Outline Business Case – New Radiotherapy Service at Swindon For approval
Title
Status
History
Board Lead(s)
Key purpose
Trust Board Meeting: Wednesday 22 January 2014
TB2014.12
Outline Business Case – New Radiotherapy Service at
Swindon
For approval
SOC approved by Trust Board July 2013
Mr Paul Brennan – Director of Clinical Services
Strategy Assurance Policy Performance
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Summary and Recommendation
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1. This Outline Business Case (OBC) proposes investment in radiotherapy facilities to be based at the Great Western Hospital in Swindon (GWH).
Expansion in radiotherapy capacity will be required by 2017 at the latest if the Trust is to be able to continue to meet the needs of its current catchment population.
2. The OBC explores a range of options, including the development of a Do
Minimum option based on the Churchill site.
Development at Swindon is shown by the business case to be the best option in terms of benefits (particularly in improving access for Swindon and
Wiltshire patients.
It is also better financially than expanding on the Churchill site, primarily because a development at Swindon will benefit from a charitable funding appeal (and committed financial support from the Swindon CCG subject to confirmation by Monitor that this is acceptable). This additional funding will not be available for options based at the Churchill.
3. The Board of the GWH is expected to confirm its support to this Business
Case later in January, and Executive Directors from GWH, clinicians and local managers have been heavily involved in its development.
4. The new service would be in place in 2017.
5.
Recommendation. The Trust Board is recommended to approve the OBC, subject to:
The GWH Board formal confirmation of the key elements of the agreement between the Trusts outlined in the procurement case section.
This will allow the Trust to commence a procurement of the facility. Final approval will be sought from the Board for the Full Business Case in
September 2014.
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Contents
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Commercial arrangements between OUH and GWH ..................................................... 71
Impact on the organisation’s income and expenditure account .................................... 74
Outline arrangements for change and contract management ....................................... 81
Financial appraisals ............................................................... 90
Commissioner/ stakeholder support letters ......................... 96
Risk register .......................................................................... 97
There are two separately bound Annexes.
“New Radiotherapy Services at Swindon - Estates Annex”
“Radiotherapy Appeal Fundraising Report”
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1. Executive Summary
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1.1
Introduction
1.1.1 This OBC seeks Board approval to invest a maximum of £14.7m (£13.3m expected) in the development of a satellite radiotherapy service at the Great
Western Hospital (GWH) in Swindon. The investment:
1.1.2
Will ensure that the OUH radiotherapy service has sufficient capacity to match the future needs of its current catchment population.
Will substantially improve the patient experience for cancer patients living in Swindon and much of Wiltshire, the majority of whom will no longer need to travel to Oxford for their care.
Is the most cost effective way for providing the capacity needed by the
Trust.
The OBC is primarily focussed on meeting the needs of the Trust’s current catchment population. The OUH is also developing a separate OBC for a satellite facility at Milton Keynes, which is primarily for patients not currently served by the Trusts. The two business cases are distinct, and each can be considered on its own merits. The Milton Keynes OBC will be considered at a later Board meeting.
1.2
Strategic case
The strategic context
1.2.1 This OBC directly supports the core strategic objectives of the Trust, in particular the aspirations for:
1.2.2
“Delivering compassionate excellence” as patients requiring multiple treatments while they fight cancer will no longer have to travel long distances to hospital.
“Excellent secondary and specialist care through sustainable clinical networks” as significant support will be provided for integrated cancer care on the GWH site.
The OBC is fully aligned with the national commissioning specification for radiotherapy and the Thames Valley Cancer Network document “Response to
NRAG” May 2010 requiring an additional 7.2 LinAcs across Thames Valley by
2016 and highlighting the excess travel time for patients in Swindon and
Wiltshire. It has the strong support of the Swindon CCG.
[DN: Support is expected from NHS England but the letter has not been received at time of document production]
1.2.3 The investment objectives and benefit criteria used within this OBC are as set out below. These benefit criteria inform the benefit appraisal. The OBC economic appraisal also assesses the financial impact of the options and the relative risk.
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Investment Objectives
1. To provide the Radiotherapy capacity needed to treat patients living in
Oxfordshire, Swindon, North Wiltshire and parts of Buckinghamshire and
Gloucestershire area within the financial and staffing resources available.
Benefit criteria to be measured
A. Ability to meet likely demand and extent to which capacity can be expanded if demand exceeds expectations
B. Extent to which spare capacity can be utilized for other populations if demand is less than expectations
2. To provide the services at a location which is as close to home for as many patients as possible, and which also meets the needs of inpatients requiring radiotherapy.
C. The number of patient journeys with significantly reduced travel time
D. Ease of transfer from inpatient services at GWH to the radiotherapy facility
3. To enable the best clinical models and the sharing of expertise and close working across professional groups working on
Cancer services through co-location of services
E. Extent to which the option increases the number of locations where there are both radiotherapy services and chemotherapy and other cancer services and impact on clinical model. (This includes issues in relation to the provision or not of CT)
4. To support the strategic plans for the best use of the NHS estate at both Great
Western Hospital and the Churchill Hospital in Oxford
F. Level of support for overall site strategy for GWH site
G. Level of support for overall site strategy for OUH site
1.2.4 The catchment area of the OUH Radiotherapy Department currently comprises of Oxfordshire, Swindon, approximately 20% of Wiltshire, and 65% of Buckinghamshire. This equates to a catchment population of approximately
1.14 million. There are long standing relationships between the OUH and
GWH in the provision of high quality cancer services. The OUH provides radiotherapy solely at the Churchill Hospital from within the new cancer centre. There are six linear accelerators (LinAcs) 5 of which are core treatment machines while the 6 th
is maintained by the PFI partner to support maintenance.
The case for change
Providing sufficient capacity
1.2.5 Demand for radiotherapy provision has been growing steadily, and should continue to do so. This relates to a number of factors. The three most important reasons are:
Growth in the number of people diagnosed with cancer (incidence).
Changes in treatment regimens which result in increased numbers of radiotherapy treatments for some cancer types (leading to improved
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1.2.6
outcomes and reduced side effects).
Increased complexity of treatments delivered, which sometimes take longer to deliver, meaning that each radiotherapy machine can handle fewer patients.
The nationally recommended model (the Malthus model Clinical Oncology,
2012;24: 1-3, and 2013;25:522-530) for assessing radiotherapy needs has been used to assess the future demand for radiotherapy from the Trust’s local catchment population. The model is consistent with the recent activity actually delivered by the Trust. The chart below shows how the Trust’s future capacity compares to the anticipated demand for its future catchment population. Two demand scenarios are shown – that for the Trust’s current core population, and that which would occur if the Trust also increased from the current 20% of
Milton Keynes population and took on the responsibility for all of that population. (The second is primarily relevant for the related OBC for a satellite at Milton Keynes).
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
DEMAND & MK CORE DEMAND CAPACITY
1.2.7 The capacity forecast suggests that there will be a shortfall in the delivery of fractions which would require one extra LinAc by 2016 and a second by 2018, simply to meet the needs of the current catchment population.
1.2.8 If the additional capacity was sited at Swindon, there would be an increase demand as the service would be closer the populations of Wiltshire and
Gloucestershire – the OBC conservatively assumes that an additional 5% of each county’s demand would switch to the new unit. The chart below show the overall capacity and demand profile for the Trust assuming this OBC is approved – it includes the assumption that there will also be a new service at
Milton Keynes.
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110,000
100,000
90,000
80,000
70,000
60,000
Two new LinAcs at Swindon - with new Milton Keynes Service
50,000
40,000
30,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
DEMAND (TOTAL) CAPACITY (TOTAL )
1.2.9 It can be seen that after a brief period with some spare capacity the Trust would need to increase capacity from 2019 onwards. Initially it would be able to do so by expanding working hours at both the centre and the satellites.
(The approach taken in the OBC towards working hours is not to assume weekend or evening working at the beginning of the investment period – otherwise there is no slack for growth, and without this potential the Trust cannot meet the commissioner requirement of 13% spare capacity to meet fluctuations in demand without increasing waiting times). However it is likely that by 2023 at least one additional LinAc would be needed above those proposed in current business cases.
Improving access
1.2.10 Currently patients residing in Swindon and parts of Wiltshire travel to OUH for radiotherapy treatment. Many patients have travel times in excess of one and a half hours each way, significantly more than the 45 minutes recommended by the National Radiotherapy Advisory Group (NRAG).
1.2.11 The nature of radiotherapy treatment means that local access is particularly important. This is because:
Patients have to receive a course of treatment – for example this could involve 37 trips to their radiotherapy provider.
Patients can sometimes be feeling ill – and so undertaking long journeys is an extra burden.
The development of a local radiotherapy service for the populations of Swindon and Wiltshire would mean over 13000 patient journeys to receive radiotherapy treatment would be significantly shorter every year.
Supporting integrated cancer care
1.2.12 The provision of local radiotherapy services offers an excellent opportunity to ensure that cancer provision on the GWH site is integrated and effective. This business case therefore explores site location options which will provide maximum support to this integration.
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1.2.13 The most significant strategic risks in relation to this investment are as follows.
Charitable funding. The scheme is dependent on the establishment of a charitable funding campaign that contributed £3m to the scheme. This risk has a dimension of both timing and total amount. The financial case within this document tests the sensitivity of the preferred options and its impact on the financial performance of the Trust in the event of the total amount achieved being less than the agreed target. In terms of timing, if the charitable campaign does not achieve target within the timescale the Trust will need to consider delaying the purchase of equipment and/or whether it can address the issue through a reprofiling of its borrowing and or capital programme.
Staffing. The Trust is already finding it challenging to recruit to its current service and nationally there is competition for scarce staff. However the provision of job opportunities in a new location is likely to make the posts attractive – and the Swindon site does not have the same issues as Oxford in terms of cost of living and difficult commuting. However, a key step after the approval of the OBC will need to be the commencement of a significant recruitment, staff training and retention campaign.
Delay. This is a complex programme with many interdependencies, and there are links between the implementation of this scheme and that for
Milton Keynes – particularly as it would stretch management capacity to go live with both at the same time. The key management mechanism is rigorous and effectively programme management and governance.
1.3
Economic case
1.3.1 The options considered in this OBC are as follows:
Ref
Option 1
Option 2
Option 3
Title and description
Do Minimum. Two additional LinAcs to be provided at the Churchill Hospital site alongside the existing cancer centre, one in 2016 and one in 2018.
Two LinAc Satellite. Standalone radiotherapy facility at Great Western
Hospital close to the Brunel Treatment Centre. Radiotherapy treatment planning would either be carried out at OUH, or if GWH chose at later stage to develop a larger CT capacity, some planning could be done at GWH radiology department.
Variant 2a) No space for future CT expansion included, delivered 2017
Variant 2b) Capacity for CT to be included within building to allow for inclusion at later stage, delivered 2017
Variant 2c) As 2b, but with one LinAc in 2016 and one in 2018. This option was developed at a late stage in the process when the Swindon CCG proposed the provision of significant transitional support if the service could commence in 2016.
Two LinAc Satellite with CT. Standalone radiotherapy facility at Great
Western Hospital close to the Brunel Treatment Centre with treatment planning capability.
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Benefits appraisal
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1.3.2 A benefits appraisal conducted by clinicians (both acute and primary care) and managers and patient representatives resulted in the following scored assessment of the options against the criteria identified above.
Option Weighted Scores
Criterion Weight 1 - Do
Minimum -
2 LinAcs at
OUH
2a - Two Linac
Satellite at
GWH - no CT or CT space
2b/c - Two
Linac Satellite at
GWH - no CT but with CT space
3- Two LinAc satellite with
CT
5.2
12.2
12.2
12.2
A Extent to which capacity can be expanded if demand above expectations
B Extent to which spare capacity can be utilized for other populations if demand is less than expectations
C The number of patient journeys with significantly reduced travel time
D Ease of transfer from inpatient services at
GWH to the radiotherapy facility
E Increases the number of locations where there are radiotherapy chemotherapy and other cancer services and supports clinical model
F Level of of support for overall site strategy for GWH site
G Level of of support for overall site strategy for OUH site
Total
Option rank
17%
8%
34%
7%
18%
10%
6%
100%
3.1
0.0
0.0
0.0
4.8
2.8
15.9
4.0
5.5
20.6
2.7
11.1
4.8
2.8
59.7
3.0
6.3
24.0
3.4
14.8
4.8
2.8
68.2
2.0
7.1
30.9
4.1
16.6
4.8
2.8
78.4
1.0
Note: Option 2c was added at a late stage because of the input of Swindon CCG, and was not considered at the workshop. However, except in terms of timing it is identical to option 2b and so it is considered that it would be scored the same as 2b in non-financial terms.
1.3.3 The benefits appraisal therefore has a very clear outcome.
The Do Minimum is substantively worse than all other options. It would therefore require a very major financial benefit to outweigh this.
Of the three options based at the GWH, the option including CT is clearly the best in benefits terms. This judgement is not altered by any change in criteria weighing, as there are no criteria in which other options score better than it.
The option including space for CT but without having the equipment installed until it is affordable is effectively a half-way house between the two other options.
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Financial appraisal
1.3.4 The capital costs of the options are as set out in the tables below. Two approaches have been taken to costing the Do Minimum (Option 1). Option
1a is based on a high level indicative costing produced by OCHRE the current
PFI partner for the cancer centre. This high level approach was taken because of the significant costs that would have resulted from asking for a detailed estimate. In order to validate these costs, and to address the issue that they were produced on a very high level basis, the independent estates advisory team for the OBC also calculated the likely capital costs of the Do
Minimum (shown as Option 1b). On reviewing the costs produced by the PFI partner it is clear that they are based on a smaller floor area than used for
Option 1b and exclude external works (e.g. changes to adjacent car parking spaces) so are almost certainly a substantial under estimate. By comparison the costing for Option 1b was carried out to a significant level of detail.
However, as neither option performs well financially detailed work has not been carried out to ensure the lower capital cost Do Minimum Option 1b fully reflects the needs of the Trust.
1.3.5 Two sets of capital costs are provided below for each option: one set includes a risk-based contingency allowance derived from the risk assessment carried out as part of the planning process. The second table includes this risk adjustment plus a further 16% ‘optimism bias’ uplift on the costs of the building. This is included to ensure that the proposal remains robust against any unanticipated risk.
Table 1 : Capital costs including calculated risk level
Capital costs (£000's)
Building cost
Equipment cost
Total capital cost
Variance from lowest cost
Option 1a Option 1b Option 2a Option 2b Option 2c Option 3
4,465 6,325 7,949 8,108 8,108 8,108
6,480 8,208 5,281 5,281 5,281 5,818
10,945 14,532 13,229 13,389 13,389 13,926
0 3,588 2,285 2,444 2,444 2,982
Table 2 : Capital costs including calculated risk level plus 16% optimism bias
Capital costs (£000's)
Building cost
Equipment cost
Total capital cost
Option 1a Option 1b Option 2a Option 2b Option 2c Option 3
5,179 7,337 9,221 9,405 9,405 9,405
6,480 8,208 5,281 5,281 5,281 5,818
11,659 15,544 14,501 14,686 14,686 15,224
1.3.6
Variance from lowest cost 0 3,886 2,842 3,027 3,027 3,565
This proposal is based on a commitment by the GWH and OUH to work together to deliver a charitable funding appeal which will provide £3m of support for the investment (for Swindon based options only). An independent report by a fundraising expert has identified a realistic funding profile and the
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1.3.7 The cumulative contribution of the options is set out in the tables below. Once again two versions of the table are presented – firstly without and then with
16% additional optimism bias added. The contribution is calculated after all capital charges, but does not include any contribution to Trust overheads.
Table 3 : Cumulative contribution based on capital costs including calculated risk level
Cumulative contribution
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
84
-82
690
678
1,019
607
17/18
-384
-663
356
317
933
176
18/19
-776
-1,262
-442
-508
403
-771
19/20
-1,512
-1,960
-934
-1,028
140
-1,411
20/21
-1,954
-2,610
-1,154
-1,276
-105
-1,776
21/22
-2,137
-2,993
-1,056
-1,205
-32
-1,822
22/23
-2,020
-3,069
-630
-806
368
-1,537
23/24
-1,614
-2,847
156
-48
1,129
-891
24/25
-871
-2,281
1,308
1,076
2,256
123
25/26
237
-1,343
2,811
2,553
3,734
1,491
26/27 Rank
1,627 5
-129
4,482
4,197
5,427
3,019
6
2
3
1
4
Table 4 : Cumulative contribution based on capital costs including calculated risk level plus additional 16% optimism bias
Cumulative contribution
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
54
-125
636
624
943
552
17/18
-456
-765
228
186
781
45
18/19
-889
-1,423
-643
-714
178
-977
19/20
-1,666
-2,178
-1,208
-1,308
-158
-1,691
20/21
-2,148
-2,885
-1,499
-1,628
-475
-2,129
21/22
-2,370
-3,323
-1,471
-1,629
-472
-2,246
22/23
-2,293
-3,454
-1,114
-1,301
-141
-2,031
23/24
-1,924
-3,286
-396
-611
552
-1,454
24/25
-1,219
-2,774
688
445
1,611
-509
25/26
-148
-1,888
2,126
1,854
3,024
792
26/27 Rank
1,206 5
-726
3,733
3,432
4,652
2,254
6
2
3
1
4
1.3.8 The table shows clearly that investment at Swindon is a much better option financially than further investment on the Churchill site. This difference is driven primarily by the level of charitable funding which should be attracted at
Swindon which would not be available at the Churchill. Of the options at
Swindon option 2c is the most financially attractive.
1.3.9 The most attractive option in benefits terms (Option 3 which has two LinAcs and CT in a Swindon satellite) performs better than the Do Minimum in financial terms but significantly less well than the other Swindon based options. This is because the CT will be relatively underutilised unless the
GWH radiology department were to lease time (e.g. cover for downtime of existing diagnostic CT scanners.)
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1.3.10 Cumulative contribution is a measure of the direct financial impact on the
Trust. A discounted cash flow analysis has also been carried out. This is effectively a measure of the overall value for money for the taxpayer. This is summarised in the tables below (without the added optimism bias – the ranking with the added optimism bias is the same).
Table 5 : Discounted cash flow analysis
Net Present Costs (£000's)
Undiscou nted
Option 1a (Do Min - OCHRE) 480,125
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
484,921
480,742
481,688
478,844
486,473
Rank NPC NPC rank
2 243,987 1
EAC EAC Rank
10,525 1
5 247,292
3 245,169
4 245,689
1 244,657
5 10,668
3 10,576
4 10,599
2 10,554
5
3
4
2
6 248,062 6 10,701 6
1.3.11 The DCF analysis shows that little variance between the options. It produces the same financial rankings as the contribution analysis with the exception that Option 1a is ranked first rather than fourth. However, as noted above we believe the capital cost estimate provided by the PFI partner would be likely to increase significantly when done to a more detailed level, and it is this distortion which switches the DCF ranking. In addition, the level of difference between option 1a and the preferred option in contribution terms, option 2c, is only £53,000 in equivalent annual cost and is not significant.
Risk appraisal
1.3.12 A detailed risk appraisal of the options was carried out. The core risk issues which differentiate between the options are:
∼
The Do Minimum is of its essence significantly lower risk as
It does not involve needing to work closely with an external organisation
∼ It can be delivered through arrangements with the Trust’s existing PFI supplier
∼
There are fewer “unknowns”
∼ There is no charitable funding component.
The Do Minimum does however involve a significant strategic risk to the market share of the Trust. This is because without a satellite service at
Swindon there is a substantial risk that another organisation will establish a new service at Swindon, and because of the access issues the Trust could
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lose the vast majority of its current Swindon and Wiltshire work. In addition, it is the highest risk in terms of being able to attract staff.
The Swindon based options have very similar levels of risk. Their major risks are around charitable funding, the potential for problems in joint working with GWH, and the linked risk of delay. The option with CT poses a slightly lower staffing risk because of the ability to offer a more attractive job profile. There is a greater level of risk around charitable funding for the option with CT as this requires a greater sum to be raised.
It could be argued that the options with CT are higher risk in general because they cost more – however, as this is taken into account in the financial appraisal the risk scores have not been adjusted to reflect this.
Option appraisal conclusion
1.3.13 The results of investment appraisal are as follows:
Table 6 : Summary of overall results based on capital costs including calculated risk level
Evaluation Option 1
Do minimum
2016 and
2018 LinAc installation
Option 2a Option 2b Option 2c
Two LinAc
Satellite no CT
2017
Two LinAc
Satellite no CT (but
CT space included)-
2017
Two LinAc
Satellite no CT (but
CT space included)
2016 and
2018
Option 3
Two
LinAc
Satellite with CT
2017
4 2 2 1 Benefits
Affordability Rank
Net Present
Cost
Rank
Score
Rank
Amount
5
15.9
5/6
Cumulative
10 year contribution
1 a) £1,627k
1 b) (£129k)
1/5
Risk Rank
1a) £244m/
1 b) £247m
1
59.7
2
£4,482k
3
£245m
3
68.2
3
£4,197k
4
£246m
3
68.2
1
£5,427k
2
£245m
3
78.4
4
£3,019k
6
£248m
2
Score 111 127 127 127 126
1.3.14 Option 3 is clearly the best in benefit terms but performs less well in terms of the financial measures. The preferred option which offers the best mix of benefit, cost and risk is option 2c. In choosing this option the Trust has the flexibility to implement CT within the scheme subject to success in charitable fundraising and the effective management of risk, but does not commit itself at this early stage to an option which adds to cost.
1.3.15 Sensitivity testing on key financial variables suggests that it would take an unrealistic change to change the overall financial ranking of the options.
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1.4
Commercial case
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1.4.1 Procurement options for buildings and equipment are analysed within this
OBC. The options considered for the buildings are:
Traditional Lump Sum Tender.
Design and Build.
ProCure21 Plus.
Private Finance Initiative (PFI)
The conclusion reached is that the Procure21 Plus route should be followed.
This is the Department of Health recommended procurement route for publically funded NJS Capital Projects of over £1m in value.
1.4.2 The key reasons for this procurement route are:
1.4.3
Cost certainty – after agreement of the guaranteed maximum price, any increases in cost are borne by the contractor, subject to Trust changes, with gain share if the cost is below the GMP.
Control of design quality – the Trust is able to maintain control of the design to ensure that its quality and functionality aspirations are met.
Speed of procurement – as the framework has already been through the
OJEU process it is possible to select a PSCP very quickly and at an early stage.
Buildability – early involvement of the PSCP and their supply chain helps produce a design which is buildable and hence reduces risk
The proposed route for procuring the equipment is through NHS Supplies who have negotiated a national contracts using economies of scales as a lever to substantially reduce costs below those the Trust could expect to pay if it went through its own procurement.
1.4.4 The OBC sets out the key elements of the relationship between the OUH and
GWH Trusts. Key components of this are:
OUH to own the building and equipment within it.
