SaHF DMBC Volume 1 Edition 1.1.pdf - Shaping a healthier future

3
Value for money
9.9.26 The purpose of the value for money criterion
The purpose of the third stage of the process is to ascertain which options present the best
value for money. The value for money criterion is assessed using five sub-criteria:
1. Capital Costs
2. Transition Costs
3. Site viability
4. Total surplus / deficit
5. Net Present Value
The financial analysis completed as part of the pre consultation phase has been refreshed
using data on beds, activity, income and expenditure, for commissioners and providers, for
the financial year 2012/13. As part of this phase of the work, we have undertaken a more
detailed appraisal of the impact of the changes to options A, B and C (options 5, 6 and 7 in
the pre-consultation phase), particularly with regard to estates solutions and the impact on
capital requirements. This updated analysis is set out in more detail in Part D of Chapter 9.
9.9.27 Feedback received about value for money criterion during consultation
During consolation we received the following feedback about the value for money evaluation:
JHOSC
“The money available in the system reduces and hence there is neither the capital nor the
revenue available to implement the plan or that the finances no longer flow in the way
envisaged.”
Westminster HOSC
“There must be absolute guarantees that capital is available so that major estate and
infrastructure issues at St Mary‟s are addressed in time to accommodate the extra service
and capacity requirements to provide specialist health services in the 21st century.
Decanting Western Eye Hospital and Hyper Acute Stroke Services into the site requires
major investment in the current infrastructure, accessibility and facilities.”
Independent reports conducted by Tim Rideout Limited on behalf of the London
Borough of Ealing and Hammersmith & Fulham Council
“The overall value for money assessment in the business case gives the highest rating to
Option 5 and the second highest rating to Options 6 and 7. However this is open to
challenge. The differentiation between Options 1 to 4 and Options 5 to 8 is primarily a
function of the capital costs estimate. As suggested above, the capital estimates work needs
to be significantly strengthened to arrive at the true capital cost of each of the estimates. The
differentiation between Options 5 to 8 is entirely a function of the impact on site and Trust
viability and the NPV calculation. Both the methodology and the application are open to
challenge, as this does not give a sufficiently accurate differential value for money
assessment between the options.”
9.9.28 The implications of this feedback for the value for money criterion
We have considered the feedback received about the value for money evaluation as follows:
9c Decision making analysis stage 6 359