1. Title of Paper: The Future of the North Yorkshire Telehealth Project from April 2013

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1 Item Number: 8.1 HARROGATE AND RURAL DISTRICT CLINICAL COMMISSIONING GROUP SHADOW GOVERNING BODY MEETING Meeting Date: Thursday 18 October 2012 Report s Sponsoring Director: Bill Redlin, Director of Standards Report Author: Kerry Wheeler, Assistant Director Telehealth Programme 1. Title of Paper: The Future of the North Yorkshire Telehealth Project from April Strategic Objectives supported by this paper: 1. To support and receive assurance from the North Yorkshire and York Clinical Commissioning Groups in commissioning high quality, safe, effective patient care, seeking to improve the quality of care wherever possible (Goal 1, 5 and 6) 2. To support and receive assurance from the NYY CCGs in delivering a clinically and financially sustainable healthcare system through delivery of the Quality, Innovation, Productivity and Prevention Programme (QIPP) and North Yorkshire Review Programme to meet the needs of the people of North Yorkshire and York (Goal 4) 3. Executive Summary NHS North Yorkshire and York (NYY) signed a 3 year contract with Tunstall Healthcare in April 2010 for the purchase of 2,000 telehealth units to be deployed to patients living with Chronic Obstructive Pulmonary Disease (COPD), Heart Failure and Diabetes. The contract value was 3.2m (capital), with ongoing revenue costs estimated as 0.9m a year. There were also 120 units transferred across to this contract, from Phase 1 deployment, based on Practice-based commissioning (PBC) business cases from York (inc Selby), Whitby and Hambleton/Richmondshire. The contract is due to end in March 2013, with a 6 month notice period required to continue or terminate the existing service. This will need to be served by the 1 October The information provided in the attached paper lists the options to commissioners and identifies the issues that need to be considered when reaching a decision on the way forward.

2 4. Risks relating to proposals in this paper Deployment of assistive technology at scale is a nationally led programme advocated by the DH under its 3 million lives campaign, giving it a high profile. Decommissioning the service will have a significant impact on patients currently receiving the service across NYY, so communications on this will have to be handled sensitively. There are financial risks associated with all options listed, including the impact of the capital depreciation of the units purchased 5. Summary of any finance / resource implications Full deployment of units (2120 across NYY) at current prices will cost 1.7m. Savings at full deployment will equate to 1.2m (this is based on non-elective activity only, so does not demonstrate full savings potential). 6. Any statutory / regulatory / legal / NHS Constitution implications None 7. Equality Impact Assessment N/A 8. Any related work with stakeholders or communications plan Ongoing as part of project delivery, through CCG discussions. 9. Recommendations / Action Required The Shadow Governing Body is asked to consider the issues and options outlined, in conjunction with the costs and savings to date for the project. A decision is then required about the preferred option across NYY, so that this can be taken forward over the next 6 months. 10. Assurance The Board will receive regular updates following the decision made, so they can be assured that the outcome is being delivered.

3 For further information please contact: Kerry Wheeler Assistant Director Telehealth Programme

4 NHS NORTH YORKSHIRE AND YORK CLUSTER The future of the North Yorkshire & York Telehealth project from April Introduction 1.1 In 2009, the first Telehealth unit was installed in NYY as part of a pilot project consisting of 120 units funded by the Strategic Health Authority (SHA) and Practice Based Commissioners (PBC). 1.2 Following a procurement exercise, NHS NYY signed a 3 year contract with Tunstall Healthcare in April 2010 for the purchase, support and maintenance of a further 2,000 telehealth units to be deployed to patients living with COPD, Heart Failure and Diabetes. The contract value was 3.2m (capital). Ongoing support and maintenance costs were forecast at around 900,000 per annum when the full 2,000 units were deployed. 1.3 The supplier business case suggested that savings across a range of services and functions could be delivered. These included reductions in emergency admissions to hospital, savings from reducing length of stay and some less well defined areas such as operational efficiencies. When the full 2,000 units were deployed, the gross savings were forecast at some 6m per annum. 1.4 There were also 120 units transferred across to this contract, from the original Phase 1 deployment, based on PBC business cases from York (inc Selby), Whitby and Hambleton/Richmondshire. 1.5 The contract is due to end in March 2013, with a notice period required to extend the contract for a further 12 months or to terminate the existing service. The PCT is currently working with the emerging CCGs to review the project to date so that a decision can be taken with regard to any extension of the project. Clearly, in the light of the implementation of the Health and Social care Act, CCG support is essential for any of the options available. 2. Current Position 2.1 In recent months, additional investment in community staff to support practices across NYY in the identification of patients suitable for Telehealth has led to a significant increase in referrals. As at 1 October 2012, there were 674 active patients managed on telehealth, with 1,089 patients having benefitted from using the technology over the last 2.5 years. At current deployment rate, the project is expecting a minimum of 1,000 active patients by March NYY are the largest single site telehealth deployment and the fastest growing 2