OUH to lease land for the building from GWH at an agreed rate included in the financial model for the OBC.
OUH will manage and operate the services in the facility, taking the income for them and bearing the costs.
GWH will lead a charitable funding campaign supported by both Trusts.
The first £3m raised by the campaign will go to support the radiotherapy facility. Figures raised above this will be directed by GWH towards other services that will benefit the local population.
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1.5
Financial case
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1.5.1 The tables below sets out the impact of the preferred option (without and then with the additional 16% optimism bias adjustment) on OUH’s income and expenditure account.
Table 7 : Income and expenditure account based on capital costs including calculated risk level
Income and expenditure
(£000's)
Oxford activity
Swindon activity
Total activity
Income from operations
Charitable funds*
Total income
Pay
Non pay
Capital charges
Total costs
Contribution
% contribution
16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
51,169 50,496 47,222 48,595 49,967 51,497 53,026 54,754 56,482 58,275 60,067
5,524 7,366 15,138 15,586 16,034 16,515 16,995 17,567 18,138 18,727 19,316
56,693 57,862 62,360 64,181 66,001 68,011 70,021 72,321 74,621 77,002 79,383
11,566 11,357 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
1,275 390 0 0 0 0 0 0 0 0 0
12,841 11,747 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
7,069 7,014 7,408 7,487 7,598 7,701 7,794 7,911 8,021 8,162 8,394
1,666
3,088
1,748
3,071
2,025
3,345
2,034
3,350
2,297
3,316
2,307
3,283
2,317
3,250
2,329
3,217
2,340
3,184
2,352
3,152
2,364
3,166
11,822 11,834 12,778 12,871 13,211 13,291 13,361 13,456 13,546 13,666 13,924
1,019
9%
-87
-1%
-529
-4%
-263
-2%
-245
-2%
73
1%
401
3%
761
5%
1,126
8%
1,478
10%
1,692
11%
Table 8 : Income and expenditure account based on capital costs including calculated risk level plus an additional 16% added optimism bias
Income and expenditure
(£000's)
Oxford activity
Swindon activity
Total activity
Income from operations
Charitable funds*
Total income
Pay
Non pay
Capital charges
Total costs
Contribution
% contribution
16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
51,169 50,496 47,222 48,595 49,967 51,497 53,026 54,754 56,482 58,275 60,067
5,524 7,366 15,138 15,586 16,034 16,515 16,995 17,567 18,138 18,727 19,316
56,693 57,862 62,360 64,181 66,001 68,011 70,021 72,321 74,621 77,002 79,383
11,566 11,357 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
1,275 390 0 0 0 0 0 0 0 0 0
12,841 11,747 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
7,069
1,666
7,014
1,748
7,408
2,025
7,487
2,034
7,598
2,297
7,701
2,307
7,794
2,317
7,911
2,329
8,021
2,340
8,162
2,352
8,394
2,364
3,164 3,146 3,419 3,423 3,388 3,353 3,319 3,285 3,251 3,218 3,231
11,898 11,909 12,851 12,943 13,283 13,362 13,430 13,524 13,613 13,732 13,989
943
8%
-162
-1%
-603
-5%
-336
-3%
-317
-2%
2
0%
332
2%
693
5%
1,059
7%
1,413
9%
1,628
10%
1.5.2 The development makes a positive contribution in 2016/17 entirely due to the inclusion of £1.3m in charitable monies before moving into deficit for the period 2017/18 to 2020/21. The contribution then increases from 2021/22 through to 2026/27 by which time it will have reached 11%. It should be noted that an additional £1.3m in charitable monies will be received pre-2016/17.
1.5.3 The proposed expenditure will have the following impact on the Trust’s balance sheet:
Increasing the fixed asset base of OUH, subject to valuations, by £8.1m for buildings and £5.3m for equipment. The equipment will be split between
£3m worth of donated assets and £2.3m NHS funded assets. Depreciation will be charged to both forms of equipment asset, but the 3.5% interest charge will only apply to NHS funded assets.
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1.5.4
The building will be depreciated over 40 years based on the length of the lease with GWH. Equipment will be depreciated over 10 years. The economic and financial modelling includes the the need to replace equipment every 10 years.
Cash generated through operations will become available for OUH’s capital programme. The model assumes cash is used to replace equipment as it reaches the end of its 10 year life, but is otherwise available to be invested elsewhere in the Trust. By 31 st
March 2027 a cash balance of £26.8m is forecast.
The radiotherapy activity and income delivered by the cancer centre at the
Churchill hospital site shown within this OBC has been adjusted downwards on the basis that it is expected a satellite unit will be developed at Milton
Keynes (dependent on a subsequent OBC). 22% of Milton Keynes patient activity is already provided by the OUH and if there was a satellite the vast majority of this would move to that satellite. If the Milton Keynes OBC did not go ahead the financial case for this development would be strengthened as there would be additional activity and income related to it at the cancer centre.
1.6
Management case
1.6.1 The OBC sets out the programme and project management arrangements in detail. The programme reporting arrangements are as shown below.
1.6.2 The programme director will report to the Director of Clinical Services. The programme manager is being recruited externally.
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1.6.3 The proposed timeline for the scheme includes the following key milestones:
1.6.4
Appointment of P21 partner – March 2014
Full Business Case July 2014
Build complete March 2016
Commissioning April to June 2016
Go live in July 2016.
The arrangements for risk management, benefits realisation and post project evaluation are described in the OBC.
1.7
Recommendation
The Board is recommended to approve the OBC, subject to:
The GWH Board formal confirmation of the key elements of the agreement between the Trusts outlined in the procurement case section.
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2. The Strategic Case
2.1
Introduction
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2.1.1 This Outline Business Case (OBC) sets out the case for investment for:
2.1.2
Expanding the radiotherapy capacity of the OUH by two LinAcs in order to meet the ever increasing demand for radiotherapy services from the patient population served by the Trust.
Providing that expanded capacity within a satellite unit at Great Western
Hospital in Swindon, rather than as an extension to the current cancer centre at the Churchill Hospital.
The OBC is being developed in parallel with an OBC for investment in a new satellite service at Milton Keynes which is expected to be considered at a later
Board meeting. However it should be recognised that the two investment proposals are fundamentally different and are virtually independent proposals
(in other words it would be quite possible for the Board to approve one OBC and not the other, or to approve both).
2.1.3
Although this OBC proposes a development option at Swindon its core purpose is to provide sufficient radiotherapy capacity for the population already served by the OUH. It makes the case that current capacity is insufficient and that without investment the OUH will not be able to provide the treatment needed by the people it already serves.
The Milton Keynes OBC is about providing a service to a predominantly new population – that of Milton Keynes and Bedfordshire. This population receive most of their current radiotherapy services from a different provider
– Northampton General Hospital. It is therefore a proposal to bring “new business” to the Trust. The OUH currently treats 20% of the MK population.
The main linkage between the schemes is that it would clearly stretch the capacity of the radiotherapy services to manage both developments within the same year.
2.1.4 It follows the approval of the Strategic Outline Case for this investment by the
OUH Trust Board in July 2013, and the TDA in October 2013.
The preferred option in this OBC is based on a partnership between the OUH and the Great Western Hospital NHS Foundation Trust (GWH). The OUH will build the facility on the GWH site and will operate the service. It will lease the land for the facility from the GWH.
2.1.5 This OBC has been prepared using the agreed standards and format for business cases, as set out in
2.1.6
HM Treasury Greenbook guidance.
The NHS Trust Development Authority guidance on the “Capital Regime in
Investment Business Case Approvals”
It follows the Five Case Model, which comprises the following key
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2.1.7
The strategic case section. This sets out the strategic context and the case for change, together with the supporting investment objectives for the scheme
The economic case section. This section identifies and evaluates the options for meeting the investment objectives, and identifies the preferred option taking account of benefits, costs and risks.
The commercial case section. This outlines the content and structure of the proposed commercial arrangements for both the procurement of the building and the arrangements with GWH.
The financial case section. This confirms funding arrangements and affordability and explains the impact on the balance sheet and financial position of the Trust.
The management case section. This demonstrates that the scheme is achievable and can be delivered successfully to cost, time and quality.
The strategic case section provides
An overview of the OUH and GWH Trusts, and their key business strategies as far as they relate to the investment.
The case for change
The proposed investment objectives, scope, constraints and benefit criteria
An assessment of the strategic risks in relation to the investment.
2.2
Organisational overview
2.2.1 The OUH provides a wide range of general and specialist health care services, primarily from four hospital sites: the Churchill Hospital, the John
Radcliffe Hospital and the Nuffield Orthopaedic Centre in Oxford and the
Horton General Hospital in Banbury. The Trust provides general hospital services to people in Oxfordshire and neighbouring counties and specialist services on a regional and national basis. As well as Oxfordshire, a significant proportion of OUH’s patients come from Buckinghamshire, Berkshire,
Wiltshire, Northamptonshire, Warwickshire and Gloucestershire. OUH provides services in more than 90 clinical specialties.
2.2.2 It is one of the largest acute teaching hospital trusts in the UK. It has a national and international reputation for the excellence of its services and its role in teaching and research.
2.2.3 In 2012/13 the Trust’s turnover was £821m. Of this income 26% relates to the
Surgery and Oncology Division within which cancer services fit. The Trust employs over 11,000 people.
2.2.4 The Trust’s main commissioners are NHS England (for specialised services including radiotherapy) and the Clinical Commissioning Groups covering
Oxfordshire, Buckinghamshire, Berkshire, Wiltshire, Northamptonshire and
Gloucestershire CCG’s.
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2.2.5 The Churchill site is the centre for cancer and renal services and other specialities. The modern Cancer Centre on the site opened in April 2009 and represented a major advance in the treatment of Cancer and Haematology in
Oxfordshire and the Thames Valley.
2.3
Business strategies
Oxford University Hospitals NHS Trust
2.3.1 The Trust in the process of applying for NHS Foundation Trust status and its business strategy is set out in the IBP supporting the application.
2.3.2 The Trust currently has six strategic goals that were generated through a strategic review involving patient and public groups, staff and colleagues in other organisations:
Table 9 : OUH Strategic Objectives – and key links to this investment proposal
OUH Strategic Objectives Links to this investment proposal
SO1 To be a patient-centred organisation, providing high quality, compassionate care with integrity and respect for patients and staff – “delivering compassionate excellence”
SO2
SO3
To be a well-governed organisation with high standards of assurance, responsive to members and stakeholders in transforming services to meet future needs - “a well-governed and adaptable organisation”
To meet the challenges of the current economic climate and changes in the NHS by providing efficient and cost-effective services and better value healthcare – “delivering better value healthcare”
The proposal will provide Swindon and Wiltshire patients with access to the highest quality of specialist cancer care. It supports compassionate care, as patients requiring multiple treatments while they fight the disease will no longer have to travel long distances to hospital for every treatment
Not directly relevant, but the new service will be patient focused and well governed. The satellite centre will be directly managed within the
OUH radiotherapy department structure compliant with externally accredited governance procedures
(ISO9001:2008, Cancer Peer review). It demonstrates the OUH’s willingness to develop new services to meet future needs.
The new services are designed to be as efficient as possible. For example physics expertise for complex radiotherapy planning will remain focused in the centre and IT links will be used extensively to facilitate this.
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OUH Strategic Objectives Links to this investment proposal
SO4 To provide high quality general acute healthcare to the people of
Oxfordshire, including more joined up care across local health and social care services– “delivering integrated healthcare”
Not directly relevant as the population served is primarily out of
Oxfordshire and this is not general acute healthcare, but specialist.
SO5 To develop extended clinical networks that benefit our partners and the people they serve. This will support the delivery of safe and sustainable services throughout the network of care that we are part of and our provision of high quality specialist care for the people of Oxfordshire and beyond- “excellent secondary and specialist care through sustainable clinical networks”
Strongly supported by the investment. The development builds on an existing strong partnership between the OUH and the GWH and will provide major benefits to patients as the network of care will support local access while at the same time delivering high quality for patients through the provision of the OUH’s specialist radiotherapy expertise.
SO6 To lead the development of durable partnerships with academic health and social care partners and the life sciences industry to facilitate discovery and implement its benefits –
“delivering the benefits of research and innovation to patients”
The investment will further develop our partnership with GWH, who are associates with the Academic Health
Science Network, and there should be benefits in ensuring greater participation in clinical trials.
2.3.3 The IBP identifies cancer services as a key area for strategic development in the Trust as set in the excerpt in the box below.
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Figure 1 : IBP text on cancer services
The Trust’s Oxford Cancer Centre provides expertise in the surgical and oncological treatment of a broad range of cancers. …….
Epidemiological analysis confirms that historical trends of rising demand for cancer treatment can be expected to continue, with the incidence of cancer continuing to rise as a result of the ageing population, coupled with the impact of lifestyle factors.
OUH has responded to this demand by investing in the Oxford Cancer Centre and a key component of its future development is the consolidation of the benefits of this investment. There are three elements to this:
Providing services that reflect best practice, delivering the benefits of research and innovation to cancer patients and benefit from the Trust’s research partnerships in line with its strategy.
Working through clinical network arrangements to design cancer care pathways focused on patient need, delivering elements of care locally where possible. This will include the continued creation of joint consultant posts with local hospitals and provision of satellite clinics and services.
Developing capacity to meet demand.
The most financially significant development in cancer services addresses each of these elements.
The modernisation of radiotherapy, in partnership with the University of Oxford’s Department of
Oncology which includes the Gray Institute for Radiation Oncology and Biology, includes the increased use of more targeted modalities such as Intensity Modulated Radiotherapy (IMRT), the development of teams of subspecialty, site-specific radiotherapy consultants, the expansion of linear accelerator capacity and the provision of satellite radiotherapy units, subject to the agreement of business cases for the investment involved .
2.3.4 The IBP makes it clear that the expansion of linear accelerator capacity and the provision of satellite units at Milton Keynes and Swindon is subject to the business case process. This document is the OBC for the Swindon based satellite.
GWH NHS Foundation Trust
2.3.5 This business case is the responsibility of the OUH as it is the organisation which will provide the investment for the radiotherapy facilities and will operate the radiotherapy service. However, GWH is a key partner in the investment and sees the development of radiotherapy services on the hospital site as a key element of its strategic vision. The GWH has had a long established desire to enable radiotherapy to be provided for the local population on the hospital site. It is also looking to develop cancer services more broadly and the chosen site for the radiotherapy service has land available which will allow a neighbouring development supporting chemotherapy.
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2.4
Commissioning context for radiotherapy services
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2.4.1 Radiotherapy services are commissioned directly by NHS England
(specialised commissioning). There is a national specification
for radiotherapy service provision. The OUH complies with the specification, and the services proposed under this OBC will also comply.
The specification demands that:
Accurate treatment is delivered in the context of a safety-conscious culture.
Treatment is delivered within an evidence based approach and according to locally agreed protocols.
Strong clinical and operational governance arrangement exist
All patients with cancer who require radiotherapy (including urgent and palliative radiotherapy) as part of their treatment receive this in a timely manner.
There is access to modern radiotherapy techniques, e.g. Intensity
Modulated Radiotherapy (IMRT) and Image Guided Radiotherapy (IGRT).
Services not able to offer this will be expected to have plans in place to move to routine IGRT over the next 12 months.
Appropriate verification systems are routinely used to ensure accuracy and correct alignment (e.g. imaging and in-vivo dosimetry)
The radiotherapy capacity is adequate to meet the current demand, to improve cure rates prevent and relieve symptoms, and improve patients’ experience by minimising any long-term side effects of treatment
Information included in the mandated national radiotherapy dataset
(RTDS) must be collected and submitted according to national requirements.
The department has robust mechanisms in place for monitoring treatment outcomes
The provider must participate in the national peer review programme for
Radiotherapy and audits should be produced and acted upon.
Where any radiotherapy is used concurrently with other treatments (such as brachytherapy or chemotherapy), it should be integrated appropriately and scheduled to meet the patients’ needs.
Radiotherapy is accessible to all patients with cancer who require it regardless of gender, age, ethnicity, disability, religion or belief, sexual orientation or any other non-medical characteristics.
1
2013/14 NHS standard contract for radiotherapy (all ages) section B part 1 - service specifications
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2.4.1 The specification recognises the importance of reducing patient travel times and sets out specific requirements in relation to satellite radiotherapy units, which are that:
The service, if operating a satellite service type model, will be required to set up and maintain formal links with a designated Cancer Centre and radiotherapy department which should include governance arrangements, staff training and development, the use and role of networked technology, and clinical cross- cover arrangements.
The service should be set up to support compliance with the NICE
Improving Outcomes Guidance for all cancer services, and fulfil membership of the relevant multi-disciplinary teams as required.
There must be protocols in place for handover of responsibility between clinicians to ensure smooth transition in support for patients throughout the cancer pathway; protocols must be network wide and easily accessible to all healthcare staff involved in the delivery of Radiotherapy
Radiotherapy staff will be expected to meet the requirement for attendance at MDTs.
Subcontracting arrangements should not be entered into without the agreement of the commissioners. There should be clear and formal agreements between the provider and any sub-contractor in the form of a service level agreement, detailing the part played by the sub-contractor in the radiotherapy service, and the arrangements for clinical accountability and responsibility between the two parties.
All work processes should be protocol led and clearly defined both within the provider and with any other service provider. Any deviation from these protocols will be clearly documented and investigated with regular reviews, and where appropriate updated. Any satellite unit must demonstrate compliance with the clinical governance and leadership arrangements of the main provider organisation. Protocols should at least be in harmony with those of the main organisation and ratified by the relevant Cancer
Network Radiotherapy Group.
The specification recognises the need for expansion in cancer services and also says that providers should allow for 13% spare capacity to ensure they can meet peaks in demand without creating waiting lists.
[At time of writing of this document a letter of support from NHS England is anticipated but has not yet been received]
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2.5
Investment objectives and related benefit criteria
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2.5.1 The Strategic Outline Case set out the following proposed investment objectives.
Original Investment Objectives
1.
2.
To provide the Radiotherapy capacity needed to treat patients living in
Oxfordshire, Swindon, North Wiltshire and parts of Buckinghamshire and
Gloucestershire area within the financial and staffing resources available.
To provide the services at a location which is as close to home for as many patients as possible, and which also meets the needs of inpatients requiring radiotherapy.
3.
4.
5.
6.
To achieve improved patient outcomes by meeting the latest standards for treatment set out by NICE and NRAG such as:
3.1. Increased attendances,
3.2. maximum travelling times,
3.3. technically advanced radiotherapy available to all patients, no less advanced than currently available
To enable close working across professional groups working on Cancer services through co-location of services
To improve involvement of patients and staff across both the OUH and
Great Western Hospital in research, particularly in the light of linkages between Great Western Hospital and the AHSN proposed for Oxford.
To develop a critical mass of radiotherapy capacity under the OUH
‘umbrella’ which will provide most effective use of scarce and expensive staff resources
7. To enable the sharing of expertise between the University and Great
Western Hospital.
2.5.2 These objectives have been reviewed as part of the development of the OBC.
It is suggested that all of the objectives remain relevant. However, it is proposed that they be changed in a number of ways to avoid double counting, to exclude factors which will not distinguish between options, and to take account to strategic investment planning at both GWH and OUH.
Objective 3 should be removed because it should be taken as a given that under all options the latest standards for treatment must be fully met.
Objective 7 should be merged with objective 4 as they cover very similar areas and could therefore result in double counting
Objective 5 should be removed because the choice of option will not have a material impact on the ability to involve patients and staff in clinical trials
Objective 6 should be removed as all options will involve the provision of
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2.5.3
the same level of capacity under the OUH umbrella and so it will not affect the option appraisal.
None of the investment objectives in the SOC include consideration of making the best strategic use of the NHS hospital estate. However, some options could make far better sense in the light of strategic plans for site development than others.
The investment objectives are therefore as follows:
Revised Investment Objectives
1.
2.
To provide the Radiotherapy capacity needed to treat patients living in
Oxfordshire, Swindon, North Wiltshire and parts of Buckinghamshire and
Gloucestershire area within the financial and staffing resources available.
To provide the services at a location which is as close to home for as many patients as possible, and which also meets the needs of inpatients requiring radiotherapy.
3. To enable the best clinical models and the sharing of expertise and close working across professional groups working on Cancer services through co-location of services
4.
2.5.4
To support the strategic plans for the best use of the NHS estate at both
Great Western Hospital and the Churchill Hospital in Oxford
The options needs to be assessed against a set of clear benefit criteria related to the investment objective. The benefit criteria identified in support of the investment objectives and which were used at the benefits appraisal workshop by the stakeholder group assessing benefits are set out below.
Investment Objectives
1.
Benefit criteria to be measured
To provide the Radiotherapy capacity needed to treat patients living in Oxfordshire, Swindon, North
Wiltshire and parts of
Buckinghamshire and
Gloucestershire area within the financial and staffing resources available.
A. Ability to meet likely demand and extent to which capacity can be expanded if demand exceeds expectations
B. Extent to which spare capacity can be utilized for other populations if demand is less than expectations
2. To provide the services at a location which is as close to home for as many patients as possible, and which also meets the needs of inpatients requiring radiotherapy.
C. The number of patient journeys with significantly reduced travel time
D. Ease of transfer from inpatient services at GWH to the radiotherapy facility
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Investment Objectives
3.
Benefit criteria to be measured
To enable the best clinical models and the sharing of expertise and close working across professional groups working on Cancer services through co-location of services
E. Extent to which the option increases the number of locations where there are both radiotherapy services and chemotherapy and other cancer services and impact on clinical model. (This includes issues in relation to the provision or not of CT)
4. To support the strategic plans for the best use of the NHS estate at both Great Western Hospital and the Churchill Hospital in Oxford
F. Level of support for overall site strategy for GWH site
G. Level of support for overall site strategy for OUH site
2.6
Existing arrangements
Current services provided by the OUH NHS Trust
2.6.1 The current catchment area of the OUH Radiotherapy Department comprises
Oxfordshire, Swindon, approximately 20% of Wiltshire, and 65% of
Buckinghamshire. This equates to a catchment population of approximately
1.14 million. OUH oncologists undertake weekly clinics in the Horton General
Hospital Great Western Hospital, Swindon and Buckinghamshire Healthcare
NHS Trust (Stoke Mandeville and Wycombe General Hospitals) amounting to
5.4 WTE activity. Since April 2013, 2 clinics have been held in Milton Keynes.
2.6.2 Clinical oncologists have been visiting GWH in Swindon for over 30 years.
Working closely with Swindon clinicians, the oncologists attend MDTs, outpatient clinics and supervise chemotherapy delivered in Swindon, recruiting many patients to clinical trials, as well as counselling and supervising new patients prior to radiotherapy to be delivered in OUH. The service has developed significantly over the past 5 years; 3 locally employed medical oncologists have taken on much of the chemotherapy supervision and acute oncology ward rounds, and the 5 visiting clinical oncologists
(16.4PA) have sub-specialised further to manage 2 tumour sites at most. Most specialist complex surgery for cancer cases are referred to OUH
(gynaecology, head and neck, upper GI, CNS) however urology, lung cancer and allogeneic bone marrow transplant cases are referred elsewhere, and the establishment of a satellite radiotherapy facility should strengthen links and may result in a change in referral pathway for these.
