing key skills from the organisation. Once the key skills have been mapped, the Trust will be in a position to consider flexible retirement options and further role re-design options. The Trust is working in partnership with other Cumbrian NHS organisations and is exploring the flexible options afforded by the pension scheme. The turnover rate at 9% is below large acute trusts in the NW at 11% but much higher than the average for the whole of Cumbria (6%). Turnover rates reflect the rural geography and relative isolation of many areas in Cumbria where staff tend to stay in the same job and location for much longer than the national average. Movement between employers is far easier within a travel to work area. Management of sickness absence, in line with the recommendations of the Boorman review, is a key workforce target. Nationally Boorman recommends that Trusts can reduce sickness absence by one third by tackling stress and employee wellbeing issues. This Trust currently spends around 0.5m on sick pay each month. It is estimated that two thirds of absent employees are covered with expensive overtime, bank or agency workers. Reducing our sickness absence by around one third would save around 200,000 each month. In addition considerable savings would be made on temporary replacement staff. The Trust is firmly committed to the principles of partnership working and employee engagement. With around two thirds of our resources directly committed to paying our staff, the Trust needs to maximise this investment by ensuring HR processes and procedures follow best practice. The Trust recognises that partnership working with staff representatives and other key stakeholders is essential in order to continuously improve and maintain the quality of patient care provided to our patients. The Trust is also working in partnership with trade union representatives to implement the new Management of Sickness Absence policy and thereby further reduce the demand for temporary staff and overtime. A revised sickness absence policy has been agreed and a reduction programme implemented which features training for managers, case West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 114

115 conferences on long-term sickness, and a consistent approach to return to work interviews, with a view to achieving 3% sickness absence. The Trust has set a target of 3% and aims to achieve the required reduction by targeting areas with high levels of absence and by taking a pro-active approach to well-being, Health and Safety and Occupational Health. The Trust has recently established a Health and Wellbeing group and will take a proactive approach to managing stress in the workplace. The Trust in the process of fully implementing Night in order to ensure that junior doctor s rotas are compliant with working time regulations. The project anticipates a highly ambitious set of benefits; Better experience for patients with more appropriately skilled staff, less waiting and less repetitive clerking Better clinical outcomes through incorporating improved rapid response/crash team and a new critical care outreach service Better training for junior doctors by reducing the proportion of their night time hours and increasing the proportion of properly supervised day time hours Better career opportunities for non-medical staff through extended and new roles Significantly lower staffing costs by 2012 by reducing the number of doctors and marginally increasing the number of nurses working in the night team The Trust has a robust vacancy control panel and has improved its authorisation process for the use of locum and agency medical staff. It is anticipated that locum costs will reduce by 1-2m As a result of modernising medical careers and the implementation of EWTD the Trust has lost medical resource of about 14% over recent years. We have therefore undertaken a wide scale review of rotas and will continue to refine them to ensure we continue to deliver high quality patient care and excellent training opportunities for our junior doctors whilst simultaneously meeting the needs of the EWTD. EWTD has been and remains a significant challenge for the Trust with much work and planning having been undertaken since April 2009 by the clinical and project leads for EWTD, whilst a number of shortterm measures to help achieve compliance across the multiple rotas in the Trust. There are however a number of rotas that will need to change over the next two years to make our plan robust and sustainable, particularly in relation to managing increasing challenges with recruitment of medical staff Agenda for Change Benefits Realisation Designing new and extended roles built around patients needs to optimise skill mix and assist in redesigning services around what the patient needs. Also, improving access by enabling extension of out of hour s services. The Trust also aims to attract workforce talent to Cumbria where there are skills gaps and developing key programmes to grow our own talent. The Trust is committed to careers promotion in local schools at all levels. Trust staff attend careers events and give presentations to all age groups. The West Cumberland Re-Development Plans The clinical strategy identified the need to develop the workforce to enable more integrated working across the economy. The future role development across the economy is now being defined as plans develop in a number of areas across family services, the emergency floor, and future advanced practitioner nursing There is a clear understanding that system wide working will require clinical teams to reach in and reach out across the economy to develop new models of care that benefit patients West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 115

116 and enhance the quality of care. This will require teams to work across traditional boundaries and transfer knowledge that can be used to develop patient awareness of managing conditions A detailed workforce plan has been developed for WCH and will continue to evolve as the planning detail defines new patient pathways. The workforce plan summary for WCH is set out below. This shows an overall reduction in pay costs of ( 6.3m) from 50.6m in 2009/10 to 44.3m in 2018/19. The reduction currently includes 142 WTE s out of 1,114 ( 12.7% from 2010/11) and also pay rate reductions achieved through skill mix changes Each variation in WTEs is supported by a detailed assessment of changes agreed through turnaround plans, or proposed rota changes, all approved by clinicians. The reduction in WTE s will be managed within the Trust through attrition and retirement profiles. These have been modelled in each area by band and so far indicate that overall reductions can largely be managed through attrition over time The Full Business case also identified the aging population where skills gaps and training needs highlighted. 19 Staff Engagement The Trust is committed to the principles of partnership working and employee engagement. With two thirds of resources directly committed to paying staff, the Trust must maximise this investment by ensuring HR practices and procedures follow best practice The Trust is conscious of the need to ensure that staff and their representatives are fully involved and consulted throughout the redevelopment of West Cumberland Hospital The formal mechanism for consultation with staff-side representatives is via the Trust Partnership Forum. This meeting is held monthly and involves representation from the Trust and from the major trades unions and professional associations whose members work within the Trust. Its purpose is to: Provide a forum for exchange of relevant information on policy and operational matters. Enable unions to represent fully and accurately the views of Trust employees. Allow managers to consult about Trust wide decisions likely to affect the wellbeing of staff The redevelopment of West Cumberland Hospital is regularly discussed at these meetings, and matters of concern are raised directly with the Project Team via the Deputy Chief Executive / Chief Operating Officer, who chairs the Partnership Forum and is also the SRO for the redevelopment project and Chair of the Project Board At an operational level, there is regular and positive communication between the Project Team and staff-side representatives with regard to the ongoing process of decanting services to alternative accommodation in preparation for the redevelopment. The support of staff representatives has been particularly valuable in encouraging large numbers of staff to become involved in the project via attendance at open sessions and other forums. Summary The Trust has a very challenging workforce plan that is fully integrated with the redevelopment and Trust Turnaround programme The re-development plan incorporates new ways of working and begins to develop new 19 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 116

117 Nurse Practitioner roles and the need for more generic consultant roles. This includes the continuous assessment of dealing with the EWTD objectives and implementation of Night The plan recognises a radical change in the workforce profile that can be addressed through the ageing workforce profile and flexibility of temporary contracts. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 117

118 4 Economic Case 4.1 Introduction In accordance with the Capital Investment Manual and requirements of HM Treasury s Green Book (A Guide to Investment Appraisal in the Public Sector), an economic appraisal of investment options was carried out in the OBC. This assessed the wide range of potential options developed in response to the potential scope identified within the Strategic Case (Section 3). The OBC identified a preferred option, which has now been further developed as part of this FBC This section provides a summary of the critical success factors, long list and short list of options, and preferred option identified at OBC. It also gives details of the updated preferred option developed during the FBC development. 4.2 Strategic Aims of the Project The strategic aims of the project are outlined below. Detailed work has been carried out to establish the benefits that the project is expected to deliver. This is summarised in section 4.6. Figure 4.1 Strategic aims of the project Strategic Aim 1. Ensure people live longer 2. Reduce the impact of illness on people s quality of life 3. Reduce lifestyle-related illness 4. Deliver quality health and health services efficiently 5. Identify health needs better and respond creatively 6. Balance collaboration and competition in the delivery of health services 7. Improve the efficiency of the health service and VFM 8. Secure the necessary skills and lead by example 9. Work closely with partners to ensure delivery of health service objectives Contribution of this Project Provide timely and effective treatment of illness and disease in high quality facilities with the latest equipment Early detection of disease will reduce morbidity. Contribute with partners in the health campus to promoting healthy lifestyles Cost of services will be better managed by reducing the unnecessary use of high cost acute care, and improving patient pathways Provide appropriate volumes of acute care for the populations of Copeland and Allerdale, taking account of predicted demographic changes and disease patterns Collaborate with other health / social care providers to offer seamless services within a campus location Flexibility of design and achievement of good clinical adjacencies will result in more efficient services and better VFM Attract and retain skilled healthcare staff to the area and support the Cumbria Master Plan. Development of a potential Health Campus and delivery of Closer to Home West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 118

119 4.3 Long-listed Options Identified in the OBC To develop a long list for the OBC the Trust identified a range of options to deliver the service requirements set out in Closer to Home and NHS Cumbria s Commissioning Strategy. These have been reproduced in the table below with a brief description and the reason for their inclusion or exclusion from the short-list of options. In considering options and taking into account the identified clinical priorities for the site, the Trust identified the following issues: An "Emergency Floor" (incorporating A&E, primary care emergency assessment, critical care and an acute assessment ward) cannot be created without a major reconfiguration and extension of existing buildings. There is no location within the existing buildings that will enable the provision of an integrated theatre department to modern space/ technical specifications. It is not possible to provide operationally functional inpatient wards with 100% single rooms within the existing footprints; it would be necessary to extend the width of the existing buildings and to create links at all levels between the four 'arms' of a cruciform building - this would require vacating the entire building, which would impede continuing service delivery and would represent poor value for money. Simply re-providing one or two of the three core clinical areas (A&E, theatres, inpatient wards) would not address the existing inefficiencies and impediments to effective service delivery - they would not enable the agreed objectives to be achieved. Figure 4.2. Long list of options identified in OBC Option Description Short-List (Yes/No)? Rationale Do Nothing Make no changes to current facilities other than routine maintenance and replacement of equipment. No Doing nothing would fail to improve the quality of patient facilities and prevent the introduction of a more efficient service by resolving known constraints to efficiency such as poor clinical adjacencies. It would also fail to address the backlog maintenance debt across the site and lead eventually to replace buildings and services in an unplanned way as their condition deteriorated to such an extent that they became unusable. Do Minimum (Short-List Option 1) Bring all existing facilities at West Cumberland Hospital to Estate Condition B and undertake minor redecoration and upgrade. Yes This option was short-listed as a baseline, since it would address backlog maintenance across the site and reduce the risk of an unplanned building or service failure. However, whilst it would deliver some improvement to the patient environment, within the constraints of the existing building it could not deliver significantly improved functional relationships and thus improvements to the safety and efficiency of services. It would also fail to provide an attractive modern working environment to West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 119

120 Option Description Short-List (Yes/No)? Rationale assist in attracting skilled clinical staff to West Cumbria. It would also require a lengthy and disruptive period of refurbishment works to the existing estate. New Emergency Care, Theatres and Imaging (Short-List Option 2) Minimum new build and refurbishment to meet critical requirements. Yes This option was short-listed as it would bring all retained buildings to Estate Condition B and re-provide in new build accommodation those services which are critical in terms of patient safety or efficiency and could not effectively be provided through reconfiguration of existing buildings. It would not re-provide inpatient wards in new-build accommodation but would allow for upgrade of existing wards for environmental improvements and to address basic mixed-sex accommodation issues. New Elective Care Centre and Ward Block, reconfigure and extend Emergency Care (Short-List Option 3) Extend and reconfigure A&E and provide inpatients and ambulatory care to be provided in new accommodation. Yes This option keeps emergency care services within Block H but provides a new extension allowing reconfiguration and a closer relationship to theatres and critical care whilst maintaining the adjacency with imaging. New theatres, outpatients, day surgery and inpatient wards are provided. New Emergency Care, Elective Centre and Wards (Short-List Option 4) Phased re-development of the majority of acute clinical services at the West Cumberland Hospital site. Yes This option provides the majority of clinical accommodation in new-build with the exception of a Women s and Children s Unit which would be provided within an upgraded existing Maternity block. Displaced services would be re-provided within vacated space in the main cruciform ward block. New Build on or Adjacent to Existing Site Re-provide all clinical and non-clinical services in West Cumbria in newbuild accommodation by redeveloping on or adjacent to the existing West Cumberland Hospital site. No A feasibility study indicated that a full new build solution was unaffordable within the capital funding available, and would be unlikely to be affordable even with the most optimistic assumptions regarding potential reductions in floor area. New Build Alternative Site Re-provide all clinical and non-clinical services in West Cumbria in newbuild accommodation on No A feasibility study indicated that a full new build solution was unaffordable within the capital funding available and would be West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 120

121 Option Description Short-List (Yes/No)? an alternative site. Rationale unlikely to be affordable even with the most optimistic assumptions regarding potential reductions in floor area. 4.4 Short list of Options Identified at OBC Stage During the development of the OBC, the short-listed options identified in the table above were defined and developed with the assistance of external health planners and architects. This generated initial schedules of accommodation and accompanying block diagrams sufficient to show space requirements and departmental clinical relationships. The short-listed options are summarised below. Figure 4.3. Short list of options identified at OBC stage Ref Option Description 1) Do Minimum Undertake essential backlog maintenance Carry out minor redecoration/refurbishment 2) New Emergency Care Centre New Imaging Department New Theatres Demolish B Block Transfer displaced wards to cruciform building Build new ECC, imaging and theatres 3) New Elective Care Centre New Inpatient Ward Block Demolish B Block Build new theatres and inpatient wards Reconfigured Emergency Care Centre Create link from H to D block reconfigure H block as Emergency Care Centre 4) New Emergency Care Centre New Elective Care Centre New Inpatient Ward Block Demolish B and P Blocks Build new Emergency Care Centre, Elective Care centre, inpatient wards and diagnostics 4.5 Preferred Option Economic appraisal results The table below summarises the results of the economic appraisal carried out by the Trust as part of the OBC. Figure 4.4. Economic appraisal results Option 1 Option 2 Option 3 Option 4 Qualitative Benefits Score Rank Initial Capital Cost West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 121

122 (including VAT) ( m) Rank Year Capital Cost ( m) Rank Revenue Costs ( m) Rank Equivalent Annual Cost ( m) Rank In selecting the preferred option the Trust sought to find the option which offered the best combination of benefits and costs, whilst remaining affordable in both capital and revenue terms to the Trust. The table indicates that Option 4 (New Emergency Care, Elective Centre, and Wards) demonstrates best value for money and was recommended in the OBC to be adopted as the preferred option This appraisal has been reviewed by the Trust since the OBC, and the Trust has concluded that the results are still valid. The results are as follows: Results of quantitative analysis The results of the quantitative Generic Economic Model are shown in 1-2. Initial Capital (Incl. VAT) Initial Capital( Excl VAT) Lifecycle Capital Total Capital Building Running Costs Efficiency Savings Disruption Costs Total Revenue Costs Total NPC Option Option Option Option Change Option 1 to Option This table shows that Option 4 delivers the lowest net present cost of 119.2m over 60 years and represents an overall 60.9m lower net present cost against Option 1. This reduced cost is achieved from: 25.0m - lower capital lifecycle costs the existing buildings will require major upgrades over the next 20 years and capital requirements increase as the buildings get older. 28.4m - lower building running costs achieved from a reduction in space 9.9m - Efficiency savings achieved by better energy efficiencies and reduced floor space with improved clinical adjacencies. (2.4m) - Expected disruption costs as facilities are re-configured. 60.9m - TOTAL NPC IMPROVEMENT COMPARED TO OPTION 1 DO MINIMAL West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 122

123 Capital costs of the preferred option The capital costs for the preferred, and the changes from OBC to FBC stage are shown below. Figure 4.5. Capital Costs for Preferred Option Option 4 OBC Approval 000 FBC 000 Change from OBC Approval 000 OBC Actual 000 Works Cost 80,984 62,746-18,238 69,809 Non Works Cost 1,600 2, ,600 Fees 6,895 7, ,411 Equipment 5,131 3,000-2,131 5,131 Planning Contingencies 4,400 4, ,400 Inflation Adjustment -7,062 (-956) 6,106 - Optimism Bias 4, ,697 - Subtotal 96,645 79,333-17,312 88,351 VAT 12,227 12, ,647 Total Cost 108,872 91,571-17,301 99,998 Source: FB forms: Note that the figure in the OBC approval column is that approved by the Department of Health in the OBC approval letter dated 4 August The figure shown in the FBC column is costed on the same basis as the DH approval. The actual cost of the scheme at OBC stage, as confirmed via the GMP agreed with the PSCP at that stage, was million as shown in the final column The movement in capital costs from the OBC to the FBC is in line with the budget reduction arising from the withdrawal of 10 million capital funding by the NWDA in 2010 post-obc approval. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 123

124 4.5.9 In addition, there has been a commitment from DH in its OBC approval to meet the additional costs of changes made to the rate of VAT (from 17.5% to 20%) since the OBC was prepared The capital costs will be incurred over a number of years and the phases of these have been provided by the design team as illustrated below. These reflect the specific phasing of capital expenditure associated with the preferred option. Figure 4.6. Phasing of Capital Costs 2009/ / / / / / / Total 000 Option 4 7,300 5,200 7,032 32,966 26,949 9,406 2,718 91, Capital Risks Source: FB forms Capital costs have been identified on the FBC cost forms which have been prepared by Rider Hunt, the independent Cost Advisor. The total capital figures are shown as 91,570,573 including VAT, and 79,332,349 excluding VAT. These figures include all allowances for completing the capital build within the timescale identified, including: Works costs plus abnormals Group 1 equipment PSCP fees PSCP contingencies PSCP Margin Trust direct fees Trust non works costs Trust contingencies Group 2, 3 and 4 equipment Applicable VAT to PSCP and Trust costs The identification and management strategy for all non-capital risks are addressed in detail in section 7.4 of the Management Case. 4.7 Conclusion A detailed option appraisal to select the preferred option was carried out at OBC stage. This identified a phased re-development of the majority of acute clinical services at the West Cumberland Hospital site as the preferred approach. This appraisal has been reviewed by the Trust since the OBC, and the Trust has concluded that the results are still valid. No changes have happened to the project which could result in the choice of preferred option changing The movement in capital costs from OBC to FBC is - 8.4m West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 124

125 5 Financial Case The redevelopment is an integral part of the Trust s forward financial planning as fully agreed with NHS Cumbria. The NHS Cumbria Board approved the plans set out below in March The Trust is also in the process of being acquired by Northumbria Healthcare NHS Foundation Trust following a decision in February 2011 where the Trust Board decided that it was not possible for the Trust to achieve Foundation Trust Status within the timescales set down by the Government. This process is now well underway and Northumbria were selected in January The acquisition is planned to be completed in the autumn 2012 and the redevelopment is a key part of the proposition. The Heads of Terms between the Trust and Northumbria were signed in May The plans set out below confirm that the West Cumberland Hospital business case will deliver a positive contribution to the Trust overall financial position from 2015/ The financial case below sets out: The Trust 2010/11 baseline income and expenditure and what proportion applies to the West Cumberland Hospital. Income overview 2012/13 to 2016/17 as agreed with NHS Cumbria. The PCT commissioning plans 2012/ /14. The Trust Turnaround programme and the link to clinical quality and safety. The Trust overall financial Income and Expenditure plan from 2010/11 to 2018/19. The West Cumberland Hospital financial plan 2010/ /19 both with and without the re-development. The Cumberland Infirmary Carlisle financial plan 2010/ /19. The proposed efficiencies specific to the re-development. The capital costs Funding of additional capital costs. The risks and sensitivities. 5.2 The Trust 2010/11 Baseline Income and Expenditure The Trust Income has been split between The West Cumberland Hospital and Carlisle Infirmary based upon PBR and a detailed review of the block contracts. The financial modelling will exclude SHA Support currently provided as part of the Trust Turnaround programme. The financial modelling includes a 2011/12 NHS Cumbria contract out-turn of 166.4m in line with Commissioners expectations. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 125

126 5.2.2 The table below shows the 2010/11 income compared to 2011/12 forecast. It shows that income is split 64% Cumberland Infirmary in Carlisle and 36% for The West Cumberland Hospital. Figure 5.1 Trust Income 2010/11 and 2011/12 Forecast NCUHT INCOME OVERVIEW m 2010/ /12 Forecast Change TOTAL TRUST Less SHA Support (20.6) (28.0) (7.4) Net Underlying (7.0) NHS Cumbria Contract Analysis NHS Cumbria Contract (7.6) Less PCT Contract Adjustment (4.8) (4.8) Additional CQUIN 0.0 NHS Overperformance/complexity NHS Cumbria Total (5.8) Other Income (1.2) TOTAL (7.0) WCH (2.6) CIC (4.4) TOTAL (7.0) The year on year Trust Income is expected to reduce by ( 7.0m). Changes between 2010/11 and 2011/12 are summarised below. Change from 2010/11 to 2011/12 m Total Trust Income 2010/ NHS Cumbria Reduction (5.8) Other Income (1.2) Total Underlying Income Forecast Change (7.0) Reductions in NHS Cumbria included follow up outpatient income and a range of other reductions agreed for 2010/11. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 126

127 5.3 Costs The Trust cost base for 2011/12 is forecast to be the same as 2010/11 at 221.8m (Excluding one-off turnaround and acquisition costs) The chart below shows that Pay costs have reduced by 3.6m but offset by increases in the PFI (Interest and Operating costs within Non-Pay), high cost drugs where costs are passed through to the PCT, and Other Non-Pay. Figure 5.2 Trust Cost Base 2010/11 and 2011/12 Forecast The Trust cost base is divided between the West Cumberland Hospital and Carlisle Infirmary except for corporate costs that have been apportioned by income. The 2010/11 Actual cost base has been used as a baseline and results in 93% of costs being specifically identified to sites. Figure 5.3 Trust Costs by Site West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 127

128 5.3.4 The costs have been specifically analysed between pay and Non-Pay by site and the remaining 7% of corporate costs have been allocated proportionately by income. The corporate costs include Executive, finance, procurement, Information Management, and Training. The table below shows a summary of the Total Trust cost base by site. TRUST 2010/11 COST SUMMARY m WCH CIC TOTAL Pay Non-Pay Corporate TOTAL % Specific to site 90% 94% 93% % Allocated - Corporate 10% 6% 7% Total 100% 100% 100% (Includes 1.0m One-off costs) The charts below illustrate the weighting of costs between WCH and CIC that illustrates the larger proportion of non-pay in CIC caused by the PFI. The non-pay in CIC represents 38% of the cost base compared to 26% in WCH. Figure 5.4 Trust % Costs by Site 5.4 Income Overview 2012/13 to 2016/ The chart below summarises the Trust Income as agreed with NHS Cumbria. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 128

129 Figure 5.5 Trust % Costs by Site The underlying NHS Cumbria income is expected to fall as Tariff reductions are planned to continue at -1.5% per year, equivalent to 15m by 2016/17. A total of 7.8m commissioning reductions are achieved over 3 years The income remains almost flat overall due to demographic growth, increased case complexity. This includes an increase in drugs costs, which if excluded would demonstrate a net 4m reduction by 2016/17 from 2012/ The only growth comes from new service development in PCI and repatriation The key conclusion is that the Health Economy will need to achieve 100% of future commissioning intentions in order to keep Trust income flat rather than rising. The likelihood is that income will continue to grow due to health needs, repatriation from out of county, and an increased complexity of patients due to Dementia, stroke, and alcoholism. The continued reduction of tariff at -1.5% is considered to be a baseline case The business case includes income reductions agreed with NHS Cumbria that reflects 100% Commissioning Intentions over 3 years from 2012/13. The final detail is being agreed with each locality and is expected to be finalised by April NHS Cumbria Commissioning Plans 2012/13 to 2013/ NHS Cumbria Clinical Commissioning Group have identified high level commissioning intentions for 2012/13 and the following two years. A reduction of 16.3m in the level of activity commissioned from the acute sector is proposed of which 7.8m is expected in North Cumbria, and 8.5m in South Cumbria The North Cumbria allocation of 7.8m is split 3.0m for West Cumbria and 4.8m for Carlisle The areas targeted are set out below in two tables as provided by NHS Cumbria. These show the Activity and Income reductions expected over 3 years that will be phased 20% in 2012/13, 40% in 2013/14 and 40% in 2014/15. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 129

130 Figure 5.6 NHS Cumbria Commissioning Reductions The Commissioning Groups are in the process of defining the detail on what clinical practices will change in order to reduce activity. The detailed planning is expected to set out what will change, who will do it, and where it is to be done. Will activity be stopped or transferred into the community What skills are required to carry out procedures and the related Governance Who will carry out procedures Are acute clinicians expected to work in community clinics How long will it take to develop appropriate skills The full effect of the Commissioning Intentions will be included in the financial plans and have been assumed to be achieved over 3 years. 5.6 The Trust Turnaround Programme The Trust has a fully developed Turnaround Programme that involves Clinical Leaders together with Divisional General Managers. The number of change projects has expanded from around 10 at the start of 2011/12 to more than 150, hence providing increased confidence in delivery The Programme for 2011/12 and 2012/13 has been fundamentally developed to reflect a West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 130

131 change from planning to operational delivery. There are three strategic elements to the turnaround strategy that are aimed at moving the Trust from achieving quick wins, developing and implementing system wide changes, and then move into a continuous improvement culture through transformational change. The first Divisional Strategy is now well underway, with the Theme Strategy in an early phase. The Directorate Strategy is aimed at reviewing cost pressure and overspend areas and started in February The following chart illustrates the three key strategies. Figure 5.6 Trust Turnaround Strategy The strategy will be achieved through a complete programme structure driven from the Chief Executive Office through Executive Theme Leadership, and into Divisional Operational Management who hold the budgetary responsibility. The organisation structure is shown below and shows a matrix approach that also ensures that double counting of efficiencies does not occur. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 131

132 Figure 5.6 Trust Turnaround Management Structure The approach and process applied to Turnaround was reviewed independently by the SHA in December This confirmed the full involvement and awareness of clinical teams that is now well underway. The first 5 months of forecasts have been achieved. 5.7 Clinical and Safety Assurance Since October 2011 the Clinical Involvement has developed and the approval of all Turnaround plans go through a thorough review. Each Idea must be signed off by the clinical teams involved in delivery which is further reviewed by the Trust Medical and Nursing Directors in a Director Review and Challenge (DRAC) Meeting held each week. The purpose of the senior review is to ensure that wider organisational issues and opportunities are considered, together with identifying potential impact across Community settings. The key check list is shown below but is not limited to this list: Does the scheme provide care in line with current guidelines where these exist? Does the scheme preserve the privacy and dignity of patients? (same sex accommodation) Does the scheme provide safe numbers of nursing staff of the appropriate skill level? Does the scheme provide safe numbers of doctors of appropriate skill level? Is the provision of other therapies at a safe level? (For example: Physiotherapy and Occupational Therapies) Will the scheme lead to breaches of key access targets? (e.g. 4hr waits, cancer targets) Will the scheme lead to failure to deliver safe care? Access to results Access to records Timeliness of communications Impact across the Health Economy and Closer to Home objectives West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 132

133 5.7.2 The principle of the Clinical and Safety check is that no efficiencies are included in Firm Trust Plans until approved by Clinical Leaders. This is fundamental to provide assurance that Patient Safety and Quality are the main priority All major transformational changes are managed as part of a Cumbria Wide System Board involving NHS Cumbria, Clinical Commissioning Group, Cumbria Partnership Foundation Trust, and the Trust The System Wide Board have defined 10 key Building Blocks set out below that have been translated into 3 key projects for the Trust covering: Emergency Flow Elective Flow Family Services including Paediatrics and obstetrics 5.8 Key Assumptions used in Financial Modelling The Trust has been working closely with NHS Cumbria to fully agree a joint financial plan. This plan takes account of Commissioning intentions, demographic changes, case complexity, and the Trust Turnaround programme The table below shows the key assumptions included in the financial modelling that represents the latest planning guidance. The assumptions have been agreed with the West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 133

