Rob Elek PFI Director (SUHT representative on LIFT board) Fiona Dalton Director of Strategy

Transcription

1 SOUTHAMPTON UNIVERSITY HOSPITALS NHS TRUST Southampton City PCT LIFT Stage 1 Business Case Report to: Trust Board 25 th May 2006 Report from: TB Report from: Sponsoring Executive: Purpose of Report: Southampton City PCT Rob Elek PFI Director (SUHT representative on LIFT board) Fiona Dalton Director of Strategy To approve the Southampton City PCT LIFT Stage 1 Business Case. (Executive Summary of the business case is attached, PCT to provide hard copy for examination) Review History to date: Updates to TB from Fiona Dalton since summer Recommendation: Strategic context: Trust Strategy and related projects Need and drivers for change Key stakeholders and nature of their interest in the project Investment objectives, scope and desired service outcomes Constraints For approval LIFT primary PCT delivery vehicle for rationalisation of services and estate specifically RSH / Moorgreen / Western redevelopments White paper, local and regional plans, PCT Strategic Service Delivery Plan SW Hampshire PCTs, Hampshire Partnerships Trust, SHA LIFT funded joint venture Transfer of Acute Mental Health Unit site to PCT ASAP. Operation of site following transfer to PCT SUHT RSH exit strategy Transfer of RSH site to PCT by October 2007 Fit with existing technological environment, e.g. IT strategy and existing arrangements if solutions are likely to include the use of technology PPI: Indicate patient and public involvement to date Plans for future involvement PCT to report PCT to report PCT to report Financial Information: Costs, both capital and It is the intention of SCPCT that no funding is withdrawn from the 1

2 revenue; SUHT SLA as a result of the LIFT sample schemes. The following paragraph is extracted from the business case: "Some of the services planned for the West Southampton Primary Care Delivery Centre are currently provided in the acute sector and this activity will be removed from the Service Level Agreement (SLA) with SUHT. Our current assumption, however, is that funding in the SLA will not be reduced - SCPCT have assumed the services in the WPCDC will be funded through new investment from growth monies and the freed up funds in the SLA will be reinvested for other services in the acute sector. This allocation of growth monies rather than the removal of funding from the SLA is for prudence and due to the unknown impact of practice based commissioning. The commissioning decision on the exact form of the reinvestment will be made closer to the time" The affect on the capital programme; None enabling works carried out by SUHT on behalf of SCPCT funded from LIFT project. Agreement/approval from Commissioners where appropriate 2

3 South West Hampshire LIFT Stage 1 Business Case Executive Summary Version 2.0, May 2006 I.1. I.1.1. I.1.2. I.1.3. I.1.4. Introduction and Background The recent Government White Paper 'Our Health, Our Care, Our Say: a New Direction for Community Services', published in February 2006, has reinforced the need to strengthen services within the primary and community care sectors and shift the balance of care away from acute hospitals. Shifting the Balance of Power is the programme of change brought about to empower frontline staff and patients in the NHS. It is part of the implementation of the NHS Plan. It introduced both opportunities and challenges for PCTs which are required to find innovative ways of delivering services to patients and to draw together staff from disparate employers into a united team. One way to do this is via LIFT. The Local Improvement Finance Trust (LIFT) project is lead by a Joint Venture (JV) Partnerships for Health (PfH) between the Department of Health (DH) and Partnerships UK plc (previously the Treasury Taskforce and itself a PPP 51% owned by the private sector and 49% by the Treasury and the Scottish Executive). NHS LIFT is a vehicle for improving and developing frontline primary and community care facilities. It allows PCTs and other stakeholders to invest in new premises in new locations, not merely reproduce existing types of service. It provides patients with modern integrated health services in high quality, fit for purpose premises. LIFT involves the local health economy (LHE) in developing a Strategic Service Development Plan (SSDP), incorporating its local primary and community service needs and relationships with, for example, intermediate care and local authority services. A private sector partner (PSP) will be identified through a competitive procurement and then a LIFT Company (LIFTCo) established between: The local health and social care communities Partnerships for Health The chosen private sector partner I.1.5. I.1.6. The LIFTCo will enter into a strategic partnering agreement to deliver investment in local care facilities and services for the next 20 to 25 years. This business case describes the scope, service benefits, economic and commercial cases for the first two developments to be delivered by the SWH LIFTCo (known as sample schemes ): Sample Scheme A West Southampton Primary Care Delivery Centre (WPCDC) Development of an integrated health centre on the Western Community Hospital site in Southampton, to provide approximately 4,000m 2 of purpose built accommodation for primary care and community services. South West Hampshire LIFT Page 1 of 11

