Item 9 for 5 Feb 13 Management of Waiting Lists Appendix 2

TABLE OF CONTENTS

1.EXECUTIVE SUMMARY

1.1Introduction

1.2Strategic Case

1.3Economic Case

1.4Commercial Case

1.5Financial Case

2.0THE STRATEGIC CASE

2.1Introduction

2.2The Strategic Context

2.3The Case for Change

2.4Benefits Realisation

3.0THE ECONOMIC CASE

3.1Introduction

3.2Critical Success Factors

3.3Developing the Options

3.4The Benefits of Appraisal

3.5The Procurement Process

3.6Economic Appraisal

3.7Summary of Economic, Risk and Financial Appraisals

3.8Sensitivity Analysis

4 THE COMMERCIAL CASE

4.1Introduction

4.2Project / Scheme Objectives

4.3Required Services

4.4Agreed Risk Transfer

4.5Agreed Charging Mechanisms

4.6Agreed Contract Length

4.7Contractual Clauses

4.8Procurement Strategy and Implementation Timescales

4.9Capital Funding

4.10Accountancy Treatment

5THE FINANCIAL CASE

5.1Introduction

5.2Costing Methodology

5.3Capital Costing & Risk Allowance

5.4Property Revenue Costs

5.5Service Revenue Costs

5.6Depreciation

5.7Lifecycle Costing

5.8Financial Profile of Short-Listed Options

5.9Preferred Option

5.10Impact on the Income and Expenditure Account

5.11Impact on the Balance Sheet

5.12Overall Affordability

5.13Sensitivity Analysis

6 THE MANAGEMENT CASE

6.1Introduction

6.1Programme and Project Management Arrangements

6.2Governance and Accountability

6.3Programme Organisation

6.4Stakeholder Involvement

6.6Project Reporting Structure

6.7Principal Project Roles and Responsibilities

6.8Standardised Documents and Controls

6.9Arrangements for Contract Management

6.10Project Plan

6.11Arrangements for Change Management

6.12Arrangements for Risk Management

6.13Technical Solution

6.14Consultations

6.15Arrangements for Benefits Realisation

6.16Performance Measurements - Key Performance Indicators

6.17Arrangements for Post Project Evaluation

LIST OF TABLES

Table 1.1Short Listed Options

Table 1.2Summary Option Appraisal

Table 1.3Key Milestones

Table 1.4Option 3 Capital Costs

Table 1.5Option 3 Revenue Costs

Table 1.6Impact on Income and Expenditure

Table 2.1Key Project Constraints

Table 3.1Critical Success Factors

Table 3.2Summary of Long Listed to Short Listed Results

Table 3.3Summary of Short Listed Options

Table 3.4Benefits Criteria

Table 3.5Weighting/Ranking of Benefits Criteria

Table 3.6Option Scoring Scale

Table 3.7Benefits Appraisal - Summary of Weighted Scores

Table 3.8Results of Sensitivity Analysis

Table 3.9Contingency Allowances

Table 3.10Capital Costs

Table 3.11Capital Expenditure Phasing

Table 3.12Additional Theatres Property Revenue Costs

Table 3.13Additional Theatres Service revenue Costs

Table 3.14Life Cycle Costs

Table 3.15Summary of Key GEM Elements

Table 3.16Summary Option Appraisal

Table 3.17Financial Sensitivities (respective increase by 10%)

Table 3.18Financial Sensitivities (respective increase by 10%) – Effect on NPC

Table 3.19Financial Sensitivities Analysis

Table 3.20Option 9b Capital Cost

Table 3.21Option 9b Revenue Cost

Table 5.1Option Summaries

Table 5.2Option 3 Capital Costs

Table 5.3Lifecycle Costs of Option 3

Table 5.4Additional Property Costs of Option 3

Table 5.5Additional Service Costs of Option 3

Table 5.6Additional Annual Depreciation of Option 3

Table 5.7Summary of Financial Appraisal

Table 5.8Sensitivity Analysis

Table 6.1NHS Grampian Advisors

Table 6.2Principal Supply Chain Members

Table 6.3Key Dates

Table 6.4Main Risks of Short Listed Options

APPENDIX A – COMMERCIAL VOLUME

A – 1Capital Cost Plans & Cash Flows

A – 2Risk Register

A – 3Property Revenue Costs

A – 4Life Cycle Costing

A – 5Generic Economic Model (All Options)