134 SHA and NHS Cumbria. Per Financ ial Year 2012/ / / / / / / 19 Tariff - Recurring -1.3% -1.5% -1.5% -1.5% -1.5% -1.5% -1.5% Tariff - Non-Recurring -0.4% -0.3% -0.3% -0.3% -0.3% -0.3% -0.3% Inflation Pressures-Pay 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% Inflation Pressures-Non Pay 4.5% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2% Demographics 1.3% 1.4% 1.3% 1.3% 1.3% 1.3% 1.3% Case Mix 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Continuous Improvement-CIC 0.0% 0.0% 2.0% 3.6% 3.6% 3.6% 3.6% Continuous Improvement-WCH 0.0% 0.0% 1.3% 2.2% 2.2% 2.7% 3.2% Income The income is based upon 2011/12 forecast out-turn and includes 100% advised commissioning intentions that are assumed to be achieved over 3 years (20%), 2013/14 (40%), and 2014/15 (40%) The total tariff reduction for 2012/13 is shown as -1.7% and reflects the 2012/13 road test results. This is agreed with NHS Cumbria. Thereafter the 2012/13 operating framework has been applied and assumed to continue until 2018/19. Inflation Pay inflation includes a 1.3% continuing cost pressure that reflects future pay awards and local pay drift Non-Pay inflation has assumed factors advised in the NHS North Planning Framework, but also increases short term due to the PFI where costs attract RPI currently running at 5% resulting in additional costs of 0.2m in 2011/12. The remaining increase includes pressures on drug costs that are increasing every year although a proportion of drug costs are excluded from PBR and costs are passed through to NHS Cumbria. This has also been included. Demographics The FBC shows that the predicted growth of people aged 65 and over is expected to grow by 9.1% in Allerdale and 11.5% in Copeland by This much older population will create a greater demand for personal health and social care. There will be a qualitatively different level of need, with a likely 82% increase in dementia over the coming 20 years, and a 60% increase in hospital admissions for stroke The increasing population and the increasing age profile is expected to result in an increasing cost per head NHS Cumbria have provided population growth estimates that are based on 2010/11 PbR Outturn & 2008-based ONS Population projections. The projections will not however take account of changing health needs or complexity. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 134

135 The table below summarises the predicted annual growth and growth on the 2010/11 Baseline. 2011/ / / / /16 Growth on previous year 1.0% 1.3% 1.3% 1.3% 1.2% WCH k CIC k , , , TOTAL 1, , , , ,607.6 Source:NHS Cumbria- February 2012 Complexity The Trust has experienced a change in recorded case mix & complexity over the last 2 years. In 2011/12 the forecast impact on Income is estimated at least 3.5m. In 2010/11 it was higher, but may have been partially created by changes to HRG coding methodology Given the predicted population growth and higher risks of Dementia and Stroke, together with Cardiac conditions, the Trust has made an estimate based upon likely 2011/12 outturn The PCT Base case model includes 0.7m per annum for complexity as agreed by NHS Cumbria. This is highlighted as a risk as it could be as high as 4m based upon 2011/12 forecast out turn. Health Needs The financial modelling is based upon 2010/11 out-turn and case mix at that time and will therefore exclude any changing health needs where Cumbria has been identified as needing to carry out more activity to address health inequalities. A good example of this is within Cardiac conditions where although there is a plan to reduce activity, there is an unmet need that will create increases in demand It is important that commissioning plans are based upon the identified health needs of the local population rather than simple national averages. This needs to be properly assessed as part of the clinical review No estimates are included in the PCT Base Case as it is difficult to predict the full effect. This is highlighted as a risk. Clinical Governance A system wide approach will require a system wide Clinical Governance Framework that will cover all organisations. At the moment each organisation has its own that creates difficulties working in an integrated way. This issue was raised and is being included within the NCAT review and the Cumbria System Wide Board. Continuous Improvement The continuous improvement at WCH has been factored below CIC as the redevelopment efficiencies have been identified separately. The overall efficiencies across both sites equate to an average 5.3% per annum CIC efficiencies assume 4.2% on all non-pay except the PFI. This results in an overall net efficiency of 3.6%. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 135

136 5.9 The Trust Financial Plan The Baseline financial review of the Trust includes 100% commissioning intentions, the total Turnaround programme for the Trust including transformation plans, current known service developments and repatriation assumptions agreed as part of the system wide plan The baseline results of the financial review for the Trust show that the overall Trust does not breakeven by 2018/19 and is left with a deficit of ( 8.8m) The Trust has been identified by the Department of Health as one of 7 that will require additional financial support for PFI. The Cumberland Infirmary was the first PFI completed in 2001 and is considered one of the most expensive. The contract has a break clause after 30 years. The PFI was also re-financed in March 2010 that enabled the Trust to secure more favourable terms in the event of a future re-finance as well as securing a lower interest rate The underlying deficit represents the additional PFI costs and historic debt issues that have yet to be resolved. The additional PFI costs in 2018/19 have been estimated using the re-financing model and external benchmarks The WCH business case delivers a positive contribution to the Trust by 2015/16 due to the inclusion of the Trust Turnaround Programme and the redevelopment The chart below shows the total Trust and each site Net Surplus/(Deficit). WCH delivers a positive contribution whilst The Cumberland Infirmary cannot achieve a surplus due to the PFI. Figure 5.9 Trust Net Surplus/(Deficit) 2010/11 to 2018/ The Total Trust Income and Expenditure is shown below. This shows that the Trust can reduce the deficit from ( 27.3m) in 2011/12 to ( 8.8m) in 2018/19. The remaining deficit is attributable to the PFI costs and Historic debts. Details of the PFI additional costs and historic debts are described below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 136

137 Figure 5.10 Trust Income & Expenditure 2010/11 to 2018/19 NCUHT TOTAL 2010/ / / / / / / / / /19 m m m m m m m m m m INCOME Baseline Subsequent non-recurrent movements Tariff deflator Impact of demographic change mix/complexity/overperformance New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN (NET) Commissioning intentions TOTAL INCOME LTFM Net PCT Contract Check EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies WCH project capital charges Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost New Services - PCI CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE LTFM NET CONTRIBUTION/(LOSS) ONE OFF COSTS SHA SUPPORT 20.6 CHECK NET SURPLUS/(DEFICIT) Re-Development One-Off Taper Relief NET CONTRIBUTION/LOSS (Including Taper Relief) The West Cumberland Hospital Financial Plan The West Cumberland Hospital Income and cost assumptions have been worked through in detail to ensure they represent a robust starting point for planning purposes. The costs include specific site related costs, plus an apportionment of corporate costs that have been allocated in proportion to income The costs include all direct costs, overheads (Finance, IT, Executive, Procurement) capital charges, and interest Taper relief is included to offset the capital charges incurred for funds drawn down before the new building is occupied and efficiencies are realised WCH Unscheduled and Scheduled Activity WCH Unscheduled activity - The chart below shows the commissioned unscheduled activity levels for the West Cumberland Hospital during the period 2012/13 to 2014/15. This takes into account the impact of the reduction in activity levels as a result of more patients being managed within community based services, partially offset by the predicted growth in activity as a result of demographic change during this period. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 137

138 Figure 5.11 WCH Unscheduled Activity WCH Scheduled Activity - The chart below shows the commissioned elective activity levels for the West Cumberland Hospital during the period 2012/13 to 2014/15. This takes into account the impact of the reduction in activity levels as a result of the elective referrals policy being implemented, and this is significantly offset by the predicted growth in activity as a result of demographic change during this period and the planned repatriation of out of county activity. Figure 5.12 WCH Scheduled Activity Monthly Number of Admissions Monthly Number of Admissions West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 138

139 5.12 WCH Including the Re-Development The Income and expenditure table below shows WCH with the re-development that shows the hospital making a positive contribution by 2017/18. Figure 5.13 WCH Including the Redevelopment WCH 2010/ / / / / / / / / /19 m m m m m m m m m m INCOME Baseline Subsequent movement in 2011/ Tariff deflator Impact of demographic change Changes in casemix/complexity New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN Commissioning intentions TOTAL INCOME EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies WCH project capital charges Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost Cost impact of New Services CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE NET CONTRIBUTION/LOSS Re-Development One-Off Taper Relief Transitional costs NET CONTRIBUTION/LOSS (Including Taper Relief) This scenario confirms the FBC result that a sustainable financial plan for WCH can be achieved assuming delivery of 100% commissioning intentions and over and above this, make a 2.5m contribution to the Trust financial position in 2018/ The Trust Turnaround programme has been phased over 3 years to allow for Pay protection constraints. The phasing of the Turnaround programme aligns to Monitor expectations. Every effort will be made to pull efficiencies forward wherever possible The turnaround programme is expected to complete in 2014/15 where it is then possible to see the underlying deficit caused by multi-site working showing circa ( 1-2m) per annum Beyond this period a continuous improvement programme has been assumed together with the efficiencies delivered by reducing estate costs, and consolidating staffing through the re-development Taper relief is included to cover the short term capital charges and transition costs incurred before the efficiencies can be delivered Re-development one-off transitional cost estimates have been included in 2014/15 and 2015/16. These may be required to cover double running through transition from the old part of the site to the new development. These costs would cover items such as hire of temporary equipment, additional staff to maintain rotas during moves etc. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 139

140 5.13 WCH Excluding the Re-development The income and expenditure table below shows WCH excluding the redevelopment. This shows that WCH cannot make a positive contribution due to increasing maintenance costs caused by the age of the buildings. Figure 5.14 WCH Excluding the Redevelopment WCH 2010/ / / / / / / / / /17 m m m m m m m m m m INCOME Baseline Subsequent movement in 2011/ Tariff deflator Impact of demographic change Changes in casemix/complexity New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN Commissioning intentions TOTAL INCOME EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies Lifecycle & Maintenance Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost Cost impact of New Services CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE NET CONTRIBUTION/LOSS Re-Development One-Off Taper Relief NET CONTRIBUTION/LOSS (Including Taper Relief) The chart below shows the WCH (deficit)/contribution with and without the redevelopment. This illustrates the short term benefit of the turnaround programme, but then the financial stability is only sustainable with the redevelopment. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 140

141 Figure 5.15 WCH Surplus/(Deficit) 2011/12 to 2018/ The Cumberland Infirmary Carlisle The Income and costs have been analysed and allocated consistently as described in the WCH model above. The table below shows the Cumberland Infirmary Income and expenditure from 2010/11 to 2018/19. This represents the baseline model including 100% of the PCT commissioning intentions The Income excludes any SHA support, and the costs exclude any one-off turnaround costs The net deficit in 2011/12 moves from ( 23.5m) to ( 11.3m) by 2018/19 and indicates the underlying cost pressure of the PFI, 2 site working, and historical debts that the Trust cannot resolve on its own The total efficiencies over the period equate to an average of 5.1% per annum The table below shows the Income and Expenditure for the Cumberland Infirmary. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 141

142 Figure 5.16 The Cumberland Infirmary 2011/12 to 2018/19 CIC 2010/ / / / / / / / / /19 m m m m m m m m m m INCOME Baseline Subsequent movement in 2011/ Tariff deflator Impact of demographic change Changes in casemix/complexity New Services - PCI Repatriation of activity Additional Drugs - Cost Pass Through CQUIN Commissioning intentions TOTAL INCOME EXPENDITURE Baseline Deficit/Turnaround Plan Continuous cost improvement WCH project efficiencies WCH project capital charges Cost savings from commissioner intentions Cost impact of repatriation activity Complexity additional cost Cost impact of New Services CQUIN Costs Inflation - pay Inflation - non pay TOTAL EXPENDITURE NET CONTRIBUTION/LOSS The PFI costs at CIC have been evaluated to establish the additional interest payable over and above the current 3.5% capital charges. The PFI interest rate in 2011/12 is 6.34% In addition an estimate has been made based upon The University of York Centre for Health Economics, research - The Efficiency Analysis of PFI schemes, carried out in November The research covered more than 60 PFI s and evaluated the hard and soft facility management services. At that time 1.8m of potential efficiencies were identified for the Trust. Including inflation, 2m has been assumed in In addition to the higher interest and facilities management costs, the Trust is unable to achieve the required 4% efficiencies each year against PFI costs. From 2011/12 to 2018/19 this grows from 1.2m to 5.0m cumulatively and therefore results in a greater deficit for CIC. Inflation has been applied at 4% per year and represents the growing inability of CIC to achieve the necessary efficiencies as tariff consistently reduces income in the period modelled. The tariff reduction of -1.5% per year includes an implied efficiency of 4% The Cumberland Infirmary therefore has a growing inability to generate a surplus given the continued reductions in tariff The chart below shows the total estimated impact of the PFI growing from 6.6m in 2011/12 to 12m in 2018/19. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 142

143 Figure 5.17 The Cumberland Infirmary PFI Additional Costs In addition to the PFI, the Trust has historical debts that result in 1m per year repayments and interest costs. 0.6m is included for CIC and 0.4m for WCH These additional costs compared to the underlying deficit in CIC therefore explain the reason for the deficit in CIC at ( 11.0m) in 2018/19 compared to 12m estimated extra PFI costs and 0.6m historic debts. This suggests that without the PFI, CIC could ultimately generate a surplus Funding of Additional Capital Charges The Outline Business Case (OBC) identified that the ultimate total capital charge of the project is 5.8 million per annum. This cost was offset by 1.9 million reduction in capital charges for demolished buildings, and 4 million of efficiencies This Full Business Case (FBC) further develops the efficiency savings in conjunction with lead clinical and estates personnel, and also identifies any benefits that have since been included in Trust wide turnaround plans to ensure that no double counting occurs. The new hospital incorporates new models of care and ways of working that release efficiencies to create a financially sustainable hospital The FBC confirms the assumptions in the OBC and will further integrate efficiency savings as defined in the Trust Turnaround plans The FBC confirms 3.9m per annum capital charges, offset by 1.1 million reduction in capital charges for demolished buildings, and 4.8 million of efficiencies. The efficiencies now included within the Trust Turnaround plans are 1.8 million and will need to be deducted. This underlying result is summarised as follows: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 143

144 Figure 5.18 Overview of FBC revenue position compared to OBC OBC to FBC Changes m OBC 2016/17 FBC 2018/19 Change Reason Total Capital Charges (5.8) (3.9) m reduction ( 0.5m) Asset re-valuation ( 0.5m) & Lives from 50 years to 90 ( 0.9m) Demolished Assets - Reduction in Charges (0.8) Maternity Block added Asset re-valuation & Lives Total Efficiencies (0.7) Efficiencies included in Trust Turnaround Programme Net Change Case with redevelopment Maintenance & Lifecycle Costs avoided Total In addition to the direct efficiencies identified it should be noted that the long term objective of creating a sustainable hospital will also include lower future lifecycle and maintenance costs. The future maintenance costs have been modelled over 60 years and include the initial build, any backlog costs and future expected capital expenditure. The on-going maintenance costs have been estimated by Laing O Rourke and also benchmarked against BMI and Building Cost Information Service comparators (BCIS). Details of the lifecycle programme are included in the Estate Annex The Net Present Cost benefit is 60.9 million representing the difference between Do minimum (Option 1) at million versus the re-development (Option 4) at million. The modelling was carried out using the Generic Economic Model as included in appendix F Overall Revenue Summary The overall revenue impact of the scheme is summarised below. It can be seen that the redevelopment will yield a positive contribution of 0.5m by 2018/19. In addition to this, 2.2m of future increased maintenance costs will be avoided as identified in the Generic Economic modelling in Section 4. Figure 5.19 Summary of FBC revenue position SUMMARY k 2010/ / / / / / / / /19 Capital Charges Efficiencies Taper Relief Total Transitional Taper Relief The Trust has assumed that 7 million of transitional taper relief is available from the SHA / DH to support the transitional period where capital charges are incurred for assets under West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 144

145 construction, and to allow sufficient time for efficiencies to be realised Overall Capital Summary The capital costs for the project have been prepared by the Trust s independent cost advisors, Rider Hunt The costs have been calculated using the Department of Health Departmental Cost Allowance Guide (DCAG), plus on-costs, fees, equipment, contingencies, and optimum bias The Guaranteed Maximum Price (GMP) is being prepared by the P21 partner, Laing O Rourke that will sit inside the DCAG cost envelope. Figure 5.20 Summary of Capital Costs Option 4 FBC 000 Works cost 62,746 Provisional location adjustment - Sub-total 62,746 Fees 7,841 Non-works costs 2,500 Equipment costs 3,000 Planning contingencies 4,202 Inflation Adjustment to MIPS 469 (956) Optimism Bias 0 Total Costs (excl VAT) 79,333 VAT based on current rate 12,238 Project FBC Total 91,571 Source: FB Forms The sources of capital funding for the project are detailed below, together with anticipated timing. The phasing of the expenditure is aligned to programme timescales and phased over 4.5 years. There are two distinct phases: Phase 1 Demolition of Blocks B and P to create space for new build completed in March Phase 2 commission new build and demolish surplus buildings To date the project has received funding of 12.5 million capital, comprising 10 million from NHS North West, 1.5 million from the Trust and 1 million from the Department of Health. As at 31 st March million has been spent for necessary enabling works, design, decanting, part-demolition, and contractor site set-up. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 145

146 Figure 5.21 Cash flow and funding requirements for preferred option k 2009/ / / / / / /16 TOTAL Cash flow requirement 7,300 1,899 10,334 32,966 26,949 9,406 2,718 91,571 Funded by: DH 1,000 5,532 31,216 24,199 6,928 2,718 71,593 SHA Capital 6,800 3,200 10,000 Trust 500 1,000 1,500 1,750 2,750 2,478 9,978 Total Funding 7,300 5,200 7,032 32,966 26,949 9,428 2,718 91,571 Difference 0 3,301-3, Source: FB forms It should be noted that if the scheme was to be aborted, then these costs would be written off against Income and Expenditure in 2011/ VAT has been calculated at the current rate of 20%. If VAT were to increase any further, this would increase the capital costs of the project however the OBC approval allowed for increases in VAT to be covered by DH funding It is anticipated that the scheme will be funded by PDC and internally generated funds. No loans are anticipated Capital Charges Capital charges for existing assets have been modelled. These have been calculated based on Net Book Values and asset lives as at 31/3/ Key assumptions are: Blocks B and P were demolished at the start of phase one in April Blocks A, A/W1, C, D, D/E, F to H, F/A, H, M and W1 demolished when the main scheme is completed in 2014/15. Impairments resulting from the demolition of blocks have been estimated to be 90% of the remaining Net Book Value for each block. Asset lives of assets have remained unchanged after impairment. Only the value is altered The table below summarises the net change in capital charges over the period of redevelopment. It shows the impact of Phase 1 and phase 2 demolition and the revenue impact of the new build. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 146

147 Figure 5.22 Capital charges net change Existing change 2010/ / / / / / / / /19 Phase 2 Demolished Assets Capital Charges Reduction (1,007) (1,319) (1,219) (1,145) (1,087) (1,011) (904) (862) Phase 1 Demolished Assets in March 2010 (369) (362) (354) (344) (337) (330) (321) (314) (307) New Build Charges ,261 2,309 3,412 4,025 3,992 3,959 3,925 Net Change in Capital Charges (81) (866) (412) 746 1,929 2,608 2,659 2,741 2, The following tables show the capital charges on existing and new assets and the impairment impact of ( 12.9m) that will occur when the decision to build is finalised. Figure 5.23 Capital charges on existing assets 2010/ / / / / / / / /19 Net Book Value of Existing Assets 36,805 35,252 33,805 32,458 31,260 30,136 29,190 28,333 27,587 Impairment when new facilities commissioned , Revaluation reserve - - (5,273) Depreciation on Existing Assets 1,553 1,447 1,347 1,198 1, Cost of Capital at 3.5% 1,261 1,208 1,160 1,115 1,074 1,038 1, Total Existing Capital Charges 2,814 2,655 2,506 2,312 2,197 1,984 1,864 1,725 1, The capital charges on new assets have been based upon the following assumptions: Assets under construction count towards net relevant assets and therefore require a 3.5% return to be earned. Buildings have been assumed to have a 90-year life, in line with the trust s current accounting policies. Equipment has been assumed to have an average 8 year life. The new facilities are transferred by July 2014, resulting in only 6 months of depreciation in the first year. No impairments on commissioning have been assumed. It is recognised that if these occur then the on-going depreciation charge will be lower. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 147

148 Figure 5.24 Capital charges on new assets k 2010/ / / / / / / / /19 Net Book Value of New Assets 88,400 87,453 86,505 85,558 Impairment when new facilities commissioned Depreciation on New Assets Cost of Capital at 3.5% ,261 2,309 2,937 3,077 3,044 3,011 2,978 Total Capital Charges ,261 2,309 3,412 4,025 3,992 3,958 3, Efficiencies delivered through the project The following sections describe how the balance of savings will be made from improved and more efficient processes enabled by the new facilities, changes in workforce and the estate. Figure 5.25 Overall revenue impact of the scheme k 2010/ / / / / / / / /19 Capital Charges Net Change Nursing costs ,158 1,278 1,043 Critical Care costs Estates pay costs Estates non-pay costs Admin and clerical costs Benefits doublecounted in Turnaround Plan Transitional Taper Relief , ,022 1, ,165-1,666-1,669-1, Total revenue implications General Nursing Costs The new build design includes a cold in-patient floor comprising 60 acute beds. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 148

149 The new proposals combine existing separate wards and create a configuration that allows for flexibility of staffing in line with occupancy. Improvements in staff efficiency will also be possible due to improved adjacencies, for example, the co-location of day case cabins immediately adjacent to theatres The total nursing staffing on the Whitehaven site, described in terms of banding, are 568. The benefits identified so far address 241 (42%) of total nursing staff The benefits detailed below are possible due to adjacencies and reduced travel times from theatres to wards. The standardisation of ward staffing models is also achieved, together with flexibility of staffing depending upon ward occupancy. The single floor approach provides a whole new way of working as described below. New Ways of Working The new design will enable a whole new way of working. Staffing models have been developed that allow a more appropriate balance of staff on wards. Key features of the model include: Three shift pattern assumed Establish standard model for 30 bed ward Band 7 - will only be on night shift from 9.00pm to 7.30am in A&E, ITU and emergency admissions Band 6 - one for every 30 beds during day, and at night one for every 50 beds. Smaller wards will have to have a band 6. Band 5 - require five for early shift, three for late shift and one for night shift. Band 4 can do all tasks except drugs, therefore future development of band to be considered There is further work to be done to identify changes in capacity throughout the year that will yield further benefits as only occupied areas of the new floor will need to be staffed. 30 unoccupied beds over a period of 1 week would yield 18.5k Adjacencies and Flexibility Bed Capacity The re-development of WCH has always provided flexible bed capacity. The Closer to home requirement is for 220 beds. The new build includes 133 new beds with the remainder being in retained estate The current and future bed base is summarised in the table below. This shows that 133 In-patient beds are included in the new build with 29 left in retained estate. Bed Base Feb 2012 New Build Retained Total Change In-Patient Beds (45) Day Case Beds (2) Step Up Step Down TOTAL (47) The reduction of 45 In-patient beds is planned to be achieved through 8 Paediatric beds, 5 through commissioning reductions, and 32 through improved length of stay. This will enable the closure of 2 wards in retained estate. These wards will be available for flexing should complexity or demographic demands require them, or alternatively longer term West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 149

150 could be reallocated for other uses that will enable other parts of the site to be vacated and consolidated. Staffing costs are planned to reduce in the financial plan The Outline Business Case assurance process highlighted not only an internal down-size opportunity, but also the potential risk of increased beds due to the potential new nuclear power stations in West Cumbria. The upside requirement was approximately 20 beds The other potential consideration is length of stay where due to increasing complexity of patients, and the transfer of short stays into community and day case, it is likely that the average length of inpatient stay will increase. The risk of future demographic and complexity increases are covered in the financial plan Key reductions in staffing will be achieved due to the adjacency of theatres to the wards. Currently transfer times can be up to 10 minutes as staff navigate through the lifts and corridors. Each transfer has to be accompanied by a qualified nurse and the ward must also maintain a minimum a 2 qualified nurses whilst the third transfers patients. The new design puts all theatres together next to ward areas therefore significantly reducing travel times and risk to the patient. Section 3.7 illustrates the reduction in patient flows The impact of these changes is to change the overall numbers and mix of staff on the Whitehaven site. Overall nursing numbers would decrease by 18.3 WTE s by 2018/19. The balance of staff would change with an increase in band 5 and band 3 staff and a decrease in other bands. The overall recurrent saving, once these changes are complete is 1m per annum It is recognised that these changes will need to be introduced gradually and enabled in part through attrition and retirements. The implications of these changes are supported by a workforce plan, as detailed in section 3.8 that will contribute to the overall Trust strategy Key Considerations and Sensitivities Economic Changes The current uncertain economic climate provides both risks, opportunities, and threats to the Trust and local economy Economic stress should be expected as many families struggle to maintain jobs and to meet basic needs. This will have a detrimental effect on health due to the length of economic downturn now exceeding 2 years The opportunities are beginning to emerge as the Trust is beginning to recruit key anaesthetics and medical staff into substantive posts. This was very difficult before and resulted in the Trust using Locum and Agency Staff at premium rates The risks in this climate are compounded with the need to achieve closer to home objectives that are being done at the same time as the recent new Trust Team deploy an aggressive Turnaround Programme and go through an acquisition process. This will have a direct negative impact on staff morale within the Trust. Early indications in 2012/13 suggest increasing sickness levels The Cumberland Infirmary PFI costs increase with RPI as well as the Trust being identified as one of the six most expensive schemes in the Country The two hospitals located 40 miles apart, means that multi-site premium costs are incurred due to the need to have 2 emergency floors, family service units, and critical care The Trust is one of the major employers in West Cumbria along with Sellafield. Reductions in workforce will have a major impact on the local economy The age profile of the Trust workforce will require careful planning over the next few months to ensure that appropriate skills development & training programmes are established. Failure to do so will create risks is sustaining services across both sites. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 150

151 5.22 The Risks and Sensitivities Quality and Safety The Trust has identified the need to maintain the highest quality and safety standards whilst navigating through major economic and service re-configuration. In conjunction with quality Governance frameworks, the Turnaround programme includes a structured review of all change projects that are signed off by Doctors and the Medical and/or Nursing Directors This FBC has identified a number of risks and opportunities. These include: Re-admission reductions in income These have been phased over 5 years in accordance with Monitor guidelines as agreed with NHS Cumbria. The full impact has not yet been fully assessed and may result in higher income reductions in the short term. Complexity - 0.7m per year has been agreed with NHS Cumbria compared to 4.0m in the Trust 2011/12 forecast. This will remain under review during 2012/13. Health needs are excluded from Income as they cannot be quantified at this time. This may result in higher income for the Trust. The Trust Turnaround programme is fundamental to financial stability where robust plans are now in place, together with detailed project management. The risk to delivery may be timing or the further impact due to pay protection constraints. The same level of detail is required to give confidence regarding the delivery of commissioning plans to reduce the risk of delay or non-implementation. 50% achievement of commissioning intentions would increase Trust income by 3.9m. Tariff Reductions assumed at -1.5% may vary either upwards or downwards. The 2012/13 road test indicates the Trust position is -1.3%. A.2% positive movement results in 0.4m of additional income. Bed Flexibility Plans include a reduction of 45 In-patient beds excluding any future demographic or complexity growth. If further beds are required, then wards in retained estate can be used. The timing of this may affect the financial plan cost profile as the cost of a ward would be a step change of circa 1m. The financial plan shows increased costs spread over time. Potential Sale of Land outside the development zone ( 2.5m) - In addition to the more tangible efficiencies above, the security of the hospital on the current site now provides the opportunity to consider parts of the site that currently provide accommodation outside the core clinical areas within the internal ring road of the hospital. The chart below illustrates the re-development area in blue and the area for disposal in yellow. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 151