4 This scheme is led by Southampton City PCT (SCPCT) and has been selected as a priority in line with the PCT s strategic vision to strengthen a locality approach to primary care provision in order to embrace economies of scale for appropriate services and develop integrated health and social care services closer to people s homes in line with Our Health, Our Care, Our Say. This will be the first in a series of PCDCs planned for development in each of the city s five localities. Sample Scheme B - Adult Mental Health Inpatient Unit (AMHU) Re-provision Major development of an acute and psychiatric intensive care unit on the Royal South Hants Hospital (RSH) site in Southampton. The facility will replace an outdated building known as the Department of Psychiatry (DoP) on the same site, where facilities are poor and not capable of allowing an appropriate therapeutic environment to be created. The new unit will provide a safe and secure therapeutic environment, designed to enhance high quality care. The Home Treatment service will also be co-located with the inpatient unit to provide support in the community and with the aim of keeping people out of hospital. The inpatient unit will provide 50 inpatient beds, a 10-bed Psychiatric Intensive Care Unit, Therapy services and facilities to meet diversity of needs e.g. multi-faith room. This scheme is led by Hampshire Partnership NHS Trust (HPT) and has long been a priority scheme for the LHE since it will deliver significant health benefits, will meet all current national guidance and will be a catalyst for future development on the RSH site. I.2. I.2.1. I.2.2. I.2.3. I.2.4. Summary of LDP and SSDP The SWH SSDP (version 4.2) was approved by the Hampshire and Isle of Wight Strategic Health Authority on 08 November It had previously been approved by relevant authorities within all partner organisations. The SSDP provides a rationale for the SWH LIFT and describes the schemes to be delivered by the LIFTCo, which, after the sample schemes include the refurbishment/replacement of health centres, clinics and GP practices across Southampton, PCDCs in the east, central and south Southampton localities, major developments at the Moorgreen and RSH Hospital sites, refurbishment of the Graham Unit at Lymington Infirmary and replacement and/or major refurbishment of GP premises across the SWH PCT Alliance area. The content of future tranches of schemes and of the SSDP will evolve as strategic work processes such as the Greater Southampton Health Plan develop and are implemented. The next version of the SWH SSDP will be published before the end of The SSDP echoes the central themes within 'Our Health, Our Care, Our Say. This Government White Paper focuses on the provision of more choice and say for patients over the care they receive in the community and much closer working between health and social care. This will include improved access to GPs by increasing the choice of practices for everyone and extending opening hours; more support for people with long term conditions; local partnerships between LAs and PCTs to produce joint teams and common assessments and a new generation of community hospitals and health centres that provide health and care services in the heart of the community. The Local Delivery Plan (LDP) is a financial and service plan, produced by organisations within each LHE to describe the way in which national targets will be South West Hampshire LIFT Page 2 of 11

5 met. Allocations are provided to PCTs to enable them to plan services for the local population over the next 3 years. The certainty in the allocations allows long term strategies to be developed which had not previously been possible. The sample schemes are highlighted as key priorities within the lead and commissioning partners current LDPs. Future LDP iterations will include focus on delivery of the key messages within the recent White Paper through the improvement and integration of health and social care services in local communities in new and refurbished LIFT buildings. I.3. I.3.1. Objectives of the LIFT The objectives of SWH LIFT are to: Address the tensions and problems across south west Hampshire, which have become drivers for change including: The changing profile of the population and society s increasing expectations of health service provision Increased demand for local health services resulting from significant housing growth planned in the area Importance of securing an appropriately skilled workforce Need to improve adult mental health facilities Opportunities presented by improved information management and technology Crucial significance of financial stability Need to develop patient choice Work to tackle health inequalities Value of working in partnership with other organisations concerned with health and how to achieve vital changes in working cultures Meet national and local targets and change strategies including those within: 'Our Health, Our Care, Our Say: a New Direction for Community Services' - the recent Government White Paper on improving community health and care services Hampshire County Structure Plan South Hampshire Sub Regional Plan Southampton City Local Plan The Hampshire and Isle of Wight (HIOW) SHA s Strategy and Priorities Greater Southampton Health Plan Local Neighbourhood Renewal Strategy ( ) SCPCT s Locality Planning Strategy (October 2005) Southampton University Hospital NHS Trust s (SUHT s) Strategy Mid and SWH Local Health Communities Integrated Services Improvement Plan (ISIP) Moving Ahead - Improving Mental Health Services for people of working age during the next 12 months (HPT consultation feedback and recommendations, February 2006) Mental Health National Service Framework (NSF) South West Hampshire LIFT Page 3 of 11

