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

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Value for money: Viable trusts and sites
9.13.6 Impact of the Changes – site viability
The financial impact of the changes to sites has been assessed by considering the key
drivers to costs. These changes are summarised in Figure 9.83.
Figure 9.83: Drivers of change in Income and Expenditure due to reconfiguration options
Pay cost
changes
Fixed cost
changes
Other
effects
Components
Consolidation
savings
Meet service
standards through
consolidation
Net change due to
local hospitals
Operating costs and ▪
depreciation on new
assets
▪
Avoid backlog
maintenance
Flows out of NWL –
loss of contribution
margin
Income change due
to MFF differences
Notes
▪ Efficiency gains through consolidating clinical services and reducing duplication
▪ Modelled as a net reduction in clinical and non-clinical pay cost for when services are
consolidated onto a single site
▪ Moving from 9 to 5 Major acute sites and consolidating teams allows for full consultant cover
to be provided with current staffing levels, which would otherwise require an increase in the
numbers across the current sites. This is reflected in conservative assumption for
consolidation savings
▪ Net reduction in fixed costs when current sites are replaced by Local Hospital. These are
assumed to have lower costs due to reduced footprint and removal of support services and
equipment that would be required on an acute site
Additional premises and other fixed costs (e.g. depreciation) for the increased capacity at
those Major Hospital sites that increase under the reconfiguration option
Note that this excludes the costs associated with new Local Hospitals and increased asset
values from covering backlog maintenance, as these effects are included in the two other
fixed cost drivers
▪ Excludes impact of capital linked to Imperial College reprovision
▪ Avoid backlog maintenance on sites that become new Local Hospitals as these are assumed
to be major refurbishments or new builds, with the fixed costs included in the relevant fixed
cost driver
▪ Flows out of sector for activity that is currently provided by NWL hospitals leading to loss of
contribution margin on the activity for the NWL Trusts
▪ Note that this is a driver of the I&E metrics for the NWL Trusts, but is neutral from a system
point of view and so is excluded from the NPV evaluation (the fixed cost implications of the
flows out of sector are included in the NPV)
▪ Differences in MFF for the Trusts leading to increase/decrease in MFF payments in the sector
▪ Note that from a commissioner perspective this is assumed to be accounted for through MFF
in the commissioner allocations
Using this methodology the surplus or deficit for each site that would occur under each
option has been assessed and compared with the „do nothing‟. The outcome is summarised
in Figure 9.84.
9d. Decision making analysis stage 6 and stage 7 398