Five Year Financial Plan 2015/16 to 2019/20
1. NHS Grampian has met its three key financial targets by 31st March
2015, subject to external audit clearance. These are operating within; revenue resource limit; capital resource limit; and cash requirement. In doing so, the organisation will begin the 2015/16 financial year in a position of accumulated revenue break even.
2. The purpose of this plan is to set out the
• Key planning assumptions
• High level financial plan for the year ended 31 March 2016
• A summary of the five year financial plan in the context of the
national 2020 priorities, health and social care integration and our own local priorities
• Capital Investment Plan
• Key financial risks and mitigating action
Plan Assumptions
3. Key assumptions underpinning the financial plan are set out in detail in
the appendices to the financial templates accompanying this narrative. Some of the more significant assumptions are noted below.
3.1 Core allocation funding uplifts. 1.8% in 2015/16 and thereafter
excluding additional National Resource Allocation Committee (NRAC) parity funding. We have assumed uplifts in NRAC parity in line with those agreed with the Scottish Government Health and Social Care Directorates (SGHSCD) which will bring us to within 1% of parity by 2015/16 and with parity through an additional allocation of £8.0m in 2016/17.
3.2 A pay increase of 1% for staff and continued full incremental pay
increases for all eligible staff are forecast for each year. We have also assumed uplifts to reflect the outcome of the actuarial revaluation of the pension scheme and the impact of ending Contracting Out arrangements from April 2016. In respect of the pension revaluation we are planning for a 1.4% increase in employer’s pension contribution rates from April 2015 and for the impact of ending Contracting Out arrangements an additional 2% on Employer NI contributions from April 2016.
3.3 Non-pay costs. Provision has been made for non pay uplifts based on
3.4 Community and Hospital Drugs. Assumed potential for significant
and less predictable growth in secondary care drugs budget, with primary care drug volumes assumed to follow prior year trends. Costs of drugs which are likely to be funded from the PPRS receipts source have been excluded as has any funding from the PPRS scheme to meet these costs.
3.5 Family Health Service (FHS) uplifts. Assumed that current funding
arrangements will continue over the next 5 years with funding uplifts sufficient to cover cost increases.
3.6 Efficiency savings. Assumed that the majority of savings will be
made recurrently, being removed from expenditure budgets, to allow investment to be retained in key priority areas. Our Efficiency Savings LDP template currently shows £7.2m of our £24.9m Efficient Government target as unidentified in 2015/16. Work is continuing to develop cost reduction plans to identify means of achieving this balance.
3.7 HEAT targets. Assumed that the current set of targets in the public
domain will not be extended. Any change in delivery targets would require to be reviewed and the cost implications reflected in our financial plan.
High level financial plan – year ending 31 March 2016 New Resources
4. NHS Grampian’s core revenue allocation uplift for 2015/16 has been
confirmed at 1.8% of our Revenue Resource Limit (RRL). Our base
funding uplift of £14m plus the additional move to NRAC parity amounts to a £43million increase compared to 2014/15.
5. In addition, amounts have been built into our financial plan to reflect
recent funding announcements on additional drug costs (£3.7m), Delayed Discharge funding (£2.7m) and the uplift to the Integrated Care Fund (£2.4m). The recent funding announcement by the Scottish Government in relation to Primary Care has yet to be reflected in our planning assumptions for 2015/16 and we await details of NHS Grampian’s share of this funding.
6. These new resources will be allocated to the following operating areas
to meet the cost pressures and new expenditure commitments noted below:
Acute Sector £28m
NRAC funding to support existing service levels £7m
Cost pressure and new expenditure commitments
7. In terms of our financial plan for 2015/16, we have allocated these new
resources to meet known unavoidable cost pressures (£36.0m) and targeted investments (£15.8m).
Cost pressures
8. The key unavoidable cost pressures are in relation to: Increased pay costs (including locums)
Non Pay Uplift & Service Agreements £15.3m £1.4m
GP and Hospital Drugs £13.8m
Targeting cost pressure funding £5.5m
Total £36.0m
9. Pay costs have been provided in accordance with the planned
assumptions stated above. We have also included provision for continued use of medical locums in recognition of the ongoing challenges of filling essential medical vacancies. Given the buoyant economy in Aberdeen City and rising cost of living and property costs, we are facing significant challenges in recruiting to posts, particularly in specialties where there are demand and supply gaps within the Scottish NHS.
10. GP and Hospital Drugs costs increase comprise the following amounts:
• Hospital prescribing and formulary allocation £2.9m
• GP prescribing £4.9m
• Net cost of new Hepatitis C drug combinations £6.0m1
We have assumed that central funding will continue to be available to meet the cost of
• Ivacaftor (for patients with a certain mutation of cystic fibrosis);
• rare and orphan drugs (approved by the new patient and clinical
engagement process – PACE); and
• Drugs approved through independent patient treatment requests.
11. Anticipated cost pressures identified by each operational sector and corporate directorate as part of our budget setting process have been scrutinised by members of the Executive Team. Consequently a total of £5.5m will be allocated into operational budgets to meet these cost pressure commitments.