152 Redevelopment of West Cumberland Hospital Fit with Development Control Plan: Jan 2012, draft only Area for new staff accommodation Area for 90m redevelopment Area for disposal Page 4 The building area equates to 14% of the site and contains buildings and residences with a current Net Book Value of 5 million. Discussions are to be reopened with housing associations, Energy Coast representatives and other interested parties to consider the long-term opportunities for redevelopment or disposal of this area of the site. Energy Centre ( 0.5m) - is currently being discussed with the NHS SBS Carbon and Energy Fund, an NHS-led procurement framework has been established. A business case will be fully assessed as to a preferred way forward. Health Campus - Two fields next to the hospital exist, one of which includes the helipad. These fields have been suggested by Copeland Borough Council as also potentially being available for Health Campus activities. Fund Raising ( 0.25m) - The local community and clinical teams have expressed an interest in running a campaign to raise funds to purchase equipment for the hospital. This is included as part of the project s Communications Strategy and will commence as soon as approval is received. The ability to deliver nursing efficiencies: The timing and ability to deliver the benefits over the next 8 years are part of the Trust Workforce Plan. The age profile of employees has been assessed and the lead Matron will be part of the Trust workforce group. All leavers and new employee requisitions are managed as part of this process. Theatre reorganisation savings: It is anticipated that savings will be generated from the re-provision and reorganisation of the operating theatres at the WCH. The exact value of these savings has yet to be fully determined, but it is anticipated that they may be in the order of 300k per annum. Further Nursing Efficiencies: The flexibility of the single ward floor will allow for flexible staffing depending upon bed occupancy. 30 beds for 1 week in a year would yield a potential 18k saving. Further work in respect of capacity will be West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 152

153 carried out. Key risks: The risk register identifies key risks if the funding is not secured or received on time and also if there were any significant increases in VAT. The funding risk is fully recognised by all parties involved. The Department of Health confirmed that movements in the VAT rate would be allowed for at OBC approval. Efficiencies not realised: There are further opportunities beyond the minimum identified in the business case that provide sufficient opportunity to minimise any downsides. The efficiencies have been developed with clinical and estates personnel and are targeted to be achieved in approximately 4 years time. Benefits will be realised earlier wherever possible and will be driven by a dedicated resource within the project team. Project Aborted: If the project ceased then it should be recognised that most of the ( 9.2m) costs to 2010/11 would need to be written off against Income and Expenditure in 2011/12. Forecast to end of 11/12 is ( 12.6m). Transitional Taper relief withdrawn: The provision of taper relief from the SHA is required to cover the initial capital charges as new buildings are constructed. The risk of taper relief being withdrawn will reduce as efficiencies are realised. Change in capital charges from 3.5%: A 1% shift in the capital charges would result in either a reduction/or increase of just under 1m per annum. Any reduction would clearly benefit the redevelopment. The benefits are excluded from the FBC, but when confirmed will contribute to the overall Trust performance and provide a further contingency regarding the overall revenue impact of the project The Trust has therefore taken a baseline view regarding income, and in this context can demonstrate that the re-development is affordable and is compliant with the clinical strategy and 100% of commissioning intentions Any further delays to the scheme would also introduce further potential risks related to construction cost inflation, changes in building regulations and contractors delay costs Conclusions WCH The Trust and NHS Cumbria have fully agreed the financial plans included in this FBC. This confirms that the West Cumberland Hospital Full Business case will deliver a positive contribution to the Trust overall financial position from 2015/16 to 2018/19 and is compliant with the system wide agreed clinical strategy This FBC also confirms that the proposed new hospital is sufficiently flexible and appropriately sized to respond to any future changes in commissioning intentions beyond 2014/ The Trust and NHS Cumbria have confirmed that all NCAT issues have been addressed Without the re-development, the costs of the existing site will increase and the long term sustainability of the site cannot be maintained. This would add further cost pressure to the economy and WCH would not be sustainable Any further delays to the scheme would also introduce further potential risks related to construction cost inflation, changes in building regulations and contractors delay costs. The risk is that any increase in capital costs will render the scheme unaffordable that would then incur major re-design costs if the scheme was changed again. This would West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 153

154 mean significant potential loss of clinical functional content. The Trust The overall annual Trust deficit in the base case reduces from ( 27.3m) over the period 2011/12 to 2018/19 to ( 8.8m). The remaining deficit is associated with additional PFI costs at ( 12m) and historic debt payments at ( 1m). This illustrates the underlying cost pressures of the PFI, 2 site working, and historical debts that the Trust cannot resolve on its own Excluding the PFI and historic debt payments, the Trust overall plans would indicate a surplus of 2m. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 154

155 6 Commercial Case 6.1 Introduction The purpose of the Commercial Case is to describe the Trust s strategy for procuring the project in order to ensure value for public money is achieved Having considered the advantages and disadvantages of the available procurement routes, the OBC concluded that procurement objectives for the West Cumberland project were most likely to be met by adopting an NHS ProCure 21 route, for the following reasons: PFI is unlikely to deliver a value for money solution owing to high transaction and bid costs. The lengthy procurement process would be a further reason for this route to be discounted. The additional cost of a second PFI in the region, in addition to the existing hospital at Carlisle, could not be afforded. As price certainty is a key priority for the Trust, this is most likely to be achieved via the Guaranteed Maximum Price mechanism under ProCure 21 or via a lump sum tender under a design and build contract rather than a traditional tender. Given the fact that design quality will be a key factor for the Trust, ProCure 21 is more likely to offer scope for Trust control and influence over the detailed design of the project than a design and build tender route. ProCure21 is a well-understood procurement route using an industry standard contract (Engineering and Construction Contract NEC2) This section of the FBC describes the process followed to select a development partner under ProCure 21 and the outcome of that process. 6.2 The Procurement Process NHS Procure The Trust has followed the standard approach to selecting its Principal Supply Chain Partner as summarised in the figure below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 155

156 Figure 6.1. PSCP Selection Process Step 1 Open Day held by NCUHT and information pack, shortlist criteria and timetable provided 9 th June 2009 Step 2 PSCP s submit Expression of Interest (EOI) and a response to the shortlist selection criteria 24 th June 2009 Step 3 NCUHT selects a shortlist of PSCP s and invites them to an initial meeting 29 th June Step 4 Shortlisted PSCP s invited to attend final interview with Trust Appointment Panel 6 th July 2009 Step 5 PSCP selected by interview selection committee 14 th July 2009 Step 6 Initial letter of appointment issued to PSCP 27 th July Evaluation of PSCP Expressions of Interest Expressions of interest were received from seven ProCure 21 partners. The EOI s were evaluated by a panel on 29 th June The evaluation criteria and agreed weightings were: Proposed PSCP membership (30%) Experience and track record of this type of project (20%) Current commitments and available capacity (20%) Status of local supply chain (20%) Location of head office The result of the panel evaluation was to short list IHP and Laing O Rourke on the basis of their expressions of interest. 6.4 Selection of PSCP An Open Day was held with IHP and Laing O Rourke where the Trust provided further information on the requirements of the scheme. At this event the bidders were not evaluated by the Trust The Open Day was followed by interviews with each bidder to inform the final evaluation of the short listed bidders. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 156

157 6.4.3 The evaluation criteria and weights for this stage of the selection were as follows: Figure 6.2. PSCP Final Selection Weightings Criterion Detail Weight/ Capability of Personnel PSCP 5 Architect 4 Service Engineer 3 Health Planner 3 Total Design Patient perception 10 Clinical solution 9 Overall site solution 5 Services solution including running costs 3 Design efficiency 3 Learning experience from other schemes 2 Other 5 Total Commercial Speed of GMP 10 Market testing process 5 Commercial structure within supply chain 4 Local supply chain 4 Statement of affordability 4 Other 9 Total 35 Team working Ability to work with users 5 PSCP organisation 2 Overall dynamic with trust team 6 Total 13 OVERALL TOTAL 100 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 157

158 6.4.4 The Evaluation panel met on 14 th July 2009 and selected Laing O Rourke as the Trust s PSCP. Review of Procurement Strategy November The outline business case for the redevelopment of West Cumberland Hospital was formally approved by the Department of Health (DH) on 4 August The Department s approval letter contained a requirement for the Trust to carry out a review of its procurement strategy and obtain the approval of the DH before entering into any further contract relating to the West Cumberland Hospital scheme. The wording of the approval letter in relation to procurement was as follows: Procurement Route It is understood from the business case that the Trust intends that a single Procure 21 arrangement is to deliver all of the works, as this arrangement has already been used to appoint a Principal Supply Chain Partner ( PSCP ) to assist the Trust in reaching finalised design, enabling works and full business case to date (known as Stage 3 in the P21 contract). The Trust should now consider, before any further works may be contracted for, how best to obtain a competitive fixed price for the entire specification. We understand that under the present P21 contract the Trust is not obliged to continue to use its PSCP for Stage 4 onwards. The Procure 21 process as currently used in many NHS schemes does not involve the full competitive tendering of works, relying instead on the benefits of partnering to promote value for money. Whilst competitive tendering undoubtedly involves a cost, both to the procuring authority and to contractors, on a scheme of this scale, particularly in current market conditions, it has the potential to put significant downward pressure on price. It is therefore a condition of this approval that the Trust analyses very thoroughly the relative financial benefits for the scheme of competitive and non-competitive approaches to its procurement. The eventual approach must be agreed by DH s capital investment branch prior to the contract being awarded. If the Procure 21 framework is to continue to play a significant role in delivery or supporting delivery of this scheme, opportunities should be sought to exploit the benefits of competitive tension to drive down prices. In considering and developing its procurement options, the Trust should note that the Procure 21 framework has been re-tendered (P21 Plus), and will therefore build in more up to date rates and margins from the market once and if put in place on expiry of the existing P21 framework. The Trust should justify why using the old framework terms going forward would be more beneficial than the new framework s terms should P21 remain the optimum option The Trust Board therefore requested that a full evaluation of procurement options be carried out in order that a decision could be made on a way forward which could secure the approval of the DH. The Project Team, in carrying out this evaluation, undertook the following: A quantified analysis of the likely capital costs of a number of different procurement routes, compiled by the Trust s cost advisers, Rider Hunt. An assessment of the proportion of total costs subject to open competitive tender, compiled by the Trust s cost advisers, Rider Hunt. An analysis of the legal implications, provided by Ward Hadaway, the Trust s legal advisers. An analysis of the potential impact in terms of delay to the programme of each route provided by PFPM Limited, the Trust s project management advisers. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 158

159 6.4.8 The analysis was also informed by the following: Meetings with the Department of Health s Programme Manager for the NHS ProCure21 framework and with the NHS ProCure21 Adviser for the North West. Meetings with officials from the Department of Health s Procurement, Investment and Commercial Division The Project Team and advisers identified five potential procurement routes open to the Trust in relation to the WCH redevelopment. These are described below: Figure 6.3 Procurement Route Options Option Definition 1 ProCure21 Continue the existing ProCure21 contract with Laing O Rourke into Phase 4 (construction) 2 Renegotiated ProCure21 Continue the existing ProCure21 contract with Laing O Rourke into Phase 4, following renegotiation of the costs and procurement strategy 3 ProCure21+ Terminate Laing O Rourke s contract either immediately or at the end of Phase 3 and appoint a new PSCP using the ProCure21+ framework, following a selection procedure. 4 Open Tender Traditional 5 Open Tender Design & Build Terminate Laing O Rourke s contract either immediately or at the end of Phase 3 and procure the works via a traditional tender, following an OJEU tendering procedure Terminate Laing O Rourke s contract either immediately or at the end of Phase 3 and procure the works via a design and build tender, following an OJEU tendering procedure Following detailed analysis and consideration, the Trust has prepared and submitted a procurement strategy to the Department of Health based on Option 2 above, and is currently seeking final DH approval to move ahead on this basis The full Procurement Strategy review is included in Appendix K. 6.5 Contract Arrangements The Trust has entered into a standard ProCure21 contract with Laing O Rourke. This is known as the New Engineering Contract (NEC), Option C (2nd Edition.) The contract has specific sections for each stage of the scheme s development. The FBC is relevant to Phase 3 of the contract. Phase 4 will comprise a standard ProCure21 Contract plus renegotiated terms as identified in a separate Legal Agreement to be approved by the Department of Health. This is the SHA approval of this Business Case dated 8 March 2012 requires that Department of Health sign off of the procurement route must formally be provided prior to financial close. The separate Legal Agreement was signed by the Trust and Laing O Rourke on 15 th June 2012 that secures further commercial benefits to the Trust as set out in Appendix K and L. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 159

160 6.6 Guaranteed Maximum Price The Guaranteed Maximum Price (GMP) is an agreed price between a Trust and a PSCP for the construction works. It represents the maximum price that the Trust will pay for the works unless the scope of work is altered or an event occurs that would entitle to PSCP to compensation The GMP is being prepared under ProCure21 as part of the Phase 3 duties i.e. at FBC. This is based on the premise that a more accurate GMP will be established if it is based upon a substantially complete design A Not To Be Exceeded price (NTBE), effectively a pre-gmp, has been developed by the PSCP based on the following factors to ensure the Trust achieves maximum value for money: The design has been signed off by the Trust All innovation and value engineering has been incorporated into the GMP Joint risk management arrangements have been agreed Provisional amounts and ownership of identified risks is agreed (e.g. ground conditions) The overhead and profit levels of the PSCP and key supply chain members have already been agreed as part of the framework selection process. This incorporates a commercial view taken by the PSCP on market conditions The GMP, as it develops from the NTBE figure will be verified by the Trust s cost advisors, and the cost advisors will continue to monitor the PSCP s costs once the Phase 4 contract is signed and construction commenced. 6.7 Enabling Works The Trust identified a need for enabling works to be carried out prior to completion of the OBC and FBC. These works were approved by the SHA on 2 nd October 2009 on the basis that they are required regardless of the final estate solution approved for the main hospital redevelopment i.e. the works and associated costs would not be abortive under any of the scenarios proposed. A copy of the approval letter is provided in Appendix A The capital cost of the enabling works is 6.8 million. Of this, 3.9 million relates to preconstruction design fees, 0.8 million to Trust costs including consultant fees, 0.35 million for the site compound and 0.25 million for car park works. Further details are provided in the Estates Annex. 6.8 Conclusion The Trust has followed a prescribed and successful procurement process to appoint Laing O Rourke as its PSCP under the NHS ProCure21 framework. The GMP is being prepared and will be the cost for the project once the FBC is approved and the Phase 4 of the contract commenced. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 160

161 7 Management Case 7.1 Introduction This chapter of the Full Business Case (FBC) outlines the Trusts arrangements for: Project plans and structure, resources and key timings Stakeholder, public and patient involvement Plans for benefits realisation, risk management, and other key areas 7.2 Timetable The outline business case for the redevelopment of WCH was approved by the Trust Board in June 2009 and the approval of NHS North West was obtained at the SHA Board meeting in November In July 2009, Laing O Rourke was appointed as the Trust s Principal Supply Chain Partner (PSCP) under the NHS ProCure21 framework and the programme agreed by the Project Board for taking the scheme forward is as follows in the below figure A detailed construction timetable and commissioning plan are detailed in the Estates Annex. Figure 7.1. Project Timetable Activity Start Date Completion Status Appoint Trust Project Manager and Cost Advisor Mar-09 Jun-09 Complete Prepare and submit OBC for approval Apr-09 Jun-09 Complete Appoint NHS Procure21 Partner (PSCP) Jun-09 Jul-09 Complete Develop and Sign-off revised Design Sept-10 Apr-11 Complete Surveys and decanting works on existing hospital site Prepare and agree final Guaranteed Maximum Price (GMP) Sept-09 Feb-12 Complete Jan-12 July-12 Underway Approval of FBC Jan -12 Jun - 12 Underway New build Jul -12 Nov-14 Not yet started Transfer hospital services to new development Dec-14 May-15 Not yet started Demolition of vacated blocks May -15 Apr -16 Not yet started Completion of external works May -15 Apr -16 Not yet started 7.3 Project Structure, Skills and Resources Good governance and effective management arrangements are essential for the successful delivery of major projects. The project management, governance and budgetary arrangements for the new West Cumberland Hospital project draw on good practice guidance as set out in the Office of Government Commerce (OGC) Managing Successful Programmes Guide, the Association for Project Management (APM) Body of Knowledge 5th Edition, the OGC Procurement Guidance Note on Project Organisation and the NHS Capital Investment Manual Project Organisation guide The basic principles of these arrangements are: Clear roles and responsibilities. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 161

162 Clear and agreed limits of authority. The correct people are allocated to key roles. Integration with the organisation s existing management and governance procedures The project structure has the following components: Sponsoring Group Senior Responsible Owner (SRO) Project Board Project Director Project Team The Sponsoring Group The Sponsoring Group (the Investment Decision Maker) is responsible for: The investment decision. The overall direction of the organisation. Ensuring the ongoing alignment of the project with the strategic direction of the organisation as a whole. Resolving strategic issues that fall outside the authority of the Project Sponsor The body with the ultimate responsibility for approving the investment is the Trust Board of the North Cumbria University Hospitals NHS Trust. The Trust Board is therefore regarded as the sponsoring group It is recognised that the Trust also has a responsibility to engage with and inform its key external stakeholders in the project, and for this purpose it has established a project Stakeholder Group, comprising representatives of patients, the public and partner organisations. Further detail about the role and membership of the Stakeholder Group is detailed at 7.5. Senior Responsible Owner (SRO) The SRO (or Project Sponsor) is accountable for the success of the project and the delivery of the anticipated benefits. This role is filled by the Chief Operating Officer/Deputy Chief Executive of NCUHT, Kevin Clarkson. The SRO s role is to: Secure the investment required to set up and run the project. Provide overall direction and leadership. Manage the interface with key stakeholders. Chair the Project Board. Project Board The Project Board comprises senior membership from within the Trust and reports directly to the Trust Board via the Chief Operating Officer/ Deputy Chief Executive Upon appointment of Laing O Rourke as the Trust s Principal Supply Chain Partner, to ensure genuine partnership working it was agreed that a senior representative of the PSCP should join the Project Board. The North West SHA, NHS Cumbria, GP commissioners and the Cumbria Partnership NHS Foundation Trust also have seats on the Project Board. The membership of the Project Board is given below The Project Board meets monthly and carries responsibility for ensuring the delivery of the project within the time and cost parameters agreed by the Trust Board. The membership of the Project Board is detailed below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 162

163 Figure 7.2. Project Board Membership Name Corrine Siddall Philip Day Alistair Mulvey Alan Davidson TBA Sue Halsall Mike Walker Karen Kershaw Lesley Carruthers Peter Fairclough Abi Chicken Ray Beale-Pratt Ramona Duguid Dr David Rogers Stephen Prince Kathryn Berry John Egan Steven Kinninmonth Position Director of Operations (Chair) Non-Executive Director Director of Finance Director of Estates and Facilities Project Director Head of Strategic Financial Planning Consultant Surgeon / Medical Director Clinical Planner / Risk Manager Deputy Director of Nursing, WCH Trust Project Manager, PFPM Ltd Trust Cost Advisor, Rider Hunt Ltd NHS Cumbria Director of Governance & Company Secretary Lead GP Commissioner (Copeland) Estates Manager, Cumbria Partnership NHS FT Associate Director, NHS North West Project Leader, Laing O Rourke Senior Project Manager, Laing O Rourke Project Director The Project Director is responsible for the day-to-day leadership and management of the project on behalf of the SRO. This includes: Managing the project within the agreed budget and timescales. Appointing and managing the project team (both internal staff and external advisers). Reporting progress at regular intervals to the SRO and Project Board. After 3 years the Project Director recently left and the Trust is in the process of finding a replacement. Project Team An investment project of this scale requires a dedicated Trust team to support the Project Director. This team is a combination of full and part-time roles and in-house and external / consultancy staff, reflecting the availability of the necessary skills and capacity The Core Team comprises the Project Director, supported by a Project Accountant, Clinical Planner / Risk Manager, Project PA, Estates Manager (also acting as Supervisor under NEC contract), and a Business Change Manager Following an NHS ProCure21 procurement route requires the Trust to appoint dedicated external professional support as follows: Project Manager the Project Manager is a named individual with specific duties under the form of contract employed in ProCure21. It is important that this role is filled by a professional adviser with experience of operating the NEC form of contract under ProCure21. Following a competitive tendering process, the Trust has appointed Peter West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 163

164 Fairclough of PFPM Ltd as Trust Project Manager Cost Adviser it is essential that the Trust retains its own independent ProCure21 experienced cost adviser. Following a competitive tendering process, the Trust has appointed Rider Hunt Ltd as Trust Cost Advisor. CDM Co-ordinator - it is a requirement under the Construction, Design and Management (CDM) regulations that a CDM Co-ordinator (formerly a Planning Supervisor) be appointed to a construction project. This appointment has been made on the Trust s behalf by the PSCP and the appointed CDMC is Peter Bromiley of Day Cummins Ltd, a firm with significant experience of working on the West Cumberland Hospital site for almost 20 years. User Groups The Trust has established a robust structure to develop and sign off the design of the new facilities. This comprises a number of User Groups organised on a care stream basis as follows: Elective care Emergency care services Family care services Ongoing conditions Support services Academic development The purpose of the User Groups is to inform the design and construction teams of clinical and service requirements to ensure that the final design solution meets service and clinical requirements. The function of the user groups is to: Define the future structure and clinical processes for the services covered by the User Group Agree planning assumptions about the future direction of those services and advise the design team accordingly Work with other User Groups to make sure that the new build delivers the most appropriate facilities Provide a clear channel of communication to the services covered by each User Group, to ensure staff input Co-ordinate clinical input to the process and provide assurance that the design meets clinical requirements Escalate issues as required to the Clinical Reference Group. Sign off drawings, room data sheets and other outputs as appropriate Clinical Reference Group The Clinical Reference Group reports to and advises the Project Board and is responsible for ensuring that the overall clinical model remains consistent and to quality-assure outputs and resolve issues arising from the individual User Groups Design development is continuing within the clinical user groups. User groups have signed off the 1:200 scale departmental layout plans for each area of the new building and significant progress has been made in agreeing room data sheets and loaded plans The project management structure is therefore as follows in the below diagram. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 164

165 Figure 7.3. Project Management Structure A summary of the key groups involved in the project structure and their responsibilities are set out in the table below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 165

166 Figure 7.4. Project Management Responsibilities Group Responsibilities Frequency Trust Board (Sponsoring Group) Project Board Project Team Clinical Reference Group User Groups Approval of business cases. Approval of project budget. Approval of land acquisitions/ disposals. Approval of appointment of PSCP. Oversight of project progress and expenditure. Oversight of sub-groups. Recommendation to the Trust Board on approval of business cases, budget and appointment of PSCP. Day to day management of project progress and expenditure. Reporting to Project Board. Production of business cases Co-ordinate and service meetings of Project Board, Clinical Reference Group and User Group Manage the appointment/ selection process for contractors and external advisers. Identify and manage project risks Oversee and ensure consistency of outputs from User Groups Advise the Project Board on clinical / design issues as required Development and sign-off of design and associated operational policies for each clinical / non-clinical area. Monthly Monthly Fortnightly Monthly As required Project Budget The costs associated with planning and delivering a major hospital construction project are significant and need to be agreed and carefully managed Project costs and fees incurred in delivering a ProCure21 project up to the start of construction fall into three main categories: In-house staff salaries and non-pay expenses. Trust s own external professional advisers. PSCP design fees. Trust Project Costs An estimate of direct project costs per annum, based on the structure proposed in section 7.2 above is detailed below It is assumed that this structure will need to be maintained for up to six financial years (2009/10, to 2014/15), however the costs for financial year 2009/10 will be lower as some appointments have been made during the financial year. As at the end of 2010/11 the SHA have provided 2m of funding to support the costs of the Trust s internal project team and external advisors. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 166

167 Certainty of cost in relation to external advisers has been provided by obtaining capped fee bids against a defined schedule of duties. PSCP Fee Costs The direct project costs incurred by the Trust exclude the professional fees incurred by the ProCure21 PSCP in developing and managing the project, which are likely to include: Architects Structural engineers Services engineers Quantity surveyors Transport planners Town planning advisers Landscape architects CDMC These fees are included within the Guaranteed Maximum Price (GMP) agreed between the Trust and PSCP for the project and are not funded from the Trust s allocated project budget. Sources of Funding The Strategic Health Authority has agreed to commit revenue funding support of 2% of capital cost to the project, based on the total capital cost approved at OBC stage. For a 100 million capital investment as proposed in this OBC, this would equate to 2 million in project funding. The tables above demonstrate that the projected Trust project costs are within this figure. Cost Reporting It is essential that the Trust is able to effectively monitor expenditure on the project on a regular basis. This will take place as follows: For costs incurred directly by the Trust (in-house staff, non-pay and professional advisers), a project budget code has been established and expenditure is monthly to the Project Board. Costs incurred by the PSCP (initially comprising design fees and subsequently construction and equipping costs) is reported by the PSCP, and checked and verified by the Trust s cost adviser The Project Accountant and the Trust s retained cost adviser have developed a financial reporting mechanism which allows the Project Board to receive a consolidated monthly project budget report. This is described in the diagram below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 167

168 Figure 7.5. Financial Reporting Trust Board and Project Board Summary Report RISK MANAGEMENT PSCP Capital Expenditure (Source: Trust Cost Advisor & PSCP) Trust Capital Expenditure (Source: Trust Central Reporting via Integra) Trust Revenue Expenditure (Source: Trust Central Reporting via Budget Reports) PSCP expenditure is managed within the ProCure21 framework and the Trust s independent cost advisors review and verify expenditure to provide assurance of value for money to the Trust. This includes detailed review of timesheets, invoices received from suppliers, application of market testing, type of expenditure, and application of standard ProCure21 pricing rates An invoice is submitted to the Trust each month following such reviews and the Trust receives a certificate of approval from its Cost Advisor and the Project Manager for each invoice, before payment is made. The roles and responsibilities of the Project Manager and Cost Advisor in this respect are clearly set out in ProCure21 guidance Trust capital expenditure is authorised by the Project Manager against an agreed programme of works. All purchase orders and invoices are approved by the Trust Project Office. The project tracks and monitors expenditure using existing standard systems and procedures Trust revenue expenditure covers the core project team and associated expenses, and follows standard Trust budget reporting and approval processes The ProCure21 Phase 3 contract with Laing O Rourke in the sum of 4.19m was signed by the Chief Executive of the Trust on 9 November This covers the costs of design and preparatory works up to completion of FBC and agreement of the GMP. Limits of Authority It is important that there is absolute clarity regarding the authority of each constituent element of the project structure to commit resources, or to approve changes to the project budget. This may relate to: Appointment of project staff West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 168

169 External consultancy / design fees Acquisition or disposal of assets Award of contracts Changes to scope of project resulting in changes to the estimated capital cost The arrangements adopted by the project are clearly documented and are consistent with the framework of the Trust s Standing Financial Instructions (SFIs) and Scheme of Delegation. 7.4 Outline Arrangements for Risk Management The Project Team has developed a risk management plan which is complementary to the Trust s overall Risk Management Strategy. It details the approach of the project to risk management, in order to ensure an integrated approach to project-related risk management activities within the Trust s overall approach to safety. It links with and is complementary to the risk management processes of the external contractors for the new hospital development project, via Laing O Rourke, as Principal Supply Chain Partner (PSCP) The Project Team has developed this process to ensure that risk management is an integral part of the new hospital development. It ensures that: Actual and potential project risks are identified through a range of mechanisms. Project risks are assessed, prioritised, managed and controlled. Wherever possible, project risks are avoided to prevent loss or, risks are reduced to an acceptable level and losses to the project and to the organisation are minimised Implementation of the following key Trust documents will ensure effective risk management of the project: Risk Management Strategy Incident Management Policy and Procedures Health and Safety Policy Complaints Procedure Control of Substances Hazardous to Health (COSHH) Fire Policy Infection Prevention and Control Policy and Procedures Risk Identification The aim of risk identification is to develop a comprehensive list of sources of risks and events that might have an impact on the achievement of objectives and the continuity of service delivery The Project Team scoped the potential risks that may threaten the success of the project. This includes internal and external factors, some of which the Trust will be unable to influence in any way. Sources of risk to the project include: Project planning, management and business case approval Land acquisition Impact of the development on clinical practice Construction hazards Environment, buildings, equipment, chemical or hazardous substances. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 169