5 telehealth service in the UK. However even this level of deployment will still leave half of the purchased units unused, after 3 years. 2.2 The identification of patients is increasingly supported by the use of a Risk Stratification tool, known as Adjusted Clinical Groups or ACGs, developed by the Johns Hopkins University. This factor is important because it enables the identification of patients who are AT RISK of being admitted to hospital, but who may not yet have developed a pattern of repeat admission. 2.2 A number of practices are now supporting patients on telehealth with Haxby Group Practice and Priory Medical Group, as the two largest practices, managing circa 100 patients each, which are increasing on a monthly basis. 2.3 Activity by CCG (as at 1 October 2012): CCG Active Patients Total Referrals Vale of York Craven H,R&W Harrogate Scarborough South Lakes 5 5 Unknown 0 17 Total 674 1, Cost/Benefit Analysis 3.1 As stated in section 1.5 above, the contract for maintenance and support of the Telehealth units is due to expire on 31 st March The PCT, working with the CCGs, essentially has three options. The first is to allow the current contract to reach its conclusion and bring the Telehealth project to an end. The second is to consider extending the project post March The third is to conduct a tendering exercise for a 3-year maintenance contract. In considering these options, it is important that the success of the project to date in delivering the original planned savings is evaluated as it is this factor that is likely to determine the future of the project. 3.2 The Project Costs The costs of running the Telehealth project can be broken down into three distinct areas. These are :- The cost of the support and maintenance contract with Tunstall The Capital Depreciation associated with the purchase of the units 3

6 The additional costs incurred by the PCT in supporting the project These are discussed in more detail below The Tunstall Support and Maintenance Contract The attached financial cost breakdown includes a series of fixed charges e.g. Service Desk and a series of variable charges e.g. Communication Fees where the charge levied depends of the number of units deployed. For the purpose of this exercise, we have calculated the annual contract costs for 2012/13 based on the assumption that 1,000 units are deployed by the end of March Under this scenario the costs of the Tunstall contract would be:- Fixed Costs - 358,752 Variable Costs - 238,645 Total Contract - 597,397 N.B. It should be noted that the variable costs are highly dependent on the total number of units deployed and the rate of deployment. When the full 2120 units are deployed, the variable costs would rise to some 665,680 under the terms of the current contract Capital Depreciation on the Purchased Telehealth Units The Telehealth units have an expected 6 year life span and therefore, the capital costs have been depreciated over this period. The capital depreciation costs include the cost of the 120 units purchased prior to the letting of the Tunstall contract. Capital Depreciation charges - 575,057 N.B. It is not clear why units with a working life of 6 years were purchased but a support and maintenance contract of only 3 years put in place. This is discussed more fully below Other PCT Costs These costs fall into 2 categories. These are the costs of project support and the costs of the community nurses who are currently deployed to identify and support patients. These costs are:- PCT Project support costs - 130,000 Community Nursing - 150,000* Total Other Costs - 280,000 4

7 *The full cost of the community nurses deployed to support the project is 300,000. However, 50% of this cost is currently met through national grant funding Total Project Costs Based on the above analysis the total cost of running the project in 2013/14, based on current contract and other costs is:- Total Project Costs - 1,452,454 N.B. Again it should be noted that when the full 2,120 units are deployed and the project effectively reaches steady state then the project costs rise to 1,729,489, under the terms of the current contract. This increase in costs is largely as a result of assuming the community nursing input would no longer be required, offset by increased maintenance costs for the full number of units. N.B. It should be noted that this analysis does not include the costs of the technical triage service that is currently provided free of charge by Tunstall. 3.3 The Project Savings The relatively small number of units deployed has hampered any comprehensive analysis of savings. However, in order to provide an assessment of savings, the PCT, working with the Yorkshire and Humber Public Health Observatory (YHPHO) has carried out an evaluation of the savings in hospital activity. This was based on an analysis of hospital activity for patients who had been on a Telehealth unit for more than 6 months and involved an assessment of activity compared to a control period prior to the installation of the Telehealth unit. Using this data, it is possible to pro rata the savings up to an annual equivalent saving when the full deployment of the 2,120 units has been achieved. (It should be noted that this is not an ideal methodology for evaluating savings. The methodology ignores the effect of Regression to the Mean. It also does not take account of the fact that patients for Telehealth are increasingly being selected using the ACG tool. This identifies patients who are at risk of admission to hospital, but who may not have yet developed a pattern of frequent hospitalisation. Therefore, comparing the pattern of hospital activity before and after Telehealth installation may understate the impact of the technology). An initial assessment of the impact on hospital activity based on 263 patients who had a Telehealth unit for more than 6 months showed reductions in hospital activity equivalent to some 1.2m, largely as a result of a reduction in non elective admissions. However a significant reduction in outpatient costs was also noted. 5