Targeted investment
12. The targeted investments approved for 2015/16 are in line with national health priorities and/or local priorities.
Service Commitments
Treatment time guarantee (recovery plan) incl endoscopy £7.5m
New Baird Family Hospital and ANCHOR Centre –project
costs £1.8m
Unscheduled care – investment in ARI front door £2.1m
Additional nursing capacity £1.3m
Other local service developments £1.6m
National priorities (Family Nurse Partnership, Insulin
Pumps, NSD Services, CNORIS) £1.5m
£15.8m
13. The Board has committed to investing a further £7.5m in recurring additional capacity to meet the requirements of the Government’s Treatment Time Guarantee. This investment will support additional activity in the following key specialties – Endoscopy (linked to improving our cancer waiting times target), Gastroenterology, Ophthalmology, General Surgery and Orthopaedics. We have also committed to enhancing our pre-assessment capacity, increase theatre nursing and short stay beds. These investments will enable the Board to increase its capacity to improve its performance against the Treatment Time Guarantee in line with the recovery plans agreed with Scottish Government. We expect that use of the independent sector will continue during 2015/16.
14. In October 2014, the Board approved a significant investment in a multi-disciplinary team for the front door of Aberdeen Royal Infirmary; including 6.5WTE Consultant Acute Care Physicians, 1.75WTE Consultants with High Dependency Unit experience, 3 WTE Consultant Geriatricians and additional allied health professional and diagnostic capacity. The Board have also committed to increasing the number of Emergency Department doctors by 5WTE during 2015/16.
15. The Board welcome the confirmation of funding using the Non Profit Distributing method and have approved £9.6m to meet the cost of the project team and external advisors required over the next 5 years to deliver the Baird Family Hospital and the Anchor Centre. Under a traditional capital funded project these costs would have been previously expensed against the capital allocation.
16. The Board are committed to increasing nurse resources in 2015/16 and have confirmed that funding will be made available for a further 30/40 WTE. During the last two financial years, we have increased nurse
staffing budgets by £8.3m, resulting in an increase in nurse staffing levels of 238WTE.
17. Scottish Government have recognised the strategic importance of the establishment of the new Integrated Joint Board during 2015/16 and a number of funding streams have been made available as follows:
• New Integrated Care Fund (replacing the Change Fund) £2.4m
• Funding to address delayed discharges £2.7m
• Primary Care TBC
18. The new Integrated Care Fund will be targeted at areas which can demonstrate shifts in health and care spend to enable the establishment of enhanced capacity in the community to support people to stay in their own homes or homely settings. Plans for the other funding streams will be developed once relevant guidance was been issued.
High Level Financial Plan – 2015/16 to 2018/19
19. Our high level five year financial plan is set out within the pro-forma schedules within the local delivery plan.
20. In setting out revenue plans over these years, we have applied conservative assumptions in terms of funding in line with the allocations advised by Scottish Government Health and Social Care Directorate (SGHSCD). We have also assumed relatively low growth in pay costs, with the exception of a provisional sum of £8.4m in 2016/17 to reflect the financial impact of the ending of Contracting Out arrangements from April 2016. We are also anticipating the potential for significant and turbulent variations in our primary and secondary care drugs budget for the foreseeable future.
21. The main risks to our financial plan are set out later in this narrative summary.
22. The framework for the allocation of resources over the next few years will reflect the national 2020 priorities, health and social care integration and our own local priorities as summarised below:
2020 vision for Health and Social care
23. The route map for the 2020 vision for health and social care has three broad areas of focus
• Improving the Quality of Care;
• Improving the health of the population; and
24. In the following paragraphs we set out how resources will be aligned to these broad areas of focus.
Improving the Quality of Care
Person Centred Care
25. We have a number of initiatives aimed at transforming the way we organise our services around patient requirements. Priority areas for the Board are improving patient flow, the implementation of our acute sector waiting times recovery plan and the national initiative “Transforming Outpatients”.
Improving Patient Flow
26. Investment to enhance our capacity to meet the pressures facing the Board in relation to unscheduled care activity remains a high priority. Following the significant investment in the Emergency Care Centre, we
have committed further funding to supportour Local Unscheduled Care
Action Plan and increase the capacity at the front door of Aberdeen Royal Infirmary.
27. The Local Unscheduled Care Action Plan is based on the principles of
clear leadership, clinical and managerial engagement and additional capacity building to improve the patient pathway through enhanced consultant and medical cover and increased support in the form of triage nurses, advanced clinical practitioners and physician associates. The Board have committed to a further increase in the number of emergency medicine consultants by 5WTE to improve the resilience within the department. Including the support received from the Scottish Government this investment in specialist emergency medicine practitioners is c£1.8m
28. In addition to the Local Unscheduled Care Action Plan, the Board has approved a further investment of £2.1m in an enhanced multi-disciplinary team to improve the assessment and management of mainly frail and elderly patients presenting at the front door of Aberdeen Royal Infirmary. The additional consultant resource as set out in paragraph 14 above will enable the establishment of the
following services during 2015/16:
• Acute Medicine Ambulatory Care Service - the provision of a 7 day
(09:00 – 20:00) consultant delivered ambulatory rapid medical assessment clinic with nurse and diagnostic support. This would draw patients from Emergency Department (ED), Acute Medical Initial Assessment (AMIA) and Short Stay environments with an aim to deliver full assessment, investigation and treatment on an outpatient basis.
