Trust Board Febuary 2010 - Sandwell & West Birmingham Hospitals

SWBTB (2/10) 045 (a)
• Additional Midwives, 2 WTEs
• Additional support to maternity theatres at City by introducing a 24/7 “theatre runner” resulting in
5.5 additional WTEs
• To partially compensate for these additional costs an assumption has been made that projected
activity growth in births and associated activities will be undertaken at a 70% marginal cost, thus
generating a 30% contribution to affording this option. This assumption is common to all options.
In headline terms the option worsens the SLR trading position by circa £570k by the end of 2013/14
resulting in a forecast deficit of £5.213 million.
Options 1 & 2: The financial consideration of these options has been taken together as, although they
are slightly different in content, they are the same in overall financial and economic terms.
There are a number of important assumptions which underpin these options, in particular,
• Future birth activity forecasts have been amended from 2011/12 to assume a catchment loss of
22% of Obstetric related activity (circa 600 births). This is consistent with the catchment change
principles embedded within RCRH modelling. This assumes circa £1.6 million worth of income is
lost in 2011/12. No specific offsetting reductions to direct costs have been applied because,
• Growth of circa 200 births per annum (£550k) has been included for non Sandwell
commissioners for births which may be repatriated to City Hospital post full implementation of the
option to a maximum of 600 births. No additional costs have been included for these births as no
cost have been removed for the Sandwell catchment loss; however, phasing of the birth
repatriation assumes a three year trajectory as opposed to catchment loss occurring all in one
year.
• The assumption of only 70% of new growth (“non repatriation”) related income requiring new
costs is included within both options.
• These options also include a forecast reduction in capital charges (£766k) associated with
closing and revaluing the current Sandwell maternity block from 2011/12 onwards. The resultant
need for an economic impairment of circa £1.7 million has not been included within this analysis,
thus delivery of the depreciation saving will be dependant upon the Trust’s ability to afford the
technical impairment. The Trust would envisage submitting an application to the StHA “Strategic
Change Fund” for 2011/12 to gain financial assistance in dealing with the economic impairment.
• Additional costs are included to cover the “theatre runner” as indicated earlier but a saving of a
theatre team has been including reducing costs by £550k by the end of 2011/12.
The impact on overall affordability depends upon whether one includes the capital charge savings and
sets aside the impairment, or whether one assumes this will not be possible within the scope of the
business case. In either case both options deliver an improved overall SLR trading position by the end of
2013/14. The magnitude of the improvement is dependant upon the capital charge/impairment issue but
is within the range of circa £500k to £1.3 million. Consideration of how the Trust may handle the
economic impairment has not been factored into the long-term financial forecasts which are presented
assuming the impairment becomes affordable. The Overall Financial appraisal ranking table (Table 11
below) demonstrates the headline changes on financial viability over the four year period assuming the
capital charge savings are realised. The table also reflects the overall affordability impact should the
targeted capital charge saving not be achievable in this timeline. In this scenario Options 1& 2 still
improve affordability but not as significantly as might be possible through generating the capital charge
saving.
Option 3: The assumptions, outcomes and risks within Option 3 are largely consistent with Options 1&2.
Where they differ is with regard to the introduction in 2012/13 of a stand alone Birth Centre in Sandwell.
Modelling assumes a part year effect of 160 births in 2012/13 leading to 400 births in 2013/14. An I&E
summary for the stand alone Birth Centre is attached at Appendix 6.
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