Trust Board Febuary 2010 - Sandwell & West Birmingham Hospitals

SWBTB (2/10) 045 (a)
11.2 Activity and Financial Risks
Each option’s financial appraisal is highly sensitive to the assumptions contained within it. The following
are the most sensitive which would have the greatest impact upon the financial viability of any given
option.
Catchment Loss: Options 1-3 assume 22% catchment loss of Sandwell births if services move to the
City Hospital site. This is consistent with RCRH principles but any significant margin of error may lead to
either operational capacity problems or further reductions in income which may affect viability.
Target Activity Repatriation: Significant work will be required to target circa 600 births largely from
HoBtPCT commissioner and change patterns of referral and preference to grow the forecast City birth
volumes. The impact of limited success in this area will worsen financial viability.
Stand Alone Birth Centre Activity: The stand alone Birth Centre in Sandwell, in Option 3 has a target
of attracting back 400 births from the assumed catchment loss. Whilst Option 3 was the preferred option
from public consultation there was also evidence that the public want more information to understand
this option fully and it is a service not currently available locally. The impact of attracting less than 400
births may raise issues about financial, clinical and operational viability of the stand alone Birth Centre.
General Trading Position: Historic SLR analysis has formed the baseline quantum of cost for maternity
services. There is an implicit assumption that the SLR exercise has generated a robust understanding of
the full maternity cost quantum. It is assumed future iterations of SLR will apply refinements to the
understanding of the cost base but will not worsen the trading position.
Costs: Released capital charge savings may accrue from decommissioning the Sandwell Maternity
centre. However, the Trust would face a one off impairment cost which it may not be able to consider
affording in 2010/11 or 2011/12. External financial assistance may be required to finance this step.
Overall costs are assumed to reduce in relation to income as each future birth is forecast to generate a
30% contribution towards option affordability. If these births are not delivered then again financial
viability is threatened.
Table 13: Activity & Financial Risks
Risk Do Minimum Option 1 Option 2 Option 3
Catchment Loss –
X X X
22% of Sandwell
births
Repatriated City
X X X
Births – 600
Stand Alone Birth
X
Centre Births - 400
General Trading X X X X
Position
Impairment Cost X X X
29