170 People employed by the Trust or any other person present in the Trust s premises. Service delivery, including continuity and service developments Financial management of the project Communication or use of information Health and safety during construction and commissioning Security of the site External factors contractor risks, NHS providers on site, external agencies, change of government. Risk identification by Principal Supply Chain Partner PSCP risk identification follows Laing O Rourke (LOR) procedures, the context for which is the same as identified above. LOR will identify significant risks which will be shared with the Trust through the standard NHS ProCure21 procedures. Risk Analysis and Evaluation Local risk analysis has been undertaken, in accordance with the Trust s Risk Management Strategy, using the Trust s risk scoring matrix. Analysis involved making an estimate of the probability (likelihood) of the risk occurring and its impact (consequence), with consideration of all action required. The product of this analysis identified the seriousness of the risk exposure and enabled risks to be prioritised as high, medium or low Appendix B contains the full risk register for the redevelopment. Figure 7.7 below is an extract from the risk register outlining the most significant project risks, potential impacts and management strategies to mitigate risks. Figure 7.6. Major risks and mitigation PSCP risk analysis and evaluation will follow Laing O Rourke (LOR) procedures, the context for which is the same as identified above. LOR will inform the Trust as appropriate West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 170

171 of all significant risks to the project through the standard NHS ProCure21 procedures. Control, Action, Review and Monitoring of Project Risks All project risks that are likely to have an impact on the organisation s ability to achieve its objectives will be recorded on the corporate risk register. All other risks will be held on the Project Team Risk Register and will be escalated as appropriate. Risks will be controlled through a variety of mechanisms including: Routine management, Trust policies and procedures Action plans Effective financial planning and governance Monthly review of the Risk Register by the Project Team in advance of Project Board meetings. This will include identification and evaluation of new risks and re-scoring, escalating or archiving existing risks as appropriate. Escalation or archiving will be agreed at Project Board. Escalated risks will be notified to the Risk Management Assurance committee as per Trust Risk Management Strategy and RA Procedure. Monitoring of the top project risks at monthly Project Board meetings. The Project Team will be represented at the RMAC for discussion of project-related risks as appropriate. The Project uses the Trust Risk Register template for management and evaluation of project risks. Some fields are hidden and will only be used when a risk is escalated to the Corporate Risk Register. All risks escalated to the Corporate Risk Register, including risks escalated by LOR, will be allocated a lead director, normally this will be the Project Director but may be other directors of the Trust depending on risk context. All risks will be the responsibility of the Project Manager. The Risk Manager for the New Hospital Project will facilitate risk management processes within the team. Once escalated to the Corporate Risk Register, the Project Team in association with LOR will continue to manage the risks and will maintain the same monthly system of review as detailed above, but with engagement with the allocated lead director for any risk not being led by the Project Director. The Project Team will inform the Risk Management Department of changes in status of any risk escalated to the Corporate Risk Register PSCP risk control action and review will follow Laing O Rourke (LOR) procedures. LOR will inform the Trust as appropriate of changes to risk status as a result of action and reviews undertaken, via the standard NHS ProCure21 procedures. Management and monitoring of LOR project risks that have been escalated to the Corporate Risk Register will be managed as detailed above Accountability, responsibility and authority for risk management within the project is defined below. Figure 7.7. Risk Management within the Project Stakeholder Project Director Project Manager Responsibility The Project Director is responsible for ensuring leadership of all risks relating to the project and for working with the project manager to ensure that these are effectively managed internally or externally with the PSCP as appropriate. The Project Director will be advised by the Project Manager. The Project Manager is responsible for ensuring effective management of all risks relating to the project and for working with the Project Team, the PSCP and Associate Medical Director / Clinical Leads for the NHP as appropriate. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 171

172 Project Team Trust Staff engaged on project-related matters External Contractors and Sub-contractors The Project Director will advise the Project Director of new risks and risks that are felt to require escalation. The Project Team will be responsible for scoping risks affecting the project and for maintaining the local risk register in liaison with the Project Manager and Project Director. All Trust staff engaged on the New Hospital Project in any capacity will follow normal Trust policies and procedures for risk management. Projectrelated risks identified by staff with regard to their own user group must be raised through user group leads who will escalate to the Project Team / Project Manager as appropriate External contractors and sub-contractors will follow Principal Supply Chain Partner (PSCP) policies and procedures with regard to risk management and will report significant project risks to the Trust s Project Board, via the Project Manager The Project Board receives details of significant project risks and mitigation plans routinely within the monthly Project Manager s report. The Project Board is chaired by the Deputy Chief Executive and reports to, and advises the Trust Board on all matters relating to the project A detailed risk register for the project has been prepared and is managed jointly between the Trust and Laing O Rourke in line with good practice. It is included as Appendix B to this FBC. 7.5 Stakeholder, Public and Patient Involvement The WCH redevelopment project launch workshop held on 6 August 2009 identified communications as an issue of major importance for the project with a number of communication risks that could potentially impact on the project. The key risks and solutions are detailed in Figure 7.8 below. Figure 7.8. Communication risks to achieving project objectives Risks Failure to raise awareness of the Trust s plans leading to potential undermining of the Business Case Mitigation Essential communication plan is put in place and full engagement is conducted with stakeholders Negative media coverage Regular Chief Executive media briefings engagement in the redevelopment fund raising campaigns In line with mitigating these risks, the Trust published a Communications Strategy for the redevelopment of WCH in August 2009, which will be updated and monitored by the communications team as the project progresses The objectives of this communications strategy are: To raise awareness of the redevelopment and the Trust s commitment to the future of West Cumberland Hospital To communicate with the Trust s stakeholders through various communication routes To engage the Trust s stakeholders through User Groups and other forums To communicate and engage the wider West Cumbrian community through a range of communication methods, including the local media To encourage feedback through each communication method West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 172

173 To encourage involvement and ownership through a local fundraising campaign To ensure all questions and correspondence about the project are dealt with in a consistent, accurate and professional manner Communication and engagement have thus been defined as follows: Figure 7.9. Communication and Engagement Communication: Providing information using varied and appropriate communication (medium, language and frequency) in order to inform the Trust s key stakeholders, including its staff, of the Trust s plans to redevelop the West Cumberland Hospital. Engagement: Takes forward communication to engender debate, understanding and informed involvement with the Trust s key stakeholders, including its staff, in shaping the vision, values and governance arrangements of the new West Cumberland Hospital There are a number of internal and external stakeholders that the project needs to communicate and engage with throughout the project lifecycle. These are broadly defined in Figure Figure Key internal and external stakeholders Service Providers Service Users Influential Groups Keep-informed groups Trust staff; Social care staff; GPs (as clinicians); Community health teams; NHS Cumbria staff; Copeland and Allerdale Locality GPs; On-site staff employed by other organisations; private and third sector providers of care; all other local NHS trusts Patients; carers and patient support groups such as: Heart and Angina Support; Action for Health; Age Concern; Alzheimer s Society; Copeland Disability Forum; Allerdale Disability Forum; MENCAP; MIND; CVS; West Cumbria Society for the Blind; Patient Panels. Trust Board/Senior Management; NHS Cumbria; GPs; Cumbria County Council (Social Care and Highways); Copeland and Allerdale Borough Councils; NWDA; Energy Coast; Local councillors and MPs; Trades Unions; Regulators of health services; the Media; Overview and Scrutiny; Cumbria LINk; Strategic Health Authority; Department of Health; Cumbria University /other educational bodies; Save Our Services; Cumbria LINk. West Cumbria businesses; employment and training providers; construction suppliers; subcontractors; local supply chain; local community; local employers; visitor population; hospital neighbours and local residents; prospective employees; Chamber of Commerce; SME support agencies; local bus companies. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 173

174 Internal stakeholder communication and engagement A number of forums have been established to allow staff and internal stakeholders to engage in the redevelopment project. These include: A staff monthly magazine issued after each Trust Board meeting with project updates WCH newsletter issued bi-monthly and containing information about the project, updates, key moments, surveys, FAQ s and contact points A regular bulletin to communicate key and urgent information quickly to all staff at WCH Chief Executive question times monthly meeting with individual departments across both hospital sites Dedicated staff engagement sessions at WCH led by members of the Project Board Sessions that have been held to brief staff have been well attended. Some of the issues raised at the sessions have included car parking, bed numbers and the location of individual departments User groups, involving over 60 clinical and non-clinical staff from the hospital and primary care are working closely with architects on an on-going basis in the planning and design of the new hospital, and regular meetings are organised with the project team. Local Consultation and Involvement The Trust has established a number of forums and websites to provide information and facilitate engagement on the proposed developments and to receive questions and feedback from patients, the public and local stakeholders as defined above. These forums include: The West Cumberland Hospital newsletter, distributed to all stakeholders eight issues have been published to date A dedicated website launched in November 2009 and linked to the Trust s own website: providing visitors with the opportunity to post comments and questions about the hospital redevelopment. GP Brief monthly updates Suggestion boxes at West Cumberland Hospital situated in the Reception and Costa Coffee Individual meetings with larger patient groups, Patient Panels and Cumbria LINk Utilising existing or planned events such as Neighbourhood Forums and Cumbria LINk meetings Regular meetings held by the Executive Team with NHS Cumbria and the Overview and Scrutiny Committee of Cumbria County Council, with a programme of meetings planned to take place throughout the duration of the project. Chairman and Chief Executive individual meetings with the local MPs A front-of-hospital display providing information for patients, visitors and staff Production of a DVD once the project is underway Media updates through Chief Executive Media Briefings Regular press releases as the project progresses and at key points of the redevelopment Local fund-raising campaign to engender a sense of ownership of the redevelopment The majority of comments from staff, patients and members of the public are very positive. Concerns and queries are being actively addressed. The Trust s communications West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 174

175 efforts around the WCH project were recognised nationally in 2010, being shortlisted for a national communications award for community engagement The Trust has also established a project Stakeholder Group with representation from NHS Cumbria and the mental health trust, together with the university, local authorities and patient and public representatives, in line with SHA comments that the health economy should establish a programme board which addresses the clinical, financial and timing interdependencies of the respective investment projects. Membership of this group is detailed in Figure 7.12 below. Figure Stakeholder Group Membership Name Neil Goodwin, Chief Executive Corrine Siddall, Director of Operations Alistair Mulvey, Director of Finance TBA, New Hospital Project Director Mike Walker, Consultant in General Surgery / Medical Director Alan Davidson, Director of Estates and Facilities Philip Day, Non Executive Director Kathryn Berry, Associate Director of Capital, Investment and PFI Ray Beale-Pratt Melinda Hughes Julie Ward Paul Walker, Chief Executive Michael Smillie Dr Susan Lee Reverend John Bannister David Day Stanley Lightfoot Organisation North Cumbria University Hospitals NHS Trust (NCUHT) NCUHT NCUHT NCUHT NCUHT NCUHT NCUHT NHS North West NHS Cumbria (PCT) Cumbria County Council Allerdale Borough Council Copeland Borough Council Cumbria Partnership Trust (Mental Health Trust) University of Cumbria Save Our Services Group Cumbria LINk West Cumberland Hospital Patient Panel The group meets every two months to provide a strategic overview of the project with particular responsibility for: Ensuring that the project remains consistent with the expectations set out in Closer to Home. Ensuring patients, the public and local stakeholders are kept fully informed of progress. Ensuring that opportunities for sharing of sites, facilities and resources for mutual benefit to constituent organisations and the local community are identified and acted upon (particularly in relation to the health campus concept). West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 175

176 Providing a formal means for the local community to engage with the project and ensuring that communication with patients and the public regarding the project is both timely and two-way. 7.6 Benefits Realisation Plans Benefits realisation planning aims to ensure that the desired business change to be delivered by the project has been clearly defined, is measurable, and supports the case for investment. Ultimately, it is required to ensure that the overall objectives of the project are actually achieved Embedding the changes required to deliver the identified benefits in the operational business requires that the benefits and measurement approach is agreed within the full business case, whilst actually realising the majority of the benefits will extend beyond the completion of the construction project itself The approach taken by the Trust is as follows: The top-level benefit criteria identified at OBC stage have been broken down into specific business benefits which will be derived from implementing the project. The means of measuring the delivery of those benefits and the source of data that will be used for measurement have been identified The appropriate point(s) at which to measure the achievement of the benefit, and the person responsible for delivering it, are set out It is intended that benefits realisation will be measured at two key points six months post opening and again two years post opening to measure longer-term benefit realisation. These would be carried out in conjunction with Stages 3 and 4 of Post-Project Evaluation Recognising the importance of planning for and delivering the benefits of the project, the Trust s project team has appointed a Business Change Manager, an experienced operational manager from within the business at West Cumberland Hospital, to lead the process of benefits management on behalf of the project. He will be responsible for ensuring that the necessary actions are taken by the clinical divisions to ensure delivery of the benefits when the facility is operational, and co-ordinating the process of measuring and reporting on delivery The benefits comprise both financial and non-financial (qualitative) benefits. Where a benefit releases a quantifiable cash saving, this has been identified and included within the Financial Case at Section 5 of this FBC The benefits to be realised by the Trust as a result of the successful development of the new hospital will also support the implementation of the NHS North West strategic aims outlined in Figure The full benefits realisation plan is included in Appendix C. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 176

177 Figure NHS North West Strategic Aim Contribution via redevelopment of WCH Strategic Aim Contribution of This Project 1. Ensure people live longer Provide timely and effective treatment of illness and disease in high quality facilities with the latest equipment 2. Reduce the impact of illness on people s quality of life Early detection of disease will reduce morbidity. 3. Reduce lifestyle-related illness Contribute with partners in the health campus to promoting healthy lifestyles 4. Deliver quality health and health services efficiently Cost of services will be better managed by reducing the unnecessary use of high cost acute care, and improving patient pathways 5. Identify health needs better and respond creatively Provide appropriate volumes of acute care for the populations of Copeland and Allerdale, taking account of predicted demographic changes and disease patterns 6. Balance collaboration and competition in the delivery of health services Collaborate with other health / social care providers to offer seamless services within a campus location 7. Improve the efficiency of the health service and VFM Flexibility of design and achievement of good clinical adjacencies will result in more efficient services and better VFM 8. Secure the necessary skills and lead by example Attract and retain skilled healthcare staff to the area and support the Cumbria Master Plan. 9. Work closely with partners to ensure delivery of health service objectives Development of a potential Health Campus and delivery of Closer to Home 7.7 Gateway Reviews The Office of Government Commerce (OGC) Gateway Project Review Process applies to construction, IT and business change projects across the public sector. The Gateway process helps the Senior Responsible Owner to achieve their business aims by giving assurance that: People with appropriate skills and experience are deployed on the project Stakeholders covered by the project fully understand the project status and the issues involved The project is ready to progress to the next stage of implementation There is visibility of realistic time and cost targets for projects The Gateway Review process is designed to examine projects at key points in their lifecycle to provide assurance that they are progressing successfully. The Review uses a series of interviews, documentation reviews, and the experience of the review team to provide valuable additional perspective on the issues facing the project team, and an external challenge to the robustness of plans and processes. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 177

178 7.7.3 There are six gates at key stages in the life of a project and the review process looks at the readiness of a project to progress through a gate to the next stage. These gates are described below. Figure The Gateway Project Review Process In preparing the OBC for the redevelopment of WCH, the Trust completed a Risk Potential Assessment (RPA) proforma to assess the status of the West Cumberland project in relation to the Gateway Review process. The outcome of the assessment is summarised in the below figure The RPA process indicated that the project falls into the Medium Risk category, achieving a score of between 31 and 40. As this is at the upper end of the medium risk category, this suggested that a Gateway Review of the project would be beneficial. The RPA is included below in Figure West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 178

179 Figure Risk Potential Assessment Proforma Max. Allocated Score Score STRATEGIC CONTEXT AT REQUESTED OGC GATEWAY REVIEW Programme/Project Status N/A* N/A* Legislative Requirement N/A* N/A* PSA Target N/A* N/A* Relationship to Major Policy Initiative announced or owned at Cabinet level N/A* N/A* Dependency Level N/A* N/A* Stakeholder Buy-In 2 1 Potential impact on the public and other businesses/organisations BUSINESS ISSUES AT REQUESTED OGC GATEWAY REVIEW Potential Benefits 4 2 Costs 4 4 Staff Affected 6 4 Business Process Change 12 2 Programme/Project Impact on Organisation 4 4 Complexity of Contractual Arrangements 4 1 DELIVERY CAPABILITY AT REQUESTED OGC GATEWAY REVIEW Delivery Skills/Team Capability 4 1 Supplier Side Capability 4 1 Organisation Resource 4 2 Supplier Resource 4 1 TECHNICAL ISSUES AT REQUESTED OGC GATEWAY REVIEW Innovative Approach 4 1 IT-Enabled Related Criteria Scope of IT Services and Supply 8 0 IT Integration Issues 5 0 Property & Construction Enabled Related Criteria Scope of programme/project 1 1 Nature of Programme/Project 3 1 Site Occupation 6 2 Type of Facility 4 1 Site Constraints 4 1 Total Scores West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 179

180 7.7.6 The project therefore underwent a Gate 2 review between 24 and 26 November The primary purpose of this Gateway is to provide assurance that the delivery strategy for the project is likely to be successful in achieving the outputs and benefits described in the OBC, and that stakeholders remain supportive of the project The review team assessed several areas of the WCH redevelopment project including: Assessment of the delivery approach Business case and stakeholders Risk Management Review of current phase Readiness for next phase investment decision The review team highlighted several key positives at Gate 2. These included: The project is being progressed by a committed and professional team to meet a demanding programme. The Trust appointed Laing O Rourke in July 2009 as their Procure 21 Principal Supply Chain Partner (PSCP), to work with them in developing design proposals and a Guaranteed Maximum Price (GMP) for the proposed investment. In the period since, work has been progressed at a considerable pace, reflecting a shared commitment within the team and a high degree of professionalism and drive. Risk management arrangements have been developed by the project team Alongside these positive factors, six recommendations were made. These are detailed below, along with a summary of the Trust s response. Figure Gateway Review recommendations and progress Ref. No. Recommendation Timing Trust Response 1. A forum should be established by the SRO to work jointly with Commissioners to review and agree models of care which will underpin scheme viability. 2. A forum should be established by the Chief Executive to work with NHS Cumbria and local partners to develop an affordable financial framework for the project within the local health economy. 3. Develop risk management arrangements to focus on a single log and achieve appropriate onward reporting and escalation arrangements. Now Now Dec 09 The local health economy has worked together successfully to agree an integrated Clinical strategy setting out agreed models of care which are reflected in the plans for the new hospital. The Trust and NHS Cumbria have established a joint economy-wide Turnaround Plan led by a Turnaround Director which will ensure consistency and affordability of capital plans across north Cumbria. In addition, there is executive and non-executive director membership from NHS Cumbria on the Project Stakeholder Group, PCT membership of the Project Board and the Trust has a seat at the PCT s LIFT Steering Board. Recognising that risk management arrangements needed to be strengthened, the project team have appointed an experienced Risk Manager to further develop risk management capability within the team. A shared project risk register between the Trust and PSCP, compliant with ProCure21 and Trust policies, is now in place and actively managed. Risk management procedures for the project are West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 180

181 Ref. No. Recommendation Timing Trust Response 4. Complete contingency planning to address potential reduced funding scenarios 5. Prepare a detailed plan for achieving timely submission of the updated OBC, the FBC and associated briefings to all appropriate approving organisations. 6. Complete a gap analysis and provide additional resources as required to ensure timely achievement of the required organisational change Dec 09 Now Feb 10 fully documented and have recently undergone an internal audit review. The scheme has been successfully redesigned to meet the shortfall arising from the NWDA funding withdrawal and has sufficient flexibility to allow for the refurbishment works to be re-scoped or rephased to match any further changes in funding availability. The OBC has been approved and the programme for completing and approving the FBC has been shared and agreed with the SHA and PCT. Recognising that a programme of change would be associated with the new facilities, and the need to realise revenue savings from the project, the project team have appointed a Business Change Manager from December 2009 to take forward detailed planning of new staffing models and operational policies within the new hospital. The appointed individual has a clinical background, operational management experience and a good working knowledge of the services at WCH The Health Gateway Review (Gate 3), expected following completion of the Full Business Case and prior to the Investment Decision, was completed during the week commencing 9 January The review comprised an external team undertaking three days of focused interviews with a range of internal and external stakeholders, including NHS Cumbria, NHS North of England, Cumbria LINk and Laing O Rourke The key findings given by the review team in their initial feedback to the Deputy Chief Executive / Director of Finance were as follows: There have been many challenges for the project team but they have worked through these well There is a good working relationship with Laing O Rourke There are improved and improving relationships with the PCT and CCG PCT/CCG sign off of the FBC will be achieved Challenges remain at SHA level in terms of broader clinical strategy affordability Collaborative working with all partners should be enhanced, especially with the SHA to secure approval A realistic timetable for approvals should be agreed with partners The overall risk rating for the project was assessed as Amber, which is defined as successful delivery appears feasible but some issues require management attention. These issues appear resolvable at this stage of the project if addressed promptly. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 181

182 The Project Team have since resolved the approval issues with the PCT / SHA, and have taken the actions to address the recommendations of the final report The final report was received on 11 January 2012 and the recommendations are set out below together with the Trust response. Ref. No. Recommendation Trust Response 1. The SRO should ensure that the project team, working collaboratively with colleagues from the PCT, SHA and acquisition preferred bidder, should update existing plans and develop a detailed and realistic plan for information requirements and timetable for getting FBC approval,. 2. The SRO to ensure that the FBC is brought up to date with the latest DH and Treasury guidance. 3. The SRO to ensure that the Project Team develop a costed contingency plan to address unforeseen costs and affordability issues. 4. The SRO to review project governance and reporting arrangements with key stakeholders for both current and future phases. 5. The SRO to build on the joint working with the CCG and PCT and ensure that this collaborative approach is pursued with the other key stakeholders. Completed. Completed and agreed with the SHA. SHA Approval achieved 8th March 2012 The Project team will build on the Assurance Work completed so far and continue to assess any changes to the financial plans. This mostly related to Project Board where new members/changes of members have been included since the start of the project. This item will be raised at the Project Board. A system wide board is in place and relationships continue to improve that had now resulted in FBC Approval and support by the CCG and PCT. Members of the CCG are also part of Project Board. 7.8 Health Impact Assessment Health is affected by a wide range of factors, known as the determinants of health and it is well recognised that improving the health of a population cannot be achieved through the action of health services alone, but is dependent upon a range of organisations working together in partnership The Health Impact Assessment (HIA) process provides a framework for the consideration of the wider effects of the redevelopment of WCH on the health of the local population. It enables identification of the beneficial effects of the project as well as any negative impacts The aim of HIA is to identify ways to remove or mitigate any of the potential negative impacts of the redevelopment on the population s health and well-being and to maximise the positive impacts The West Cumberland Hospital HIA was led by a Steering Group who produced a report presenting recommendations from the process. The assessment engaged with a range of people including members of the public, voluntary sector, professionals and elected members to consider the proposals and to identify their potential positive or negative effects and how these can be either maximised or mitigated. In line with SHA requirements for approval of the OBC, key agencies across the area, including agencies involved in the delivery of the Energy Coast Masterplan, were engaged in the HIA process. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 182

183 7.8.5 The HIA process followed a series of steps outlined in Figure Figure The Health Impact Assessment Process Scoping Identifying aspects of the proposal to be assessed Community profile and review of evidence Exploring the health needs of the population and the research evidence Stakeholder workshop Patients, professionals, elected members and voluntary agencies identify potential health impacts and suggest ways to mitigate impacts Agreeing Recommendations Based on workshop findings, research evidence and community profile, the steering group agree recommendations Scope of the HIA It was agreed by the steering group that the HIA should consider the health impacts of both the construction and operational phases of the redevelopment. It was also agreed that there should be a focus on the opportunities provided by the redevelopment. Stakeholder Workshop In order to assess the impact of the redevelopment of WCH on the local population, a stakeholder workshop was held during which seven groups of people were asked to use their own experiences, the evidence presented in a community profile (see section 2.2 of this document for a profile the West Cumbrian population) and information from the project overview document to identify the potential impacts of the proposal Participants identified to contribute to the workshop are listed in Figure 7.17 below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 183

184 Figure Stakeholders invited to HIA workshop Representatives from West Cumberland Hospital Patients Panel West Cumberland Hospital League of Friends Patient Advice and Liaison Officers South Whitehaven Neighbourhood Management Local residents living close to the hospital Age Concern West Cumbria Older Peoples Forum AWAZ Primary Care Trust Representatives Social Care Representatives Cumbria Partnership Trust Representatives Representatives from Education and Regeneration Cumbria Constabulary Local Authority Elected Members Representatives from North Cumbria Acute Hospitals Representatives from Cumbria Disability Forum Representatives from the West Cumberland Hospital Redevelopment Project team Cumbria LINk Save Our Services group Participants were asked to consider issues relating to the redevelopment of WCH during the construction phase and in the longer term. These were categorised along 4 themes: Access to services People s healthy behaviours The environment Education and employment Workshop findings are detailed in full in the HIA report attached in Appendix D. Recommendations Based on the findings from the workshop, the consultation process, the community profile and a review of the evidence, the following recommendations are proposed in order to maximise the positive impacts of the proposal and to mitigate the negative impacts. Recommendations of the HIA are detailed below, together with the Trust s proposed actions. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 184

185 Figure HIA Recommendations Recommendation Project Response 1. Access to Services I. Construction Phase In order to encourage people to use public transport and thereby reduce the amount of traffic to the site there should be an active travel plan agreed between North Cumbria University Hospitals NHS Trust, Cumbria County Council, the local public transport provider and Patient Advice and Liaison Service. Site route maps should be sent out to patients with their hospital appointment. There should be friendly, knowledgeable car parking attendants directing patients and visitors coming on to site. Clear signage should be visible providing straightforward directions for visitors. There should be knowledgeable, friendly volunteers / attendants at front of house, welcoming and directing patients and visitors within the hospital. The Trust should work with the local media to ensure widely available up to date information about changes on the site. II. Longer Term A Travel Plan was produced to accompany the Trust s planning application for the redevelopment and its implementation will be monitored by the local authority in line with the planning approval. These will be prepared as part of commissioning and opening the new hospital The Trust put in place additional attendants to direct drivers and ensures that new traffic and parking arrangements introduced in May 2010 were implemented safely and smoothly. A similar approach will be implemented as further changes are made to roads and car parking during the development New signage has been installed on the site to assist visitors with the new traffic and parking arrangements during the period of the development. Appropriate new signage will be provided on completion of the development. Staff are available on the main reception desk to welcome and direct patients and visitors. Press releases are issued to the local media to ensure information on changes is widely circulated. Leaflet drops have also been carried out to local addresses when necessary regarding changes in traffic arrangements on site etc. The Acute Trust should give a commitment to ensure that those services that continue to be provided from the old hospital are of the same quality as those provided in the new building, particularly for mental health provision. This should be from an Clinical areas within retained buildings will be refurbished as necessary to an appropriate standard. Full refurbishment of all areas cannot be afforded within the available budget. Mental health inpatient provision will be in a fully-refurbished unit. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 185