8 A more recent analysis, based on a larger patient cohort and using the same methodology, showed savings in non elective costs of 651,000. The savings in outpatients and other areas are currently being analysed, but it is unlikely that these will increase the savings to more than 0.9m. Finally, an analysis of the same 290 patients using a revised methodology developed by the YHPHO has calculated projected savings of 1.2m in non elective admission costs, giving an estimated reduction in hospital activity costs of around 1.4m per annum. The project has failed to identify any significant reductions in A&E attendance costs or elective admission costs. In activity terms, the project has identified the following:- Non Elective admissions - 23% reduction Length of Stay - 26% reduction It has not been possible during the course of the project to identify savings associated with Service Redesign. In summary, the project has identified potential savings of up to 1.4m through reduced hospital activity when the full 2,120 units are deployed. It must therefore be recognised that if the project continues during 2013/14, when the final 1,120 units are planned to be deployed, the savings generated will be significantly less, whilst the costs will be around 1.78m. At the outset of the project, it was agreed that the Nuffield institute would carry out a comprehensive project evaluation using a control group of patients. This was planned to begin when 1,000 units were deployed, however, because of the low rate of deployment, the project evaluation has not been able to commence. The latest plan is to begin the evaluation in October 2012 when it is hoped some 700 units will have been deployed. According to current timescales, the final report from the Nuffield Institute is expected in The Whole System Demonstrator Evaluation In 2006, the Department of Health announced 3 large pilots of Telehealth, known as the Whole Systems Demonstrators (WSDs). The pilots were evaluated using a variety of methods including a randomised controlled trial (RCT) in which groups of patients either received the Telehealth intervention or acted as controls by receiving their usual care. With over 3,000 patients participating in the trial the evaluation was the largest and most complex in the world. The first strand of analysis looking at the impact of Telehealth on hospital care was examined by the Nuffield Institute and published in the BMJ. Other strands, including the cost effectiveness of Telehealth are still to be published. The recent publication of evidence from the WSD evaluation identified the following findings: 6

9 45% reduction in mortality rates 20% reduction in emergency admissions 15% reduction in A&E visits 14% reduction in elective admissions 14% reduction in bed days 8% reduction in tariff costs Whilst there are some significant differences between the evaluation of the WSDs and the PCT s results, there is broad agreement on the biggest single factor, the reduction in emergency admissions (20% for WSD Vs 23% for PCT). 5. Options for the Future of the Project In our view, there are 3 options which the PCT and CCGs need to consider. 5.1 Option 1 Do Not Renew the Contract As stated above, the contract with Tunstall for the support and maintenance of the Telehealth units expires at the end of March This option would involve confirming with Tunstall that we do not wish to extend the contract (see below) and use the final 6 months of the period to plan for and complete the removal of the existing Telehealth units from patients and return them to their normal mode of care. We would also end the contracts for the use of community nurses. Pros The evidence suggests that the project is not delivering the revenue savings originally planned. Ending the project now would prevent further losses. Cons The evidence of savings is not conclusive and is based on a limited evaluation using low numbers of patients and a questionable methodology. Ending the project would mean the full Nuffield evaluation could not be completed. Removing some 700 telehealth units from patients who enjoy this mode of treatment is likely to be difficult and controversial. The project has undertaken patient surveys over the last 2 years with 98% of patients extremely satisfied with the service they received and 59% believe it has prevented a hospital admission. The residual costs of the purchased units (estimated to be 1.8m in March 2013) would have to be written off and would impact directly on the PCT I&E accounts for 2012/13 (to be confirmed by finance colleagues) 7

