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Agenda Item No: 6.1
Trust Board Meeting
Date: 16 December 2008
Havering NHS
London Clinical and Business Support Agency (LCBSA)
‘The Hub’
PURPOSE OF REPORT:
This report sets out the Full Business Case and formal resolution to
enable the 31 PCTs to work together to design a new organisation
to support commissioners across London. This organisation will
bring together existing pan-London services and build new
commissioning support expertise to help PCTs become World Class
commissioners, improve the health of London’s population, and
minimise costs to the taxpayer. The new entity will be called the
London Clinical & Business Support Agency (LCBSA aka the “hub”).
FIT WITH OPERATIONAL PLAN:
The LCBSA will deliver benefits to all PCTs starting from April 2009.
The success of the LCBSA will depend on the full support and
ownership of PCTs. The Business Case aims to arm PCTs and their
Boards with the necessary evidence and information to carry the
LCBSA forward and set a clear pathway towards better healthcare
for Londoners.
SUMMARY:
The proposed LCBSA services will enable PCTs to meet World
Class Commissioning competencies and Next Stage Review
requirements. The LCBSA will enable PCTs to deliver direct
benefits to patients through improved health intelligence, clinical
guidance, and performance management. Financial benefits are
expected to repay investment and running costs in Year 2. To
ensure delivery, stated benefits and success measures will be
performance managed through gateway reviews at critical stages.
IMPACT:
• Assurance Framework - Governance structure. The LCBSA
will be governed by a Board accountable to all member PCTs.
• Health Impact Assessment – The LCBSA will provide tangible
benefits to PCTs through improving health outcomes and
reducing the costs of provision. The expectation is that a
coordinated set of services through a single entity supporting all
of London will enable commissioners to invest in services that
will offer improved health outcomes for all Londoners.
An example of this could be the introduction of disease
management programmes appropriate to the London population
that improve pathway design and the education of patients.
• Financial Costs – The table below illustrates the costs and
benefits analysis for NHS Havering from 2009-2012.
It is also necessary in 2008-09 and reflective of start-up costs in
Q4, that PCTs are being asked for £2.9m of which our share is
£86.8k. All contributions are based on weighted capitation.
Havering PCT
Existing service Additional HfL New LCBSA
£, '000 contributions contribution services Total contributions Total benefits*
2009/10 252 173 325 750 681
2010/11 n/a n/a n/a 850 1,422
2011/12 n/a n/a n/a 874 1,956
*Partial estimate of quantifiable benefits (excludes HfL benefits and all
qualitative health outcome benefits)
The Full Business Case illustrates in detail at Appendix 2, the
services and the calculated benefits including cost benefits. A
number of areas have yet to be estimated in terms of cost
benefit, for example clinical advice and expertise and social
marketing.
• HR – A due diligence exercise is planned to commence in
January 2009 in order to consult with staff who will be affected,
for example staff employed by the commissioning support
services.
It is assessed that LCBSA will commence in phase 1 with 275
wte, rising by the end of phase 1 to 360 wte. By the end of
phase 3, it is assessed that around 530 wte will be employed,
some of whom will be external contractors.
• Estates - No known impact directed to NHS Havering.
• Legal – The Board Resolution paper below is the legal entity that
supports the Full Business Case.
It is Resolved that:-
1 The PCT approves the business case for the establishment
of the London Clinical and Business Support Agency
(LCBSA) and in particular
1.1 to commit the PCT to the cost and risk share set out
in the business case and the Establishment
agreement referred to below.
1.2 To agree to the arrangements for set up funding (to
be distributed in the last quarter of 2008/09
2 The PCT approves in principle the entry into the
Establishment agreement presented in draft for the
establishment of a joint committee with the other Primary
Care Trusts listed in accordance with the terms of
reference annexed (the "Management Board") to provide
management oversight and accountability to the London
PCTs from LCBSA, and delegates authority to the Chief
Executive to agree any final changes in accordance with
the business plan to enable execution of the agreement to
take place. In particular the PCT approves the following:-
2.1 Funding arrangements and the budgets
2.2 Risk sharing arrangements
2.3 Arrangements for termination
2.4 Arrangements for entering into a Hosting agreement
in accordance with the assumptions set out in
Schedule 4
As set out in the current draft and the Business Case.
3 The Chief Executive be granted delegated authority on
behalf of the PCT to take all steps necessary for the
formation of the Management Board including making
arrangements for the appointment of members of the
Management Board, and the execution of documents to
give effect to the arrangements and to act on behalf of the
PCT in respect of decisions to be taken concerning LCBSA
through the London Chief Executives’ Forum.
4 The PCT delegates to the Management Board full power to
act on its behalf in respect of the matters set out in the
terms of reference of the Management Board, with the
authority to delegate further to a sub committee and the
officers engaged by it.
5 The PCT approves the transfer to the LCBSA when
established of the following operations and their associated
funding streams:-
5.1 The Commissioning Support Service
5.2 The London Health Observatory
5.3 Healthcare for London
5.4 The London Development Centre
5.5 The London New Drugs Group
5.6 The London Social Marketing Team
5.7 The Thames Cancer Register
Provided that the PCT shall continue with the current
funding arrangements for the above organisations (where
relevant) for the period until the effective operational date
of LCBSA.
6 The Secretary be authorised to amend the scheme of
delegation of the PCT to reflect the arrangements
approved by the Management Board
• ICT – No known direct impact to NHS Havering.
ACTION OR RECOMMENDATION REQUIRED:
Board approval is sought for:
1) The LCBSA Full Business Case.
2) The Board Resolution paper as set out under Legal above.
Phillip Ainsworth
Director of Health Care Procurement and Performance
Confidential Final Version 1 December 2008
London Clinical and Business
Support Agency (LCBSA)
Programme
Full Business Case
NHS London PCTs
1 December 2008
Final Version
Confidential LCBSA Full Business Case 1 December 2008
FOREWORD: A VISION FOR WORLD CLASS HEALTHCARE IN LONDON
Londoners live in one of the most advanced cities in the world, and they deserve the best health
care in the world.
Over the last few years in London, PCTs and other health organisations have achieved many
things, yet there remains much to be done, including the full realisation of the Healthcare for
London vision, and meeting the demands of the Next Stage Review.
In order to achieve World Class Commissioning competencies and ensure the capital’s citizens get
the best possible care, London has set out an ambitious programme to strengthen commissioning,
at practice-based, borough and pan-London level. The Strengthening Commissioning programme
identified the need for a central expert shared service in London, bringing together existing
services and developing new skills.
The last six months have seen an extensive and thorough consultation process designed to agree
what this organisation should look like. We have listened closely to the PCTs, existing pan-
London entities and other stakeholders to understand where the key gaps and opportunities lie.
The proposed London Clinical and Business Support Agency (LCBSA) will address those gaps
and realise those opportunities, and should serve as a cornerstone of commissioning capabilities
across the region.
Crucially, the success of the LCBSA will depend on the full support of the PCTs. This Business
Case aims to arm PCTs and their Boards with the necessary evidence and information to carry the
LCBSA forward and set a clear pathway towards better healthcare for Londoners.
Chas Hollwey
SRO LCBSA
1st December 2008
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EXECUTIVE SUMMARY
London’s 31 PCTs have collaborated to design a new organisation that supports commissioners
across London. This organisation will bring together existing pan-London services and build new
commissioning support expertise to help PCTs achieve World Class Commissioning, improve the
health of London’s population and minimise costs for optimal use of taxpayer money. The new
entity will be called the London Clinical & Business Support Agency (LCBSA).
The vision for the LCBSA is that it will be a centre of clinical and business excellence in healthcare
commissioning, supporting each of London’s PCTs and governed by them all. It will be a
responsive and flexible client-focused organisation whose deliverables directly address
commissioners’ needs. It will provide services more effectively and without duplication, enabling
PCTs to focus more resources on local analysis and commissioning.
Working together with PCT CEs, Directors, and other stakeholders, the LCBSA programme has
defined a set of services to ensure the optimal return on PCT investment. Regional, national and
international case studies allowed the programme to learn from previous experience and fully bring
best practice to bear. Services have been designed and phased to maximise the success of
implementation and ongoing delivery. Each proposed service and its phasing has been rigorously
reviewed to ensure that provision through the LCBSA provides the best value for money.
The LCBSA has been designed as a collective investment by the PCTs to achieve critical tasks
that individual PCTs would find it difficult or extremely costly to do on their own:
Strengthened clinical evidence base and capacity modelling across the key care pathways that
better enables commissioners to target health spend and achieve maximum ‘return on investment’
Predictive modelling of disease risk to enable better service planning and earlier patient
interventions that lower cost and improve health outcomes
Comprehensive and consistent quality and performance reporting to inform and enable patient
choice in line with the vision of the Next Stage Review
Comparative analysis of provider cost and performance to help PCTs to achieve a measurable
improvement in the quality of healthcare, while controlling the overall costs to the system
through more sophisticated contract management
Access to the scarce expert talent required across a variety of commissioning activities to attain
World Class Commissioning competencies
The LCBSA is expected to achieve these tasks cost-effectively through economies of scale and
avoidance of duplication, enabling commissioners to re-invest freed up resources in local
commissioning. Finally, it is expected improve accountability to PCTs and reduce outsourcing cost
through greater buying power.
The proposed expert support services can be categorised into four major groups:
Pan-London prioritised service improvement programmes (including current HfL programme)
Clinical advisory and engagement (under the Regional Medical Director)
Health intelligence and Public Health programme support
Commercial support (claims management, provider intelligence and contracting/tendering)
In addition, the LCBSA will provide a number of enabling support functions, including
communications, informatics and PCT development support.
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Specific examples of the savings and performance benefits to be expected (based on national and
international case studies of similar services) include:
Improved quality of care through better performance-based contracting: London could succeed
in reducing the costs of care (through better clinical focus) by ~£20m per annum and save
thousands of lives in key clinical areas (e.g. heart attacks and heart failure, pneumonia)
Improved effectiveness of health promotion interventions: Better engagement of high-risk
patients could decrease in-patient treatment and related hospital costs by ~20% and significantly
improve outcomes in targeted areas (e.g. ~50% reduction in diabetes-related amputations)
Reduced spend on acute care: Improved clinical coding review and better provider intelligence
for contract negotiations could save at least ~£30m in acute spend annually, while driving service
cost reductions (and not provider indebtedness) through better targeted contractual incentives
Reduced spend (by avoiding duplication) to achieving WCC and NSR requirements: LCBSA’s
provision of advanced health intelligence support could save PCTs ~£3m per annum and the
provision of a consistent quality framework could save an additional ~£3m per annum
An assessment of financial and health improvement benefits shows a high expected return on PCTs’
investment in the LCBSA. Even a partial assessment shows a net financial gain for PCTs by year 2.
Funding for the LCBSA will come from a combination of existing PCT commitments, existing
SHA and DH monies (to be channelled into the LCBSA) and new funding for new services.
To establish the highest-priority LCBSA services and deliver these benefits, the LCBSA requires a
set-up investment and initial core funding. To provide PCTs with the maximum possible flexibility
to change the nature and funding of services over time, the business case calls for an annual review,
and control over spending growth. Over time, the proportion of services reviewed annually or
offered as completely optional will grow significantly. Moreover, even in the case of core services,
a robust framework for performance assurance and potential termination of services will be in place.
For fiscal year 2009/10, the LCBSA budget is estimated at ~£32m. Funding from SHA/DH sources
amounts to ~£7.0m, leaving a total PCT contribution of £25.3m. This includes existing PCT funding
of £8.5m (i.e. recurring funds committed to HfL, CSS and LHO) along with an additional ~£5.9m in
supplemental funding for HfL, and £10.9m in funding for new services. The incremental request in
2009/10 amounts to ~£540k per PCT on average (~£350k excluding supplemental HfL funding),
with each PCT’s specific contribution dependent on their weighted capitation.
The core recurring cost for 2010/11 and 2011/12 amount to ~£36m and ~£37m respectively, with the
total PCT contribution rising from £25.3m in 2009/10 (including £8.5m of existing funding) to
£28.7m and £29.5m for years 2010/11 and 2011/12 respectively.
LCBSA governance and organisation: The LCBSA will be hosted by a PCT and governed by a
separate LCBSA board with members chosen from PCT executive and non-executive directors in a
way that ensures adequate representation across London’s PCTs, as well as relevant professional
knowledge (e.g. clinical and commercial). The organisation structure will be designed to minimise
disruption to ongoing activities, while facilitating a transition to an end-state that realises the large
potential synergies. The organisation structure will be finalised when a new CEO is in place.
A number of risks have been considered including those related to set-up (recruitment and
infrastructure) and operation (integration and delivery). Initial mitigation steps have been
considered and will need to be developed fully during finalisation of the implementation plan.
PCT boards are asked to approve set-up funding for the last quarter of 2008/9, first-year funding for
2009/10 and recurring core funding for 2010/11 and 2012/13. Exact funding levels vary by PCT,
and are detailed in the funding section in this business case.
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TABLE OF CONTENTS
1. PURPOSE OF THIS DOCUMENT 6
2. BACKGROUND AND ROLE OF THE LCBSA 7
3. PROPOSED SCOPE AND PHASING 9
4. EXPECTED BENEFITS 13
5. FUNDING 22
6. COSTS AND VALUE PROPOSITION 25
7. MECHANISMS TO ASSURE DELIVERY OF BENEFITS 40
8. BUILD VERSUS BUY 42
9. PARTNER ORGANISATIONS 44
10. GOVERNANCE 49
11. ORGANISATION MODEL AND DEPLOYMENT OF SERVICES 52
12. KEY RISKS 57
13. NEXT STEPS 58
14. RECOMMENDATION TO THE PCT BOARDS 59
APPENDIX 1: PROCESS FOR CONTENT DEVELOPMENT 60
APPENDIX 2: DETAILED DESCRIPTION OF SERVICES AND BENEFITS 63
APPENDIX 3. OPTIONAL PRODUCTS 80
APPENDIX 4. PHASING PRIORITISATION CRITERIA 81
APPENDIX 5. BUILD VS. BUY CRITERIA 82
APPENDIX 6. BENEFITS EXAMPLES 83
APPENDIX 7: LESSONS LEARNT FROM PAST EXPERIENCE 85
APPENDIX 8: IT DEVELOPMENT BUDGET 92
APPENDIX 9. GLOSSARY OF ACRONYMS (GOA) 93
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1. PURPOSE OF THIS DOCUMENT
This document asks PCT Boards to consider and approve the creation of the London Clinical and
Business Support Agency (LCBSA), also known as the ‘Hub’. Specifically, PCT Boards are asked
to approve the following:
The business case, with any comments to be duly noted for implementation planning
Set-up funding to be dispensed in the last quarter of financial year 2008/09
First-year funding for 2009/10 for all core services
Second and third-year funding for 2010/11 and 2012/13 for core services
Agreement in principle to mechanisms that assure the delivery of benefits, and potentially alter or
terminate services at the end of the three-year start-up phase in the case of inadequate delivery
Agreement in principle to the transfer of existing PCT-funded entities and their funds (i.e. HfL
and CSS) into the LCBSA, including assets and liabilities
Agreement in principle to the transfer of DH and SHA-funded entities into the LCBSA
Agreement in principle to the risk sharing arrangements set out in the Agreement for the
Establishment of a Joint Committee to Oversee the London Clinical Business Support Agency
To allow PCT Boards to reach a fact-based decision, this document outlines the key arguments for
the creation of the LCBSA, organised into the following sections:
Background and role of the LCBSA
Expected benefits for PCTs
Intended scope of LCBSA services
Review of existing entities related to the LCBSA scope, and an assessment of their integration
potential
Phasing of LCBSA service development
Funding model, costs and value-for-money proposition
Delivery assurance measures and programme controls, including an evaluation process and
potential termination mechanism
Assessment of build versus buy opportunities
Outline of key design principles (organisation and deployment; governance and hosting
arrangements)
High-level implementation plan and risk assessment
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2. BACKGROUND AND ROLE OF THE LCBSA
Background
The Strengthening Commissioning programme identified the need for an expert support and shared
services organisation for London’s PCTs. It was driven by three key elements:
The bar for PCT commissioners has been set high:
World Class Commissioning (WCC) will provide a transparent assessment and ranking of
commissioning organisations, and preliminary assessments to date highlight competency
gaps to be filled
Healthcare for London (HfL) set ambitious goals for health improvement and identified big
challenges in a number of areas, from primary through to secondary care
The Next Stage Review set out additional goals for commissioners, particularly around the
‘quality agenda’, requiring a step-change in the way we work
PCTs are finding that many critical capabilities currently do not exist or are under-resourced:
Most commissioning support capabilities are underfunded relative to international
benchmarks
Existing expert support and shared services are small and/or not held accountable to PCTs,
and will be unable to meet the challenge of WCC
Many critical skills (e.g. health intelligence analysts, health economists, ROI model
developers) are almost entirely absent from the NHS system and relatively scarce in the
market, causing PCTs difficulty in gaining access to them
Scarce skills are often not efficiently utilised across the system:
Data availability and analysis is inconsistent across London and of variable reliability and
the current efforts that exist to convert it into actionable knowledge are uncoordinated
Existing expert support and shared services are not organised to leverage the maximum
possible synergies between them, leading to sub-optimal delivery
There is much duplication of effort as various PCTs attempt to perform some of the same
functions (e.g. communications function, provider performance review), often at sub-scale,
and with sub-optimal knowledge-sharing across London
Role of the LCBSA
The LCBSA will be a new centre of clinical and business excellence in healthcare commissioning
supporting each of London’s PCTs and governed by all of them. It will be a responsive, flexible and
cost-effective support centre whose deliverables directly relate to the needs of the PCTs. It will bring
together existing pan-London entities and add new commissioning skills to provide the services and
products that the PCTs need to become world class commissioners, serving the common goal of
improving the health and wellbeing of Londoners.
The LCBSA will support PCTs in achieving their goals more effectively and in a shorter timeframe
through the best use of resources across London. The LCBSA will provide clear value-for-money
for PCTs by focusing on expert support that would otherwise be far more expensive or remain
simply out of reach for individual PCTs or sectors. The LCBSA will learn from past experiences
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and create robust measures of success as well as mechanisms for client feedback and performance
review to ensure good service delivery. Specific areas of expected impact include:
Enhancing the delivery of Healthcare for London including support in re-design of clinical
pathways and service configuration
Strengthening clinical input and engagement across the commissioning process under the
direction of a new NHS London Medical Director
Improving understanding of the population’s health needs, aiding the planning and prioritisation
of spend on health services, and facilitating the creation of better health promotion initiatives
Tightening control over the cost and quality of provision through better performance
measurement, monitoring and management
While there are certain activities that the LCBSA will do, it is equally important to stress what it will
not do. Most importantly, it is not intended to take decision-making away from PCTs, deplete their
resources or dilute their capabilities. In addition, the LCBSA will not provide other services that
could potentially benefit from sharing but which are not directly related to the expert support needed
most urgently to strengthen commissioning. This scope of the LCBSA is summarised in Figure 1.
Figure 1. What the LCBSA will and will not do
Will… Will not…
Be accountable to commissioners as × Focus on transactional services
intelligent clients
× Denude PCTs of their existing
Help transform the delivery of healthcare commissioning skills
services in London by bringing all PCTs up
to the standard of the best
× Simply move people around the
system or reinforce existing shared
Secure new and enhanced capabilities to services
meet essential skills gaps and attain WCC
× Introduce new services that duplicate
Complement existing skills at the local and existing efforts
sector levels, as part of an integrated
approach to strengthening capabilities
× Create further complexity and
bureaucracy
Effectively combine and/or coordinate
existing shared resources that are often
× Make commissioning decisions or
hold commissioning budgets
scattered across various organisations
Strengthen clinical expertise and evidence
× Have a role in coordinating patient
care
to achieve Healthcare for London and health
outcome targets identified in Vital Signs × Be an independent entity, setting its
own agenda, with accountability to a
Operate as a responsive organisation to
third party
which PCTs contribute funding, and receive
deliverables directly relevant to them
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3. PROPOSED SCOPE AND PHASING
Proposed Scope:
The proposed scope of the LCBSA was agreed with PCTs through an extensive consultation
comprising multiple workshops and interviews running over September and October 2008, and
involving ~150 stakeholders (including PCT CEs, Board members, NEDs, DoFs, DoCs, PEC Chairs,
GPs, existing entities and other specialists). The resulting scope is intended to address the most
pressing needs of London’s PCTs.
Broadly speaking, the LCBSA scope can be split into four main service groupings: Pan-London
Prioritised Programmes (clinical improvement and service change), Clinical Advisory Services,
Public Health Services (including health intelligence) and Commercial Services (including provider
intelligence). The LCBSA will also provide a number of additional smaller services such as
informatics, communications and PCT development support. The service groupings and the benefits
they bring to PCTs are described in more detail in Section 4.
Figure 2. LCBSA service groupings
Service groupings Description
• Support high-priority service redesign based on evidence-based care pathways,
Pan-London and modelling of activity flows versus planned capacity
prioritised • Provide cost-quality assessment of different interventions across the care pathway
programmes and support commissioners in targeting their spend to optimise health outcomes
• Share national and international best practice to facilitate service improvements
• Provide an independent and credible clinical advisory team to guide service
Clinical advisory and development and engage clinicians to support the delivery of change
engagement • Provide clinical guidance on new drugs/devices and potential R&D priorities
• Advise on the most relevant quality metrics to ensuring improved health outcomes
• Advanced health intelligence capabilities (e.g. predictive modelling, intervention
effectiveness comparison, ROI and financial implications estimates) to enable
Public Health services PCTs to better assess population health needs
• Support public health programme development, facilitating targeted behavioural
change programme design and coordinated implementation planning across PCTs
• Provide claims management and coding review to challenge provider invoices,
Commercial support reduce clinically ineffective procedures and contain potential price inflation
• Ensure relevant provider intelligence and expert commercial advise to support
commissioners in contract negotiations and tendering for new providers
• PPI and Communications support to major change programmes, and to decrease
the cost and increase the quality of sub-scale functions (e.g. patient surveying)
Other services
• PCT development to ensure knowledge sharing and consistency in key
development areas across PCTs
• Informatics support to provide consistent, valid and comparable data sets and
reporting tools across PCTs
Each service grouping comprises multiple ‘service lines’, each of which will comprise a number of
‘products’. The service lines and products are designed to meet specific PCT needs. For example,
Clinical Advisory service includes a ‘Quality Observatory’ service line and set of products ranging
from clinically-driven quality metrics (around major pathways) to quality performance
benchmarking and reporting. These products represent specific PCT requirements as set out in the
Next Stage Review that can only be achieved effectively at a pan-London level.
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In total there are 12 service lines which, between them, cover the entire LCBSA scope. The
complete set of service lines, grouped by organisation unit, is shown in Figure 3. Full details of
service lines and products are included in Appendix 2.
Figure 3. LCBSA service lines
Service grouping Service lines
1 Pan-London care pathway and service delivery design and implementation support
Pan-London service (HfL Programme)
improvement
programmes 2 Expert guidance and developmental support in prioritised pathways
3 Clinical advice and engagement
Clinical advisory
services
4 Quality observatory
5 Health intelligence
Public Health
6 Public health programme development
Services
7 Social marketing (strongly linked to Communications and PPI support)
8 Claims management and coding review
Commercial support
9 Provider intelligence, contracting negotiation support and commercial advice
10 Communications and PPI support
Other services 11 PCT development
12 Informatics (data storage, quality and reporting tools)
Proposed Phasing:
In designing the roll-out of LCBSA services, we have balanced the desire to achieve critical areas of
support as quickly as possible with the pragmatic imperative to ensure deliverability. Following a
prioritisation exercise with PCT Chief Executives, services have been split into three ‘phases’, which
will be implemented over the course of three years. Services were prioritised based on their
expected level of impact and likely ease of implementation (see Appendices 2 & 4 for further
details).
A high-level schematic of implementation phasing (Figure 4) shows that most service lines (and all
new service lines) will be rolled-out over the course of 2–3 years, with the highest-impact and
easiest to implement ‘products’ rolled out in year 1, followed by the lower-impact or more complex
products in years 2 & 3. (see Appendix 2 for detailed product by product phasing).
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Figure 4. Implementation phasing
Phase 1 Phase 2 Phase 3
Apr 2009–Apr 2010 Apr 2010–Apr 2011 Apr 2011–Apr 2012
Pan-London care pathway & service
1 delivery design and implementation
support (e.g. HfL programme)
3 Clinical advice and expertise
11 Pan-London PCT development
• Most new service lines
have been phased over
2 Expert guidance and development support in prioritised pathways
two years to ensure
feasibility of delivery
4 Quality Observatory
• Those deliverables with
5 Health Intelligence (from core WCC capabilities to advanced capabilities) the highest expected
impact and relative ease of
6 Public health programme development (gradual integration of regional PH) implementation have been
prioritised for phase 1
7 Social Marketing (gradual build out of pilot programme) delivery
8 Claims management and coding reviews
9 Provider intelligence, contract negotiation support and commercial advice
10 PPI and communications support (building on existing HfL programme support)
12 Data warehousing and web portal development (existing systems)
Phase 1: April 2009 – March 2010
Phase 1 consists of high-impact services that the LCBSA can implement relatively quickly and
easily. Many services are based on the activities of founding entities that will combine to form the
basis of the LCBSA (see Section 9 for full details). In addition, high priority services not currently
available today but urgently required (e.g. due to WCC and NSR mandates) will be developed and
implemented during Phase 1. Overall, phase 1 develops most analytics capabilities in tandem to
ensure that the overall structure of analytics support is developed rationally and comprehensively.
Examples of services slated for Phase 1 include elements of the Quality Observatory required by the
NSR, health intelligence capabilities emphasised in WCC and commercial support activities likely to
bring large cost savings.
Initial launch of these services will begin in April 2009 across all PCTs, but roll-out of full service
support is steadily paced over the course of the year to ensure feasibility of delivery. Support in
areas where certain PCTs have already developed or purchased support (such as claims
management) will be phased in order to allow those PCTs to adjust existing contracts and redeploy
resources with minimal disruption and waste of resources. An initial assessment shows that these
areas of overlap are quite limited, and should be easily managed during implementation planning
and roll-out.
Phase 2: April 2010 – March 2011
Phase 2 consists of high-impact services not currently available today but generally more difficult to
provide and/or dependent on the availability of Phase 1 services. For example, Health Intelligence
activities will expand to include return on investment modelling of health promotion initiatives, and
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care pathway development will expand to include detailed cost-quality assessments of different
intervention options. These services are generally just as high-impact as Phase 1 services, but are
planned for Phase 2 to ensure greater feasibility of delivery.
Phase 2 also includes the integration of those existing entities relevant to the LCBSA scope that
were not integrated in Phase 1. The delay in integrating these entities was driven by the desire to
keep the first phase as manageable as possible, and to only integrate existing entities when they are
most relevant to the LCBSA service offering.
It is also important to note that some services offered in Phase 1 will be subject to review before
further development in Phase 2. These include PCT development support, social marketing support,
and some elements of expert guidance and development support in prioritised pathways.
Phase 3: April 2011 – March 2012
Phase 3 consists primarily of services which PCTs requested should form part of the LCBSA but
which were seen as lower impact than other services. In addition, certain services and existing
entities not covered by this business case could be considered for inclusion, on the basis that by this
time the LCBSA will have developed into a mature organisation and so will potentially have scope
to extend its remit.
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4. EXPECTED BENEFITS
Benefits overview
The LCBSA will provide major tangible benefits to PCTs through improving healthcare outcomes
and reducing the cost of provision. These can be thought of as ‘direct’ benefits in that they affect the
cost and quality of services commissioned by PCTs today. In financial terms, these ‘direct’ cost
savings should be seen as directly improving today’s bottom line for PCTs.
At the same time, the LCBSA will provide these benefits at excellent value for money, by enabling
services to be introduced once for London rather than 31 times, by realising synergies across
functions, and by strengthening accountability mechanisms. Hence, the LCBSA will reduce the cost
to PCTs of achieving World Class Commissioning and other high-priority improvements. In
financial terms, these savings can be thought of as ‘avoided’ costs, in that they are savings on money
that PCTs would have had to spend in future to achieve World Class Commissioning in the absence
of the LCBSA.
Overall quantifiable benefits in Year 1 are expected to be at least £23m. These comprise £10m in
tangible (‘direct’) cost savings (specifically relating to savings achieved through claims management
and coding reviews), plus £13m in reduced cost of provision (‘avoided’ costs associated with
achieving World Class Commissioning and providing claims management). In Year 3, overall
quantifiable benefits are expected to rise to at least £66m, of which £48m are direct cost savings and
£18m are avoided costs related to achieving World Class Commissioning and providing claims
management. This business case uses the lowest expected benefits in its cost-benefit analysis in
order to be conservative (for details see Appendix 2).
It is worth highlighting that the LCBSA business case does not estimate the benefits expected from
the existing HfL programme (which represents about 30% of the total LCBSA budget, and almost
50% of the funding being asked for from PCTs) or the CSIP-LDC programme (which represents
another 10-15% of the total budget)
The HfL programme plan and budget is being presented in a separate paper, although this paper does
make the business case for why the HfL programme should be incorporated into the LCBSA.
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Figure 5. Key benefits expected from the LCBSA
1 2
The LCBSA will deliver tangible benefits … and it is the most effective (value-for-money) way to
in the way we commission … achieve these benefits
• Drive better allocation of Doing things • Affordable access to various new skills
Improved spend to the most effective, (required by WCC) which would
once rather
outcomes clinically-proven forms of otherwise be prohibitively expensive for
than 31 times
treatment and health individual PCTs
intervention • Greater consistency across London in
• Enable better management areas requiring a “common front” (e.g.
of provider quality through the implementation of NSR
improved measurement, requirements)
monitoring, and pay-for-
performance specification • Placing numerous commissioning
Stronger
• Facilitate more focus on accountability support activities under the clear
local tailoring and + to PCTs ownership of PCTs with direct
partnerships to drive better accountability to them
outcomes • Simplifying the governance structure
and strengthening the oversight of
scattered commissioning support efforts
• Identify coding errors and
Reduced cost poor clinical practice to
of provision challenge provider claims Synergies • Improving joint planning and
across collaboration across activities requiring
• Empower contract functions the same skills or working along the
negotiations to strengthen same pathway
mechanisms for controlling
costs • Increased opportunities for career and
skill development both within the
• Enable engagement of the LCBSA and through rotation with PCTs
market to encourage
competition • Cost savings from shared back office
and enabling functions
Each set of services (described in Section 3 of this Business Case) will deliver specific benefits to
PCTs (further details on service-specific benefits are described in Appendix 2).
Benefits by Service Grouping:
Pan-London Prioritised Programmes
The LCBSA will draw together two major programmes focused on improving commissioning and
service delivery in prioritised areas of care: the HfL Programme and the London Development
Centre (formerly CSIP). These pan-London programmes are expected to continue supporting the
implementation of best-practice pathways and service delivery models, enabling the improvements
in care envisioned by Darzi’s HfL strategy and the DH’s ongoing guidance.
Such programmes benefit greatly from pan-London consistency and economies of scale. Doing this
work at an individual PCT level would greatly diminish effectiveness, and would potentially be
prohibitively expensive. Their integration into the LCBSA is designed to strengthen the ability to
deliver on these objectives in two ways:
First, these programmes bring complementary skills and experience, and in some cases they work
along the same care pathway. The LCBSA will ensure this pan-London work is aligned, and that
it is best directed to meet national and regional goals. Healthcare for London has achieved brand
recognition as the banner for strategic London-wide service improvement and change, while
LDC has achieved similar recognition in relation to mental health services, and other areas of
specific focus. The LCBSA would aim to build on and further strengthen both brands.
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Second, the LCBSA will strengthen these programmes by adding critical new capabilities and
functionality. Most importantly, the LCBSA will strengthen both the clinical evidence base and
the level of clinical engagement that is critical to the success of such programmes (at both the
local and pan-London level). Moreover, it will ensure better and broader analytics support to the
design and implementation of these programmes.
Clinical Advisory and Engagement
Clinical Advisory and Engagement services will bring together critical areas of clinical knowledge
under the leadership of a new regional Medical Director. The Medical Director will be responsible
for high impact, comprehensive and cohesive clinical leadership within the LCBSA and across
London.