A – 6Non Financial Benefit Scores

A – 7 Clinical Risks

APPENDIX B – PROJECT TECHNICAL VOLUME

B – 1Schedule of Accommodation

B – 2Design Information

B – 3 Programme

1.EXECUTIVE SUMMARY

1.1Introduction

Background / Context

1.1.1This Standard Business Case (SBC) for NHS Grampian’s ‘Theatres Project’delivers on the changing needs of patients and the continued forecast of increasing demand on emergency and elective surgery.

1.1.2The SBC addresses the short-fall in theatre capacity at Aberdeen Royal Infirmary (ARI) and is an enabler to meet Treatment Time Guarantee (TTG) requirements for primarily, General Surgery, Gynaecology and Neurology.

Structure and content of the document

1.1.3The Standard Business Case has been prepared using the agreed standards and format from HM Treasury for Business Cases, as set out in the Scottish Investment Manual (SCIM). The approved format is the Five Case Model adopted as part of the SCIM, which comprises the following key components:

• The strategic case - this sets out the case for change, together with the supporting investment objectives for the scheme
• The economic case - this demonstrates that the organisation has selected the most economically advantageous offer, which best meets the existing and future needs of the service and optimises value for money (VFM)
• The commercial case - this sets out the content of the proposed deal
• The financial case - confirming funding arrangements, affordability and the effect on the balance sheet of the organisation
• The managementcase - detailing the plans for the successful delivery of the scheme to cost, time and quality.

1.1.4This model supports a clear, authoritative and practical approach to Standard Business Case production providing a systematic and comprehensive framework for decision making, particularly capital investment decisions, while ensuring that the preferred option satisfies the following crucial tests:

• Applicable to business needs and strategic direction
• Optimum value for money
• Attractiveness to the market place (suppliers and contractors)
• Affordability to the organisation (The Health Board)
• Achievable in terms of timescale, resources and other business parameters

1.1.5This Standard Business Case has been developed with stakeholder involvement and is supported by the NHS Grampian Board and the Scottish Government Health Directorate.

1.1.6In July 2012 NHS Grampian Board appointed Robertson Dawn Health (RDH) as their Principal Supply Chain Partner (PSCP) for ARI Reconfiguration Projects. These projects are to be taken forward under the Health Facilities Scotland Frameworks Scotland Agreement.

1.2Strategic Case

1.2.1This section sets out the strategic context to this Standard Business Case, which informs the project objectives and the planning assumptions. It explains the review of health provision in Grampian as set out in the three-year Health Plan (Grampian Heath Plan (2010 – 2013).

1.2.2Underpinning this business case is the requirement for NHS Grampian to meet the “Treatment Time Guarantee Standard” as defined in the legally binding, Patients Right Bill and maintaining the 18 week Referral to Treatment Standard.

The Strategic Context

1.2.3NHS Grampian Health Plan 2010-2013 and the subsequent 2020 Healthfit vision remain the context for safe and effective care at the point of service delivery.

1.2.4The service change towards more preventative procedures and the increasing measures to make theatres more productive, places ever changing demands upon the staff and the estate.

National Context

1.2.5 NHS Grampian is expected to provide high quality elective and emergency surgical care and meet targets for waiting times and cancer care set out in the Treatment Time Guarantee. In addition, emergency services must be provided with a commitment to meet targets for waiting times in Accident and Emergency.

1.2.6 This Standard Business Case embraces modernisation of the delivery of surgical care within the NHS Scotland strategic agenda:

Better Health, Better Care (2007)

• Provide effective, consistent and mutuality-focused healthcare;
• To be more responsive to the needs and wishes of patients and
• To remove local and national variations in service availability and quality.

Healthcare Quality Strategy for NHS Scotland (2010)

• Putting people at the heart of our NHS (Person Centre).

• Building on the values of the people working in and with NHS Scotland and their commitment to provide the best possible care and advice compassionately and reliably by making the right thing easier to do for every person, every time (Safe).
• Making measurable improvements in the aspects of quality care that patients, their families and carers and those providing healthcare services see as really important (Effective).