2.6.3 The radiotherapy service at the OUH has been continually developed and modernized. For example: An IMRT business case (SPC 2012-042), was approved by the Board in July 2012 and is being implemented. This is resulting in IMRT being extended from 30 patients per year (2011-12) to 450 patients in 2013-14 and all the 750 patients who would benefit from it in 2014-
15.
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2.6.4 Radiotherapy equipment at the Churchill Hospital is provided through a
Managed Equipment Scheme (MES) set up as part of the PFI project that created the Cancer Centre. The MES provides for the supply, maintenance and availability of equipment for an agreed fee. The equipment in use is all selected to ensure compatibility across equipment and systems.
2.6.5 Varian, the equipment suppliers for the MES, are required to provide 5 machines operating at high capacity. They have chosen to provide 6 in order to ensure availability meets the required level. Five of the Radiotherapy linear accelerators are in routine clinical use whilst the sixth machine is used as a service efficiency machine. This means that the current service is particularly resilient, as the service continues to run at the planned level even when machines are off-line because of planned preventive maintenance or breakdowns. It is important that patients do not have any unplanned interruptions to their course of treatment since there is strong evidence that this would allow tumour repopulation with an increased rate of local recurrence
.
2.6.6 Oxford provides 99% of planned capacity compared to the national average of
87% recommended by NRAG. It achieves this because of the 6 th
machine
2.6.7 The core operating hours of the Radiotherapy Department are from 8:00 –
18:30 Monday to Friday each week. The department is open for a total of 257 days a year including bank holidays with the exception of Christmas Day,
Boxing Day and Good Friday.
2.6.8 From April 2013 the operational hours of all five of the treatment machines in daily clinical use have been 10.5 hours. The number of operational hours identified are dedicated to the delivery of treatment to patients. Time for quality assurance checks is covered by utilising the service efficiency linear accelerator.
2.6.9 In the past two years, significant developments have been undertaken at OUH to implement a strategic approach to Image Guided Radiation Therapy, Cone
Beam Computed Topography, Intensity Modulated Radiation Therapy programme, and stereotactic body and Central Nervous System radiotherapy
(see separate IMRT business case). These developments have been part of the Radiotherapy Modernisation Strategy, which was developed through close collaboration between the NHS and University of Oxford Departments of
Oncology since 2010.
2.6.10 The nearest NHS providers of radiotherapy to the OUH are in Bath, Bristol and Cheltenham to the West, Northampton in the North and Reading and
Mount Vernon in the South East.
2.6.11 Currently a relatively small number of patients undergo radiotherapy as a
2
Royal College of Radiologists, The timely delivery of radical radiotherapy: standards and guidelines for the management of unscheduled treatment interruptions 2008
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OUH has recently signed a Heads of Terms agreement with a private partner to provide specific oversight of private patients receiving radiotherapy and chemotherapy within OUH. It is expected that this will increase the number of patients receiving private radiotherapy from the current 130 per year increasing steadily up to 350 per annum.
2.6.12 Cancer Partners UK are currently building two single LinAc private radiotherapy facilities (in Newport Pagnall and Oxford) which should open in the next 6 months. There are no current plans to build such a facility in
Swindon that OUH is aware of.
2.6.13 It is not expected that there will be a significant loss of work to other private providers of radiotherapy, as there are very few incentives for patients to choose to go outside the NHS and because of the importance of integrated cancer care.
2.7
Business needs and case for change
2.7.1 The key business needs and drivers for change are
Meeting rising patient demand for radiotherapy care. This is the single most fundamental driver, as the OUH does not have sufficient capacity to meet the demand for this core service in the future.
Improving patient access for the population of Swindon and Wiltshire.
The development of the existing cancer network to providing integrated care to patients closer to home.
These elements are covered in the following 3 sub-sections.
2.8
Meeting patient demand with sufficient capacity
Demand
2.8.1 Demand for radiotherapy provision has been growing steadily, and will continue to do so. This relates to a number of factors. The three most important reasons are:
2.8.2
Growth in the number of people diagnosed with cancer (incidence).
Changes in treatment regimens which result in increased numbers of radiotherapy treatments.
Increased complexity of treatments delivered, which sometimes take longer to deliver, meaning that each radiotherapy machine can handle fewer patients.
Figure 2 below shows how the number of cancer diagnoses has been rising in a range of common cancers across Oxfordshire
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Figure 1: Comparative Growth in Cancer Diagnoses
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2.8.3 The number of patients diagnosed with cancer is rising. Breast and prostate cancer, which account for 35% of patients treated, are rising significantly more steeply than other cancers. As a result of these factors an annual 3% increase in cancer incidence can be expected over the next decade.
2.8.4 The Malthus model has been used to predict the number radiotherapy fractions that will be required in the future for the catchment population served by the OUH. This is a modelling tool developed by the National Cancer Action
Team and is recognised by NHS England who commission radiotherapy services as the best practice approach for identifying future demand. This tool identifies the likely burden of cancer (by cancer type) on a local population
(based on its demographic profile), the number of patients therefore likely to need radiotherapy, the best practice number of fractions per patient, and therefore the total number of radiotherapy fractions a population is likely to need over time.
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2.8.5 The Trust currently provides radiotherapy for the following populations.
Population served
BUCKINGHAMSHIRE
MILTON KEYNES *
OXFORDSHIRE
SWINDON
WILTSHIRE
Percentage of population treated by
OUH
68.0%
22.0%
92.0%
96.0%
20.0%
* The patients from Milton Keynes are those that require more specialist services which cannot be provided by NGH, as well as (from April 2013) urological and GI malignancy.
2.8.6 The Malthus model has been used to predict future demand for each of these populations, and to match this against the current capacity of the centre. In doing so it has been assumed that each of the cancer centre machines operates a 5 day week for 10.5 hour days. It is important to note that the
OUH will experience a reduction in capacity in 2019 and 2020 as existing
LinAcs have to be replaced. During this period the 6 th
“service efficiency”
LinAc will be fully utilised in core service provision. This will mean that significantly more time will be lost on the other machines for both planned and unplanned maintenance, and in those years the capacity will therefore reduce.
2.8.7 In order to test the validity of the model the demand predictions from the
Malthus model have been compared with the actual experience of the Oxford
Cancer Centre in recent years. This has shown that our demand has been growing sharply but has not yet quite reached the level predicted by Malthus for the OUH population. In the last financial year it was 8% less than that predicted. However, the upward trend towards Malthus levels is clear. It is therefore assumed that the gap between the actual figures and those of
Malthus is gradually diminished. The chart below shows
2.8.8
The actual supply in previous years – blue line.
The Malthus predictions unadjusted – green line
The Malthus predictions adjusted down by 8% for the first year but with a
2% reduction every year for four years.
It is clear that the activity level at the centre is trending towards that predicted by Malthus. It is therefore considered that its longer term predictions are robust. In the activity modelling it is therefore assumed that over the next four years OUH activity will continue to move towards Malthus predicted levels, reaching them in 2016.
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Figure 2 : Malthus predictions compared to actual supply by OUH
65,000
60,000
55,000
50,000
45,000
40,000
35,000
Actual
MALTHUS (inc correction factor)
Malthus (no correction factor)
30,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2.8.9 There is another factor which could significantly increase demand. This is that the NGH has stated an intention to withdraw from service provision to the
Milton Keynes population in 2016. Without the development of a new satellite service at Milton Keynes this would result in a major increase in demand for service at OUH (one which could not be met within current capacity). It would also result in an unacceptable negative impact on travel time and access for
Milton Keynes patients needing radiotherapy.
Potential impact of competition
2.8.10 Radiotherapy provision for NHS commissioned services is a complex market with relatively high barriers to entry. There are two possible sources of competition:
Independent sector
Other NHS Trusts
Independent sector
2.8.11 The single most important barrier to external competition is the requirement to treat patients in an integrated way through a Multi-Disciplinary Team (MDT) approach, with the right form of specialist expertise available through the
MDT. As set out above the NHSE specification for radiotherapy services demands that satellite units be linked to a cancer centre, and has stringent requirements regarding integrated care and governance.
2.8.12 Private/independent radiotherapy units do exist, but predominantly to serve the private patient market. There is no indication that NHS England will wish to commission radiotherapy care from private units, and they are not viewed as a significant competitive threat. An independent unit providing radiotherapy is planned at Littlemore in Oxford. While this is a potential threat to recruitment and retention within the Oxford service it is not viewed as likely that there will be any significant workload loss to it. The same is true of the
Ridgeway Hospital in Swindon which also offers radiotherapy.
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Other NHS Trusts
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2.8.13 Other cancer centres in the region are planning to expand radiotherapy capacity – for example it is understood that the RUH in Bath is seeking to expand. However, this expansion is to serve their existing population and it is not seen as a risk to patient numbers. The key factors affecting where people have radiotherapy are:
Travel times and access. Swindon is very easy to travel to and the GWH has excellent on-site parking. The planning in the OBC simply assumes that the population accessing the service will be those who currently use the GWH for other acute care. If anything, it is likely that this will increase as patients increasingly find it hard to travel to sites such as the RUH which has much worse road access.
The need for MDTs and integrated treatment.
The key here is effective linkage with the local consultants and surgeons seeing cancer patients who will wish to ensure their patients follow a safe, high quality and integrated pathway. There are strong relationships between GWH clinician’s and the OUH and the presence of a satellite unit at Swindon can only improve this.
2.8.14 The only realistic risk from NHS competition is if another NHS Trust chose to establish a satellite unit within or very close to the OUH catchment. It is considered this is highly unlikely, and once Trusts are aware of the OUH intention to develop a satellite service at Swindon this will become even less likely as they would know any unit would face major competition.
2.8.15 The only circumstances in which this market risk is likely to be realised is if the OUH does not establish a satellite unit at GWH. In this situation the GWH might well look to a relationship with the centres of Bath or Bristol to enable the development of a local service.
Capacity
2.8.16 In the last few years, the average number of fractions that can be delivered per hour is 3.8. Based on this
A LinAc operating in a satellite for an 8.5 hour working day, 5 day week would deliver 7000 fractions
A LinAc operating in the OUH cancer centre for an 8.5 hour working day would deliver about 8100 fractions, because it will have less unplanned downtime as there is a service efficiency machine that can be brought in when there is downtime.
2.8.17 The OBC has modelled a slight increase in throughput above this as a result of the implementation of Rapid Arc technology which allows treatment to be delivered for some patients more quickly. The OUH radiotherapy department has now installed RapidArc on three treatment machines and commissioning is nearly complete. This mode of treatment delivery will start in early 2014.
The reduction in treatment time can be significant (e.g. prostate cancer treatment drops from 15 to 10 minutes per day. It is planned that Rapid Arc technology will be utilised on all machines in the satellite centres. The OBC
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2.8.18 Clearly the hours could be increased, and could potentially include weekend working – this would be the prime mechanism for coping with the anticipated increase in demand. However, it would be unwise to plan the LinAc capacity on the basis of weekend working and longer daytime hours because:
There are already staffing challenges – and insisting on weekend working or longer (more unsociable) hours would exacerbate these.
The model suggests that the Trust will relatively quickly have a shortage of capacity compared to supply (see charts below). The ability to expand the hours of operation will be the key mechanism for coping with this gap.
When planning the number of LinAcs it is therefore essential to provide some “room for growth” in terms of the hours worked each week. This has been evidenced during the recent upgrade to machines during 2013; to keep up with the demand the department has been running 7 day working on 2 treatment machines.
Linking demand with capacity needed
2.8.19 The chart below shows two separate demand scenarios and matches them against current supply:
Core demand is the demand from the current catchment population.
Demand and MK is the demand that would result in 2016 based on the
NGH decision to withdraw from providing services to the Milton Keynes population in 2016.
Figure 3 : Future demand and capacity OUH catchment population
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
DEMAND & MK CORE DEMAND CAPACITY
2.8.20 The chart shows clearly that even without taking on any provision for the
Milton Keynes population there will be a shortfall in provision of 7,000 fractions by 2017 and that this will rapidly increase to 15,000 by 2019 (this is in the period of the LinAc replacement programme). The gap continues to rise beyond this point, and demands at least two extra linear accelerators. It is also quite clear that without alternative provision being provided for the Milton
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Keynes population the OUH could not offer to provide the services that would be needed by Milton Keynes patients if the NGH withdraws from providing a service to them in 2016 as it has said.
2.8.21 The actual demand for the future service will inevitably vary depending on the location of the provision. If radiotherapy provision is expanded at the Churchill hospital there is no reason to expect that this would attract a wider population than is currently served by the OUH. However, if the service is provided at
Swindon, it will be closer to parts of the populations of Wiltshire and
Gloucestershire than the current providers. It is therefore highly likely that there will be an increase in the population served.
2.8.22 In our demand modelling it has been conservatively estimated that in the future:
Instead of providing a service to 20% of the Wiltshire population it will be
25%.
Instead of providing no services to the Gloucestershire population it will be
5% in the future.
2.8.23 In order to ensure that the OUH is providing the correct level of supply under each option 4 different future scenarios have been modelled. In the scenarios without a new service at Milton Keynes capacity has been matched against future demand with two demand profiles (one assuming NGH withdraws from
Milton Keynes provision, and one assuming it does not).
The Do Minimum option for this OBC which is the provision of 2 extra
LinAcs at the Churchill Hospital
∼ With the assumption that there is no new service at Milton Keynes, so the
OUH continues to serve 22% of the Milton Keynes patients.
∼
With the assumption that the OUH also invests in provision at Milton
Keynes. The reason for showing this is that the vast majority of the 22% of patient from Milton Keynes would no longer need to come to the OUH.
The development of a two LinAc satellite at Swindon,
∼
With the assumption that there is no new service at Milton Keynes.
∼ With the assumption that there is a new OUH service at Milton Keynes.
2.8.24 The outcome is shown in the four charts overleaf. Note that the model assumes that the two additional LinAcs will be operated for 8.5 hour days – this is so that there is expansion potential to meet future growth in demand.
2.8.25 In terms of timetabling the charts assume
A new service in Swindon in 2017.
A staged implementation of the Do Minimum matching the capacity increase to the shortfall. This would mean the first machine was installed in 2016 and the second in 2018.
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Figure 4 : Demand and capacity scenarios
100,000
Do Minimum - two LinAcs at Centre - scenario with new service at Milton Keynes
90,000
80,000
70,000
60,000
50,000
40,000
30,000
2011 2012 2013 2014 2015 2016 2017
DEMAND (TOTAL)
2018 2019 2020
CAPACITY (TOTAL )
2021 2022 2023 2024 2025 2026
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
2011
Do Minimum with 2 new LinAcs at centre - no new Milton Keynes Service
2012 2013 2014 2015 2016
DEMAND & MK
2017 2018
DEMAND
2019 2020 2021
FUTURE CAPACITY
2022 2023 2024 2025 2026
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
2011 2012
Two new LinAcs at Swindon - no new Milton Keynes Service
2013 2014 2015
DEMAND
2016 2017 2018
DEMAND & MK
2019 2020 2021
FUURE CAPACITY
2022 2023 2024 2025 2026
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110,000
100,000
90,000
80,000
70,000
60,000
Two new LinAcs at Swindon - with new Milton Keynes Service
50,000
40,000
30,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
DEMAND (TOTAL) CAPACITY (TOTAL )
2.8.26 The key conclusions that can be drawn from the above projections are as follows:
There will be a major shortfall of capacity at OUH from 2016 onwards if it was asked to take on the service for the Milton Keynes population without a new service at Milton Keynes.
Under all scenarios the OUH will need a minimum of two extra LinAcs, but there is a question of timing. Charts 1 & 2 on the previous page show that if new machines are at the Churchill (The Do Minimum) the best fit of demand and supply is one machine in 2016 and one in 2018.
If the expansion takes place at GWH in Swindon the two LinAcs will both be needed from 2017/18. However, a 2016 implementation would significantly reduce the capacity pressure on the current cancer centre. A two LinAc implementation in 2016 would result in significant underutilisation in the satellite in the first year, causing major affordability issues.
While a single LinAc would not be a long term sustainable solution a staged implementation with one LinAc in 2016 and one in 2018, as for the
Do Minimum is a potentially good option.
Under all options there will be a continuing shortfall in capacity from 2019 onwards. The ways to manage this will be initially in increasing the hours worked (e.g. the satellites could move to 10.5 hour days, and potentially to
12, and the centre could move to 12 hour days, and implement weekend working), and then investing in further expansion. While extending hours will clearly be appropriate to meet the shortfall in the earlier years, there will inevitably be a need for further investment.
2.9
Improving access
2.9.1 Currently patients residing in Swindon and parts of Wiltshire travel to OUH for radiotherapy treatment. Many patients have travel times in excess of one hour to one and a half hours each way, significantly more than the 45 minutes recommended by the National Radiotherapy Advisory Group (NRAG).
2.9.2 The nature of radiotherapy treatment means that local access is particularly
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2.9.3
Patients have to receive a course of treatment – for example this could involve 37 trips to their radiotherapy provider.
Patients can sometimes be feeling ill – and so undertaking long journeys is an extra burden.
The map in Figure 2 below illustrates the major gap in radiotherapy provision
for the Swindon and Wiltshire areas.
Figure 2: Travel times for radiotherapy – 30 minute travel times from current provider
2.9.4 The development of a local radiotherapy service for the populations of
Swindon and Wiltshire would mean over 13000 patient journeys to receive radiotherapy treatment would be significantly shorter every year.
2.10
Effective cancer networks providing integrated care
Cancer centre support for local services
2.10.1 The effective treatment of cancer is a highly complex process. It requires the delivery of services which are as local as possible for the patient, but which also provide the full spectrum of specialist care needed – whether that relates to radiotherapy, chemotherapy or surgery. Cancer services are therefore typically provided on a hub and spoke basis, with specialist cancer centres such as the OUH supporting local services such as Great Western Hospital.
2.10.2 In the current service, five OUH based visiting tumour site specialised clinical oncology consultants and two registrars hold once or twice weekly clinics in
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Swindon. Patients consent for radiotherapy care and follow up both take place in these clinics at Swindon, as well as the supervision of locally delivered chemotherapy. OUH clinicians provide the majority of consultations and treatment planning and supervision for Swindon patients undergoing radiotherapy in Oxford.
2.10.3 GWH has a longstanding aspiration to increase the range of cancer services provided locally to its population. Clinical research is very active in GWH and having the radiotherapy department on site will permit a further expansion in potential clinical trial recruitment in GWH.
2.10.4 The provision of local radiotherapy services offers an excellent opportunity to ensure that cancer provision on the GWH site is integrated and effective. This business case therefore explores site location options which will provide maximum support to this integration.
2.11
Potential business scope and key service requirements
2.11.1 This section describes the scope for the project in relation to the above business needs. The minimum scope is:
Two additional linear accelerators at the Churchill Hospital.
2.11.2 The mid-range scope is
A local radiotherapy service at GWH with two linear accelerators and associated equipment and treatment facilities.
CT and planning services for radiotherapy patients to be provided at OUH
The reason for the mid-range scope not including CT is that with a two
LinAc service there are not enough patients to fully utilise a CT scanner and the service is therefore potentially not cost effective. Without local CT patients would need one trip to Oxford at the start of their treatment).
Swindon currently has no spare CT capacity that could be used to support radiotherapy planning.
2.11.3 The maximum scope is
A local radiotherapy service at GWH with two linear accelerators and associated equipment and treatment facilities.
CT and planning services for radiotherapy patients to be provided within the new unit. This is desirable because:
∼
It avoids all patients needing to make a journey to Oxford
∼ Palliative patients in particular, are frequently reluctant to undertake longer journeys, and if the planning is not available locally this may sway their decision on whether to accept treatment, or the Doctors decision whether to offer it for frail patients.
2.11.4 The options within these ranges are considered within the economic case.
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2.12
Main risks
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2.12.1 The main business and service risks associated with the potential scope for this project are shown below, together with their counter measures. These risks have been identified by the core project team who have made an assessment of their probability and likelihood. See Appendix 3 for a detailed risk register including assessment of impact and risk, and the estates annex for detailed design and construction risks.
Those risk with the highest risk score are summarised below.
Table 10 : Main project risks
Ref Risk Counter-measure Probability after mitigation
Negative impact after mitigation
Risk
Score
4 Charitable funding campaign does not hit minumum target
5 Additional staffing not available
15 Delay meaning capacity not in place in time
As for item above, and could implement satellites with only 1
LinAc to start with, and reduce staffing to match
Develop early staffing plans and work with HR at both Trusts to develop proactive recruitment - campaigns and increase recruitment to training programmes locally.
Good project management. Rapid escalation of issues with time impact. In event of delay, consider use of private capacity and further extended working hours at the centre
3
3
2
4
4
4
12
12
8
2.12.2 The analysis shows that the most significant risks are therefore:
Charitable funding. This risk has a dimension on both timing and total amount. The financial case within this document tests the sensitivity of the preferred options and its impact on the financial performance of the Trust in the event of the total amount achieved being less than the agreed target.
In terms of timing, if the charitable campaign does not achieve target within the timescale the Trust will need to consider delaying the purchase of equipment and/or whether it can address the issue through a reprofiling of its borrowing and or capital programme.
Staffing. The Trust is already finding it challenging to recruit to its current service and nationally there is competition for scarce staff. However the provision of job opportunities in a new location is likely to make the posts attractive – and the Swindon site does not have the same issues as Oxford in terms of cost of living and difficult commuting. However, a key step after the approval of the OBC will need to be the commencement of a significant recruitment and retention campaign.
Delay. This is a complex programme with many interdependencies, and there are links between the implementation of this scheme and that for
Milton Keynes – particularly as it would stretch management capacity to go live with both at the same time. The key management mechanism is rigorous and effectively programme management and governance.
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2.13
Constraints and dependencies
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2.13.1 The project is subject to the following constraints:
All options must deliver all key national standards in terms of nature and quality of radiotherapy treatment.
The preferred option must be affordable and not negatively impact on the
Trust’s risk rating.
Current equipment is provided by a single provider and is specifically set up to be compatible across all functions. This would need to be the case in future if the service is to operate across a wider base, so the expansion of the service in Swindon would depend on the procurement of compatible equipment which can deliver conventional radiotherapy as well as highly technical IMRT& IGRT to the same standard as patients receive in the cancer centre.