Clinical Advisory and Engagement services will deliver:
Improved clinical guidance and engagement to both local and pan-London programmes, through
a reinforced network of clinical leads and expert forums that works in close collaboration with
existing clinical networks (GP, nursing and specialist), and the Professional Executive
Committees (PEC) and their Chairs
Robust mechanisms for prioritising regional R&D initiatives to ensure knowledge sharing and
maximum investment impact and value
Specific direction on new drugs and devices to help avoid the ‘postcode lottery’ and save PCTs
the cost of independent review
Clinical Advisory services will also provide leadership to a new ‘Quality Observatory’ enabling
robust provider quality measurement, benchmarking and reporting based on consistent metrics
accepted across London. This will provide the information necessary for commissioners to
renegotiate contracts based on performance and embed quality metrics into future contract
conditions. Examples of pay-for-performance arrangements based on quality metrics show both cost
and outcome improvements, resulting in thousands of lives saved, and tens of millions of pounds in
additional savings.
The work of the Quality Observatory will also provide the information needed by patients to
exercise intelligent choice of providers, a key goal of the Next Stage Review.
Incorporating these activities into the LCBSA will ensure that clinical evidence is at the heart of
commissioning. By providing a central focus, it will also strengthen engagement with local
clinicians and clinical networks, and ensure maximum coordination across London.
Health Intelligence and Public health Programme support
The LCBSA will provide a new centre of excellence to support advanced health intelligence and
innovative health promotion initiatives, leading directly to lower disease incidences and better
patient experience.
The LCBSA’s health intelligence support will enable PCTs to improve their needs assessment
capabilities and better inform their planning and investment decisions by providing predictive
models of disease incidence, and ‘return on investment’ assessment for potential interventions.
These models will provide the information necessary to identify patients at risk, create effective
engagement programmes, and pro-actively plan service delivery infrastructure. Such models require
scarce health economics expertise, and must be based on large population areas to ensure statistical
accuracy. Doing this work once across London will result in the best quality models covering the
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largest range of disease categories. Rough estimates suggest that the LCBSA could provide WCC
Health Intelligence standards for all PCTs for 50-80% less funding than doing so multiple times
across sectors. This reduction in resource requirement equates to annual savings of £2.9m - £11.6m
in Year 1.
Additional public health programme support will enable PCTs to develop cutting-edge health
promotion efforts, leveraging expert knowledge across London, coordinating similar efforts to avoid
duplication, and managing pan-London programmes where PCTs feel such an approach is warranted.
Numerous behavioural change and social marketing programmes have already shown strong
improvements in the effectiveness of interventions in areas from obesity to unnecessary A&E use.
Various individual PCTs are investing hundreds of thousands of pounds in such programmes which
are often very narrowly focused by their nature. In many cases these efforts could be more cheaply
and effectively managed across PCTs, allowing each individual PCT to benefit from more
programmes at a lower relative cost.
Locating these Public Health support services in the LCBSA will improve coordination with other
pan-London functions (e.g. the HfL programme) and ensure consistency and quality across public
health campaigns. Social marketing support in particular relies heavily on communications expertise,
and creating strong organisational links to the LCBSA communications function will help ensure
maximum effectiveness.
Commercial support benefits
Commercial support services will focus on activities that provide a direct and tangible benefit in
terms of costs and performance. This support will be integral to the way commissioners work,
providing ready-to-action deliverables in claims management and coding review and contract
negotiation analytics. In addition, the LCBSA could provide expert contracting and tendering advice
in areas such as polyclinic procurement (including legal advice, negotiation expertise, and standard
tools/templates) where PCTs feel it adds value.
London’s commissioners are already disadvantaged due to their size in negotiations with large acute
providers, and as the foundation trusts increase their sophistication, the risk of more significant cost
increases grows. LCBSA commercial support will provide PCTs and sectors with the leverage they
need to help to reduce current costs and contain future costs (i.e. fight the forward risk of cost
inflation) while also ensuring performance improvements.
Case examples in Germany, Scandinavia, and the UK (e.g. AOK shared provider benchmarking tool,
MDK providing unbiased centralised clinical coding review) show that shared expert service centres
are the most effective way to provide this type of support. These examples indicate that better
claims management and coding review could result in savings of at least ~£30m a year, while
providing a strong risk management mechanism against future price inflation. Moreover, evidence-
driven contract negotiations could provide an additional reduction of 1–2% in acute provision costs
year-on-year, resulting in potential additional cost savings in the tens of millions of pounds a year.
The later should drive incentives that encourage changes in the providers’ cost structure, and hence
lead to a sustainable increase in efficiency.
Centralising commercial support in the LCBSA will be much cheaper than providing it in individual
PCTs or sectors. Based on the cost of existing PCT efforts in claims management, and talks with
external providers, we estimate that provision once across London should cost ~50% less (~£3m)
than the total implied by separate provision. Moreover, a single contract for the whole of London
should reduce performance-related fees by another ~50%, saving an additional ~£8m by Year 3.
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Other services benefits
The LCBSA will bring together a number of other pan-London functions which will benefit from the
increased accountability, coordination and sharing of resources.
(i) Communications: By integrating a number of scattered communications staff into one unit and
adding minimal additional resources, the LCBSA will enable better expert communications support
to pan-London programmes, while adding a few high value-add functions (e.g. cheaper outsourcing
of print and design support). Providing these services once for London is expected to be 50-80%
cheaper than providing them multiple times across sectors. This equates to avoided costs in Year 1
of £1.3m - £5.2m.
(ii) PCT development: Currently spearheaded with SHA support, this service will be moved to the
LCBSA to ensure stronger coordination with other pan-London efforts, and greater accountability to
PCTs.
(iii) Informatics: Informatics is a key enabler for many of the other service lines. Providing this
through the LCBSA will ensure consistent and valid data across London. It is also the best way to
develop extraction and storage methodologies for new data sets in the most efficient and robust way
across London. Finally, a centralised function ensures that scarce IT and web development skills are
best utilised across the LCBSA. Providing these services once for London is expected to be 50-80%
cheaper than providing them multiple times across sectors. This equates to avoided costs in Year 1
of £1.5m - £6.0m.
Overall benefits across the LCBSA:
Financial benefits
Total quantifiable benefits for the LCBSA are estimated to be at least ~£23m in Phase 1, rising to at
least ~£66m in Phase 3. These comprise direct cost savings realised through LCBSA products
(specifically, pay-per-performance contracting, claims management and coding reviews) and
avoided costs either in achieving WCC competencies, or in other economies of scale associated with
doing things once across London. These figures represent the lower range of savings estimated from
past experience (nationally and internationally) of such shared services.
In Phase 1, savings are relatively evenly split between direct cost savings (~£10m) and avoided costs
related to achieve WCC (~£8m) and other economies of scale (~£5m). In Phase 3, direct cost
savings rise steeply to ~£48m as the claims management and coding review services ramp up. Costs
avoided through implementing WCC and gaining other economies of scale via the LCBSA rather
than in individual PCTs are anticipated to rise to ~£18m.
Moreover, in order to avoid any potential double-counting, and to emphasise only the benefits of
entirely new services, these estimates do not include the additional direct savings that might come
from stronger contract negotiations (facilitated by the LCBSA provider intelligence support), nor
does it include the economies of scale achieved in the shared pan-London programmes (i.e. the
existing HfL programme, CSIP-LDC, and the pan-London public health programmes).
Finally, the business case analysis has found that significant additional financial benefits are
achievable through the LCBSA should PCTs choose to add to the core services in subsequent years
(based on satisfaction with its delivery of the core). See Appendix 2 for more details.
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Figure 6. Quantifiable benefits
NOT COMPREHENSIVE
£m 2009/10 2010/11 2011/12
Direct cost savings
Clinical advisory services 0 14 18
Commercial services 10 18 30
Total direct savings 10 32 48
Avoided costs related
to achieving WCC
Pan-London prioritised 0 1 1
programmes
Clinical advisory services 2 3 4
Public health 3 3 3
Other (Comms & Informatics) 3 4 4
Total costs avoided 8 10 11
Other avoided costs
Commercial services 5 6 7
Total benefits 23 48 66
All financial benefits that we have been able to quantify are included in Section 6 (and Appendix 2)
of this Business Case to illustrate the LCBSA’s overall value proposition to PCTs. More detailed
examples of similar national and international initiatives with demonstrable benefits have been
included in Appendices 6 & 7 to illustrate further the LCBSA’s potential impact.
Health outcome benefits
In addition to the quantifiable benefits detailed here, the LCBSA will bring many other benefits in
the form of better patient health outcomes and experience, which are difficult to quantify
Some illustrative examples of health outcome benefits are summarised in Figure 7. More detailed
explanations of expected health outcome benefits are summarised for each of the LCBSA’s main
service categories in Appendix 2.
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Figure 7. Example health outcome benefits
ILLUSTRATIVE
Example Description Benefit
• ‘Disease management’ programmes • Increased registration rates by 65%
Public Health: AOK originally organised locally were brought
(Germany) disease
• Increased eye examinations by 45%
together into a shared centre to leverage
management • Decreased hospital cases by 18%
expertise and best practice
• Decreased amputations by 46%
• Comprised a cross functional team of 12
WTEs including medical, analytics and
customer acquisition
• Piloted 2 year ‘pay for performance’ • Overall quality rose in US pilot hospitals by
Quality Observatory: programme with 250 US hospitals 11.8% based on 30 standard quality metrics
Premier Inc. • Recently launched in NW England PCTs • US pilot improvements saved an estimated
1,284 heart attack patients
• Potential NW England benefits estimated to
be 141 lives saved, 159 complications and
248 re-admissions avoided
• Online weight-management program that • After 6 months, 26 % of participants have
Public Health uses tailored messages to provide lost >5% of their weight
Programmes: Kaiser customized motivational behaviour
Permanante
• After 6 months, 43% reported improving their
change advice to support weight loss physical activity
• Multi-partner, multi-pronged social • Performance 2006/07:
Social Marketing: West marketing strategy – WoS project cost £1.3m
Scotland oral cancer
awareness project
• Used detailed insights into consumer – Campaign caught 41 oral cancer cases
behaviour and understanding to leverage earlier
change and improve health outcomes
– 27 lives saved through campaigns
across large region
– Savings realised £695,000 in cost of
treatment
Benefits in relation to World Class Commissioning
Each LCBSA service line will help PCTs in their efforts to achieve certain World Class
Commissioning competencies at a much lower cost than what would be expected otherwise. Figure
8 outlines the expected impact of service lines on WCC competencies. Further details are included
in Appendix 2.
The LCBSA services and their direct impact on WCC competencies across London should be
integrated into individual PCT Organisational Development plans with an understanding of the
potential costs avoided.
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Figure 8. Service lines in relation to WCC
Key areas of LCBSA
WCC Competency Service lines focus
1 2 3 4 5 6 7 8 9 10 11 12
Local leader of
1
the NHS
Collaborates with
2
partners
Public/patient
3
Engagement
Clinical
4
engagement
5 Needs assessment
6 Prioritisation
Stimulate the
7
market
8 Innovation
Procurement and
9
contacting
Performance
10
management
Sound financial
11
decisions
Benefits in relation to Next Stage Review
The clinical advisory services (including both the new Medical Director’s clinical leadership, as well
as the Quality Observatory) will also be essential to enabling PCTs to meet the quality monitoring,
reporting and contract management requirements outlined in the Next Stage Review. Regional level
collaboration to meet these requirements has been deemed necessary across England, and the
LCBSA will allow this initiative to be managed and owned by the PCTs.
In addition to the above benefits, the LCBSA will bring major benefits in two additional areas:
Governance and management: Bringing together multiple scattered pan-London organisations
and programmes into a single PCT-owned organisation will give PCTs significantly better line of
sight into and control over these activities. This is especially true of organisations that primarily
serve PCTs today but are not currently fully accountable to them. Bringing these organisations
and programmes together will also simplify and improve their overall management, specifically
by minimising current overlap in scope and maximising synergies (see below). Finally,
increasing PCT ownership is fully aligned with the expectation from NHS London and DH that
many existing organisations and programmes would be better integrated with current PCT work
‘on the ground’ and better owned by them collectively.
Synergies: The creation of the LCBSA will realise synergy benefits in three main areas. First,
the back office functions (e.g. HR, finance) of the founding entities (see Section 9) can be
consolidated into a single, shared back office, which will reduce the overhead cost per WTE.
Second, expert support functions (e.g. communications, informatics) that exist in founding
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entities today can also be consolidated into single teams. The increased scale of these teams
should improve their overall performance and range of services. Third, bringing together
functions such as pan-London programmes and health intelligence will improve their
effectiveness in working together.
The above benefits are not quantified in this business case, but should be considerable. Their
quantification and achievement will be focus of the Post Merger Management work from January to
March.
Additional resource-related benefits to PCTs
Through the sharing of certain tasks across London, individual PCTs are also expected to see greater
managerial and operational resources freed up to focus on the execution of local commissioning
initiatives. These might include more specific local needs assessments (around unique borough-
level issues), more local tailoring of care pathways and service design, more detailed commercial
assessment of local providers, and more comprehensive local partnership arrangements.
The extent of these benefits will vary greatly from PCT to PCT owing to the large difference in the
way PCT resources are currently deployed. The LCBSA has been designed to achieve these benefits
through a strong partnership approach that ensures LCBSA products are well integrated into PCT
operations and allow the true redeployment of resources to other high-priority areas (discussed in
more detail in Section 11). Although these benefits are not quantified in the business case, their
achievement will be a clear measure of success for the LCBSA.
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5. FUNDING
If PCTs are to realise the maximum overall benefits from the LCBSA, the service delivery and
funding model must strike a balance between providing stability for the LCBSA and flexibility for
PCTs. The LCBSA requires funding certainty to support investment in new services and products
and planning certainty to maximise service delivery and efficiency. PCTs require flexibility to select
and pay for only the most relevant, value adding services and freedom to opt out of services if they
fail to deliver. The LCBSA and PCTs’ fundamental common goal is the provision of world class,
value adding services on a fair and cost-efficient basis, in line with World Class Commissioning
objectives.
LCBSA membership
Following extensive PCT workshops and focus groups, it was agreed that LCBSA membership
should be compulsory, with individual products arranged into categories of varying commitment:
Core recurring: Products that should form the basis of a core membership package for all 31
PCTs lasting 3 years. These products are ones that all PCTs require and which either must be
delivered once on a pan-London basis for coordination and/or consistency reasons, or which
would benefit from being delivered once based on economies of scale or scope.
Core non-recurring: Products required by all PCTs but on a non-recurring basis should be
agreed by the LCBSA Board annually and provided as part of a non-recurring annual package.
Optional: Products required by some but not all PCTs on an ad-hoc basis should, where possible,
be made available to PCTs on a completely optional, draw-down basis.
A strong governance and decision making structure is essential to ensure that products are
categorised appropriately, both initially during LCBSA set-up and on a regular, ongoing basis that
allows for the transition to greater optionality.
Elements of all 12 service lines have been classified as core. This is to ensure that the LCBSA is
able to provide the baseline of commissioning support services deemed necessary for PCTs to
achieve World Class Commissioning standards. Within this core set of services, the split between
core recurring (3 year commitment) and core non-recurring (1 year commitment) varies by product
and over time. Product-by-product details are included in Appendix 2.
PCTs are being asked to commit to funding for core recurring services for Years 1, 2 and 3 plus core
non-recurring funding for Year 1. These elements form the basis for the budget section of this
business case. Subsequent funding for core non-recurring services (e.g. in Years 2 and 3) will be
agreed on an ongoing annual basis and is therefore not a focus of this business case.
In addition to core products provided to all PCTs, the LCBSA will also offer a range of optional
products. The product range is expected to grow over time and will evolve in line with PCT demand.
Examples of optional products include ad-hoc PCT-specific detailed analysis, contract reviews,
negotiation support and social marketing campaigns. A full list of example optional products is
included in Appendix 3. While optional products could offer very good value-for-money to PCTs, it
will be left up to individual PCTs to decide the cost-benefit case in each particular instance. These
products are therefore not a focus of this business case.
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Figure 9. Funding categories for different product
Description Proposal
1. Core • Services required on an ongoing • Provide required services via the
(recurring) basis by all PCTs LCBSA as part of a compulsory
• Alternative providers may exist but package for all 31 PCTs
there is a strong argument for doing • Commitment to ~3 years
them once for all of London (e.g., • Strategic reassessment of product set
economies of scale or scope) after 3 years, based on performance
Increasing flexibility for PCTs
to date and future requirements
2. Core • Services required by all PCTs on a • Annual commitment
(non- non-recurring basis • Provide via the LCBSA to all 31 PCTs
recurring) • Alternative providers may exist, but on a subscription basis
there is a strong argument for doing • Redefine product set annually
them once for all of London (e.g.,
economies of scale or scope)
3. Optional • Services required by some but • Make available to all PCTs on an
not all PCTs, or at highly varying ad-hoc, optional ‘draw down’ basis
levels • LCBSA serves as “first point of
contact” for any such work, but PCTs
can use outside providers
Existing PCT commitments
Compulsory membership brings with it a risk that PCTs who already have agreements with external
suppliers will be forced to pay for the same services twice. However, in general this risk is
negligible. PCTs with agreements with external providers such as Dr Foster and Experian should be
able to cancel their contracts at minimal cost. Two PCTs are known to have contracts with external
providers for claims management support. The total cost for cancelling these contracts is anticipated
to be in the region of £200k, and would be absorbed by the LCBSA.
Fees
Charges for all compulsory products should be weighted according to PCTs’ recurring resource
(based on weighted capitation). This is the fairest way of allocating costs approximately in line with
product usage. It is also consistent with the majority of existing cost allocation methodologies in
place today.
Charges for optional services should be determined individually and aligned to total cost of
provision.
While it is recognised that financial health varies considerably between PCTs, the LCBSA is
expected to bring benefits more than commensurate to its costs, and members should contribute to it
on a consistent basis, with no subsidisation for PCTs with financial difficulty.
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Payment mechanisms
PCTs should pay for the ongoing operating costs of running the LCBSA (including capital charges),
plus non-capital expenditure set-up costs. Capital expenditure will be covered by the standard NHS
capital investments process, which will be handled by the host PCT (N.B. The LCBSA hosting
arrangement is described in Section 10).
LCBSA charges for PCTs should be cost-based, in line with the LCBSA role as an internal service
provider. Market-based charges should only be used in relation to any commissioned activities the
LCBSA may carry out, either in the provision of “option” service to PCTs or through in
commissioned work to (or in collaboration with) third parties.
All payments should be made directly from member PCTs to the host PCT, according to standard
NHS procedures.
Commissioned activities
The LCBSA’s overwhelming priority should be to deliver value adding products to its member
PCTs. As such, commissioned work to PCTs on an “optional” basis within the scope of LCBSA
services will be facilitated; with mechanisms for ensuring core services are not neglected.
Nevertheless, offering services to non-member customers on a fee-generating basis risks distracting
the LCBSA from its main priority. In addition, doing so would increase financial, operating and
litigation risk.
In cases where there are large potential benefits to LCBSA members from selective fee-generating
activities (e.g. in terms of promoting innovation or leveraging local partnerships) the LCBSA Board
will be able to consider these on a case-by-case basis with the obligation to demonstrate clear value
to members.
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6. COSTS AND VALUE PROPOSITION
Introduction
This section describes the expected costs of the LCBSA core offering, and compares them to the
benefits outlined above. It begins with a high level overview of the methodology for calculating
costs vs. benefits. It then provides a comparison of the overall costs to benefits, followed by a
detailed breakdown of costs, and a comparison of costs vs. benefits by service line.
Cost/benefit overview
Where possible, the benefits to PCTs of the LCBSA have been quantified in financial terms.
Benefits have been estimated conservatively, and there is significant potential for actual benefits to
be as much as double the figures used in this Business Case. Total quantifiable benefits are
estimated to be approximately ~£23m in Phase 1, rising to ~£66m in Phase 3 (see Figure 10). These
comprise direct cost savings realised through LCBSA products and economies of scale from using
the LCBSA to deliver these services. There are many additional benefits that are not included in
these figures, both financial ones that have not been quantified (e.g. those of the HfL programme),
and non-financial ones such as improved outcomes (that are in fact the primary driver for the
LCBSA).
The cost of provision has been calculated for each service line in a detailed budget that incorporates
the budgets of the founding entities (see Section 9) plus bottom up estimates for new services
derived through international benchmarking and expertise.
Founding entities to be integrated to the LCBSA have an anticipated ongoing spend of £15.6m (see
Figure 17). Assuming that these budgets will be ‘taken over’ by the LCBSA, the incremental
funding required from PCTs are £16.8m in year 1, £28.7m in year 2 and £29.5m in year 3,
respectively. Year 2 and 3 PCT contributions factor in all existing contributions that amount to
£8.5m in year 1. The overall cost for the LCBSA is £32.4m in Phase 1, £36.3m in Phase 2 and
£37.3m by Phase 3.
Comparing quantifiable benefits with incremental costs illustrates a compelling value proposition to
PCTs. Over three years, total cost of roughly £105m stand against conservatively estimated benefits
of ~£140m. This does not include estimates of any benefits from continued HfL and LDC
programmes. Also, bearing in mind that the fundamental driver behind the LCBSA is actually the
non-financial benefits around improving outcomes, the value proposition to PCTs becomes even
more compelling.
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Figure 10. Benefits vs. costs
BENEFITS NOT COMPREHENSIVE
Overall benefits vs. costs
£m
LCBSA cost of services 66 • Net benefits for each
PCT should reach at
Direct cost savings 7 least £1.5m in 2010/11,
Avoided costs related to and £2.1m in 2011/12
achieving WCC 11
48 • The benefits from the
Other avoided cost
6 HfL and LDC
programmes were not
37 assessed (accounting
36 10
32 for ~40% of the costs
in 2009/10)
23 48 • The significant health
5 outcome benefits to
32 patients from stronger
8
clinical evidence,
better prioritisation of
10 health interventions
and contract
Costs Benefits Costs Benefits Costs Benefits management of quality
(excluding (excluding (excluding were not quantified
HfL prog.) HfL prog.) HfL prog.)
2009/10 2010/11 2011/12
Costs
A detailed budget for each service line and product line was developed for this business case. The
budgets of the founding entities have been integrated into the forecasts. Bottom up WTE estimates
have been derived through international benchmarking and expert input considering each specific
product and expected deliverables, the need for specific geographical coverage by sectors, and
additional functional considerations (e.g. the number and type of providers to be covered). Existing
capabilities have subsequently been mapped against PCTs’ future needs and reorganised where
appropriate (e.g. split of CSS into a well defined informatics unit and provider performance analysis
commissioning support unit).
The budget was developed as a combination of ‘build’ and ‘buy’ which is similar to that found in
London’s existing shared service entities, as well as other national and international examples. This
baseline hypothesis allowed us to estimate the expected cost for the LCBSA (refer to Section 8 for
further details). There remains potential for further outsourcing of services (beyond that assumed in
the baseline business case). The impact of outsourcing on the business case is explored in Section 8.
The overall cost for the LCBSA is expected to grow from £32m in Phase 1 to £37m by Phase 3 (see
Figure 12). The LCBSA will start off with an equivalent of 275 WTEs and employ ~360 WTEs by
the end of Phase 1. This number increases to a final estimated number of 530 WTEs by the end of
Phase 3. Much of this might be bought in from external contractors. The starting number of WTEs
includes ~210 WTEs from the founding entities (e.g., LDC (66), HfL (72), CSS (52), LHO (20)).
Of the ~360 WTEs expected by the end of Phase 1, ~50 WTEs could be located offsite. (N.B. All 50
WTEs are from the claims management service line might be part of an outsourcing arrangement).
Additional services such as the quality observatory, health intelligence and informatics could
potentially be outsourced, but WTEs would still be expected to be located onsite.) In addition, ~40
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Confidential LCBSA Full Business Case 1 December 2008
WTEs are expected to spend up to 50% of their time offsite (e.g. business partners spending time
with PCTs or sectors) and so would require only 20 desks between them. Therefore only ~290
permanent desks will be definitely required by the end of Phase 1.
The preferred premises option comprises 3 floors with space for ~100 desks each (based on a review
of the facilities hosting LCBSA founding entities and the good practice contained in recent Office of
Government Commerce facilities management guidelines), although an additional ~60 desks could
be accommodated if necessary, making a total comfortable capacity of 300 desks and a total
potential capacity of 360 desks. Therefore, the 3 floors would provide appropriate space for the
minimum requirement of 290 desks, while also offering the potential to accommodate the total 360
desks if required. The latter scenario would involve smaller space allowances for desks, reduced
provision of executive and manager offices, meeting rooms and informal breakout areas. A no cost
option can be taken on a fourth floor to accommodate additional WTEs expected to be recruited in
Phase 2.
PCT and SHA contributions
The total cost in year 1 of the LCBSA amounts to £32.4m (see Figure 11). Taking existing funding
of £15.6m in year 1 into account (see Figure 17), an additional contribution of £16.8m is requested
from the PCTs.
Figure 11. Year 2009/10 funding breakdown for LCBSA
£m SHA/DH contributions
PCT existing contributions
New PCT contributions
32.4
New PCT 10.9
funding of
£16.8m
5.9
0.2 0.2
3.9
4.2
Last year’s additional
contribution to HfL of £9.3m
5.6 was covered by the SHA
1.5
SHA/DH SHA/DH HfL CSS LHO LNDG HfL New Total
new existing recurring recurring recurring recurring additional LCBSA
funding* funding** funding
* Contribution to MD
** Including LDC, and PCT development and regional Public Health programme money
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Confidential LCBSA Full Business Case 1 December 2008
Figure 12. Three year core funding breakdown for LCBSA
Three-year LCBSA funding forecast
£m
Non recurring core
funding is subject to
annual approval by PCTs
13.2
9.7 PCTs commit for 3 year
36 37 to core services
32 Non recurring budget for
core services (with
estimated potential of
~£10m in year 2 and
New PCT funding 16.8 ~£13m in year 3) will
28.7 29.5 have to be approved
through an annual
budget request and
supplemental business
case
Existing PCT funding 8.5
New/existing SHA funding 7.1 7.6 7.8
2009/10 2010/11 2011/12
Figure 13. Average PCT contribution to LCBSA
Average three-year contribution per PCT
£m
Average new contribution for
core LCBSA services 0.54
(including HfL)
Average total contribution for
PCTs (including existing 0.82 0.93 0.95
commitments) Potential
additional non
recurring funding
for core services
could be
approved on an
New LCBSA services 0.35
annual basis
subject to PCTs'
0.95 satisfaction with
0.93
service delivery
Increase funding for and benefit
0.19
HfL programmes realisation
Average recurring PCT
contributions (CSS, 0.27
HfL, LHO etc)
2009/10 2010/11 2011/12
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Confidential LCBSA Full Business Case 1 December 2008
The average new contribution per PCT in Phase 1 is £0.54m and can be broken down into two
components:
New core services of LCBSA: £0.35m
Increased recurrent funding for HfL: £0.19m
In addition to this, there is an average of £0.27m per PCT that will roll over from existing recurring
commitments, to reach a total average cost per PCT of £0.82m.
The average PCT contribution for core services in year 2 and 3 (for which a commitment is required)
are £0.93m and £0.95m, respectively (see Figure 13). The latter two include all PCT funding
currently committed to CSS, HfL and LHO.
Figure 14a. Total split of additional year 1 funding and total PCT funding as weighted
contribution per PCT (1/2)
£m
Existing PCT Additional New Total PCT Total PCT Total PCT
Name of PCT obligations – + HfL + services = funding funding funding
year 1 - year 1 - year 1 - year 1 - year 2 - year 3
Barking and Dagenham 0.21 0.14 0.27 0.62 0.70 0.72
Barnet 0.33 0.23 0.43 0.98 1.11 1.14
Bexley 0.21 0.15 0.28 0.64 0.72 0.74
Brent Teaching 0.32 0.22 0.42 0.96 1.09 1.12
Bromley 0.30 0.21 0.39 0.89 1.01 1.04
Camden 0.29 0.20 0.37 0.86 0.98 1.00
City and Hackney 0.32 0.22 0.42 0.96 1.09 1.12
Croydon 0.35 0.24 0.44 1.03 1.16 1.19
Ealing 0.34 0.24 0.44 1.03 1.16 1.20
Enfield 0.29 0.20 0.38 0.87 0.99 1.02
Greenwich Teaching 0.28 0.19 0.36 0.83 0.94 0.97
Hammersmith and Fulham 0.21 0.14 0.27 0.62 0.70 0.72
Haringey Teaching 0.29 0.20 0.37 0.85 0.96 0.99
Harrow 0.20 0.14 0.25 0.59 0.67 0.68
Havering 0.25 0.17 0.33 0.75 0.85 0.87
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Confidential LCBSA Full Business Case 1 December 2008
Figure 14b. Total split of additional Phase 1 funding and total PCT funding as weighted
contribution per PCT (2/2)
£m
Existing PCT Additional New Total PCT Total PCT Total PCT
Name of PCT obligations – + HfL + services = funding funding funding
year 1 - year 1 - year 1 - year 1 - year 2 - year 3
Hillingdon 0.25 0.17 0.32 0.73 0.83 0.86
Hounslow 0.24 0.16 0.30 0.70 0.80 0.82
Islington 0.26 0.18 0.33 0.77 0.87 0.89
Kensington and Chelsea 0.22 0.15 0.28 0.65 0.73 0.75
Kingston 0.15 0.11 0.20 0.46 0.52 0.53
Lambeth 0.34 0.24 0.44 1.02 1.16 1.19
Lewisham 0.29 0.20 0.38 0.87 0.99 1.02
Newham 0.35 0.24 0.46 1.05 1.20 1.23
Redbridge 0.24 0.16 0.31 0.71 0.80 0.82
Richmond and Twickenham 0.17 0.11 0.21 0.49 0.56 0.57
Southwark 0.32 0.22 0.42 0.96 1.09 1.12
Sutton and Merton 0.36 0.25 0.47 1.08 1.23 1.26
Tower Hamlets 0.31 0.21 0.40 0.92 1.04 1.07
Waltham Forest 0.26 0.18 0.34 0.78 0.88 0.91
Wandsworth 0.29 0.20 0.37 0.86 0.97 1.00
Westminster 0.27 0.19 0.35 0.81 0.92 0.94
As shown in Figure 14a and b, weighted PCT contributions vary between £0.31m for Kingston
(£0.11m additional HfL services plus £0.20m new services) and £0.72m for Sutton and Merton
(£0.25m additional HfL services plus £0.47m new services).
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Confidential LCBSA Full Business Case 1 December 2008
Cost breakdown of year 1 to 3
Only core products have been included in the budget calculations (see Figure 15). There are a
number of core (non-recurring) services that will have to be agreed by PCTs in following years.
Some of these non-recurring services, such as claims management, are an extension of service
provided. Therefore, approval of additional funding will be critically linked with a thorough
performance review. This funding mechanism will provide PCTs with flexibility and control over
spend (see also details of core recurring and non-recurring products in Section 3 and detailed budget
and WTE numbers in Appendix 2). The PCTs are expected to make a firm commitment for new
services for year 1 and core services for year 2 and 3 (see Figure 12 and 13). Budget allotments for
core non-recurring services for Phase 2 and 3 will have to be approved by the PCTs before the
Financial Year 2010/11 and 2011/12, respectively. Finally, there will be a number of fully optional
services that PCTs will be able to commission from the LCBSA on a ‘drawdown’ basis (see
Appendix 3). The cost of such optional services will have to be priced on a demand basis.
Figure 15. Costs break down by service line (detailed product break down
in Appendix 2)
Three year budget of the LCBSA
£m Non recurring services
that need approval in
subsequent years
13.2 Non-recurring core
9.7 37 services will need further
36 approval by the PCTs.