Achieving Sustainable Quality in Scotland’s Healthcare (2011)

• By 2020 everyone is able to live longer healthier lives at home, or in a homely setting;
• Hospital care will be provided to the highest standards of quality and safety, with the person at the centre of all decisions.
• There will be a focus on ensuring that people get back into their home or community environment as soon as appropriate.

Patients’ Rights (Scotland) Act 2011

• Protects in law that, once a patient has been diagnosed as requiring inpatient or day case treatment, and has agreed to that treatment, that patient’s treatment must start within 12 weeks of the treatment having been agreed with the Health Board.

Treatment Time Guarantee

• To assure timely access to high quality care at each point of the patient journey.

Local Context

1.2.7Since 2010 a number of national, regional and local strategies have been adopted by NHS Grampianthat have informed the planning of additional theatre capacity across NHS Grampian and have been crucial in providing the framework in which options for this project have been developed and ultimately the key to determining the preferred solutions at Aberdeen Royal infirmary (ARI).

1.2.8The Healthfit 2020paper approved by NHS Grampian Board (Oct, 2012)

describes the framework for delivering NHS Grampian’s 2020 vision for safe and effective Health Services in the future that are closer to patients home and where only specialist care is delivered from the three main sites: Aberdeen Royal Infirmary, Woodend Hospital or Dr Gray’s. The aim of the Property and Asset Management Plans are to ensure that the Board’s asset base is the right size, suitable for purpose, supports delivery of quality service and enhances service users’ experience.

The Case for Change

1.2.9The driving force for service change, redesign and capacity planning in Grampian are outlined in the following Board approved strategy documents:

• 3-year Health Plan (2010 – 2013);
• Healthfit 2012 – Outlines the 2020 vision and the Action Plan (Healthcare Framework);
• Property and Asset Management Plan (2012 – 2021).

1.2.10NHS Grampian has taken a whole systems approach to the provision of patient centred, safe and effective care. The model of care developed and owned by the acute sector aims to provide high quality patient pathways from purpose built facilities supported by robust information systems for ensuring the Board complies with Treatment Time Guarantee at each point of the patient journey.

1.2.11Following discussion with the Scottish Government Health and Social Care Directorate Access Team, NHS Grampian agreed a high level demand and capacity action planwhich sets out how NHS Grampian proposes to address the current back-log of patients waiting for treatment and ensure the required level of resource is available to meet the requirements of the Treatment Time Guarantee from 1st October 2012.

Demand and Capacity across NHS Grampian

1.2.12The demand and capacity work undertaken by Health Intelligencedemonstrate that the following specialties will potentially require allocation of additional theatre sessions at ARI.

Specialties indicating capacity shortfalls at ARI are:

Breast

ENT

General Surgery

Gynaecology

Neurosurgery

Investment in Sustainable Capacity

1.2.13The limiting factor in terms of NHS Grampians ability to meet Treatment Time Guarantee requirements has been the availability of theatre capacity. In order to address this shortfall in capacity, primarily in general surgery, orthopaedics and neurosurgery, NHS Grampian can demonstrate through their Delivery Action Plan that there is a requirement fortwo permanent theatres at ARI.

Key assumptions are:

• Demand / Capacity gap based on current assessment
• Future increases in demand will be met through further productivity and efficiency measures, rather than further infrastructure and service investment.

Benefits Realisation

1.2.14The benefits criteria were developed by members of the ARI Theatres Project Team on 25th October 2012. One patient / public representative attended this meeting. The benefit criteria are shown below:

• Capacity & Efficiency
• Supports Strategy (National, Regional, & Local) and National Policy for Waiting Times
• Timing
• Patient Experience / Safety
• Quality of Building Environment
• Flexibility and Future proofing
• Staff Recruitment

1.2.15In conjunction with the above the following project risks have also been established and assessed. These are detailed within the Risk Register and will be migrated through appropriate risk management:

• Strategic Fit
• Clinical Practice
• Safety
• Workforce
• Infrastructure
• Politics and Public

1.2.16The implementation of the project is constrained by the following, for which robust management plans are in place:

• Planning acceptability
• Affordability
• Programme
• Site Logistics and Access

1.2.17Moreover, the project has the following interdependencies that will be carefully monitored and managed throughout the lifespan of the scheme:

• Prompt approval by the NHS Grampian Board
• The approval by the Scottish Capital Investment Group
• Receipt of Local Authority (Planning Department, Aberdeen City Council) Planning Approval for the preferred location taking account of the consultation process.

