Aneurin Bevan University Health Board Capital Programme Update 1 Introduction This paper updates the Board on the Capital Programme for 2014/15 and priorities for future years. The Board is requested to: Note the position regarding the 2014/15 capital programme and the increased capital allocation funding from Welsh Government; Note that the discretionary capital availability in 2015/16 exceeds capital demand pressures despite the Welsh Government uplift and that a process that has been put in place to risk assess all Divisional/Directorate and corporate requirements and; Approve the prioritised capital expenditure for 2104/15 (annex 1). Financial Assessment and link to Financial Recovery Plan Risk Assessment Annual Quality Framework Standards for Health Services Wales Equality and Child Impact Assessments This report considers the Capital Programme. This is made up of the Discretionary Capital Programme and all-wales capital schemes. The total value is expressed as the Capital Resource Limit (CRL). All schemes are subject to individual risk assessments as a standard requirement of the Health Board s Capital Procedures. There is significant risk associated with unmet capital need within ABUHB A number of current schemes contribute to the achievement of the AQF and next steps implementation of Clinical Futures. Information on the capital programme, the estate and individual projects is supplied when required for SHS review purposes. Individual project level requirement. 2. Capital Programme Development July to October 2014 In the paper submitted to the Board in July the significant imbalance between capital funding and demand was described in detail. Not only was there a significant requirement for capital to sustain service delivery and development but it was also clear that the Health Board could not meet all its other capital demands including: Fire Safety Estate Risk and Backlog - 1 -
Fully depreciated theatre, diagnostic and general equipment replacement including ultrasound and major scanners and non-clinical requirements ICT infrastructure Other Corporate development priorities such as Digital Health Records Ward Upgrades and wider Environment issues In summary it was estimated that the organisation s demand for Capital is estimated to be in excess of 74m over the period 2014/15 to 2018/2019 with Discretionary Capital funding anticipated to be circa 5.7m per annum rising to 7.2m as set out in section 3 of this paper. It was also assumed that in most areas there would also be further unforeseen capital requirements in the period covered by this programme and this is not currently reflected in the table. As noted in the July Board meeting, a Divisional Capital Prioritisation exercise would be undertaken which would cover risk assessment, impact and mitigation. The outcome from this exercise was to ensure that we identified the core risks associated with our unmet capital need and to provide reassurance to the Board that we have the correct measures in place to identify and where possible mitigate against that risk. This exercise has now been carried out. Each Division and corporate function was asked to:- 1. Undertake a thorough review of all outstanding capital requirements. 2. Remove any capital bids which are no longer required. 3. Risk assess remaining bids based on probability and likely impact. 4. Provide a brief narrative to justify/explain the risk scores given. 5. Describe measures that will be put in place to mitigate the risk should capital funding not be available. The outcome of this process was a detailed schedule of capital requirements with a risk scores ranging from 0 to 25. The initial focus was on those items scored 25 and 20, i.e. the highest risk that needed to be delivered with certainty in 2014/15 financial year (or would impact early in 2015/16). This information was then assessed against capital availability and the consequent position i.e. risk assessed demand versus capital allocation, which also included further dialogue with Divisions, is set out in the following Table: - 2 -
2014/15 Annual Plan Spend to Date Forecast Outturn 000 000 000 Source Discretionary Capital:- Total Discretionary Funding in CRL 5,676 5,676 Add Forecast NBV of Disposed Properties 50 50 Total Available Discretionary Funding 5,726 5,726 All Wales Capital Programme Funding - confirmed 10,070 10,070 All Wales Capital Programme Funding - expected 1,800 1,800 Total expected Capital Funding / Capital Resource Limit (CRL) 17,596 17,596 Applications: Discretionary Capital:- Statutory maintenance, radiology & fire programmes 611 173 611 Essential Requirements b/f from 2013/14 932 917 1,000 HB Wide Defbrillator replacement 375 0 375 Sustainability NICU (B6) 707 54 224 Sustainability Maternity etc (B5) 50 4 50 Reconfiguration of A&E RGH 300 5 50 Women's Health Unit, B7 650 0 0 Estate Rationalisation, LGH Decant Ph3 300 266 300 Essential Estate Works 365 0 365 Ward Refurb Year 1 4/1 330 0 330 Critical equipment and IT replacements 1,368 39 1,367 Contingency 342 0 342 Total Discretionary Capital 6,330 1,458 5,014 All Wales Capital Programme:- SCCC 9,466 3,332 9,466 HT Funding - Mental Health assisitive Technologies 320 56 320 Investment to prepare for NATO 284 194 284 High Value Equipment Replacement 1,800 0 1,800 Total AWCP Capital 11,870 3,582 11,870 Total Programme Allocation and Expenditure 18,200 5,040 16,884 Underspend / (overspend) against CRL 712 3. Current Position (based on our latest Nov 2014 data) Following the Capital Review Meeting held on 6 th November between the Health Board and Welsh Government, we were informed that