For example, claims
32
6.7 7.1 management can be
Public Health extended if a
Services 4.6
performance review
Clinical advisory 5.5 6.1 concludes its merit (cost
4.7
and engagement benefit analysis)
(For a detailed
Commercial support 7.5 8.4 8.6 breakdown by product
see in the appendix)
Pan-London service
improvement programmes 11.8 11.0 10.0
Other services* 3.8 4.8 5.4
2009/10 2010/11 2011/12
* Including informatics, communications and PCT development
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Confidential LCBSA Full Business Case 1 December 2008
Figure 16a. Detailed costs and benefits by service line (1/2) (detailed product break down in
Appendix 2)
Financial costs and benefits Other benefits
2009/10 2010/11 2011/12
Organisation unit Service line Cost Benefit Cost Benefit Cost Benefit Qualitative WCC competencies
Pan-London Pan-London care £ 8.0 m Not £ 5.8 m Not estimated £ 4.8 m Not estimated Improved effectiveness 4. Clinical engagement
prioritised pathway and service estimated for for ongoing for ongoing through better coordinated 6. Prioritization
programmes delivery design and ongoing HfL HfL services HfL services access to analytical functions 7. Stimulate market
1 implementation services and clinical networks 8. Innovation
support (HfL Better clinical outcomes 11. Sound financial decisions
Programme) through improved care
pathways
Expert advisory and £ 3.8 m Not £ 5.2 m ~£0.5m £ 5.3 m ~£0.6m Better decision making 4. Clinical engagement
developmental estimated for (avoided) - (avoided) - leading to more effective 5. Needs assessment
2 support in prioritised ongoing HfL only estimated only estimated spending leading to higher 8. Innovation
pathways services for new for new quality services 11. Sound financial decisions
services services
Clinical advisory Clinical advice and £ 2.6 m Not £ 2.2 m Not estimated £ 2.6 m Not estimated More effective and efficient 1. Local NHS leader
services expertise estimated for for ongoing for ongoing clinical leadership across 2. Collaborate with partners
3 ongoing clinical clinical London through better 3. Engagement
clinical services services integration and improved 4. Clinical engagement
services communications
Quality Observatory £ 2.1 m ~£2.1m £ 3.3 m ~£13.5m £ 3.6 m ~£18m (direct) Improved provider 8. Innovation
(avoided) (direct) ~£3.6m performance through 10. Performance management
4 ~£3.2m (avoided) rigorous performance
(avoided) monitoring using robust
quality metrics
Public health Health intelligence £ 2.8 m ~£2.9m £ 3.8 m ~£2.8m £ 3.8 m ~£2.9m More targetted intervention 5. Needs assessment
(avoided) (avoided) (avoided) planning, prioritisation and 6. Prioritisation
5 investment decisions through 11. Sound financial decisions
better forecasting and impact
assessment
Public health £ 1.4 m Not £ 2.6 m Not estimated £ 3.0 m Not estimated More consistent, higher 2. Collaborate with partners
6 programme estimated for for ongoing for ongoing quality and more impactful 3. Public engagement
development ongoing NHSL services NHSL services campaigns through improved 6. Prioritization
NHSL coordination with related 8. Innovation
services activities
Social marketing £ 0.3 m Depends on £ 0.3 m Depends on £ 0.3 m Depends on Improved intervention 2. Collaborate with partners
7 number of number of number of effectiveness through better 3. Public engagement
programmes programmes programmes coordination between 5. Needs assessment
per year per year per year functions and across London 6. Prioritization
8. Innovation
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Confidential LCBSA Full Business Case 1 December 2008
Figure 16b. Detailed costs and benefits by service line (2/2) (detailed product break down in
Appendix 2)
Financial costs and benefits Other benefits
2009/10 2010/11 2011/12
Organisation unit Service line Cost Benefit Cost Benefit Cost Benefit Qualitative WCC competencies
Commercial Claims management £ 5.0 m ~£5.0m £ 6.3 m ~£6.2m £ 6.7 m ~£6.6m Better focused activity driven 9. Procurement
8 and coding review (avoided) (avoided) (avoided) by improved coordination 10. Performance management
~£10m ~£18m (direct) ~£30m (direct) between functions
(direct)
Provider intel igence, £ 2.5 m Assumed to £ 2.1 m Assumed to £ 2.0 m Assumed to Improved provider 7. Stimulate the market
contracting be covered be covered in be covered in performance driven by 8. Innovation
9 negotiation and in SL8, SL8, although SL8, although robust, factbased challenges 9. Procurement
commercial support although could be some could be some and renegotiations 10. Performance management
could be additional additional 11. Sound financial decisions
some benefits benefits
additional
benefits
Other Communications £ 1.3 m ~£1.3m £ 1.4 m ~£1.6m £ 2.0 m ~£1.7m Greater consistency, quality 2. Collaborate with partners
support (avoided) (avoided) (avoided) and coordination of 3. Public engagement
10 communications between
functions/programmes and
across London
PCT development £ 1.1 m Benefits not £ 1.1 m Benefits not £ 1.1 m Benefits not Overal improvements to 1. Local NHS leader
quantified quantified quantified PCT performance leading to 2. Collaborate with partners
11
better commissioning
effectiveness
Informatics (access £ 1.4 m ~£1.5m £ 2.3 m ~£2.3m £ 2.4 m ~£2.4m Key enabler of many other 5. Needs assessment
to data) (avoided) (avoided) (avoided) service lines through 10. Performance management
12 provision of a single source,
comprehensive, robust data
set
Total £ 32.4 m £22.8 m £ 36.3 m £48.4 m £ 37.3 m £65.8 m
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Confidential LCBSA Full Business Case 1 December 2008
Existing funding contributions
Founding entities have an anticipated ongoing current spend of £15.6m which is assumed inflation
adjusted for PCT contribution calculation (see Figure 17). The major budgets of the founding entities
include:
£3.9m is included in the budget to be allocated to LDC programmes excluding all monies held on
behalf of the system. However, going forward, the LDC budget could raise to a local budget of
£4.9m (TBD in the implementation phase). This includes £3.5m of NHS mainstream funding and
£1.4m of Department of Health and other specific programme money. An additional £1.6m of
LDC funding is expected to be available for the delivery of the national mental health equalities
programme that LDC leads nationally. Other ‘pass through’ income in this year’s budget is not
included in the business case budget.
£4.2m and £3.9m of recurring funding by the PCTs for HfL and CSS are included in the budget,
respectively.
SHA contributions for the Quality Observatory and Medical Director have been estimated at
£1.5m and will have to be confirmed.
A contribution of £0.6m in year 1 and £1.0m in years 2 and 3 for Public Health activities
provided by the LCBSA through the DH ring-fenced programme funding have been estimated.
DH ring-fenced programme monies of ~£1m in funds were provided for such work last year but
future funding levels are uncertain.
Contributions for running the London New Drugs Group (£0.2m) and the London Health
Observatory (current PCT contribution of £0.2m) are included.
Figure 17. Funding provided by founding entities
£m 16.7*
16.3* SHA/DH funding
LNDPG 15.6 0.2
0.2 0.2
LHO 0.2 PCT funding
1.0
0.2 0.2 1.0
NHSL regional Public Health 0.6 1.2
contribution 1.1
1.1
SHA contribution 1.6
for PCT development 1.5
1.5
SHA contribution
for health obs. and MD
4.0 4.0
LDC 3.9
4.1 4.2
CSS 4.0
HfL 4.2 4.3 4.4
2009/10 2010/11 2011/12
* Inflation adjusted, based on 2009/10 budgets
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Confidential LCBSA Full Business Case 1 December 2008
Next steps
Going forward, several outsourcing decisions will have to be taken, e.g., claims management and
clinical coding review. The criteria for outsourcing will be discussed in Section 8 of this document
(Section 9). It should be noted here that these decisions will impact the budget predictions.
Outsourcing should generally either lower the cost or reduce risk carried by the LCBSA. In a few
areas – Healthcare for London project allocations, Clinical advisory group, programme and IT
development – outsourcing needs have already been included in the budget because it was
considered unlikely that the LCBSA would build these capabilities in the first place.
Estimation of minimal scale
We estimated the need for full PCT buy-in through a hypothetical example if the LCBSA was to
provide the same products for only 20 PCTs, rather than 31. In order to do this, we estimated the
cost to run the LCBSA for only 20 PCTs, and found it to be extremely non-linear, as we would
expect from a service based on achieving economies of scale and scope.
For example, based on a supplier quote claims management would still attract 72% rather than 65%
of the cost as the ratio would suggest. Furthermore, there are a number of products that will attract
similar cost whether the product is done for 31 PCTs or 20 PCT. These services include amongst
other cost quality analysis of care pathway design, development of quality metrics and tracking of
outcomes, and models for predicting population health needs and individual disease risk. Using these
metrics an increased average PCT contribution of 30-40% would result in the case of only 20 PCTs
signing up. Moreover, the emergence of sector commissioning vehicles (which will be both clients
of the LCBSA, and work in coordination with it) make the non-participation of any single PCT
much more complex to handle.
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Confidential LCBSA Full Business Case 1 December 2008
Start up budget
Start-up costs for the months January to March are estimated to be £2.9m (see Figures 18 to 21 for a
detailed breakdown). Costs were calculated based on the need to develop a full operating model,
design and pilot specific products due to be launched at the beginning of Phase 1, manage the
infrastructure and HR transition, and continue to engage stakeholders throughout the process (refer
to Section 6 for details of implementation phasing). A weighted breakdown of individual PCT
contributions required to fund this start-up phase appears in Figure 22.
Figure 18. Start up budget breakdown for Jan-Mar 2009 (1/4)
Cost breakdown by category
£000
2,931
80
250
161
980
516
322
355
212
55
Programme ‘Lights on’ ‘Lights on’ Programme Target Product Build Build - IT* Buy Total
management contingency office Operating design - recruitment* (procure
Model analytics services)*
* Cost of building or buying services will depend on the final build vs. buy decision
Source: Team estimates
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Confidential LCBSA Full Business Case 1 December 2008
Figure 19. Start up budget breakdown for Jan-Mar 2009 (2/4)
Spend
£000 Why spend required How the spend was calculated
Minimal
preliminaries
Programme 55 • Provide overall direction and leadership to the • NHS Programme SRO, Director
Management programme and admin support at current
• Performance manage programme delivery compensation
• Engage stakeholders and ‘market’ the hub
“Lights On” 567 • Ensure all founding organisations are combined • Legal support for hosting, TUPE,
(including into the new entity (enabling infrastructure) and management recruiting
contingency) • Create an adequate hosting and governance arrangements calculated based
arrangement on past experience
• Establish and fund interim leadership team
• Appoint full management team
Programme
support
332 • Support to programme management across • Used current programme office
Programme organisation building workstreams professional fees as standard
Office – Establishing hosting arrangements
– Establishing leadership and staff
– Enabling infrastructure
• Support to programme director in liaising with and
reporting to the SC programme
• Support internal & external communications,
including staff consultations
• Implementation planning (resourcing,
dependencies, etc.)
Source: Team estimates
Figure 20. Start up budget breakdown for Jan-Mar 2009 (3/4)
Spend
£000 Why spend required How the spend was calculated
Programme
roll-out
472 • Detailed design of how the new entity will operate, • Based on typical external team
Target Operating including and expertise required similar
Model – Determine final org structure and key role projects using catalyst pricing of
descriptions professional fees
– Identify effectiveness and efficiency synergies • Includes an internal NHS team at
– Planning and support of post-merger mgmt. standard programme lead costs
– Describe internal governance and processes for
delivering services (RACI)
– Develop a regular performance review process
and talent mgmt. guidelines
– Sketching scalable and flexible high level IT
architecture (in light of build vs. buy decisions)
980 • Full design of products, including user needs • Based on typical external team
Product Design – assessment, clinical and expert input, product and expertise required similar
analytics specification and piloting, the identification of projects using Catalist pricing of
performance metrics for delivery, and support for professional fees
buying services (where relevant). The focus of • Includes an internal NHS team,
products for roll out in April 09, will be a with one lead per product at
comprehensive and consistent analytics standard programme lead costs
functionality across services:
– Care pathway analytics (capacity planning and
financial implications modelling)
– Quality Observatory (provider quality, analysis
and reporting)
– Health Intelligence (predictive modelling and
health promotion support)
– Claims management and coding review
Source: Team estimates – Contract negotiation analytics support
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Confidential LCBSA Full Business Case 1 December 2008
Figure 21. Start up budget breakdown for Jan-Mar 2009 (4/4)
Spend
£000 Why spend required How the spend was calculated
Programme
roll-out
Build 411 • Recruitment of additional ~45-50 in new staff • Based on typical recruitment
(recruitment across the organisations costs found in NHSL, and on the
and IT) • Full mapping of existing IT tools and translation of IT costs for similar projects in
user needs (defined in product design) to technical other parts of England
specs
80 • Develop formal specifications for procurement • Based on cost of typical external
Buy (develop work packages procurement expert
work packages)
Source: Team estimates
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Confidential LCBSA Full Business Case 1 December 2008
Figure 22. Individual PCT weighted contributions to start-up phase (Jan-Mar 2009)
Barking and Dagenham £71,533
Barnet £113,547
Bexley £73,810
Brent Teaching £110,870
Bromley £103,134
Camden £99,625
City and Hackney £111,483
Croydon £118,701
Ealing £118,878
Enfield £101,115
Greenwich Teaching £96,108
Hammersmith and Fulham £71,260
Haringey Teaching £98,398
Harrow £67,893
Havering £86,846
Hillingdon £84,990
Hounslow £81,239
Islington £88,553
Kensington and Chelsea £74,774
Kingston £52,962
Lambeth £118,313
Lewisham £101,087
Newham £122,110
Redbridge £81,743
Richmond and Twickenham £56,685
Southwark £110,859
Sutton and Merton £125,296
Tower Hamlets £106,509
Waltham Forest £89,981
Wandsworth £98,953
Westminster £93,745
Total £2,931,000
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7. MECHANISMS TO ASSURE DELIVERY OF BENEFITS
It is vital that the LCBSA’s ongoing performance is closely monitored to ensure that it is delivering
on its service commitments and providing value for money to PCTs. PCTs must be provided with
appropriate performance metrics (both quantitative and qualitative) to allow them to make informed
decisions about future LCBSA investments and service scope. Ultimately, if the LCBSA does not
deliver to expected levels, mechanisms must be in place to enable PCTs to terminate the
organisation, and choose other means for managing, hosting, governing and funding pan-London
collaborative efforts.
Performance measurements and ongoing review mechanisms
It will be the responsibility of the LCBSA Chief Executive to present an annual performance
assessment to the LCBSA Board, who will review performance on behalf of all member PCTs. As
such, an extensive year one assessment is expected, including PCT feedback and evaluation of
benefits received. The review should recognise the variety of ways to measure and ensure success:
Detailed product specifications, well-tested pilot products, and a well defined service model will
allow PCTs to have a clear understanding of expected service levels, and to monitor these. For
outsourced services, this will take the form of contractual SLAs (service level agreements), while
for in-house services there will be an internal SLA equivalent
Annual WCC assessments will confirm to what extent PCTs have improved in core competencies
where LCBSA services are expected to drive improvements (see Figure 8 and Appendix 2 for
specific details).
A robust, formal annual feedback process will be established for PCTs/Sectors to provide
individual assessments of how well the LCBSA is delivering on its commitments. The feedback
should focus on areas such as how responsive the LCBSA has been to their individual needs, as
well as how effective it has been as a vehicle for driving pan-London change.
For services that are designed to realise measurable cost savings (e.g. claims management and
coding reviews), quantifiable benefits will be monitored and reported against the cost of
provision. Specifically, in Year 1 direct cost savings of £10m are expected through claims
management and coding reviews. Year 1 performance relative to targets will be used to agree
investment levels in subsequent years.
For all services where non-financial deliverables can be clearly defined and assessed (e.g. health
outcome improvements closely associated with particular programmes), these will be monitored
and reported. Specific metrics need to be defined during the implementation phase, in line with
full product design according to PCT specifications.
LCBSA costs will be monitored, allocated against specific products (using standard management
accounting methodology) and then benchmarked against equivalent providers on a product-by-
product basis to ensure ongoing value for money relative to alternatives.
Such performance reviews will be used to rigorously assure delivery, and guide any necessary
adjustments in the product specification, allocation of funds across products, the deployment (or
client service) model, etc. It will also be the CE’s responsibility to give regular performance updates
at LCBSA board meetings, and to respond to specific requests for information in-year.
Gated funding approach to product expansion
While the potential for considerable growth has been identified for the LCBSA’s core services, the
budget has made a clear distinction between a 3-year recurring commitment (necessary to launch
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Confidential LCBSA Full Business Case 1 December 2008
core services at reasonable scale, and provide for pragmatic, multi-year roll out) and additional non-
recurring funds which PCTs will have the ability to extend or cut back based on their satisfaction
with the LCBSA’s performance. These non-recurring finds can then be dispersed based on a ‘gated’
approach that requires certain benchmarks be met before further funding is provided. This approach
will force the LCBSA to show positive progress toward achieving its goals before any significant
increases in funding take place during the first three years.
Strategic evaluation and termination mechanism
PCTs’ core membership obligation and the ‘start-up’ commitment period will last 3 years. A
comprehensive evaluation of activity to date should take place at the end of Year 2 (2010/11) to
ensure PCTs have the ability to change strategic direction regarding shared support services and the
LCBSA’s role. This will form the basis for discussions about the scope of future activity and
funding commitments beyond the end of Year 3 (2011/12). At this point, PCTs should be given the
option to terminate their involvement with the LCBSA or significantly reduce or increase its core
scope.
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8. BUILD VERSUS BUY
The decision to ‘build’ or ‘buy’ services depends on many factors. Making the right decision will
ensure a cost effective, efficient delivery of services that fits with the culture of the organisation and
its goals. In this section we consider these factors and acknowledge areas that will require further
investigation as we move into the implementation phase
Base case
The budget was developed as a combination of ‘build’ and ‘buy’ which is similar to that found in
London’s existing shared support entities, as well as other national and international examples. In
many cases, the preferred option would be to build ‘core’ services internally, either because the
required skills already exist in entities that will be incorporated into the LCBSA, or because there are
significant benefits from long-term ownership and in-house experience. The business case assumes
that ‘bought’ external support will be used in helping to develop new services and to provide
expertise where it is not likely to be accessible otherwise. External sources will include academic
clinicians, IT specialists and business consultants. External providers will also be used for certain
optional services, where demand is not expected to be sufficient or constant enough to justify a
permanent LCBSA team, or where expertise is simply not available to build internally. Examples
include social marketing campaign implementation, legal and commercial expertise and specialised
communications support.
Although additional outsourcing is still an option where it offers reduced costs, better risk
management or quicker implementation, the baseline assumptions were felt to give the soundest
fundamental estimate of the cost of delivery. The decision about whether to buy some products
currently budgeted as ‘build’ will take place after full product development and a testing of the
market (to take place January – March 2009).
Nevertheless, this phase of the project has explored the possibility of additional outsourcing,
providing a number of important insights to consider. Potential opportunities were explored at a
series of PCT focus groups held in early November 2008. National and international examples of
outsourcing arrangements were also gathered from industry experts. The major areas identified with
significant potential for buying services from external providers were the Quality Observatory,
Health Intelligence and Claims Management. An initial assessment of costs suggests that, in general,
doing so is unlikely to be significantly cheaper than building equivalent services. Although some
outsourcing arrangements (e.g. claims management) will effectively guarantee return on spend, this
generally does not prevent the need for an initial investment. Interviews with industry experts also
highlighted that buying services from external providers can often involve significant ‘building’ as
well, whether in developing adequate bespoke products, or adding additional staff to utilise products
(e.g. claims assessors). Further details of specific services that could be outsourced and examples of
where it has been done before are given below
Quality Observatory
The development, tracking and analysis of quality metrics was identified as having the potential to
be outsourced to an external provider. Providers would typically be contracted to develop a
comprehensive quality-based performance improvement programme.
The North West England SHA recently entered an agreement with Premier Inc. to develop a pay-for-
performance programme. £7.1m will be invested in Year 1, with the potential to rise to over £10m
in future years. These figures include financial incentives to be awarded to hospitals that are
successful in improving quality.
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Results from the first two years of a similar US project suggest that participating hospitals have
raised overall quality by 11.8% in two years, based on their delivery of 30 nationally standardised
and widely accepted care measures to patients in five clinical areas. Improvements in quality of care
saved an estimated 1,284 heart attack patients, according to an analysis of mortality rates at hospitals
participating in the Hospital Quality Incentive Demonstration (HQID) project. Patients also received
approximately 150,000 additional recommended evidence-based clinical quality measures, such as
smoking cessation counselling, discharge instructions and pneumococcal vaccination. Further
details are included in Appendix 7.
Average cost improvement per patient across all clinical areas in US studies is estimated at $1,063.
Estimates suggest that the potential benefits to the North West will be in the region of £17m, with
the biggest saving made in the hospital days avoided.
Health Intelligence
PCT focus groups identified predictive modelling and return on investment calculations as potential
services to outsource. A number of providers exist with the capability to develop these services.
For example, Ashton, Leigh and Wigan PCT recently entered into a 3 year, £2m contract with Tribal,
the public services consultancy. Tribal will focus on strengthening health needs assessment, shaping
provider configuration, operationalising practice-based commissioning and managing demand for
acute services. Tribal placed 100% of fees at risk, to guarantee savings from demand management
and invoice validation.
Social Marketing
Social marketing and behavioural change programme development was identified as a strong
candidate for outsourcing. The LCBSA business case assumes a small internal social marketing
team that would liaise with external providers to develop and manage programmes on behalf of
PCTs, and with their close involvement. Hence this function would be almost entirely outsourced
on a project by project basis with optional participation by interested PCTs.
Claims Management
Claims management was identified by PCT focus groups as having clear potential to outsource.
Various PCTs in London and elsewhere in England have already entered into outsourcing
agreements with private sector providers. Agreements can be structured with highly attractive initial
financials (e.g. zero PCT investment), although this is typically offset by less favourable profit
sharing arrangements when savings are realised.
One London PCT has a three year agreement with Bupa to provide clinical evaluation support. The
basic fee is £400k/year, plus variable fees of 30% of all realised savings above the first £0.5m (with
expected savings anticipated to be £2-3m). Bupa support consists primarily of clinical support, with
some supplemental analytical support. Another London PCT has recently entered into an agreement
with Humana to provide their Settlement and Invoice Validation service. Humana offers a full
claims management system with training for a team of assessors (generally employed by the NHS).
Other
Other services identified by PCT focus groups as having the potential to be bought from external
providers include capacity planning, developing cost quality curves of care pathway interventions,
communications support, survey design, patient feedback collection, PCT development and
informatics support.
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9. PARTNER ORGANISATIONS
A large number of entities already offer support to London's PCTs across a range of commissioning
activities. Following an in-depth review of over 20 entities, it has been agreed that eight
organisations/programmes will be combined to form the basis of the LCBSA in Phase 1, based on
their relevance to its proposed scope, ability to be integrated and the potential impact of doing so.
These organisations are: Healthcare for London programme (HfL), Commissioning Support Services
(CSS), London Health Observatory (LHO), London Development Centre (formerly CSIP-LDC),
London Social Marketing Unit (LSMU), London New Drugs Group (LNDG), PCT Development
Functions and the Commercial Board programmes.
As part of the integration, the LCBSA will take on the assets and liabilities of these preceding
organizations. This is not expected to affect significantly the LCBSA budget or business case.
These entities will provide a solid foundation for the LCBSA while realising multiple broader
benefits:
Form the basis for building critical new skills by leveraging the scarce skills that already exist in
the system
Strengthen PCT ownership and accountability arrangements to better measure and review
performance
Encourage better partnership with PCTs to improve their utilisation of services, and hence the
ability of founding entities to deliver tangible benefits
Ensure joint planning and working of commissioning support programmes across London
(existing and new)
Enable the prioritisation and comparison of spend across commissioning support programmes to
facilitate the best value-for-money investments in them
Simplify the governance of pan-London commissioning support, eliminating the multiple layers
that now exists, and more effectively focusing PCT managerial oversight
Reduce the complexity of interfaces and interactions for PCTs and Sectors
A number of organisations considered might be incorporated into the LCBSA at a future date,
dependent on further review. Other organisations were considered to be unsuitable for incorporation
at any point.
Entities that will form the basis of the LCBSA in Phase 1:
For each of the eight organisations that will form the basis of the LCBSA, there are certain specific
issues that need to be considered and overcome to ensure effective integration. In addition, it is
imperative that potential disruption to the work currently being carried out by these organisations is
minimised. The following paragraphs discuss specific considerations for each organisation in turn.
Healthcare for London Programme: Following integration with the LCBSA, the pan-London HfL
programme will remain the spearhead for implementing specific high priority elements of the overall
HfL strategy. As such, the HfL programme’s current workstreams will be expected to meet their
delivery targets for 2009/10, and efforts will be taken within the LCBSA to ensure this happens.
The overall HfL strategy (beyond the current HfL programme) will continue to be managed outside
the LCBSA. As part of the LCBSA, the HfL programme will continue to work in close partnership
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with PCTs, advising and supporting them in rolling-out elements of the HfL strategy at a sector and
borough level. Integration with the LCBSA is expected to give the HfL programme better access to
scarce expert resources and better links to other organisations working in the same core space (e.g.
LDC’s work supporting commissioners in mental health, and public health work supporting
diabetes).
At the beginning of Phase 1, it is expected that the HfL clinical advisory group will be replaced by a
stronger clinical advisory and engagement group under the Medical Director. In addition, the HfL
communications team is expected to form the centre of an overall LCBSA communications support
function. Despite these changes, a clearly defined link to HfL programmes will remain to ensure
decisions are clinically-driven and that the programme is well syndicated with clinicians and
communicated to stakeholders. Other organisational changes may take place over the course of year
1, but these will be phased in slowly and carefully subject to a full operating model design between
January and March 2009.
Commissioning Support Services (CSS): CSS’s primary focus is on gathering and analysing
provider data on behalf of all 31 London PCTs, which will remain a core element of the LCBSA
going forward. Based on the lessons learned to-date, it is expected that the current CSS operation
will undergo a number of changes. Some of these changes have already been set in motion by the
CSS.
First, following integration into the LCBSA, current CSS activities will be split into two distinct
elements:
Informatics support responsible for creating and validating datasets, developing business
intelligence tools and providing access to data. This unit will be leveraged to serve other LCBSA
service lines (e.g. Health Intelligence and Quality Observatory).
Analytics support responsible for providing commissioners with intelligent analysis of their
provider activity, and performance data benchmarking across London’s PCTs.
Second, the CSS analytics support will be fully absorbed into the LCBSA commercial support
services and its activity will be reorganised to better serve the needs of commissioners:
It will function according to a strong client-service model, with working arrangements that are
well integrated into commissioners’ day-to-day tasks, and their annual commissioning cycle.
This will include working alongside commissioners in the sectors and PCTs themselves
It will be responsible for delivering specific ‘products’ that directly support commissioning tasks
in claims management, contract negotiations and contract specification/tendering processes. This
unit will have a clear focus on providing value-add deliverables to commissioners.
Finally, in order to ensure deliverables are adequately meeting commissioners’ needs, the new
commercial services unit will continue the current process (being undertaken by the CSS and Bexley
PCT) of reassessing deliverables, clarifying the specific value-add required by PCTs, and piloting
‘beta versions’ for thorough client testing and feedback before release.
London Health Observatory: LHO’s PCT-focused activities should be integrated into the LCBSA
health intelligence service line (e.g. providing high quality public health analysis to support
commissioning decisions, such as population needs assessments). These activities will continue and
will form a solid foundation on which to build additional health intelligence services. LHO’s DH-
mandated activities will remain ‘protected’ post-integration. Specifically, its role as a PHO to
provide a core set of unbiased public health intelligence that can be used to challenge the regulator,
PCTs or providers will not be compromised by its inclusion in what will be a PCT-owned
organisation. It is also critical that it preserve its strong links to APHO. In accordance with APHO
requirements, there will continue to be a ‘LHO Director’, with responsibility for LHO’s non-PCT-
focused activities, who will sit on the APHO Board. There may also be some form of regional LHO
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Board or Committee if deemed necessary. Overall, while the integration of the LHO requires
adequate due diligence, there are precedents elsewhere in England which point to it being a
manageable arrangement, with a number of potential benefits to all stakeholders. Exact details will
be resolved fully in the target operating model to be finalised from January to March 2009, at which
time a decision will be made about whether to keep the DH-mandated elements of the LHO as an
entirely separate unit that sits ‘alongside’ the PCT-support elements of the LCBSA health
intelligence function but is not fully integrated.
London Development Centre: In its role of providing implementation support to service
development, LDC could be effectively absorbed alongside HfL (discussed above). Following
integration, LDC’s work in undertaking, and in one case leading, national programme work would
need to continue. National funding which is explicitly provided for specific programmes will remain
ring-fenced for such programmes. Nevertheless, significant elements of LDC programme work
could be shaped in closer coordination with PCTs, and even more effectively leveraged through
alignment with other pan-London efforts.
London Social Marketing Unit: LSMU’s vision of acting as a ‘centre of excellence’ for pan-
London social marketing makes it a sensible basis for the social marketing service line. It will
benefit from inclusion in the LCBSA through closer integration with broader pan-London public
health and communications programmes. LSMU currently outsources most activities, which is
likely to continue following its integration with the LCBSA, at least initially, although certain
elements could eventually be brought in-house.
London New Drugs Group and London Cancer New Drugs Group: Given its pan-London role
and strong PCT support and building on the work of the London Cancer Networks Board/LCNDG,
LNDG will form the basis for a service providing pre and non-NICE guidance on drugs and devices.
It is proposed the LNDG will expand the work of the LCNDG during the course of Phase 1 of
implementation. We expect these groups to come together and form part of the LCBSA’s clinical
advice and expertise service line. Bringing it into the LCBSA will help to strengthen links and
explore synergies between it and other clinical advice functions. Both LNDG and LCNDG (on
behalf on the LCNB) already deliver strong value adding services today. It is important that these
services are not disrupted during the transition into the LCBSA.
PCT Development Functions: An SHA initiative has recently established a PCT development
function tackling a number of high-priority workstreams determined in consultation with PCTs. Its
current work programme stretches into 2009/10, and it will remain accountable for this programme.
Once existing seed funding runs out at the end of 2009/10, the function will be evaluated for
effectiveness, and PCTs will be able to decide whether to continue funding it.
Commercial Board programmes: The Commercial Board is currently leading and developing a
number of programmes which will be integrated into the LCBSA’s commercial support function.
Commercial Toolkit: to be transferred upon the completion of its development
IS Programmes: the Board will transfer operational functions of the ISTCs to the LCBSA
from 1st April, with the exception of London North which requires strategic guidance before
transfer can take place (at a date tbc)
The Commercial Board is expected to retain responsibility for refreshing the Commercial Strategy,
and providing strategic leadership on commercial issues such as market management.
N.B. Funding is already in place for the development of the commercial support function. This is
not included in the LCBSA budget, since it is entirely freestanding and will have no impact on the
overall LCBSA budget’s bottom line.
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Entities likely to be included in the LCBSA in Phases 2 & 3
A number of existing entities should either work in close coordination with the LCBSA or be
integrated with it in Phases 2 & 3. However, integration should not be considered for April 2009,
either because their expected impact is small and therefore potentially distracting during Phase 1 or
because further work is required to determine the most effective way to integrate them. This should
be a key focus of the ongoing development work required during year 1.
Pan-London Public Health programmes: Three projects are underway for pan-London Public
Health Programmes (Childhood Immunisation, Vascular Disease Prevention, and Sexual
Health). These programmes are well aligned with the proposed public health programme support to
be built in the LCBSA, and would benefit from closer coordination with pan-London Health
Intelligence. Integration of these projects into the LCBSA should begin early in Phase 1, in step
with the gradual development of these programmes in early 2009/10. While integration by April 09
remains a possibility, additional analysis is required to clarify the joint working relationship between
the LCBSA and the Regional Public Health Group. To ensure the feasibility of LCBSA
implementation, integration has thus been targeted for the first half of 2009/10, with full integration
by year 2.
Improvement programmes currently led by the NHSL Nursing Directorate: A number of
focused commissioning improvement programmes are currently led through the Nursing Directorate
with a combination of PCT and other funding. These include work on maternity services,
safeguarding children, equalities and diversity, healthcare acquired infections, improving patient
experience, and patient safety and clinical quality. These programmes should fit well into the
LCBSA’s pan-London service improvement support, and would benefit from the greater PCT-
ownership and cross-programme coordination, and operational synergies afforded by the LCBSA.
In cases of programmes likely to have an ongoing purpose, integration should be planned over the
course of Phase 1, with full integration by Phase 2. In particular, the patient safety and clinical
quality programme should be slated for early integration into the LCBSA, with a joint-working and
handover period over the first six months of 2009/10. Programmes likely to terminate in the next
year or so would not be integrated, but any future programmes proposed through the initiative of the
Nursing Directorate should be established through the LCBSA as the common platform for pan-
London commissioning improvement work.
London Procurement Programme (LPP): The PCT-focused elements of this programme
(specifically, the Purchased Healthcare category) are aligned with the proposed focus of commercial
support services and would benefit from LCBSA integration, primarily through coordinated
planning, skills reinforcement and operational synergies with other LCBSA services. The scope of
LPP work for 2009/10 (focused on Continuing Care and Mental Health) does not overlap with that
proposed for the LCBSA (initially focused on the acute sector), but is fully complementary to it, and
could be smoothly incorporated. Because of the strong benefits of working closely with the LCBSA,
work on integration should begin early in Phase 1, and full integration is expected for Phase 2. The
integrated function would continue to have strong ties with the remaining LPP categories.