2.13.2 Key dependencies for the project are:
A close working relationship between OUH and GWH to ensure the delivery of the scheme. This business case has been developed on the basis of a shared memorandum of understanding. This memorandum of understanding will effectively be replaced by this business case which sets out the key elements of the future relationship in Sections 5 and 6. The management case described the process for ensuring that the project is joint and effectively managed between the two Trusts.
The establishment of a successful charitable fundraising campaign to ensure the scheme is financially viable. This is described in more detail in
The continued support of NHS England as the commissioner for the services involved.
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3. The Economic Case
3.1
Introduction
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3.1.1 In accordance with the Capital Investment Manual and requirements of HM
Treasury’s Green Book (A Guide to Investment Appraisal in the Public
Sector), this section of the OBC documents the range of options that have been considered in response to the potential scope identified within the strategic case.
3.2
Long list of options
3.2.1 The Strategic Outline Case identified a range of dimensions for the development of a long list of options. These are described below, together with the conclusions reached at SOC stage, and any amendments to those conclusions based on a review at OBC stage
Table 11 : Long list
3.2.2 In addition to the above dimensions identified at SOC stage, the OUH and
GWH have also looked at the potential alternatives site locations at the Great
Western Hospital site.
Long listing alternatives for options
SOC conclusion and OBC decision on shortlisting
1. Level of radiotherapy capacity to be provided
1.1. One additional
LinAc
SOC conclusion.
not desirable
Should be explored at OBC but
OBC decision. Does not merit inclusion in the shortlist as modelling shows clearly that this capacity level will be inadequate. However a variant for the Do Minimum with a staged implementation with one LinAc in 2017 and one in 2018 should be explored.
1.2. Two additional
LinAcs
SOC conclusion. Should shortlist
OBC decision. Shortlist for appraisal
2.
2.1.
Location of capacity – with options based at
The Churchill
Hospital Site
SOC conclusion. Should be included in shortlist as
Do Minimum
OBC decision. Shortlist for appraisal
2.2. The Great
Western Hospital
Site
SOC conclusion. Should be included in shortlist
OBC decision. Shortlist for appraisal
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2.3. Other Swindon locations
SOC conclusion. Performs much worse than GWH location because of clinical linkages and does not merit detailed work
OBC decision: Do not shortlist
3.
3.1.
Scope of service at a satellite location
Radiotherapy only
SOC conclusion. Should be included in shortlist
OBC decision. Shortlist for appraisal and include a variant where the space is provided for the CT but the equipment is not installed
3.2.3
3.2. Radiotherapy and CT (for planning)
SOC conclusion.
OBC decision.
Should be included in shortlist
Shortlist for appraisal immediately.
In addition to the above dimensions identified at SOC stage, the OUH and
GWH have also looked at the potential alternatives site locations at the Great
Western Hospital site. The GWH FT has, as part of its site strategy development identified 3 possible location options as shown in the table below
Long listing alternatives for options
4.
OBC decision on shortlisting
Site location for GWH based options
4.1. Land adjacent to
GWH, but not currently owned by the Trust
OBC decision. Does not merit inclusion in the shortlist as there is no certainty on when the land could be purchased and this would prejudice the development of the capacity in time to ensure there is not a significant shortfall
OBC decision. Shortlist for appraisal 4.2. Land adjacent to the
Brunel treatment centre
4.3. Land currently used for priority parking for hospital staff
OBC decision: Although the location is good, it is too small to allow for an effective development. Does not merit inclusion in the shortlist.
3.2.4 The location of the shortlisted option for the GWH site is marked on the plan below.
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Figure 5 : Location of GWH based options
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3.3
Shortlisted Options for Appraisal
3.3.1 Based on the analysis above the OBC appraises the following options:
Ref Title and description
Option 1 Do Minimum. Two additional LinAcs to be provided at the
Churchill Hospital site alongside the existing cancer centre, one in in 2016 and one in 2018
Option 2 Two LinAc Satellite. Standalone radiotherapy facility at Great
Western Hospital close to the Brunel Treatment Centre.
Radiotherapy planning would either be carried out at OUH, or if
GWH chose at later stage to develop a larger CT capacity, some radiotherapy planning could be done at GWH.
Variant 2a) No space for future CT expansion included. Delivery
2017
Variant 2b) Capacity for CT to be included within building to allow for inclusion at later stage. Delivery 2017
Variant 2c) Capacity for CT to be included within building to allow for inclusion at later stage. Delivery 2016 for first LinAc and 2018 for second. This option was added at a late stage because of a request from the Swindon CCG to bring the implementation forward by a year.
Option 3 Two LinAc Satellite with CT. Standalone radiotherapy facility at
Great Western Hospital close to the Brunel Treatment Centre with radiotherapy planning capability. Delivery 2017
3.3.2 The following sections provides an assessment of the relative benefits, costs and risks associated with each of the selected options. It should be noted that option 2c is analysed separately in financial terms, but the risk and benefits assessments are considered to be the same as those for option 2b.
3.4
Qualitative benefits assessment
3.4.1 This section considers the performance of each option against the qualitative
(non-financial) benefit criteria set out in section 2.3.5. It does not include
benefits which can be financially quantified, as these are included within the financial appraisal.
3.4.2 A workshop of 18 key stakeholders was held at on 29th November 2013 to evaluate the qualitative benefits associated with each option. The stakeholder present included GWH Consultants and other clinicians providing cancer services, the Swindon CCG Clinical Chair and Executive Nurse, a GP facilitator from the Macmillan charity, the GWH Director of Finance, the GWH
Cancer Manager and GWH representatives from estates and IT services. It was also attended by the OUH Clinical Director for Oncology and
Haematology /Head of Service for Radiotherapy, the OUH Radiotherapy
Services Manager and the OUH Joint Head of Radiotherapy Physics.
3.4.3 The appraisal of the qualitative benefits associated with each option was
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3.4.4
Confirming the benefits criteria relating to each of the investment objectives.
Weighting the relative importance (in %s) of each benefit criterion. This was done through an initial paper exercise with stakeholders, and then finalised at the workshop.
Scoring each of the short-listed options against the benefit criteria on a scale of 0 to 9.
Deriving a weighted benefits score for each option.
The table below sets out the agreed benefit criteria and the agreed weighting.
These weightings
Table 12 : Criteria weighting
Criterion Weight
A Extent to which capacity can be expanded if demand above expectations
B Extent to which spare capacity can be utilized for other populations if demand is less than expectations
C
D
The number of patient journeys with significantly reduced travel time
Ease of transfer from inpatient services at GWH to the radiotherapy facility
17%
8%
34%
7%
E Increases the number of locations where there are radiotherapy chemotherapy and other cancer services
F
18%
Level of of support for overall site strategy for GWH site 10%
G Level of of support for overall site strategy for OUH site 6%
Total 100%
3.4.5 Benefits scores were allocated on a range of 0-9 for each option and agreed by discussion by the workshop participants to confirm that the scores were fair and reasonable.
3.4.6 The discussion identified the following key factors in terms of differentiating between the options on the basis of the agreed criteria
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Table 13 : Commentary on benefit scoring
Criterion
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Key differentiators
A. Extent to which capacity can be expanded if demand above expectations
B. Extent to which spare capacity can be utilized for other populations if demand is less than expectations
C. The number of patient journeys with significantly reduced travel time
D. Ease of transfer from inpatient services at GWH to the radiotherapy facility
E. Extent to which the option increases the number of locations where there are both radiotherapy services and chemotherapy and other cancer services and impact on clinical model.
F. Level of support for overall site strategy for GWH site
Option 1 performs least well, as there very little expansion potential outside that proposed for the Do Minimum. Options 2 and 3 both perform well as they will both allow an extra bunker to be put in at Swindon, and there would continue to be potential to expand at the Churchill.
Option 1 performs least well as it does not expand the likely catchment area of the service. The options based at Swindon allow for increased use from wider parts of Wiltshire and
Gloucestershire. The availability of CT makes it more likely the service would be attractive to a wider population and therefore the option with the CT scored highest, while the option with the potential for CT in the future was considered better than that with no space for it.
Option 1 performs very poorly – there is no reduction in patient journeys. Option 2 will result in around 14,500 much shorter patient journeys in 2017. Option 3 would result in around
15,200 shorter patient journeys as there will around 200 patients who can have their CT scan at Swindon and not at
OUH. The workshop agreed that the option with potential for
CT should also receive a higher score than that without, as it was more likely in the future to enable fewer journeys.
Option 1 provides no improvement. For options 2 and 3 there will continue to be a short journey outside buildings, and therefore requiring transport, but it will be a few hundred meters only. The option without CT makes it more likely that an inpatient will need to be transferred to the OUH.
Option 1 has no impact on number of locations with both kinds of services, and does not provide for any improvements in the model of care. Both options 2 and 3 increase the number of locations with share care. Option3 also supports the strongest clinical model as it provides the full range of care locally and allows the creation of more attractive posts at the satellite. It also provides important backup for the CT located at the
Churchill. When that CT needs replacement in 2020 it would minimise disruption to have a CT available for use at Swindon that could be used on a temporary basis during the replacement.
For both these criteria the workshop agreed that there was no evidence to suggest any options performed better than others.
G. Level of support for overall site strategy for OUH site
3.4.7 On the basis of these key distinctions the stakeholder workshop agreed the following scores for the options. The first table shows the raw scores, the second shows the impact of the agreed criteria weighting.
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Table 14 : Benefit scores
Option Raw Scores
Criterion
A Extent to which capacity can be expanded if demand above expectations
B Extent to which spare capacity can be utilized for other populations if demand is less than expectations
C The number of patient journeys with significantly reduced travel time
D Ease of transfer from inpatient services at
GWH to the radiotherapy facility
E Increases the number of locations where there are radiotherapy chemotherapy and other cancer services and supports clinical model
F Level of of support for overall site strategy for GWH site
G Level of of support for overall site strategy for OUH site
Total
Weight
NA
1 - Do
Minimum -
2 LinAcs at
OUH
3
2a - Two Linac
Satellite at
2b/c - Two
Linac Satellite at
3- Two LinAc satellite with
GWH - no CT or CT space
GWH - no CT but with CT
CT space
7 7 7
NA
NA
NA
NA
NA
NA
NA
4
0
0
0
5
5
17
7
6
4
6
5
5
40
8
7
5
8
5
5
45
9
9
6
9
5
5
50
Option Weighted Scores
Criterion Weight 1 - Do
Minimum -
2 LinAcs at
OUH
5.2
2a - Two Linac
Satellite at
GWH - no CT or CT space
2b/c - Two
Linac Satellite at
GWH - no CT but with CT space
3- Two LinAc satellite with
CT
12.2
12.2
12.2
A Extent to which capacity can be expanded if demand above expectations
B Extent to which spare capacity can be utilized for other populations if demand is less than expectations
C The number of patient journeys with significantly reduced travel time
D Ease of transfer from inpatient services at
GWH to the radiotherapy facility
E Increases the number of locations where there are radiotherapy chemotherapy and other cancer services and supports clinical model
F Level of of support for overall site strategy for GWH site
G Level of of support for overall site strategy for OUH site
Total
Option rank
17%
8%
34%
7%
18%
10%
6%
100%
3.1
0.0
0.0
0.0
4.8
2.8
15.9
4.0
5.5
20.6
2.7
11.1
4.8
2.8
59.7
3.0
6.3
24.0
3.4
14.8
4.8
2.8
68.2
2.0
7.1
30.9
4.1
16.6
4.8
2.8
78.4
1.0
3.4.8 The benefits appraisal therefore has a very clear outcome.
The Do Minimum is substantively worse than all other options. It would therefore require a very major financial benefit to outweigh this.
Of the three options based at the GWH, the option including CT is clearly the best in benefits terms. This judgement is not altered by any change in
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criteria weighing, as there are no criteria in which other options score better than it.
The option including space for CT but without having the equipment installed until it is affordable is effectively a half-way house between the two other options.
3.5
Financial appraisal
Capital costs
3.5.1 Costs were developed for the options on the following basis
3.5.2 Costs for the Do Minimum were obtained in two ways.
3.5.3
Financial Option 1a is developed from costs provided by the PFI partner at the cancer centre. These costs were described as high level and indicative.
(A detailed costing would have required significant fees). The costs provided did not include VAT, which has been added, and it is believed are too low as:
∼
The physical space used for the quotation is less than half the amount modelled by independent architects and Quantity Surveyors.
∼
No allowance had been made for external works such as any required changes to adjacent roads and car parks.
∼
No allowance had been made for optimism bias which is bound to apply as the level of detail is no limited.
Financial Option 1b. A bottom up costing was carried out by the independent architectural and QS team who have worked up all the other options.
Optimism bias
and risk has been calculated by the Trust’s independent
estates advisors for the scheme using the standard nationally agreed model.
The calculation is included within the estates annex.
3.5.4
The calculation suggests that before any risk mitigation the “upper bound”
(which is the maximum adjustment suggested for a scheme based on certain key criteria should be 16%).
After mitigation the allowance for risk is calculated at 7.5%. This effectively reflects the low risk nature of the proposed build and its location.
However, in order to provide reassurance that if the level of optimism bias had been underestimated the scheme would be still be viable, two sets of economic and financial costs have been calculated. The first does not include additional optimism bias and the second has an additional 16% optimism bias applied to building costs, meaning a total of 23.5% optimism bias/risk against
3
Optimism bias is a term used to describe an upward adjustment of estimated capital costs to make an allowance for unforeseen cost pressures materialising.
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3.5.5 Equipment costs were based on quotes from NHS Supplies (for the LinAcs in the Swindon-based options) and the PFI provider (for other equipment including radiotherapy planning workstations and software). VAT is chargeable on all equipment unless purchased from NHS Supplies or by using charitable funds.
3.5.6 The capital costs of the various options are shown in the tables below – the first table reflects capital costs excluding additional optimism bias, the second costs after adding and additional 16% optimism bias to the building cost.
Costs reflect the Trust’s ability to avoid VAT on equipment purchased using charitable funding, the differing quotes for Do Minimum and Swindon-based options’ equipment, and the two methodologies used to cost building costs for the Do Minimum.
Table 15 : Capital costs (£000’s)- without the additional optimism bias
Capital costs (£000's)
Building cost
Equipment cost
Total capital cost
Variance from lowest cost
Option 1a Option 1b Option 2a Option 2b Option 2c Option 3
4,465 6,325 7,949 8,108 8,108 8,108
6,480 8,208 5,281 5,281 5,281 5,818
10,945 14,532 13,229 13,389 13,389 13,926
0 3,588 2,285 2,444 2,444 2,982
Table 16 : Capital costs (£000’s)- including the additional 16% optimism bias
Capital costs (£000's)
Building cost
Equipment cost
Total capital cost
Variance from lowest cost
Option 1a Option 1b Option 2a Option 2b Option 2c Option 3
5,179 7,337 9,221 9,405 9,405 9,405
6,480 8,208 5,281 5,281 5,281 5,818
11,659 15,544 14,501 14,686 14,686 15,224
0 3,886 2,842 3,027 3,027 3,565
3.5.7 Option 1a, the do minimum based on the PFI partner’s quote, has the lowest capital costs, but these are considered highly likely to be significantly understated for the reasons listed above. Of the remaining options Option 2a, which excludes CT space and equipment, has the lowest capital cost. Adding space for CT adds £159k (without optimism bias) to the build cost (Option 2b) whilst also equipping the space with a CT would add £697k (Option 3).
Although build costs are lower for the Oxford-based Do Minimum options, this benefit is offset by higher equipment costs as the LinAcs under the Do
Minimum would be purchased at higher cost through the PFI partner. Even if this were not the case and the two LinAcs could be purchased for the Do
Minimum from NHS Supplies, the Do Minimum option would be more expensive to the Trust because no charitable funds would be generated to fund the equipment – see section below.
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Charitable funding
3.5.8 An independent expert report was commissioned to assess the potential of a charitable funding appeal, and suggests that a well-run campaign in Swindon should be able to raise approximately £2m per annum.
3.5.9 The table below is extracted from the report and suggests a realistic target for net appeal funds after costs. It also allows for £250k per annum to be devoted to other charitable purposes important to GWH in the first three years and then substantial charitable contributions once the target for radiotherapy is achieved.
Table 17 : Charitable funding income (£000’s)
Table 18 : Charitable funding after costs and use of funding
3.5.10 The assumption is of a broad appeal covering radiotherapy and other cancer
services (see Procurement Case section 4.5.11 and Management Case
Section 6.8 for more detail). It will continue raising funds beyond the level
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3.5.11 Charitable funds would only be generated for the Swindon-based options.
New NHS accounting rules consolidated charitable income and the impact of using these monies into NHS provider’s accounts. The impact of these rules is that:
The charitable funds generated are recognised in the year of receipt in the
Trust’s income and expenditure account.
The donated assets purchased with these monies (the LinAcs) have been depreciated (over 10 years).
3.5.12 The overall income and expenditure impact of the charitable funds and related donated asset over 10 years is therefore zero, but the phasing is not smooth i.e.: non-recurrent income in year 1 and depreciation charges in years 1-10. A
‘normalised’ set of accounts excluding the impact of charitable monies has also been produced.
Revenue costs and affordability
3.5.13 The income and costs modelled relate to the radiotherapy service at Oxford as well as the satellite at Swindon. This methodology was needed to achieve a consistent approach reflecting the change of treatment location for Swindon and neighbouring CCG patients in Swindon-based options: numbers quoted below therefore, refer to income and costs at the ‘centre’ (Oxford) as well as
Swindon.
3.5.14 Income and costs were developed for the options on the following basis:
All numbers are for both existing Oxford-based activity and activity that would be undertaken at Swindon.
The modelling assumes the Milton Keynes satellite also goes ahead in so far that a small amount of Milton Keynes CCG activity is removed from the
Oxford ‘centre’. However, income and costs relating to the Milton Keynes satellite are excluded from the model. If Milton Keynes did not go ahead the result would be an improvement in the contribution made in Oxford
‘centre’.
The Swindon-based options assume that a modest growth in market share in Gloucestershire and Wiltshire will result from radiotherapy being available closer to home for a greater proportion of people living in these two counties. The assumptions used are that OUH’s market share will grow form 20% to 25% in Wilshire and from 0% to 5% in Gloucestershire.
Income was modelled using the recently published 2014/15 tariff plus
OUH’s market forces factor multiplied by the activity estimated based on
Malthus predictions (see above). It should be noted that the new tariff resulted in a substantial reduction in the most common radiotherapy tariff – therefore adding considerably to affordability challenge (with the most common tariff dropping from £199 per fraction to £178).
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Staff numbers for the options were agreed by the relevant departmental heads. These staffing establishments were then costed using existing
Trust average costs by pay band.
Direct non-pay costs were estimated on a ‘cost per fraction’ basis based on current radiotherapy budgets.
Hard and soft facilities management costs, and utilities costs were estimated based on floor area.
Capital charges were calculated on the basis of a 40 year life for buildings
(based on the length of the lease) and 10 years for equipment.
Capital charges have been calculated on sub-options ‘with and without’ the additional allowance for optimism bias – two sets of tables are presented below to reflect these variants.
3.5.15 The annual and cumulative contributions under each of the options to the end of 2026/27 are shown in the two tables below.
Table 19 : Annual contribution (£000’s) without additional optimism bias
Annual contribution (£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
84
-82
690
678
1,019
607
17/18
-468
-581
-334
-361
-87
-431
18/19
-391
-599
-798
-825
-529
-947
19/20
-737
-698
-492
-520
-263
-640
20/21
-442
-650
-220
-247
-245
-365
21/22
-183
-383
98
71
73
-45
22/23
117
-76
426
399
401
285
23/24
407
222
786
759
761
647
24/25
743
566
1,151
1,124
1,126
1,014
25/26
1,108
938
1,503
1,476
1,478
1,368
26/27
1,391
1,214
1,671
1,644
1,692
1,528
Table 20 : Annual contribution (£000’s) with additional 16% optimism bias
Annual contribution (£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
54
-125
636
624
943
552
17/18
-510
-640
18/19
-433
-658
-408
-437
-871
-900
-162 -603
-507 -1,022
19/20
-777
-755
-565
-594
-336
-714
20/21
-482
-706
-291
-320
-317
-438
21/22
-222
-439
2
-117
28
-1
22/23
78
-131
357
328
332
214
23/24
369
168
718
689
693
577
24/25
705
512
1,084
1,056
1,059
945
25/26
1,071
886
1,438
1,409
1,413
1,301
26/27
1,354
1,162
1,607
1,578
1,628
1,462
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Table 21 : Cumulative contribution (£000’s) without additional optimism bias
Cumulative contribution
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
84
-82
690
678
1,019
607
17/18
-384
-663
356
317
933
176
18/19
-776
-1,262
-442
-508
403
-771
19/20
-1,512
-1,960
-934
-1,028
140
-1,411
20/21
-1,954
-2,610
-1,154
-1,276
-105
-1,776
21/22
-2,137
-2,993
-1,056
-1,205
-32
-1,822
22/23
-2,020
-3,069
-630
-806
368
-1,537
23/24
-1,614
-2,847
156
-48
1,129
-891
24/25
-871
-2,281
1,308
1,076
2,256
123
25/26
237
-1,343
2,811
2,553
3,734
1,491
Table 22 : Cumulative contribution (£000’s) with additional 16% optimism bias
26/27 Rank
1,627 5
-129
4,482
4,197
5,427
3,019
6
2
3
1
4
Cumulative contribution
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
54
-125
636
624
943
552
17/18
-456
-765
228
186
781
45
18/19
-889
-1,423
-643
-714
178
-977
19/20
-1,666
-2,178
-1,208
-1,308
-158
-1,691
20/21
-2,148
-2,885
-1,499
-1,628
-475
-2,129
21/22
-2,370
-3,323
-1,471
-1,629
-472
-2,246
22/23
-2,293
-3,454
-1,114
-1,301
-141
-2,031
23/24
-1,924
-3,286
-396
-611
552
-1,454
24/25
-1,219
-2,774
688
445
1,611
-509
25/26
-148
-1,888
2,126
1,854
3,024
792
26/27 Rank
1,206 5
-726
3,733
3,432
4,652
2,254
6
2
3
1
4
3.5.16 The highest ranked option is Option 2c. Option 2c is ranked highest because it is the only option under which Swindon CCG would provide transitional support.
3.5.17 The four Swindon-based options all make a positive financial contribution in
2016/17 due to the inclusion of charitable monies. Not shown on the tables are the years prior to 2016/17 when the Trust would also be in receipt of charitable donations. From 2017/18 all options experience a period of annual losses due to sub-optimal utilisation of LinAc capacity and equipment coming out of warranty. These annual losses are reversed in 2021/22 in the highest ranked options and by 2023/24 for all options.
3.5.18 On a cumulative basis Option 2c makes a cumulative contribution in all years except 2020/21 and 2021/22 (without optimism bias) and by the end of the period modelled has generated a cumulative contribution of £5.4m without optimism bias or £4.7m with optimism bias. The lowest ranked option (Option
1b) remains loss making, on a cumulative basis, throughout the period modelled. All other options make a positive contribution by the end of the period modelled.