6 I.4. Summary of proposed initial schemes Table A Summary of Sample Scheme A Name of scheme Services/facilities to be provided Site & Locality Sample scheme A: West Southampton Primary Care Delivery Centre Western Community Hospital, West Southampton Walk-in centre Out of hours services GP and PwSI services Community services Ambulance base Musculo-skeletal services Chronic disease management Direct access basic x-ray and ultrasound diagnostics Pad for mobile diagnostics Pharmacy Table B Summary of Sample Scheme B Name of scheme Services/facilities to be provided Site & Locality 50 acute mental health beds (two wards of 15 beds and two areas of 10 beds) One 10-bed psychiatric Sample Scheme intensive care unit B: Adult Mental A place of safety Health In-patient An ECT suite Unit Central therapy areas Internal and external recreation Royal South Hants areas Hospital, Central Individual ward gardens Southampton Improved staff facilities Modern catering arrangements Guest accommodation Home treatment service Estimated capital value 15m Estimated capital value 27m Estimated Lease Charge p.a. 1 Net LPA: 1.1m ( 291 per m2) Estimated Lease Charge p.a. Net Unitary Charge: 1.97m ( 321per m2) I.5. I.5.1. I.5.2. I.5.3. Consequences of other services within the local health economy The service developments for the WPCDC focus on a service shift out of the acute sector into a primary care setting, in line with the Government White Paper Our Health, Our Care, Our Say. Some of the services planned for the WPCDC are currently provided in the acute sector and this activity will be removed from the Service Level Agreement (SLA) with SUHT. Our current assumption, however, is that funding in the SLA will not be reduced - SCPCT have assumed the services in the WPCDC will be funded through new investment from growth monies and the freed up funds in the SLA will be reinvested for other services in the acute sector. This allocation of growth monies rather than the removal of funding from the SLA is for prudence and due to the unknown impact of practice based commissioning. The commissioning decision on the exact form of the reinvestment will be made closer to the time. In conjunction with the re-provision of the AMHU, strengthening assertive outreach teams and increasing the availability of community-based perinatal mental health 1 The estimated lease charge for both schemes excludes pass through and other operating costs such as capital charges due on enabling and equipping expenditure. South West Hampshire LIFT Page 4 of 11

7 staff, along with establishing early intervention in psychosis services will improve the treatment and support that service users receive. This will not only benefit the service user but also primary care as it will provide appropriate treatment out of the hospital environment and closer to the patient s home. Crisis resolution and home treatment services will lead to a reduction in the number of admissions to acute psychiatric hospitals and also reduce length of stay for those admitted due to provision of intensive levels of support once people are discharged. The interrelation of these issues has been addressed in the Moving Ahead modernisation programme. I.6. I.6.1. I.7. I.7.1. Contract Structure The latest versions of the LIFT Strategic Partnering Agreement (SPA) and Shareholders Agreement will be used. The latest version of the standard Lease Plus Agreement (LPA) will be used for the WPCDC. The stakeholder Trusts and SHA have agreed, in consultation with our advisers, PfH and the Department of Health s (DH s) Private Finance Unit (PFU) that the most appropriate form of contract for the AMHU scheme, where land will be retained in the ownership of the NHS, is the standard form PFI contract. The latest version will be used for the AMHU scheme. Summary Financial Case The costs for both schemes can be broken down as follows: Non-recurring capital costs: LIFTCo fees, land, enabling and construction costs 2 Enabling works Equipment Non-recurring revenue costs Project fees, including: o Project management o Legal advisors o Financial advisors o Technical advisors o Surveys o Financing costs o Commissioning o Technical services o Project fees not attributable to LIFTCo. Stamp Duty liability land tax (SDLT) will be payable on the GP sub lease Decant costs Annual recurring revenue costs: Premises costs ο Net annual rental cost payable to LIFTCo. This is payable over 25 years for the WPCDC and over 30 years for the AMHU. This charge is inclusive of fees, land, construction, financing, hard FM and lifecycle costs ο Pass through costs (rates, utilities and insurance) paid by LIFTCo for the building and passed onto leaseholders 2 VAT, which is recoverable by the private sector, is excluded South West Hampshire LIFT Page 5 of 11