Primary Care Contracting (PCC): The London-focused WTEs within this programme are aligned
with the proposed focus of commercial support services and would benefit from LCBSA integration,
primarily through coordinated planning, skills reinforcement and operational synergies with other
LCBSA services. The scope of PCC work for 2009/10 (focused on Primary Care contracting
support) does not overlap with that proposed for the LCBSA (focused initially on the acute sector),
but is fully complementary to it, and could be smoothly incorporated. The integrated function would
continue to have strong ties to the national element of PCC. Integration is expected for Phase 2.
Pan-London clinical network groups such as the London Cancer Networks Board are currently
carrying out London wide workstreams which would in due course be suitable for integration into
the LCBSA. The potential to integrate elements of the Thames Cancer Registry and London
Cancer Networks Board, either through full integration or staff secondments will be explored early
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in Phase 1. In either case, there would not be any overall budget implications, since additional costs
would be covered by existing network funding.
The Office of London PCT CEs could be integrated with the LCBSA to simplify the PCT support
organisation landscape and associated governance, although its activities would not be limited to
LCBSA-related work. Integration should be explored at a later date.
Organisations not suitable for inclusion in the LCBSA
A number of organisations were assessed whose mandate is not currently within the scope of the
LCBSA and therefore are not suitable for inclusion in the LCBSA. There future integration or closer
coordination could be considered in Phases 2 or 3.
Shared Business Services
London Specialist Commissioning Group (LSCG) - LSCG is likely to become either a formal
LCBSA member (based on a tailored service offering) or a major pay-per-use customer
Education Commissioning
Health Protection Agency
Healthy Urban Development Unit
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10. GOVERNANCE
Governance structure
This business case envisages the establishment of the LCBSA as a hosted organisation under a PCT
(see supporting legal documents accompanying the business case). The LCBSA will be governed by
a board accountable to all member PCTs. Here we consider an outline of this structure and draw out
the points that will need further clarity going forward.
The outline governance structure (see Figure 23) provides a high-level overview of the major
elements of LCBSA governance. This section focuses on the LCBSA Board and its interaction with
the PCT Host board.
Governance structures linking back to the PCTs and co-ordination with other pan-London structures
will be subject to further investigation through a separate piece of work looking comprehensively at
the governance of all pan-London entities.
Figure 23. Structure of the LCBSA Governance
Proposed LCBSA Governance structure Focus areas
London PCTs 1 “Terms of Reference” of the LCBSA
APHO*
board. Key points inc.
• Approving strategic and business plans
3 2 1
PCT Host • Monitoring performance
LCBSA
board and
board • Selecting and compensating executives
sub-boards
2 “Memorandum of Understanding”
between the 31 PCTs and the LCBSA.
Key points inc.
Committees • PCTs own the LCBSA and assume
relevant obligations
• LCBSA will comply with strategic plans
Host PCT set by the board and deliver services in
LCBSA
CEO a timely fashion
CEO
3 Hosting arrangements and risk sharing
agreements
Host PCT LCBSA executive
committee • The host will assume corporate
responsibility and provide back office
services
LCBSA organisation
• Most risks should be shared by equally
by all PCTs
* Links to external (national) boards, such as the APHO will need to be defined (TBD)
The “LCBSA Board” is the main governing body with overall responsibility for financial and
operational delivery. The LCBSA Board is a non-statutory governing body with the following
responsibilities (to be detailed in a formal ‘Terms of Reference’):
Steers, advises and reviews the performance of the executive management to ensure the LCBSA
delivers services to the PCTs and other clients
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Reviews and approves management’s strategic and business plans – understanding and
questioning the assumptions on which such plans are based, and forging an independent view as
to whether these plans can be realised
Monitors LCBSA performance against their strategic and business plans, including operating
results, on a regular basis to evaluate whether the LCBSA is being properly managed
Reviews and recommends approval (to PCTs) of the annual budget, and serves as an in-year
decision-making forum for areas outside the delegated authority of the executive team
Ensures the LCBSA is meeting contractual and non-contractual obligations to non-PCT
structures (e.g. DH & national bodies), and fulfilling existing agreements of founding entities (e.g.
LHO)
Selection, compensation, review and when necessary, replacement of key executives, including
the LCBSA CEO (in subsequent years)
Ensures the LCBSA is meeting statutory obligations (under hosting arrangement)
Approving a corporate philosophy and mission
Board members are expected to be chosen from PCT executive and non-executive directors in a
way that ensures adequate representation across London’s PCTs, as well as relevant professional
knowledge (e.g. clinical and commercial expertise).
Memorandum of understanding
A “Memorandum of understanding” will be agreed between the PCTs (who are the owners of the
LCBSA) and the LCBSA Board and its senior management. Key points include:
PCTs act as the owners of the LCBSA and assume obligations similar to investors in the private
sector, i.e. act in the long-term interest of maximising the value-creation of the LCBSA (to all of
London’s PCTs)
PCTs strive to come to a reasonable agreement on the LCBSA strategic plans and the common
core of services it provides to all PCTs
PCTs work closely with the LCBSA to agree on service line specification (detailed deliverables
and timing of delivery) for provision of services
PCTs cover the cost of the LCBSA in an equitable manner across London
PCTs agree with Hosting PCT on a fair risk sharing agreement
The LCBSA management and board will provide regular bulletins on finance and operations
The LCBSA will provide services to PCTs as agreed by well defined service specifications
The LCBSA will treat all PCTs in an equal manner
The LCBSA will comply with set strategic plans as approved by the LCBSA board and the
overarching governing body
The LCBSA will act within its annual budget, and will highlight for PCTs’ consideration any
areas of significant potential divergence from annual budgetary plans
The LCBSA will interact proactively with PCTs (e.g., through Business partners) to deliver tailor
made and bespoke solutions
The LCBSA will adjust services and resource allocation in response to PCTs’ feedback
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Hosting arrangement
The business plan recommends initially setting-up the LCBSA as an organisation hosted by one of
the London PCTs. This arrangement will allow a timely ramp-up of operations without the need to
establish a statutory organisation. In a later stage, the LCBSA might be established as an
independent legal entity. The Host PCT will assume multiple functions, providing support and a
legal shell for the LCBSA.
The Host will assume corporate accountability for:
Employing LCBSA staff, with full statutory obligations
Financial accountability, incorporating the LCBSA as part of the Host PCT’s budget. Therefore,
the Host’s Audit Committee will assume an oversight role, pre-approve the budget before it goes
to approval to the LCBSA Board and the Host Board
Statutory compliance with proper procurement procedures
Health and safety liabilities (potentially covered through insurance policy by the Host)
Smooth functioning of this arrangement will depend on a certain level of flexibility and cooperation
between the Host Board and the LCBSA Board and executive team. In general, the LCBSA Board
will assume full operational responsibility as if it were an independent entity, while the Host Board
will act as a second control mechanism which in principle should not have to intervene except in
cases of clear dereliction of duties.
The Host PCT will provide multiple back-office services to the LCBSA to help keep the LCBSA
organisation as lean as possible.
Finance: mainly transactional support such as payroll, billing and invoicing
HR: basic recruiting functions such as posting advertisements, collecting applicant materials,
organising interviews, etc.
IT: basic IT support, including helpdesk, maintenance of systems, email server etc (given the
likely physical separation between the LCBSA and the Host, this function might be outsourced)
Procurement: Manage tendering processes and ensure compliance with statutory obligations
It is proposed that compensation for the Host PCT is provided by the LCBSA at an agreed upon
charge
An Establishment Order will be drafted to formalise the arrangement between PCTs and the host
PCT in relation to the governance and operation of the LCBSA. This will be circulated to PCT
Boards with this business case for review and approval.
A number of additional mechanisms (outside formal governance structures) will be put in place to
ensure the LCBSA has adequate stakeholder involvement:
A robust, formal feedback process will be established for PCTs to provide individual assessments
of how well the LCBSA is delivering on its commitments.
Regular user forums for ensuring adequate and timely feedback on the quality of services
delivered, and to facilitate changes when necessary
Additional stakeholder forums to ensure that the LCBSA activities and benefits are adequately
communicated, that they are robustly aligned with efforts across the system, and to facilitate
changes when necessary
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11. ORGANISATION MODEL AND DEPLOYMENT OF SERVICES
This section of the business case describes the key considerations for designing an optimum
organisation model. It also outlines two potential models for consideration by the incoming LCBSA
Chief Executive, who will take responsibility for finalising the model. Finally, it describes potential
deployment model options.
Key design considerations
The LCBSA organisation design must strike a balance between capturing functional synergies across
the core services (a pull toward centralisation) and ensuring the LCBSA is sufficiently decentralised
to maintain local relevance. As such, the organisation model should identify the best way to serve
individual PCTs and Sectors while adequately leveraging its expert resources to delivery high
quality services across London’s PCTS in accordance with well defined service specifications.
The design process focused on two criteria categories with a series of questions:
1. The ‘fit’ of the organisation:
Will the organisation model ‘fit’ with the vision of the LCBSA?
Will it align with the people and culture of founding entities coming into the LCBSA?
Do we have the resources to make it work (IT, infrastructure, etc.)?
2. The robustness of its structure:
Will the organisation solve potentially difficult links between business units?
Will the structure demonstrate clear accountability without redundant hierarchy?
Will it be flexible enough to meet changing needs and allow for specialist cultures to develop?
Potential organisation designs
Through focus groups and expert interviews, two potential organisation designs were developed.
Both are based primarily on a service line approach, with clear accountability and pooling of skills to
ensure delivery of relevant value-add products to PCT customers.
In the first design, the major organisation units have been aligned with the key service groupings:
Clinical advisory services
Pan-London prioritised improvement programmes
Public Health services (Health Intelligence and PH Programme support)
Commercial support services
In addition, a set of smaller units will be established providing supplemental support to these core
services: These include communications, informatics, and PCT development.
A flexible system of analytics sharing and resource pooling would be envisioned to ensure that the
clinical, health intelligence and commercial analytics functions adequately share data and knowledge,
and are most efficiently utilised across the LCBSA. By bringing different analytical roles closer
together, this model would also increase analysts’ career development and role rotation opportunities.
This is envisaged to improve the overall standard of analytics within the LCBSA, and also improve
recruitment and retention of high quality analysts by presenting a more attractive career path.
The main benefits of this design would be
Well aligned to standard national and local organisation models (which split public health and
clinical activities)
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Minimal interruption will facilitate implementation and therefore, faster deliverables
Service line approach will ensure that clinical, health intelligence and commercial functions are
all well served with strong links between them
In the second design, the Public Health programme support element might be incorporated into the
pan-London prioritised improvement programmes group. This group would comprise units devoted
to each care pathway end-to-end, running all relevant programmes and ongoing activities related to
that pathway. In this case, Public Health leadership and expertise would form a part of this larger
programme-focused group.
In addition to combining prioritised programmes into one group, this potential organisation design,
would group all analytics teams into a single function. This analytics function would provide
support across all programmes, incorporating capacity and financial modelling, health intelligence
and provider performance analytics.
The main benefits of this design would be:
Full integration of all clinical and public health programmes into a single programme-based
structure that assesses improvement opportunities across the care pathway, and ensures full
coordination of activity end-to-end
A strong integrated analytics function (leading to even greater career development and role
rotation opportunities for analysts)
Timing
Between January and March 2009, the founding entities will remain separate from the LCBSA
programme. Post-1st April, initial transition of the founding entities occurs, with new reporting lines
but with the changes to organisation functions kept to a minimum where there is a large risk of
disrupting current work. Over the course of Phase 1 the new LCBSA organisation structure will be
formed. This process and timings will be described in more detail in the final LCBSA
Implementation Plan, and will be subject to adjustment based on the input of the new CE, and the
finalisation of the target operating model between January and March.
Deployment model considerations: Sector liaison
Crucially, through sector designated business partners (one per sector) the LCBSA structure will
support PCTs in optimally utilising services, and allow them to guide the development of the
services delivered to them. This role should facilitate PCTs to act as ‘intelligent clients’. In addition,
in all elements of service delivery, across all service lines, key LCBSA staff will be expected to
engage with particular PCT clients (whether DoCs, DoPHs or others) and set up joint working
arrangements that ensure their deliverables are well integrated into commissioners’ key tasks.
In total, ~ 40 LCBSA staff (including the business partners, analysts and specialists) would split
their time between the LCBSA central office and PCT/sector offices ensuring strong engagement
with PCT clients. Some of these staff will engage on an ongoing basis, while others will work more
on a project by project consultancy model.
The LCBSA also presents opportunities for secondments of PCT staff into the LCBSA through an
established rotation scheme. This would have two major benefits:
First, a rotation scheme would further strengthen LCBSA-PCT links. It would give seconded
staff a detailed ‘insider’ understanding of how the LCBSA works, which should help to make the
LCBSA-PCT interface as effective and efficient as possible. It would also give PCT staff the
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perfect opportunity to influence the LCBSA’s services to ensure it continues to provide the most
relevant, value adding services to PCTs in the most appropriate way.
Second, a rotation scheme would provide valuable development opportunities to PCT staff that
would otherwise not exist. PCT staff would benefit from experience in many of the roles within
the LCBSA, which would allow them to develop skills that would be highly relevant to
subsequent roles within their PCTs. Analyst and programme management roles have especially
strong potential in this respect.
Key PCT-LCBSA points of contact are described in Figure 24.
Figure 24. Role descriptions of key interfaces
Description and examples
• Designated by Sector
Business Partners • Facilitators between LCBSA and PCTs
• Understand PCT needs and work with them to develop hub services that are
fit-for-purpose
• Engage PCT clients to ensure they are utilising available LCBSA services
• Responsible for managing demand of in-house and out-sourced products
• Facilitate communication between PCTs and share best-practice commissioning
activities
• Represent the LCBSA at Sector meetings
• Designated by skill/knowledge, i.e., clinical, public health, commercial, e.g., care
Project/Programme pathway design, cost quality curves of care pathway interventions
Managers • Key point of contact for all major projects (in house or out-sourced) not needed on a
regular basis, e.g., social marketing project
• Designated by skill/knowledge, i.e., clinical, public health, commercial
Analysts • Key point of contact for all day to day ongoing work, e.g., analysis and benchmarking
of provider performance
People Management
Bringing together multiple founding entities into a single new organisation presents significant
people management challenges. In anticipation of these challenges, a People Management Agenda
has been developed leading up to 1st April 2009 to ensure the following:
A shared vision of why we need to create the LCBSA
Commitment to the mission in establishing the new shared service agency by 1st April
A shared understanding that sustainability of a new culture and the commitment from those
working in the LCBSA will be critical to its success in supporting PCTs in achieving World
Class Commissioning if adequately resourced
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Engagement in and support for developing a pragmatic Implementation Plan that will help to
deliver the key people management milestones prior to and after the launch date of 1st April
2009
A focus on creating a sustainable organisation that provides staff continuity wherever possible
The key people management activities prior to 1st April 2009 can be grouped into recruitment, staff
transfer and programme implementation. Specific activities have been identified within each area:
Recruitment:
Appointment of a Chief Executive, pan-London Medical Director, and other key roles (e.g. senior
professional leadership for Public Health and Commercial functions)
Recruitment of a transitional team and arrangements for transition to a new leadership team after
1st April 2009
Identification of other recruitment needs (e.g. high-skill staff for delivery of new services)
Staff transfer:
A detailed Due Diligence exercise prior to the commencement of TUPE consultation in early
January 2009 that will result in staff in founding entities (already referred to in this Business
Case) transferring to the new employer
Ensuring that all staff transfers are fair and transparent and that any potential fear of uncertainty
felt by staff arising from the change management process in creating the LCBSA is minimised
(through full consultation)
Ensuring that where new roles differ from current roles, the changes are fully understood and
agreed to, and that nobody is ‘deskilled’ as a result of transferring.
Staff Side representatives in the Partner Organisations and PCTs are formally consulted
throughout the change management process
A programme of Staff Briefings with staff in the Partner Organisations as part of the on-boarding
plans
The production of informative briefing documentation for management and staff
Programme implementation:
The development of and management of a robust implementation plan designed to facilitate the
launch of the LCBSA by 1st April 2009
Identifying and addressing any people management issues identified in the LCBSA
Implementation Plan relating to Hosting and Governance; work location; infrastructure
development and the final and transitional organisational structure
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Development of new roles in the LCBSA and any recruitment prior to 1st April 2009.
Planning for ‘post merger management’ arrangements
Planning for induction and training activities prior to and after 1st April 2009
Post-April 1st, the major people management focuses should be on supporting the merger
management/transition process (including TUPE), developing detailed organisational designs and
role definitions, training and inducting new staff, recruiting and managing secondments, inputting to
performance management and other processes, and managing staff communications. The overall
goal is for the people transition to be gradual but noticeable.
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12. KEY RISKS
Through the process of developing this business case, a number of potential risks to successful
implementation of the LCBSA have been identified. Risks can be grouped into four main
categories: Recruitment, Infrastructure, Integration and Delivery. For each risk, mitigating steps
have also been identified which would reduce risks to acceptable levels. Details of specific risks and
their mitigating steps are summarised in Figure 25.
Figure 25. Key risks and mitigations
Risk Mitigation
Set-up
• Filling key roles, e.g. Chief Executive and • Early advertising of key roles and interviewing of
Medical Director applicants
Recruitment • General staffing: adequate volume and skill • Build vs. buy due diligence: if adequate skills or do not
levels are not found on time to deliver the exist then products should be bought until services
product offerings in Phase 1 can be built to ensure on-time delivery
• If key roles are not filled by 1st April, the transition
management team will remain in place until they are
• Sourcing and putting in place location • An implementation team is in place at present
arrangements investigating possible locations and facility design
Infrastructure
• Ensuring fit for purpose IT systems (including IT)
• High-low scenarios for WTE requirements based on
degree of outsourcing possible, etc. have been
checked to ensure minimal risk of ove-rinvestment
Operations • Merging cultures of existing organisations, • A full and complete organisation design will need to be
e.g. HfL, LHO and CSS fleshed out under the incoming CE and a Post Merger
• Formal claims against TUPE Management team put in place to ensure a seamless
Integration • Failing to mitigate governance complexities transition of existing services into one entity to
with existing organisations, e.g. LHO, who facilitate collaborative working, sharing of skills and
have both regional and national obligations delivery of products
• Lack of PCT engagement during integration • Initial org design principles focused on avoiding
(e.g. detailed product design and testing) disruption to ongoing work
• PCT engagement requirements during the
implementation phase will be agreed ahead of time
• Derailing existing activities • The new organisation structure will ring fence existing
Delivery • Failing to deliver on new services activities where necessary
• Underutilisation of new services • Product design & deployment method will be worked
out in detail to ensure close alignment with PCT needs
• Mechanisms for performance review and delivery
assurance have been outlined, and will be fully
designed before launch
In addition to the implementation risks identified above, a more immediate risk is if not all PCT
Boards sign up to the LCBSA. In this scenario, the ability of the LCBSA to deliver the full benefits
presented in this business case would be severely compromised. For PCTs who do not sign up, the
risk is that they would either deliver sub-optimal and less economical versions of the LCBSA on an
individual or Sector basis; or wouldn’t do anything at all. In either case, the ultimate impact is likely
to be slower progress towards the World Class Commissioning vision.
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13. NEXT STEPS
This business case has raised a number of questions which we have not yet been able to answer, and
which must be resolved as the LCBSA programme moves into the detailed implementation planning
phase. Once the outline proposal is approved by PCT Boards, work should focus on addressing the
following areas:
Finalisation of organisation design: The organisation design and description will need to be
formally agreed and put into place. This responsibility will fall under the remit of the incoming
Chief Executive.
Finalisation of governance structure: Outstanding governance questions must be resolved,
including LCBSA board membership, the relationship to all 31 PCTS, and specific questions
related to founding entities with non-PCT obligations (e.g. LHO). This will be done as part of an
overall review of joint PCT work now being conducted.
Formal review mechanism: A formal evaluation process, annual review and feedback
mechanism, as well as a year 3 assessment (and potential termination mechanism) need to be
fully developed and agreed.
Finalisation of product design: Detailed product specifications and tools must be developed (e.g.
predictive modelling systems).
Infrastructure development: The physical location for the LCBSA and associated facilities
arrangements (especially IT infrastructure) must be agreed and established.
Post merger management team: Managing the integration of founding entities is critical to the
successful launch of the LCBSA. Issues such as culture, compensation, roles and responsibilities
must be resolved.
Equality Impact Assessment: Conduct a full Equality Impact Assessment. Initial assessments
suggest that the LCBSA will have no adverse impact on any equality groups. In addition, it is
likely to contribute to reducing geographical inequalities across London.
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14. RECOMMENDATION TO THE PCT BOARDS
For London’s PCTs to realise the vision for World Class Commissioning and healthcare set out in
this business case, PCTs and their Boards are urged to support the recommendation to establish the
LCBSA and approve this Business Case. Specifically, PCT Boards are asked to approve the
following:
Set-up funding to be dispensed in the last quarter of financial year 2008/09
First-year funding for 2009/10 for all core (recurring and non-recurring) services
Second and third-year funding for 20010/11 and 2012/13 for core services
Agreement in principle to mechanisms to assure the delivery of benefits, and potentially alter or
terminate services at the end of the three-year start-up phase in the case of inadequate delivery
Agreement in principle to the transfer of existing PCT-funded entities and their funds (i.e. HfL
and CSS) into the LCBSA, including their assets and liabilities
Agreement in principle to the transfer of DH and SHA-funded entities into the LCBSA
Agreement in principle to the risk sharing arrangements set out in the Agreement for the
Establishment of a Joint Committee to Oversee the London Clinical Business Support Agency
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APPENDIX 1: PROCESS FOR CONTENT DEVELOPMENT
In order to develop the scope of the LCBSA and deliver clear and practical answers to the key
design issues (Governance, Funding and Organisation model), an iterative process of workshops,
interviews and focus groups was essential to achieve the following objectives:
Ensure full engagement of the PCTs across London so that all major concerns, ideas and
expectations would be reflected into the proposed scope
Refine and clarify where the greatest pan-London commissioning needs lie
Understand which activities would have the greatest impact in strengthening commissioning and
improving the health outcomes of Londoners
Allow an organisation and governance model to be built that would realise the vision of the
LCBSA whilst ensuring adequate flexibility and accountability to the PCTs
Lay out an acceptable and realistic funding model required for the LCBSA to succeed
Learn from previous shared service success factors and failures
The overall process consisted of 8 major steps (some running in parallel):
1. Sector workshops
Consisting of a representative of Chief Executives, Directors of Commissioning, Finance and
Public Health
The workshops focused discussion on the core activities and deliverables of a world class
commissioner; examining those that would best serve through placement within the LCBSA and
those that should remain at sector and PCT level
These outputs identified a set of PCT key figures to talk to in a set of in-depth interviews
2. In-depth interviews
One-on-one focused interviews with Directors of Commissioning, Finance and Public Health
These interviews fleshed out what the key activities looked like on the ground and which parts of
those activities should be placed within the LCBSA
This information was then replayed back into later sector workshops for further refinement and
prioritization
3. Expert interviews
Ran in parallel to sector workshops and in-depth interviews
Subject matter experts, both national and international (service line and key design issues) and
existing UK shared service organisations (e.g., Greater Manchester and West Midlands CBSA)
Engaging with existing pan-London commissioning support functions (e.g. LHO, CSS and HfL)
Gaining further insight into the nuances of the proposed activities and key design issues
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Learning their key success factors and mitigating major risks
4. Existing organisation interviews
In-depth interviews with the existing organisations providing commissioning-related services to
PCTs today
Developed understanding of current capabilities and resources (including funding structure)
Identified organisations likely to benefit from LCBSA integration
Understood how current services mapped to proposed LCBSA services and identified gaps for
the LCBSA to close
5. Pan-London workshop
Large workshop comprising cross-sector representatives who had been involved in previous
individual sector workshops and in-depth interviews
Brought together the outputs from the individual sector workshops and deep dive workshops
Enabled PCTs jointly to agree and prioritise proposed LCBSA services
Output forms the basis for the services and products proposed in this outline business case
6. Focus groups (key design issues)
Following the pan London workshop and agreement of service lines further investigation was
required to flesh out and solve the key design issues
Three focus groups; Governance, Funding and Organisation Design were established
Each group was led by a PCT Chief Executive and was represented by a cross section of PCT
chairs, PEC chairs, Chief Executives, Directors of Finance, Commissioning, and Public Health,
as well as relevant representatives from the founding entities
These groups were responsible for the resolution of the key design issues seen later in the
business case
7. Focus groups (Service Line refinement)
Following the pan London workshop and agreement of service lines further investigation was
required to be explicit and clear about the products on offer, when they would be phased into the
LCBSA and whether or not they should be bought or built
The following focus groups were set up: Clinical, Public Health, Commercial and
Communication, with participants including PEC chairs, additional CAG members, Directors of
Finance, Commissioning, Public Health and Communications, as well as relevant representatives
from the founding entities
These groups were responsible for refinement of service lines and resolution of above questions
laid out in this business case
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8. Ongoing steering group guidance and feedback
A broad steering group was established with a CE SRO chairing the group, additional CE
members representing all sectors, and representatives from the most relevant founding entities.
This group provided guidance and feedback on three major iterations of the Business Case, with
substantive input into the service lines, their phasing and funding, the trade-off between build vs.
buy, the process for ensuring delivery, and the various governance and organisational principles
Smaller sub-groups were engaged to specifically test the “value-for-money” case, and to ensure
that the budget was directed to the most critical and relevant services, and that the overall cost
stayed within the envelope of affordability
Individual members also provided one-on-one guidance and feedback in areas of particular
knowledge and expertise
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APPENDIX 2: DETAILED DESCRIPTION OF SERVICES AND BENEFITS
This appendix breaks down the 12 service lines into specific ‘products’, and describes in detail the
phased roll-out of these products, and their expected costs and benefits.
Delivery of services will be phased by impact and feasibility
Phase 1 Phase 2 Phase 3
Apr 2009–Apr 2010 Apr 2010–Apr 2011 Apr 2011–Apr 2012
Existing New New
• Care pathway and service design, baselining and
1 •1 Capacity, performance and financial •3 Identification and prioritisation of new
gaps assessment for HfL programmes implications of HfL implementation research opportunities
• Support to PCTs and sectors in HfL •2 Cost-Quality curves of care pathway •9 Review of the market (regular reports)
implementation of major reconfigurations interventions, and opportunity assessment • Directory and fact-base comparison of
• Expert commissioning and development support
2 •4 Ensure and support consistent use of metrics independent potential providers
in prioritised areas of care (LDC) in contracts •
10 Survey design and patient feedback
• Design protocols for drug and device use
3 •5 Return on investment modelling of health collection
5
• Analyses/benchmarking of health needs promotion initiatives
For future consideration (not currently
• Expert programme development support in
6 •7 Programme development and performance budgeted)
prioritised public health issues management of behavioural change (e.g.