• Acute Medicine consultant presence in the ED – the provision of 7 day (12:00 – 20:00) acute care medical consultants to work within the ED department. They would be part of the ED team but work to offer rapid support and direct assessment of patients with medical type presentations. They would be able to stream cases to the ambulatory medical service and have strong direct links with medical sub-specialities including Acute Care of the Elderly
• Extended AMIA consultant availability - the provision of additional
assessment capacity within AMIA to provide 09:00 – 23:00 consultant presence with overlapping shifts.
• Medical High Dependency Care - expansion of the senior medical
staff in the HDU to allow a full 24/7 service to be delivered.
• Acute Care of the Elderly (Enablement Team) - the development of
an enablement team that is available to see patients within the ED or other ward locations within the hospital to provide timely assessment and support to help enable the safe discharge of an elderly frail person to their home. This would be a 7 day daytime service
Acute Sector Waiting Time Recovery Plan
29. We have approved an additional £7.5m investment in 2015/16 to further enhance our capacity to treat patients within the Treatment Time Guarantee and Cancer Diagnosis to Treatment access standards. Whilst delivering access targets places significant additional demands on the organisation’s financial resources, we recognise the importance of ensuring that patients have access to care in line with the principles endorsed by our Board and enshrined within the Patient Rights (Scotland) Act 2011.
30. We will continue to work with surgical specialties to ensure that we redesign pathways to address changes in future demand.
Transforming outpatients
31. We are working with a number of specialties to transform approaches to outpatient care and reduce attendance at hospital clinics using the No Delays ‘platform which has been developed with a private sector partner.
Safe Care
32. Patient safety and all its related topics have always been considered by NHS Grampian as the fundamental responsibility for all staff in the organisation. Decisions on resource deployment are taken only after safety, quality of patient care and affordability has been considered together.
33. Efforts continue across the organisation to improve the physical environment in which staff work and patients are treated. As noted below within the capital plan we welcome the announcement of £120m to replace the existing maternity hospital and establish a purpose built cancer centre. The Board will continue to prioritise its core capital allocation in upgrading existing buildings to meet statutory requirements and HAI standards, in addition to improving the environment for our patients.
34. Reducing the level of delayed discharges and keeping patients out of hospital when there is no need for them to be there remains a key objective in improving patient safety.
35. We are working with local authority and third sector partners to ensure that we are jointly developing plans to reduce the number of patients whose discharge from a hospital setting is delayed and implement alternatives to ensure patients can stay well longer at home or in a homely setting. We welcome the announcement of an additional £100m which will be made available to NHS Boards across Scotland over the next three years to develop plans to enable the discharge of patients from hospital. This will be a priority objective for the new Integrated Joint Boards.
36. In terms on preventing admission to hospital, actions taken by the community health partnerships and our key partners has helped to reduce the level of A&E attendances by 3.9% in Grampian between 2013 and 2014, contrasting with a 2.3% increase across Scotland. There were 141,592 A&E attendances in 2014. This was the lowest annual total since 2008 and compared with a total of 147,367 in 2013. 37. In terms of future service changes we are in the process of planning for
the:
• implementation of robotic surgery during 2015/16, initially focused on
urology patients;
• introduction of a major trauma centre during 2016 within Aberdeen
Royal Infirmary, as part of an enhanced network of care for major trauma patients in Scotland. People with serious injuries, such as
those who have been in a serious car accident, or who experience severe head injuries, will be initially cared for at the new centre; and
• the potential introduction of seven day services for conditions where
there is a clear and evidential basis to extend the availability of current provision.
Integrated (primary and secondary) and unscheduled care redesign
38. Everything we do must promote the health and wellbeing of the population of Grampian. A huge amount of work is in progress across NHS Grampian to modernise what we do with the aim of improving the health of the population and changing the way we deliver services to patients. Over the next 5 years we anticipate challenges relating to population demographics and a further period of financial restraint. 39. The Board’s strategy as set out in Healthfit 2020 sets out in practical
terms how the NHS in Grampian could change by becoming more person centred, applying best practice, improving efficiency, developing our staff, using technology effectively, re-organising our facilities and working as one with local authorities and the third sector. The strategy is focused around the following key themes:
• Planned care - focused on the transformation of NHS Grampian’s
approach to outpatients, ambulatory care and elective inpatient care
• Unscheduled care - focused on avoiding unnecessary admission
and attendance at hospital by supporting professionals and patients in the community, and improving the flow of patients who require healthcare
• Integration - our vision is to ensure that care is delivered at the right
time, in the most suitable environment by staff who are most appropriately trained and skilled to fulfil the patient’s needs. This will involve improved integration of services within health (locally, nationally and regionally) and through integration with local authority partners.