8 ο Capital charges or equivalent Service development costs I.7.2. I.7.3. The costs and revenue sources for each scheme are summarised below. Sample Scheme A West Primary Care Delivery Centre (WPCDC) This scheme will incur the following capital costs. The sources of funding for each are shown in the table. Table C Capital Costs and Funding - WPCDC Expenditure Source of Funding LIFTCo Capex 11,396 LIFTCo Land 2,120 LIFTCo Enabling works (re-provision of the Joint Equipment Store (JES)) 250 Equipment 738 Total 14,948 Enabling funds allocated to the project by the DH. The total 2.515m enabling funds awarded has been split between the sample schemes Receipt from sale of JES land to LIFTCo. Using this capital will minimise the recurring revenue costs of the scheme (as borrowing is reduced) I.7.4. The non-recurring revenue costs associated with the scheme and the funding source for each are shown in the table below. Table D Non-recurring Revenue Costs and Funding WPCDC Expenditure 000 Source of Funding Fees 444 Set up budget (funded from stakeholder and SHA contributions and NHS Bank Support, available for schemes were the combined capital value is more than 25m, as shown in Table E below) Stamp Duty liability land tax (SDLT) will be payable on the Stamp Duty Land Tax GP sub lease. In line with the GMS Premises guidance 52 Liability GP lease 2004 this will be reimbursed through GMS budgets to the GP practice Contingency 54 Set up budget, as above Total 550 I.7.5. The non-recurring revenue sources and their application are shown in more detail below. The split in the table is indicative until a cash flow matching income to expenditure is defined as the project progresses. Table E Non-recurring Revenue Sources - WPCDC Non recurring costs SHA Grant LHE Contributions NHS Bank Support Total Source ,600 Application WPCDC Scheme A AMHU Scheme B Total ,600 3 A breakdown of these costs is provided in the OB forms in the appendices of this document. South West Hampshire LIFT Page 6 of 11

9 I.7.6. The recurring revenue costs for the project are shown in Table F below. Table F Recurring Revenue Costs - WPCDC Expenditure 000 Lease Plus Charge net of VAT, where recoverable 1,162 Pass Through Costs 140 Capital Charges 120 Service Development Costs 664 Total 2,087 I.7.7. The funding sources for the annual recurring revenue costs are shown below. Table G Recurring Revenue Funding Sources - WPCDC Expenditure GP SCPCT HAST 3rd Party Total P 000 i Ph Net Lease Plus Charge Rates, Utilities & Insurance Capital Charges or equivalent Total Recurrent Premises Costs Service Development Total Recurrent Costs 343 1, ,087 Existing costs savings (77) (138) (5) 0 (220) Cost to be met outside NHS Net new funding requirement I.7.8. The estimated new funding requirement for the NHS stakeholders is shown below, profiled over the first two years of the project. Table H Funding Profile - WPCDC Source of funding SCPCT SCPCT (GMS) HAST Total Net New funding required /10 Part year /11 Full year I.7.9. The current LDP allocation ends in 2007/08 and we await confirmation from the DH as to the growth monies that will be available in the future. This is likely to be less than the 9% currently being received; however cost savings would be expected through investment in this scheme. These are difficult to quantify at present until HRGs have been refined for Emergency Medicine and Chronic Disease Management. The investment funds are available for the scheme based on our current estimates of likely growth monies available in the future, as shown in an extract from the main commissioner s 5 Year Plan below. Table I Extract from SCPCT 5 Year Financial Plan (Re-current Funding) 2006/ / / / / Known Growth 9.2% and 9.5% respectively 24,764 28,032 Estimated Growth 5.5% 17,779 18,757 19,783 Growth 24,764 28,032 17,779 18,757 19,783 South West Hampshire LIFT Page 7 of 11