1.3Economic Case

The Procurement

1.3.1In line with guidance from Health Facilities Scotland the project has been procured via Frameworks Scotland. Each of the Principal Supply Chain Partners (PSCP), were selected by Health Facilities Scotland for the Framework and were further invited by NHS Grampian to submit Expressions of Interest and attend an open day. Following this, the PSCPs were interviewed and scored. The selection process resulted in the appointment of Robertson Dawn Health (RDH) as the PSCP to work with NHS Grampian to complete Business Cases under the Health Campus programme of works under ARI Reconfiguration Projects.

1.3.2The PSCP is responsible for developing the design solution in conjunction with NHS Grampian and this will permit the submission of a not to exceed Target Price for this Standard Business Case.

Long List and Short List

1.3.3A key component of developing a Business Case is the option appraisal exercise with comparison of alternative courses of action at the heart of this. It is only by comparing the alternatives that the real merits of any particular course of action are exposed. In order to achieve this, a ‘long list’ of options was generated initially at an end-user work-shop (August 2010) and revisited at an Options Appraisal workshop on the 25th October 2012. This is recorded in Section 3.0 of this Business Case.

1.3.4 The next stage in the process was for the long-listed options to be reduced to a more manageable ‘short list’ of options for in-depth appraisal and evaluation and this list was derived at an Options Appraisal Workshop on the 25th October 2012. The short listed options are as recorded below in Table 1.1.

Table 1.1Short Listed Options

13.5The summary of the economic, risk and benefits appraisal is shown in table 1.2 below. The cost and benefits of each option have been brought together by calculating a cost per benefit point for each option.

Table 1.2: Summary Option Appraisal

1.3.6The above summary provides an overview of the impact of the process to arrive at the preferred option. This ultimately concludes with the lowest cost per benefit point, whilst arriving at the greatest mitigated clinical risk total.

1.3.7The preferred option is Option 3 and the Financial Case (Section 5) explores the affordability of this option.

1.3Commercial Case

Agreed Products and Services

1.4.1It is proposed that the facility will be built by the selected PSCP under the Frameworks Scotland Agreement, NEC 3 Option C Target Contract with Activity Schedule. An open book approach will be used with full details provided within Section 4.0 of this Standard Business Case. This methodology will provide the following benefits:

• Completion of Schemes to the standard and functionality that meets the requirements set out in the Scheme Contract;

• Value for money, not only in the initial capital cost, but also for the whole life costs through the application of the principles of value management;
• Certainty of delivery in terms of time and cost;
• Consistent delivery in terms of quality in both design and construction;
• The introduction of continuous improvement through collaborative working, the adoption of benchmarking and performance management;
• Improved management of risk; and
• Optimised delivery of sustainable development on all major NHS schemes in Scotland procured through the Frameworks Scotland Agreement.

1.4.2The PSCP will enter into an individual project specific Scheme Contract with NHS Grampian at the beginning of each stage of the scheme, and ultimately for the Construction and Commissioning element of the project.

1.4.3The products and services under contract are for a single point deliverer. This offers a procurement vehicle with an integrated supply chain for the delivery of design, manufacture, construction and commissioning of facilities to enable NHS Grampian to meet sustainable Treatment Time Guarantee solution for additional theatre capacities at ARI, as set-out within this SBC, at the earliest opportunity.

1.4.4With regard to equipment and supporting infrastructure for the two additional theatres, NHS Grampian has sought the assistance of colleagues from Health Facilities Scotland for guidance on purchase through national contracts, competitive tendering and where appropriate via EU Procurement. The programme for supply and installation will be co-ordinated by Health Facilities Scotland (on behalf of NHS Grampian) and the PSCP as appropriate.

Agreed Risk Transfer

1.4.5As the scheme has been developed the risks within the scheme have been identified, allocated to the party best placed to manage them and quantified in a number of workshops. This has resulted in the agreed Risk Register which can be found in Appendix A-2 which records the allocation and quantification of each risk.