40. The Community Empowerment and Renewal Bill when enacted will embed community participation in the design and delivery of services. The development of the role of community planning, the commitments made under the Single Outcome Agreements and Health and Social Care Integration will be important in delivering the reforms highlighted by the Commission.
41. During 2015/16, we will be actively working with our local authority partners during the shadow period leading up to the full implementation of integrated health and social care partnerships by 1 April 2016 at the latest.
42. The indicative level of joint NHS and Local Authority resource that will be delegated to the new Integrated Joint Boards is as follows:
Indicative annual
joint budget WTE staff
Aberdeen City IJB £232.7m 1,743
Aberdeenshire IJB £239.3m 2,657
Moray IJB £100.4m 1,272
£572.4m 5,672
Improving the health of the population
43. Whilst the Grampian region enjoys relatively good health in a Scottish context there are areas of deprivation and disadvantage where the health of the population is well below acceptable standards. We are committed to targeting resources to addressing inequalities within our health board area and ensuring that we are taking proactive steps to support health improvement.
44. Government policy sets out to increase healthy life expectancy in Scotland, to break the link between early life adversity and adult disease, to reduce health inequalities particularly in the most deprived communities and to reduce smoking, excessive alcohol consumption and other risk factors to a healthier life. Protecting the public’s health is equally a top priority and NHS Grampian is well placed to take forward this whole agenda.
45. The Government continues to offer targeted funding in addition to core allocations to support health improvement and we must ensure that we make most effective and efficient use of such funds in innovative and imaginative ways.
46. We have a number of preventative health programmes which we will commit to invest in to support the outcome for longer and healthier lives. In addition we are also working with communities to identify needs, and then collaborate effectively to meet these needs. This process will recognise and build on the strengths and resources that communities already have (an ‘asset-based’ approach).
• Childhood Obesity - we will continue to embed ‘Grow Well Choices’
our child healthy weight programme in primary schools into routine practice. Working with Education partners we will progress the long term sustainability of this school based intervention.
• Adult Obesity - we will continue to implement our integrated care
• Smoking cessation and prevention – we continue to allocate
funding to specific and targeted projects through our formal resource allocation framework which allows us to evaluate each bid and prioritise funding accordingly. Our Tobacco Control Strategy Action Plan guides the targeted implementation of programmes and projects preventing tobacco use, supporting people to stop smoking and controlling environmental tobacco smoke.
• Alcohol brief intervention (ABI) – this preventative programme,
mainly delivered through general practice, will continue to expand. Increased numbers of ABIs targeting hazardous and harmful drinkers across Grampian will reduce the harm from excessive alcohol consumption. Local implementation of this programme also aims to provide support and clinical management to those identified as dependent drinkers by referring them to the appropriate specialist service when required. This part of the pathway addresses tertiary prevention aspects of alcohol misuse.
• Health and Work – we will continue to work with over 170
organisations registered with Healthy Working Lives National Award in Grampian providing support for policy development and practice including health promotion, occupational health and safety and employability. The initiative is also targeted at raising awareness of how a healthy workforce contributes to healthy business and productivity. We will continue our work to embed ‘employability’ into our pathways of care to ensure that patients are supported in their journey towards work.
Securing the value and sustainability of health services
Workforce – Fit for Purpose and Affordable
47. NHS Grampian, as other boards, spends a significant element of its core revenue expenditure on directly employed staff. It is therefore essential that staff employed are suitable in terms of numbers and skills and that the cost of employing them is managed within available financial resources. The key areas of focus in relation to our workforce are noted below.
Nursing staff
48. Investment in additional nursing capacity will remain a priority for the Board. An investment of £2.1m in additional nursing capacity was made in 2014/15 and we have confirmed funding for a further 30/40 WTE nursing posts in 2015/16.
49. In order to prioritise the new funding available in 2015/16, all areas have been reviewing their nursing establishment and agreeing with line management the configuration of staffing taking cognisance of professional guidance, bed capacity, patient requirements and projections in respect of nurse staff recruitment and retention. The outcome of these assessments will be reviewed and scrutinised by the Board’s Nurse Resource Group.
50. We continue to encourage Robert Gordon University graduates to enter employment with NHS Grampian upon graduation. During 2014 employment upon graduation from Robert Gordon University within NHS Grampian has increased from 52% to 70%. We aim to increase the graduate conversion further for the 2015 intake.
Medical staffing
51. During 2014/15, we experienced an increasing level of medical staff vacancies which resulted in the costs of medical staffing rising significantly. Recruiting to vacant posts remains a key priority. Initial steps have been taken towards the establishment of a refreshed medical workforce plan including: developing a baseline medical workforce profile and action plans from the recent GP and Acute sector medical workforce summits.
Operating within capital resource limit
52. The Property and Asset Management Plan sets out the Board’s
priorities for managing the infrastructure that supports the delivery of patient care and associated services across NHS Grampian and is integral to the delivery of the NHS Grampian Healthfit 2020 vision.