additional discretionary capital would be made available to us on a recurrent and non-recurrent basis as follows: The annual discretionary allocation will be uplifted recurrently from 2014-15 by 1.53m and returns us to our original 2010 capital allocation. In addition, a further one-off sum of 3.46m will be allocated for 2014-2015 financial year. The Welsh Government were very encouraged by the risk assessment undertaken by this organisation and would be recommending a similar approach across Wales. As part of this allocation, the Health Board has been directed to use some of this capital to address the High Value diagnostic equipment and Phase 1 of the replacement Cardiac Cath Lab equipment at RGH which was already in our priority list for the organisation. This requirement coupled with the inclusion of capital requirements with a risk score of 16 and above in 2014/2015 and higher risk items in 2015-2016 has resulted in a significantly improved position, i.e. risk assessed demand versus capital allocation, as noted in the table below: - 3 -
- 4 - Aneurin Bevan University Health Board 2014/ 15 000 Currently Available Discretionary Funding 712 Additional monies available from Paediatric sustainability decisions 200 Reduce contingency balance 100 Sub Total Available Discretionary Funding 1,012 WG Recurrent Discretionary uplift 1,533 Additional Non Recurrent WG funding 3,467 Additional WG Funding 5,000 Total Unallocated Funding 6,012 Proposals for Available Funding Priority Schemes Replacement of individual components within Cardiac Cath Lab 842 Replacement of Radiology Ultrasounds 640 Replacement of 2 Radiology General Rooms 700 Sub Total Priority Schemes 2,182 Risk score 25 & 20 bids (Detailed in attachment 1) 2,300 Risk score 16 Bids (Detailed in attachment 1) 1,561 (Shortfall) / Surplus After Funding Proposed Bids -31 Balance of Contingency 242 Total Balance of Available Funding 211 It should be noted that as part of this most recent funding award, Welsh Government will require an agreed submission of a schedule of proposed expenditure which has been approved by the Board prior to formal approval of this funding. The majority of the proposals contained within Annex 1 were submitted to the Executive Team on 3 rd November following internal scrutiny by our Capital Group. These have now been approved subject to the release of additional funding by Welsh Government and the formal submission and authorisation of specific approval documentation. Whilst this additional funding from Welsh Government is welcome and allows us to address the high risk areas this year, there continues to remain significant unmet capital requirements across the organisation which will continue to be risk assessed and mitigated wherever possible. 4. Capital Outlook: 2015/16 onwards This Directorate, Divisional and Corporate level risk based approach to capital requirements has now been embedded in the 3 year planning process and will be used to inform future year s capital requirements. The table below presents our initial assessment of priorities for 2015/16 based on up to date information on capital priorities. This now includes the option of not proceeding with the single site solution for Obstetric, Neonatal and Paediatric services in the short
- 5 - Aneurin Bevan University Health Board term, recognising that some priority investment is still required for these facilities in the interim. A revised service sustainability plan for these services is being developed which will not rely on significant capital expenditure in the short and medium terms and will be presented at a future meeting of the Planning and Strategic Change Committee. We have also included RGH endoscopy decontamination, Cardiac Cath Lab completion and MRI replacement at RGH as these are critical priority schemes as it is still unclear which (if any) of these areas will be funded directly by Welsh Government. 2015/16 000 Baseline Funding 5,676 Potential WG Uplift 1,533 Forecast property disposal 75 Potential available funding 7,284 Capital Funding Requirements Minimum funding for statutory requirements 475 Priority Schemes Women's Health Unit 650 RGH Neonatal Unit Refurbishment 1,000 CAU & Paediatric Outpatients 500 A&E Scheme 2,700 RGH Endoscopy Decontamination 1,675 Cath Lab Completion 800 Replacement MRI RGH 1,200 Sub Total Priority Schemes 8,525 Total Requirements for Statutory and Priority 9,000 (Shortfall) / Surplus funding Available -1,716 This table does not include other outstanding areas of risk such as equipment, backlog, ICT etc. and it is clear that not all schemes can be funded or completed within the 2015/16 financial year. Some initiatives may straddle financial years and the Welsh Government has recently advised that additional national ringfenced capital will be potentially be secured for national programmes in areas such as High Value diagnostic equipment. Again, this is very much welcomed and will help to mitigate against some of our organisational risk. Further work will be undertaken over the coming weeks to provide a more robust, affordable and achievable programme for these schemes over the 2 year period 2015/16 and 2016/17 linked to the 3 year planning process. 6. Action Required by the Board The Board is requested to: Note the position regarding the 2014/15 to 2015/16 capital programme. Note the additional discretionary capital allocation from Welsh Government and approve the prioritised capital expenditure for 2104/15 (annex 1) as requested.
Sponsored by: Prepared by: Richard Bowen Director of Planning Andrew Walker Chris Hopper Rosie Cavill Date: 10 th November 2014-6 -