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Figure 6 : Cumulative contribution
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£6,000,000
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£0
-£1,000,000
-£2,000,000
-£3,000,000
-£4,000,000
Cumulative contribution (without additional optimism bias)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with
CT space)
Option 2c (two LinAc 2016 & 2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
£6,000,000
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£0
-£1,000,000
-£2,000,000
-£3,000,000
-£4,000,000
Cumulative contribution (with additional 16% optimism bias)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 & 2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
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3.5.19 The cash flows associated with each option have also been modelled, with and without additional optimism bias, as shown in the table below.
Table 23 : Cumulative cash flow without additional optimism bias (£000’s)
Cumulative cashflow
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
832
-1,923
-2,425
-2,590
25
-3,144
17/18
3,169
430
298
110
2,754
-460
18/19
2,646
-945
2,611
2,399
2,682
1,765
19/20
5,059
1,705
5,186
4,949
5,492
4,250
20/21
7,709
4,388
8,016
7,755
8,321
6,991
21/22 22/23
10,619 13,821
7,316 10,545
11,164 14,630
10,879 14,319
11,447 14,890
10,052 13,432
23/24 24/25
17,324 21,146
14,081 17,945
18,471 22,652
18,136 22,291
18,709 22,866
17,191 21,289
25/26 26/27 Rank
25,337 26,580 3
22,186 22,607 6
27,190 26,629
26,804 26,218
27,381 29,481
25,746 24,562
2
4
1
5
Table 24 : Cumulative cash flow with additional 16% optimism bias (£000’s)
Cumulative cashflow
(£000's)
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
16/17
106
-2,951
-3,709
-3,900
-1,334
-4,454
17/18
2,420
-631
-1,034
-1,250
1,352
-1,820
18/19
1,874
-2,039
1,237
997
1,238
363
19/20
4,264
579
3,770
3,506
4,008
2,806
20/21
6,892
3,230
6,561
6,271
6,798
5,507
21/22 22/23
9,780 12,961
6,128 9,327
9,671 13,099
9,355 12,757
9,886 13,291
8,529 11,870
23/24 24/25
16,443 20,246
12,834 16,670
16,904 21,049
16,538 20,657
17,075 21,197
15,592 19,654
25/26 26/27 Rank
24,418 25,642 2
20,884 21,279
25,553 24,960
25,135 24,515
25,679 27,746
24,077 22,859
6
3
4
1
5
3.5.20 The order or preference based on cash is the same as the ranking based on contribution with the exception that Option 1a is ranked higher than Option 3
(see concerns relating to the likely understatement of Option 1a costs discussed above). Cash flows are for the combined Oxford and Swindon service and differ from contribution primarily because depreciation is a noncash item, which is replaced by capital expenditure.
3.5.21 The option with the best cash position is Option 2c. As shown in the graph below (with optimism bias) cash balances rapidly increase once the service goes live under each option. The reduction in the gradient of the slope in the last few years for all options reflects the use of cash to replace LinAcs as they come to the end of their 10 year life.
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Figure 7 : Cumulative cash flow
Cumulative cashflow with additional 16% optimism bias
£30,000,000
£25,000,000
£20,000,000
£15,000,000
£10,000,000
£5,000,000
£0
-£5,000,000
-£10,000,000
Option 1a (Do Min - OCHRE)
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 & 2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
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Net present cost findings
3.5.22 The following table summarises the key results of the economic appraisals for each option and once again are presented without and with optimism bias being applied.
Table 25 : Net present costs and equivalent annual costs without additional optimism bias
(£000’s)
Net Present Costs (£000's)
Undiscou nted Rank NPC NPC rank EAC EAC Rank
Option 1a (Do Min - OCHRE) 480,125 2 243,987 1 10,525 1
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
484,921
480,742
481,688
478,844
486,473
5 247,292
3 245,169
4 245,689
1 244,657
6 248,062
5
3
4
2
6
10,668
10,576
10,599
10,554
10,701
5
3
4
2
6
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Table 26 : Net present costs and equivalent annual costs with additional 16% optimism bias
(£000’s)
Net Present Costs (£000's)
Undiscou nted Rank NPC NPC rank EAC EAC Rank
Option 1a (Do Min - OCHRE) 480,839 2 244,664 1 10,554 1
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Option 3 (Two LinAc satellite with CT)
485,933
482,014
482,985
480,141
5 248,250
3 246,342
4 246,886
1 245,881
5 10,709
3 10,627
4 10,650
2 10,607
5
3
4
2
487,770 6 249,259 6 10,753 6
3.5.23 With exception of Option 1a being ranked first, the ranking of net present costs and equivalent annual costs (EAC) are the same as the ranking of affordability discussed above reflecting the common 44 year appraisal period for all options (4 years build/ commissioning and 40 year lease of space) and the relatively similar profile of capital and revenue costs between years under all options. The net present cost analysis does not take account of income so the table does not show the benefit to OUH of gaining additional market share or charitable funding in the Swindon-based options.
3.6
Risk appraisal
3.6.1 This section identifies the relative risks related to the options.
3.6.2 The risk assessment is based on a workshop of key project team members that took place in November. This workshop looked at all key risks in relation to the options and made an assessment of the impact and probability of each risk, before and after risk mitigation action that could be taken.
3.6.3 The workshop assigned the risk scores shown in the following table on the basis of participants’ judgment and assessment of previous service developments and investments. The table on the next two pages sets out the detailed workshop judgement on the relative risk of the options using a probability and impact methodology. The workshop did not separately assess the risk of the option which includes space for CT but no equipment – essentially because its risks will be identical to those of the options without CT
(although obviously the capital costs is higher, which is apparent in the capital appraisal).
3.6.4 The table below summarises the risk performance and ranking. It can be seen that effectively options 2a/2b/2c and 3 have no significant difference in level of risk.
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Table 27 : Summary of risk scores and ranks
Risk Score
Option 1 - Do minimum
111
Options 2a/2b/2c
GWH site 2 Linacs
127
Option 3 GWH site 2
LinAcs + CT
126
Risk rank 1 3 2
3.6.5 The core risk issues are:
3.6.6
The Do Minimum is of its essence significantly lower risk than the other options.
∼
It does not involve needing to work closely with an external organisation
∼
It can be delivered through arrangements with the Trust’s existing
PFI supplier
∼
There are fewer “unknowns”
∼ There is no charitable funding component.
The Do Minimum does however involve a major strategic risk to the market share of the Trust. This is because without a satellite service at Swindon there is a substantial risk that another organisation will establish a new service at Swindon, and because of the access issues the Trust could lose the vast majority of its current Swindon and Wiltshire work. In addition, it is the highest risk in terms of being able to attract staff.
The Swindon based options have very similar levels of risk. Their major risks are around charitable funding, the potential for problems in joint working with GWH, and the linked risk of delay. The option with CT poses a slightly lower staffing risk because of the ability to offer a more attractive job profile. There is a greater level of risk around charitable funding for the option with CT as this requires a greater sum to be raised.
It could be argued that the options with CT are higher risk in general because they cost more – however, as this is taken into account in the financial appraisal the risk scores have not been adjusted to reflect this.
The detailed assessment of the risks and their scores is shown overleaf.
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Table 28 : Relative risks of options
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Ref Risk Relative risks between options
Business/operational
1 Demand exceeds capacity
2 Demand overestimated - for example if no of fractions per patient reduces
3 Charitable funding campaign too slow
4 Charitable funding campaign does not hit minumum target
Risk does not vary between options
The Do Minimum has less mitigation potential as the extra capacity is all at Oxford, so it would be harder to bring in work from other geographies
Not relevant for Do Minimum. Highest for option with CT as more funding needed
Not relevant for Do Minimum. Highest for option with CT as more funding needed
5 Additional staffing not available Do Minimum least attractive for recruitment and retention because has smaller geography to attract pool of staff, and poor transport times for commuting.Option with CT at GWH most attractive to staff as offers more interesting roles
6 Private radiotherapy units take business or other NHS provider develops satellites
7 Staffing costs underestimated -
CIPS
8 Changes to service specification adding to costs without extra income
9 Ineffective joint working with
GWH
10 Tariff reductions beyond those assumed
11 Patients not taking treatment because of journey time to Oxford
Do minimum is substantial risk - likely that GWH would consider partnering with another centre to enable a local services. Private units are lower risk because of lack of links with cancer centres
No differentiation between options
No differentation between options
No risk for Do Minimum. Same level of risks for both GWH options
No differentiation between options
This is primarily about palliative patients who are less likely to be prepared to undertake a longer journey to Oxford. It is greatest under the Do Minimum, as they have to travel for every treatment, but there is also a differential between the two GWH options as the risk does not exist where CT is local, but is there if it is not
Option 1 - Do minimum
Probability after mitigation
Negative impact after mitigation
Risk
Score
Options 2a/2b/2c GWH 2 Linacs
Probability after mitigation
Negative impact after mitigation
Risk
Score
Option 3 GWH 2 LinAcs + CT
Probability after mitigation
Negative impact after mitigation
Risk
Score
4
2
0
0
3
4
1
2
0
2
4
1
3
0
0
4
4
4
3
0
3
2
4
6
0
0
12
16
4
6
0
6
8
4
2
3
3
2
1
1
2
2
2
3
1
2
4
4
4
4
4
3
4
3
2
4
4
12
12
8
4
4
6
8
6
6
4
2
4
4
1
1
1
2
2
2
1
1
2
4
4
4
4
4
3
4
3
1
4
4
4
4
6
8
6
1
16
16
4
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Oxford University Hospitals NHS Trust
Ref Risk Relative risks between options
12
Design/build
Cost of construction increases above assumed levels
13 User specification changes and increases costs
14 Unanticipated on-costs
15 Planning permission - potential extra costs from planning constraints
Implementation
16 Delay meaning capacity not in place in time
17 Unable to achieve planning permission
18 Unable to attract competitive proposals for equipment
19 Infufficient project resourcing
Total risk
The current Do Minimum costing is much higher level than that for the satellites, and so there is a higher risk of scope increate. Also the nature of the PFI contract will make controlling the overall capital costs harder
Same for all options
Same for all options
Same for all options
Higher risk for projects at GWH because they might be delayed due to inter organisational issues, and delays in obtaining charitable funding
Same for all options
Same for all options
GWH options this applies more because of need for resourcing for charitable funding campaign
1
1
3
1
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Option 1 - Do minimum
Probability after mitigation
Negative impact after mitigation
Risk
Score
Options 2a/2b/2c GWH 2 Linacs
Probability after mitigation
Negative impact after mitigation
Risk
Score
Option 3 GWH 2 LinAcs + CT
Probability after mitigation
Negative impact after mitigation
Risk
Score
2 4 8 1 4 4 1 4 4
1
2
1
5
5
4
3
4
4
4
5
5
12
3
111
4
8
4
2
1
3
2
1
2
1
5
5
4
3
4
4
4
10
5
12
6
127
4
8
4
2
1
3
2
1
2
1
5
5
4
3
4
4
4
4
8
4
10
5
12
6
126
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3.7
The preferred option
3.7.1 The results of investment appraisal are as follows:
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Table 29 : Summary of overall results (without additional optimism bias)
Evaluation Option 1
Do minimum
2016 and
2018 LinAc installation
Option 2a
Two LinAc
Satellite no CT
2017
Option 2b
Two LinAc
Satellite no
CT (but CT space incl)
2017
Benefits Rank
Score
Affordability Rank
4
15.9
5/6
Cumulative
10 year contribution
1 a) 1,627k
1 b) (£129k)
Net Present
Cost
Rank
Amount
1/5
Risk Rank
1 a) £244m/
1 b) £247m
1
3
59.7
2
£4,482k
3
£245m
2
68.2
3
£4,197k
4
£246m
2
£245m
3 3 3
Score 111 127 127
Table 30 : Summary of overall results (with additional 16% optimism bias)
127
Option 2c
Two LinAc
Satellite no
CT (but CT space incl)
2016 and
2018
2
68.2
1
£5,427k
Option 3
Two
LinAc
Satellite with CT
2017
1
78.4
4
£3,019k
6
£248m
2
126
Evaluation
Benefits
Affordability
Rank
Score
Rank
Cumulative
10 year contribution
Rank
Amount
Option 1 Do minimum
2016 and
2018 LinAc installation
Option 2a
Two LinAc
Satellite no
CT
2017
4
15.9
5/6
1 a) £1,206k
1 b) (£726k)
3
59.7
2
£3,733k
Option 2b
Two LinAc
Satellite no
CT (but CT space incl)
2017
2
68.2
3
£3,432k
Option 2c
Two LinAc
Satellite no
CT (but CT space incl)
2016 and
2018
2
68.2
1
£4,652k
Option 3
Two LinAc
Satellite with CT
2017
1
78.4
4
£2,254k
Net Present
Cost
Risk Rank
Score
1/5
1 a) £245m
1 b) £248m
1
111
3
£246m
3
127
4
£247m
3
127
2
£246m
3
127
6
£249m
2
126
3.7.2 Option 3 is clearly the best in benefit terms but performs less well in terms of the financial measures. The preferred option which offers the best mix of benefit, cost and risk is option 2c. In going for this option the Trust has the
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Oxford University Hospitals NHS Trust TB2014.12 flexibility to implement the CT subject to success in charitable funding and the effective management of all other financial risks.
The preferred option is described in detail in estates terms in the estates annex.
3.8
Sensitivity analysis
3.8.1 Sensitivity analysis has been undertaken on Option 2c, the preferred option.
3.8.2 The key financial risk associated with the preferred option is the ability to generate charitable funding. We have, therefore modelled the scenario of raising only £2m in donations rather than £3m. The tables below set out the resulting impact on contribution, cumulative contribution and cumulative cash flow comparing the option 2c base case to the new scenario. All tables are based on numbers including optimism bias to because this presents the worst case.
Table 31 : Contribution (£000’s)
Contribution (£000's)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Scenario 1
16/17
943
313
17/18
-162
-572
18/19
-603
-633
19/20
-336
-374
20/21
-317
-357
21/22
2
-40
22/23
332
287
23/24
693
646
24/25
1,059
1,010
25/26
1,413
1,362
26/27
1,628
1,575
Table 32 : Cumulative contribution (£000’s)
Cumulative contribution
(£000's)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Scenario 1
16/17
943
313
17/18
781
-259
18/19
178
-892
19/20
-158
-1,266
20/21
-475
-1,623
21/22
-472
-1,663
22/23
-141
-1,376
23/24
552
-730
24/25
1,611
280
25/26
3,024
1,642
26/27 Variance
4,652 0
3,216 -1,435
Table 33 : Cumulative cash flow (£000’s)
Cumulative cashflow
(£000's)
Option 2c (two LinAc 2016 &
2018 satellite with CT space)
Scenario 1
3.8.3
16/17
-1,334
17/18
1,352
18/19
1,238
19/20
4,008
20/21
6,798
21/22 22/23
9,886 13,291
23/24 24/25 25/26
17,075 21,197 25,679
26/27 Variance
27,746 0
-1,963 313 171 2,903 5,653 8,699 12,060 15,797 19,870 24,301 26,315 -1,431
Under the scenario of lower charitable funding the contribution is worse in the first two years reflecting £1m less charitable funds. In later years this causes a small change in capital charges leading to the overall impact being a cumulative contribution that is £1,435k lower over the period modelled. In this scenario the preferred option would be ranked third, but still ahead of the two
Oxford-based Do Minimum options and Option 3 – it is important to recognise that the comparison with the other Swindon-based options is unrealistic as the numbers presented in the table below assumes both continue to receive the full £3m rather than £2m in charitable monies.
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Oxford University Hospitals NHS Trust
Table 34 : Cumulative contribution ranking with scenario (£000’s)
Cumulative contribution
(£000's)
Option 1a (Do Min - OCHRE) 54
16/17
-456
17/18
-889
18/19 19/20
-1,666
20/21
-2,148
21/22
-2,370
22/23
-2,293
23/24 24/25
-1,924 -1,219
Option 1b (Do Min - inde esti)
Option 2a (two LinAc satellite no CT)
Option 2b (two LinAc satellite with CT space)
-125
636
624
-765
228
186
-1,423
-643
-714
-2,178
-1,208
-1,308
-2,885
-1,499
-1,628
-3,323
-1,471
-1,629
-3,454
-1,114
-1,301
-3,286
-396
-611
-2,774
688
445
Option 2c scenario 313
Option 3 (Two LinAc satellite with CT)
552
-259
45
-892
-977
-1,266
-1,691
-1,623
-2,129
-1,663
-2,246
-1,376
-2,031
-730
-1,454
280
-509
3.8.4
25/26
-148
-1,888
2,126
1,854
1,642
792
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26/27
1,206
-726
3,733
3,432
3,216
2,254
Rank
5
We have also attempted to estimate the switching point at which the best ranked Do Minimum option (Option 1a) becomes preferable to Option 2c if charitable funding is lower than anticipated. If no charitable funding were received the cumulative contribution for Option 2c would be £1,505k be the end of 2026/27 which is still higher than Option 1a raised for Option 2b.
6
1
2
3
4
3.8.5 The Do Minimum options are more expensive in terms of capital costs due to a lack of charitable funding. This disadvantage along with lower activity and income associated with these two options results in them being ranked fourth and fifth. The best ranked Do Minimum (Option 1a) would not become higher ranked in terms of contribution, than Option 2c even if its building related capital costs were removed altogether. Option 1a would only become more affordable than Option 2c if its equipment costs were reduced from £6.4m to
£3.4m which is not credible as this would reduce costs to considerably below the quote from NHS Supplies.
3.8.6 A further sensitivity has been run on activity and, therefore income, to ascertain at what point Option 1a becomes more affordable than Option 2c.
By the end of 2026/27 Option 2c is £3,445k more favourable than Option 1b
(based on the ‘with optimism bias’ numbers). Average income per fraction is
£198 and assuming direct costs of 50% of income i.e. £99, Option 2c would need to undertake approximately 34,800 fewer fractions over the course of the 10 operational years modelled before Option 1a became the preference.
This shortfall is equivalent to 23% of the Swindon activity.
3.8.7 All options are at risk from future reductions in the tariff. The tariff reduced by
10.5% between 2013/14 and 2014/15. Whilst all options are at risk from any further tariff reductions, a further cut of 3.5% on all income at Oxford and the satellite, would eliminate the cumulative £4,652k contribution forecast over the first 10 years of the satellite being operational unless mitigating cost savings were achieved.
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4. The Commercial Case
4.1
Introduction
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4.1.1 This section of the OBC outlines the proposed deal in relation to the preferred option outlined in the economic case.
4.1.2 The section is arranged as follows:
Section 4.2 assesses the various options available for procuring the new
facilities and makes a recommendation.
Section 4.3 covers the procurement of equipment.
Section 4.4 outlines the potential for risk transfer
Section 4.5 describes the commercial arrangements to be put in place
between the OUH and GWH.
4.2
Procurement options - facilities
4.2.1 Consideration has particularly been given to the requirements of EU procurement directives and the Public Contract Regulations 2006 and the programme impact of compliance with these. The four key procurement options available to the Trust are as follows:
4.2.2
Traditional Lump Sum Tender.
Design and Build.
ProCure21 Plus.
Private Finance Initiative (PFI).
These options have been reviewed against a number of key criteria, as follows:
Cost certainty.
Value for money.
Programme.
Control of design and quality.
Future flexibility.
Traditional Lump Sum Tender
4.2.3 Under a traditional procurement, the detailed design is completed by the design team retained by the Trust, and the building contract for that design is then tendered and let to a main contractor.
Advantages of Traditional Tender
4.2.4 A traditional route will provide the Trust with full control of the detailed design and therefore maximum influence on design quality
4.2.5 The cost of design changes at later stages is typically lower than under a
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Oxford University Hospitals NHS Trust TB2014.12 design and build or PFI contract and there can be more cost certainty if changes are priced against tendered rates.
4.2.6 As the project will have been fully specified by the Trust prior to the tender process, the prices returned by contractors are likely to be directly comparable and more keenly priced than under a design and build procurement as there will be less risk and uncertainty for the contractor.
Disadvantages of Traditional Tender
4.2.7 This option often results in a lower tender figure than other procurement routes, but this can increase significantly during the construction phase.
There is a risk of ongoing design changes, variations and unforeseen circumstances leading to unplanned cost increases, delays and contractual claims. Often the full impact of these is not finalised until long after completion.
4.2.8 This option results in a higher level of up-front design fees being incurred by the Trust than in a design and build tender, as the Trust pays for the full detailed design to be developed.
4.2.9 There is no early contractor involvement if a single stage tender route is adopted.
4.2.10 There is a later start on site compared to other procurement routes because sufficient completed and coordinated design information for robust lump sum pricing is required prior to commencing tendering and appointment stage.
Design and Build
4.2.11 Design and Build contracts are typically used for projects where the building form is comparatively standardised and well understood, so that the contractor can price the project and the risks associated with design development with a degree of confidence. This type of approach is suited to projects where the client is expected to be relatively uninvolved in developing the project design.
4.2.12 The Trust would appoint a design team to complete the concept stage of design only. A contractor is then appointed on the basis of this design, with the designer’s contracts then generally novated from the Trust to the appointed Design and Build contractor.
Advantages of Design and Build tender
4.2.13 As the detailed design is undertaken by the contractor, the Trust incurs lower up-front design team fees. However the contractor’s design fees are of course reflected in its overall tender price.
4.2.14 Tenders are invited on a lump sum basis and therefore the Trust would have certainty of final capital cost, unless it then makes design changes postcontract.
4.2.15 Recent years have seen a number of cancer centre developed across the UK
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Oxford University Hospitals NHS Trust and internationally under the design and build route, resulting in developments in exemplar designs and good practice.
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4.2.16 There would also be a single point of contact for the design and construction of the works, simplifying the argument of who is liable if a problem arises and reducing the risk of claims. The single point of responsibility also means that the contractor is not relying on other parties for design or for the supply of information.
4.2.17 The contractor undertaking the work will have knowledge of their design and they will have a better understanding of how it needs to be built decreasing the time required during the construction stage.
4.2.18 As the contractor is both the designer and the constructor, they are more likely to develop a design that is easier to build and thereby reduce the risk to cost and programme.
Disadvantages of Design and Build tender
4.2.19 As the Trust only produces an outline design prior to issuing a Design and
Build tender, with the selected contractor producing the detailed design, the
Trust’s ability to influence design quality is limited.
4.2.20 As the design has not yet been developed in detail and full planning consent may not yet have been obtained, there will still be a number of unknowns.
Contractors will include for this level of risk in their tender prices.
4.2.21 Any changes to the design made during the construction period will be expensive to implement.
4.2.22 As a significant proportion of the detail of the design will be left to the contractor’s interpretation, it can be more difficult to make accurate price comparisons between tenderers who have made different assumptions.