social marketing) programmes •
12 Data warehouse system – New data,
•
7 Social marketing pilot programme e.g., of non-acute providers
– Behaviour-based segmentation of at-risk
•
9 Procurement and contracting expert tools
populations • Training and development support across
•
10 Communications support to HfL programmes key functions (Public Health,
– Identification of key influence patterns for
•
11 Pan-London PCT development programmes Communications, Commercial, etc.)
each segment
•
12 Data warehouse system and Web portals – Portfolio of interventions to target segments
• Specialised Commissioning
in line with key influence patterns • Education Commissioning
New
• HfL implementation/planning support to PCTs
•9 Contract reviews and negotiation support
1
• Independent clinical advice and MD function
•
10 Expert communications support to pan-London
3
Public Health programmes
•
4 Development and tracking of quality metrics
• Portfolio of agencies (design, print, PR,
• Analyses/benchmarking of provider quality political affairs) with pan-London purchasing
•
5 Predictive modelling of health needs in key • Professional support and guidance to
health risk categories Sector/PCT communications function
• Pan-London public health campaign/ programme
6
design, support and monitoring
• Claims management & clinical coding review
8
• Provider performance analysis/benchmarking
9
Recurring core Non-recurring core
£m 2009/10 2010/11 2011/12
Pan-London care pathway and
1 service delivery design and 8.0 5.8 3.4 4.8 4.8
implementation support
Expert guidance and developmental 3.8 5.2 5.3 0.5
2
support in prioritised pathways
2.6 2.2 0.5 2.6 0.5
3 Clinical advice and engagement
4 Quality observatory 2.1 3.3 3.6
5 Health intelligence 2.8 3.8 3.8 0.3
Public health programme
6 1.4 2.6 3.0
development
Social marketing (strongly linked to
7 0.3 0.3 0.3
Communications and PPI support) 0.2 0.2
Claims management and coding
8 5.0 6.3 4.2 6.7 4.4
review
Provider intelligence, contracting
2.5 2.1 1.0 2.0 1.7
9 negotiation support and commercial
advice
1.3 1.4 0.5 2.0 0.8
10 Communications and PPI support
11 PCT development 1.1 1.1 1.1
Informatics (data storage, quality and 1.4 2.3 2.4
12
reporting tools)
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1 Pan-London care pathway and service delivery design and Additional services
(year 2 decision) –
cost not inc in budget
implementation support (e.g. HfL Programme) (1/2)
Product Description Phase I Phase II Phase III Existing resources
A WTE
• Select high (pan-London and borough 15
• HfL designs pathways and service
15 15
level if required) priority pathways and delivery models in prioritised areas
Care pathway
Care pathway 7 7
service delivery models
and service
and service
delivery design
delivery design • Create end-to-end evidence-based care 8 8
for pan-London
for pan-London pathways and service delivery model
change
change designs (3-5 per year including what £m
2.2 2.0 2.0
programmes
programmes interventions, when, by who and where)
(HfL pro-
(HfL pro- • Identify minimum clinical scale 0.9 1.0
grammes)
grammes) 1.1 1.0
• Maintain fact base for each pathway
If only 20 PCTs do this, they
still need ~same resources
Fully loaded cost, including
product development
B • Diagnostic of current care pathways and WTE • HfL baselines current care pathways
Baseline of
Baseline of delivery models activity levels (in line and identifies gaps and oppor-tunities
with 1A) 27 27 27 for prioritised pathways
current pathways
current pathways
and delivery
and delivery • Benchmarking relative to gold standard 11 14
models, and
models, and pathway and preferred delivery models 16 13
identification of
identification of (comparison across PCTs regionally and
gaps and
gaps and nationally)
opportunities
opportunities • Identification of major gaps and critical £m
(for prioritised
(for prioritised areas for change 3.6 3.4 3.4
HfL pro-
HfL pro-
grammes)
grammes) 1.5 1.7
1.9 1.7
Only significant cost reduction
if an entire sector pulls out
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
1 Pan-London care pathway and service delivery design and Additional services
(year 2 decision) –
cost not inc in budget
implementation support (e.g. HfL Programme) (2/2)
Product Description Phase I Phase II Phase III Existing resources
C • Support PCTs in reconfiguring services, WTE • HfL currently provides ad hoc
including robust analytical support for service 16 17 17 support
designation decisions (in line with 1A) 8 8 to sectors in roll-out of prioritised
Support to PCTs
Support to PCTs programmes
and sectors in
• Work with PCTs/Sectors to redefine 9 9
and sectors in commissioning according to new service
implementation
implementation configuration plan
of major
of major £m
reconfigurations
reconfigurations
• Work with PCTs/Sectors to develop tailored,
2.2
2.1 2.0
local and smaller pathways in line with the
pan-London service configuration plan 0.9 1.1
• Provide programme management expertise 1.1 1.1
to help PCTs/Sectors build an
implementation programme Only significant cost reduction
• Develop cross-cutting initiatives (e.g. clinical if a entire sector pulls out
network development) and enabling
strategies (e.g. workforce planning) Fully loaded cost, including
product development
D WTE
Capacity,
Capacity, • Baseline of current capacity and provider 9 10
performance and
performance and supply in relation to patient demand
5
financial
financial • High-level financial costing of different • HfL models sector/PCT
0 5
implication
implication service provision options implications for prioritised
reports of care
reports of care • High-level performance scoring of different pathways (currently there are 8)
pathway £m 1.7 1.8
pathway service provision options
implementation
implementation 0.9
(for prioritised
• Scenario-planning model to simulate ser-vice
(for prioritised reconfiguration options and their capacity, 0.9
HfL
HfL 0
performance and financial implications
programmes)
programmes)
• Deep-dive assessment of possible activity Only significant cost reduction
level changes at key provider sites if a entire sector pulls out
Fully loaded cost, including
product development
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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2 Expert guidance and development support in prioritised Additional services
(year 2 decision) –
cost not inc in budget
pathways (1/2)
Product Description Phase I Phase II Phase III Existing resources
A
• Select disease areas of focus based on WTE 18 • Not currently provided by any
performance and potential size of impact 13 existing bodies
9
Develop cost-
Develop cost- • Identify evidence-based best practice
quality curves
quality curves pathway (describing specific 0 9
for care pathway
for care pathway interventions) for selected disease areas
interventions,
interventions, using national and international
and assess
and assess guidelines (e.g, Map of Medicine) £m 1.9
opportunities
opportunities • Assess evidence for cost and benefit of 1.4 0.5
each intervention in pathway
1.4
• Where appropriate: Hand-off to HfL 0
change programme to be led by as pan-
London workstream If only 20 PCTs do this, they still
need ~same resources
There is a certain level of options for PCT to get Optional in year
tailored support decision to be taken
– Measure payor gaps in actual performance vs. best on adding this service
practice for each intervention in Phase I
– Calculate the cost of closing each gap
– Construct a cost curve to determine the maximum
improvement in quality possible for a given PCT
spend in terms of cost and life years gained
– Prioritise/sequence interventions by assessing
realistic improvements vs. feasibility
• Where required by PCTs: Describe the changes for
provider structure and conduct required to deliver
– Optimal provider delivery model
– Information transparency and provider incentives
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
2 Expert guidance and development support in prioritised
pathways (2/2)
Product Description Phase I Phase II Phase III Existing resources
B
Expert
Expert
• Support PCTs in developing key areas of WTE • LDC cur-
commissioning care in-line with national and regional rently pro-vides support to PCTs in
commissioning 66 66 66
and development priorities across 3-5 focus areas the areas of Mental
and development
support in • Support engagement on these prioritised Health, Children & Family, and Health
support in
prioritised areas issues with practitioners and other in the Criminal Justice System
prioritised areas
of care (not
of care (not stakeholders required to implement • ~£3.8m recurring budget (excluding
involving major
involving major changes £m all monies held on behalf of the
reconfiguration)
reconfiguration) • Develop and lead in the provision of system)
3.8 3.8 3.9
training to practitioners and other
stakeholders
• Organise workshops/conferences to
disseminate best-practice
• Provide web-based tools to support
commissioners in implementing national
Money held on behalf of
guidelines and best-practice system excluded
• Provide expert guidance to support
commissioners, including tools like Externally funded
quality score cards, etc. programme mandated for all
of London LHO
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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Additional services
3 Clinical advice and expertise (year 2 decision) –
cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
A • Core clinical team led by Medical WTE • CAG is a shared clinical advice
Director, with credibility across London: 14 14 14 resource, although it currently
Provision of
Provision of Provide/facilitate clinical advise to provides advice primarily to HfL
independent
independent LCBSA programmes • Clinical networks provide advice on
clinical advice
clinical advice – Engage and work with clinicians “on their specialist areas
£m
the ground” • Nurses Network has a steering group
– Advisory team can be used across the 2.0 2.0 2.0 which oversees various care areas
LCBSA service lines when needed 0.5 0.5 • N.B. CAG, clinical networks and
Ad hoc clinical 1.5 1.5
advice to PCTs • Act as the professional lead for sector Nurses Network workstreams
could be CAGs and various clinical network heads sometimes overlap
available on • HFL ~£0.5mfor CAG
demand, as an • Outsourcing of ‘rare expertise’ when Outsourcing of part-time CAG is non-
optional pay-per- required from (inter)national sources clinical expertise at the recurring core and
use service • Advisory team should include cross levels currently required will need approval
for HfL is included at the end of year1
membership of nurses, primary,
community, MH and acute clinicians
If only 20 PCTs do this, they
• Ad hoc independent clinical advice still need ~same resources
B • Develop policy that will allow PCTs to WTE
Design
Design 6 6
offer consistent delivery of drugs across 4 • LNDPG and LCNDG
policy/protocols
policy/protocols
London, minimising the risk of the post develop guidelines for pre-
for therapy
for therapy
code lottery (50-60 new drugs/devices £m and non-NICE drugs
interventions use
interventions use 0.7 0.7
reviewed annually) 0.5 • LNDPG ~£0.5m
that are pre- and
that are pre- and
non-NICE
non-NICE
If only 20 PCTs do this, they
still need ~same resources
C • Recognise and prioritise steps along • Currently no provided
WTE
Identification and
Identification and pathway that require further evidence 3
based research providing an annual 0 0
prioritisation of
prioritisation of
new research
new research research strategy with an estimated £m
opportunities
opportunities budget and implementation plan 0.4
• Liaise with academic institutions 0 0
• Apply for funding
If only 20 PCTs do this, they
still need ~same resources
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
4 Quality observatory
Product Description Phase I Phase II Phase III Existing resources
A • Define key metrics/operational targets that include • Not currently provided by
community and acute provision of service, in-line WTE any existing bodies
with national targets and the gold standard care 4 5 5
Development of
Development of pathway
quality metrics
quality metrics
and tracking of
and tracking of
• Integrate national metrics and standards into
outcomes regional quality programme £m*
outcomes
• Define frameworks for qualitative assessments 0.9 0.8 0.8
from patients, GPs and providers
• Report on quality performance quarterly, and
gather clinical recommendations around key
If only 20 PCTs do this, they still
Optional service improvement areas (feedback into care pathway
need ~same resources
to have provider development where appropriate)
specific analyses
done • Pro-active development of new metrics
encompassing acute and community services
B
Analyses and
Analyses and • Define format for consistent data collection across WTE • CSS provides some analysis
benchmarking of London, and ensure proper validation 7 10 10 of available metrics
benchmarking of
the quality and
the quality and • Analyse/benchmark data (captured in data • CSS £0.1m-0.2m
efficiency
efficiency warehouse by informatics team) across London and • Largely not provided by any
metrics of
metrics of UK on KPIs, price and volume £m* existing bodies
1.2 1.3 1.4
current and new
current and new • Provide comparisons with international BP
providers
providers • Publish available data quarterly and make available
in varying formats applicable to PCTs, Providers If only 20 PCTs do this, they still
and the public need ~85% of these resources
C
• Communicate quality metrics and KPIs to WTE • Not currently provided by
7 10
Ensure and
Ensure and commissioners any existing bodies
support
support 0
consistent use of
• Produce quality specifications to facilitate the
consistent use of incorporation of metrics and KPIs into contracts £m* 1.4
metrics in 1.1
metrics in
contracts
contracts • Gather BP experience, and disseminate the most 0
effective and appropriate use of quality measures in
contracts If only 20 PCTs do this, they still
need ~same resources
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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5 Health intelligence (1/2)
Product Description Phase I Phase II Phase III Existing resources
A
Analyses and • Provide in-depth expertise around key WTE • LHO publishes annual PH indi-cator
Analyses and
benchmarking of national and region health databases, and 12 12 analyses by PCT
benchmarking of 11
ability to specify consistent reports required • LHO coordinated a London-specific
current
current on a regular basis ‘boost’ to the Health Survey for
population
population
health needs
health needs • Identify current health needs (i.e., disease England
around key
around key burden, lifestyle and risk factors, pre-mature • LHO’s ‘Health Inequalities Intervention
disease areas mortality) for ~3-5 key disease areas per £m* Tool’ allows PCTs to benchmark
disease areas
and population
and population sector per year, and benchmark against 1.4 1.3 1.3 population demographics
segments
segments other PCTs in London, nationally and
• Thames Cancer Registry does
comparables internationally
analytics around key cancer indicators
• Identify pockets of deprivation and regional
inequalities across London, sector and
• LHO ~£0.2–0.3m
borough level to highlight in-balance
between health needs and care provided Does not include
the potential
• Benchmark across U.K., sector and local addition of TCR
PCT comparables; International health intelligence
benchmarking against other major cities to resources
highlight systematic failures
• Analyse key success factors for
PCTs/regions with healthiest populations If only 20 PCTs do this, they still
and best performing health promotion need ~85% of these resources
programmes
• Apply analysis to identify key variances,
within and between PCTs, for life
expectancy, incidence and prevalence
rates, mortality and morbidity and their key
determinants (e.g., SCARF analysis)
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
5 Health intelligence (2/2) Additional services
(year 2 decision) –
cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
B
• Design predictive toolkits for population WTE • LHO’s ‘Health Inequalities
Predictive projections (age, size, structure), disease Intervention Tool’ allows PCTs to
Predictive trends and change in financial burdens 9 10 10 run basic ‘what if’ public health
modelling of
modelling of for ~3-5 key disease areas per sector per scenarios
population
population
health needs for year • However, broadly not available
health needs for £m*
key disease
key disease • Model scenarios that forecast future today
1.4 1.4 1.4
areas and health
areas and health health needs of old and new populations
risks
risks • Identify key patients at risk through
disease area (e.g., PARR score use)
• Map areas within PCTs, sectors and If only 20 PCTs do this, they
across London at greatest risk of still need ~same resources
increased disease burden and
undiagnosed illness (e.g., Experian and
Dr. Foster work in Slough and Diabetes)
C 11
• Collaborate with PCTs to prioritise WTE
8
• LHO conducts ad-hoc or specifically
assessed initiatives in line with current 3 commissioned analysis of future
and predicted health needs 0 8 health needs in specific areas (e.g.,
Return on
Return on
investment • Develop models to assess potential ROI impact of smoking ban)
investment
modelling of
modelling of of health promotion initiatives in terms of £m* • However, broadly not available
££ and QALY’s for ~3-5 key disease 1.5 today
health promotion
health promotion 1.1
areas per sector per year (leveraging 0.3
initiatives
initiatives
cost-quality care pathway work above) 0 1.2
• Support PCTs in using insights to choose
how much to invest in different initiatives
If only 20 PCTs do this, they
(e.g., mental health promotion or
still need ~same resources
exercise campaigns)
• Provide support to PCTs in using models
or adjusting them to local circumstances
This service will be offered on
an additional basis and needs
approval to start
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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6 Public health programme development
Product Description Phase I Phase II Phase III Existing resources
A • Support PCTs to prioritise London public WTE • RPHG and NHSL coordinate
Programme 7 7
Programme health issues and develop programmes prioritisation of issues
development and 4
development and based on national guidelines • DH ring-fenced programme monies
evaluation
evaluation • Disseminate best-practice knowledge and provided ~£1m in funds for such
support in
support in standards of quality for PH programmes work last year (future funding level
prioritised public
prioritised public uncertain)
• Support PCTs in evaluating the £m*
health issues
health issues
effectiveness of programmes, and 1.1 1.1
disseminate guidelines 0.6
• Provide specialist expert guidance in
prioritised areas (e.g., immunisations,
screening programmes) DH ring fenced allocations
mandated for whole of
London
B
Pan-London
Pan-London Core: WTE • NHSL currently coordinates
public health 14 18 some pan-London programme
public health • Collaborate with PCTs to select high-priority
programme
programme PH initiatives to be implemented pan- 7 design
design,
design, London
implementation
implementation • Design programmes to tackle prioritised £m*
and monitoring
and monitoring issues (e.g., physical activity, smoking, 1.9
1.5
immunisations and screening) – potentially 0.8
based on a social marketing effort (see
below)
• Maintain local flexibility to PCTs allowing
If only 20 PCTs do this, they
tailoring where required
still need ~85% of these
• Roll out pan-London programmes to PCTs resources
and other relevant bodies (e.g., schools);
and provide implementation support
• Monitor programme performance
• Coordinate subsequent programme
development through communications
support team
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
7 Social marketing Additional services
(year 2 decision) –
cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
A WTE 5 5
• Design protocols and templates 3
• LSMC coordinates end-to-end social
(questionnaires, communication methods, 2 2 marketing campaigns with external
Coordinate
Coordinate
social marketing etc.) and conduct pan- London research in 3 3 providers for specific social
social marketing
programmes
programmes order to segment public/patients, based on marketing projects (e.g., heart
across PCTs
across PCTs behavioural drivers and barriers to change disease)
£m
• Regularly review and update fact base • ~£0.2m (Programme budget 07/08
0.5 0.5 was ~£7m)
0.3 0.2 0.2
Such programmes
Such programmes 0.3 0.3
would include:
would include:
• Design protocols and templates
Behaviour-based
Behaviour-based (questionnaires, communication methods, Optional number of
segmentation of
segmentation of etc.) and conduct pan- London research in social marketing
at-risk
at-risk order to segment public/patients, based on campaigns with each
Additional resources can
populations
populations behavioural drivers and barriers to change ~£0.5m-£1.0m
be flexed up depending on
• Regularly review and update fact base number of social marketing associated cost
campaigns (would need
about 1 WTE per new
• Using the support portfolio, collect and programme)
Identification of
Identification of analyse public/patient information to better
key influence
key influence understand local word of mouth network,
patterns for each
patterns for each key influencers, places where time is spent, If only 20 PCTs do this, they
segment
segment learning preferences and media habits still need ~85% of these
resources
Portfolio of
Portfolio of • Maintain up to date folder of
interventions to
interventions to international/national successful case
target segments
target segments studies allowing PCTs to prioritise choice of
in line with key
in line with key initiatives depending on local priorities
influence
influence • Regularly review and update fact base
patterns
patterns
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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8 Claims management and coding review Additional services
(year 2 decision) –
cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
108 120
A • Support reconciliation of monthly provider WTE • CSS systems allow analyses
invoices with own data to identify 40 48 of SUS data for claims
discrepancies (e.g. overbilling), breaches 31 review
Claims
Claims 68 72
management of contract and other potential issues • No claims management
management
support
support • Support preparation of reconciliation function provided
statements and subsequent discussion £m* 7.5
with providers 6.8
2.7 3.0
• Recommend areas for clinical audits 2.3
4.1 4.5
Potential
candidate for
buy option • Optional: Increase clinical coding review
capability: Increase current team of 30 clinicians to
50 – 100 clinicians, as international benchmarks would
suggest for the size of London
• Optional: Expand claims management to include
community services
WTE 30 30
B • Conduct deep dive audits into specific • Not currently provided by
cases as highlighted by above analyses 20 12 12 any existing bodies
Clinical coding
Clinical coding • Analyse and benchmark results,
reviews
reviews highlighting issues and opportunities 18 18
• Detailed assessment of areas for potential
legal challenge
£m*
3.5 3.5
2.6
1.4 1.4
2.1 2.1
If only 20 PCTs do this, they still
need ~85% of these resources
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
9 Provider intelligence, contracting negotiation support Additional services
(year 2 decision) –
and commercial advice (1/2) cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
A • Monthly analysis and benchmark existing • CSS account managers
WTE
Provider
Provider provider activity and performance data to support commissioners in
performance 15 15 15
performance identify systematic discrepancies, levers provider performance analysis
analysis for
analysis for for value-creation and potential targets for negotiations
contract
contract for renegotiation
negotiations
negotiations • Provide analytic support to contract
review teams, identifying £m*
underperformers and key success 1.6 1.4 1.4
factors for top performing providers
Optional: Assist If only 20 PCTs do this, they
PCTs in managing still need ~85% of these
ISTC contracts resources
B
• Work with PCTs to identify specific WTE • LPP reviews current contract
Contract providers or services that would benefit 5 5 performance in selected areas
Contract
reviews and
reviews and from detailed contract reviews (currently focusing on
negotiations
negotiations • Review contracts, focusing on: 0 continuing care)
support
support • Legal terms and conditions
£m*
• Commercial terms, e.g. pricing 0.9 0.9
• Identify areas for renegotiation and
recommending best-practice
0
• Support subsequent renegotiations
If only 20 PCTs do this, they
still need ~85% of these
resources
* Including IT and product development cost
** Rough estimates
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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9 Provider intelligence, contracting negotiation support and Additional services
(year 2 decision) –
commercial advice (2/2) cost not inc in budget
Product Description Phase I Phase II Phase III Existing resources
C
• Develop and maintain a toolkit providing WTE • PCC provides support on usage
support to ongoing procurement and 5 5 5 of national frame-work contracts,
Procurement
Procurement contracting activities, including: where available
and contracting
and contracting
expertise
• Guidance and protocols for tendering • Commercial Development
expertise programme putting together a
• Contract specification guides (price, volume,
KPIs) £m*0.9 ‘toolkit’ for commercial support
• Contract structuring guidance and templates 0.7 0.6
• Procurement support and advice
• Legal support (e.g. translating clinical
guidelines into legalese)
• Contract conflict resolution guidelines If only 20 PCTs do this, they still
need ~85% of these resources
D • Publish biannual pan-London report • Not currently provided by any
identifying and reviewing new providers existing bodies
Review of the
Review of the (primary, acute and community)
market (regular
market (regular
reports)
• Share information on market place
reports) WTE 4
developments within different PCTs
• Feedback on successes/failures and 0 0
lessons learnt
• Act as a potential advertising ground for
independent providers and PCTs to £m* 0.7
stimulate the market
E 0 0
• Develop and maintain an annual directory
Directory and
Directory and of potential providers (national and
fact-base
fact-base If only 20 PCTs do this, they still
international)
comparison of
comparison of need ~same resources
potential
• Quarterly review and update directory
potential
providers
providers
• Quarterly review and benchmark providers
to provide consistent intelligence on: Cost,
Quality and Innovation
* Including IT and product development cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
10 Patient and public information and communication Additional services
(year 2 decision) –
cost not inc in budget
support (1/3)
Product Description Phase I Phase II Phase III Existing resources
A
PPI and • Write and publish reports on pan-London
PPI and
Communications initiatives (e.g. unscheduled care report)
Communications
delivery to pan-
delivery to pan- • Conduct road shows and health fairs across
London
London London for public syndication of pan-London
programmes programmes WTE
programmes 17 17
(e.g. HfL and
(e.g. HfL and • Provide PPI/communications materials (e.g.
public heath)
public heath) FAQs, staff brief, press releases, posters, leaflets, 12 5 5
website)
• Place pan-London adverts to engage major public 12 12
• Currently provided for HfL
stakeholder groups programmes only
• Track the effectiveness of public engagement and • HfL ~£1.3m
communications efforts
£m*
1.6 1.6
B 1.2 0.5 0.5
Expert PPI and
Expert PPI and • Support the design and leadership of consultations
communications
communications related to pan-London programmes 1.1 1.1
support to
support to • Guide and coordinate key message development
PCTs/sector in
PCTs/sector in and the design of supporting material
implementation
implementation development
of pan-London
of pan-London • Support stakeholder engagement with large pan- If only 20 PCTs do this, they
programmes
programmes London stakeholders (e.g. Diabetes UK), and still need ~85% of these
provide guidance to PCT/sector stakeholder resources
management plans
• Support PCTs’ delivery planning and performance
tracking of PPI and communications programmes
• Provide PPI/communications templates (e.g.,
FAQs, staff brief, posters, leaflets, press release,
website support)
• Support sectors in communications and
consultations on major reconfigurations (call-off
support)
* Including IT and product development cost
** Assuming £75k full weighted cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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10 Patient and public information and communication
support (2/3)
Product Description Phase I Phase II Phase III Existing resources
C
Professional • Support the development of PCT and sector- WTE • Not currently provided by
Professional 7
support and level communications strategies, facilitating the any existing bodies
support and
guidance to incorporation of SHA-driven priorities
guidance to
Sector/PCT
Sector/PCT • Support PCTs and sectors in engaging the 0 0
communications
communications major media outlets, and in undertaking media
and PPI function
and PPI function evaluation
£m 0.6
(not necessarily
(not necessarily • Provide support and guidance in meeting key
related to pan-
related to pan- system-wide priorities (e.g. constitution
London
London consultation) 0 0
programmes)
programmes) • Support and coordinate message development
related to national issues that need to be
‘localised’ (e.g. DH press releases) If only 20 PCTs do this, they
• Share good practice and facilitate linkages in still need ~85% of these
areas of common importance (e.g. resources
immunisation programme design)
• Provide pan-London (adaptable) framework for
stakeholder engagement and public affairs,
including stakeholder surveys
• Provide expert guidance in positioning, brand
and reputation management, market research,
performance tracking, etc.
• Coordinate programmes for capability and
capacity building
* Assuming £75k full weighted cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
10 Patient and public information and communication Additional services
(year 2 decision) –
cost not inc in budget
support (3/3)
Product Description Phase I Phase II Phase III Existing resources
D
Portfolio of • Maintain list of agencies of varying size that WTE • Not currently provided by any
Portfolio of
agencies PCTs could use to help develop effective 1 1 1 existing bodies
agencies
(design/print/me local level and marketing campaigns,
(design/print/me
dia/PR/ political including
dia/PR/ political
affairs) with pan-
affairs) with pan- – Cost benefit analysis
London £m
London – Contract template formatted
purchasing
purchasing • Establish a purchasing framework for PCTs <0.1 <0.1 <0.1
arrangements
arrangements with major agencies at reduced rates
• Coordinate between PCTs to ensure efficient
transfer of previous work for other PCTs to
avoid unnecessary duplication If only 20 PCTs do this, they
• Regularly review and update fact base still need ~85% of these
• Build in-house teams where justified by resources
sufficient workflows (e.g. in-house print and
design team)
E
Pan London
Pan London • Consistent survey design purchase and use WTE 6 • Not currently provided by any
purchasing of
purchasing of based on best practice and consistent existing bodies
patient survey
patient survey approach 4
2
designs and
designs and • Coordinate specification of pan-London
feedback 0 2
feedback surveys to ensure consistency (to enable
collection
collection future benchmarking across PCTs)
• Coordinate London-wide procurement of £m 0.5
patient experience tracker (PET) for 0.2 0.3
collecting patient feedback 0 0.2
Saving only if entire sector
pulls out for service
* Assuming £75k full weighted cost
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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11 PCT development
Product Description Phase I Phase II Phase III Existing resources
A
• Identify priority areas requiring skill and WTE • A PCT Commissioning Development
Pan-London PCT
Pan-London PCT capability development across London Programme was recently initiated,
PCTs (e.g., Board development, ~10 ~10 ~10 split into specific work streams (e.g.
development
development
programmes
programmes workforce planning) Integration and partnership with
• Work with a core group of PCT health and social services,
representatives to determine potential Commissioning professionals
interventions programme)
• Design an implementation plan for all 31 £m
PCTs 1.1 1.1 1.1
• Oversee implementation, participating
and providing support as necessary
(e.g., developing training material,
running workshops, providing individual
coaching) 20 PCTs would need ~70%
• Liaise with external providers as resource
necessary to deliver implementation plan
• Provide guidance and a procurement
framework for PCTs in contracting This is fully offset in
external support for major development 2009/10 through ring-
programmes fenced money
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
12 Informatics (access to data)
Product Description Phase I Phase II Phase III Existing resources
A
• Central system capturing all pan-London WTE • CSS is currently developing a
data not already captured in national data warehouse, initially
20 20
Data warehouse
Data warehouse systems (e.g., covering health, provider, 16 focusing on provider data
system
system quality data) • LHO captures and makes
• Validating data quality and consistency available a range of public
health indicators
• Technical support managing all data
extraction, loading and storage (including
• CSS ~£1.0m
£m
establishing links to new sources) 1.8 1.8
• Creation of standard reports covering key 1.1
issues
• Help desk support for basic user queries
(e.g., how to load a standard report)
If only 20 PCTs do this, they
• Creation of special reports in support of
still need ~same resources
analytics functions
B • Standard reports derived from the central
‘Business
‘Business data warehouse on a regular basis
Intelligence’
Intelligence’ • Defined specifically by service lines (and in
reporting tools
reporting tools conjunction with commissioner clients) where
regular reporting functionality is required
C • Develop and maintain web portals for WTE • Several existing organisations
any hub products and services 10 10 10 have web portals, including
requiring one LHO
Web portals
Web portals • CSS ~£0.3m
• Ensure consistency across portals and,
where appropriate, links between them £m 0.4 0.5 0.6
If only 20 PCTs do this, they
still need ~same resources
Source: Expert interviews; PCTs and shared services; McKinsey; team analysis
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Detailed Benefits Description (by Service Line and Product)
1 Pan-London care pathway and service delivery design and
implementation support (HfL Programme)
Benefits to delivery Financial benefits WCC benefits
• Better clinical outcomes through • Financial benefits not • 4. Lead continuous and meaningful engagement
improved care pathways estimated, since pan-London with clinicians to inform strategy, and drive quality,
services already exist (HfL) service design and resource utilisation
• Continue work under recognised
– Operational and project management skills to
HfL brand to the success of
implement new ways of working
London’s health system
• Better coordinated access to • 6. Prioritise investment according to local needs,
analytics and back office service requirements and the values of the NHS
functions for HfL – Prioritisation and decision making skills
• Better prioritisation of spend to • 7. Effectively stimulate the market to meet
improve health outcomes demand and secure required clinical, and health
and well-being outcomes
• Closer connection to more – Patient, public and staff engagement skills
comprehensive clinical network
– Provision analysis and monitoring skills
• Better environment to attract top – Project management skills
talent – Presenting and influencing skills
• 8. Promote and specify continuous improvements
in quality and outcomes through clinical and
provider innovation and configuration
– Relationship management skills
– Project management skills that assist provider
organisations in delivering innovative practice
• 11. Make sound financial investments to ensure
sustainable development and value for money
– Professional financial management skills
– Business-case modelling skills
– Impact and risk assessment skills
– Programme budgeting skills
2 Expert guidance and development support in prioritised
pathways
Benefits to delivery Financial benefits WCC benefits
2A. Develop cost-quality curves • For cost-quality curves, • 4. Lead continuous and meaningful engagement
for care pathway interventions, providing once for London is with clinicians to inform strategy, and drive quality,
and assess opportunities expected to be 50% - 80% service design and resource utilisation
• Better clinical outcomes through cheaper than providing once – Clinical relations skills
improved care pathways per sector:
• 5. Manage knowledge and undertake robust and
• Creates stronger fact-base for – Year 1 avoided costs: £0m regular needs assessments that establish a full
driving service design change, – Year 2 avoided costs: £0.5m understanding of current and future local health
saving time in consultation and - £2.0m needs and requirements
easing clinical engagement – Partnership liaison skills, to ensure a meaningful
– Year 3 avoided costs: £0.6m exchange of key data and analysis
• More effective use of - £2.4m
commissioning spend, enabling – Information-gathering and research skills
commissioners to drive changes – Information analysis skills
in care that can reduce the cost
• 8. Promote and specify continuous improvements
of achieving the same (or better)
in quality and outcomes through clinical and
outcome
provider innovation and configuration
• A pilot programme for congestive – Relationship management skills: seek and
hearth failure found interventions maintain networks and relationships that identify
at the same stage of treatment best clinical and service innovation, research
can vary in cost-outcome and knowledge
effectiveness by 3X, with some – Information management skills: seeks and
interventions having NEGATIVE shares knowledge and intelligence with local
mortality effects clinical and service providers
• Case study in Germany showed
• 11. Make sound financial investments to ensure
the use roll-out of evidence-
sustainable development and value for money
based care-pathway improved
– Professional financial management skills
performance versus other
– Business-case modelling skills
hospitals
– Impact and risk assessment skills
– Programme budgeting skills
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2 Expert guidance and development support in prioritised
pathways
Benefits to delivery Financial benefits WCC benefits
2B. Expert commissioning and • Financial benefits not • 4. Lead continuous and meaningful engagement
development support in estimated, since pan-London with clinicians to inform strategy, and drive quality,
prioritised areas of care (not services already exist (LDC), service design and resource utilisation
involving major reconfiguration) and has been mandated by – Clinical relations skills
• Better clinical outcomes through DH priorities on a national
basis • 5. Manage knowledge and undertake robust and
improved care pathways regular needs assessments that establish a full
• Better coordination with other • Nevertheless, … understanding of current and future local health
pan-London functions, i.e., LDC needs and requirements
with HfL programmes – Partnership liaison skills, to ensure a meaningful
• Improved health services through exchange of key data and analysis
implementation of national – Information-gathering and research skills
directives and best practice – Information analysis skills
• 8. Promote and specify continuous improvements
in quality and outcomes through clinical and
provider innovation and configuration
– Relationship management skills: seek and
maintain networks and relationships that identify
best clinical and service innovation, research
and knowledge
– Information management skills: seeks and
shares knowledge and intelligence with local
clinical and service providers
• 11. Make sound financial investments to ensure
sustainable development and value for money
– Professional financial management skills
– Business-case modelling skills
– Impact and risk assessment skills
– Programme budgeting skills
3 Clinical advice and expertise
Benefits to delivery Financial benefits WCC benefits
• Create cohesive clinical leadership • Financial benefits not • 1. Are recognised as the local leader of the NHS
across London estimated, since pan- – Listens to partner NHS organisations and other
London services already providers
• Create consistency across London, exist (CAG) – Signals future priorities of the local NHS
including avoiding the postcode
– Has good presentation and influencing skills
lottery
• Provides robust mechanism for • 2. Work collaboratively with community partners
prioritising regional R&D initiatives to commission services that optimise health gains
and reductions in health inequalities
– Partner relations skills
– Presentation and influencing skills
• 3. Proactively seek and build continuous and
meaningful engagement with the public and
patients, to shape services and improve health
– Proactive listening and communication skills
– Patient and public relations skills
– Presentation and influencing skills
• 4. Lead continuous and meaningful engagement
with clinicians to inform strategy, and drive quality,
service design and resource utilisation
– Clinical relations skills
– Effective presentation and influencing skills of
PEC members
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4 Quality observatory
Benefits to delivery Financial benefits WCC benefits
• Health improvements through fact • Based on the experience of Premier • 8. Promote and specify continuous
based quality metrics Inc in a US pilot and forecasted improvements in quality and
benefits for a subsequent project in outcomes through clinical and
• Ensures quality metrics are NW England, Contracting for Quality provider innovation and
consistently defined and comparable
is expected to achieve direct cost configuration
across PCTs
savings of £13.5m - £16.5m in Year – Information management skills:
• Allows the detection of poor 2, rising to £18m - £22m in Year 3 seek and share knowledge with
performers against peers local clinical and service providers
• Providing once for London is
– Project management skills that
• Provides information necessary for expected to be 50% - 80% cheaper
assist provider organisations in
contract challenges than providing once per sector:
delivering innovative practice
• Facilitates the intelligent choice of – Year 1 avoided costs: £2.1m -
providers, giving robust justification £8.4m • 10. Effectively manage systems and
for service changes work in partnership with providers to
– Year 2 avoided costs: £3.2m -
ensure contract compliance and
£12.8m
continuous improvements in quality
– Year 3 avoided costs: £3.6m - and outcomes
£14.4m – Contract management, including
performance dialogue skills
– Database management
– Root cause analysis skills
5 Health intelligence
Benefits to delivery Financial benefits WCC benefits
• Better needs assessment will lead to • Providing once for London is • 5. Manage knowledge and undertake
more targeted investment decisions expected to be 50% - 80% robust and regular needs assessments
cheaper than providing once that establish a full understanding of
• Improved planning and targeting
per sector: current and future local health needs and
health interventions leading to lower
requirements
disease incidence – Year 1 avoided costs: £2.9m
– Information-gathering and research
- £11.6m
• Provide robust patient parameters to skills, including data quality assurance
facilitate disease management – Year 2 avoided costs: £2.8m – Database management and monitoring
programmes - £11.2m skills
– Information analysis skills (including
• Models will allow to use health – Year 3 avoided costs: £2.9m
predictive modelling)
economic principles to prioritize and - £11.6m
measurably justify initiatives
• 6. Prioritise investment according to local
needs, service requirements and the
values of the NHS
– Prioritisation and decision-making skills
– Programme budget and marginal
analysis capability
• 11. Make sound financial investments to
ensure sustainable development and
value for money
– Professional financial management
skills
– Business-case modelling skills
– Impact and risk assessment skills
– Programme budgeting skills
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6 Public health programme development
Benefits to delivery Financial benefits WCC benefits
• Central coordination of function • Not estimated, since pan- • 2. Work collaboratively with community partners
London services already to commission services that optimise health
• Work better coordinated with other exist (RPHG / NHSL) gains and reductions in health inequalities
pan-London functions
– Development of partnership agreements
• Ability of PCTs to influence the – Partner relations skills
shape and priorities of function – Presentation and influencing skills
• Ensures compliance with national
• 3. Proactively seek and build continuous and
priorities/standards
meaningful engagement with the public and
• Reduction of duplication of patients, to shape services and improve health
campaigns – Proactive listening and communication skills
– Patient and public relations skills
• More consistency and higher quality – Presentation and influencing skills
campaigns
• Centralisation advantages, reaching • 6. Prioritise investment according to local
whole population sets (e.g., pan- needs, service requirements and the values of
London ethnicities) the NHS
– Prioritisation and decision-making skills
• Potentially complementing HfL – Presentation and influencing skills
programmes with appropriated pan-
London health promotion
• 8. Promote and specify continuous
improvements in quality and outcomes through
clinical and provider innovation and
configuration
– Project management skills that assist provider
organisations in delivering innovative practice
– Negotiation and specification skills
– Presentation and influencing skills
7 Social marketing
Benefits to delivery Financial benefits WCC benefits
• Numerous social marketing • The bulk of social • 2. Work collaboratively with community partners to
programmes have shown marketing programme commission services that optimise health gains and
strong improvements in the design and monitoring reductions in health inequalities
effectiveness of interventions costs are completely – Development of partnership agreements
in areas from obesity to scalable – Database management
unnecessary A&E use – Partner relations skills
• Implementation costs
• 3. Proactively seek and build continuous and meaningful
have varying scalability
engagement with the public and patients, to shape services
depending on need for
and improve health
local tailoring
– Proactive listening and communication skills
• Actual benefits will – Patient and public relations skills
depend on the number – Presentation and influencing skills
of programmes per year • 5. Manage knowledge and undertake robust and regular
and have therefore not needs assessments that establish a full understanding of
been included in the current and future local health needs and requirements
Business Case – Information-gathering and research skills, including data
quality assurance
– Database management and monitoring skills
– Information analysis skills (including predictive modelling)
• 6. Prioritise investment according to local needs, service
requirements and the values of the NHS
– Database and knowledge management skills
– Market segmentation
• 8. Promote and specify continuous improvements in quality
and outcomes through clinical and provider innovation and
configuration
– Information management skills
– Project management skills that assist provider
organisations in delivering innovative practice
– Presentation and influencing skills
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8 Claims management and coding review
Benefits to delivery Financial benefits WCC benefits
• Provide fact-base for robust provider • International benchmarks show a • 9. Secure procurement skills that
challenges in contract renegotiations potential recurring gain of 1-3% of ensure robust and viable contracts
total acute cost, which implies the – Stakeholder liaison and
• Incentivises providers to develop following annual savings potential: information sharing
innovative new services, leading to
– Legal and regulatory skills
overall quality improvements – Year 1: £10m - £16m
relevant to tendering and
– Year 2: £25m - £50m contracting
– Negotiation skills
– Year 3: £40m - £80m
– Contract and performance
management
• Providing once for London is • 10. Effectively manage systems and
expected to be 50% - 80% cheaper
work in partnership with providers to
than providing once per sector:
ensure contract compliance and
– Year 1 avoided costs: £5.0m - continuous improvements in quality
£20.0m and outcomes
– Contract management, including
– Year 2 avoided costs: £10.3m -
performance dialogue skills
£41.2m
– Database management
– Year 3 avoided costs: £11.2m - – Root cause analysis skills
£44.8m – Presentation and influencing skills
9 Provider intelligence, contracting negotiation and commercial support
Benefits to delivery Financial benefits WCC benefits
• Provide fact-base for • Financial benefits not • 7. Effectively stimulate the market to meet demand and secure
robust provider included in Business Case required clinical, and health and well-being outcomes
challenges in contract because of potential – Establishing and developing formal and informal relationships with
renegotiations double counting with existing and potential providers
Service Line 8 (Claims – Signalling to current and potential providers their future priorities,
• Dissemination of best-
Management and Coding needs and aspirations
practice and national
Review) – Provision analysis and monitoring skills
guidance across PCTs
– Negotiation skills
• However, some additional
• Reduce re-work in • 8. Promote and specify continuous improvements in quality and
benefits are likely
forming tenders and outcomes through clinical and provider innovation and configuration
(international examples
contract specifications – Information management skills: seeks and shares knowledge and
show 1–2% acute cost
intelligence with local clinical and service providers, including
savings through good
current and potential providers
renegotiations of contracts
– Negotiation and specification skills
on fact base (this would
• 9. Secure procurement skills that ensure robust and viable contracts
result in £50m+ savings)
– Stakeholder liaison and information sharing
– Legal and regulatory skills relevant to tendering and contracting
– Skills in understanding and writing legal, enforceable and fair
contracts and specifications
– Negotiation skills
– Contract and performance management
• 10. Effectively manage systems and work in partnership with
providers to ensure contract compliance and continuous
improvements in quality and outcomes
– Contract management, including performance dialogue skills
– Database management
– Root cause analysis skills
– Presentation and influencing skills
• 11. Make sound financial investments to ensure sustainable
development and value for money
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10 Patient and public information and communication support
Benefits to delivery Financial benefits WCC benefits
• Greater consistency, quality and • Providing once for London is • 2. Work collaboratively with
coordination of communications expected to be 50% - 80% cheaper community partners to commission
between functions/programmes and than providing once per sector: services that optimise health gains
across London and reductions in health inequalities
– Year 1 avoided costs: £1.3m -
– Partner relations skills
£5.2m
– Presentation and influencing skills
– Year 2 avoided costs: £1.6m -
£6.4m • 3. Proactively seek and build
continuous and meaningful
– Year 3 avoided costs: £1.7m -
engagement with the public and
£6.8m
patients, to shape services and
improve health
– Proactive listening and
communication skills
– Patient and public relations skills
– Presentation and influencing skills
11 PCT development
Benefits to delivery Financial benefits WCC benefits
• Function is seen as vital for future • Financial benefits not included in the • 1. Are recognised as the local leader
commissioning provision and will business case, since pan-London of the NHS
need to be developed in any case PCT development services would – Listens to partner NHS
exist without the LCBSA organisations and other providers
• Overall improvements to PCT
– Has good presentation and
performance leading to better
influencing skills
commissioning effectiveness
– Has good organisational
development skills
• 2. Work collaboratively with
community partners to commission
services that optimise health gains
and reductions in health inequalities
– Partner relations skills
– Presentation and influencing skills
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12 Informatics (access to data)
Benefits to delivery Financial benefits WCC benefits
• Ensures consistency of data across • Providing once for London is • 5. Manage knowledge and
London expected to be 50% - 80% cheaper undertake robust and regular needs
than providing once per sector: assessments that establish a full
• Key enabler of many other service
understanding of current and future
lines through provision of a single – Year 1 avoided costs: £1.5m -
local health needs and requirements
source, comprehensive, robust data £6.0m
– Information-gathering and
set
– Year 2 avoided costs: £2.3m - research skills, including data
• LCBSA will bring uniformity and £9.2m quality assurance
consistent appearance and “one – Database management and
– Year 3 avoided costs: £2.4m -
stop” portal for information needs monitoring skills
£9.6m
creating better links across share – Information analysis skills
organisations (including predictive modelling)
• 10. Effectively manage systems and
work in partnership with providers to
ensure contract compliance and
continuous improvements in quality
and outcomes
– Database management
– Root cause analysis skills
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APPENDIX 3. OPTIONAL PRODUCTS
The following exhibit is a set of illustrative example additional products. The actual set of
additional products will evolve over time on the basis of PCT and Sector demand.