10 Increased de-installation costs in the final 6 months of the year as the 700 units are removed Nationally, Telehealth is emerging as the technology of choice, featuring heavily in Innovation, Health and Wealth, 3 million lives etc. NHS NYY has been asked to consider being one of the national pathfinders for this work. It is expected that the national CQUIN scheme for 2013/14 will require commissioners to support Telehealth deployment. A high profile patch like North Yorkshire withdrawing from the use of Telehealth could prove politically difficult and damaging NHS NYY is currently working in partnership with the Technology Strategy Board (TSB) and the Nuffield Trust to independently evaluate the NYY project and develop a commissioning toolkit. Additional funding has been received to deliver this, which equates to 150,000 (50% of the total costs). This has been used across NYY to provide additional nursing capacity within community services, to support practices in the identification and management of patients. The funding will need to be reimbursed, should the decision be made to end the contract. 5.2 Option 2 - Extend the Contract for a further 12 months As stated previously, it is not clear why the original contract for support and maintenance was let for 3 years when the life of the purchased units was 6 years. However, the contract does include a clause allowing for an extension of the contract for a 12 month period. The PCT has already approached Tunstall to enquire about costs for a 12 month extension. Pros Would give all parties breathing space to consider the position and enable the CCGs to take ownership of the project Would enable an aggressive negotiation for an improved price for the maintenance and support for 2013/14. Early indications are that Tunstall would be prepared to reduce their costs significantly in 2013/14 Would not require the PCT to write off the residual value of the Telehealth units in 2012/13 Would enable the CCGs to consider further emerging evidence from the WSD pilots Cons Would simply transfer the problem to the CCGs without offering a solution. At the end of the 12 month period, the CCGs would still have the problem of the residual value of the Telehealth units, but with no possibility of awarding a further contract extension. Would not allow sufficient additional time for a full evaluation of the project locally by the Nuffield Institute 8

11 Legal advice suggests that the PCT could be open to challenge in awarding the contract extension. Although the option is included within the contract schedules, legal advice indicates that the option was not clearly stated in the original tendering process and, as a result, the extension could be challenged, particularly given that this is a high profile contract 5.3 Option 3 - Conduct a Tendering Exercise for a 3 year Maintenance Contract Under this option it is proposed that the PCT conduct a rapid tendering exercise for a 3 year contract to provide maintenance support to the existing units and to support the continued roll out of the purchased units. Pros This would enable us to synchronise the maintenance and support arrangements with the life of the units so that, in 3 years time, the units will have reached the end of their lives at the same time as the contract for support and maintenance expires enabling the future CCGs to withdraw from the technology without residual capital impact, or, to tender for a new service Would give sufficient time for a full independent evaluation of the project to be completed by the Nuffield Trust enabling the CCGs to make an informed judgement about the future of the project Would invite innovative proposals in a highly competitive area that may enable the PCT/CCGs to further improve the cost effectiveness and/or quality of service to patients Would avoid any procurement challenge. The tendering exercise will still allow CCGs to terminate the contract should they wish to do so, should the bids received not meet the full requirements of the service specification, particularly on cost effectiveness Cons Conversations with Tunstall suggest that the only company able to provide a comprehensive maintenance and support service to the Tunstall units is Tunstall themselves. The tendering exercise may therefore result in no other company apart from Tunstall being able to submit a bid. This option would require the CCGs, who are already sceptical about the benefits of Telehealth, to take ownership of the project for at least a further 3 years 6. Summary and Conclusions This analysis demonstrates that there are significant challenges in deciding the most appropriate way forward for the North Yorkshire Telehealth Project and that there is no easy option available. 9

12 In order to reach a conclusion as to the preferred option, it is proposed that this paper, along with any views and recommendations from the Board, is presented to the CCGs and their agreement sought on their preferred option for the way forward. 7. Recommendations 7.1 The CCGs are asked to: Consider the issues and options outlined above, in conjunction with the attachments on costs and savings to date for the project. Make a decision about the preferred option, so that this can be taken forward over the next 6 months. Agree the support required to take the proposed option forward. 10

NHS VALE OF YORK CLINICAL COMMISSIONING GROUP

Item 17 NHS VALE OF YORK CLINICAL COMMISSIONING GROUP Minutes of the meeting of the Audit Committee held on 19 April 2013 at St Catherine s Hospice, Scarborough Present Mr Keith Ramsay (Chair) Lay Member