4.2.23 A lower quality of design can arise because the contractor is trying to minimise their costs.
ProCure21 Plus (P21+)
4.2.24 P21+ is a new version of the ProCure21 procurement route which commenced in October 2010. P21+ is the recommended procurement route of the Department of Health for publicly-funded NHS capital projects over £1 million in value. It is a construction solution using a partnering framework run by the Department of Health, on which there are six pre-selected Principal
Supply Chain Partners (PSCPs). As the Department of Health has procured the frameworks in accordance with the EU procurement directives already, these PSCPs can undertake publicly-funded NHS projects without a Trust having to go through the OJEU tender process. This saves several months tendering time on each scheme compared to a traditional tender. P21+ recommends that Trusts select a PSCP as early as possible. The PSCPs then partner with the Trust through to delivery of the scheme.
4.2.25 The PSCPs (generally large construction contractors) have pre-accredited
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Oxford University Hospitals NHS Trust TB2014.12 supply chains of advisers such as architects, engineers and healthcare planners, although where advisers are in place prior to appointment of a
PSCP Trusts are able to (and often do) specify that they wish these advisers to continue on the project. The Trust and the PSCP work with the supply chain members to develop the brief, the design and eventually the
Guaranteed Maximum Price (GMP).
4.2.26 By using a GMP, the Trust and the PSCP agree a final cost of the scheme.
Assuming the Trust do not make changes that affect cost, the final cost will be that agreed at GMP. If there is any overspend, it is borne by the PSCP, and any under spend is shared between the Trust and the PSCP.
4.2.27 P21+ uses the NEC ECC (Option C) suite of contract forms widely used for public sector and engineering contracts. It is fully compliant with the OCG
Achieving Excellence in Construction initiative, and supported by them for use in public sector procurement as it promotes collaborative working, uses simple drafting, has standard add on options (sections) for specific elements and looks to resolve issues before they will impact on the project.
4.2.28 The P21+ procurement process has a break contract clause prior to the construction phase of the project (phase 4). Under this procurement route, the
Trusts interests are protected as there is no commitment under the contract beyond the latest stage in the contract. In addition, only the actual costs incurred within each stage are reimbursable to the Contractor. The stage of works to be procured by the Trust must be declared as part of the procurement process in selecting a PSCP.
Advantages of NHS P21+
4.2.29 Once a GMP is agreed, any increases in cost are borne by the contractor, provided no changes are made by the Trust. If the out-turn cost on completion works out less than GMP, any savings are shared. To ensure that the need for Trust-initiated changes post-GMP is minimised, it is important that there is active, hands-on project management throughout the design and development process.
4.2.30 There would be a considerable saving in the cost of procurement compared to a traditional procurement route.
4.2.31 As PSCPs would have been pre-selected, there would be no requirement for the Trust to go through an OJEU process, which can save several months on programme compared with a traditional or design and build procurement route. P21+ also enables early involvement of the contractor’s supply chain in the business case and design process. This helps the scheme by providing early advice on feasibility and affordability issues and improving construction planning, providing reassurance to the Trust on cost, time and quality. The supply chain also develops a far better understanding of the scheme and the client.
4.2.32 P21+ schemes are offered dedicated support from the P21+ team at the
Department of Health and have access to a range of tools and documentation to assist with the process. The P21+ team will also mediate and help to
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Oxford University Hospitals NHS Trust TB2014.12 resolve any disagreement between a Trust and PSCP. There is also access to dedicated VAT advice, which helps maximise VAT reclaim.
4.2.33 The Trust, working with the PSCPs supply chain members, would be able to retain control over the final design of the project and ensure design quality aspirations are met.
4.2.34 A number of similar projects are currently progressing, or have been completed under P21 and P21+. There is, therefore, significant relevant experience within the PSCPs.
4.2.35 It is possible to procure major medical equipment through the PSCP, with advantages to timescales, choice and design as described above.
Disadvantages of P21+
4.2.36 Whilst P21+ costs are benchmarked by the Department of Health to determine value for money, the elimination of a competitive tendering process means that there is a risk that the GMP may not be as competitive as that obtained through a traditional tendering exercise.
4.2.37 Whilst cost advisers form part of the supply chain provided by the PSCP, many Trusts choose to retain their own independent cost advisers to check and provide reassurance regarding the value for money of the PSCP’s solution. This is effectively a double-running cost, although this is generally minimal in relation to scheme size and is more than offset by the saving in procurement costs compared to a traditional route.
4.2.38 Fees for supply chain members appointed through the PSCP are subject to the addition of an overhead percentage, generally in the region of 6%.
Adviser costs can therefore be higher than if the Trust directly appointed and managed the design team.
4.2.39 P21+ is based on the principle of partnering and an open-book relationship between the Trust and its selected PSCP. Should the trust between the two parties break down, the project can run into difficulties.
Private Finance Initiative (PFI)
4.2.40 Under PFI, the NHS Trust specifies the outputs it requires and a private sector consortium then contracts to meet those requirements by undertaking the design, construction, financing, maintenance and operation of a facility which meets the Trust’s specification. The Trust pays for the use of this building via a fixed unitary payment covering the cost of the building and the facilities management support services provided by the PFI partner. PFI contracts are generally around 30 years in length.
4.2.41 The risk involved in the project is shared between the parties, with each party managing the risks they are best able to. This provides incentives for the private sector to perform, with the ability for the NHS client to make deductions for poor performance.
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Advantages of PFI
4.2.42 Under PFI, the Trust transfers to the private sector partner the vast majority of risks associated with designing, building, maintaining and operating the new building. Hence the Trust will not be liable for any delays or cost over-runs in the construction of the new cancer centre, or the costs of maintaining the building in a defined condition throughout its lifecycle. The Trust will be able to make deductions from the tariff paid to the PFI partner for any non-availability of accommodation or shortfalls in quality.
4.2.43 PFI offers the Trust revenue cost certainty, in that a fixed unitary payment is determined as part of the project agreement, which gives the Trust certainty regarding its financial commitment to the facility for the full life of the project.
4.2.44 The PFI partner is contracted to provide a building which is fully maintained to agreed standards throughout the life of the contract, hence the Trust does not have to deal with backlog maintenance. However, the costs of achieving these standards are funded within the PFI contract, which can affect affordability.
Disadvantages of PFI
4.2.45 In relation to the level of capital investment being undertaken, procurement times for a PFI project are likely to be disproportionately long. HM Treasury research in 2003 indicated that the timescale from placing an OJEU advert to signing a PFI contract (financial close) averaged 22 months across all sectors and construction works will not commence until after this point. Health projects are typically at the longer end of the spectrum.
4.2.46 Whilst it is possible that a PFI partner may be incentivised to deliver a shorter construction time than under a publicly funded route, this is almost certain to be outweighed by the extended procurement timescale.
4.2.47 Small PFI schemes typically face disproportionately high transaction and bid costs as compared to larger schemes. Small schemes face a similar level of legal and technical documentation, due diligence requirements and financial modelling to that required by lenders for much larger projects. As a result, the cost of procurement is relatively higher, in relation to capital value, for small schemes. This means that projects of the size of the Milton Keynes and
Swindon schemes are unattractive to the market and are likely to fail to generate any interest from potential bidders
4.2.48 The cost of future changes to the building under PFI can be high, as these can only be carried out by the incumbent provider. Hence, should the Trust wish to change or extend the building in the future in line with patient demand, it is unlikely to be able to get good value for money .
Summary of appraisal of different procurement routes
4.2.49 The table below summarises advantages and disadvantages of each of the procurement routes previously considered:
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Table 35 : Summary of advantages and disadvantages of procurement routes
Cost certainty
Value for money
Programme
Control of design and quality
Future flexibility
Early contractor involvement
Traditional
Tender
Design and
Build x
*
ProCure21
Plus
(P21+)
Private
Finance
Initiative
(PFI)
* = based on tender price
# x
4.2.50 x
x
x
x
# = based on out-turn cost
x x x
On the basis of the information available at the present time, using the simple summary table above to review the procurement options against the Trust’s priorities would suggest that the most preferential procurement route for the project could be P21+. The key reasons for this procurement route are:
Cost certainty – after agreement of the GMP, any increases in cost are borne by the contractor, subject to Trust changes, with gain share if the cost is below the GMP.
Control of design quality – the Trust is able to maintain control of the design to ensure that its quality and functionality aspirations are met.
Speed of procurement – as the framework has already been through the
OJEU process it is possible to select a PSCP very quickly and at an early stage.
Buildability – early involvement of the PSCP and their supply chain helps produce a design which is buildable and hence reduces risk
Equipment procurement – it is possible to procure major medical equipment through the PSCP, with advantages to timescales, choice and design
4.3
Procurement of equipment
4.3.1 The majority of the equipment costs relate to the Linear Accelerators. There is a substantial advantage in the equipment being supplied by Varian as it ensures the maximum integration between the centre and the satellites, and also supports a common information system across them. However, this does limit the ability of the Trust to ensure maximum competitive pressure on costs.
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4.3.2 The main options for the Trust in procuring the LinAcs are:
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Through an expansion of the existing arrangement with the PFI provider for the Churchill Cancer Centre.
Through a separate procurement.
Through the P21+ process.
Through a national contract negotiated by NHS Supplies.
These different options are briefly assessed below.
Expansion of current PFI contract
4.3.3 The main benefit of this approach is that it is likely to provide the easiest implementation of an integrated service between the satellites and the centre, as a single provider would be responsible for a Managed Equipment Scheme covering both centre and satellite.
4.3.4 The main disadvantage is that it can be expected there will be a substantial cost premium, and the Trust has no ability to apply any competitive pressure to ensure good value for money.
Separate procurement
4.3.5 While this is theoretically possible, the fact that there is a major advantage in using Varian equipment limits the potential of a normal competitive procurement to maximise value for money. Initial cost soundings directly with the supplier indicated that costs would be likely to be high.
Through the P21+ procurement route
4.3.6 It is possible under P21+ to procure major medical equipment through the
PSCP, thus avoiding the need to go through the OJEU selection process.
This has a number of advantages:
4.3.7
There is a time saving in the procurement process and a saving in Trust resource in managing the procurement.
The Trust is free to choose the most appropriate equipment to best suit its clinical needs and to be compatible with existing systems.
The manufacturer can be involved in the design process at an early stage, avoiding the need to design the bunkers for the “worst case” of several manufacturers.
There is precedent to this being done with linear accelerators on previous radiotherapy schemes.
The PSCP may be able to use negotiating power to reduce overall costs.
However, the benefits of doing this are not quantifiable at this stage, particularly in terms of the ability of the PSCP to achieve savings through enhanced purchasing power.
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Through national NHS Supplies Contract
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4.3.8 NHS supplies have recently negotiated a contract for a call off order for 20
Linear Accelerators. They have been able to use the number of LinAcs includes to secure significant savings. Subject to the Board agreeing this OBC they have agreed that the OUH can take four of these to support the two satellite units it plans. The costs negotiated by NHS supplies are significantly below those indicated by a direct estimate from the supplier.
The conclusion reached is that the equipment should be procured through NHS
Supplies. This will require a formal request from the Trust to NHS supplies to reserve the equipment.
It should be noted that the main disadvantage of procuring through NHS supplies is that VAT has already been paid by the NHS. This means that the VAT cannot be reduced by the use of charitable funds to purchase the equipment. However, the proposed approach is to maximise the use of charitable funds to purchase the non-
LinAc elements of the equipment, therefore reducing VAT through a different route.
4.4
Potential for risk transfer
4.4.1 The general principle is that risks should be passed to ‘the party best able to manage them’, subject to value for money. The table below summarises how it is anticipated that risks are shared between the OUH and the providers of the buildings and equipment.
Table 16: Risk transfer matrix
Risk Category Potential allocation
1. Design risk
2. Construction and development risk
3. Transition and implementation risk
4. Availability and performance risk
5. Operating risk
6. Variability of revenue risks
7. Termination risks
8. Technology and obsolescence risks
9. Control risks
10. Residual value risks
11. Financing risks
Public Private Shared
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Risk Category Potential allocation
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12. Legislative risks
13. Other project risks
Public Private Shared
4.5
Commercial arrangements between OUH and GWH
4.5.1 A Memorandum of Understanding to guide this OBC was agreed between the two Trusts. This section confirms the core elements of the MOU and provides additional detail as appropriate. Agreement by the two Trust Boards to the
OBC will confirm these core elements. The section covers
Ownership of the facility.
Lease of land for the facility.
Principles governing capital costs in relation to the facility and its implementation.
Management and operation of clinical services within the unit.
Principles in relation to linked clinical services.
Principles in relation to support services for the facility.
Fundraising.
Ownership of the facility
4.5.2 The radiotherapy building and all equipment within it will be owned by the
OUH.
Lease of land
4.5.3 The land on which the building is placed is owned by GWH. It will be leased to the OUH for a minimum period of 40 years at what is effectively a peppercorn rate. However, the lease cost will include an element that will support the necessary investment GWH will need to make in electrical infrastructure.
Car parking
4.5.4 The OUH will bear capital costs for the provision of additional car parking spaces needed because of the presence of the unit on site (spaces for staff and patients attending the unit, and to replace lost car parking spaces resulting from the new facility being developed).
Electrical infrastructure
4.5.5 The WT team leading the capital costing work have identified a capital cost of to update the electrical infrastructure to enable the operation of the radiotherapy facility. It is assumed that this cost will be born by OUH and is within the capital costs.
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Management and operation of clinical services
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4.5.6 The radiotherapy services will be managed and operated by OUH. OUH will receive the income for those services and will bear the costs of provision. The clinical and administration staff working at the radiotherapy facility will be employed by the OUH. In order to support recruitment and retention, OUH staff based at GWH will be given equal access to GWH staff facilities (learning and development, housing and car parking). However they will work to OUH terms and conditions. The OUH will have full responsibility for quality of care.
4.5.7 Nothing within this OBC shall be taken to imply that clinical services operated by GWH will be taken over by OUH. In order to support the financial viability of the radiotherapy facility, the GWH will be willing to explore with OUH the potential to change referral patterns so that work currently sent to external tertiary providers would be sent to OUH where this is clinically appropriate.
Support services for the facility
4.5.8 OUH will bear the costs of electricity, rates and other utility costs (e.g. IT, telephony) for the radiotherapy service. Should the most sensible arrangement be through a recharge from GWH, this will be at cost.
4.5.9 The OUH may establish an SLA for support services for the building such as cleaning, maintenance etc. with the GWH PFI partner. However, the OUH will be free to secure such services elsewhere if it is more cost effective.
Relationship with GWH PFI partner
4.5.10 GWH has confirmed that it is the owner of the site that it will lease to the
OUH, that the PFI partner does not have rights which will hinder the granting of the lease, and that it will be responsible for any necessary discussions with the PFI partner as a result of the development. In particular:
GWH will agree with the partner whether the boundary for the area covered by the support services agreement with the partner should change
They will confirm that it is not intended to place any significant retail facilities within the new building.
Fundraising
4.5.11 OUH and GWH agree to the launch of a single fundraising appeal for cancer services on the Swindon site. The appeal will be self-funding. Both Trusts will support and promote the appeal. The appeal will need to be Swindon focussed and led. The appeal will be governed by a Steering Group with senior representation from both Trusts.
4.5.12 GWH will manage the appeal through the enhancement of its fundraising team.
4.5.13 The first £3m of funding achieved by the appeal will be used to reduce the capital costs to the OUH of developing and equipping the radiotherapy facilities. Additional funds raised above this will be devoted to support wider investment in cancer services on the site and the priorities for this will be set
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4.5.14 GWH will be leading the appeal, but will ensure that its governance enshrines the above agreement and is committed to setting up the appeal to achieve the financial targets set out within this OBC, including ensuring that the appeal can be launched in June 2014 (see management case).
Financial elements of the agreement
4.5.15 The OBC financial model is based on the following payments from OUH to
GWH.
Lease and service level agreement with GWH
(preferred option £000's)
Lease
Hard & soft FM
Utilities
Total
16/17
9
161
19
189
17/18
9
230
27
266
18/19
9
230
27
266
19/20
9
230
27
266
20/21
9
230
27
266
21/22
9
230
27
266
22/23
9
230
27
266
23/24
9
230
27
266
24/25
9
230
27
266
25/26
9
230
27
266
26/27
9
230
27
266
4.5.16 The table above assumes costs in 2016/17 are lower because only one LinAc is operational. The lease cost shown relates to a peppercorn rent for the land plus the lease of car parking space. The Trust reserves the right to contract for hard and soft facilities management services from the best value supplier which may not be GWH. Utilities costs will be based on ‘pass through’ costs recharged by GWH.
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5. The Financial Case
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The purpose of this section is to set out the forecast financial implications of the preferred option (as set out in the economic case section) and the proposed deal (as described in the commercial case).
5.1
Impact on the organisation’s income and expenditure account
5.1.1 The table below sets out the impact of the preferred option on OUH’s income and expenditure account. As in the economic case all numbers relate to the radiotherapy service in Oxford and the Swindon satellite unit.
Table 36 : Income and expenditure account without additional optimism bias
Income and expenditure
(£000's)
Oxford activity
Swindon activity
Total activity
Income from operations
Charitable funds*
Total income
Pay
Non pay
Capital charges
Total costs
Contribution
% contribution
16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
51,169 50,496 47,222 48,595 49,967 51,497 53,026 54,754 56,482 58,275 60,067
5,524 7,366 15,138 15,586 16,034 16,515 16,995 17,567 18,138 18,727 19,316
56,693 57,862 62,360 64,181 66,001 68,011 70,021 72,321 74,621 77,002 79,383
11,566 11,357 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
1,275 390 0 0 0 0 0 0 0 0 0
12,841 11,747 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
7,069 7,014 7,408 7,487 7,598 7,701 7,794 7,911 8,021 8,162 8,394
1,666
3,088
1,748
3,071
2,025
3,345
2,034
3,350
2,297
3,316
2,307
3,283
2,317
3,250
2,329
3,217
2,340
3,184
2,352
3,152
2,364
3,166
11,822 11,834 12,778 12,871 13,211 13,291 13,361 13,456 13,546 13,666 13,924
1,019
9%
-87
-1%
-529
-4%
-263
-2%
-245
-2%
73
1%
401
3%
761
5%
1,126
8%
1,478
10%
1,692
11%
Table 37 : Income and expenditure account with additional 16% optimism bias
Income and expenditure
(£000's)
Oxford activity
Swindon activity
Total activity
Income from operations
Charitable funds*
Total income
Pay
Non pay
Capital charges
Total costs
Contribution
% contribution
16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
51,169 50,496 47,222 48,595 49,967 51,497 53,026 54,754 56,482 58,275 60,067
5,524 7,366 15,138 15,586 16,034 16,515 16,995 17,567 18,138 18,727 19,316
56,693 57,862 62,360 64,181 66,001 68,011 70,021 72,321 74,621 77,002 79,383
11,566 11,357 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
1,275 390 0 0 0 0 0 0 0 0 0
12,841 11,747 12,248 12,607 12,966 13,364 13,762 14,217 14,672 15,144 15,616
7,069
1,666
3,164
7,014
1,748
3,146
7,408
2,025
3,419
7,487
2,034
3,423
7,598
2,297
3,388
7,701
2,307
3,353
7,794
2,317
3,319
7,911
2,329
3,285
8,021
2,340
3,251
8,162
2,352
3,218
8,394
2,364
3,231
11,898 11,909 12,851 12,943 13,283 13,362 13,430 13,524 13,613 13,732 13,989
943
8%
-162
-1%
-603
-5%
-336
-3%
-317
-2%
2
0%
332
2%
693
5%
1,059
7%
1,413
9%
1,628
10%
* Charitable funding is also received in earlier years
5.1.2 The development makes a positive contribution in 2016/17 entirely due to the inclusion of £1,275k in charitable monies before moving into deficit for the period 2017/18 to 2020/21. The contribution then increases from 2021/22 through to 2026/27 by which time it will have reached 11%/10%.
5.1.3 It should be noted that the total anticipated from charitable funding is £3m, with the balance between this amount and the £1.7m shown in the table being generated in 2015/16 and 2016/17.
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5.1.4
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It should also be noted that £37k in staff costs would be incurred in the last three months of 2015/16. These costs relate to three employees who would start work six months before the first LinAc goes live.
5.1.5 The whole time equivalent number of staff required between Oxford and the satellite is shown in the table below. The number of staff has been modelled based on changes in activity at both sites.
Table 38 : Staff (whole time equivalent)
Swindon-based options staff w.t.e.
Medical consultants
Radiographers
Physicists
Engineers
Nursing
IT
Total
16/17
16.4
73.0
31.3
6.5
3.9
2.5
133.6
17/18
16.5
70.3
31.3
5.8
3.9
2.5
130.2
18/19
16.7
76.0
34.0
6.3
4.3
2.5
139.7
19/20
16.8
78.0
34.1
6.3
4.3
2.5
141.9
20/21
17.0
80.4
34.2
6.3
4.3
2.5
144.6
21/22
17.2
82.0
34.3
6.8
4.3
2.5
147.0
22/23
17.3
84.4
34.4
6.8
4.3
2.5
149.6
23/24
17.5
87.4
34.5
6.8
4.3
2.5
152.9
24/25
17.7
89.4
34.6
7.3
4.3
2.5
155.7
25/26
17.9
92.9
34.7
7.3
4.3
2.5
159.5
26/27
18.1
98.9
34.8
7.3
4.3
2.5
165.8
5.2
Impact on cash flow
5.2.1 The tables below shows cash flows for the preferred option in the period to the end of 2026/27 – the table includes columns for 2014/15 and 2015/16 to reflect the building period.