Service line Example optional products
Pan-London care pathway and service delivery design • Focused PCT/Sector-specific pathway design or capacity analysis
and implementation support (HfL Programme) • Local support to PCTs on implementation of individual reconfigurations
Expert guidance and developmental support in • Cost-quality curves of care pathway interventions, and opportunity assessment
prioritised pathways • Support to local training development and delivery for key areas of care
• Ad hoc, on demand clinical advice
Clinical advice and engagement
• Quality metrics definition for PCT/Sector-specific services
Quality observatory
• Ad-hoc support to local benchmarking analysis
Health intelligence
• Return on investment modelling of PCT/Sector-specific health promotion initiatives
• Local analysis of PCT/Sector-specific disease priorities
Public health programme development
• Local tailoring of regional public health programmes or support to PCT/Sector-specific
programme development and implementation
Social marketing (strongly linked to Communications • Population analysis or campaign support for PCT/Sector-specific social marketing
and PPI support) programmes
• Claims management for local community services
Claims management and coding review
• ISTC contract management support
Provider intelligence, contracting negotiation support • Local provider-specific analyses.
and commercial advice • Local contract reviews and negotiation support
• Local support for developing PCT/Sector-specific communications strategies
Communications and PPI support
• Expert guidance in local brand and reputation management
• Local diagnostic of priority development areas
PCT development
• Local consulting support focusing on local development opportunities
Informatics (data storage, quality and reporting tools)
• Local informatics assistance to PCTs, e.g. on web portal design and development
• Development of PCT/Sector-specific reports
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APPENDIX 4. PHASING PRIORITISATION CRITERIA
• Will this service strengthen commissioning and help make the step change
Level of impact necessary to make London PCTs World Class Commissioners?
• Will this service lead to improved health outcomes and/or quality of care for
the population of London?
• Will this service add real value and/or make the lives of the PCTs easier in
their day to day work?
• Which services are needed urgently by PCTs, are new, or significantly under-
resourced?
• How quickly can this service be delivered?
Ease of
implementation • Does it exist already elsewhere? i.e. what can be expected to be delivered
early and what new services will take more time
• Are the key inputs readily available?
• How easily will we be able to source the required skills necessary to deliver
this service?
• Who else will delivery depend on (e.g., external partners) and how will this
affect timing?
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APPENDIX 5. BUILD VS. BUY CRITERIA
Choose if Rationale
Requires long • Capability demands long-term relationships and/or
term ownership benefits from institutional knowledge building
Build
Benefits from in- • Capability demands in-house experience (work in a
house experience related role, understanding of org culture, etc.)
What is the Required skills • Adequate skills exist in PCTs or NHS London, represent
most exist already a value proposition to employees and/or may be difficult
appropriate to release/redeploy owing to contract constraints
way to access
Job market does • Difficult to find adequate skills offered by contractors,
shared
not offer skills and quicker/cheaper to build than hirer in
capability?
Do not have • Requires deep expertise in areas where skills are new or
Buy expertise, and scarce within the NHS
difficult to build • Complex workforce arrangements make it difficult to build
• Benefits from bringing in an external perspective and
newest thinking/technologies
Urgent need • Degree of pressure for quick results
• Capability gap is large, and there are large benefits to
filling immediately
Demand highly • Requires flexible and/or short term resources with
variable capabilities that don’t otherwise exist in the organisation
Fixed cost is high • Little willingness for upfront investment
• Requires significant investment in proprietary tools and
technology which already exist outside the NHS
Source: Team analysis
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APPENDIX 6. BENEFITS EXAMPLES
Outcome and cost benefits
A number of national and international examples of shared expert services provide strong evidence
of improved outcomes and reduced cost of provision. Commercial support in coding review alone
suggests potential annual savings that would more than cover the total cost of the LCBSA.
Moreover, examples of similar public health related support suggests significant benefits to health
outcomes (and large long-run cost savings).
Examples of cost and quality benefits to be expected from LCBSA services
ILLUSTRATIVE
Example Description Benefit
Claims management • Invoice reconciliation and coding reviews • Achieved recurring multi-million cost
support: across 17 PCTs using SUS data savings in first two years of operation
West Midlands CBSA • International examples show a potential
commercial support recurring gain of 1-3% of total cost, which
would imply annual savings potential of
£50-150m a year
• ‘Disease management’ programmes were • Hospital cases decreased by 18%
Health intelligence: introduced by AOK to improve pathway
AOK (Germany) disease
• Hospital costs decreased by 20%
design and educate patients
management • Amputations decreased by 46%
• A shared service centre was established to
centralise expertise and ensure best
practices
Social marketing: • Multi-partner, multi-pronged social • Performance 2006/07:
West Scotland marketing strategy – WoS project cost £1.3m
awareness project (oral • Used detailed insights into consumer – Campaign caught 41 oral cancer cases
cancer) behaviour and understanding to leverage earlier
change and improve health outcomes
– 27 lives saved through campaigns
across large region
– Savings realised £695,000 in cost of
treatment
Delivery model effectiveness benefits
A set of London-specific case studies also highlight the considerable gains to be had from providing
proposed services through a pan-London organisation such as the LCBSA. Rough estimates based
on deep-dive interviews, benchmarking, and PCT/NHSL assessments suggest that across the
Communications, Health Intelligence and Claims Management services at least ~£12.5m (and
potentially >£31m) per year can be saved by provision of service once across London through the
LCBSA.
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Examples of the greater effectiveness of LCBSA pan-London provision
ILLUSTRATIVE
Example Description Benefit
Care pathway design • Pilot project experience suggests that • The LCBSA will provide such guidelines for
and capacity planning: developing clinically-driven quality all 31 PCTs, allowing for ~10 high-priority
Commissioning for parameters for commissioners requires pathways covered each year with a team
clinical quality ~1.5-2.0 WTEs per pathway of 15-20 WTEs
• Doing this separately in each PCT would
require having the same size resource
31 times
• Health Intelligence functions currently • The LCBSA could potentially provide WCC
Health intelligence: provided at PCT level would need to be Health Intelligence standards for all PCTs
Provision of WCC-level increased by at least ~3-5 WTEs to reach with ~30-50 WTEs
Health Intelligence WCC standards** • Saving potential of £3-9m* while providing
• Hence PCTs would need to add WCC level PH
90-150 WTEs
• One PCT outsourcing claims management • Provision (build or buy) once across London
Claims management: has following costs: should cost ~50% less than total implied by
Outsourced by an separate provision, saving ~£6m per year
individual PCT – £0.4m base
– £0.6m performance related • A 50% reduction in performance-related fee
(~27% of achieved savings would save an additional £9m
– ~2 WTEs doing data validation
• Total cost across all PCTs ~£31m
* Assuming £75k full weighted cost
** Guideline determined through interviews with PCT managers, and a spread analysis of current PH resourcing across PCTs
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APPENDIX 7: LESSONS LEARNT FROM PAST EXPERIENCE
The LCBSA programme team took every opportunity to learn from the experiences of existing
shared support organisations, both in London (see above), nationally and internationally. In London,
particular emphasis was placed on understanding the experiences of CSS, HfL, LHO and LDC.
Nationally, the Greater Manchester CBS and West Midlands CBSA were analysed in detail, and the
South East England Public Health Observatory was also reviewed. Internationally, public and
private sector examples of shared services were reviewed from Europe and the USA. Full details
can be found below.
Overall, five key lessons emerged. First, shared support should be established only where there are
clear advantages to providing services once rather than multiple times. Second, services must be
well specified and deliverables clearly defined to ensure they meet commissioners’ needs. Third, a
business partnership approach is essential to ensure that the shared support becomes an integral part
of the way commissioners work, rather than a separate and distinct entity. Fourth, full buy-in and
engagement from PCTs as intelligent clients is essential to ensure that services are developed and
delivered to scale and on time. Finally, shared support organisations should be fully accountable to
PCTs to ensure adequate performance incentives and review mechanisms.
The review of existing cases and the key learnings are summarised in the two figures below
Review of existing cases
Existing pan- • Detailed reviews of all relevant existing pan-London shared services entities, including in-depth
London interviews and workshops, to understand their key learnings of running shared service organisations,
shared focusing on key success factors, issues and root causes
services – In-depth interviews with heads of all relevant entities (~20)
– Particular focus on CSS, HfL, LHO and LDC, with multiple detailed interviews and workshops with
senior managers in all key areas (e.g. finance, IT, operations), as part of an iterative process to ensure
the LCBSA is able to build on their success to date and address issues going forward
– Additional detailed diagnostic work on CSS, building on the review conducted by Bexley PCT and
including work by external IT specialists, to identify ways to improve its services through the LCBSA
– Detailed business plan and budget reviews of founding entities to identify WTE, funding and activity
implications of integration with the LCBSA
Existing • Multiple in-depth interviews with the Greater Manchester CBS and West Midlands CBSA to understand
national their experience to date and key decisions they took
shared service
– Initial interviews to understand overall service offering, delivery/deployment model and start-up
organisations development process
– Follow up discussions focusing on organisation design, funding (mechanisms and budgets) and
governance structure
• Review of South East England Public Health Observatory to understand organisational and governance
implications of locating a public health observatory within a larger organisation
National and • Reviews of relevant national and international examples from Europe and the USA
international – Detailed discussions with commissioning support organisations from Europe and the USA (e.g. AOK,
examples Bell Pottinger, Humana, Kaiser Permanente, MDK), focusing on product offerings, delivery models and
outsourcing potential
– Product demonstrations from commissioning support organisations
– Interviews with healthcare industry experts from Germany, Scandinavia and the USA focusing on
different delivery models for commissioning support services (e.g. rationale for building or buying,
breadth of services offered)
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Key learnings and LCBSA implications
Learning Description LCBSA implications
• Mixed past experience of shared service • The LCBSA must be based on a solid,
Clear advantages to organisations means PCTs will not buy into compelling benefits case that PCTs
providing services new ones unless there are clear benefits to believe in
once across London doing so • This must be backed up by regular
performance reviews
Well specified • Detailed scoping of services in close • The LCBSA must work closely with PCTs
services to meet partnership with commissioners is essential during design and implementation phases
commissioners’ to ensure products are wanted, usable and to develop detailed product specifications
needs will deliver real value and test them fully
• Shared services organisations must • The LCBSA deployment model must link
Business become an integral element of daily closely with PCTs and Sectors through
partnership commissioning activities, with close day to ‘business partners’, secondments and other
approach day links to ‘on the ground’ commissioners similar mechanisms
• PCTs must buy in fully to shared service • The LCBSA business case must be based
Full buy-in from organisations, and commit to devoting the on a realistic minimum scale to ensure
PCTs necessary resources to developing services success
at an adequate scale • PCTs must agree to committing time and
expertise during design and implementation
• Shared service organisations must be fully • A robust performance management
Full accountability accountable to PCTs to ensure that they framework needs to be in place for the
to PCTs deliver fully on their promises LCBSA to ensure performance monitoring
and specify actions to be taken in the case
of under-delivery
National examples of shared service organisations
N.B. Many of these case studies focus on organisations established prior to World Class
Commissioning and with significantly smaller scale and scope than LCBSA. Nonetheless they
provide useful reference points for the LCBSA programme.
Greater Manchester Central Business Service (CBS)
Established by the 10 Greater Manchester PCTs in 2007 to accelerate the development of
commissioning
Serves the founding PCTs, plus other NHS and private sector organisations, with a significant
commercial focus to its business model. Founder PCTs are equity owners, and therefore have
profit earning potential
Employs c.50 WTEs across 4 service lines: Intelligence (25), clinical review (7), procurement
(10) and contracting/performance management. (8)
Key services are contract performance management and benchmarking commissioning
performance
Overall income in 2008-09 was £3.1m, comprising £1.8m core funding split equitably across the
10 founding PCTs; and £1.3m chargeable income. From 2009-10, funding will become entirely
bespoke for individual PCTs, depending on their service requirements
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West Midlands Commissioning Business Support Agency (CBSA)
Providing commissioning support to 17 PCTs in the West Midlands since April 2007
Set-up costs of ~£1m paid for by the SHA
£3m budget in 2008-09, generated by population weighted subscription (although will be
based on recurrent resources at PCTs because this better reflects morbidity and age)
c. 50 WTEs split across 3 teams: data warehouse (12), account management (30),
commissioning intelligence (~8)
Data warehouse
Sollis-based system, supported by a combination of technical and business analysts and
systems developers
As well as running the system, handles complex SQL analysis
Uses primarily SUS data (doesn’t bother with the missing data – 80/20 rule) which it has to
clean significantly (remove duplicates, etc.) before it can be used
Contract recently signed with Bupa to provide a ‘risk stratification’ tool that will sit on top
of the data warehouse
Account management
~20 account managers and 10 analysts spread across 19 general and acute trusts (broadly
speaking there is one account manager per trust); organised into ‘virtual’ clusters across 3
trusts (1 senior account manager, 2 account managers, 1 analyst)
Account managers are based in PCTs and work alongside senior contract management staff
in PCTs: ‘One of the harsh lessons we learnt is that CBSA doesn’t exist if there isn’t an
account manager locally’
Manage the relationship with PCTs and trusts, especially around agreeing monthly payments,
e.g. reconciliation, identification of issues, brokering agreements. Responsibility varies by
PCT: in some PCTs account managers will handle most of the process including provider
meetings and negotiations
High staff turnover: some poached by PCTs; others see the role as a stepping stone from the
private sector into the NHS and proactively move
Commissioning intelligence
Ad-hoc Excel and Access data analysis
Knowledge creation including publishing papers (e.g. Outpatient Procedure Coding)
Not core to CBSA but a valuable initiative in terms of raising visibility
International examples of shared service organisations
Humana
Humana is a health insurance organisation, marketing and administering health benefit consumer
services
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Humana has been hailed as leading the health benefits industry into a new world in which
the focus will shift from employers, doctors and hospitals to consumers
The Centre for Health Metrics is part of Humana’s formal innovation centre, Clinical
Leadership and Innovation: “We sit on an amazing amount of information about consumer
behaviour in the health sector, and we plan to use it to better understand our customers,
better understand our performance, and create new services and services to meet our
customers’ needs”
Humana analyses patterns of incidence/activity that allows them to predict potential increases,
and do something to reduce them
Run scenarios to identify not only health trend for an individual but also which services they
may choose and how they will use it
Routinely reviews industries/sectors to enhance its consumer research process
Developed an “Innovations Centre” within its consumer research division that is focused on
developing mathematical/statistical models that help identify business opportunities
Case study: Actuarial skills and predictive modelling to
inform service design and strategic investments
Background Solution Impact
Accurately predicting future Predictive modelling uses Predictive modelling tools allow
healthcare risks and costs is a actuarial techniques to PCTs to move from reactive to
well recognised challenge for improve accuracy of proactive commissioning
commissioners predictions
Predicting future trends and
Traditional approaches are Large volumes of patient data risks will enable PCTs to focus
frequently too slow or too late are analysed to identify links their budgets on key outcomes,
to maximise the intended between variables (e.g., less and to design services
impact of interventions smoking leads to longer life accordingly
expectancies; which in turn
Humana established the lead to increased Alzheimer’s) Patient care, hospital
Centre for Health Metrics to admissions and costs will
drive innovation in predictive Changes in treatments can be improve accordingly
modelling as part of its analysed in the same way to
innovation Clinical Leadership assess their impact
and Innovation
Source: McKinsey
AOK
AOK is Germany’s biggest health insurance organisation providing care for roughly 26m people
15 regional AOKs serve approximately 2m people each and are split into regional units and
shared service units
There is a strict payor-provider split
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The current organisation has evolved from sub-scale independent local payors serving
~40,000 people each
Reform was undertaken to achieve economies of scope and scale through consolidating payors
and establishing a central shared service centre
Shared services are split into “central services” (e.g. IT, HR and Legal support) and
“healthcare services” (e.g. inpatient, pharmaceuticals, auxiliary aids purchasing)
Big improvements in efficiencies and effectiveness have been achieved
At a federal level, AOK Consult provides analytics (e.g. benchmark databases and
consulting services to AOKs)
Specific examples of the level of quality improvements, cost savings and efficiency gains
include:
Increased scale allows AOKs to focus on influencing pharmaceutical prescribing behaviour
Centralising claims processing leads to higher efficiency and effectiveness: typically an
increase in deductions from 1% to 2%
Synergies can be realised trough bundling of competence and specialisation (e.g. hospitals
bills processing and hospital negotiation)
Good negotiation achieves sound resource allocation and specialisation as well 1 - 2% cost
decrease
Case study: Care pathway design and disease management to
ensure optimal treatment and prevention at all stages
Background Solution Impact
Management of long-term A shared service centre was
conditions in Germany was established to centralise Before After
identified as being ineffective expertise and ensure best
and costly practices were used Subscription
1.418
rates
2.338
(monthly)
‘Disease management’ A highly skilled, cross
programmes were introduced by functional team provided the +65%
AOK to improve care pathway following services:
design and educate – Comprehensive patient Hospital 621
beneficiaries cases* 511
database
– Enrolment incentive systems
Programmes were originally -18%
organised regionally, but – Intervention campaigns
suffered from poor performance – Centralised mass mailings Hospital 1.700
cost* 1.354
(e.g., only 30% of diabetics – Expert support for local
registered) implementation
-20%
6.9
Amputations*
3.7
-46%
* Average per 1,000 beneficiaries
Source: McKinsey
Kaiser Permanente
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Kaiser Permanente is America’s largest not for profit health care organisation
There are three organisations within the group – Kaiser Foundation Health Plans, Kaiser
Foundation hospitals and Permanente Medical Group
Kaiser Permanete’s Care Management Institute (CMI), created in 1997, is an institution with
a mandate to drive, fund, and catalyze care management activities throughout KP
Kaiser’s Care Management Institute (CMI) is an outcome improvement initiative designed
to combine evidence-based clinical guidelines, coordinated care, and epidemiological
research with IT to improve the overall health of its members
It is a collaboration of Kaiser Foundation Health Plan and the Permanente Medical Groups
CMI’s physician staff are members of The Federation, representing the Medical Groups,
and its non-physician staff are Health Plan employees
CMI’s board of Directors is composed of senior leaders from both Health Plan and the
Permanente Medical Groups
CMI designs and carries out nationwide outcome studies
Leveraging the vast patient data from the network, CMI identifies successful clinical practices,
develop innovations and promotes their implementation (e.g., evidence-based guidelines, innovative
population care management programmes)
CASE-STUDY IN CLINICAL EXPERTISE POOLS: KAISER
PERMANENTE AND COLLABORATIVE PARTNER MGT
Background What is distinctive Key benefits
• Kaiser Permanente is • CMI draws its strength from the unified efforts of • Stronger clinical
America’s largest not for Kaiser Foundation Health Plan and the expertise links between
profit health care Permanente Medical Groups PCT commissioners
organisation • Kaiser’s Care Management Institute (CMI) is an and provider clinicians
• There are three outcome improvement initiative designed to could drive further
organisations within the combine evidence-based clinical guidelines, development and
group – Kaiser Foundation coordinated care, and epidemiological research implementation of
Health Plans, Kaiser with IT to improve the overall health of its members successful and
Foundation hospitals and innovative clinical
• It is a collaboration of Kaiser Foundation Health practices
Permanente Medical Plan and the Permanente Medical Groups
Group
– CMI’s physician staff are members of The
• Kaiser Permanete’s Care Federation, representing the Medical Groups,
Management Institute and its non-physician staff are Health Plan
(CMI), created in 1997, is employees
an institution with a
mandate to drive, fund, – CMI’s board of Directors is composed of senior
and catalyze care leaders from both Health Plan and the
management activities Permanente Medical Groups
throughout KP • CMI designs and carries out nationwide outcome
studies
• Leveraging the vast patient data from the network,
CMI identifies successful clinical practices, develop
innovations and promotes their implementation
(e.g., evidence-based guidelines, innovative
population care management programmes)
COMMERCIAL-IN-CONFIDENCE 90
Confidential LCBSA Full Business Case 1 December 2008
Other case studies
North West England has allied with Premier Health Care
Services to launch its Advancing Quality programme
Premier’s U.S Hospital Quality Incentive North West England Advancing Quality
Demonstration Program Programme
• Premier has piloted a two-year “pay for • The North West England PCTs have launched
performance” programme with 250 U.S. the Advancing Quality Programme which will
hospital to improve care quality through include more than 30 care sites
positive incentives
• Initial focus is on 5 areas of healthcare
• Results suggest that participating hospitals important across the North West: heart
have raised overall quality by 11.8% based attacks, pneumonia, heart failure, hip and
on their delivery of 30 standardized quality knee replacement and heart-by-pass
measures in five clinical areas
• The PCTs have set aside £7.1m for the first
• Improvements in quality of care saved an full year of the programme, with ~£5m going
estimated 1,284 heart attack patients, toward performance incentives
according to an analysis of mortality rates at
hospitals participating
• Potential benefits estimated at 141 saved lives,
159 complications and 248 re-admissions
• Patients also received recommended avoided, and ~£17m in costs eliminated,
evidence-based clinical quality measures, primarily from hospital days avoided
such as smoking cessation counselling,
discharge instruction, etc.
• The SHA has allocated a designated resource
to ensure successful implementation; It is
• Average cost improvement per patient across proposed that local health economies will take
all clinical areas in US studies is estimated at ownership of Advancing Quality once the core
$1,063 systems and processes are established
Source: Pressing clippings
Case study: Social marketing for behavioral change where a NHS
PCT has demonstrated clear success in improving smoker quit rates
Background Solution Impact
• A preventative approach to A major multi-partner, multi- A step-change increase
healthcare is recognised as pronged social marketing occurred in the borough’s
having significant benefits in strategy smoking cessation rates
reducing health inequalities Gathered insight into consumer Performance 2007/08:
• One of the most most behaviour, and designed
– First quarter – 174%
deprived boroughs in England, intervention approach
increase in quitters on the
is experiencing profound accordingly
previous year
health inequalities across its Research showed a need for a
population – Second quarter – the
friendly, non-judgemental
equivalent of of 1,179
• The biggest single cause of ill- service, easy, close to home,
quitters per 100,000
health in the borough is run by ‘people like us’.
population, demonstrating
smoking Developed programme to 194% more quitters than
• Over half of the adults smoke implement service and set average performance
- twice the national average goals & campaign with friendly, nationally
positive imagery
• If any impact is to be made to
reduce health inequalities, Doubled access to
smoking must be reduced programmes, with a target-
significantly. group approach
Immersed staff in communities
to ensure proper
implementation
Source: McKinsey
COMMERCIAL-IN-CONFIDENCE 91
Confidential LCBSA Full Business Case 1 December 2008
APPENDIX 8: IT DEVELOPMENT BUDGET
The LCBSA’s IT development needs are estimated at £1.5m for each phase (N.B. this has been
allocated across the major cost areas in Figure 10). This needs assessment was fleshed out through
interviews with IT experts and in–depth analysis of three critical dimensions, carried out for each
service line. Each dimension is described in more detail, below:
1. Data availability
Diagnostic was carried out of the readiness and availability of data and its ease of incorporation into
the data warehouse (e.g. good reporting by providers, consistent database formats). This took into
account the need for data cleansing depending on the current quality of data (i.e. consistency,
completeness etc).
Significant data gaps were identified around provider and quality metrics (service lines 3 and 7). We
estimate that an additional investment of approximately £0.5m - £1.5m will be required over three
years. The main work will focus on preparing and validating performance and quality data (e.g.
mental health and primary care data) that is to be included in the data-warehouse.
2: System requirements
This includes server infrastructure, software licensing and front- and back-end tool development.
Four service lines will need considerable IT development: service line 1 (Capacity Planning), service
line 3 (Quality Observatory and Quality Metrics), service line 4 (Health Intelligence and Predictive
Modelling) and service line 7 (Commercial Provider Intelligence).
Additional system requirements were estimated at approximately £3m - £4m over the next three
years. The additional requirements include:
Further server capacity to be added to CSS’s existing system in order to accommodate a much
larger organisation with larger data needs
Software and licensing fees (e.g., Business Intelligence software, financial modelling tools)
Tool development, especially for health intelligence functions and the Quality Observatory
3: Capabilities
Estimation of the capabilities needed to develop underlying models and tools. This resulted in
additional analysts being added to the service lines.
Overall capabilities for the four services were built into the WTE estimates of the overall budget.
The current WTE estimates include strong analyst support for all four service lines, with 2-3
dedicated analysts on average.
COMMERCIAL-IN-CONFIDENCE 92
Confidential LCBSA Full Business Case 1 December 2008
APPENDIX 9. GLOSSARY OF ACRONYMS (GOA)
APHO Association of Public Health Observatories
CE Chief Executive
CSIP Care Services Improvement Partnership
CSS Commissioning Support Services
DH Department of Health
GOA Glossary of Acronyms
GP General Practitioner
HfL Healthcare for London
HQID Hospital Quality Incentive Demonstration
HR Human Resources
IT Information Technology
LCBSA London Clinical and Business Support Agency
LCNDG London Cancer New Drugs Group
LDC London Development Centre
LHO London Health Observatory
LNDG London New Drugs Group
LPP London Procurement Programme
LSCG London Specialist Commissioning Group
LSMU London Social Marketing Unit
MD Medical Director
NHSL National Health Service London
NICE National Institute of health and Clinical Excellence
NSR Next Stage Review
PCC Primary Care Contracting
PCT Primary Care Trust
PH Public Health
ROI Return on Investment
SHA Strategic Health Authority
SLA Service Level Agreement
TUPE Transfer of Undertakings (Protection of Employment)
WCC World Class Commissioning
WTE Whole Time Equivalent
COMMERCIAL-IN-CONFIDENCE 93
Agenda Item No: 6.2
Trust Board Meeting
Date: 16 December 2008
NHS Havering
Establishment Agreement for London Specialised
Commissioning Group
PURPOSE OF REPORT:
To approve the revised Establishment Agreement for the London
Specialised Commissioning Group as a joint committee of the
Boards of the 31 Primary Care Trusts in London.
FIT WITH OPERATIONAL PLAN:
SUMMARY:
London PCT’s agreed an interim Establishment Agreement for the
London SCG between May and September 2007, pending
completion of the London review of the commissioning of
specialised services, following which a final Establishment
Agreement would be brought back to Boards for agreement.
The review of specialised services commissioning in London
reported in early 2008 and after consultation through Collaborative
commissioning Groups, the London Commissioning Group
confirmed agreement of a number of the review recommendations.