10 2006/ / / / / Pressures 57% and 55% of growth respectively -14,330-15,641 Pressures assume 55% of growth -9,778-10,316-10,881 1% Contribution of strategic reserve on baseline -2,952-3, % Contribution of strategic reserve on baseline -1,616-1,705-1,798 Investments 3% of baseline -8,857-9,697 PBR Shortfall -5,120-5,560 Brought forward deficit -1,000 Recovery plan 7,495 6, Monies left for reinvestment 2% of baseline 0 0 6,465 6,820 7,194 West Lease Payment WEST Service development AMHU Lease Payment Net Service investment / saving AMHU Monies remaining for investment 0 0 6,465 4,627 5,882 Distance From Target 7,115 6,885??? I I The final costs for the WPCDC scheme will be assessed by the District Valuer to prove that the scheme is value for money. Sample Scheme B Adult Mental Health In-patient Unit (AMHU) The AMHU scheme will incur the following capital costs. The sources of funding for each are shown the tables below. Table J Capital Costs and Funding - AMHU Expenditure Funding Source LIFT Capex, including some fixed 25,000 LIFTCo catering equipment Enabling works on the RSH site 1,076 AMHU scheme s proportion of enabling funds allocated to the project by the DH Equipment 719 Enabling funds grant, block capital and part of land receipt from sale of JES Baytree re-provision conversion 400 HPT block capital Total 27,195 Table K Capital Funding Breakdown - AMHU Expenditure Enabling funds Grant Trust Block Capital Land Receipt SCPCT LIFTCo Total Capex costs 25,000 25,000 Enabling works ,076 Equipment A breakdown of these costs is provided in the OB forms in the appendices of this document. South West Hampshire LIFT Page 8 of 11

11 Expenditure Enabling funds Grant Trust Block Capital Land Receipt SCPCT LIFTCo Total Baytree replacement Total 1, ,000 27,195 I The non-recurring revenue costs associated with the scheme and the funding source for each are shown in the table below. Table L Non-recurring Revenue Costs and Funding - AMHU 000 Source of Funding Fees 845 Set up budget (funded from stakeholder and SHA contributions and NHS Contingency 205 Bank Support, available for schemes were the combined capital value is more than 25m, as shown in Table E above) Total 1050 I The estimated recurrent revenue costs for the AMHU scheme are summarised below. Land for the AMHU scheme would be retained in NHS ownership under a standard form PFI contract and therefore land costs have not been included; but capital charges will be payable on the retained land. Table M Recurring Revenue Costs - AMHU Expenditure 000 p.a. Unitary Charge net VAT 1,970 Pass Through Costs 180 Capital Charges for equipment, land use and enabling works 205 Baytree re-provision Costs 130 Total 2,486 I The funding sources for the annual recurring revenue costs are shown below. Table N Recurring Revenue Funding Sources AMHU SCPCT ETVS PCT Total '000 '000 '000 Total Recurrent Costs 2, ,485 Existing costs savings (765) Net new funding requirement ,720 I I Note that the apportionment of costs for the AMHU scheme is based on SCPCT commissioning 86% of the beds in the unit, with the remaining (14%) being commissioned by ETVS PCT. The estimated new funding requirement for the NHS stakeholders is shown below, profiled over the first two years of the project. Table O Funding Profile AMHU Source of funding SCPCT ETVS Total Net New funding required / / South West Hampshire LIFT Page 9 of 11