186 environmental perspective as well as a service delivery perspective. Hospital areas should be colour zoned and linked to specific car parking areas in order to ensure ease of access for people with mobility problems. Car parking (including disabled and parent/child spaces) will be available close to all entrances of the new hospital. These arrangements have been discussed with Copeland Disability Forum and others to ensure suitability. The wayfinding strategy for the new hospital has yet to be agreed in detail and consideration will be given to the use of coloured zones. This will form part of the final colour scheme and detailed interior design. There should be stronger links with acute and community services in order to ensure continuity of care provision on discharge. Local travel plans should ensure the provision of adequate public transport services to the site. There should be an ongoing communication strategy to ensure that the population is given open, transparent, timely and consistent messages relating to strategic development. 2. Healthy Behaviours This is being implemented through the Trust s ongoing work with NHS Cumbria. This is not the responsibility of the Trust but we are happy to work with local public transport authorities on suitable solutions. There is an agreed Communication and Engagement Strategy for the project which has been widely circulated. This allows a number of routes for feedback from stakeholders as well as communication from the project. I. Construction Phase Planning for population health improvement should commence during this phase. The Health Promoting Hospital approach should be implemented through a partnership involving primary, secondary and public health sectors. In order to promote physical activity attractive outside space should be prioritised which should include the provision of covered walkways as well as open spaces and cycle ways. Cycling and walking to work should be promoted through the provision of appropriate facilities for staff. II. Longer Term This falls within the responsibility of NHS Cumbria. We will work with the Public Health team at NHS Cumbria to address this recommendation in preparation for the new hospital opening. The redeveloped site will include landscaped public spaces. This will form part of the detailed external works design later in the process. Provision including cycle racks, lockers and shower / changing facilities will be available to enable staff to walk / cycle to work. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 186

187 The main entrance space should be utilised for specific health promotion initiatives. A range of primary care in-reach services should be provided within the outpatients areas and linked to the appropriate clinics. For example the Stop Smoking service could be directly linked to the vascular and respiratory clinics providing a one stop shop for patients with smoking related illness. Acute staff should be trained to give healthy lifestyle advice and support to patients (e.g. to stop smoking). Catering services in the hospital should ensure a range of healthy eating options are available at all times. 3. Environmental Factors There will be adequate space within the new main entrance to allow these initiatives to take place. This will be discussed with NHS Cumbria and other relevant primary care providers in advance of the new facilities opening. The approach to health promoting activities within the hospital will be agreed with NHS Cumbria Catering within the hospital will meet all relevant NHS quality standards. I. Construction Phase Consideration should be given to the ratio of single rooms to multiple occupancy rooms. The provision of attractive communal environments should be prioritised in order to minimise feelings of isolation. Contractors should be mindful of school hours and arrange deliveries to ensure that they do not coincide with school opening / closing times. During the construction phase of the project the negative impacts resulting from the associated building work should be mitigated using the following measures: Restricting the use of certain machinery to certain hours of the day, minimising the dust arising from construction work during the drier months, minimising traffic flow, conducting a noise survey and the use of low noise equipment. II. Longer Term The majority of inpatient beds (circa 75%) will be provided in single rooms. Some inpatient beds will be retained in bays of no more than 4 beds. The design allows for attractive, light and airy public / waiting areas throughout. Inpatient areas have communal spaces This is a requirement built into the contract preliminaries. The Project Team and Laing O Rourke team are working closely with clinical staff and the Infection Prevention and Control Team to put in place measures to reduce any risk to patients and staff from demolition works. Traffic flow around the site has been changed to prevent any disruption from the ongoing works. A separate site access has been formed off the Sneckyeat Industrial Estate to keep construction site and hospital traffic flows apart. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 187

188 Where possible patients should be offered a choice of single room occupancy or shared room. Both service users and staff should be encouraged to use public transport to access the site. In some areas it will be possible to offer a choice of single or multi-bed rooms. We are happy to work with public transport providers to encourage greater uptake amongst people travelling to the hospital. The design allows access for buses and taxis to access the site up to the main entrance. 4. Education and Employment I. Construction Phase There should be a commitment from the appointed contractors to, where possible, offer employment to the local workforce. Recognition should be given to the need to train and educate people who will remain in Cumbria. In order to increase the locally skilled workforce and ensure sustainability of the local economy, contractors should offer the provision of apprenticeships. Development pathways should be provided through links between the appointed contractors and local education facilities. II. Longer Term Laing O Rourke is committed via its employment and procurement strategies to ensuring that a minimum of 60% of those employed on the scheme are locallybased. As above, Laing O Rourke will maximise use of local labour through both direct employment and subcontractors. Laing O Rourke will be offering apprenticeships on the project. Laing O Rourke is to appoint a Schools Liaison Officer for the project. In order to attract highly skilled individuals to West Cumbria the National Park status should be utilised to market local vacant posts. A priority should be given to the development of the health campus. This is already used as part of the Trust s recruitment literature. This is being taken forward by a working group chaired by Cllr Tim Knowles and involving the Hospitals Trust, NHS Cumbria, University of Cumbria and Britain s Energy Coast West Cumbria. 7.9 Regeneration, Environmental Sustainability and Corporate Citizenship Following the publication of Choosing Health: Making Healthy Choices Easier 20 in 2004, 20 Department of Health, Choosing Health: Making healthy choices easier, February 2005 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 188

189 the NHS has placed a new emphasis on corporate citizenship and sustainability. Figure Defining Regeneration, Sustainability and Corporate Citizenship The NHS can use its assets to help build communities by promoting employment from deprived areas, encouraging environmental and local procurement policies, and investing in well designed, environmentally sensitive buildings, using a sustainable construction process, thereby having a beneficial impact on the environment and on health inequalities by acting as a good corporate citizen to support sustainable local regeneration Good Corporate Citizenship describes how NHS organisations can embrace sustainable development and tackle health inequalities through their day-to-day activities. This means using NHS organisations corporate powers and resources in ways that benefit rather than damage the social, economic and environmental conditions in which we live How the NHS behaves as an employer, a purchaser of goods and services, a manager of transport, energy, waste and water, as a landholder and commissioner of building work and as an influential neighbour in many communities can make a big difference to people s health and to the wellbeing of society, the economy and the environment. By operating as a good corporate citizen an NHS organisation can benefit from a healthier local population, improved staff morale and faster patient recovery rates In order to promote and improve sustainability and corporate citizenship within the NHS to realise these benefits, the DH has created a corporate citizenship self-assessment model 22 to allow Trusts to assess themselves against a national and regional average score. This tool helps Trusts monitor how they are performing as corporate citizens and think about how they can better contribute to sustainable development The self-assessment tool covers six areas of good corporate citizenship, as outlined below. 21 Health Development Agency, Good Corporate Citizenship and the NHS, West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 189

190 Figure Good Corporate Citizenship Good Corporate Citizenship Travel: Encouraging people to make active and sustainable travel choices where possible, such as walking and cycling Ensuring that health services can be accessed by good quality foot and cycle paths, and effective public transport systems, and encouraging their use ahead of private vehicles Making sure that collisions, noise, pollution, congestion and CO2 emissions are minimised through effective travel planning Providing facilities and working arrangements that reduce the need for travel and distances travelled Managing travel in ways that benefit communities, support local economies and help protect the environment Procurement: Buying what is needed, and seeking innovative, lower impact products and services Understanding demand to ensure most efficient delivery of outcomes Specifying environmental and social standards through the procurement process to influence supply chains and drive innovation Basing procurement decisions on whole life rather than short-term costs and benefits Providing business opportunities and supporting skills development amongst supplier communities Making sure procurement supports and facilitates a reduction in resource use and waste Buildings: Working with contractors to ensure sustainable development objectives are properly specified, understood and delivered Using building projects to trigger improvement in other areas, like promoting active travel, cutting carbon, and expanding green and natural spaces Maximising sustainability performance through all phases of a building s lifetime planning, design, construction and operation Supporting a strong and sustainable local economy by involving local suppliers in building projects. Facilities Management: Complying with environmental and other appropriate legislation Making highly efficient use of resources such as energy, water, land and products Minimising waste Protecting green space and biodiversity Supporting local communities and economies wherever possible Community Engagement: They can help local people make informed decisions, enabling them to live healthy, sustainable lifestyles. They can work with local authorities and other public services (such as schools and transport planners) to produce healthy, sustainable outcomes more efficiently. And they can demonstrate leadership through the example they set to others in areas like food, active travel and energy efficiency. Workforce: A workforce strategy that supports sustainable development means: Understanding and responding to local employment conditions and needs Proactively building a skilled local workforce Building partnerships with education, training and skills providers, and voluntary organisations that help specific groups of people find employment Promoting the health and wellbeing of employees through enlightened HR policies Providing opportunities for employees to practice sustainable development NCUHT has carried out a corporate citizen self-assessment and compared scores against other NHS organisations in the North West. Figure 7.21 below demonstrates the Trusts performance as a corporate citizen is above the regional average across all six areas. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 190

191 Figure NCUHT Corporate Citizen Self-Assessment Score 60 % Test Scores NCUHT North West 0 Travel Procurement Facilities Management Workforce Community Engagement Buildings The scores for NCUHT are calculated as an average across the two acute sites managed by the Trust, with the new hospital at Cumberland Infirmary contributing significantly to the Buildings, Facilities Management and Travel scores. The redevelopment of WCH will further contribute to the already high scores achieved by the Trust. Sustainable development and regeneration is particularly pertinent in West Cumbria, given the links between the provision of acute healthcare in the area and the investment in the Energy Coast Masterplan The Trust is developing a Sustainability Strategy to ensure that sustainability is inherent in the design, construction and operation of West Cumberland Hospital. The ambition for the redevelopment of West Cumberland Hospital is to limit its environmental impact, achieving or exceeding all statutory requirements. In doing this, the Trust will consider its use of energy and emissions of CO2, use of water, material use and transport. Careful management of all these aspects will contribute to a low carbon hospital, providing a better internal environment for staff and patients and engaging the local community. Specific aims have been laid out to achieve a more sustainable hospital: To reduce predicted CO2 emissions in new builds and improve the existing buildings: NCUHT aspires to exceed the 2020 target of a 26% reduction in carbon emissions, specifically in the area of carbon emissions associated with energy. This will be achieved by applying energy efficient design principles, implementing an energy management strategy and behavioural change programme, improving existing building stock and utilising, wherever possible, low and zero carbon technologies. Reduce water use by integrating water efficient plant, appliances and fittings: NCUHT aspires to go beyond current NHS targets for reducing water use by using new, water-efficient plant, appliances and fittings throughout the new hospital. Studies are also being undertaken to investigate the use of ground water on site. Reduce construction and demolition waste going to landfill, prioritise materials comprising of recycled content and enable recycling: The redevelopment of West Cumberland Hospital will provide for the careful and sustainable disposal of waste. Construction and demolition waste going to landfill will be limited by investigating West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 191

192 opportunities to use materials with recycled content, off-site manufacture and in-use recycling. The redevelopment will include new facilities for staff, patients and visitors to develop good practice for recycling waste. Monitor transport during demolition and construction, and increase the use of sustainable modes of transport when the building is in use: The redevelopment of the hospital aspires to reduce carbon emissions. To minimise transport-related carbon emissions, a "green travel plan" is being produced looking at opportunities to improve public transport links and incorporate excellent facilities for cyclists, with the aim of making bike use easy and practical. During demolition and construction, transport will be monitored with methods to reduce construction waste implemented. Improve the capacity of the building to operate successfully under the different and demanding climate conditions predicted in future: To address the impacts of climate change, and contribute to making the new hospital climate-resilient, WCH are considering: o Sustainable drainage systems o Green open spaces o Solar shading o Insulation o Energy efficient equipment o Low and zero carbon technologies Reduce the environmental impacts of materials by selection on the basis of environmental impact: During the design of the new hospital, reference is being made to the Building Research Establishment's Green Guide to Specification to ensure that the environmental impacts of the main elements of the building are minimised, including: o o o Use of certified sustainable timber Re-using materials from the locality in construction Maximising the recycled content of building materials Reduce building related emissions and the risk of pollution. Consider the impact of air, light, noise and thermal pollution on the surrounding environment and community. During construction, the site will be managed in an environmentally and socially considerate manner. This includes being assessed for: o Environmental policies regarding air, dust and water pollution o Polices for waste management to segregate, recycle and reuse waste generated on site. o Consideration of ecological impacts o Energy saving measures o Procuring materials from local sources and certified responsible sources. Measures will be implemented to address the impact of air, light and noise pollution on the surrounding environment and local community. Enhance the surrounding ecology and biodiversity of the site by protecting existing assets and by introducing new habitats and/or species: Redevelopment of previously developed sites reduces the burden on green space, and will have less impact on local biodiversity in line with the principles of the UK Biodiversity Action Plan. In order to protect and enhance the ecology of the site, a suitably qualified West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 192

193 ecologist has been appointed and ecological studies are being undertaken. The contractor will be required to implement any necessary ecological protection measures during the works in order to minimise the impact on the existing site ecology, and the ecology of surrounding areas. All relevant UK and EU legislation will be complied with during the design and construction process to protect the biodiversity of the site. Provide a healthy and comfortable environment, which is safe, accessible and contributes to an improved physiological and psychological wellbeing: The new hospital will be designed to be user-friendly, giving staff and patients a high level of comfort and control over their internal environment, maximising natural light and ventilation. WCH will aim to incorporate high levels of security, achieving the Secured By Design award. Members of the local community will be actively encouraged to discuss their concerns, views, needs and aspirations for the hospital, all of which lead towards promoting social inclusion. Provide opportunity for local businesses, contribute to the local economy: The new hospital will make a major contribution to the regeneration of West Cumbria and aims to: o o o Contribute to the local economy Increase the viability of existing local businesses and encourage new businesses by investigating ways to procure goods and services locally Provide local employment opportunities during construction and operation Enable the hospital to deliver environmental, social and economic benefits throughout its life: Once constructed and in operation, the new West Cumberland Hospital will aim to promote positive environmental behaviour by all the building's users, for example: o Recycling schemes o Energy awareness programmes o Education initiatives o Convenient low carbon travel options 7.10 Post-project Evaluation Evaluation is the process of assessing the impact of a project while it is in operation, or after it has come to an end. It is an essential aid to improving project performance, achieving value for money from public resources, improving decision-making and learning lessons. Evaluation can help to: Improve the design, organisation, implementation and management of projects. Ascertain whether the project is running smoothly so that corrective action can be taken if necessary. Promote organisational learning to improve current and future performance Avoid repeating costly mistakes. Improve decision-making and resource allocation. Improve accountability by demonstrating to internal and external parties that resources have been used efficiently and effectively. Demonstrate acceptable outcomes Capital projects in the NHS are required by the Department of Health, HM Treasury and the National Audit Office to evaluate and learn from their projects. This is mandatory for West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 193

194 projects with a cost in excess of 1 million Projects are required to undertake evaluation activities at four main stages: Stage 1: plan and cost the scope of the Post-Project Evaluation work. Stage 2: monitor progress and evaluate the project outputs on completion of the facility. Stage 3: initial post-project evaluation of the service outcomes six to twelve months after the facility has been commissioned. Stage 4: follow-up post-project evaluation to assess longer-term service outcomes two years after the facility has been commissioned The guidance contained in the Department of Health publication Learning Lessons from Post-Project Evaluation A Good Practice Guide will be used in determining the strategy for post-project evaluation of the scheme. An outline evaluation timetable is given below: Figure Post Project Evaluation Timetable Activities Stage 1 Plan and Scope the PPE Stage 2 Monitor Progress and Evaluate Outputs Stage 3 Initial post-project evaluation - six months Stage 4 Follow-up post-project evaluation - two years Timing After FBC approval During construction phases Six months after opening of each phase Two years after completion of full scheme The tasks to be undertaken at Stage 1 will include: Identify members of multi-disciplinary Evaluation Group. The core group responsible for carrying out the evaluation will consist of the following members: Project Director Project Manager Deputy Director of Nursing, WCH Business Change Manager Head of Strategic Planning and Finance Patient / Service User Representative (Cumbria LINk or Patient Panel) Identify a Project Lead for PPE. The PPE project will be led by the Business Change Manager Identify methods, resource requirements and budget. Methods of evaluating the success of the project will include: Staff and patient surveys to obtain qualitative information on user satisfaction Analysis of financial and activity information to determine achievement of financial / operating efficiency benefits Comparison of performance metrics before and after the West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 194

195 development External benchmarking of performance against similar organisations Finalise benefits realisation plan. The final benefits realisation plan is included within this FBC. Identify evaluation criteria / performance indicators. Evaluation Reports The benefits realisation plan contains the performance indicators against which performance will be measured The outcome of the PPE process will be an evaluation report see example format below. The evaluation reports at each stage will as far as possible address the following issues: Were the project objectives achieved? Was the project completed on time, within budget, and according to specification? Are users, patients and other stakeholders satisfied with the project results? Were the business case forecasts (success criteria) achieved? Overall success of the project taking into account all the success criteria and performance indicators, was the project a success? Organisation and implementation of project did the Trust and wider team adopt the right processes? In retrospect, could the Trust and wider team have organised and implemented the project better? What lessons were learned about the way the project was developed and implemented? What went well? What did not proceed according to plan? Project team recommendations record lessons and insights for posterity. These may include, for example, changes in procurement practice, delivery, or the continuation, modification or replacement of the project. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 195

196 8 Design & Construction 8.1 Introduction The existing hospital has very poor clinical adjacencies and is not compliant with current design guidance. This leads to poor patient experience and inefficient deployment of staff The layout below shows the existing hospital, block by block, within the proposed development area, together with the departments currently housed therein. Figure 8.1. Existing hospital layout The new design has been developed to eradicate the deficiencies in the current layout and provide significantly improved clinical adjacencies. 8.2 PCT and SHA Involvement The Trust has been keen to ensure that there has been full involvement and engagement of its main commissioner (NHS Cumbria) and its strategic health authority (NHS North West) at all levels throughout the project. This has included: Involvement in project governance: The Chief Executive and a non-executive director from NHS Cumbria are members of the project s Stakeholder Group, and there is director-level PCT representation on the Project Board The SHA Associate Director of Capital is a member of the Stakeholder Group and also has a seat at the Project Board Both NHS Cumbria and NHS North West were interviewed as part of the Gateway 2 and Gateway 3 Review of the project The Health Impact Assessment of the WCH project was led by the Public Health team of NHS Cumbria There is executive and non-executive director representation from NHS Cumbria on the Overview and Scrutiny Committee Task Group for the West Cumberland Hospital project West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 196

197 8.2.3 Involvement in project planning and design: Each of the Clinical User Groups responsible for the design of the new facilities includes membership from NHS Cumbria NHS Cumbria is represented by a local General Practitioner on the project s Clinical Reference Group to ensure that service models across primary and secondary care are consistent The SHA Strategic Estates Advisor took part in the Design Review Panel held in October 2009 and was invited to attend the AEDET assessment workshop held in January The SHA Strategic Estates Advisor observed the PSCP appointment process NHS Cumbria was represented at the Project Launch Workshop held in August This is in addition to a large number of ad-hoc meetings with both the PCT and SHA to discuss specific issues since the start of the project. 8.3 Description of the Design The redevelopment involves the demolition of certain existing buildings on a phased basis, with the replacement of key areas with new build blocks. Certain of the buildings are retained with refreshing of some of the existing elevations and some internal refurbishment Following OBC approval, the project underwent a redesign process resulting from a reduction in the available capital budget from 100 million to 90 million, and a revised requirement for the provision of inpatient mental health services The redesign has retained the beneficial clinical adjacencies delivered under the previous scheme, within an overall gross internal area which has reduced by a further 7,800sqm a reduction of 16% from OBC stage and an overall reduction from the current site of almost 25% The revised design has also further reduced the proportion of retained estate within the scheme compared to new build accommodation, with significant ongoing benefits in relation to operating costs and backlog maintenance The further reduction in backlog maintenance associated with additional demolitions is a major benefit to the Trust. As a result of the redevelopment, the West Cumberland Hospital site backlog will reduce by over 95% from in excess of 200/sqm prior to the scheme to approximately 5/sqm on completion The proposals involve a mixture of new build and refurbishment, since it is felt that some of the existing buildings do lend themselves to adaptation to modern use and are in sufficiently good condition to be economically refurbished and remodelled The new build areas involve the provision of inpatient ward areas, plus the following departments: Accident and Emergency Critical Care / Stroke Unit Acute Assessment Unit / Urgent Care Centre Ambulatory Care centre Surgery and Intervention Centre (including Operating Theatres, etc.) Diagnostics (including X Ray etc.) Pathology Facilities Mortuary West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 197

198 Medical Equipment Department Pharmacy FM and Catering facilities. Plant Rooms and Boiler House The construction will be phased, with a decanting process that will enable the hospital to remain functional throughout the reconstruction process The form of the existing hospital is complex, due to the site levels. Much of the building in the south west quadrant of the site is multi storey, ranging from 2 storeys up to 5 storeys in the centre of the site. To the north and east the mass of the buildings is lower varying from two storeys down to single storey The proposed development area is contained by the existing site ring road and does not affect the series of smaller buildings that are located outside this perimeter on the lower slopes of the hillside going down towards the town. Figure 8.2. Proposed development area and hospital access The design is based on the model of care and patient flow described in the Strategic Case and has the following key features and benefits: Clinical adjacencies substantially improved. For example: CCU/HDU/ICU are together in one unit instead of being separated as present Family Services including Maternity and Paediatrics are co-located West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 198

199 on a single floor A 30 bedded assessment unit adjacent to A&E to avoid unnecessary inpatient admissions 24 hour assessment unit is adjacent to Critical Care There is an integrated emergency floor including GP out-of-hours Outpatients are located together instead of their current dispersal around the site Ambulatory care services are located together i.e. outpatients, diagnostics and medical investigations Theatres are located together, instead of in multiple blocks as current Flexible use of space to adjust capacity in line with changing requirements. For example: Singe rooms can be opened and closed as needed Use of cabins for day surgery avoids use of inpatient beds 80% generic design generic rooms can be multi-purpose Cabins provided in the theatres can be used pre and post operatively Almost 100% single rooms in the new accommodation improves infection prevention and management Privacy and dignity is enhanced by the number of single rooms provided in the development ensuring that the requirements of mixed sex accommodation are met Navigation around the site is considerably enhanced for all users: Entrances of more than 20 reduced 5 The main entrance is visible immediately upon entering the site and has convenient car parking in front Single entrance for FM takes traffic away from patient and staff Patient parking on the same level as the entrance (current below/different levels) Reduced travel distances between departments The overall internal area of the site is reduced by almost one quarter from 55,499m2 to 42,145m2, thereby reducing maintenance and support costs whilst increasing the space for individual beds and consulting areas to meet the most modern NHS standards. Building standards are brought up to HBN/HTM standards for new build Patient views optimised The design is open, light, welcoming unlike now. Natural light and ventilation are available throughout the redeveloped areas A multi faith room and haven is provided Layouts are standardised throughout the development which is better staff familiarisation leading to efficiencies Bus and taxi routes are well planned throughout the site Further details of the new design are contained in the Design and Access Statement and plans and elevations provided in the Estates Annex. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 199

200 8.4 Health Park and Health Cluster An aspiration of the Trust and its partners is to provide a health campus at the West Cumberland Hospital site, bringing together public, voluntary and private bodies to provide an integrated health, social care, education and research campus. The Energy Coast Masterplan commits partners in West Cumbria to work together to develop a health campus around plans to create a new acute hospital. The Masterplan suggests that there may be opportunities to increase the impact of the planned investment in the new hospital on regeneration, by considering linkages with other related developments in West Cumbria. This may include possible spin-offs in further and higher education, training and R&D activity arising from potential synergies between health and the nuclear industry West Cumbria is unique in the UK and Europe due to its long association with the nuclear industry, and this in turn provides a unique opportunity associated with plans for the new hospital. There is an opportunity for partners in different sectors to work together to achieve a greater overall impact on the economic regeneration of the area. Alongside the commitment to provide a new hospital, there is currently a major expansion of higher education in West Cumbria that includes the creation of the new University of Cumbria as well as the presence nearby of the University of Central Lancashire and the Dalton Institute (University of Manchester), both located at the West Lakes Science Park, the new Energus Academy, Lakes College, the University of Cumbria Gateway Campus at Lillyhall and the National Nuclear Laboratory at Sellafield These developments have coincided with the appointment of Nuclear Management Partners (NMP) to operate the Sellafield site and manage the process of decommissioning and clean-up at least over the next seventeen years. This new organisation has already endorsed Britain s Energy Coast Masterplan as a response to the economic, social and environmental challenges facing the area. Figure 8.3. Elevation Local partners have expanded the idea of the health campus to encompass the concept of a health cluster : A health campus is a physical space that contains health-related facilities operated by different partners that are co-located for mutual benefit, for example the sharing of facilities. A health cluster refers to the building of a wider network or community of interest around health-related issues for the benefit of local development. The health cluster would embrace facilities not just within the health campus but across the local area A vision of a health campus and health cluster has emerged from discussions with a wide range of partners at a number of meetings and seminars held over recent months. The campus would be centred on the new hospital and include expanded local provision of training and healthcare education in partnership with the University of Cumbria. Primary care and adult social care could also be integrated with the campus, possibly involving partnerships with social housing providers. The potential to include provision of local community-related services that would be accessed by hospital visitors, including post office, optician, chemist and dental services could also be explored. The health cluster would also encompass the commercial, educational and research expertise located in the immediate area at West Lakes Science Park, Sellafield and Lillyhall. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 200

201 8.4.6 The diagram below, drawn from Clustering of Health, Higher Education and the Nuclear Industry in West Cumbria: Lessons from Experience in the USA 23 illustrates the vision developed locally. Figure 8.4. Cumbria Health Campus Vision The University of Cumbria report draws upon a research visit by representatives of local stakeholders to two nuclear communities in the US (Oak Ridge, Tennessee and Aiken, South Carolina) during This visit demonstrated that health services as major employers can have significant direct and indirect benefits for economic regeneration, with spin-off effects on education and skills development in the local population. These factors provide a strong rationale for the development of a health campus that uses the development of a new hospital as a catalyst for associated investment in higher education, R&D, training provision and local services Whilst the redevelopment of the acute hospital is at a more advanced stage than many of the other potential developments within the health campus, it is clear that the involvement of partner organisations within the hospital site is already well underway, for example: The integration and sharing of facilities between the Trust s emergency care services and Cumbria Health on Call Ltd, the local GP out-of-hours provider The integration of Cumbria Partnership Trust-run step-up/step-down facility and mental health facilities on site 23 Centre for Regional Economic Development, University of Cumbria, 2009 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 201

202 8.4.9 Completion of the redevelopment of the hospital will facilitate further development of the health campus by consolidating services and allowing demolition of outlying buildings, thereby releasing land for new developments by potential partners. The Trust will continue to work closely with local partners under the leadership of Cumbria Vision to bring about further development of the health campus over time. 8.5 Infection Prevention/Control The Trust recognises the importance of ensuring that the redeveloped hospital allows it to maintain and improve upon its existing excellent record for infection prevention and control. For this reason, the Trust s Infection Prevention Team has been represented at almost every User Group meeting throughout the design process and has signed off the 1:200 drawings as being compliant with good infection prevention and control practice In particular, the decision to progress with a scheme providing single, en-suite bed rooms for inpatients within the new build is regarded as a positive step, supported by a body of independent evidence on the impact of single bed accommodation in reducing infection rates. The experience of the Trust s designers in developing plans for single room accommodation and other patient areas at other hospitals to meet infection prevention requirements has proved invaluable In addition, the input of the Infection Prevention team has led to a number of proposed design and operational policy changes in non-patient areas to ensure that the storage and flows of clean and dirty equipment, scopes, beds and other items comply with good practice and reduce risk. The Infection Prevention team continues to be involved in detail as the 1:50 room layouts and room data sheets are agreed Improving patient safety is a key feature of the proposed design, particularly in relation to the single en-suite rooms for inpatients. Their design is based on evidence obtained from other schemes both nationally and internationally and draws heavily on work undertaken by the team which planned the Pembury Hospital redevelopment in Kent, the UK s first all single room hospital. The evidence-based design features include: The head of the bed is placed in direct line of sight of the door, maximising observation for staff and reducing isolation for the patient whilst still affording privacy and dignity Wash hand basin at entrance to room to encourage use by staff thereby contributing to infection prevention. Bed space within the room meets HBN standards, to allow safe movement and handling around the bed Rooms enhance the therapeutic environment by maximising daylight and outside views from the bed Rooms can be naturally ventilated, maximising patient control over the environment Head of bed is on the same side as the en-suite, reducing travel distance and minimising risk of falls. WC is located immediately on entering en-suite, thereby reducing travel distance. Ensuite designed to maximise separation of wet and dry zones to reduce the risk of slips 8.6 Planning Permission The Local Planning Authority for the West Cumberland Hospital site is Copeland Borough Council. The New Hospital Project Team and the designers have held several meetings with senior officers from the Planning / Development Control Department of the Council, including a visit and tour of the hospital site. Key issues raised in relation to the redevelopment of West Cumberland Hospital at these meetings were: There are unlikely to be any restrictions on the height of development on the site, within reason. The planners would ideally like to see potential views from the upper floors of any development maximised for the benefit of site users. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 202