53. The plan is focused on actions across four main areas:
• Investment in infrastructure consistent with our strategic health
priorities including initiatives to reduce carbon emissions;
• Reduction in high and significant risk backlog maintenance in clinical
areas and compliance with statutory requirements;
• Replacement of essential equipment; and
• Disposal of assets declared surplus to requirements.
54. The supporting financial plan incorporates the resources aligned
against these areas of expenditure financed from revenue operating budgets, the capital programme, other charitable sources and through asset disposals.
55. We have assumed a formula capital allocation over the five years of the plan consistent with that outlined in the NHS Scotland Chief Executive letter of 6 February 2015. This is in addition to previously approved funding for legally committed schemes and other nationally agreed investment programmes such as the, hub initiative and non-profit distributing model.
56. During the five year period of this local delivery plan, we will be
progressing the new Baird Family Hospital and Anchor Centre for which funding has been allocated under the non-profit distributing model.
56. Our five year plan is summarised as follows:-
NHS GRAMPIAN SUMMARY INFRASTRUCTURE AND BACKLOG MAINTENANCE PROGRAMME
15/16 16/17 17/18 18/19 19/20 Total 5 Year Plan AVAILABLE FUNDING £000s £000s £000s £000s £000s £000s Core CRL Formula allocation 14,092 14,092 14,092 14,092 14,092 70,459
Revenue to capital (change Fund Inverurie Xray) 2,000 0 0 0 0 2,000
Radiotherapy Equip Prog 785 0 150 0 0 935
Surgery Robot 1,000 0 0 0 0 1,000
Additional allocation - backlog maintenance (15) 11 0 0 0 (4)
Sub Total Core CRL 17,862 14,103 14,242 14,092 14,092 74,390
Withdraw al of NBV benefit by SGHSCD (5,992) (2,630) 0 0 0 (8,622)
Net CRL 11,870 11,473 14,242 14,092 14,092 65,768
Non Core CRL
CRL Cover est - Inverurie - hub 0 0 10,100 0 0 10,100
CRL Cover est - Foresterhill - hub 0 0 7,816 0 0 7,816
CRL Cover est - Other Primary Care - hub 0 0 0 19,000 0 19,000
Sub Total Non Core CRL 0 0 17,916 19,000 0 36,916
Total Gross CRL 11,870 11,473 32,158 33,092 14,092 102,684
OTHER FUNDING SOURCES - CAPITAL
Estimated Actual NBV benefit on disposal - property 8,518 2,630 0 0 0 11,148
OTHER FUNDING SOURCES - CHARITABLE CONTRIBUTIONS
Endow ments - Robotic Surgery 500 0 0 0 0 500
UCAN - Robotic surgery 200 0 0 0 0 200
Endow ments - Phase 2 ari 991 1,603 0 0 0 2,594
MRI - Woodend 1,350 0 0 0 0 1,350
Endow ment - Equipment 500 500 500 500 500 2,500
OTHER FUNDING SOURCES - REVENUE
Estimated Net Surplus on Disposal of Property 8,494 5,180 0 0 0 13,674
Aroma Payback 20 20 16 0 0 56
Estates Maintenance operational budget 1,140 1,140 1,140 1,140 1,140 5,700
Non Value added Infrastructure budget 250 250 250 250 250 1,250
TOTAL FUNDING AVAILABLE FOR INFRASTRUCTURE AND BACKLOG MAINTENANCE 33,833 22,796 34,064 34,982 15,982 141,656 PLANNED EXPENDITURE
Primary Care 2,615 200 23,271 19,200 200 45,486
Other Strategic Priorities 2,000 3,000 1,000 0 0 6,000
Backlog Maintenance 19,963 16,326 4,223 9,362 9,362 59,235
Equipment Replacement 5,210 2,275 4,575 5,425 5,425 22,910
New Equipment 3,550 500 500 500 500 5,550
Other 495 495 495 495 495 2,475
Investment in strategic health priorities
57. During 2014/15 we committed £10m of capital expenditure on backlog maintenance of our properties, £10m on primary care facilities including the new Forres and Woodside Fountain Health Centres, £6.0m on essential equipment replacement and £2m on a replacement PET/CT Scanner funded through the National programme.
Primary and Community Care investments
58. We have a comprehensive primary care premises strategy which sets out our priorities across the Grampian area, taking account of the functional suitability and capacity of existing premises and emerging new settlements in line with local development plans. We remain committed to our investment in modern new build facilities with the following projects prioritised :
• the replacement of the health centre and establishment of the
community maternity unit in Inverurie;
• relocation of Foresterhill health centre as part of the enabling works for
the new Baird Family hospital and Anchor centre;
• relocation of the Denburn Medical Practice;
• a further £19m to be targeted at new premises in areas where there
are immediate challenges related to population growth.
59. We acknowledge the support provided by Scottish Government through the hub initiative to support our programme and we shall be submitting further bids as future infrastructure funding becomes available to meet priority developments in line with our primary care premises strategy.