12 I I I I.8. I.8.1. I.8.2. Funding for the scheme will be allocated within the commissioning PCT s LDPs. We await confirmation of the likely growth monies available after 2007/08; however our current assumptions show that funding will be available, as shown in the main commissioner s 5 Year Plan (Table I) above. A public sector comparator has been produced for this scheme (see Appendix L) in order that this LIFT procurement can be compared against a traditional procurement method. When you compare the LIFT LPA against the cost of a traditional build, LIFT appears more expensive on an annual equivalent basis. Once the risk factor is included this gap is removed with LIFT showing better value for money. The sensitivity analysis shows that changes could switch the value for money choice of procurement. However as no public sector funding is available it shows that LIFT does offer value for money and the choice of LIFT as a procurement method does not adversely affect the value for money calculation. Timetable The milestone table below reflects the PfH standard procurement timescale from issue of ITN to selection of preferred bidder. The standard programme allows 6 months from the appointment of preferred partner to financial close on the sample schemes and the establishment of LIFTCo. It has been agreed to extend this to 9 months due to the complex nature of the AMHU and since the PFI contract has not previously been used within LIFT. We will also ask the bidders to cost a further 3 month contingency in their fixed fee bids to give the public sector some comfort on costs and have allowed for this contingency in our costings. It is intended that all commercial issues are resolved prior to the appointment of the preferred partner. A key part of the ITN evaluation will be assessing the bidders plans, resources and ability to manage the financial close process to, or in advance of, programme. Section Error! Reference source not found. expands further on the tasks/issues to be resolved in order to manage the financial close process to, or in advance of, programme. Table P SWH LIFT Milestone Table Milestones Completion Date Stage 1 business case V2.0 approved by SHA Capital Group 18/05/06 V2.0 submitted to SHA Board and DH 19/05/06 V2.0 approved by Public Sector Stakeholder Boards 25/05/06 V2.0 approved by SHA Board 15/06/06 V2.0 approved by DH 04/07/06 Stage 2 business case (pre-financial close) Public Sector Stakeholders Board Approval Jun 07 SHA Approval Jul 07 DH Approval Aug 07 Private Sector Partner Approval Aug 07 Partnerships for Health Investment Committee Approval Aug/Sep 07 Procurement Shortlist approved and notified 05/04/06 Draft ITN submitted to DH 06/06/06 Project Board approval of ITN 23/06/06 DH approval of ITN 04/07/06 South West Hampshire LIFT Page 10 of 11

13 Milestones Completion Date Issue ITN 11/07/06 Deadline for bids 07/11/06 Appoint preferred bidder 17/01/07 Negotiations with preferred bidder (9 months) Jan to Oct 07 Financial close 24/10/07 Construction and commissioning Construction WPCDC 12/05/09 Commissioning complete and WPCDC operational 14/07/09 Construction AMHU 22/12/09 5 Commissioning complete and AMHU operational 24/03/10 Note: we have costed a 3 month contingency to give the LHE some comfort in the fixed fee schedule agreed with our preferred partner. If this contingency was required, latest dates would be as follows: Financial close 25/01/08 Construction WPCDC 18/08/09 Commissioning complete and WPCDC operational 20/10/09 Construction AMHU 07/04/10 Commissioning complete and AMHU operational 30/06/10 I.9. I.9.1. I.9.2. I.9.3. I.9.4. Conclusion Both sample schemes are central to the delivery of national and local strategies. Our Health, Our Care, Our Say has added further weight to the central aims and objectives of the WPCDC to provide general, specialist and long term conditions care closer to people s homes in a suitable environment outside of the acute sector. The scheme is deemed to be affordable by SCPCT and its delivery will enable the establishment of LIFTCo in order to further improve primary and community care services across this area for the next 20 to 25 years. The AMHU scheme has long been a priority for all stakeholders since it will deliver significant health benefits and is a catalyst for future development/disposal of the RSH site. In 2004, the Commission for Health Improvement stated: As a matter of urgency, the Trust needs to continue to progress plans for the re-provision of services in the Department of Psychiatry. Concerns have been raised that there should be no further delays to the reprovision in the Annual Report of the Mental Health Act Commission published in October Until a new AMHU is provided, patients continue to be cared for in poor quality facilities which fall short of modern standards and services standards as required by the NHS Plan and Mental Health NSF are not being achieved. The introduction of LIFT into the SWH area has provided the LHE with an opportunity to ensure that a new AMHU is delivered as soon as possible as part of a wider strategy to provide significant additional investment in healthcare services across south west Hampshire. 5 As a priority scheme, it is the LHE s intention that the AMHU scheme is delivered as soon as possible and ideally well before We would expect our preferred partner to improve on the construction duration shown in this table in order to achieve the earliest possible completion date. South West Hampshire LIFT Page 11 of 11