203 There are no buildings on the site that Copeland Borough Council would regard as having to be retained in any redevelopment. Tree Preservation Orders (TPOs) exist towards the lower part of site The public footpath to the south-east boundary of site would require re-aligning if any development took place on the area currently occupied by the helipad. Planning policy guidelines exist which set out expected numbers of parking spaces or hospitals. Copeland Borough Council will consider an exception to these guidelines if it helps to prevent overspill parking in adjacent residential areas. Loss of significant numbers of parking spaces during construction would be a concern. Planners will expect to see a Traffic Impact Assessment and Travel Plan submitted with any major planning application. The Council policy will require the optimum use of public transport, with the possibility of buses entering /dropping off on the site rather than at the hospital boundary. Environmental / sustainability issues are very high on the Council s agenda and planners will want to see how the redevelopment addresses sustainable development issues. Planners are keen to see how green space and landscaping is maximised within the redevelopment scheme. Opportunities to identify areas on site to be allocated for future Health Campus related developments should be borne in mind. A full planning application for the scheme was submitted to Copeland Borough Council on 26 January 2010 and was approved by the Council s Planning Panel on 30 April This was updated and approved on 18 th August 2011 following the reduction of capital funding from 100m to 90m The Trust does not anticipate any delays or issues arising from the planning process in relation to the revised scheme contained in this FBC that would impact materially on the cost, deliverability or timetable for the scheme. Figure 8.5. Elevation Achieving Excellence in Design Evaluation Toolkit (AEDET) AEDET is a tool for evaluating the quality of design in healthcare buildings. It delivers a profile that indicates the strengths and weaknesses of a design or an existing building. It is not meant to produce a simplistic single overall score. Because of the nature of design, which inevitably involves trade-offs, it may not be possible to produce a building which would have the maximum score for all the sections. Indeed it may quite often be the case that a high score for one statement reflects a design which inevitably may be scored low on another statement. A single overall score would thus be misleading and uninformative AEDET Evolution (the most recent version) has 3 main areas Impact, Build Quality and Functionality split into 10 sections each of which will produce a score. The 10 sections summarise how well a healthcare building complies with best practice. The sections have several statements that taken together build up a score for that section. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 203

204 8.7.3 The scoring for each statement may be given a weighting of High (2), Normal (1) or Zero (0). This can be used to determine the effect of the statement in arriving at an overall score for that section A 6 point scoring scale is used to express a level of agreement with the statement. In this case the scores are used as follows: Virtually complete agreement (6) Strong agreement (5) Fair agreement (4) Little agreement (3) Hardly any agreement (2) Virtually no agreement (1) AEDET Evolution has 3 main sections Impact, Build Quality and Functionality split into 10 assessment criteria. Scoring these criteria assesses how well a healthcare building complies with best practice. Figure 8.6. AEDET Structure The four IMPACT sections deal with the extent to which the building creates a sense of place and contributes positively to the lives of those who use it and are its neighbours The three BUILD QUALITY sections deal with the physical components of the building rather than the spaces. This is therefore what might be thought of as the more technical and engineering aspects of the building. 24 Achieving Excellence Design Evaluation Toolkit (AEDET Evolution) Instructions, Scoring and Guidance. Dept of Health. January West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 204

205 8.7.8 The three FUNCTIONALITY sections deal with all those issues to do with the primary purpose or function of the building. It deals with how well the building serves these primary purposes and the extent to which it facilitates or inhibits the activities of the people who carry out the functions inside and around the building Further explanation of these assessment criteria is provided in the table below. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 205

206 Figure 8.7. AEDET Criteria Criteria Character and innovation: The overall feeling of the building. Whether the building has clarity of design intention and whether this is appropriate to its purpose. Form and materials: How the building presents itself to the outside world in terms of its appearance and organisation. Staff and patient environment: How well an environment complies with best practice as indicated by the research evidence. Urban and social integration: The way the building relates to its surroundings. Performance: The technical performance of the building during its lifetime. Engineering: Whether the engineering systems are of high quality and fit for their purpose, will be easy to operate and if they are efficient and sustainable. Construction: Concerned with the technical issues of actually constructing the building and with the performance of the main components. Use: The way the building enables the users to perform their duties and operate the healthcare systems and facilities housed in the building. Considerations There are clear ideas behind the design of the building. The building is interesting to look at and move around in. The building projects a caring and reassuring atmosphere. The building appropriately expresses the values of the NHS. The building is likely to influence future healthcare designs. The building has a human scale and feels welcoming. The building is well orientated on the site. Entrances are obvious and logically positioned in relation to likely points of arrival on site. The external materials and detailing appear to be of high quality. The external colours and textures seem appropriate and attractive. The building respects the dignity of patients and allows for appropriate levels of privacy and company. There are good views inside and out of the building. Patients and staff have good easy access to outdoors. There are high levels both of comfort and control of comfort. The building is clearly understandable. The interior of the building is attractive in appearance. There are good bath /toilet and other facilities for patients. There are good facilities for staff including convenient places to work and relax without being on demand. The height, volume and skyline of the building relate well to the surrounding environment. The building contributes positively to its locality. The hard and soft landscapes around the building contribute positively to the locality. The building is sensitive to neighbours and passers-by. The building is easy to operate. The building is easy to clean. The building has appropriately durable finishes. The building will weather and age well. The engineering systems are well designed, flexible and effective. The engineering systems are well designed, flexible and effective. The engineering systems exploit any benefits from standardisation and prefabrication where relevant. The engineering systems are energy efficient. There are emergency backup systems that are designed to minimise disruption. During construction disruption to essential services is minimised. If phased planning and construction are necessary the various stages are well organised. Temporary construction is minimised. The impact of the construction process on continuing healthcare provision is minimised. The building can be readily maintained. The construction is robust. The construction allows easy access to engineering systems for maintenance, replacement and expansion. The construction exploits any benefits from standardisation and prefabrication where relevant. The prime functional requirements of the brief are satisfied. The design facilitates the care model of the Trust. Overall the building is capable of handling the projected throughput. Workflows and logistics are arranged optimally. The building is sufficiently adaptable to respond to change and to enable expansion. Where possible spaces are standardised and flexible in use West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 206

207 Criteria Access: The way the users of the building can come and go. Whether people can easily and efficiently get onto and off the site using a variety of means of transport and whether they can logically, easily and safely get into and out of the building. Space: The amount of space in the building in relation to its purpose. Considerations patterns. The layout facilitates both security and supervision. There is good access from available public transport including any on-site roads. There is adequate parking for visitors and staff cars with appropriate provision for disabled people. The approach and access for ambulances is appropriately provided. Goods and waste disposal vehicle circulation is good and segregated from public and staff access where appropriate. Pedestrian access routes are obvious, pleasant and suitable for wheelchair users and people with other disabilities / impaired sight. Outdoor spaces are provided with appropriate and safe lighting indicating paths, ramps and steps. The fire planning strategy allows for ready access and egress. The design achieves appropriate space standards (at least satisfy all the minimum requirements of the relevant HBNs and HTNs.) The ratio of usable space to the total area is good. The circulation distances travelled by staff, patients and visitors are minimised by the layout. Any necessary isolation and segregation of spaces is achieved. The design makes appropriate provision for gender segregation. There is adequate storage space The Trust has undertaken an AEDET evaluation of the design for the redevelopment of WCH. The outcome of the evaluation is summarised below with further details of the weighting and scoring provided in the Estates Annex. Figure 8.8. AEDET Scores The figure shows that the design scores very well in the AEDET evaluation. Only the Performance criteria scored below 75% of the maximum (4.5/6.0.) In fact 6 of the 10 criteria scored 5.0 or higher The Trust is therefore confident it has secured a high quality design for the scheme. 8.8 Design Review Panel The NHS Design Review Panel (DRP) was set up to provide independent advice, guidance and support to the NHS at key stages during the design development process of major investment schemes. The objective is to support the NHS to improve the quality of the healthcare estate. The Department of Health s Estates and Facilities Division manages the process with the support of the Commission for Architecture and the Built Environment (CABE) and The Prince's Foundation Panels are drawn from a pool of professionals who have expertise in architecture, urban design, capital planning, engineering, NHS management and project management. The panel s approach to reviewing each scheme is based upon the following criteria: Master planning - how the design responds to the local context in terms of access, transport and siting West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 207

208 Quality of place - how the design supports high quality care and offers a positive environment for patients, visitors and staff Sustainability how the design anticipates future service developments and responds to requirements posed by climate change The new West Cumberland Hospital will be one of the single biggest investments in West Cumbria, and it should therefore be a building of civic importance which acts as a clear symbol of well-designed healthcare for the area. A Design Review Panel was therefore undertaken at West Cumberland Hospital on 23rd October The purpose of the review was to look at design proposals for the new development The following areas of good practice were noted by the Panel: The bulk of patient and visitor car parking will be provided immediately adjacent to the proposed new main entrance, which will be clearly visible upon entering the site. The decision to provide 100% single bedrooms in the new build will address privacy and dignity arrangements at ward level, and the bedroom layouts appear to successfully address safety issues in relation to reducing the number of falls (for example, the location of the en-suite on the same side as the bed). The proposed day surgery cabins seem to be a sensible way to reduce patient movement, as well as providing a safe and private place for each patient to prepare for and recover from their treatment All bedrooms and most patient spaces appear to benefit from natural light The proposed clinical adjacencies would work well. Work has been done to zone the building and to locate key departments near to one another The Trust has some excellent high-level sustainable design ambitions in place The Panel s recommendations following the review were as follows: Consider how the project fits within the wider local regeneration context, as well as how the new building will specifically respond to its interesting landscape setting. Ensure that routes and connections across the site are as efficient as possible. Prioritise landscape designs as the project progresses. Ensure that designs for the hospital s external cladding treatments give the new building a strong civic presence which is sympathetic to the surrounding Cumbrian landscape. Try to rationalise and reduce the number of entrances so that the main entrance can be a stronger landmark. Try to maximise daylight levels in staff areas. Translate sustainability aspirations into clear targets Plan how soft spaces in the building could be adapted for future expansion if required The Trust has taken these recommendations on board and is able to confirm that they can be met within the proposed design and available capital budget. 8.9 Energy Consumption The scheme incorporates a new energy centre for the following reasons: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 208

209 Condition of existing facility: The existing energy centre was showing clear signs of fatigue, lack of maintenance and requiring significant investment to be brought in line to achieve minimum energy targets. Much of the existing site plant was not HTM compliant and would need replacing/upgrading in line with any refurbishment works. Efficiency of existing facility: The existing LP Steam plant had a maximum operating efficiency of 75% and distribution losses of up to 25%. The standby fuel supply (heavy oil) absorbed up to 15% of the annual energy load to maintain a fluid/viscous state for combustion, if ever the need arise. Requirement for LP Steam: There is no need for the site to keep LP Steam. The safer and more efficient option is to change to LPHW. Carbon Reduction and Energy Targets: The site and its existing energy centre do not meet any of the requirements laid down for future proofing the sustainability and efficiency of the energy load, together with the required carbon reduction. Integration and cost of CHP into existing LP steam infrastructure: The location of the CHP was critical in providing integration with both the LPHW system and the LV distribution. Ideally this should be in close proximity within an existing energy centre. Whatever option was decided, the existing facility had to be maintained until the works to the new build had been completed The Energy Centre will release almost 200,000 saving per annum compared to current costs. Further details are provided in the Estates Annex Design Freeze The Trust has achieved sign-off to the 1:200 layouts from User Leads and the Clinical Steering group The sign off to the 1:200 plans represents acceptance and agreement to the number and type of rooms, and their relative adjacencies. The plans therefore reflect accurately the overall facilities required to meet the clinical needs and models of care Any changes to the plans required by the Users will incur time and cost effects, and will need to be approved by the Project Director. Likewise, any changes to the plans required by the designers or constructors will require agreement from the Users and similar approval from the Project Director Equipment An allowance of 3,000,000 excluding VAT has been made within the FBC cost forms for new furniture and equipment for the preferred option A detailed assessment of user requirements is being undertaken to complete equipment schedules for all group 2, 3 and 4 items, and taking into consideration existing equipment appropriate for transfer from existing facilities. Group 1 items will be supplied and fixed by the Contractor. All equipment items are identified in detail on the individual room data sheets (ADB sheets), which have been largely completed and signed off by users This will be augmented by a detailed review of the availability of suitable and compatible equipment which may be surplus within the Trust following other rationalisation programmes, either presently being carried out or in the immediate future The procurement of all furniture and equipment will be made through a procurement specialist, either the Procurement Department or another party selected through market testing, who will purchase any necessary equipment through their Capital Equipment Department, and will cost all items identified as being required from the above steps Procurement procedures will conform to all EU regulations, Standing Financial Instructions and all other current codes of practice and orders of the Trust to ensure probity and value for money. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 209

210 A commissioning team will lead a formal commissioning process to address the purchase, delivery and commissioning of the equipment required Environmental Standards The overarching ambition for the development is to limit its environmental impact while achieving or exceeding all the necessary statutory requirements. Key aspects of the developments performance will relate to its use of energy and emissions of CO2, use of water and other material resources. Careful management of all these key aspects will contribute to the achievement of a BREEAM Very Good rating The design team for the scheme have considerable experience in delivering low carbon healthcare buildings, whilst at the same time providing a better internal environment for occupants. While Building Regulations establish statutory minimum targets, further good environmental performance is required to achieve a high BREEAM rating, thus, demanding the application of standards which exceed Building Regulations. A BREEAM Very Good building will be developed through a holistic approach embedding sustainable design in every aspect of the scheme The BREEAM assessor has carried out an initial assessment of the design intent, and site of the proposed redeveloped West Cumberland Hospital, against the criteria for BREEAM Healthcare Below is a summary of the likely performance of the proposed hospital against BREEAM. Figure 8.9. BREEAM Pre-Assessment Predicted Score The initial assessment indicates that the proposed scheme for West Cumberland Hospital Redevelopment could achieve a BREEAM Very Good rating. The very good rating applies to the scheme as a whole including refurbished areas. The new build in isolation would be excellent. Further details are provided in the Estates Annex Sustainability The Trust acknowledges that, whilst pay-back on investment is desirable, the essence of sustainability will sometimes preclude savings, and the project will be an investment to save the environment. Some potential projects, such as solar and wind-powered street lights are more expensive than the conventional models, but make a statement to all visitors that the Trust is serious about green issues and will therefore be considered The potential to form a Health Campus, working with West Lakes and others, could significantly reduce carbon emissions. The new build work is planned to be Excellent rated under the BREEAM methodology, and at all stages sustainability is key to the activity. The existing boiler house (steam producing) will be decentralised, and low pressure hot water units will provide heat. Combined Heat and Power will contribute to a new multi High Voltage-fed ring main system. The Estate will at that stage operate at sub- West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 210

211 50 Gj/m2, with the new build significantly better than that. All aspects of the sustainable environment will be utilised, from light wells, major reliance on natural ventilation systems and green travel planning to the use as standard of LED lighting and Passive Infra Red switching The estate will be rationalised to best use, with car parking key to access as well as public transport to the main entrance. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 211

212 9 Facilities Management Services 9.1 Facilities Management (FM) Service Strategy The two guiding principles of the West Cumberland Hospital FM strategy are: To positively affect the patient experience To ensure space and operational efficiency Several underlying principles outlined below, support FM services and are enabled through the following aspects of the redevelopment of the hospital. General Principles Centralised FM accommodation area at level 2 of the new build is enabling site wide co-ordination of services such as Catering and Security services. Zonal FM accommodation minimizes ward FM space and promotes improved service response. Embedded ward FM space provides discreet but direct services to patients as part of the ward care team. A central FM service yard for co-ordinating all goods in / out activity is remote from other site traffic, ensuring FM does not disrupt patient or visitor journeys into or out of the hospital. Visitor, ambulatory and service traffic have separate access routes to minimize congestion. Dedicated FM logistics routes ensure the logistics process is discreet and uninterrupted Proposed service methodologies to support these key principles are outlined as follows for cleaning, catering, portering and materials management, linen, telephony and security services. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 212

213 9.2 Cleaning: Microfibre Technology Microfibre Mops and Cloths: Improves bug kill, achieves higher cleanliness rates and lower infection rates. Environment: No chemicals required for general cleaning and pre-dowsing reduces water usage. Use of high efficiency ride on scrubber dryer machines. Monitored wash systems to ensure cloths / mops are 100% germ free. Use of Hydrogen Peroxide Vapour (HPV) for room and equipment decontamination. Ward specific equipment to eliminate spread of infection. 9.3 Catering (Patient Dining): Use of Steam Pressure cooking systems. Improved patient choice with over 20 main meals choices for the patient at each service. Fresh cooked meals mean wholesome and nutritious food for patients. Food nutritional content is maintained during cooking. Plate waste reduced and patient satisfaction improved. Plated meal system means 24 hour access to hot meals for patients, no more missed meals. Uses Ward Hostess system to provide ward accountability and control of the service. Additionally, frees up nursing time and creates job opportunities. Dramatically reduces energy usage from fresh cook system to microwaves. Food costs comparable to traditional meals services like cook chill. Space efficient service means less area required. Significantly reduced equipment costs. Steam vending enables 24 hour access to hot meals for staff. All packaging and materials recycled. Modern retail space that provides income opportunities. 9.4 Portering & Materials Management: Streamlined logistics operation Pneumatic tube for sample and prescription movement. Central receiving dock and waste compound to optimise staff utilization. Centralised loading bay for space efficient logistics operation. Separate logistic flows thus decongesting and quieting the patient environment and minimizing risk of cross contamination. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 213

214 9.5 Linen: Logistics services are discrete and separate from public and patient activity. Central store with exchange trolley system to wards. 9.6 Telephony Services: Co-location and integration of Security and Telephony (Helpdesk/Switchboard). This will promote closer working and communication (response co-ordination) enable robust cover arrangements. Optimises service staffing on a 24 hour per day 7 day per week basis. Vocera communication throughout: reduces switch activity, improves nurse communication. 9.7 Security: Integrated proximity card and door access control system provides greater control over hospital security. Sensitive areas such as Theatres and Maternity services will be secure to ensuring the integrity of the clinical services. Adjacency of car parking provides increased staff / visitor protection. Single central monitoring control room provides constant vigilance of the Hospital and can initiate immediate incident response including clinical and Estates activities. Active monitoring systems that co-ordinate alarm activation and recording systems. Car Parking - Segregation of key groups to minimize congestion at key times. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 214

215 10 Information Management and Technology 10.1 Introduction The effective use and management of information is fundamental in achieving the quality and productivity improvements enabled by the redevelopment of West Cumberland Hospital This chapter outlines how IM&T improvements will be implemented in the redevelopment of the hospital, and how these contribute to achieving hospital, Trust-wide and national objectives for quality and productivity as well as information management National Programme for IT The National Programme for Information Technology (NPfIT) continues to develop capability that the Trust needs to work towards adopting in the longer term, subject to capital investment for implementation being available. Therefore, any investment in new systems (including those necessitated by the redevelopment of WCH) needs to be consistent with the vision for NPfIT programme and be capable of harmonisation with NPfIT solutions in the longer term. This has been considered in determining the IM&T requirements for WCH The Department of Health published the Health Informatics Review in 2008 determining the minimum system functionality requirements in secondary care to meet the needs of clinicians. Five key elements, the Clinical 5, were determined to be essential in acceptable IT systems. The Clinical 5 are outlined in Figure 10.1 below. Figure Clinical 5: Delivering IM&T functionality Clinical 5 A Patient Administration System with integration with other systems and sophisticated reporting Order Communications and Diagnostics Reporting (including all pathology and radiology tests and tests ordered in primary care) Letters with coding (discharge summaries, clinic and Accident and Emergency letters) Scheduling for (beds, tests, theatres etc E-prescribing (including to take out medicines ) Making it Happen Build on existing functionality of the i express PAS system, re-engineer intelligence to improve reporting and ensure integration with other clinical systems Review whether existing community based ordering solution or new i-express order comms module, or a hybrid of both, best meets Trust s needs Review existing Electronic Discharge summary (EDS) project and look to ensure it integrates with clinical systems to avoid re-keying of information Support real time ADT, procure bed management system and review ORMIS to maximise existing investment Provide technology to support on ward prescribing and prescription collection on discharge In line with these minimum requirements, the Trust has developed its local IM&T strategy and plans for WCH. These are covered in more detail below Local IM&T Vision NCUHT has a vision for an information based culture. This Trust has defined four West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 215

216 strategic goals toward achieving this vision. These are: Improve Clinical Information Support: improving the quality of the information provided and ensure that accurate information is available to support best practice clinical care and evidence based medicine Improve Support for Coordination of Care: improving communication and integration of patient information across health care providers and other associated services Improve Management Information: improving the availability, accuracy, timeliness, relevance and effective use in decision making and service development, and performance management Develop sharing of information across the Cumbrian health economy: improving the availability of information to be shared across the economy supporting seamless care, and effective management decisions The key principle of the IM&T strategy is to support service delivery and improvement. To achieve this, the strategy recognises the Trust s corporate strategic objectives and specifically looks at the role of IM&T in enabling the delivery of the Trust s corporate objectives Figure 10.2 outlines the key corporate objectives the strategy contributes to. Figure IM&T contribution to corporate objectives Resources: improving access to service (via Choose & Book), developing the market potential of services and targeting services in line with demographic changes; Quality & Safety: ensuring a quality healthcare journey, improving risk management and looking at the evaluation of the patient experience; Services: reviewing core business and evaluating the sustainability of non core services, developing optimum bed utilisation and improving joint delivery of care across the two hospital sites at Carlisle and Whitehaven. Organisation (Foundation Trust): supporting the work towards becoming a foundation trust, delivery of the Closer to Home agenda, preventing admissions and support prompt discharge. Facilities: develop a first class modern healthcare facility in West Cumbria which is fit for the 21st Century The role of IM&T is to be a key enabler that makes information accessible through electronic means and therefore ensure that the patient journey is not prematurely disrupted, ultimately resulting in appointments being cancelled. High quality, timely, and accessible information is vital to achieving the objectives of the Trust and the project of delivering safe, prompt, and appropriate care As demonstrated in Figure 10.3, below, there are three, intrinsically linked, aspects to achieving high quality care. The most important is the quality of the patient journey or experience and this is clearly underpinned by an excellent clinical journey, supporting by a high quality intelligence led management journey. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 216

217 Figure Features of the patient experience Figure 10.4 outlines the key changes required in each of the areas of the patient experience. Figure IM&T changes required 10.4 IM&T requirements at the redeveloped WCH Each of the changes outlined above has been considered in assessing the IM&T requirements at WCH, and ensuring that the availability and quality of information needed by clinicians, supporting services, and the patient is available, timely and maximises the patient experience and the quality and efficiency of care received. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 217

218 The redevelopment of the hospital enables appropriate wireless technologies to be installed, and the opportunity to completely change existing ways of working that rely on paper handling and many non-added value activities. The facilities are being reorganised and have been aligned to future IM&T plans that will both accelerate change and enable a cultural shift that would not be achieved without the redevelopment The key opportunities are: Real time admission, tracking and discharge Clinical Portal Single sign on Order communications Wireless network Voice recognition The redevelopment has already co-located some staff, and begun to change attitudes. Expectations are being raised amongst staff that the new hospital will be modern and will signal a move away from welcome old paper-based systems. There will not be the same requirement for storage of paper as in the undeveloped hospital site. This will require a major programme of change alongside the development, but the potential benefits are substantial The change process will accelerate the need to eliminate paper systems and to ensure that patient information is easily transferred between hospitals, GPs and community hospitals. The IM&T function are already in dialogue with parties Cumbria-wide to define the most cost effective Cumbrian Strategy The general concept of the redevelopment is that support staff will be decanted into existing estate. This has started, grouping certain administration staff together and beginning the pooling of resources. Space will also be provided for medical records, however the volume of paper is growing and the need to scan and destroy is increasing. A separate project for medical records will be launched across the Trust and is also urgent as up to 30% of appointments are being rescheduled because records are not available at the right time The objectives and benefits of IM&T requirements at WCH have been developed and are included in detail the below: Infrastructure & Hardware: Wireless technology installed in the new building will enable efficiencies. The redevelopment of WCH will enable a reduction in the electricity costs and carbon footprint of the hospital, and will reduce the space required by IM&T by 50%. Expenditure on current staffing levels will be reduced and business continuity enhanced through the greater accessibility of information. Benefits will include savings of 110 tonnes of CO2 and 11k per annum on utility costs, as well as 35k per annum on staffing costs. Patient Journey: Patients will be able to self-register, enabled through the use of bar coded appointment cards. Patients will be supported by staff where required, but a reduction in reception and administration staff for each speciality will be achieved. Outpatients: Patients will receive appointments on demand when leaving clinics, with mediated West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 218

219 central support and text or reminders as per patient choice. This will reduce the number of missed appointments and minimise the related inefficiencies and productivity losses. Consultant Lists: All patient information will be held and presented electronically. Summary case records will show hospital records including test results and imaging. Information will be presented in order of patient attendance and digital dictation will be enabled to minimise administration time. Hard copy patient records can be eliminated, reducing the time and cost of paper handling and storage. All activity can be monitored electronically to provide PbR charging transparency. Telemetry: Active patient tracking will enable the safeguarding of children, vulnerable adults and the elderly, as well as tracking inpatient activity. Bedside scheduling and access to all clinical information will reduce duplication of pathology etc as information is held in the real time, and discharges will be faster as a result of bedside prescribing. Ward based hand held terminals will reduce paperwork and ward based clerical activity. Capital asset tracking will improve maintenance by enabling assets to be located easily. Currently 20% of time is spent finding assets. Effective asset audit will be enabled, with an overall effect on reducing clinical risk and improving patient outcomes. Where required, the remote monitoring of inpatients and outpatients will enable effective use of nursing time. Telemetric monitoring will support Hospital at Night by enable the identification of high risk patients and access to experts, resulting in better and faster patient care and outcomes. Communications Internal voice communications will be attached to the individual, reducing telephone costs and line rentals with all inter-site communication free. Hot desking will be enabled and a central switchboard will not be necessary. A 24/7, patient centred voice recognition service will direct calls automatically. Management Information As all data will be captured at source, administration costs will be reduced through reduced errors, with standard reporting trust-wide. Payment by Results will be enabled by accurate coding and revenue billing External reporting will be faster and more direct. Medical Records A move to electronic records will mean paper documentation can be scanned and destroyed on demand, reducing space and paper handling and improving the overall patient experience. Diagnostics In-patient diagnostics can be booked from the bedside, reducing portering and improving internal efficiencies, with images and results made available to consultants in real time. Faster responses back to consultants and GPs will support the 18 week West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 219

220 10.5 Summary patient experience Information management and technology requirements related to the redevelopment of West Cumberland Hospital have been considered in light of the future requirements of the National Programme for IT and the wider Trust strategy The redevelopment of West Cumberland Hospital enables a cultural shift towards new ways of working that will be underpinned by modern up-to-date infrastructure, wireless capability, and the use of telemetry The installation of new technologies will enable non-added value activities to be removed and ensure information is available at the right time and to the highest quality, maximising efficiency and productivity and improving the patient experience The redevelopment of WCH will enable the following key IM&T benefits to be realised: Open up access channels for more patient choice on how and when they contact the Trust Improve information flows including electronic reminders to reduce DNA s Continually improving patient satisfaction through effective care pathways supported by intelligence led decision making Real time information capture and access which reduces data errors Reduction in transaction costs in all areas Integration with SCR to support emergency care Integrated clinical pathways to support closer to home Support and training for the workforce to develop new skills This includes a wider use of telemetry, and also enables asset management that provides the opportunity to track, maintain, and manage assets across the site. This work will develop during the construction phase and is essential to manage the transition. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 220