Major hospital development investments
60. The Board welcomed the confirmation of funding for the replacement of the maternity hospital (Baird Family Hospital) and establishment of a Cancer Centre (Anchor Centre) on the Aberdeen Royal Infirmary site. We have agreed the funding to meet the project team costs and advisor fees and have appointed to a number of key posts. Work is ongoing in relation to the clinical output specification. A provision for enabling works is included in the infrastructure plan funded through the formula capital allocation. Equipment requirements will be quantified during the planning phase of the contract and are assumed to be incurred outwith the current period of the plan.
Sustainability
61. The Board are committed to reduce the level of carbon emissions across our property base and all new developments are now delivered with integral technology designed to reduce energy use and consequently carbon emission levels. Developments currently at varying stages of approval using both traditional capital funding streams and the Carbon Energy Fund lease model are expected to contribute towards a significant reduction in energy usage/carbon emissions in the coming years. These include replacement Boiler plant at Dr Grays, Inverurie and Woodend hospitals, an energy link between Foresterhill and Royal Cornhill Hospital, replacement lighting and chiller units at various locations on the Foresterhill site and new High Voltage plant at the Foresterhill site.
Reduction in backlog maintenance statutory compliance
62. Our planned investment programme in respect of backlog maintenance fits clearly with NHS Grampians strategic theme of delivering high quality care in the right place through providing safer, effective and sustainable services. In addition the plans fit national and local strategy as follows :-
• The Scottish Government’s “Policy for Property and Asset
Management in NHSS” issued in September 2010(CEL 35(2010) requires all NHS Boards to target backlog maintenance reduction as an integral part of their Property and Asset Management Strategy.
• Our backlog maintenance costs estimated at circa £170m2 are the
second highest of all the Scottish Health Boards, of which circa £60m was high or very high risk
• A large part of the planned programme to address backlog focuses on
East End 2 and Phase 2 at Aberdeen Royal Infirmary (ARI). Both buildings will remain as inpatient facilities for the next 10-15 years. Beyond this period the Foresterhill Development Framework has identified an area to the east of the ECC for the construction of a new inpatient facility to replace both buildings. This requirement has been recognised by the Scottish Government and the major investment required has featured in the Government’s long term infrastructure plans.
• The planned work at ARI, although focused on backlog maintenance
reduction, will enable the reconfiguration of services consistent with the Health Campus Programme Initial Agreement and the
2The values used to quantify backlog maintenance risk are stated net of VAT, fees and other on costs which means that the actual project costs necessary to deliver the required works
Foresterhill Development Framework approved by the NHS Grampian Board in 2008.
• The reprovision of clinical services from Denburn Health Centre and
Woolmanhill Hospital will enable estate rationalisation and an overall reduction in our building footprint.
63. Firm plans now exist to progress a programme of targeted expenditure initiatives, asset disposals and site rationalisation that will result in an overall reduction in backlog maintenance against this target of £52m (30%) by March 2018. Within this overall figure very high risk backlog will reduce by £12m (67%) and high risk by £22m (43%).
64. During 2014/15 significant progress was achieved through completion of a planned package of works associated with the East End 2 block (target price £5.452m).
65. The following extract from our financial plans summarises the budgeted expenditure on backlog maintenance (inclusive of VAT fees and other on costs) and the anticipated sources of funding available to support the programme over the 5 years 2015/16 to 2019/20.
NHS Grampian
Backlog Maintenance Programme
15/16 16/17 17/18 18/19 19/20 Total 5
Year Plan
AVAILABLE FUNDING £000s £000s £000s £000s £000s £000s
Formula Capital Allocation 9,088 8,153 2,833 7,972 7,972 36,017
Endowments - Phase 2 ARI 991 1,603 2,594
Estimated Net Surplus/(Loss) on Disposal of Property 8,494 5,180 13,674
Estates Maintenance revenue operational budget 1,140 1,140 1,140 1,140 1,140 5,700
Non Value added revenue Infrastructure budget 250 250 250 250 250 1,250 TOTAL FUNDING AVAILABLE FOR INFRASTRUCTURE AND BACKLOG MAINT 19,963 16,326 4,223 9,362 9,362 59,235 PLANNED EXPENDITURE
Planned expenditure
East End 2/Phase 2 Blocks - ARI 12,875 12,326 2,208 27,409
Denburn Exit Strategy - GP accommodation 4,000 1,000 5,000
ENT/Audiology 1,700 1,700
Other Programme specific - Fire, legionella etc 1,000 1,000 1,000 1,000 4,000
Additional Estates Backlog 240 240
Phase 1 Block ARI 0 15 8,000 7,662 15,677
Mortuary accreditation works 0
Woodend Boilers 710 709
Contingency - Backlog Maintenance (optimism bias) 3,438 362 700 4,499
Total Planned expenditure on Backlog Maintenance 19,963 16,326 4,223 9,362 9,362 59,234
Surplus / (-)Deficit 0 0 0 0 0 0
Total Funding Available For infrastructure Investment 33,833 22,796 34,064 34,982 15,982 141,655
66. The scope of the works programme for ARI Phase 2 is now agreed with the affected services and detailed design planning underway. The works package will be delivered in 3 separate stand alone stages
67. The Board approved £10.6m (with a contingency of £1m) to meet the cost of the first stage of the ARI Phase 2 backlog project. Work is progressing on this initial phase with the Board expected to approve Stage 2 funding in the early part of 2015/16.