Table 39 : Cash flow without additional optimism bias
Cashflow (£000's)
Income from operations
Charitable funds
Pay
Non pay excl deprec
Total operating activities
Cumulative cash
Building costs
Lifecycle capital
Equipment
Total investing activities
Cumulative cash
Total cash
14/15
10,513
422
-6,524
-1,248
3,163
3,163
-2,420
0
0
-2,420
-2,420
743
15/16
10,900
913
-6,574
-1,497
3,742
6,905
16/17
11,566
1,275
-7,069
-1,904
3,869
10,774
17/18
11,357
390
-7,014
-2,001
2,732
13,506
18/19
12,248
0
-7,408
-2,268
2,572
16,078
19/20
12,607
0
-7,487
-2,305
2,815
18,894
20/21
12,966
0
-7,598
-2,516
2,852
21,746
21/22
13,364
0
-7,701
-2,513
3,150
24,896
22/23
13,762
0
-7,794
-2,489
3,479
28,375
23/24
14,217
0
-7,911
-2,467
3,840
32,214
24/25
14,672
0
-8,021
-2,445
4,206
36,420
25/26
15,144
0
-8,162
-2,423
4,559
40,980
-5,485
0
0
-5,485
-203
0
-2,640
-2,843
0
-4
0
-4
0
-4
-2,640
-2,644
0
-5
0
-5
0
-24
0
-24
0
-24
0
-24
0
-36
0
-36
0
-20
0
-20
0
-49
0
-49
0
-44
0
-44
0
-39
-2,640
-2,679
-7,905 -10,748 -10,752 -13,396 -13,401 -13,425 -13,449 -13,485 -13,505 -13,554 -13,598 -16,277
26/27
15,616
0
-8,394
-2,444
4,778
45,758
-1,000 25 2,754 2,682 5,492 8,321 11,447 14,890 18,709 22,866 27,381 29,481
Table 40 : Cash flow with additional 16% optimism bias
Cashflow (£000's)
Income from operations
Charitable funds
Pay
Non pay excl deprec
Total operating activities
Cumulative cash
Building costs
Lifecycle capital
Equipment
Total investing activities
Cumulative cash
Total cash
-2,807
0
0
-2,807
-2,807
356
14/15
10,513
422
-6,524
-1,248
3,163
3,163
15/16
10,900
913
-6,574
-1,517
3,722
6,885
16/17
11,566
1,275
-7,069
-1,946
3,827
10,712
17/18
11,357
390
-7,014
-2,043
2,690
13,401
18/19
12,248
0
-7,408
-2,310
2,530
15,932
19/20
12,607
0
-7,487
-2,345
2,775
18,707
20/21
12,966
0
-7,598
-2,555
2,813
21,520
21/22
13,364
0
-7,701
-2,551
3,112
24,632
22/23
13,762
0
-7,794
-2,526
3,442
28,074
23/24
14,217
0
-7,911
-2,503
3,804
31,877
24/25
14,672
0
-8,021
-2,479
4,171
36,048
25/26
15,144
0
-8,162
-2,457
4,526
40,574
26/27
15,616
0
-8,394
-2,476
4,746
45,320
-6,363
0
0
-6,363
-235
0
-2,640
-2,876
0
-4
0
-4
0
-4
-2,640
-2,644
0
-5
0
-5
0
-24
0
-24
0
-24
0
-24
0
-36
0
-36
0
-20
0
-20
0
-49
0
-49
0
-44
0
-44
0
-39
-2,640
-2,679
-9,170 -12,046 -12,049 -14,694 -14,699 -14,722 -14,746 -14,782 -14,802 -14,851 -14,896 -17,574
-2,285 -1,334 1,352 1,238 4,008 6,798 9,886 13,291 17,075 21,197 25,679 27,746
5.2.2 The cash balance steadily increases as the operation of both the Oxford and
Swindon sites generates between £2.7m and £4.7m in cash each year from
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2017/18 to 2025/26. In 2026/27 the Trust will need to invest £2.6m in replacing the first of the two LinAcs and associated equipment at Swindon – the second LinAc would need to be replaced in 2028/29.
5.3
Impact on the balance sheet
5.3.1 The proposed expenditure will have the following impact:
Increasing the fixed asset base of OUH, subject to valuations, by £9.4m for buildings (including additional optimism bias) and £5.3m for equipment.
The equipment will be split between £3m worth of donated assets and
£2.3m NHS funded assets. Depreciation will be charged to both forms of equipment asset, but the 3.5% interest charge will only apply to NHS funded assets.
The building will be depreciated over 40 years based on the length of the lease with GWH. Equipment will be depreciated over 10 years. We have included within the economic and financial modelling the need to replace equipment every 10 years.
Cash generated through operations will become available for OUH’s capital programme. The model assumes cash is used to replace equipment as it reaches the end of its 10 year life, but is otherwise available to be invested elsewhere in the Trust. By 31 st
March 2027 a cash balance of £27.7m is forecast (‘with additional 16% optimism bias’ variant).
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6. The Management Case
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This section of the OBC addresses the ‘achievability’ of the scheme. Its purpose, therefore, is to build on the SOC by setting out in more detail the actions that will be required to ensure the successful delivery of the scheme in accordance with best practice. This section includes the following elements:
Programme and project management arrangements – Section 6.1
The programme plan – Section 6.2.
Use of external advisors – Section Table 42 :
Change management – Section 6.4
Benefits realisation – Section 0
Post project evaluation – Section 6.7
Charitable appeal – Section 6.8
6.1
Programme and project management arrangements
6.1.1 The scheme is a core part of the OUH’s overall radiotherapy development programme. This programme consists of:
6.1.2
This project
The proposed investment in radiotherapy services at Milton Keynes
Hospital
While the two projects have minimal overlap in terms of patient populations served there is clearly a linkage of terms of implementation as the same OUH department will be leading on the delivery of both proposals. The two projects will therefore be led by a single overarching Investment Programme
Board which will ensure that the implementation and risks of the two projects are effectively managed together.
6.1.3 The Senior Responsible Officer is Sir Jonathan Michael, Chief Executive of the OUH NHS Trust. The Chief Operating Officer will take on the responsibility of Programme Sponsor and will have Trust Board accountability for the programme together with the following roles:
Ensure that the projects progress to deliver the plans set out in the Trust
IBP.
Ensure support from partner agencies to deliver their aspects of the change required to realise the vision set out in the overall Trust strategy.
Ensure commitment by all members of the board through to the completion of the construction phase.
Maintain visible and sustained commitment to the programme.
Take the lead responsibility for risk relating to the project and for the realisation of associated benefits – balancing the acceptable level of risk against objectives and business opportunities.
Holding the Programme Director to account
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6.1.4
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As the proposal requires strong interworking between OUH and GWH hospitals there will also be a GWH Radiotherapy Project Partnership Board which will provide the leadership for all elements of the Project which effectively require joint working. The elements of the Project which will be the key focus of the Partnership Board will be:
6.1.5
The fundraising appeal.
Development of all necessary inter-Trust contract documentation (leases,
SLAs etc.).
Clinical interrelationships between radiotherapy and other cancer related clinical services on site at GWH.
Engagement of patients/users in the project
Capital investment/changes on GWH site required for the project which are not directly part of the radiotherapy service (such as electrical infrastructure)
Obtaining planning permission
There will be a project team which will be responsible for the day to day delivery of all elements of the project. It will be supported by external expert
advice as required (see section Table 42 : ).
Figure 8 : Programme reporting arrangements
OUH NHS
Trust Board
GWH NHS
Foundation
Trust Board
OUH Radiotherapy
Investment
Programme Board
Project Delivery
Team
GWH/OUH
Partnership
Project Board
Cancer Services
GWH Board
Charitable
Funds Sub-
Committee
Cancer
Fundraising
Appeal
Governing Board
Internal HR and
Finance Support
Clinical Team
Expert Advisers:
Project Management,
Architecture, Engineering and Quantity Surveying
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6.1.6 The table below sets out the membership of key Programme/Project Groups.
Table 41 : Key programme/project groups – Roles and membership
Group Role Membership
Radiotherapy
Investment
Programme
Board
To ensure the development is delivered to agreed timescales and within agreed budgets.
To ensure best value which reflects the needs of service users and staff whilst ensuring public and stakeholder confidence.
Director of Clinical Services,
Divisional General Manager Cancer
Services, Lead Clinician Cancer
Services, Radiotherapy Investment
Programme Director, [Finance lead
TBA]
GWH
Partnership
Project
Board
Agree all necessary contracts and SLAs. Identify and manage risks in relation to the hospital site.
OUH -Divisional General Manager
Cancer Services, Lead Clinician
Cancer Services, Radiotherapy
Investment Programme Director
GWH - Director of Finance, Head of
Cancer Services, Head of Estates
[other TBA]
Appeal
Governing
Board *
Project
Delivery
Team
Establish and lead the fundraising appeal. Ensure it is appropriately governed.
Membership to be nominated by the
GWH Partnership Project Board, but to include senior staff from both
Trusts.
To ensure co-ordination of the project in terms of its delivery to prescribed time, quality and cost parameters.
Project Manager, Finance
Representative, HR representative,
Lead Clinician Cancer Services,
Manager of Radiotherapy Services,
Radiological Projection Advisor,
Commissioning/Equipping Manager and Support Services representatives from GWH Trust.
6.1.7 The project will be managed in accordance with PRINCE 2 methodology.
6.2
Project plan
6.2.1 The following key milestones are those extracted from the MCP attached within the estates annex to this OBC.
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Table 42 : Project plan
Activity
Project Organisation
Establish OUH Radiotherapy Investment Programme Board
Establish GWH Partnership Project Board
Establish Project Team
Preparation of Detailed Project Plan (PID)
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By date
31 January 2014
Outline Business Case (OBC)
OBC Approval from Trust Board
OBC Approval from TDA
PSCP Selection
Register Scheme with DoH P21+ Centre and receive HLIP
Issue HLIP
Receive HLIP responses
Preparation for open days
Open day
Appoint PSCP
Full Business Case (FBC)
Submit FBC to Trust Board
FBC Approval from TDA
Detail Design Main Scheme
Planning Application – Decision Notice
Design
Detailed Design
Production Information
On Site Works
Main Scheme
Commissioning (first LinAc)
22 January 2014
22 March 2014
Mid-March 2014
9 July 2014
Early September
2014
End July 2014
End July 2014
End September 2014
1 October 2014 -
31 March 2016
1 April 2016 - end June 2016
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6.3
Use of special advisers
6.3.1 Special advisers will be used in a timely and cost-effective manner in accordance with the Treasury Guidance: Use of Special Advisers. Advice will be procured in the following areas:
Table 20: Use of special advisers
Specialist Area Adviser
Financial – for FBC
Project Management
To be confirmed
WT Partnership
Architecture
Mechanical & Electrical
Engineer
Structural Engineer
AFL
Arup
Wareham & Associates
Quantity Surveying
Principal Supply Chain
Partner (PSCP)
WT Partnership
To be confirmed
6.4
Outline arrangements for change and contract management
6.4.1 To the extent that changes are required within the Trust, these will be dealt with by the Project Board in discussion with the clinical heads of each department. Help and support will be provided to the clinical services and departments via project management from capital estates which will be over seen by the Project Board. Assistance will include support from IT.
6.4.2 In relation to plans for the management of new premises, the operational arrangements will be included within the building operational policy.
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6.5
Benefits realisation plan
6.5.1 The key benefits anticipated from this investment and the approach for achieving them is outlined in the table below. These benefits are directly
linked to the objectives for the investment described in section 2.5.
Ref Benefit
1 The delivery of sufficient radiotherapy capacity to meet the needs of the OUH catchment population.
2
3
A substantial reduction in the number of lengthy patient journeys to receive radiotherapy
The enhancement of integrated cancer services on the Swindon site leading to better service for patients
Approach for realisation
This benefit will be directly delivered by the implementation of the new service – the plan for delivering the benefit is therefore the same as the plan for delivering the whole scheme.
This benefit can be measured by evidence on waiting lists and times, and reviewing referral patterns to identify whether patients from the catchment area are having to use other services.
This will primarily be delivered by the implementation of the service. The benefit will be measured through the core monitoring of local activity.
The implementation of the investment will be a fundamental enabler of this. However, it will also require very close clinical working between OUH and GWH clinicians to ensure maximum benefits are achieved through the synergy. The delivery of this benefit will be monitored by the proposed Partnership
Project Board.
This benefit is strategically recognised by both Trusts, but specific outcomes will need to be identified by the Partnership Project
Board to ensure they are monitored and delivered.
6.5.2 Given that the vast majority of the benefit will be delivered directly by the implementation of the scheme, the benefits realisation plan is effectively the same as the overall programme plan for delivering the scheme.
6.5.3 However, during the FBC phase, a more detailed assessment will be made of other benefits which could and should be delivered through the proposal, and the benefits realisation plan will be updated to reflect this. The FBC will therefore include a fuller Benefits Realisation Plan
6.5.4 In the future stages of the planning process, the Benefits Realisation Plan will be used as a means for ensuring that the planned development will deliver the maximum benefits to the Trust. The Benefits Realisation Plan will itself be reviewed at each stage to ensure that it still reflects the aims and objectives of the Trust. Some benefits may have been achieved already, others may have changed and more may be envisaged i.e. as a result of NHS requirements.
Once the project has been completed, it will be evaluated in accordance with the Capital Investment Manual. At that point, the Benefits Realisation Plan
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Oxford University Hospitals NHS Trust TB2014.12 will be studied to confirm that the correct benefits were being sought. The final solution implemented by the scheme will also be compared against the original Benefits Realisation Plan and its subsequent amendments to confirm that the scheme has indeed delivered all of the benefits sought.
6.6
Outline arrangements for risk management
6.6.1 The strategy, framework and plan for dealing with the management of risk are as follows:
6.6.2 Risk management is an integral part of every project. Consequently, risks will be identified, assessed and managed throughout the entire programme. An initial register of risks known at the time of preparing this Business Case is provided at Appendix Four. In due course a detailed risk log for the project will be prepared which will, for each risk identified, assess the likelihood of occurrence, impact and offer a sensitivity analysis to counter any optimum bias. The Project Manager will maintain a log of all identified project risks.
6.6.3 The risk management processes will be firmly integrated within (and be consistent with) OUH’s corporate governance and risk management arrangements. The management of risk is embedded into the project management process, including:
6.6.4
The requirements of Corporate Governance have been adopted, including more focused and open ways of managing risk;
The Project Manager ensures that those with responsibilities for risks have the necessary authority and capability to fulfil their role;
The programme reporting structure encourages reporting and upward referral of significant issues – risks will be actively monitored and regularly reviewed.
Monthly progress reports on the programme will include identification of significant risk issues.
OUH has a well-developed strategy for the management of risk, enabling wellmanaged risk-taking where it is likely to lead to sustainable improvements in service delivery. The management of risk is embedded into the project management process, including:
The requirements of Corporate Governance have been adopted, including more focused and open ways of managing risk.
The Project Director is the “risk owner” at senior level – supporting, owning and leading on risk management.
All members of the project team own risk at all levels and have the authority and capability to fulfil their responsibilities.
The project reporting structure encourages reporting and upward referral of significant issues – risks will be actively monitored and regularly reviewed at the Programme Board.
Monthly progress reports will include identification of significant risk issues.
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6.6.5
The risk management framework for the consistent treatment of risk has been established and shared at all levels of the organisation.
The project risk will be managed in the wider context of the whole of the
Trust activities.
The risk management framework policy addresses the following key elements:
Identification of the main stakeholders
Clarification of objectives
Identification of risks in relation to key objectives
Definition of responsibilities for managing risks and reporting to senior management.
Information about their probability and potential impact.
Quantification, taking into account expert advice and the degree of uncertainty.
Identification of options for dealing with the risks, taking into account constraints.
Documented decisions on risk management – including criteria for assessing whether further risk reduction is necessary, taking into account cost benefit analysis.
Implementation monitoring and evaluation.
Communication mechanisms.
Engagement of stakeholders.
Establish the quality assurance framework for the risk management process.
6.6.6 The Risk Management Plan will be reviewed upon completion of each key stage as part of the continuous post-project evaluation process and updated with increasing detail as the project progresses.
The overall programme risk register is included as Appendix Four. Design, costing and building risks are broken down in further details in the Estates Annex.
6.7
Outline arrangements for post project evaluation
6.7.1 The outline arrangements for post implementation review (PIR) and project evaluation review (PER) have been established in accordance with best practice and are as follows:
Post Implementation Review: within 12 months of scheme completion.
Project Evaluation Review: within 24 months of scheme completion.
This section also sets out how these arrangements will be managed, how information will be disseminated and in what timescale.
6.7.2 The Trust will ensure that a thorough post-project evaluation is undertaken at
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Oxford University Hospitals NHS Trust TB2014.12 key stages in the process to ensure that positive lessons can be learnt from the project. These will be of benefit to:
6.7.3
The Trust – in using this knowledge for future capital schemes;
Other key local stakeholders – to inform their approaches to future projects;
The NHS more widely – to test whether the policies and procedures used in this procurement have been used effectively.
PPE also sets in place a framework within which the benefits realisation plan can be tested to identify which of the anticipated project benefits have been achieved– with the reasons made clear. The Trust will comply with the newly published NHS guidance on PPE during the various evaluation stages. The plan for each of these stages is set out below:
6.7.4 The evaluation will examine the following elements, where applicable at each stage:
6.7.5
The effectiveness of the project management of the scheme – viewed internally and externally.
The quality of the documentation prepared by the Trust for the contractors and suppliers.
Communications and involvement during procurement.
The effectiveness of advisers utilised on the scheme.
The efficacy of NHS guidance in delivery the scheme.
Perceptions of advice, guidance and support from the Trust Development
Authority and NHS Property Services in progressing the scheme.
The method and plan for undertaking this evaluation is set out in the table below:
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Table 43 : Methodology for Evaluating the Project
Theme
Effectiveness of
Project Team
Effectiveness of
Constructor
Team
Effectiveness of
Joint Working
Arrangements •
•
•
•
Elements
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Robustness of the team
The right skills were in place
The team were properly resourced
Outputs were delivered in a timely way
Outputs were of a high quality
Communication was satisfactory
Change was well managed
Reporting on progress was satisfactory
The internal trust organisation was supportive of the team;
Commercial confidentiality was respected
Advisers were well managed
Appropriate feedback was given
Sufficient contact was provided to users during the process
Overall impressions of the project delivery
Aspects which were particularly well managed
Aspects where there was room for improvement
Same elements as above
Structures put in place worked satisfactorily
Communications between parties were effective
Effectiveness of problem solving
Evidence of partnership working
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Oxford University Hospitals NHS Trust
Theme
Project
Documentation
Effectiveness of
Advisers
Effectiveness of
NHS Guidance
Communications and Involvement
Support from
Trust
Development
Authority
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Elements
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Content
Presentation and style
Substance
Clarity
Timeliness of document issue
Overall usefulness
Structure
Aspects which were exemplars
Aspects where there was room for improvement
Communications and involvement during procurement
Internal consultation well managed
External consultation well managed
Timeliness of communications
Effectiveness of involvement sought
Aspects which were undertaken well
Aspects where there was room for improvement
Quality of advice
Timeliness of advice
Value for Money
Problem solving
Accessibility
Overall contribution
Areas of exemplary performance
Areas for improvement
Comprehensive
User friendly
Addressed key issues well
Areas which are exemplary
Areas where there is room for improvement
Internal consultation well managed
External consultation well managed
Timeliness of communications
Effectiveness of involvement sought
Effective liaison with local people and residents
Aspects which were undertaken well
Aspects where there was room for improvement
Responsive
Timely
Supportive
Pro-active
Facilitative
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Theme
Assessment of
Overall Success
Factors
Elements
•
•
•
•
•
Delivery on time
Delivery to cost
Delivery to high quality
Delivery of non-financial benefits
Delivery of financial benefits
6.7.6 The assessment will be carried out by the Programme Partnership Board.
6.8
Management of charitable appeal
6.8.1 The effective delivery of the charitable appeal is a fundamental component of this OBC’s delivery. The OUH has commissioned an independent expert report (attached as a separate annex to this OBC) by Valentine Morby
Associates to provide assurance on the amount of funding that is achievable, and to give advice on the most appropriate way of managing and operating the appeal. The key conclusions drawn from the report are as follows:
The appeal needs to be locally driven. Local organisations and people are much likely to be prepared to give to the appeal if they understand that it is for locally based services. Any implication that the appeal is to support services at Oxford would significantly damage the campaign. This affects both the management and the branding of the appeal.
∼
The management should be local and perceived to be such.
∼
While there are merits in associating the name of the OUH with the appeal (because the OUH brand conveys specialist expertise) the prime branding should be around Swindon and the GWH.
The appeal should be managed by the GWH Trust. In developing the
OBC the option of asking a charity such as MacMillan to run the appeal on the NHS’s behalf was considered. However, there is a significant benefit to the GWH in directly managing the appeal.
∼ It allows the establishment of a long term charitable funding programme providing a steady stream of charitable support for services at the Trust, rather than simply coming to an end when the appeal has hit its target for radiotherapy. This means that a broad range of the Trust’s services should be able to benefit.
∼
It gives the GWH the key say in where funds in excess of the target for radiotherapy should be applied.
∼ The commitment and motivation of an in-house team is very strong, and an in-house team is better able to leverage the input of key clinicians and executives into the appeal.
In order to achieve the level of funding anticipated within this OBC to the timeline required the appeal should be ready for launch by June. The expert report proposes a headline implementation plan. The following key steps are proposed.
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Table 44 : Charitable funding key steps
Key steps By date
Preparation phase
Draft Case for Support, test internally and externally
Recruit Appeal Chair/Board, and key project team members in post
March 30
May 31 st th
2014
2014
Appeal
Launch private appeal (focus on major donors, media support, corporate sponsors)
Mid- June 2014
September 2014
6.8.2
Launch public appeal
Fundraising through to 2016 to meet target for radiotherapy but appeal ongoing beyond this
Radiotherapy funds raised 2016
The basis for distributing funds from the appeal will need to be agreed in detail at the Partnership Project Board but will be guided by the in principle
understanding set out in paragraph 4.5.11.
6.8.3 The report suggests a staffing structure as shown in the figure below.
Figure 9 : Appeal staffing structure
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Appendix One.