221 Appendix A Approval Letters West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 221

222 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 222

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225 4 August 2010 Carole Heatly Chief Executive North Cumbria University Hospitals NHS Trust Cumberland Infirmary Newtown Road Carlisle Cumbria CA2 7HY BY Dear Carole North Cumbria University Hospitals NHS Trust West Cumberland Hospital Redevelopment - Outline Business Case Approval I am writing to inform you that the Department of Health (DH) has reviewed the business case received March 2010 for a substantial redevelopment of the buildings at West Cumberland Hospital, and has decided that the proposals should be approved, including the request that public capital is made available to meet the capital cost of the scheme. The Treasury has also given its support to the proposals. This approval is subject to a number of conditions, which are set out below: Approved capital cost 1) The North West Strategic Health Authority, DH and Treasury based their reviews on the March 2010 version of the business case and clarifications. This envisaged capital expenditure, including inflation and VAT of approximately million. This is not the cost on which the approval of funding is based at this stage, and you are asked to note the following: i. The DH will commit to funding inflation, but on the basis of inflation actually incurred, as measured by movements observed in the Median Index of Public Sector Building Tender Prices (MIPS) or another appropriate index if MIPS ceases to be produced. The current level of MIPS, as confirmed by Rob Smith Director of Estates and Facilities on DH s website on 11 th March 2010, is just below 480, though should be counted as 480 for the purposes of capital business cases, such West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 225

226 that the un-inflated level of capital cost is some 7% lower than was included in the business case. ii. DH will not commit to funding the optimism bias contingency. While allocations from this contingency may be considered, they will only be considered once all reasonable mitigation measures have been undertaken and shown to be insufficient iii. DH will commit to funding VAT at the prevailing rates, which could, over the timeframe of this scheme, differ from the 17.5% rate currently suffered on most supplies. 2) Reflecting the above conditions, the un-inflated net of VAT cost for the scheme on which the approval is as shown in the table below, in the right-hand column. The figures in the lefthand column were drawn from the FB Forms supplied as part of the March 2010 business case. Cost at MIPS 530 for approval purposes (excluding VAT) Cost as per the Mar 2010 OBC ( m) Adjusted to current MIPS of 480 Cost base net of VAT for the purpose of this approval ( m) Total net cost un-inflated Inflation to outturn See condition at 2(i) above Total net cost + inflation Optimism Bias See condition at 2(ii) above TOTAL VAT at 17.5% See condition at 2(iii) above Total cost per Mar OBC ) As stated in the outline business case, of the 100 million planned capital expenditure for the scheme (based on the assumptions in the business case about price levels and VAT), 6.8 million has already been incurred for enabling works. Furthermore, the North West Development Agency has committed to contributing 10 million to the scheme. Therefore, DH s total remaining contribution (based on the assumptions in the business case about West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 226

227 price-levels and VAT) would be 83.2million. Of the amount that has still to be funded by the Health sector, 10 million has to be funded from the Trust s own retained cash and 3.2 million from capital funding totals agreed for the North West SHA. The balance of the capital funding required for the project as determined under points 1) and 2) above will come from the department s central budgets. Procurement route 4) It is understood from the business case that the Trust intends that a single Procure 21 arrangement is to deliver all of the works, as this arrangement has already been used to appoint a Principal Supply Chain Partner ( PSCP ) to assist the Trust in reaching finalised design, enabling works and full business case to date (known as Stage 3 in the P21 contract). The Trust should now consider, before any further works may be contracted for, how best to obtain a competitive fixed price for the entire specification. We understand that under the present P21 contract the Trust is not obliged to continue to use its PSCP for Stage 4 onwards. 5) The Procure 21 process as currently used in many NHS schemes does not involve the full competitive tendering of works, relying instead on the benefits of partnering to promote value for money. Whilst competitive tendering undoubtedly involves a cost, both to the procuring authority and to contractors, on a scheme of this scale, particularly in current market conditions, it has the potential to put significant downward pressure on price. 6) It is therefore a condition of this approval that the Trust analyses very thoroughly the relative financial benefits for the scheme of competitive and non-competitive approaches to its procurement. The eventual approach must be agreed by DH s capital investment branch prior to the contract being awarded. If the Procure 21 framework is to continue to play a significant role in delivery or supporting delivery of this scheme, opportunities should be sought to exploit the benefits of competitive tension to drive down prices. 7) In considering and developing its procurement options, the Trust should note that the Procure 21 framework has been re-tendered (P21 Plus), and will therefore build in more up to date rates and margins from the market once and if put in place on expiry of the existing P21 framework. The Trust should justify why using the old framework terms going forward would be more beneficial than the new framework s terms should P21 remain the optimum option. 8) An Appointment Business Case (ABC) will need to be produced by the trust and approved by the DH and the Treasury before a preferred bidder is appointed. This will be required to confirm the continued revenue affordability of the scheme. 9) It is recommended that the trust keep the revenue affordability of the project and the delivery of the necessary efficiency savings under regular review, to ensure that it does not spend its resources or cause the private sector to incur costs on a project that has become unaffordable. As part of this responsibility, it is recommended that agreement is reached as soon as possible on the 7.5 million of funding for transitional costs that is envisaged in the business case. This had not been confirmed when the business case was approved by the SHA and submitted to the DH. It is expected that the funding arrangements for transitional costs will be clarified, at the latest, in the ABC. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 227

228 10) The trust should note also that for public accountability purposes, it is a requirement that all outline business cases for major schemes must be available to the public through publication on the trust s website. The trust should consider commercially sensitive information when publishing the document. Finally, I would like to thank your team for the hard work in producing the outline business case, and in responding to the DH s and the Treasury s requests for clarification of parts of it. Should you or your team have any questions regarding this approval, I will be happy to discuss them with you. Yours Sincerely Ben Masterson Acting Deputy Director, Procurement, Investment & Commercial Division address: ben.masterson@dh.gsi.gov.uk Cc: David Hounslea, North Cumbria University Hospitals NHS Trust Peter Coates, Department of Health Bob Alexander, Department of Health David Flory, Department of Health Richard Douglas, Department of Health West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 228

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240 NHS North Board Approval 8th March 2012 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 240

241 Appendix B Project Risk Register West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 241

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263 Appendix C - Benefits Realisation Plan Benefit Criteria Business Benefits Method of Measurement / Source of Data When Measured Person Responsible Enable the provision of safe, high quality, sustainable acute health services for the population of West Cumbria Meeting commitments made in the Closer to Home public consultation Comparison of functional / service content of new hospital with Closer to Home requirements, specifically the provision of 220 beds with space for expansion to 250 beds if required Completion of design, on clinical sign-off of drawings Project Director Reduced number of adverse clinical incidents / claims Number of reported incidents / claims per annum Two years after opening Director of Nursing Reduction in clinical risk Improved clinical adjacencies between departments resulting in shorter transfer / travel times in critical situations Reduced number of clinical risks identified within corporate risk register Design provides all essential and desirable clinical adjacencies as agreed with clinical staff Completion of design, on clinical sign-off of drawings Project Director Measurable reduction in distances between key clinical departments and better use of staff time Flexibility of design to adapt to future High percentage of generic rooms service needs suitable for flexible future use Completion of design, on clinical sign-off of drawings Project Director Design and construction of building and services allows for easy reconfiguration to meet future needs West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 263

264 Improved recruitment and retention of key clinical staff enables safe services to be sustained in West Cumbria Reduction in unfilled vacancies Two years after opening Director of HR New facilities meet all current fire, H&S and DDA legislation Compliance with current legislation Completion of design, on clinical sign-off of drawings Project Director Enable improvements to the hospital facilities for patients and visitors Increased patient privacy and dignity, particularly for inpatients Compliance with all current Health Building Note (HBN) space standards Completion of design, on clinical sign-off of drawings Project Director Minimum of 70% single en-suite rooms across the site No mixed-sex accommodation Natural light and ventilation to all appropriate patient areas, with high level of patient control over own environment and comfort Percentage of patient-occupied areas with natural light and ventilation Improved infection prevention and control Reduction in infection rates Six months after opening Director of Nursing Improved patient safety Reduction in slips / trips / falls and other adverse incidents West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 264

265 Improved patient perceptions of hospital Patient surveys record increasing levels of satisfaction Two years after opening Director of Nursing Fewer complaints from service users Reduced number of complaints received Two years after related to environmental / facilities opening issues Director of Nursing Improved provision of spiritual care / chaplaincy facilities Facilities meet current standards and provide convenient access to appropriate care and support for patients, relatives and staff Completion of design, on clinical sign-off of drawings Project Director Improved service to bereaved relatives Provision of suitable and appropriate body storage and viewing facilities complying with current guidance More patients attracted to use West Cumberland in preference to alternative providers Patient choice decisions as indicated by referral rates Six months after opening Chief Operating Officer Hospital becomes more energyefficient / reduced environmental impact Design meets BREEAM excellent standard for new build accommodation Completion of design Project Director Reduced energy / utility costs and CO2 emissions Six months after opening Director of Estates and Facilities Safe access to all services maintained throughout construction period All services maintained on site at WCH during construction with minimum disruption to staff and patients During construction Project Director Enable an increase in the efficiency and effectiveness of service delivery Reduced maintenance expenditure on buildings Reduced percentage of floor area not meeting a minimum standard of NHS Condition B On completion Director of Estates and Facilities West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 265

266 Demonstrable reductions in Two years after maintenance expenditure per m2 in opening comparison with current situation. Achievement of top quartile performance in comparison with peer group of Trusts via ERIC data Director of Estates and Facilities More efficient use of theatres Theatre throughput and utilisation rates Six months after opening General Manager Reduction in cancellation rates Reduced inpatient ward nursing costs through flexible design of wards Reduced nursing cost per bed compared Six months after with current situation and in top quartile opening compared with peer group of trusts Deputy Director of Nursing Reduced critical care nursing costs through adjacency and flexibility of bed usage between ICU/HDU/CCU Reduced requirement for administrative / clerical staff through pooling of resources (co-location) and implementation of IT solutions Reduced nursing cost per bed compared Six months after with current situation and in top quartile opening compared with peer group of trusts Reduction in cost of admin / clerical staff compared with current situation and in top quartile of performance compared with peer group of trusts Six months after opening Deputy Director of Nursing General Managers Reduced transfer time between departments Reduction in staff time spent escorting patients between departments Six months after opening General Managers Reduction in DNA rates DNA rates per clinic as per Trust information Six months after opening Outpatients Manager Increased day surgery rates / reduced lengths of stay % of day surgery for agreed procedures Average length of stay from Trust Six months after opening General Manager West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 266

267 information Reduction in emergency admissions resulting from implementation of emergency floor model of care Number of admissions from Trust information Six months after opening General Manager Ongoing achievement of waiting time targets 18 weeks, 4 hours A&E, Cancer Waiting time information from Trust systems Six months after opening Chief Operating Officer Reduced cost per episode / attendance realised through greater efficiency Service line reporting information on cost of clinical services / specialties Six months after opening Director of Finance Reduced floor area and higher quality finishes resulting in reduced costs for cleaning Demonstrable reductions in cleaning costs per m2 in comparison with current situation. Achievement of top quartile performance in comparison with peer group of Trusts via ERIC data Six months after opening Director of Estates and Facilities Enable provision of facilities that will contribute to the recruitment, retention, education and development of staff in West Cumbria Reduced turnover rates amongst clinical staff, reducing service disruption Staff turnover rates, unfilled vacancies, numbers of applications for vacancies Six months after opening Director of HR Reduced costs of filling vacancies Bank / agency staffing costs and recruitment costs Six months after opening Director of HR Increased staff satisfaction Staff opinion surveys Two years after opening Director of HR Reduced sickness absence Monitoring of sickness absence per West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 267

268 department from Trust information Increased number of staff accessing training / education opportunities Numbers of staff attending training courses / seminars per annum Two years after opening AMD, for Education, Training, R&D Increase in range / volume of R&D carried out at WCH R&D funding secured / clinical trials undertaken Creation of local employment and training opportunities through the construction of the new facilities which increases the skills and employment prospects of local people Percentage of contractor / subcontractor workforce living in West Cumbria postcodes Value of work awarded to locally-based suppliers / sub-contractors During construction Project Leader, Laing O Rourke Number of apprenticeships created / training courses completed Facilitate greater integration of primary/community care and acute hospital services Provide facilities for integrated primary and secondary emergency care services Design of emergency care centre facilitates joint working between primary and secondary care clinicians On completion of design Project Director Step-up /step-down facilities provided on acute hospital site to facilitate closer working between acute and intermediate care Provision made for 20 step-up / stepdown beds within the WCH site On completion of design Project Director West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 268

269 Improved and more convenient patient pathways through closer working between acute and primary care Fewer repeat visits / contacts per episode of care, reduced duplication of tests. Six months after opening Chief Operating Officer Provide the opportunity for co-locating related services on the WCH site, where possible Maximum amount of site made available for complementary developments by health campus partners Reduced footprint of acute facilities On completion of freeing up maximum future development design space on WCH site Project Director Service improvements / cost Improved convenience for service users reductions achieved by co-locating through co-location of acute care with related services and sharing support other health and social care facilities facilities On agreement of health campus elements Project Director Demonstrable financial benefits to Trust and partner organisations from sharing of site and support services On completion of health campus developments (outside scope of this business case) Director of Finance West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 269

270 Appendix D Health Impact Assessment Stakeholder Workshop STAKEHOLDER WORKSHOP The stakeholder workshop event involved two group work exercises during which seven groups of people were asked to use their own experiences, the evidence from the community profile and the information from the project overview document to identify the potential impacts of the proposal. Participants invited to attend the workshop were identified as representatives who were likely to be affected by the proposal and / or those with expertise in elements of the proposal. These included: Representatives from West Cumberland Hospital Patients Panel West Cumberland Hospital League of Friends Patient Advice and Liaison Officers South Whitehaven Neighbourhood Management Local residents living close to the hospital Age Concern West Cumbria Older Peoples Forum AWAZ Primary Care Trust Representatives Social Care Representatives Cumbria Partnership Trust Representatives Representatives from Education and Regeneration Cumbria Constabulary Local Authority Elected Members Representatives from North Cumbria Acute Hospitals Representatives from Cumbria Disability Forum Representatives from the West Cumberland Hospital Redevelopment Project team Cumbria LINk Save Our Services group Each group was facilitated by an experienced facilitator. Based on the issues identified by the workshop participants, a number of recommendations are outlined in relation to the proposal. Health impacts were assessed in relation to: Who they would most affect The degree of their impact (small effect, few people to big effect, many people). During the workshop participants were asked to consider a number of issues relating to the likely effects on the population of West Cumbria of the construction phase of the development, as well as the effects on the local population once the development is built and up and running. Participants were then asked to consider the actions that could be taken to minimise the identified negative impacts and maximise the positive impacts. Workshop participants identified a number of both positive and potential negative impacts of the proposals. HEALTH IMPACTS OF THE PROPOSAL The following potential impacts were identified: 1. Issues Relating to the Construction Phase. I. Access to Services Workshop participants identified that there may be some considerable issues relating to access to services during this phase of the redevelopment. The issues highlighted included such considerations as confusion for patients attending relocated services, parking and increased traffic on the site, the impact on appointment times and resultant levels of stress. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 270

271 There were concerns raised that if the construction phase is not managed well this may result in an increase of patients not attending appointments or opting to attend services elsewhere through the Choose and Book system. It was generally agreed that access to the site will be difficult during this phase. It was also identified that the potential for reduced availability of parking spaces on the hospital site during construction may lead to hospital users accessing on-street parking, causing disruption to local residents. Research evidence (Douglas et al 2007) indicates that transport to services is an important determinant of health. Social exclusion and inequality may result where access or transport provision is not equal for all groups. Research in the UK demonstrates that in a single twelve month period, almost one and a half million people missed, turned down or chose not to seek medical help because they had transport problems. II. People s Healthy Behaviours Participants felt that the construction phase offered an opportunity to influence health through the development of an integrated approach to health promotion through primary, secondary and public health. It was proposed that this phase could be used to plan future health improvement strategies. The Health Promoting Hospital philosophy (WHO 2005) highlights the evidence that in order for hospitals to substantially impact on the health of the population, they need to be more targeted towards the needs of the people they serve. The population profile of West Cumbria outlined earlier shows that life expectancy for people living in Copeland and Allerdale is lower than the England average for both men and women. The main conditions causing this difference in life expectancy are those which may be modified through individual lifestyle factors, such as smoking, alcohol, diet and exercise. Planning for health promotion strategies during the construction phase, therefore will provide the opportunity for long term health improvement. Some participants felt that the difficulties relating to on site parking during construction could initiate the promotion of walking or cycling to work initiatives for staff. This view is supported by WHO (2005) who advocate the promotion of a healthy lifestyle for staff as a method of both supporting individuals to follow general health promoting policies and also to enable staff to fulfil their expected role as models of good practice for healthy behaviour. It was also suggested that a walkway and cycle path should be incorporated into the development. III. The Environment Participants felt that the increased construction traffic may impact on road safety for pupils attending local schools. There were also concerns in relation to disruption of certain services (sewers, gas, electricity) for patients, staff and local residents during construction. Participants also raised concerns in relation to noise during the building phase as well as the dust generated from the work IV. Education and Employment Participants felt that the construction of the building will have the potential to increase local employment opportunities. It may also provide opportunities for training for local people in the construction industry. As this is a three year project, staff employed during this phase may have the opportunity to learn transferable skills which could lead into future employment opportunities. It was also noted that the construction phase would offer the opportunity for local procurement of materials, goods and services. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 271

272 2. Issues Relating to the Redevelopment in the Longer Term I. Access to Services Participants overall welcomed the prospect of this new hospital as being modern, accessible and fit for current and future use. Some participants raised concerns relating to the potential for a lower quality of care for those services which will continue to be provided from the old hospital compared to those delivered in the new building. Particular concerns related to the care of people suffering from mental health issues who receive services from the Copeland and Yewdale units which will remain within the old building. A recent consultation exercise by NHS Cumbria (2008) found that Mental Health Service users and their carers felt that the quality of mental health services was fundamental to both their care and recovery. There were some concerns raised that changes made to service delivery may be viewed negatively by the public as being a result of the redevelopment rather than strategic development decisions. Some concerns were raised that there may be issues relating to the distances between the various car parks and different parts of the new building. This could have a negative impact on people with mobility problems. It was felt that the provision of an integrated emergency care centre would provide improved quality of care. This view is supported by research evidence (Boyle et al 2008) which indicates that the provision of integrated hospital emergency care offers significant advantages beyond the emergency department and improves efficiency. This improved efficiency however was found to result in a reduction in income for the hospital. Many participants felt that the new building, once established should have much stronger links with the wider community services, thereby improving the interface between primary and secondary care. II. People s Healthy Behaviours Many participants felt that the new development offers a real opportunity to influence healthy lifestyle behaviours. It was suggested that the ground floor main entrance area and other waiting areas such as outpatient s clinics could be used for specific health promotion initiatives. This supports the evidence base (WHO 2005) which highlights the role that hospitals can play in targeting health behaviour change to their local populations. It was generally agreed that such services as drugs and alcohol and primary care could utilise the main entrance area to promote their services. It was also felt that the new build will provide an opportunity to influence healthy eating through more effective use of the hospital canteen to ensure a wide range of healthy food options. It was noted that there will also be an opportunity to provide in-reach services such as support to stop smoking, both within the acute setting and within the health campus. III. Environment Many people felt that it would be important for the wellbeing of patients that the hospital estate was a pleasant environment to walk around. Others felt that the inclusion of covered walkways in hospital grounds would encourage increased mobility, activity and therefore have a positive impact on patient rehabilitation. In relation to the research evidence, studies have found clear evidence for a positive relationship between green space and health. There is also an acknowledgement that the opportunity to view green space can provide a benefit, although the mechanism for this is unknown. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 272

273 The proximity of green space is recognised as having a positive effect on the physical activity of all age groups including the elderly. This in turn has been shown to have a positive impact on promoting wellbeing and reducing stress (University of York 2007) A number of people expressed concerns in relation to the majority of in - patient accommodation being restricted to single room facilities as opposed to rooms with multiple beds. Whilst participants acknowledged that single rooms will provide increased privacy and promote dignity for patients, some people were concerned that such rooms would increase feelings of isolation, particularly for those patients confined to bed for extended periods. Other participants noted that single room facilities may reduce hospital acquired infections. The current NHS agenda requires that efforts should be made to ensure the protection of patients dignity while in hospital, that their privacy should be respected and that confidentiality is given the highest priority. In relation to the evidence base Dowdeswell et al (2004) examined the literature in relation to the determinants influencing single room provision. They found that several authors agree that the provision of single rooms promotes privacy, dignity and confidentiality for patients (Ulrich et al 2004, Lawson and Phiri 2004). However other authors found that treating patients in single rooms increased their levels of anxiety about isolation (Sharma and Monaghan 2003, Rees et al 2000). Overall Dowdeswell et al (2004) propose that guidelines for NHS hospitals should promote a good practice range of between 50% and 100% single rooms. They contend that there is a strong confidence base for this judgement. Dowdeswell et al (2004) could find no evidence from randomised controlled trials to suggest that single rooms prevent hospital acquired infection. This view is upheld by Van de Glind et al (2007) who, in their review of the literature could find no substantive evidence to suggest that hospital design was linked to the prevention of infection. They argue that other measures in particular hand washing, had a greater impact. There was a general consensus that the proposal to site the wards on the upper floors to enable inpatients to benefit from views across the local landscape would have a positive impact on health. This view is supported by previous work (University of York 2007) as outlined above which found that simply being able to view green space may provide health benefits. Some participants felt that by increasing the services within this area there would be a resultant increase in traffic congestion. IV. Education and Employment It was noted that a positive outcome may be the potential to retain the skilled workforce from the construction phase in the local area in view of the development of the Energy Coast. It was also felt that the redevelopment could have a positive impact on the area s ability to recruit and retain specialist staff from other areas, particularly in relation to the NHS workforce. Participants highlighted the potential for research and development opportunities through partnerships between local universities and the hospital West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 273

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282 Appendix F The Generic Economic Model Assumptions 1.1 Introduction Assumptions Results of quantitative analysis Figures Figure 1-1: Key Cost inputs for the Generic Economic model Figure 1-2: Quantitative Results for Options 1 to Figure 1-3: Key Assumptions used for each Option West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 282

283 1. Introduction This report summarises the quantitative analysis performed to assess 4 options selected for the re-development of the West Cumberland Hospital The economic appraisal represents a discounted cash flow analysis expressed in today s value of Net Present Cost (NPC) or an Equivalent Annual Cost (EAC) The four Options considered are: Option 1 Do Minimum (Address only backlog costs of 12.2m) Option 2 New Emergency Care Centre, Imaging and Theatres Option 3 New Elective Care Centre, Inpatient Ward Block and re-configured Emergency Care Centre Option 4 New Emergency Care, Elective Care, and Inpatient Wards Option 4 was selected as the preferred option as detailed in the Outline Business Case. The options have been reviewed for the Full Business Case reflecting a reduction in the scheme capital from 100m to 91.6m ( 90m scheme + VAT movement from 17.5% to 20%) 1.2 Assumptions In conjunction with The Department of Health, Generic Economic Model Guide, this section details the key inputs used in the model and the key results. Figure 1-1: Key Cost inputs for the Generic Economic model Input Area Assumption Appraisal Period 60 Years Discount Rate Years 1-30; Years % and; 3.0% Initial Capital Life Cycle Costs Revenue Costs Building Running Costs Efficiency Savings Based upon Independent E C Harris Estimates of possible schemes For existing buildings - Historic capital costs since 1964 projected forward to include major capital upgrades where known. Adjusted for each option based upon floor areas affected. For New Build Based upon Laing O Rourke costs provided Includes relevant costs of site management The relevant costs of running the site including Energy, Maintenance. Savings expected from new build to include staffing, energy costs, maintenance. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 283

284 Residual Value Capital Capital Expenditure in Year 26 Residual Value 64 th Year Option m Option m Option m Do Minimum m Residual Values in Year 64 calculated assuming 23/60 years life remaining The key cost inputs are shown above. Further details of the sources of these figures are given below: Initial Capital Initial Capital has been based on the pre VAT cash flows provided by E C Harris consultants for Options 2 and 3, and Laing O Rourke for Option 4 as included in FB cost VAT is excluded as this is a transfer payment within the public sector and does not generate additional costs. Lifecycle Costs Lifecycle costs include backlog, are based on the historic capital expenditure profile since 1964, and projected forward lifecycle costs. The profile of costs are expected to increase as the building gets older Independent consultants estimated that a full re-build of the hospital would be 150k. The model assumes that a partial or complete re-build will be essential in 2035 with the exception of Option 4 that further demolishes the Family Services Block. The remaining buildings are Nurse Hostel Accommodation and a Training Block that have been estimated at 15m for non-clinical space. Building Running Costs Building running costs include Electricity, Gas, Water, rates, Council Tax, Waste disposal, Gardening, Engineering and building maintenance. The costs are based upon 2009/10 budgets. The do Minimum (Option1) baseline includes a 25% increase in Gas and Electricity costs in 2010/11. Efficiency Savings These represent up to 3m per annum savings expected from the development in order to pay for Capital charges. The savings planned include reduction in operating theatres, use of IT to eliminate non-added value activity, new patient pathways, other overheads and reductions in the estate running costs. 1.3 Results of quantitative analysis The results of the quantitative Generic Economic Model are shown in 1-2. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 284

285 Figure 1-2: Quantitative Results for Options 1 to 4 Initial Capital (Incl. VAT) Initial Capital( Excl VAT) Lifecycle Capital Total Capital Building Running Costs Efficiency Savings Disruption Costs Total Revenue Costs Total NPC Option Option Option Option Change Option 1 to Option This table shows that Option 4 delivers the lowest net present cost of 119.2m over 60 years and represents an overall 60.9m lower net present cost against Option 1. This reduced cost is achieved from: 25.0m - lower capital lifecycle costs the existing buildings will require major upgrades over the next 20 years and capital requirements increase as the buildings get older. 28.4m - lower building running costs achieved from a reduction in space 9.9m - Efficiency savings achieved by better energy efficiencies and reduced floor space with improved clinical adjacencies. (2.4m) - Expected disruption costs as facilities are re-configured. 60.9m - TOTAL NPC IMPROVEMENT COMPARED TO OPTION 1 DO MINIMAL Figure 1-3: Key Assumptions used for each Option 1-4 The table below summarises the key assumptions used within the model. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 285

286 OPTION New Area Built & refurbished Area Demolished On-Going Maintenance Energy Costs Savings Initial Capital Cost (Net Present Cost) OPTION 1 Do Minimum Total floor area 46,771m2 No demolition None 12.2m Backlog Increases at projected high levels as building gets older. Significant elements of replacement required, particularly ward upgrades, then re-build required in Increasing over time. None 12.2m OPTION 2 New Emergency Care Centre and New Theatres 15,856m2 B, H & Q 8,231m2 (17.6%) 5.7m NBV 0.3m Depreciation reduction Ward upgrades required at 0.75m for 13 wards. Backlog maintenance reduced by 1.3m 15% savings assumed in line with area demolished. Clinical efficiencies 47.6m Remaining buildings 58% of Option 1 lifecycle. Balance of rebuild required in OPTION 3 New Elective Care, Wards, and reconfiguration of Emergency 20,200m2 B & A Blocks 7,266m2 (15.5%) 2.0m NBV 0.1m Depreciation reduction Backlog maintenance reduced by 3.0m On-going maintenance reduced by 144k for cladding water upgrades and lifts as areas demolished. 15% savings assumed in line with areas demolished. Clinical efficiencies 65.0m West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 286