68. The overall programme at ARI is underpinned by a complex series of service moves, a “decant plan”, which is agreed on a stage by stage basis by both clinical leadership within the affected service areas and the Acute Sector Management Team. The decant plan is aimed at ensuring that services are only required to move once to allow the work to complete prior to occupying their permanent accommodation
69. By March 2018 there will still be a sizeable backlog risk in our estate. The largest remaining areas with a planned future clinical use and high levels of backlog are the Phase 1 block and Theatres at ARI. The Foresterhill site rationalisation plan identifies Phase 1 as the future location for ambulatory care services in the medium term. The service plans to deliver this are at a very early stage of development and a firm works programme for this area cannot be agreed until the service configuration is finalised (the current backlog risk categorisation reflects use as in patient accommodation and this will change significantly, potentially requiring less intervention, if we change the use to out patient only). Our 5 year financial plan identifies additional resource to be targeted at Phase 1 and other additional backlog priorities from 2017/18 onwards.
70. The proposed programme of works is affordable within our overall financial plans and will target the significant areas of risk within our estate. The dependency on asset disposals is a key risk to the affordability of the programme and to mitigate this the major programme of works at ARI Phase 2 is delivered in 3 distinct stages with Board approval requested prior to the commencement of each stage.
Replacement of essential equipment
71. A key element of our capital programme is the replacement of essential equipment and critical assets within our clinical and non clinical services. We have had significant engagement with clinical services in order to assess and prioritise available funding to target at essential equipment replacement.
72. We are gradually refining our detailed equipment replacement strategy, informed by a comprehensive assessment of risk. The commitment to the backlog maintenance and to various priority strategic developments including primary care facilities and the replacement maternity hospital and Cancer Centre impacts on the funding available to support a rolling replacement equipment programme. This requires a flexible approach to prioritise funding to those areas of highest priority and risk. The following table summarises the position regarding prioritised equipment replacement needs against available funding over the 5 years of the local delivery plan.
Essential Equipment replacement programme
2015/16 2016/17 2017/18 18/19 19/20 Total £000's £000's £000's £000's £000's £000's
Imaging (CT / Ultrasound / MRI / Gamma Cameras) 1,427 294 2,101 205 1,709 5,735 Other X ray (Angio / Dental / Fluoroscopy / General X Ray) 1,577 1,200 1,255 0 323 4,355 IV systems (Syringe and Volumetric Pumps) 8 108 70 180 623 990 Other medical equipment eg defibrilators, dialysis machines, endoscopes 2,629 2,818 3,861 2,311 6,063 17,682 0
Support Services Vehicles 86 20 41 15 56 218
0
Plant and Machinery 60 0 0 0 60 120
Catering 46 52 56 35 102 291 Security 180 100 80 110 336 806 Decontamination / Linen 316 254 614 729 569 2,482 Estates 0 0 0 0 77 77 0 eHealth Projects 4,303 3,598 2,674 2,681 3,863 17,119
Total requirement identified by service leads (exc major system development) 10,632 8,444 10,752 6,266 13,781 49,875 Available resource :
Total uncommitteed resource available for equipment replacement 3,800 1,650 3,800 4,800 4,800 18,850
Shortfall 6,832 6,794 6,952 1,466 8,981 31,025
Note :
The above requirement is identified by each service lead (Labs, Radiology, MED Physics & Facilities). A full risk assessment and peer review process is underway to assist in prioritisation of these requirements against the total resource available for equipment replacement and if necessary against other planned infrastructure investment areas.
Donated Assets
73. NHS Grampian enjoys excellent relationships with third sector partners and local philanthropic interests. Planned developments for which donated funding is confirmed include the development of Robotic Surgery at ARI, purchase and installation of an additional MRI scanner at Woodend Hospital and use of Endowment Funds to improve the physical environment in ward accommodation at ARI.
Disposal of surplus assets
74. A key element of the delivery of our capital plan is achievement of our programme of disposals of surplus assets. The disposal programme and delivery of the required actions is monitored closely by the Board’s
75. Clearly our planning must remain realistic regarding expectation of additional resource availability to support new service development over the period of the plan and this is a key consideration when addressing strategic priorities locally. We continually refine our expenditure proposals to achieve the correct balance and shape our programme to achieve maximum benefit across the range of funding sources available to us.
Financial Risks and Managing Them
76. This paper touches throughout on financial risks to the organisation but this section is intended to focus on summarising the key financial risks and how we can eliminate or reduce them to tolerable levels.
Policy and Legislative change
77. The policy and legislative landscape in which Boards operate is
continually evolving and requires adjustments to be made in terms of our operating and planning framework. We had the recent enactment of the Patient Rights (Scotland) Act, the Public Bodies (Joint Working) (Scotland) Bill and the Community Empowerment and Renewal Bill.