IMPACT:
• Assurance Framework - Will enable collective decisions to
review, plan, procure and performance monitor services.
• Health Impact Assessment – Consistent commissioning for all
London residents will enable improved outcomes for patients.
• Financial Costs – Each PCT to contribute to the costs of
running LSCG and costs incurred by the ‘host’, Croydon PCT on
our behalf. PCT’s are committed to the impact of any future
transitional costs.
• HR – Part of the development requires a 5 year plan to look at
HR and accommodation.
• Estates - Part of the development requires a 5 year plan to look
at HR and accommodation.
• Legal – London SCG is established as a joint committee of each
PCT Board in accordance with Regulations 9 and 10 of the NHS
Regulations 2002.
• ICT – No known impact.
ACTION OR RECOMMENDATION REQUIRED:
NHS Havering is asked to support the revised Establishment
Agreement.
Phillip Ainsworth
Director of Health Care Procurement and Performance
ESTABLISHMENT AGREEMENT
FOR
LONDON SPECIALISED COMMISSIONING GROUP
1. Introduction
1.1 The London Specialised Commissioning Group (London SCG) is a committee
comprising representatives of the following 31 Primary Care Trusts (PCTs), hereafter
referred to as ‘Members’:
Barking and Dagenham Barnet
Bexley Care Trust Brent Teaching
Bromley Camden
City and Hackney Teaching Croydon
Ealing Enfield
Greenwich Teaching Hammersmith and Fulham
Haringey Teaching Harrow
Havering Hillingdon
Hounslow Islington
Kensington and Chelsea Kingston
Lambeth Lewisham
Newham Redbridge
Richmond and Twickenham Southwark
Sutton and Merton Tower Hamlets
Waltham Forest Wandsworth Teaching
Westminster
1.2 The London SCG is established as a joint committee of each of the Boards of
Members in accordance with Regulations 9 and 10 of the National Health Service
(Functions of Strategic Health Authorities and Primary Care Trusts and Administrative
Arrangements) (England) Regulations 2002.
The members therefore acknowledge that the London SCG is subject to any
directions, which may be made by the London Strategic Health Authority or by the
Secretary of State.
2. Functions of the Specialised Commissioning Group
2.1 The London SCG has been established in accordance with the above regulations to
enable the Members to make collective decisions on the review, planning,
procurement and performance monitoring of agreed services, these include
Specialised Services as set out in the Specialised Services National Definitions Set
(2002) or any revision thereto as well as any other service as agreed by the
Members, commissioned on behalf of the relevant populations of the Members and
set out in Appendix 1 of this agreement. Services commissioned nationally by the
National Commissioning Group are excluded from this Agreement.
2.2 The functions of the London SCG are undertaken in the context where NHS
commissioning is increasingly focussed on developing care standards and the quality
assurance of provider services.
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2.3 The London SCG sits within the London Commissioning Model, working with the
London Commissioning Group and Collaborative Commissioning Groups to improve
health and reduce inequalities through effective commissioning. The London SCG
reports to the London Commissioning Group.
2.4 The London SCG will undertake the following functions:-
to plan, including needs assessment, procure and performance monitor
Specialised Services, and other services as defined and agreed by Members, to
meet the health needs of Members’ populations;
to undertake reviews of Specialised Services and other agreed services, manage
the introduction of new services, drugs and technologies and oversee the
implementation of NICE and/or other National guidance or standards relating to
Specialised Services and other agreed services;
to designate providers to ensure that Specialised Services and other agreed
services are provided to the highest clinical standard, represent value for money
and are accessible to everyone that needs them and to avoid unplanned, unsafe
proliferation of specialised services provision;
to coordinate a common approach to the commissioning of Specialised Services
and other agreed services from providers in the London SCG area and
elsewhere;
to manage the budget (pooled from PCT allocations) for commissioning
Specialised Services and other agreed services, be held accountable for its use,
and develop financial risk sharing arrangements;
to develop, negotiate, agree, maintain and monitor service level agreements/
contracts for Specialised Services and other agreed services from providers in the
London SCG area and elsewhere;
to develop the most appropriate ways of engaging patients and the public in the
work of the London SCG;
to monitor and fund the costs of non-contractual activity (NCA) for those services
agreed by Members;
to provide a coordinated Specialised Services Commissioning input to clinical
networks, local commissioning groups/fora and partnerships, and coordinate
service development plans with PCTs and their practice-based commissioners in
the London SCG area;
to maintain close links with PCTs and providers, and other statutory authorities,
including those within the criminal justice system, in the London SCG area;
to work closely with Collaborative Commissioning Groups (CCGs) in London with
regard to the commissioning of specialised services;
to work in partnership with other SCGs and act as lead commissioner on behalf of
other SCGs where agreed by those SCGs and their PCTs;
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to be a member of the National Specialised Services Commissioning Group
(NSCG) and take account of its decisions.
3. Principles upon with the London SCG is based:
3.1 The London SCG will support Member PCTs in striving to reduce the inequalities in
access to and delivery of services for the populations the Member PCTs serve.
3.2 The London SCG will seek to share skills, knowledge and/or appropriate resources
for the benefit of the total population served.
3.3 The London SCG will utilise the funds made available to it by Members to
commission agreed services and support its management costs in a transparent and
cost effective way, ensuring that the financial risks to individual Members of
unforeseen/unplanned activity are minimised.
3.4 Commitments made by the London SCG, its collaborative commissioning consortia
and by London SCG representatives acting on behalf of the London SCG under
agreed terms of reference/management protocols, will be binding on all Members
until the London SCG agrees otherwise.
3.5 The London SCG will review, plan, develop and monitor the agreed services in
partnership with clinicians, providers and service users.
3.6 The London SCG will maintain close working links with service providers, clinical
networks and other commissioners or commissioning groups, fora and partnerships.
3.7 A standard facilitation/arbitration procedure will apply when disputes between
Members arise.
3.8 The London SCG and the collective work of the PCTs will be subject to performance
management arrangements by the SHA (NHS London)
4. Membership of the London SCG
4.1 In addition to the Chair, each Member will be represented on the London SCG by the
nominated PCT CEO lead for specialised services commissioning for their sector
based CCG (5 in London). In the absence of the nominated representative, an
alternative Chief Executive from the CCG may attend.
4.2 The London SCG will meet 5 to 6 times per annum and the quorum for a meeting will
be 4 out of the 5 representatives of members.
4.3 In attendance at the meetings of the London SCG in a non-voting capacity, will be:
SCG Management Team
PPE representatives
Representatives of other organisations may attend with the agreement of the
Chair
4.4 If any Member PCT becomes aware of any conflict of interest which has or is likely to
have an adverse effect on the London SCG decision (acting reasonably), this shall be
declared to other Member PCTs and they shall take such action under this
Agreement as is deemed necessary.
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4.5 When the meeting is considering a confidential matter, non Members may be asked
to leave the meeting at the discretion of the London SCG Chair.
4.6 The meetings will be chaired by the Chief Executive of the Host PCT, and in the
absence of the Chair by a designated deputy. The Chief Operating Officer of the
London SCG’s Specialised Services Commissioning Team (henceforth known as the
London SCG Chief Officer) will act as Secretary to the meeting.
5. Conduct of the Meetings and Delegations of Business
5.1 The London SCG Chief Officer as Secretary to the London SCG will be responsible
for giving notice of the London SCG meetings, such notice (which will be
accompanied by an agenda and supporting papers) shall be sent to Member
representatives no later than 7 days before the date of the meeting. When the
Chairman shall deem it necessary in the light of urgent circumstances to call a
meeting at short notice, the notice period shall be such as he/she shall specify.
5.2 The London SCG’s aim is to always achieve collective decision making in a
collaborative manner through consensus. The London SCG will have a collective
responsibility to try to resolve and minimise any local challenges or any
disproportionate impact of regional decisions on any one PCT or CCG.
If the London SCG do need to take a formal vote on any issue, the majority of the
voting members in attendance will apply. Any change to this Agreement shall require
a unanimous decision of the Membership.
5.3 The London SCG may delegate tasks to such individuals, sub-committees or
individual Members, as it shall see fit provided that any such delegations are
recorded in a Scheme of Delegation and are governed by terms of reference.
5.4 The London SCG may also delegate commissioning responsibility, including
procurement, to another London SCG and/or commissioner, as it shall see fit
provided that any such delegation is recorded in a Scheme of Delegation.
5.5 Minutes of each meeting of the London SCG or any sub-committees shall be
circulated with the agenda for the next meeting and their approval shall be considered
as an agenda item.
6. Accountability of the London SCG
6.1 A) At SCG Level
Each Primary Care Trust is accountable through its statutory responsibilities to use its
resources to improve the health of its population. For a number of services, this can
only be achieved by working with other PCTs. This London SCG is established on
this basis of a shared approach to commissioning.
6.1.1 The London SCG is a joint committee of each of the Boards of the Members and the
Member representatives can: -
commit resources within delegated responsibilities and agreed resource limits;
decide commissioning policy;
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commission research / reviews to inform decisions;
agree, review and update action plans;
act as an agent for the London SCG;
commission and monitor service level agreements /contracts between Members
and between the London SCG and other service providers.
6.1.2 Each Member’s representative on the London SCG will be able to commit resources
on behalf of their Member within the limits set out in their own Standing Financial
Instructions. By signing this Agreement each of the Members confirms that its
Standing Financial Instructions and Standing Orders are consistent with this
Agreement and empowers their representative to commit resources.
6.1.3 For the avoidance of doubt, in the event of any conflict between the terms of this
Agreement and the Standing Orders or Standing Financial Instructions of any of the
Members, the latter will prevail.
6.1.4 In order to ensure that time is allowed for a Member’s representative to consult within
their own PCT and with other key stakeholders, wherever possible, adequate notice
will be given of proposals to change commissioning policies, commit resources and/or
enter into service agreements and contracts.
6.2 B) At Pan-SCG Level
In order to discharge its duties on behalf of Members, the London SCG will be
responsible for representing Members’ interests in commissioning specialised
services, or other services as agreed by the London SCG, that span a number of
SHA areas and/or require a national commissioning approach. Such responsibility
will be discharged through service specific groups/networks agreed by the London
SCG in conjunction with other SCGs and/or through the National Specialised
Services Commissioning Group (NSCG).
6.2.1 A nominated Member representative of the London SCG or officer from the
Specialised Services Commissioning Team will be delegated to represent the London
SCG and ensure that the London SCG’s views are properly taken into account in
reaching a decision at pan-London SCG or NSCG level.
6.2.2 London SCGs will take into account decisions taken at pan-London SCG or NSCG
level.
6.2.3 London SCGs will be given adequate notice regarding any issues which entail
decision-making at pan-London SCG or NSCG level meetings.
7. Funding Arrangements
7.1 Each Member will contribute an annual subscription to the London SCG, based on
the London SCG’s commissioning portfolio of services and the management costs of
supporting such commissioning. Subscriptions are to be paid on a monthly basis
before the end of each month and no later than the 16th day of the relevant month.
Members indemnify the host PCT from any financial liability arising from the hosting
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of this service with the host's liability limited to its share of the portfolio of services and
management costs as per any other member.
7.2 The baseline subscription value for (2008/9) is as per the schedule in Appendix 2.
The subscriptions include both the cost of the services commissioned by the London
SCG and the management costs of the London SCG.
7.3 Adjustments to the subscriptions may be required for the following reasons:
to reflect annual inflationary and other generic and service specific cost pressures
(e.g. NICE guidance, Working Time Directives, etc);
in-year over or under performance against provider service agreements/contracts;
agreed changes to the London SCG commissioning portfolio or the portfolio of
service providers covered by the subscription arrangements and agreed
investments to support service improvements, developments or other changes
reflected in the Operating Plans of each PCT;
changes in PCT cash limited allocations that affect the services covered by these
subscription arrangements;
national or local initiatives which impact upon the services covered by the
subscription arrangements;
other technical changes.
7.4 It is recognised that the London SCG operates these services within a risk-sharing,
Host PCT arrangement to ensure that the budget is in financial balance at the year-
end and that no financial liability, risk or benefit resides with the Host PCT.
Therefore, any net under-spend against the London SCG budget will need to be
returned to members and any net over-spend will need to be funded by Members on
the basis of agreed shares.
7.5 Notwithstanding the provisions within 7.4, the London SCG will endeavour to manage
the totality of the subscription, the shared or pooled budget, within an agreed financial
plan, any changes to the plan, and therefore the subscription, which may be required
during the financial year, will be submitted to the London SCG for consultation prior to
agreement at the London SCG. Changes will be made using agreed methodologies
that support the principles of appropriate risk sharing and equity between Members.
7.6 All services included in the subscription arrangements, will be operated as a pool
resource within each service specific consortia until such time as the London SCG
can operate a pooled resource equitably for all services and members (i.e. with over
performances on one contract/service level agreement offset by under performances
on others). Until then, adjustments for over and or under performance will be made
only on the consortia specific budgets. Any alternative methodology will only be used
following approval by the London SCG.
7.7 The commissioning portfolio of the London SCG as specified in this Agreement in
Appendix 1 will only be changed following a revision to the Specialised Services
National Definitions Set (2002) or by the agreement of London SCG and any such
changes will be applied to all Members.
8. Procurement of Agreed Services
8.1 The London SCG will determine which services/products should be procured, (these
will be known as the agreed services and will be included in the list of services set out
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in Appendix 1) and from which provider(s) and advise the Specialised Services
Commissioning Team accordingly.
8.2 The providers of agreed services may be:
NHS Foundation Trusts (NHSFT);
NHS Trusts;
Other NHS Bodies;
Local Government Authorities and agencies;
Independent sector providers or suppliers;
Charities and voluntary sector providers
Social Enterprises
8.3 The providers of agreed services may not be restricted to the United Kingdom.
8.4 Each Member agrees with each of the others that the principles underpinning and the
functions of, the London SCG are to support collaborative procurement of the agreed
services including:
approving the range of agreed services;
maintaining close working and contractual relationship between the PCTs;
operating with transparency, openness and maximum good faith;
obtaining best value for the agreed services by assessing clinical effectiveness,
cost effectiveness and patients’ and carers’ views;
ensuring that the requirements of Patient Choice are met;
agreeing and managing risk sharing arrangements;
negotiating and agreeing service level agreement/contracts and from time to time
negotiating and agreeing variations of specifications and service level
agreement/contract terms;
coordinating and planning for changes in demand and in the financial and
investment requirements of Member PCTs and reflecting these changes in
service level agreements/contracts and any variations to ;
setting the initial annual budget for each service level agreement/contract;
agreeing any in-year variations with the provider and consequential adjustments
between the Members if the total London SCG budget over or under performs;
monitoring the provider’s performance under each service level
agreement/contract, including activity and patient outcomes, specification
requirements and standards, waiting times and other targets;
carrying out annual or other reviews with the provider, as required under each
service level agreement/contract;
agreeing referral, discharge and other protocols with the provider for each service
level agreement/contract;
establishing any links and/or reporting networks with other PCT consortia, other
SCGs, or the NSCG.
8.5 The Members jointly delegate their respective functions for the procurement of
agreed services to the London SCG, its collaborative commissioning consortia and
the London Specialised Services Commissioning Team acting on behalf of the
London SCG to negotiate, agree and manage all aspects of service level
agreements/contracts for the agreed services on such terms and for such purposes
as agreed by the London SCG.
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8.6 Agreed service level agreements/contracts will be signed on behalf of the Host PCT
and for all other Members, in accordance with the delegated financial limits set by the
Host PCT’s Standing Financial Instructions.
8.7 The Host PCT will collect from all other Members their subscriptions monthly and pay
the aggregate amounts to the providers of agreed services on behalf of all Members.
All Members must not cease these payments under any circumstances and if there is
a dispute must follow the facilitation and arbitration process in Section 13.
8.8 The London SCT will provide each Member with a statement for each service level
agreement/contract on a monthly basis showing:
actual London SCG activity and cost against agreed planned London SCG activity
and cost;
forecast London SCG annual activity against agreed planned London SCG annual
activity;
In addition
a quarterly report for the London SCG will be provided on London SCG
commissioned services.
8.9 The London SCG will provide each Member with an annual statement summarising
for each service level agreement/contract:
actual London SCG activity and cost against agreed planned London SCG activity
and cost for the previous year;
allocation of actual activity and of actual cost by individual Member PCT for the
previous year;
progress on annual contract reviews;
effect of risk sharing arrangements.
8.10 Whilst the London SCG will endeavour to act on behalf of all the PCTs working
collaboratively, each Member remains responsible for performing and exercising its
statutory duties and functions for delivery of the agreed services to its population and
its patients, including:
assessing individual patient cases;
referrals;
patient complaints and complaints procedures;
individual contract exclusions (where appropriate);
emergencies;
managing waiting lists;
obtaining legal advice if necessary (e.g. on the legality of a specific treatment
policy) in conjunction with the London SCG where appropriate;
Patient and Public Engagement as appropriate for the agreed services (in
conjunction with the London SCG where appropriate);
each PCT is responsible for managing independent patient appeals (supported by
the London SCG).
8.11 In 8.10 above, it may be appropriate for the London SCG to support and act on behalf
of the Members if the Members so agree, this will not negate each Member’s
statutory responsibility to ensure the delivery of appropriate healthcare services to its
population.
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9. Host Primary Care Trust
9.1 One of the Members will be designated, by agreement, as the Host PCT for the
London SCG.
9.2 The responsibilities of the Host PCT are:
to appoint and employ such officers as may be required to form the London
Specialised Services Commissioning Team and provide all necessary corporate
services and management support as may be required, including the collection of
subscriptions from members and the making of payments to providers of the
agreed services;
to have in place Standing Orders, Standing Financial Instructions and other
appropriate governance arrangements and Schemes of Delegation necessary to
enable the London SCG’s functions to be carried out by the London Specialised
Services Commissioning Team;
to hold the management budget for the Specialised Services Commissioning
Team and make payments and receive income as necessary on behalf of the
Specialised Services Commissioning Team;
to be authorised to appoint lawyers and other professional advisors and to agree
the terms and conditions of their engagement and give them instructions from
time to time on behalf of the London SCG.
9.3 The London SCG shall adopt the Standing Orders, Standing Financial Orders and
relevant Schemes of Delegation of the Host PCT.
9.4 A management charge, as agreed with the London SCG, would be payable to the
Host PCT from the management budget for the costs incurred in acting as the Host
PCT
10. The Specialised Services Commissioning Team
10.1 The London SCG will, through the nominated Host PCT, appoint and employ such
officers as may be required to form the Specialised Services Commissioning Team.
10.2 The London SCG Chief Officer shall be the Lead Officer of the Specialised Services
Commissioning Team and will act as Secretary to the London SCG. The London
SCG Chief Officer will be accountable to the Chief Executive of the Host PCT and
London SCG Chair
10.3 The Specialised Services Commissioning Team, through the London SCG Chief
Officer, will be empowered by the London SCG to undertake its functions and
specifically to negotiate, agree and manage all aspects of service level
agreements/contracts for agreed services on such terms and for such purposes as
the London SCG thinks fit.
10.4 The London SCG Director shall act within the delegated authority agreed by London
SCG and within the SFIs/SOs of the Host PCT.
10.5 As part of the London SCG’s membership of the NSCG and in its working in
partnership with other SCGs, the Specialised Services Commissioning Team will be
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required to undertake and/or lead work and/or act as Lead Commissioner on behalf of
some or all SCGs with the agreement of those SCGs and their PCTs.
11. Involvement of Service Providers and Clinicians
11.1 Each London SCG service review group, clinical network and informal network that
plays a major role in the London SCG’s strategy development will need to
demonstrate how they are involving the relevant service provider(s) including clinical
representation.
11.2 The Specialised Services Commissioning Team should be responsible for ensuring
public health input into such groups and/or networks.
12. User Involvement
12.1 The London SCG and each SCG service review group and local clinical network will
need to be able to demonstrate how they are involving service users in the planning
and commissioning process.
13. Facilitation and Arbitration
13.1 Facilitation and/or arbitration may be required in the following circumstances:
13.1.1 the Chair of the London SCG requests facilitation because an impasse has
been reached between the London SCG (or the Specialised Services Commissioning
Team representing the SCG) and one or more providers of the service if the provider
is not a Foundation Trust;
13.1.2 the Chair of the London SCG requests facilitation because an impasse has
been reached between the London SCG and one or more of its Members.
13.2 Where facilitation or arbitration is required, the following process will be followed:
Stage 1 – Facilitation
A meeting is held which includes the following:
• 2 commissioners (Director level)
• Up to 2 provider representatives (for 13.1.1 above) OR 2 PCT representatives (for
13.1.2 above)
• An appropriate Director from the SHA
• Chief Officer of the SCG Specialised Services Commissioning Team
The meeting will be chaired by the relevant SHA Director and involve expert clinical
advice where appropriate.
If resolution is reached, the process will conclude here.
Stage 2 – Arbitration
Both the commissioners and/or providers involved in the dispute will produce a joint
statement of facts as well as a separate report setting out their positions and submit
them to the SHA.
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The SHA may invite the commissioners and/or the providers to present their positions
or they may choose to decide on the basis of the information submitted. The decision
of the SHA will be binding.
13.3 In the event of a dispute between two or more SCGs, the NSCG will be invited to
facilitate and/or arbitrate according to its own facilitation/arbitration process.
13.4 In the event of disputes between the London SCG and any Foundation Trust, the
procedures set out in the contract should be followed.
14. Communication
14.1 Chief Executives (or their representatives) of each Member PCT will act as the overall
communication link to their health communities supported by the London SCG.
14.2 A London SCG Annual Report will be produced for Member’s Boards within six
months of the end of the financial year.
14.3 The Specialised Services Commissioning Team will provide a common link between
appropriate clinical networks and/or commissioner and provider service review
groups who will each develop a communication process as part of their work.
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APPENDIX 1
National Definition Set of Specialised Services
No. Specialised Service
1. Specialised cancer services (adult)
2. Specialised services for blood and marrow transplantation (all ages)
3. Specialised services for haemophilia and other related bleeding disorders (all ages)
4. Specialised services for women’s health (adult)
5. Assessment and provision of equipment for people with complex physical disability (all
ages)
6. Specialised spinal services (all ages)
7. Complex specialised rehabilitation for brain injury and complex disability (adult)
8. Specialised neurosciences services (adult)
9. Specialised burns services (all ages)
10. Cystic fibrosis (all ages)
11. Specialised Renal services (adult)
12. Home parenteral nutrition (adult)
13. Specialised cardiology and cardiac surgery (adult), including cardiothoracic transplantation
(all ages)
14. Specialised services for HIV/AIDS treatment and care services (all ages)
15. Cleft lip and palate services (all ages)
16. Specialised clinical immunology services (all ages)
17. Specialised services for allergy (all ages)
18. Specialised services for infectious diseases (adult)
19. Specialised services for hepatology, hepatobiliary and pancreatic surgery (adult)
20. Medical genetic services (all ages)
21. Specialised learning disability services (adult)
22. Specialised mental health (adult)
23. Specialised Services for children
24. Specialised dermatology services (adult)
25. Specialised pathology services (all ages)
26. Specialised rheumatology services (adult)
27. Specialised endocrinology services (adult)
28. Hyperbaric treatment services (adult)
29. Specialised respiratory services (adult)
30. Specialised vascular services (adult)
31. Specialised pain management services (adult)
32. Specialised Ear Surgery (all ages)
33. Specialised Colorectal Services (adult)
34. Specialised Orthopaedic Services (adult)
35. Specialised Morbid Obesity Services (all ages)
Further details of each specialised service can be found on the Department of Health
website:
http://www.doh.gov.uk/specialisedservicesdefinitions/
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Appendix 2 – London SCG Specialised Services Collaborative Commissioning Plan for
2008/9
Summary of London Specialised Commissioning Group 2008/09
Collaborative Commissioning Plan
Consortia/Service
A) Services funded through the London SSCCP SSCCP Value
BMT (Adult) 29,666,770
Paediatric BMT Services 6,212,777
PICU 46,935,256
Spinal Injuries 7,705,385
Deaf Mental Health services 3,360,826
Cleft Lip and Palate Services 7,835,783
Gender Dysphoria 1,094,611
Royal Brompton HCP - SAPFs only 582,935
Specialised Psychotherapies 1,227,447
Genetics A – Services 17,185,621
Genetics B - Antenatal Screening (North West Thames only) and Neonatal 1,107,962
PKU/CHT Screening (North Thames only).
Newborn Screening Services 2,347,264
Specialised services NCA 4,269,638
Burns 13,292,079
Haemophilia Services 93,006,194
HIV / AIDS Services 233,572,940
HIV Consortium Costs net of overhead - apportioned to service baseline 116,782
Specialist Pharmacy 2,734,968
North Thames Non-heart beating organ retrieval service bid 126,216
North Thames Donor Transplant Co-ordination Service 759,101
SCG Central Team Budget 480,120
AIAU Services 540,963
Neurorehabilitation 15,594,222
Screening - Commissioning and QA 203,782
Children & young people Cancer A 2,501,201
Total Services Funded through 2008/09 SSCCP 492,460,840
B) Specialised Services & Corporate Cost agreed via alternative income
streams ( For info on SSCCP Only)
Children & young people Cancer B 8,563,274
SUI Costs 65,000
Burns Network Cost 157,659
Sexual Health 173,015
High Secure Service Corporate Cost 181,400
High Secure Service 52,541,000
NICU Corporate Cost 2,543,923
NICU 62,930,872
Total Specialised Services & Corporate Cost via alternative income streams 127,156,143
Totals 619,616,982
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Appendix 3 – Glossary
CCG Collaborative Commissioning Group
Member PCTs Primary Care Trusts
London SCG London Specialised Commissioning Group.
Board of representative PCT Chief
Executives who oversee commissioning
arrangements for specialised services
Specialised Services Services as defined in the Specialised
Services National Definition Set (2002)
London SCT London Specialised Commissioning Team.
Management team supporting the
commissioning of specialised services for
London
Host PCT PCT who will employ the London SCT and
host the financial trading accounts for all
SCG pooled budgets.
SHA Strategic Health Authority
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Appendix 4 – Signatures
Barking & Dagenham PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Barnet PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Bexley Care Trust
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Brent PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Bromley PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Camden PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
City & Hackney PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Croydon PCT
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SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Ealing PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Enfield PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Greenwich PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Hammersmith and Fulham PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Haringey PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Harrow PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Havering PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Hillingdon PCT
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SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Hounslow PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Islington PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Kensington & Chelsea PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Kingston PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Lambeth PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Lewisham PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Newham PCT
SIGNED ……………………………………………………………………
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For and on behalf of the Primary Care Trust
Redbridge PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Richmond & Twinckenham PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Southwark PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Sutton & Merton PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Tower Hamlets PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Waltham Forest PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
Wandsworth PCT
SIGNED ……………………………………………………………………
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For and on behalf of the Primary Care Trust
Westminster PCT
SIGNED ……………………………………………………………………
For and on behalf of the Primary Care Trust
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Agenda Item No: 6.3
Trust Board Meeting
Date: 16th December 2008
NHS HAVERING
MEDIUM TERM FINANCIAL STRATEGY FOR LONDON
PURPOSE OF REPORT:
To present the Medium Term Financial Strategy for London to the
Board and seek approval of its recommendations.
FIT WITH OPERATING PLAN:
The Medium Term Financial Strategy (MTFS) for London will
strongly influence the PCT’s Commissioning Strategic Plan, MTFS
and Operating Plan for 2009/10.
SUMMARY:
It is an ambition of PCT’s in London that all Londoners can expect
the same level of healthcare regardless of where they live. This will
be achieved by commissioners working together collectively with
the acute sector, to ensure all organisations are clinically and
economically sustainable, and then to enable real improvements in
health outcomes and health gain across all of London.
Following concerted action in recent years, the NHS in London now
has a strong financial position with an overall planned surplus of
£300m (2%) for 2008/9.
Despite the overall surplus for the Capital, the scale of the historic
debt that still exists in some places and the uneven distribution of
surpluses across London will present serious challenges for some
PCTs to develop the health system and invest in services. PCTs
therefore need to identify a solution which will address the historic
debt issue and ensure PCTs and Trusts have investment capability
to be able to achieve their strategic plans to improve the quality of
healthcare across London.
NHS London estimates that by the end of the financial year 2011,
assuming delivery of planned savings, the historic debt will stand at
£373m for hospitals and one PCT will have debts of £19m. In
addition, there is a net £187m resources shortfall, which represents
the outstanding RAB deficits of trusts.
A Steering Group of PCT Chief Executives and Finance Directors
has developed the MTFS proposal for London for the next two
years as an alternative solution to the previous topslicing approach.
The proposal aims to stabilise the financial position and support
PCTs and Trusts in delivering their strategic intentions for the
Healthcare for London (HfL) programme and Trust Transformation.
Through this suggested approach, the PCTs will, jointly with the
SHA, control the spending of a fund created from monies
previously topsliced from PCT’s and an additional levy over 2
years. This will give PCTs control in the allocation of monies to
help clear the historic debts of Trusts that they were unable to
exercise through the previous topslicing approach.
The proposal is that over the next 2 years, PCTs invest in a
collective fund from existing resources to tackle the residual legacy
debt and, at the same time, establish sector-based investment
funds to support PCTs to implement HfL and their reconfiguration
plans.
For Havering this would result in a contribution of £6.1m from
existing topslices and a maximum levy of £9m over 2 years
(2009/10 and 2010/11).
This would enable struggling hospitals to better invest in services
for patients, driving up quality. It would, for many, also remove the
major single barrier to FT status. In return, PCTs would have
increased leverage to demand better performance and ensure that
sustainable and well managed financial, governance and
leadership arrangements are in place for hospital Trusts.
IMPACT:
• Assurance Framework – A clear understanding of the PCT’s
medium term financial position is essential in order to manage
any financial risks faced by the PCT.
• Health Impact Assessment – The MTFS would support
reduction in health inequalities and enable improvement in
health outcomes and health gains across London.
• Financial Costs – Identified within the report.
• HR – None.
• Estates – None.
• Legal – The PCT is required to contain expenditure within its
approved Revenue Resource Limit.
• ICT – None.
ACTION OR RECOMMENDATION REQUIRED:
In order to address the deficit problem of London and facilitate the
implementation of reconfiguration and HfL across the Capital, it is
recommended that:
1. The Board agrees to forgo the return of the topslice (£6.1m
for Havering)
2. The Board agrees to a non-recurrent, non-recoverable levy
of 1.3% p.a. for the next 2 years where the PCT is in balance
and not repaying prior year debts (£9m over 2 years for
Havering)
3. The Board agrees to establish a joint committee with NHS
London and the 31 London PCTs to form the Challenged
Trust Board, with representation for the 31 PCTs to be
provided through 7 members which will be agreed within
each sector
4. The Board agrees to define within sectors the level of funds
required to support PCTs within their sector to implement at
least the minimum requirements of HfL and any
reconfiguration costs to support Trust Transformation
5. The Board agrees to set up sectoral investment committees
(or their JCPCTs, if appropriate) to oversee the allocation
and repayment of monies from sector-based investment
funds in relation to 4)
6. Where initial impact assessments indicate further work is
required to mitigate risks, the board agrees to undertake full
local equality impact assessments (EIAs) as well as health
inequalities impact assessments (HIIAs) relating to the
effects of the MTFS in the context of plans and
commissioning arrangements being completed in Quarter 4
Simon East
Director of Finance
Board Paper December 2008
Proposal for a Medium Term Financial Strategy
for London
1 Context
The planned financial position for NHS London this year is a net surplus of £300m.
Most PCTs and Trusts have strong control disciplines around financial recovery and
investments. Medium term financial plans for all organisations will be finalised in
Quarter 4, but the current expectations are as follows:
2007/08 2008/09 2009/10 2010/11
£m £m £m £m
Trusts 47 (1) 45 26
PCTs (inc Lodging) 184 264 172 105
Other (SHA, MPET, Hosted Budgets) 54 37 23 19
Total 285 300 240 150
There are currently 14 FTs and 27 non-FTs (including mental health) across London.
The variability of non-FTs’ projected Income & Expenditure (I&E) surpluses, allied to
their differing stages of preparation for FT status, suggest that the FT pipeline will
continue for some time, with certain Financially Challenged Trusts (FCTs) unlikely to
achieve FT status. The financial performance of the non-FTs’ is summarised below:
• Most Trusts in cumulative surplus are projecting strong in-year I&E surpluses,
which should support their aspirations for FT status in the future.