287 Remaining buildings 47% of Option 1 lifecycle. Balance of rebuild required in OPTION New Area Built & refurbished Area Demolished On-Going Maintenance Energy Costs Savings Initial Capital Cost OPTION 4 New Emergency Care and Wards 20,950m2 (new build) 3,600m2 (refurb) Blocks A,B,C,CDU,D, H,M,P,W1,W3, Q 34685m2 (62%) 18.9m NBV 0.7m Depreciation reduction Backlog maintenance reduced by 12.0m. Lifecycle starts 2022 at 1% of capital costs over first 20 years. Remaining buildings 40% of Option 1 lifecycle. 56% savings assumed in line with areas demolished Clinical efficiencies optimised 78.8m Balance of rebuild required in West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 287

288 Appendix K The Procurement Strategy COMMERCIAL IN CONFIDENCE WEST CUMBERLAND HOSPITAL PROJECT PROCUREMENT STRATEGY 1. INTRODUCTION This paper describes the proposed procurement strategy for the redevelopment of West Cumberland Hospital. 2. BACKGROUND TO THE PROJECT The project as described in the Trust s OBC is to demolish and replace buildings at the north east of the current West Cumberland Hospital site with a new build development of some 22,000sqm, to provide replacement facilities for: Accident and Emergency / Urgent Care Centre Critical Care / Coronary Care Unit Acute Assessment Unit Medical Investigations Unit Surgery and Intervention Centre (including operating theatres) Diagnostics (including x-ray) Pathology Pharmacy FM and catering facilities Plant rooms and boiler house On completion and commissioning of the new build facilities, the bulk of the remaining buildings will be subject to a phased demolition, which will leave a small number of existing retained buildings for internal refurbishment and alteration. The proposals involve a mixture of new build and refurbishment, since it is felt that some of the existing buildings lend themselves to adaptation to modern use and are in sufficiently good condition to be economically refurbished and remodelled. The construction will be phased, with a decanting process that will enable the hospital to remain functional throughout the redevelopment. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 288

289 The current position with the project is that the Trust has: Obtained OBC approval from NHS North West, Department of Health and HM Treasury for a publicly-funded redevelopment. Secured commitment of 90 million of public capital, to be funded by the Trust, NHS North West and DH. Appointed Laing O Rourke as Principal Supply Chain Partner under the NHS ProCure21 framework under a Stage 3 contract, up to completion of design and FBC Completed and signed off detailed plans at 1:50 scale and room data sheets for the bulk of the new facilities Undertaken approximately two-thirds of the required decanting and demolitions to clear the proposed site for the new build. Secured full planning permission for the redevelopment from Copeland Borough Council 3. BACKGROUND TO THE PROCUREMENT STRATEGY The Department of Health (DH) issued an approval letter in relation to the West Cumberland Hospital outline business case (OBC) on 4 August This letter contained a requirement for the Trust to carry out a review of its procurement strategy and obtain the approval of the DH before entering into any further contract relating to the West Cumberland Hospital scheme. The wording of the approval letter in relation to procurement was as follows: Procurement Route It is understood from the business case that the Trust intends that a single Procure 21 arrangement is to deliver all of the works, as this arrangement has already been used to appoint a Principal Supply Chain Partner ( PSCP ) to assist the Trust in reaching finalised design, enabling works and full business case to date (known as Stage 3 in the P21 contract). The Trust should now consider, before any further works may be contracted for, how best to obtain a competitive fixed price for the entire specification. We understand that under the present P21 contract the Trust is not obliged to continue to use its PSCP for Stage 4 onwards. The Procure 21 process as currently used in many NHS schemes does not involve the full competitive tendering of works, relying instead on the benefits of partnering to promote value for money. Whilst competitive tendering undoubtedly involves a cost, both to the procuring authority and to contractors, on a scheme of this scale, particularly in current market conditions, it has the potential to put significant downward pressure on price. It is therefore a condition of this approval that the Trust analyses very thoroughly the relative financial benefits for the scheme of competitive and non-competitive approaches to its procurement. The eventual approach must be agreed by DH s capital investment branch prior to the contract being awarded. If the Procure 21 framework is to continue to play a significant role in delivery or supporting delivery of this scheme, opportunities should be sought to exploit the benefits of competitive tension to drive down prices. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 289

290 In considering and developing its procurement options, the Trust should note that the Procure 21 framework has been re-tendered (P21 Plus), and will therefore build in more up to date rates and margins from the market once and if put in place on expiry of the existing P21 framework. The Trust should justify why using the old framework terms going forward would be more beneficial than the new framework s terms should P21 remain the optimum option. A thorough quantitative evaluation of procurement options has therefore been carried out in order to identify a way forward which best demonstrates that opportunities have been taken to secure value for money on this project, balancing cost and risk. This strategy summarises the work undertaken by the West Cumberland Hospital Project Team in carrying out this evaluation, and seeks to answer the following questions: Which procurement route will allow the Trust to secure the most competitive price for the scheme and to take advantage of current market conditions? What would be the potential impact on programme of the alternative procurement routes, and would this have a quantifiable financial impact? Would there be any legal issues associated with a change of procurement route? Which procurement routes can offer greatest certainty of out-turn cost, given the fixed capital funding available? Are there any other costs, risks or other issues that should be taken into account? 4. PROCUREMENT REVIEW PROCESS The Trust Project Team has worked closely with experienced professional advisers in preparing this analysis. This has included: A quantified analysis of the likely capital costs of a number of different procurement routes, compiled by the Trust s cost advisers, Rider Hunt. An analysis of the legal implications, provided by Ward Hadaway, the Trust s legal advisers. An analysis of the potential impact in terms of delay to the programme of each route provided by PFPM Limited, the Trust s project management advisers. An analysis of the likely revenue impact of changes to programme provided by the Trust s finance team The analysis has also been informed by the following: Meetings with the Department of Health s Programme Manager for the NHS ProCure21 framework and with the NHS ProCure21 Adviser for the North West. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 290

291 Teleconferences with officials from the Department of Health s Procurement, Investment and Commercial Division. Teleconferences with the Project Director at Epsom & St Helier University Hospitals NHS Trust (an NHS Trust undertaking a similar procurement review process in response to a DH condition at OBC approval). Meetings with Laing O Rourke (LOR), the Trust s current ProCure21 PSCP. The outcome of this process is set out in the following sections. 5. OPTIONS EVALUATED The Project Team and advisers have identified five potential procurement routes open to the Trust in relation to the WCH redevelopment. These are described below: Option Definition 1 ProCure21 Continue the existing ProCure21 contract with the current PSCP into Phase 4 (construction) 2 Renegotiated ProCure21 Continue the existing ProCure21 contract with the current PSCP into Phase 4, following renegotiation of the costs and procurement strategy, including an obligation to competitively tender the works 3 ProCure21+ Terminate the current PSCP s contract either immediately or at the end of Phase 3 and appoint a new PSCP using the ProCure21+ framework, following a selection procedure. 4 Open Tender Traditional 5 Open Tender Design & Build Terminate the current PSCP s contract either immediately or at the end of Phase 3 and procure the works via a traditional tender, following an OJEU tendering procedure Terminate the current PSCP s contract either immediately or at the end of Phase 3 and procure the works via a design and build tender, following an OJEU tendering procedure As the availability of public capital for this project has been confirmed, no consideration has been given to options utilising private finance. The shortlist also excluded further consideration of options involving splitting the procurement, for example between the new build and refurbishment works elements. The key reasons for this decision were as follows: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 291

292 A single fixed price for the entirety of the scheme would not be possible, hence the Board would have no certainty of final capital cost until both procurement processes had been completed. The potential for two contractors to be working on a congested site at the same time would create risks, introduce complexities regarding responsibility and therefore introduce significant demands and additional costs on the Trust in managing this position. Opportunities for value engineering between the two elements of the scheme would be reduced 6. ADVANTAGES AND DISADVANTAGES OF OPTIONS The table below sets out the pros and cons of the procurement routes considered, before moving into the detailed consideration of the financial, legal and programme implications of each option. For the purposes of the table, Options 4 and 5 (open tender via either traditional or design and build routes) is treated as one, as each route will have similar advantages and disadvantages: Option 1 ProCure 21 Pros Cons Continuity of team - further development of current working arrangements. No loss of time with an incoming team getting to know the Trust, its needs and scheme development / design to date Lack of competition-driven pricing OBC approval letter requires a 'competitive fixed price' and the benefits of current market conditions to be sought through competition Track Record Trust Board comfortable with existing appointment and services provided to date by LOR No change of Contract Terms continued utilisation of tried and tested P21 contracting arrangements No queries regarding transfer of design etc no issues with transferring intellectual property rights, warranted works and services No risk of challenge from LOR Lack of recently tendered pricing the new P21+ framework incorporates recently tendered pricing and margin arrangements which may offer a more cost effective solution No obligation to fully tender all works packages and other elements of the scheme continuing with existing arrangements without adjustment would not oblige LOR to undertake full competitive tendering or other measures to ensure that a competitive fixed price has been achieved. This would be unlikely to secure the approval of the Department of Health West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 292

293 Lack of flexibility inherent in using pre-set framework terms and conditions Option 2 Renegotiated ProCure21 Pros Continuity of team further development of current working arrangements. No loss of time with an incoming team getting to know the Trust, its needs and scheme development / design to date Track Record Trust Board comfortable with existing appointment and services provided to date No change of Contract Terms continued utilisation of tried and tested P21 contracting arrangements No queries regarding transfer of design etc no issues with transferring intellectual property rights, warranted works and services No risk of challenge from LOR A greater proportion of the costs subject to competitive tender Rider Hunt assessment is that 78% of the scheme costs would be subject to competition, which would enable the Trust to demonstrate a much greater element of competitive pricing in the current market Cons Works packages will be competitively tendered, but this may not address pre-set profits and overhead charges which may be improved upon in competition and which have already been improved upon within the P21+ framework. The tendering process may in some areas be restricted to or include LOR supply chain members this may not be sufficient to demonstrate truly competitive pricing Potential lack of transparency LOR may run its mini-competitions in a way which does not involve the Trust or its advisers in a true open book arrangement Lack of detailed design development for refurbishment areas this could lead to uncertainty on pricing and cost certainty Lack of flexibility inherent in using pre-set framework terms and conditions Is an adjusted P21 approach possible, within the constraints of the framework? Value engineering is possible. The other elements of LOR s approach to drive down prices would need to be fully compliant with P21 framework arrangements. If not fully compliant, then potential risk of legal challenge. Option 3 ProCure21+ Pros Recently tendered framework arrangements, which should mean that the most competitive rates for PSCP margin / profit / overhead are available Cons LOR was not appointed to the P21+ framework, and therefore would not have an opportunity to deliver the remainder of the scheme West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 293

294 P21+ is based on a tried and tested approach to deliver healthcare facilities through partnership working Management of all P21+ panel members and full support for the Trust from the DH P21+ team. There is some evidence to suggest that PSCPs have been keen to ensure their approach to NHS clients is consistent with partnership working and that potential loss of their position on the P21 framework incentivises such behaviour. P21+ has been improved to address lessons learnt from the operation of P21 A faster process to appoint a contractor than traditional OJEU procurement processes Flexible contracting structure which allows for the scheme to be value engineered to match revised funding envelope or service needs LOR may look to challenge these arrangements and/or seek to make additional claims, or be challenging in terms of handover of existing design Direct warranties would not automatically be available for the existing design and an incoming contractor may want to check and satisfy itself on the existing design. This may take time and incur some additional cost There is no automatic mechanism for the existing design team to be novated to the incoming contractor although this could be negotiated Potential lack of transparency the PSCP may run its mini competitions in a way which does not involve the Trust or its advisers in a true open book arrangements Lack of flexibility inherent in using pre-set framework terms and conditions New ideas / fresh approach a new team may bring new ideas which lead to a better value scheme Increased competition an ability to enforce price competition both at appointment and in subsequent work package tendering may lead to reduced costs Learning curve there would be a loss of scheme knowledge from LOR staff, and a new team may require some time to understand Trust requirements and design to date, if existing designers could not be novated. Time a new PSCP appointment process will take between four and eight weeks and will require Trust staff and adviser time to be committed to the process. Public / staff perception a change to the selected partner may impact on staff or public perceptions of progress of the project Options 4 and 5 Open Tender Pros An OJEU-compliant competitive tender would satisfy the requirement that a competitive fixed price for the entire specification had been achieved Cons The refurbishment elements of the scheme have not yet been finalised and would need to be completed before the Invitation to Tender is issued West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 294

295 LOR and other contractors who are not on the P21+ framework would be able to compete for the opportunity Choice of form of contract would be at the Trust's discretion and could be tailored to meet the specific needs of the scheme Structured and well-understood procurement process to follow A fixed price could be achieved As the procurement process would take several months to complete there would be a time envelope available within which to fully design out the refurbishment elements of the scheme. New ideas / fresh approach a new team may bring new ideas which lead to a better value scheme LOR may look to challenge these arrangements and/or seek to make additional claims, or be challenging in terms of handover of existing design Some contractors may not wish to bid for the opportunity, given LOR's previous involvement in the scheme There is no automatic mechanism for the existing design team to be novated to the incoming contractor although this could be negotiated. Time delay of several months to appointment Cost and staff time commitment of tendering the opportunity, both for the Trust and contractors Significant risk of future claims LOR may reach an agreement with its existing supply chain (including designers) that they tender with them, this has the potential to distort competition Potentially, the absence of framework arrangements and a different form of contract could lead to the need for more detail to be agreed to ensure certainty for all involved and therefore avoiding challenge later The existing design would not be warranted and as such an incoming contractor may want to check and satisfy itself on the existing design, this may take time and incur an additional cost. Public / staff perception a change to the selected partner may impact on staff or public perceptions of progress of the project West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 295

296 7. COST ANALYSIS The OBC approval letter requires the Trust to undertake an analysis of the relative financial benefits of potential procurement routes. This process has been undertaken in two parts: i) a quantitative analysis of the likely capital costs achievable under each route ii) an assessment of the proportion of costs subject to open competitive tender i) Quantitative Analysis of Costs The Trust s appointed cost advisers, Rider Hunt, have undertaken an exercise to estimate the costs of each of the five potential procurement routes, based on the detailed design already established for the scheme. This quantitative analysis is based on: Known costs from Laing O Rourke under ProCure21, as set out in their original GMP submission Estimated costs of the renegotiated ProCure21 route with Laing O Rourke, based on a revised procurement strategy for all works packages and a detailed review of other cost elements. Information obtained from the DH ProCure21 Team on the fee levels and margins established as part of the new ProCure21+ framework for projects of this value Rider Hunt detailed knowledge of costs achieved in the current market, from their significant portfolio of healthcare projects across the North of England. The outcome of this analysis is set out below (all costs are shown net of VAT). The detailed line by line cost analysis and key assumptions is shown at Annex 1: West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 296

297 Cost Item Option 1 ProCure21 (as at GMP) Option 2 ProCure21 Renegotiated Option 3 ProCure21+ Option 4 Single stage traditional tender Option 5 Single stage D&B tender Spend to date (incl. margin) 6,647,167 6,647,167 6,647,167 6,647,167 6,647,167 Works Cost 56,185,289 56,185,289 56,185,289 56,185,289 56,185,289 Preliminaries 8,430,298 7,990,298 7,274,813 7,274,813 7,274,813 Commercial Adjustment -1,601, Total Works 69,661,656 70,822,754 70,107,268 70,107,268 70,107,268 Fees 2,523,282 2,523,282 2,698,318-2,103,218 Contractor Risk 1,999,919 1,999,919 1,999,919 1,402,145 3,610,524 Contractor Margin 5,035,415 5,152,409 3,407,917 3,243,112 3,458,692 Commercial Adjustment - -1,593, Contractor Total 79,220,272 78,904,496 78,213,422 74,752,526 79,279,703 Trust Fees ,000 2,551,369 1,463,764 Trust Equipment 5,130,747 5,130,747 5,130,747 5,130,747 5,130,747 Trust Risk 2,400,000 2,400,000 2,685,028 7,475,253 4,756,782 Trust Non Works 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 Trust Total 9,130,747 9,130,747 9,475,775 16,757,368 12,951,293 OVERALL TOTAL 88,351,019 88,035,243 87,689,198 91,509,895 92,230,996 West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 297

298 The key assumptions in the table can be summarised as follows: Works Cost: For purposes of comparison, works costs have been assumed to be consistent across all options. LOR has committed to 100% competitive tendering of all works packages under Option 2, and this could also be enforced under Option 3 (ProCure21+). This provides protection to the Trust in the event that there are further falls in the market. Clearly, under either option, the contract would need to identify that full and open competitive tendering would be undertaken and that any savings resulting from competitive tendering below the levels agreed at GMP are returned in full to the Trust. Preliminaries: At Option 2, LOR have agreed to a reduction in their prelim costs compared to their previous GMP position. This is however still a higher figure than Rider Hunt advise is currently obtainable through competition in the market, a potential saving that would be available to the Trust under Options 3, 4 and 5. LOR have also committed to further reductions in prelim costs in the event of a reduction in the scope of the scheme, and this is reflected in the legal agreement. Commercial Adjustment: At Option 3, LOR have confirmed that this is a fixed reduction to the total costs, calculated as a percentage reduction on all payments. Again, this would need to be identified within the legal agreement. Contractor Margin: This is fixed under the framework arrangements. Under ProCure21, LOR s margin is 7.5%. We are advised by DH ProCure21 team that under the new ProCure21+ framework, typical margins for a scheme of this size are around 2.5% lower, at circa 5%. Trust Fees: The increase in Trust fees under Option 3 reflects a provision for some additional advisor costs and a potential extension to the lease secured on the adjacent field for the contractor s compound. Under Options 4 and 5, allowances are based on Rider Hunt advice. Trust Risk: The Trust risk under Option 1 (ProCure21) is based on a quantified and agreed risk register. This has been adjusted at Option 3 for the risk of time delays, changes to building regulations and variances in tendering approaches. At Options 4 and 5, the risk calculation reflects Rider Hunt advice on suitable risk allowances for open tenders. Overall, the table indicates that the most cost-effective route in capital terms, by 346k (a margin of less than 0.5% over Option 2), is Option 3, to pursue a ProCure21+ procurement. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 298

299 ii) Extent of Competitive Tendering The OBC approval letter sets out the Department of Health s expectation that the Trust will fully consider the use of competitive tendering as a means of securing value for taxpayer funds on this project. The approval letter sets out this expectation as follows: Whilst competitive tendering undoubtedly involves a cost, both to the procuring authority and to contractors, on a scheme of this scale, particularly in current market conditions, it has the potential to put significant downward pressure on price. It is therefore a condition of this approval that the Trust analyses very thoroughly the relative financial benefits for the scheme of competitive and non-competitive approaches to its procurement. If the Procure 21 framework is to continue to play a significant role in delivery or supporting delivery of this scheme, opportunities should be sought to exploit the benefits of competitive tension to drive down prices. The DH has been clear that market-testing (seeking a price from one tenderer only) or benchmarking (comparing costs against previous completed schemes) is not regarded as being equivalent to full competitive tendering. The table below sets out information provided by the Trust s cost adviser on the estimated proportion of the remaining scheme cost that would be subject to open competition in the current market under each of the procurement routes under consideration: ProCure21 ProCure21 Renegotiated ProCure21+ Single stage traditional tender Single stage D&B tender Proportion of total scheme cost subject to competition 46% 78% 84% 100% 100% 8. LEGAL POSITION Any course of action will have potential legal implications and the Project Team has therefore obtained advice from Ward Hadaway, the Trust s legal advisers, on key legal issues. Their advice is set out below: Legal Issue Can the existing ProCure21 contract be terminated? Ward Hadaway Advice Clause 90.2 does appear to have an ability to terminate at will, but it is not expressed with clarity and may be conditioned by acting in "a spirit of mutual trust and cooperation". Z5 of the ProCure21 supplementary clauses includes for termination if SOC, OBC and FBC are not accepted and also if parties cannot agree GMP. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 299

300 If we terminate, can we use all of the designs and other works undertaken to date with another contractor to develop the scheme? Generic P21 guidance states this to be the case, but that anticipates that the whole scope of WORKS including construction is included in contract. Clause Z6 of the P21 contract indicates that upon termination the Contractor hands over all materials and electronic data etc (including that of its subcontractors) and the Employer (the Trust) has right to use them to complete the WORKS. This brings us back to the definition of WORKS. If we terminate, can existing PSCP supply chain appointments be transferred, novated or assigned? If we terminate, can an incoming contractor rely on the design and other works undertaken to date? Will the design / other works be warranted to the new contractor? Novation, collateral warranties or third party rights would be required and a new contractor would have to be willing to accept retrospective responsibility. Can we change the existing P21 arrangements to improve on pricing and other arrangements? Can the existing P21 partner be required / agree to market test all works packages? Framework Agreement arrangements need to be considered but at clause 3.4 Overriding Objective does require that the NHS Client receive best whole life value for money through value engineering. We recommend reviewing Practice Note "Target Price Setting and Adjustment" referred to at 3.15 of the generic framework. Open book accounting is adopted, however profit, overhead and margin may have been fixed via the initial tender process. Can the proposals offered by LOR (to drive price efficiencies) be possible under ProCure21 Framework arrangements? There may be some leverage to use the value engineering process. Whether that would achieve the same savings as a lump sum quotation in the current financial environment is difficult to predict. Whether the design has developed sufficiently towards a finished state to facilitate a reliable lump sum tender is a question for technical advisers. However, the same considerations apply to a target cost arrangement in that the target is only as reliable as the state of completion of the design upon which it is based. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 300

301 9. PROGRAMME IMPLICATIONS The Trust s Project Managers, PFPM Limited, have prepared an analysis of the likely impact on programme of each potential procurement route. This is set out in summary below, and the detailed indicative programmes are attached at Annex 2: Option Estimated Start on Site Estimated Completion 1 ProCure21 Jun 2011 Nov Renegotiated ProCure21 Jun 2011 Nov ProCure21+ Sep 2011 Mar Open Tender - Traditional Jun 2012 Feb Open Tender Design & Build Apr 2012 Dec 2014 The information provided illustrates that there would be no significant impact on the start on site date from adopting either a renegotiated approach under ProCure21 or appointing an alternative PSCP under ProCure21+. However, an open tender route would lead to a significant delay to the start of works on site of between nine and twelve months. The Trust s analysis includes the potential for adverse revenue effects from delay to programme. The achievement of revenue efficiencies derived from the new hospital as set out in the OBC would be put back in line with any delay to the completion and opening of the new facilities. This is estimated by the Trust finance team to be equivalent to in the region of 100,000 of savings foregone for every month of delay. There would also be some additional costs associated with maintaining an in-house project team and Trust advisers over a longer period, which are estimated to be in the region of 35,000 per month. Estimates of these additional costs are set out in the table below: Option Estimated Revenue Costs of Delayed Implementation Estimated Additional Costs of Trust Team Total Estimated Additional Costs 1 ProCure Renegotiated ProCure ProCure k 140k 540k 4 Open Tender - Traditional 1,500k 525k 2,025k 5 Open Tender Design & Build 1,200k 420k 1,620k West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 301

302 The table indicates that under Options 3, 4 and 5 the Trust would be subject to additional revenue costs arising from a prolongation of the programme. 10. SUMMARY The table below summarises the outputs of the work undertaken by the Project Team in conjunction with the Trust s professional advisors and sets out the financial, legal and programme issues associated with each of the potential procurement routes for taking forward the redevelopment of West Cumberland Hospital: ProCure21 Renegotiated ProCure21 ProCure21+ Open Tender (Traditional) Open Tender (Design & Build) Estimated Capital Cost ( m excl VAT) 88.35m 88.04m 87.69m 91.51m 92.23m Certainty of Final Capital Cost Cost certainty (subject to no client changes) only at agreement of GMP. Cost certainty (subject to no client changes) only at agreement of GMP. Cost certainty (subject to no client changes) only at agreement of GMP. Costs uncertain until receipt and clarification of tenders. Significant risk of claims. Costs uncertain until receipt and clarification of tenders. Significant risk of claims. Capital Cost Indexation (MIPS) Risk Significant, as only 46% of total costs are tendered in the current market. Moderate, as 78% of costs are tendered in the current market. Moderate, as 84% of costs would be tendered in the current market. Low, as 100% of costs will reflect current market conditions. Low, as 100% of costs will reflect current market conditions. Legal Risks No specific risks identified Potential challenge if modifications are made to the P21 framework arrangements Potential challenge from LOR. Lack of complete clarity in P21 contract re: ownership of design and arrangements for termination Potential challenge from LOR. Lack of complete clarity in P21 contract re: ownership of design and arrangements for termination Potential challenge from LOR. Lack of complete clarity in P21 contract re: ownership of design and arrangements for termination Programme Impact Little or no delay to programme. Little or no delay to programme. Estimated delay of up to four months Estimated delay of up to 15 months Estimated delay of up to 12 months Estimated Revenue Impact of Delay Nil Nil 540k 2,025k 1,620k Approvals Risk Very unlikely to secure DH approval owing to low level of competitive Full competitive tendering of works packages and negotiated Trust can insist on full competitive tendering of all works packages and Very likely to secure DH approval as demonstrates full and open competition Very likely to secure DH approval as demonstrates full and open competition West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 302

303 tendering and uncompetitive rates / margins from old P21 framework. commercial adjustment (discount) to offset higher margins. Some other elements not subject to full competition. can take advantage of more competitive margins built into the new P21+ framework. for all elements of cost in the current open market. for all elements of cost in the current open market. 11. CONCLUSION The Trust has concluded on the basis of the quantitative evidence presented that the best value procurement route available is Option 2, to pursue a renegotiated ProCure21 contract with its existing PSCP. The Trust perceives the benefits of this proposed approach to be as follows: Best Value for Money: The most advantageous overall financial outcome for the Trust, balancing the estimated capital and revenue implications of each option. A 2% reduction on all PSCP costs via a confirmed commercial adjustment Taking Advantage of Current Market Conditions: 100% competitive tendering of all works to Trust-approved tender lists of between 3 and 5 companies, securing the benefits of competition for all works in the scheme Full Trust input and involvement in the sub-contractor tendering and selection process on a transparent and open-book basis 100% of aggregate savings from competitive tendering post-agreement of GMP to come back to the Trust Failure by the PSCP to competitively tender any works package would allow the Trust to value that works package and pay only its own valuation Major elements of the competitive tendering can be undertaken during early 2011, taking advantage of current construction market conditions prior to a forecast rise in tender prices later in 2011 and 2012 (as predicted by DH Estates and Facilities): West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 303

304 Cost Certainty: Fixed price secured at GMP (subject to no client changes) and minimal risk of claims (no previous claims under the ProCure21 framework) Full risk transfer of costs in excess of the GMP to the PSCP Full Trust access to all PSCP and sub-contractor records on an open-book basis throughout the project to validate actual costs, including the right to withhold payment where agreed validation documents are not provided Minimal Disruption to Programme: No disruption or loss of time owing to procurement processes No additional costs to the Trust associated with procurement processes Other Advantages: Utilises DH-approved and OGC-recommended framework approach and standard form of contract Significant prior experience of the Trust advisory team in managing projects under the ProCure21 framework, a tried and tested arrangement It is acknowledged that this approach can only be taken forward as the preferred option on the basis that the favourable terms of the renegotiated arrangements are properly secured in a legal agreement. These terms have therefore been documented and agreed with Laing O Rourke as set out in the attached schedule (Annex 3), which will form the basis for a formal legal agreement, with guidance from the Trust s legal advisors. The Trust is therefore confident that the favourable terms secured in renegotiation can be enforced and would not award a Stage 4 (construction) contract without a formal agreement in place. West Cumberland Hospital FBC Treasury Submission (V21 4) - June 2012 FINAL (2) 304

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