Financial appraisals
16/17 17/18 Option 1a
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
Contribution
% contribution
11,326
0
0
0
0
11,326
54
192
168
2,048
108
90
202
102
348
639
197
75
658
450
93
78
81
0
244
990
6,816
170
14
2,782
184
287
509
420
60
4,426
84
0.7%
11,589
0
0
0
0
11,589
54
252
204
2,093
120
158
202
136
375
677
217
90
81
0
257
1,038
697
510
93
78
7,331
179
56
2,782
247
293
509
420
240
4,726
-468
-4.0%
325
1,017
420
240
179
56
3,107
287
5,630
-442
-3.4%
54
252
204
2,171
120
158
202
136
375
706
217
90
81
0
257
1,086
735
581
93
104
7,621
20/21
12,810
0
0
0
0
12,810
316
1,017
420
240
179
56
3,106
313
5,647
-737
-5.9%
54
252
204
2,145
120
158
202
136
375
697
217
90
81
0
257
1,086
735
540
93
104
7,544
19/20
12,455
0
0
0
0
12,455
335
1,017
420
240
179
56
3,107
260
5,614
-183
-1.4%
54
276
204
2,210
120
158
202
136
375
716
217
90
81
0
257
1,086
813
581
93
104
7,771
21/22
13,203
0
0
0
0
13,203
179
56
3,106
283
307
509
420
240
5,100
-391
-3.2%
54
252
204
2,119
120
158
202
136
375
687
217
90
81
0
257
1,038
697
510
93
104
7,392
18/19
12,100
0
0
0
0
12,100
344
1,017
420
240
179
56
3,108
234
5,599
117
0.9%
54
276
204
2,262
120
158
202
136
375
725
217
90
81
0
257
1,134
813
581
93
104
7,881
22/23
13,596
0
0
0
0
13,596
367
1,017
420
240
179
56
3,109
182
5,570
743
5.1%
54
300
204
2,340
120
158
202
136
375
745
217
90
81
0
257
1,134
890
660
93
130
8,184
24/25
14,497
0
0
0
0
14,497
356
1,017
420
240
179
56
3,108
208
5,584
407
2.9%
54
276
204
2,301
120
158
202
136
375
735
217
90
81
0
257
1,134
890
630
93
104
8,056
23/24
14,047
0
0
0
0
14,047
379
1,017
420
240
179
56
3,109
157
5,557
1,108
7.4%
54
300
204
2,379
120
158
202
136
375
754
217
90
81
0
257
1,134
929
690
93
130
8,301
25/26
14,966
0
0
0
0
14,966
390
1,017
420
240
179
56
3,110
187
5,600
1,391
9.0%
54
300
204
2,418
120
158
202
136
375
764
217
90
81
0
257
1,134
967
720
93
156
8,445
26/27
15,435
0
0
0
0
15,435
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Oxford University Hospitals NHS Trust
16/17 17/18 Option 1b
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
11,326
0
0
0
0
11,326
11,589
0
0
0
0
11,589
18/19
12,100
0
0
0
0
12,100
19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
12,455
0
0
0
0
12,455
12,810
0
0
0
0
12,810
13,203
0
0
0
0
13,203
13,596
0
0
0
0
13,596
14,047
0
0
0
0
14,047
14,497
0
0
0
0
14,497
14,966
0
0
0
0
14,966
15,435
0
0
0
0
15,435
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
Contribution
% contribution
102
348
639
197
75
54
192
168
2,048
108
81
0
244
990
658
450
93
78
90
202
6,816
136
375
687
217
90
54
252
204
2,119
120
81
0
257
1,038
697
510
93
104
158
202
7,392
136
375
677
217
90
54
252
204
2,093
120
81
0
257
1,038
697
510
93
78
158
202
7,331
136
375
706
217
90
54
252
204
2,171
120
81
0
257
1,086
735
581
93
104
158
202
7,621
136
375
697
217
90
54
252
204
2,145
120
81
0
257
1,086
735
540
93
104
158
202
7,544
287
509
420
32
171
14
2,915
244
4,592
293
509
420
128
182
56
2,915
335
4,839
307
509
420
128
182
56
3,326
380
5,308
-82
-0.7%
-581
-5.0%
-599
-5.0%
316
763
420
128
182
56
3,326
418
5,609
325
1,017
420
128
182
56
3,326
384
5,838
-698
-5.6%
-650
-5.1%
335
1,017
420
128
182
56
3,326
350
5,814
-383
-2.9%
-76
-0.6%
344
1,017
420
128
182
56
3,327
316
5,791
136
375
725
217
90
54
276
204
2,262
120
81
0
257
1,134
813
581
93
104
158
202
7,881
136
375
716
217
90
54
276
204
2,210
120
81
0
257
1,086
813
581
93
104
158
202
7,771
356
1,017
420
128
182
56
3,327
282
5,769
222
1.6%
136
375
735
217
90
54
276
204
2,301
120
81
0
257
1,134
890
630
93
104
158
202
8,056
367
1,017
420
128
182
56
3,328
249
5,747
566
3.9%
379
1,017
420
128
182
56
3,329
215
5,726
938
6.3%
136
375
754
217
90
54
300
204
2,379
120
81
0
257
1,134
929
690
93
130
158
202
8,301
136
375
745
217
90
54
300
204
2,340
120
81
0
257
1,134
890
660
93
130
158
202
8,184
136
375
764
217
90
54
300
204
2,418
120
81
0
257
1,134
967
720
93
156
158
202
8,445
390
1,017
420
128
182
56
3,329
254
5,777
1,214
7.9%
TB2014.12 Swindon Radiotherapy OBC.docx
TB2014.12
Page 91
Oxford University Hospitals NHS Trust
Option 2a
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
16/17
10,872
0
0
0
1,275
12,147
17/18
8,818
2,857
60
0
390
12,125
18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27
9,209
2,979
60
0
0
12,248
9,479
3,068
60
0
0
12,607
9,749
3,158
60
0
0
12,966
10,051
3,253
60
0
0
13,364
10,353
3,349
60
0
0
13,762
10,693
3,464
60
0
0
14,217
11,033
3,578
60
0
0
14,672
11,388
3,696
60
0
0
15,144
11,744
3,813
60
0
0
15,616
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
Contribution
% contribution
102
348
634
197
75
54
192
168
1,976
108
81
0
244
990
619
450
93
78
90
202
6,701
136
375
663
217
90
54
252
204
2,145
120
81
0
257
1,038
697
450
93
78
158
202
7,308
136
375
668
217
90
54
252
204
2,171
120
81
0
257
1,038
735
480
93
78
158
202
7,408
136
375
673
217
90
54
252
204
2,184
120
81
0
257
1,038
774
480
93
78
181
202
7,487
276
509
423
54
173
24
3,073
224
4,756
690
5.7%
296
509
429
218
192
95
3,074
338
5,150
-334
-2.8%
309
1,017
429
218
192
95
3,074
304
5,638
-798
-6.5%
318
1,017
429
218
192
95
3,074
269
5,613
-492
-3.9%
327
1,017
429
218
192
95
3,074
235
5,588
-220
-1.7%
136
375
677
217
90
54
252
204
2,210
120
81
0
257
1,038
813
521
93
78
181
202
7,598
337
1,017
429
218
192
95
3,075
201
5,565
98
0.7%
136
375
682
217
90
54
276
204
2,236
120
81
0
257
1,038
813
570
93
78
181
202
7,701
347
1,017
429
218
192
95
3,076
168
5,542
426
3.1%
136
375
687
217
90
54
276
204
2,249
120
81
0
257
1,038
851
570
130
78
181
202
7,794
358
1,017
429
218
192
95
3,076
134
5,520
786
5.5%
136
375
692
217
90
54
276
204
2,275
120
81
0
257
1,038
851
630
156
78
181
202
7,911
370
1,017
429
218
192
95
3,077
100
5,499
1,151
7.8%
136
375
697
217
90
54
300
204
2,301
120
81
0
257
1,038
851
660
181
78
181
202
8,021
382
1,017
429
218
192
95
3,078
67
5,479
1,503
9.9%
136
375
701
217
90
54
300
204
2,327
120
81
0
257
1,038
890
705
207
78
181
202
8,162
393
1,017
429
218
192
95
3,079
126
5,551
1,671
10.7%
136
375
706
217
90
54
300
204
2,353
120
81
0
257
1,038
1,006
765
233
78
181
202
8,394
TB2014.12 Swindon Radiotherapy OBC.docx
TB2014.12
Page 92
Oxford University Hospitals NHS Trust
Option 2b
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
16/17
10,872
0
0
0
1,275
12,147
17/18 18/19
8,818
2,857
60
0
390
9,209
2,979
60
0
0
12,125 12,248
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
90
202
102
348
634
197
75
54
192
168
1,976
108
81
0
244
990
619
450
93
78
6,701
276
509
423
57
173
25
3,077
227
4,768
158
202
136
375
663
217
90
54
252
204
2,145
120
81
0
257
1,038
697
450
93
78
7,308
296
509
429
230
194
100
3,078
344
5,178
309
1,017
429
230
194
100
3,078
309
5,666
158
202
136
375
668
217
90
54
252
204
2,171
120
81
0
257
1,038
735
480
93
78
7,408
Contribution
% contribution
678
5.6%
-361
-3.0%
-825
-6.7%
19/20 20/21
9,479
3,068
60
0
0
9,749
3,158
60
0
0
12,607 12,966
21/22
10,051
3,253
60
0
0
13,364
22/23 23/24
10,353
3,349
60
0
0
10,693
3,464
60
0
0
13,762 14,217
318
1,017
429
230
194
100
3,078
274
5,640
-520
-4.1%
181
202
136
375
673
217
90
54
252
204
2,184
120
81
0
257
1,038
774
480
93
78
7,487
327
1,017
429
230
194
100
3,078
240
5,616
-247
-1.9%
181
202
136
375
677
217
90
54
252
204
2,210
120
81
0
257
1,038
813
521
93
78
7,598
337
1,017
429
230
194
100
3,079
206
5,592
71
0.5%
181
202
136
375
682
217
90
54
276
204
2,236
120
81
0
257
1,038
813
570
93
78
7,701
347
1,017
429
230
194
100
3,080
172
5,570
399
2.9%
181
202
136
375
687
217
90
54
276
204
2,249
120
81
0
257
1,038
851
570
130
78
7,794
358
1,017
429
230
194
100
3,080
139
5,548
759
5.3%
181
202
136
375
692
217
90
54
276
204
2,275
120
81
0
257
1,038
851
630
156
78
7,911
370
1,017
429
230
194
100
3,082
105
5,527
1,124
7.7%
181
202
136
375
697
217
90
54
300
204
2,301
120
81
0
257
1,038
851
660
181
78
8,021
24/25 25/26
11,033
3,578
60
0
0
11,388
3,696
60
0
0
14,672 15,144
26/27
11,744
3,813
60
0
0
15,616
TB2014.12
382
1,017
429
230
194
100
3,083
72
5,506
1,476
9.7%
181
202
136
375
701
217
90
54
300
204
2,327
120
81
0
257
1,038
890
705
207
78
8,162
393
1,017
429
230
194
100
3,084
131
5,578
1,644
10.5%
181
202
136
375
706
217
90
54
300
204
2,353
120
81
0
257
1,038
1,006
765
233
78
8,394
TB2014.12 Swindon Radiotherapy OBC.docx Page 93
Oxford University Hospitals NHS Trust
Option 2c
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
16/17
9,979
1,087
0
500
1,275
12,841
17/18 18/19
9,848
1,449
60
0
390
9,209
2,979
60
0
0
11,747 12,248
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
116
202
102
348
634
197
75
54
219
182
2,132
120
81
0
257
1,038
692
450
93
78
7,069
281
509
429
161
186
100
2,813
274
4,753
124
202
102
348
634
197
75
54
228
186
2,145
120
81
0
257
990
658
442
93
78
7,014
287
509
429
230
194
100
2,814
258
4,820
309
763
429
230
194
100
3,078
267
5,370
158
202
136
375
668
217
90
54
252
204
2,171
120
81
0
257
1,038
735
480
93
78
7,408
Contribution
% contribution
1,019
7.9%
-87
-0.7%
-529
-4.3%
19/20 20/21
9,479
3,068
60
0
0
9,749
3,158
60
0
0
12,607 12,966
21/22
10,051
3,253
60
0
0
13,364
22/23 23/24
10,353
3,349
60
0
0
10,693
3,464
60
0
0
13,762 14,217
318
763
429
230
194
100
3,078
272
5,384
-263
-2.1%
181
202
136
375
673
217
90
54
252
204
2,184
120
81
0
257
1,038
774
480
93
78
7,487
327
1,017
429
230
194
100
3,078
238
5,614
-245
-1.9%
181
202
136
375
677
217
90
54
252
204
2,210
120
81
0
257
1,038
813
521
93
78
7,598
337
1,017
429
230
194
100
3,079
204
5,590
73
0.5%
181
202
136
375
682
217
90
54
276
204
2,236
120
81
0
257
1,038
813
570
93
78
7,701
347
1,017
429
230
194
100
3,080
170
5,567
401
2.9%
181
202
136
375
687
217
90
54
276
204
2,249
120
81
0
257
1,038
851
570
130
78
7,794
358
1,017
429
230
194
100
3,080
136
5,545
761
5.4%
181
202
136
375
692
217
90
54
276
204
2,275
120
81
0
257
1,038
851
630
156
78
7,911
370
1,017
429
230
194
100
3,082
103
5,524
1,126
7.7%
181
202
136
375
697
217
90
54
300
204
2,301
120
81
0
257
1,038
851
660
181
78
8,021
24/25 25/26
11,033
3,578
60
0
0
11,388
3,696
60
0
0
14,672 15,144
26/27
11,744
3,813
60
0
0
15,616
TB2014.12
382
1,017
429
230
194
100
3,083
70
5,504
1,478
9.8%
181
202
136
375
701
217
90
54
300
204
2,327
120
81
0
257
1,038
890
705
207
78
8,162
393
1,017
429
230
194
100
3,084
82
5,530
1,692
10.8%
181
202
136
375
706
217
90
54
300
204
2,353
120
81
0
257
1,038
1,006
765
233
78
8,394
TB2014.12 Swindon Radiotherapy OBC.docx Page 94
Oxford University Hospitals NHS Trust
Option 3
Income
Oxford fractions & planning
Swindon fractions & planning
Swindon CCG ex-travel costs
Swindon CCG transitional support
Charitable funding income
Total income
16/17
10,872
0
0
0
1,275
12,147
17/18 18/19
8,818
2,857
60
0
390
9,209
2,979
60
0
0
12,125 12,248
Staff costs
Radiographer band 8c
Radiographer band 8b
Radiographer band 8a
Radiographer band 7
Radiographer band 6
Radiographer band 5
Assistant Practitioner band 4
A&C scheduler band 4
Radiographer helper band 3
Physics band 8c
Physics band 8b
Physics band 8a
Physics band 7
Physics band 6
Physics band 5
Radiotherapy Engineer band 8a
Radiotherapy Engineer band 7
Nursing band 7
Consultant Clinical Oncologist
IT support
Total staff costs
Non pay costs
Direct non staff costs
Equipment maintenance
PFI unitary payment/ lease
Hard/soft FM etc
Utilities
Rates
Capital charges - depreciation
Capital charges - cost of capital (3.5%)
Total non pay costs
90
202
102
348
634
197
75
54
192
168
1,976
108
81
0
244
990
619
450
93
78
6,701
276
509
423
57
173
25
3,131
245
4,839
158
202
136
375
663
217
90
54
252
204
2,145
120
81
0
257
1,038
697
450
93
78
7,308
296
509
429
230
194
100
3,131
360
5,248
309
1,071
429
230
194
100
3,131
323
5,787
158
202
136
375
668
217
90
54
252
204
2,171
120
81
0
257
1,038
735
480
93
78
7,408
Contribution
% contribution
607
5.0%
-431
-3.6%
-947
-7.7%
19/20 20/21
9,479
3,068
60
0
0
9,749
3,158
60
0
0
12,607 12,966
21/22
10,051
3,253
60
0
0
13,364
22/23 23/24
10,353
3,349
60
0
0
10,693
3,464
60
0
0
13,762 14,217
318
1,071
429
230
194
100
3,132
287
5,760
-640
-5.1%
181
202
136
375
673
217
90
54
252
204
2,184
120
81
0
257
1,038
774
480
93
78
7,487
327
1,071
429
230
194
100
3,132
250
5,734
-365
-2.8%
181
202
136
375
677
217
90
54
252
204
2,210
120
81
0
257
1,038
813
521
93
78
7,598
337
1,071
429
230
194
100
3,133
215
5,708
-45
-0.3%
181
202
136
375
682
217
90
54
276
204
2,236
120
81
0
257
1,038
813
570
93
78
7,701
347
1,071
429
230
194
100
3,134
179
5,684
285
2.1%
181
202
136
375
687
217
90
54
276
204
2,249
120
81
0
257
1,038
851
570
130
78
7,794
358
1,071
429
230
194
100
3,134
143
5,660
647
4.5%
181
202
136
375
692
217
90
54
276
204
2,275
120
81
0
257
1,038
851
630
156
78
7,911
370
1,071
429
230
194
100
3,135
108
5,637
1,014
6.9%
181
202
136
375
697
217
90
54
300
204
2,301
120
81
0
257
1,038
851
660
181
78
8,021
24/25 25/26
11,033
3,578
60
0
0
11,388
3,696
60
0
0
14,672 15,144
26/27
11,744
3,813
60
0
0
15,616
TB2014.12
382
1,071
429
230
194
100
3,136
73
5,615
1,368
9.0%
181
202
136
375
701
217
90
54
300
204
2,327
120
81
0
257
1,038
890
705
207
78
8,162
393
1,071
429
230
194
100
3,137
139
5,694
1,528
9.8%
181
202
136
375
706
217
90
54
300
204
2,353
120
81
0
257
1,038
1,006
765
233
78
8,394
TB2014.12 Swindon Radiotherapy OBC.docx Page 95
Oxford University Hospitals NHS Trust
Appendix Two.
Commissioner/ stakeholder support letters
[to follow when available]
TB2014.12
TB2014.12 Swindon Radiotherapy OBC.docx Page 96
Oxford University Hospitals NHS Trust
Appendix Three.
Risk register
Risks applying to all options
Ref Risk Counter-measure
Business/operational
1 Demand exceeds capacity
2 Demand overestimated - for example if no of fractions per patient reduces
3 Charitable funding campaign too slow
4 Charitable funding campaign does not hit minumum target
Scope for expanding working hours, and for adding additional bunkers at satellite sites
Likely trend is for longer fractionation times. Also would aim at wider population, approach private patient market, and reduce staffing to mitigate
Start campaign as soon as possible. Identify capital funding contingency within LTFM
As for item above, and could implement satellites with only 1
LinAc to start with, and reduce staffing to match
5 Additional staffing not available
Develop early staffing plans and work with HR at both Trusts to develop proactive recruitment - campaigns and increase recruitment to training programmes locally. Ng Northants staff
+ move current staff
6 Private radiotherapy units take business or other NHS provider develops satellites
NHS E specification for radiotherapy makes it clear satellite units have to be linked to cancer centre. NHS E support for activity and income assumptions will be obtained for OBC.
7 Staffing costs underestimated -
CIPS
8 Changes to service specification adding to costs without extra income
Staffing model agreed on basis of good practice guidance
This is a general risk for all NHS services, and would need to be managed by working together with other radiotherapy providers to negotiate with NHE E
Probability after mitigation
Negative impact after mitigation
Risk
Score
4
2
3
3
3
1
1
1
2
4
4
4
4
4
4
4
12
12
12
4
4
2 3 6
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Ref Risk Counter-measure
9 Ineffective joint working with
MKH and/or GWH
10 Tariff reductions beyond those assumed
OBC establishes strong governance arrangements, and there will be clear SLAs and legal agreements
This is a general risk for all NHS services, and would need to be managed by working together with other radiotherapy providers to negotiate with NHE E
Design/build
11 Cost of construction increases above assumed levels
Benchmarked costs, design to budget approach implemented, rigorous time control, contringency linked to risk register
12 User specification changes and increases costs
13 Unanticipated on-costs
14 Planning permission - potential extra costs from planning constraints
Implementation
15 Delay meaning capacity not in place in time
Change control for scope increases, + user involvement in initial design
Rigorous site investigation together with appropriate allocation of risks in procurement.
Early discussion already held with planners and also make clear to local authorities that this threatens ability to have the facility at all
Good project management. Rapid escalation of issues with time impact. In event of delay, consider use of private capacity and further extended working hours at the centre
Probability after mitigation
Negative impact after mitigation
Risk Score
1 4 4
2
1
1
2
1
2
3
4
4
3
4
4
6
4
4
6
4
8
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Project risks – different options
Ref Risk Relative risks between options
Business/operational
1 Demand exceeds capacity
2 Demand overestimated - for example if no of fractions per patient reduces
3 Charitable funding campaign too slow
4 Charitable funding campaign does not hit minumum target
Risk does not vary between options
The Do Minimum has less mitigation potential as the extra capacity is all at Oxford, so it would be harder to bring in work from other geographies
Not relevant for Do Minimum. Highest for option with CT as more funding needed
Not relevant for Do Minimum. Highest for option with CT as more funding needed
5 Additional staffing not available Do Minimum least attractive for recruitment and retention because has smaller geography to attract pool of staff, and poor transport times for commuting.Option with CT at GWH most attractive to staff as offers more interesting roles
6 Private radiotherapy units take business or other NHS provider develops satellites
7 Staffing costs underestimated -
CIPS
8 Changes to service specification adding to costs without extra income
9 Ineffective joint working with
GWH
10 Tariff reductions beyond those assumed
11 Patients not taking treatment because of journey time to Oxford
Do minimum is substantial risk - likely that GWH would consider partnering with another centre to enable a local services. Private units are lower risk because of lack of links with cancer centres
No differentiation between options
No differentation between options
No risk for Do Minimum. Same level of risks for both GWH options
No differentiation between options
This is primarily about palliative patients who are less likely to be prepared to undertake a longer journey to Oxford. It is greatest under the Do Minimum, as they have to travel for every treatment, but there is also a differential between the two GWH options as the risk does not exist where CT is local, but is there if it is not
Option 1 - Do minimum
Probability after mitigation
Negative impact after mitigation
Risk
Score
Options 2a/2b GWH site 2 Linacs Option 3 GWH site 2 LinAcs + CT
Probability after mitigation
Negative impact after mitigation
Risk
Score
Probability after mitigation
Negative impact after mitigation
Risk
Score
4
2
0
0
3
4
1
2
0
2
4
1
3
0
0
4
4
4
3
0
3
2
4
6
0
0
12
16
4
6
0
6
8
4
2
3
3
2
1
1
2
2
2
3
1
2
4
4
4
4
4
3
4
3
2
4
4
12
12
8
4
4
6
8
6
6
4
2
4
4
1
1
1
2
2
2
1
1
2
4
4
4
4
4
3
4
3
1
4
4
4
6
8
6
1
16
16
4
4
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Ref Risk Relative risks between options
12
Design/build
Cost of construction increases above assumed levels
13 User specification changes and increases costs
14 Unanticipated on-costs
15 Planning permission - potential extra costs from planning constraints
Implementation
16 Delay meaning capacity not in place in time
17 Unable to achieve planning permission
18 Unable to attract competitive proposals for equipment
19 Infufficient project resourcing
Total risk
The current Do Minimum costing is much higher level than that for the satellites, and so there is a higher risk of scope increate. Also the nature of the PFI contract will make controlling the overall capital costs harder
Same for all options
Same for all options
Same for all options
Higher risk for projects at GWH because they might be delayed due to inter organisational issues, and delays in obtaining charitable funding
Same for all options
Same for all options
GWH options this applies more because of need for resourcing for charitable funding campaign
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Option 1 - Do minimum
Probability after mitigation
Negative impact after mitigation
Risk
Score
Options 2a/2b GWH site 2 Linacs Option 3 GWH site 2 LinAcs + CT
Probability after mitigation
Negative impact after mitigation
Risk
Score
Probability after mitigation
Negative impact after mitigation
Risk
Score
2 4 8 1 4 4 1 4 4
1
2
1
1
1
3
1
4
4
4
5
5
4
3
4
8
4
5
5
12
3
111
1
2
1
2
1
3
2
4
4
4
5
5
4
3
4
8
4
10
5
12
6
127
1
2
1
2
1
3
2
4
4
4
5
5
4
3
4
8
4
10
5
12
6
126
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