The Board’s local delivery plan acknowledges the new legislation and work is progressing to identify the resource and financial implications (costs and opportunities) of the changes to health and social care integration and in community planning. We are also undertaking preliminary planning for the introduction of the new major trauma centre hub in Aberdeen, the costs and funding for which have not been confirmed nor reflected within our financial plan.
Access to new drugs
78. The Grampian Medicines Management Group performs a critical role in
ensuring that the organisation is effective in its management of prescription drugs in both primary care and hospital settings. The Group’s report to the Budget Steering Group suggests an increase of the annual drugs budget by £7.8m million in 2015/16 (excluding the costs of the new Hepatitis C drugs). During 2014/15 we experienced a
significant increase in our primary and secondary care prescribing budgets. Primary care drug costs being influenced by both price and volume increases higher than forecast and secondary care drugs impacted by the approval of a number of high cost drugs under the new Scottish Medicines Consortium approval process. Whilst provision has been made in our financial plans to reflect recurring additional funding for primary and secondary care drugs the full extent of any cost may have to be met from a re-prioritisation of service funding.
Capital
79. The level of capital funding available to NHS Boards does not fully reflect the investment levels required to ensure that our infrastructure (buildings, equipment and technology) remain fit for purpose and in compliance with required legislation. The Asset Management Group
(AMG) advises the NHS Grampian Board on the prioritisation of available capital, and other sources of funding, in line with agreed service strategy and assessed high risk areas for infrastructure replacement and improvement. All capital expenditure proposals are subject to robust scrutiny and challenge by the AMG on an ongoing basis to ensure that all available funding is targeted in the most appropriate manner and phased to maximise impact on reducing known risks.
Managing demand pressures
80. Changing demographics, with an increasing and aging population, are
placing additional pressures on existing health resources. The population of Grampian continues to rise at a faster rate than other parts of Scotland, with new and emerging communities reflected in the local development plans in Aberdeen City and Aberdeenshire in particular. These challenges are reflected in gaps in primary care health provision (current and predicted) and rising levels of activity and patient acuity in our major hospital sites. Our Property and Asset
Management Plan will set out the challenges we face in relation to location of our infrastructure and the need for transformation in relation to the provision of primary and social care. NHS Grampian in conjunction with local authority partners have made very good progress in discharging more elderly patients to suitable care environments. This is not only much better for patients but frees up much needed bed space to allow a faster throughput of activity which in turn improves access for new patients. There is growing concern, however, that local authorities will find it difficult in future to allocate sufficient funding to support patients discharging into the community, leading once again to “delayed discharge” difficulties. The establishment of the new Integrated Joint Boards should prove to be instrumental in avoiding any reversal of outcomes. The reintroduction of a more challenging target for reducing delayed discharges will further focus attention.
Workforce
81. The employment market within the Grampian area is particularly challenging given the buoyancy of the local market, rising property costs and availability of affordable rental accommodation. In addition we are facing similar challenges to other Boards in Scotland in terms of recruitment of consultants and other clinicians within certain medical specialties and sub-specialties. These challenges have manifested themselves in increases in medical locum costs and higher levels of nursing vacancies.
82 As a Board we are reviewing all aspects of our recruitment arrangements to ensure that we are maximising the potential to attract and retain staff in the Grampian area. The increasing level of medical locums required to support and sustain clinical services remains a concern both from a financial and clinical service perspective. We do however remain ambitious in our aims for the delivery of healthcare and to building on our position as a high quality teaching and research establishment.
Pay and pension costs
83 The ending of Contracting Out arrangements from April 2016 will
present a significant cost pressure in 2016/17. The impact of the
ending of the existing Contracting Out arrangements will add an additional £8.4m to our pay cost from 1 April 2016.
Summary and Conclusion
84 NHS Grampian has met its key revenue targets in 2014/15 (subject to
external audit clearance) and during the five years of this plan, will remain within financial balance. In doing so, it must achieve recurring cost reductions in each of these years. This will be a very substantial challenge in an environment where demand for health services will continue to grow exponentially.
85 The capital programme in 2014/15 will also be met and will deliver very
significant benefits to the organisation, to staff and to patients.
86 The Board continues to drive forward our 2020 vision and ensuring that
we are able to make the necessary changes required to support our ambitions.
87 Demography will demand a different way of service delivery and this is
likely to involve a redesign of services both locally and regionally. A robust methodology for assessing resource prioritisation and its effective application in such turbulent circumstances will be essential.
88 We do however acknowledge the agreement to accelerate the funding of NRAC parity and we expect to be within 1% of parity from 2015/16, with further progression towards parity thereafter.
89 There has been an enormous and effective collective effort in 2014/15
to operate within resources and achieving the required level of efficiencies whilst continuing to deliver safe and effective clinical care. There will be no rest from such efforts in the immediate future. No service will be exempt from the financial pressure so it follows that working collectively to achieve the organisation’s aims is likely to have most chance of success and to bring everyone together in morale boosting planning and delivery.
Alan Gray
Director of Finance NHS Grampian