• The deficit Trusts, who are non-FCTs but have cumulative deficits, are
currently projecting surpluses which will result in a reduction in their
cumulative deficit positions. But not all will exit the planning period with a
balanced cumulative position. The 2008/09 projected positions indicate that
there are significant risks in delivering these plans for a number of
organisations. Two of these organisations are currently projecting that they
will increase their cumulative deficits over this planning cycle
• For the FCTs, the cumulative deficits for these organisations will continue to
worsen, albeit at a reducing rate for most. For a number of organisations, the
cumulative deficit position will not improve unless structural solutions are
implemented. NHS London is the only SHA with more than one FCT.
Of the 31 PCTs, there is again variability of financial standing (details provided in
Appendix A):
• 5 PCTs are currently in the process of repaying their cumulative deficits over
the next 2 years, amounting to £119m.
• Some PCTs are in a breakeven position, but with little or no surpluses or
lodgings due to recently having emerged out of turnaround, and/or
experiencing particular cost pressures.
• Some PCTs have surplus and lodgings that have been accumulated to
address future pressures and investment plans.
Despite an overall surplus for the Capital, the scale of the historic debt that still exists
in some places and the uneven distribution of surpluses across London will present
6.3.2 MTFS Proposal.doc -1-
Board Paper December 2008
serious challenges for some PCTs to develop the health system and invest in
services. PCTs therefore need to identify a solution which will address the historic
debt issue and ensure PCTs and Trusts have investment capability to be able to
achieve their strategic plans to improve the quality of healthcare across London.
The challenging economic climate is likely to play out in the next Comprehensive
Spending Review, which means there is a one-off opportunity in the next two years to
use the financial flexibility to maximise the impact of our strategies.
2 Background
There is a need for funding to address deficiencies in the healthcare system in
London. A Steering Group of PCT Chief Executives and Finance Directors has
developed the MTFS proposal for London for the next two years to stabilise the
financial position and support PCTs and Trusts in delivering their strategic intentions
for the Healthcare for London (HfL) programme and Trust Transformation.
It is in the interests of all PCTs to have a reliable network within London; a non-viable
Trust within London can create problems for healthcare provision within London more
broadly.
The development of the Medium Term Financial Strategy (MTFS) has been led by
the PCTs as an alternative solution to the previous method of imposed topslices.
Through this suggested approach, the PCTs will, jointly with NHS London, control the
spending of this funding. This will give PCTs control in the allocation of monies to
help clear historic debts of Trusts that they were unable to exercise through the
previous topslicing approach.
This paper summarises the proposal for the MTFS which all PCT boards are being
asked to consider and approve.
3 Principles of the MTFS
There have been intensive discussions with PCTs over the last few weeks to help
shape the proposal. The Steering Group has worked hard to ensure PCTs have
been fully engaged and that there has been extensive non-executive involvement in
the process.
Core to the development of the MTFS proposal are some fundamental principles
which PCTs have agreed:
• There are 2 problems to solve:
– Historic debt
– Strategic investment
• It needs a capital wide solution for a capital wide problem
• All PCTs want to achieve the “minimum” HfL standards
• PCTs want to see debt free Trusts and a trajectory of improvement
• In addressing the 2 problems, PCTs recognise that there will be other things
they cannot do (“opportunity cost”)
• PCTs want to use our financial leverage to step up our commissioning
capacity
• PCTs want to ensure all organisations now in balance (or better) remain in
that state
• The framework should incentivise improvement and not be seen to reward
poor performance
6.3.2 MTFS Proposal.doc -2-
Board Paper December 2008
• PCTs are not trying to solve everything via the investment fund proposal
• It needs to be simple
• The framework needs to be robust and transparent
• PCTs want to achieve this together
4 What Are PCTs Aiming to Achieve?
PCTs’ ambition is that all Londoners can expect the same level of healthcare
regardless of where they live. This will be achieved by commissioners working
together collectively with the acute sector, to ensure all organisations are clinically
and economically sustainable, and then to enable real improvements in health
outcomes and health gain across all of London.
The ambitions and goals which have been outlined in HfL are of an unprecedented
scale and level of complexity. There is a determination to swiftly address
unacceptable variations and deficiencies in our health care services and a resolve to
implement innovative best practice models which will ensure world class health and
health care for London’s eight million residents. The Trust Transformation
programme will facilitate the development of a provider landscape that is fit for
purpose and deliver the level of services expected in a leading health economy.
The MTFS provides a major opportunity for PCTs to:
• Ensure sustainability through improved governance, financial management
and leadership
• Implement HfL consistently across London
• Perform effective acute commissioning at a sector level
• Have increased leverage which can be used to improve performance in the
Trusts/PCTs receiving funding under the MTFS
• Demonstrate corporate leadership
Successful implementation of these proposals will support PCTs and Trusts in
delivering their strategic intentions for the HfL programme.
5 What Are the Problems PCTs Are Trying to Solve?
The key area of financial support required is for the acute sector. If acute Trusts are
left with their levels of deficits, it means that London will end up with failing Trusts
with significant debt, which will result in performance failure, not only financially, but
in patient care. This in turn could lead to an increase in poor health outcomes and
inequalities developing in those areas, leading to greater challenges for the acute
Trusts and the boroughs they sit within. This could also impact on other boroughs
who will experience growing demand from disaffected patients from the failing health
economies.
Therefore, if the acute setting of patient care is not addressed by ensuring providers
are financially robust and able to invest in their services, then the whole service to
patients across London will continue to be variable and the benefits of HfL will not be
delivered as envisaged.
It therefore seems inappropriate that the quality of healthcare for a local population
could be lower than that in a neighbouring borough due to the historic financial
performance of the Trust. Despite large cost improvement programmes, and a
programme of formal turnaround for many Trusts, the level of savings required to
both return to recurrent balance and repay their historic debt is extremely high, and
highly unlikely to be met by March 2011.
6.3.2 MTFS Proposal.doc -3-
Board Paper December 2008
5.1 Historic Debt
It is estimated that by the end of the financial year 2011, the historic debt across
London will stand at £373m for acute Trusts (see Appendix A) and one PCT will have
debts of £19m.
In addition, there is a further pressure arising due to the impact of RAB. The DH
reversed the RAB reductions made to Trusts on 28 March 2007; however they did
not fully resource this decision. As a consequence of the way this was implemented
in relation to London Trusts, there is a net £187m resources shortfall, which
represents the RAB deficits of Trusts. A paper has been developed which explains
the RAB position in more detail (see Appendix B) and has been circulated to all PCT
FDs.
This means that, in total for London, there is a financial pressure of £579m as at
March 2011 as follows:
Cumulative deficit to clear for acutes £373m
Residual deficit for Hillingdon PCT £ 19m
RAB – acute Trusts £187m
Total gap £579m
5.2 Strategic Investment
The delivery of HfL needs to be implemented in a consistent and equitable way
across the Capital.
The PCT leadership in each sector needs to secure the minimum acceptable level for
HfL, and this would represent a consistent minimum for all PCTs in London.
Currently, this includes Stroke in all parts, Trauma and 1 polyclinic per PCT, as an
absolute minimum, though it is a reasonable expectation that PCTs will strive to
achieve more.
The Trust Transformation programme aims for the majority of providers to be
autonomous by 2010 and requires sustainable recurrent financial balance as well as
acceptable financial standing, clinical and service performance. The programme
aims to have alternative structural solutions for those providers which will not be in a
position to apply for Foundation status by 2010. Reconfiguration of services across
London will require support for enabling/double running costs.
The size of the investment fund required to support HfL and reconfiguration costs has
been examined carefully during this process. The levels are being set to achieve
what will be required for HfL and the level of reconfiguration which could realistically
be implemented in the next 2 years given implementation timescales.
The estimated costs are being finalised as part of the current planning processes
across the PCTs, and sectors will then be able to identify any funding gaps within
their sector.
6.3.2 MTFS Proposal.doc -4-
Board Paper December 2008
6 The Proposal
The proposal is that over the next 2 years, PCTs invest in a collective fund from
existing resources to tackle the residual legacy debt and, at the same time, establish
sector-based investment funds to support PCTs to implement HfL and their
reconfiguration plans.
This would enable struggling hospitals to better invest in services for patients, driving
up quality. It would, for many, also remove the major single barrier to FT status. In
return, PCTs would have increased leverage to demand better performance and
ensure that sustainable and well managed financial, governance and leadership
arrangements are in place for hospital Trusts.
The proposal has been developed based on a set of key assumptions:
• All PCTs sign up to the proposal
• No return of topslice
• Lodged funds returned in April 2009
• The 5 financially challenged PCTs are exempt whilst repaying debt but will
become eligible to contribute in the year they are back in financial balance
• Rates for growth and inflation are as advised by NHS London
• There will be no significant impact of change in the allocation formula during
the current CSR period
• Pay awards are as per the CSP assumptions schedule
• PCTs will fund Strengthening Commissioning at sector and London level
There are two elements to the proposal.
6.1 Historic Debt
The collective fund to tackle the legacy debt would consist of the following:
• PCTs forgoing the return of the £304m topslices levied in 2006/07 and
2007/08
• A non-recoverable, non-recurrent levy for 2 years of 1.3% to fund the
remaining historic debt of £275m.
The non-recoverable levy would be applied to all PCTs except the 5 financially
challenged ones. The 5 PCTs to be excluded would be:
• Bexley
• Enfield
• Hillingdon
• Hounslow
• Kingston
However, these PCTs would be expected to pay the levy once they are back in
financial balance. Based on current plans, this would mean that Kingston would
contribute to the levy in 2010/11.
The possibility of phasing the £275m over the 2 years to reflect those PCTs who
could afford to give more in 2009/10 (and less in 2010/11) to help other PCTs pay
less in 2009/10 (and more in 2010/11) would be available as long as the overall
annual requirement is maintained to meet debt repayment requirements, and would
therefore need to be agreed with NHS London.
6.3.2 MTFS Proposal.doc -5-
Board Paper December 2008
Any investment into financially challenged Trusts needs to make strategic sense and
be financially robust. As part of the package for repaying the legacy debt across
London, controls will be put in place to ensure stringent enforcement of recovery
programmes and standards of performance through a failure regime led by a
London-wide Challenged Trust Board.
6.2 Challenged Trust Board
Applying commissioning resources to clear deficits is technically necessary, but it
must be seen as part of a long term strategy, specifically as part of commissioners’
responsibilities for system management.
PCTs need confidence that the investment will bring about radical change and
permanent solutions, and that those Trusts in receipt of funding to clear their debt will
be held to account in the development of robust plans and their delivery. There are 2
key levers:
• Commitment by providers to futures which are clinically and economically
sustainable, and in line with HfL roles
• Commissioners in roles both as investors and system managers need control
over the enforcement of the transformation/recovery programmes and
recourse to a stringent failure regime where this is not being delivered
It is therefore proposed that the above is achieved through a Challenged Trust Board
(CTB). The proposal for this has been developed through discussions with PCT
colleagues, NHS London and the Provider Agency to identify the purpose, role and
governance arrangements for the CTB.
6.2.1 The Purpose and Role of the Challenged Trust Board
The CTB would apply to the Trusts requiring financial support to clear their
cumulative deficits (currently 11).
The role of the CTB is to:
• Accelerate the transformation of Trusts through joined up commissioner and
Provider Agency intervention to shape the future provider landscape. This
reinforces at a pan-London level the sectoral review initiatives between
commissioners and providers currently being instigated, and may involve
significant reconfiguration or mergers.
• Act as gatekeeper to minimise the risk of the investment in Trusts failing and
assure PCTs that Trusts only receive financial support on the basis of robust
financial performance trajectories and subsequent delivery of these
commitments. Funds will not be given if a Trust is recurrently in debt and
cannot provide a robust plan to secure sustainable financial balance.
• Oversee and monitor Trusts to ensure monies are being used appropriately
and for the intended purpose, and that Trusts’ plans are on trajectory. The
alignment with the Provider Agency will ensure that those Trusts not in receipt
of funds to clear debts (and therefore not part of the CTB remit per se), but at
risk of moving from underperforming/seriously underperforming to challenged,
are still under review. This will minimise the risk of the London health
economy returning to a position of serious debt, effectively undoing the
benefits of the Medium Term Financial Strategy (MTFS).
• Support NHS London to manage the escalation process by triggering
appropriate corrective interventions as per the proposed NHS Performance
Regimes. This would be executed in a consistent and aligned manner
6.3.2 MTFS Proposal.doc -6-
Board Paper December 2008
through the Provider Agency and local system managers. The CTB would
therefore support the process for managing failing organisations, with
increased levels of intervention where necessary, if Trusts are unable to
demonstrate that they are on an upward performance trajectory.
• Fulfil an advisory role, providing coherence and access to expertise to local
(sector) commissioners in fulfilling their responsibilities in their stewardship of
the provider landscape.
6.2.2 Terms of Reference of the CTB
It is proposed that the CTB has the following terms of reference:
• To direct the use of the PCT levy for addressing historic debts
• To determine the conditions (in the form of a recovery plan or similar) to be
placed upon Trusts receiving payments from the pool
• To monitor the delivery of agreed recovery plans
Each of these activities will be carried out in collaboration with the relevant
coordinating commissioner and the Provider Agency.
Should a financially challenged Trust fail to develop a credible recovery plan, or if a
Trust's delivery of an agreed recovery plan is not satisfactory, then the role of the
CTB is:
• To recommend to the coordinating commissioner that specified corrective
action be taken should a provider fail to develop an agreed and robust
recovery plan.
• To recommend to NHS London that specified remedial action be taken (in line
with the NHS performance regime) should a provider fail to deliver the agreed
recovery plan satisfactorily.
The mode of operation for the CTB will be as follows:
• The PCTs would be responsible for contributing the monies to the historic
debt fund, and the PCT representatives of the CTB would therefore be
responsible for discharging these monies on behalf of the 31 PCTs.
• For plans to be accepted, and funding to be provided, NHS London and
Provider Agency also need to agree that the plan is robust and sufficient, and
that the organisation has the capacity and capability to deliver it.
• Proposals which are not approved by both parties to the CTB will be returned
to the relevant commissioners for further work.
6.2.3 Constitution of the Challenged Trust Board
It is important to have a pan-London approach to the CTB to:
• Ensure pan-London governance of the PCT monies
• Encourage consistency and provide expertise and advice, but with local input
to ensure the local perspective is represented
• Ensure PCTs hold each other to account for the delivery of step change in the
local health economies and therefore across London
This will be delivered through a joint committee of the 31 PCTs and NHS London,
with shared powers to make decisions on behalf of the PCTs and NHS London.
The PCTs will be represented on the CTB by representatives from the 31 PCTs
which would involve 7 PCT members, 1 from each sector, as follows:
– 2 PCT Chairs
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– 1 PCT Audit Chair
– 2 PCT Chief Executives
– 1 PCT Director of Finance
– 1 PCT Non-Executive Director/PEC Chair
NHS London would be represented by the Chair and Chief Executive of the Provider
Agency and NHS London Director of Finance and Investment.
There will be a double-lock mechanism in place such that all investment of the
collective fund requires the agreement of the PCT representatives, and in addition,
plans will only be sanctioned where NHS London is satisfied with the robustness of
the proposal and the capacity of the organisation(s) concerned to implement them.
The 7 PCT members would be drawn from the 7 sectors of London, with
representation to be determined with the agreement of PCT Chairs and Chief
Executives.
The chair of the CTB would be one of the PCT Chairs.
The CTB will require programme office and administration support as well as access
to turnaround expertise to scrutinise the plans. PCTs will need to support this
through their joint funding of pan-London work.
6.2.4 Relationship with the Local Health Economy
The relationship between the CTB and the local health economy, and especially the
PCT as the leader of that economy, is key. They would need to complement each
other to ensure that current local improvement plans deliver the required changes
and meet CTB requirements.
Challenged Trusts would work in partnership with the local health economy (host
PCT and any other key commissioner(s)) plus the Provider Agency to develop (if not
already in place) a shared plan for financial recovery, service review and consultation
for any changes. There would be regular checks on the Trust’s run rate and recovery
plan to ensure these are on track. These plans would be reviewed by the CTB to
ensure they were sufficient to meet their requirements to support any funding for the
Trust.
The plans would identify key milestones of outcomes required by a Trust to
demonstrate an upward performance trajectory. These outcomes, initially, may be
efficiency improvements or performance outcomes which will, in time, lead to
financial benefits and, more specifically, run rate balance. The CTB will agree any
funding payments based on the achievement of these milestones/outcomes.
As PCTs are responsible locally for driving performance and managing the system,
they will be expected to lead the joint partnership arrangements with Trusts in
defining proposals and obtaining CTB approval for their implementation.
Hillingdon PCT will require funding support to clear its cumulative debt, and therefore
would also be subject to review and progress monitoring by the CTB, with escalation
processes to NHS London if required.
The following diagram illustrates the process to be implemented by the CTB. The
first task of the CTB, if approved, will be to develop and agree the operational
aspects of the CTB in detail.
6.3.2 MTFS Proposal.doc -8-
Board Paper December 2008
Overview of Progress Reporting and Monitoring Process
`
PCT(s) and Trust(s) develop agreed plans for
sustainable financial balance as part of future
health economy solutions
Check adequacy, capacity and
capability
CTB reviews plans
Approval in principle of funds
Plans to be revised subject to delivery
Approved
Agreed milestones
PCT and trust report Current position vs planned
to the CTB target
Dependencies
On track Not on track
Variations outside tolerance levels
CTB agrees
payment - profiled CTB withholds
against milestones payment
Achieved plan(s)
CTB transfers to local PCT to
continue monitoring as part of Provider
business as usual arrangements Agency CTB undertakes
through contracts manages intensive
organisation’s monitoring
performance
Performance and local
drops outside commissioner
tolerance levels escalates
performance
management
through
contracts
Local PCT refers to
CTB for monitoring
Improvement
No improvement
CTB determine Provider Agency
which Performance assessment of
Regime option options
PCT and trust report On track
should be triggered
to the CTB in partnership with Supporting
SHA and local strategic case
commissioner for preferred
option
Not on track
NHS London take
Exception reporting remedial action –
by PCT and trust trust reconfigured,
board eg merged
Not on track
6.3.2 MTFS Proposal.doc -9-
Board Paper December 2008
6.2.5 Requirements of Trusts
By investing in Trusts through the repayment of the historic debt, PCTs would want to
see tangible benefits from acute Trusts. In identifying these requirements, there is a
balance to be struck between ‘quid pro quos’ for commissioners investing in
providers, and the need to avoid destabilising Trusts required to demonstrate their
return to balance. The key requirements would therefore be:
• Trusts would be expected to focus single-mindedly on delivering substantial
improvements in the quality of patient care through consistent achievement of
national and local targets.
• Trusts will be expected to demonstrate rapid movement towards benchmark
levels of productivity/efficiency.
• A process of co-operation and collaboration between Trusts and PCTs
through formal engagement in HfL and reconfiguration programmes, including
board level assurance and sign off. This would include the joint agreement of
plans on the future mapping of services and a commitment to radical
organisational change where required, in agreement with local commissioners
and the local health economy.
• Trusts would be expected to work constructively and cooperatively with PCTs
to implement the efficiency and performance levers contained in the national
contract and London Terms of Business, including:
– The application of efficiency metrics and penalties for non achievement
– A commitment to the unbundling of tariffs
– Timely and transparent sharing of information.
London-wide commissioning intentions will bring greater consistency on the
treatment of non-PbR tariffs. However, any outstanding disputes re non-PbR
pricing will be resolved promptly through independent review, facilitated by
the Challenged Trust Board where necessary.
The above implies a commitment from NHS London to use its powers, where
necessary, to ensure adherence to these requirements.
6.3 Investment Fund
The proposal for the investment fund is to have a sector-based investment fund,
rather than pan-London. It was felt that a sector-based solution had a number of
benefits, including:
• Easier to manage locally
• More realistic costs
• Beneficial impact of peer pressure on level of request/more realistic costs and
acceptable and agreed repayment profiles
• In some sectors, it may also open up interest from FTs to contribute to an
investment fund
Any contributions made by PCTs will be recoverable.
The amount of funding required will be dependent on the gap between the
requirements of HfL and the transitional costs of reconfiguration over the next 2 years
on the one hand, and the resources available to individual PCTs in the sector on the
other.
Therefore contributions will vary significantly between sectors and PCTs, and there
could be a risk for some sectors with limited financial flexibility, as they would need to
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Board Paper December 2008
finance any pressures from within their sector as there would be no opportunity for
wider support.
The investment fund will be owned by the PCTs but administered by NHS London
through the resource clearance facility. Each sector will have a local committee to
review and approve the funding requests, which could be the JCPCT if appropriate,
and the detailed governance arrangements will be agreed by each sector if approved
by the boards.
All PCTs could access the fund, but this would need to be supported by a robust
business case to demonstrate sustainable financial position is achievable thereafter,
with strict evaluation criteria.
Any monies drawn by PCTs from the investment fund would be repayable by the
PCT. The timing of the repayments would take account of when a PCT can afford to
make the repayments without putting them back into a deficit position.
7 Implications of the MTFS Proposal
The estimated impact of the historic debt proposal by PCT is provided in Appendix C.
NHS London is in discussions with the Department of Health regarding a potential
contribution to the RAB issue, for which a decision is expected within the coming
weeks. Appendix C therefore assesses the impact on the historic debt levy under 3
scenarios for illustrative purposes:
• No contribution to RAB
• 50% contribution to RAB funding shortfall; the levy would fall from 1.3% to
0.8% - 0.9%
• 100% contribution to RAB funding shortfall; the levy would fall from 1.3% to
0.4%
The contribution requirements from PCTs for the sector-based investment fund will
be confirmed following the finalising of the PCTs’ plans, as this will identify the
potential funding gap required to implement at least the minimum HfL standards and
any reconfiguration costs.
The implications for the local PCT, in terms of financial and delivery impact, are
included in Appendix D.
8 Assessment of Alternatives
During the development of the MTFS proposal, a number of options have been
considered to ascertain how the problems identified above could be addressed.
i. Use existing surpluses and lodgings to finance write offs of legacy
debts
This option when discussed with the PCTs was not supported by the majority
due to the perceived inequity.
ii. No intervention and PCTs and Trusts encouraged to resolve their issues
on their own or at local/sector basis
The size of Trusts’ legacy deficits is not solvable without assistance. It could
not be resolved locally in all cases due to the mismatch between surplus PCT
resources and location of legacy deficits. It would also result in uneven
implementation of HfL and standards of healthcare to patients and potential
knock on effects to other boroughs in the event of failure of a Trust.
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Board Paper December 2008
iii. Generate additional surpluses this year to reduce burden on this
scheme
This has been tested robustly with the Department of Health and they have
confirmed that that the flexibility to increase the overall control total for
London is not available.
iv. Write off PCT debts as of now
There are a number of issues with this option:
– It is generally not supported, especially in light of the resulting inequity vs
those who have successfully come out of turnaround.
– It is inconsistent with the proposed Trust scheme (based on deficits as at
2010/11), and PCTs in recovery would not be incentivised to complete
their recovery
– Potential support required for HfL and reconfiguration is not confined to
those PCTs in deficit.
v. Additional reduction to provider tariffs over and above the national 3%
efficiency requirement
Again, there are a number of issues with this option:
– There would be strong resistance from FTs and ISTCs which could result
in the reduction only applying to NHS providers, thereby creating an
uneven playing field for providers
– It could make FT applications less viable and/or exacerbate difficulties of
challenged Trusts as it would make it more difficult for Trusts to achieve
an in year breakeven position
– Although allowable under the finance regime, this would be a suspension
of PbR which would require a very strong case to be made to the DH
vi. Differential levy among PCTs
There were extensive discussions regarding the levy and whether there could
be differential levies to help those PCTs with limited financial flexibility.
However, the impact on the levy for the remaining PCTs would then create
financial pressures for these PCTs.
It is also over simplistic to assume that a PCT with a larger surplus is more
able to contribute than others; many of these PCTs have very substantial
needs for future investment on behalf of needy and poorly served
communities.
These proposals therefore deal with differing financial strengths primarily
through differential access to Investment Fund support based on need rather
than varying the rate of contribution.
In addition, the ability for PCTs to reprofile the phasing of their payments over
the 2 years will allow PCTs within sectors, and across London, to meet the
overall annual requirement but give some flexibility to those with limited
financial flexibility and financial pressures from investment and/or saving
commitments.
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Board Paper December 2008
9 Equality Impact Assessment
EIAs cover the six equality groups of race, disability, gender, age, faith and sexual
orientation, as required by the relevant legislations and statutory codes of practice.
The final report “Health Inequalities and Equality Impact Assessments of Healthcare
for London: consulting the capital” (London Health Commission, March 2008)
recommended priority issues and actions relevant to EIAs and HIIAs. Primary care,
maternity care and stroke pathway were identified as the most relevant to impacting
on equality and inequalities. A recurring theme is that any proposal could either
increase or reduce health inequalities depending on how they are implemented.
The PCTs will each need to have assessed the impact of the MTFS from an
equalities perspective to determine whether there will be an impact and, if so, its
likely magnitude. In making its decision as to whether to agree to the MTFS, the PCT
Board must take the assessment of impact into account (together with consideration
of how it could negate or minimise any adverse impact through its detailed planning
processes).
The MTFS will have variable impacts on PCTs due to the differential degree of
financial flexibilities linked to the amount of surplus (deficits)/lodgings and capitation
positions. The following factors are therefore important considerations for the EIA:
• Return of historic topslices was not included in PCT plans and therefore there
are no planned services that will be affected by PCTs forgoing the return of
these
• In terms of how the levy will impact on services for specific EIA groups, this
will vary between PCTs but:
– The majority of PCTs will pay the levy using non-recurrent monies, e.g.
lodgings, which cannot generally be used for service improvements as
these tend to be recurrent in nature.
– Some PCTs may have wanted to spend the non-recurrent monies on
initiatives such as estate improvement grants, additional payments to
reduce LIFT liabilities, or accelerating 'invest to save' schemes but these
would now have to be cancelled or delayed.
– PCTs with insufficient non-recurrent funds may need to use recurrent
monies to pay the levy. These recurrent monies will only be lost in-year,
not in future years and the impact in year 2 will be lessened by the
recurrent growth versus a non-recurrent levy i.e. two years of growth
monies but the levy remains the same as in year 1.
– There is potential for PCTs to flex the profile of their payment over the 2
years which would assist those PCTs financially tight in 2009/10 to defer
some of their payment to 2010/11, which may also help balance/avoid
the need for using recurrent monies.
– Flexibilities are needed for one PCT experiencing significant population
growth not matched by funding growth in terms of the revenue resource
limit due to the current allocation formula lagging behind.
– Excluding PCTs with deficits from the levy payment means that those
who are already being top-sliced to repay legacy debts are not put into
an even more challenging financial position which would jeopardise their
move out of deficit.
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Board Paper December 2008
– The sector investment funds should help to ensure at least the minimum
standards of HfL are achieved across the capital, even for those PCTs
with limited financial flexibility.
• The establishment of the Challenged Trust Board provides assurance for
PCTs to have real levers to implement sustainable change.
• London has a deficit which has to be paid off for NHS London, PCTs and
Trusts to meet their statutory duty. In the past, when the Department of
Health or NHS London have top-sliced PCTs to clear debt, PCTs have had to
accept the imposition without having an input on the deployment of these
funds, or how the impact on equality and inequalities would be addressed.
The MTFS proposal gives PCTs more control and involvement in the usage of
these monies.
It is recognised that for some PCTs there may be an impact, for example deferral of a
planned scheme. All PCTs have made an initial impact assessment of the impact of
the MTFS for their locality (see Appendix D). It is not envisaged that the MTFS will
have a significant impact from an equality perspective. The planning process for
developing operational plans, which PCTs are currently undertaking, will ensure that
any adverse impact identified by PCTs for their locality is minimised/mitigated. The
flexibility available to PCTs within sectors, and across London, regarding the phasing
of the historic debt levy should help PCTs to plan and manage their contribution to
minimise the impact. In addition, PCTs with financial challenges will be eligible to
apply to the sectoral investment funds for support with HfL and reconfiguration
investments. It is therefore envisaged that any potential negative impact of the
MTFS can be mitigated to a very substantial extent.
10 Risk Management
The scale and nature of the challenges faced in London mean that substantial
intervention is required. The impact for some PCTs means that this is likely to be
highly visible and deeply contentious in some areas.
There are therefore a number of risks identified, with mitigating actions to address
them:
• Investments fail to deliver desired solutions
– Rigour in assuring individual Trust strategies and business plans, on
which financial investments are predicated, including appropriate
external validation through the development of the Challenged Trust
Board and rigorous benefit realisation and programme management of
Trusts’ performance
– Robust local application of failure regime where performance falls short
of projections, with rapid escalation to structural intervention
• External risks including changes in planning assumptions, eg growth funding,
local council plans and/or additional unplanned financial pressures impacts
significantly on PCTs and investment plans
– Boards would need to sign up in principle, subject to no significant
changes in assumptions/DH spending plans announced in December
• Local stakeholder concerns
– Communication plan to provide proactive stakeholder management
– Significant local flexibility both on the timing of the 1.3% levy and the use
of the investment fund should help manage the local impact
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Board Paper December 2008
11 Recommendation
In order to address the deficit problem of London and facilitate the implementation of
reconfiguration and HfL across the Capital, it is recommended that:
1) The board agrees to forgo the return of the topslice (£6.1m for Havering)
2) The board agrees to a non-recurrent, non-recoverable levy of 1.3% p.a. for
the next 2 years where the PCT is in balance and not repaying prior year
debts (£9m over 2 years for Havering)
3) The board agrees to establish a joint committee with NHS London and the 31
London PCTs to form the Challenged Trust Board, with representation for the
31 PCTs to be provided through 7 members which will be agreed within each
sector
4) The board agrees to define within sectors the level of funds required to
support PCTs within their sector to implement at least the minimum
requirements of HfL and any reconfiguration costs to support Trust
Transformation
5) The board agrees to set up sectoral investment committees (or their JCPCTs,
if appropriate) to oversee the allocation and repayment of monies from sector-
based investment funds in relation to 4)
6) Where initial impact assessments indicate further work is required to mitigate
risks, the board agrees to undertake full local equality impact assessments
(EIAs) as well as health inequalities impact assessments (HIIAs) relating to
the effects of the MTFS in the context of plans and commissioning
arrangements being completed in Quarter 4
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Board Paper December 2008
Appendix A
Financial Position for PCTs
Cumulative Cumulative
Expected
Deficit Deficit
Surplus/ Existing
as at March as at March
Lodgings Topslice
2008 2011
2008/09
£m £m
Barking And Dagenham 24,821 7,039
Barnet 7,272 12,746
Bexley 10,280 1,348
Brent 10,796 12,445 13,626
Bromley 11,167
Camden 4,006 11,039
City And Hackney 29,484 11,336
Croydon 12,836 12,688
Ealing 14,151 13,313
Enfield 18,245 10,716
Greenwich 2,501 10,300
Hammersmith And Fulham 27,224 7,925
Haringey 7,864 10,348
Harrow 1,718 6,605
Havering 695 6,141
Hillingdon 42,480 19,377 6,674
Hounslow 21,274 8,570
Islington 7,678 10,075
Kensington And Chelsea 8,778 9,196
Kingston 15,862 6,775
Lambeth 8,161 13,985
Lewisham 9,702
Newham 5,755 12,353
Redbridge 39,629 8,753
Richmond And Twickenham 6,719
Southwark 8,795
Sutton And Merton 13,127
Tower Hamlets 28,618 10,715
Waltham Forest 100 9,599
Wandsworth 13,163 11,624
Westminster 22,902 10,984
Total 118,937 19,377 279,801 303,986
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Board Paper December 2008
Financial Position for Trusts
Cumulative Deficit Likely I&E Deficit Cumulative Deficit
2007/08 2008/09 to 2010/11 2010/11
£m £m £m
Financially Challenged Trusts*
Bromley Hospitals 49 0 49
Queen Elizabeth Hospital 43 17 60
Queen Marys Sidcup 28 59 87
Lewisham Hospital 2 2 4
BHRT 68 16 84
Whipps Cross 26 0 26
Sub Total 216 94 310
Non-Financially Challenged Trusts*
St George's 32 (16) 16
Barnet & Chase 19 0 19
North Middlesex 10 (11) 0
Epsom & St Helier 6 (13) 0
Newham UHT 4 (3) 1
Royal National Orthopaedic 3 (5) 0
NWL Hospitals 23 0 23
Mayday 1 (9) 0
West Middlesex 13 (9) 4
Sub Total 111 (66) 63
Total 327 28 373
* Dept of Health designation
6.3.2 MTFS Proposal.doc - 17 -
Board Paper December 2008
Appendix B
Explanation of RAB
1. Introduction:
Until 2006/07 the DH’s Resource Accounting and Budgeting (RAB) system was
based on carry forward arrangements for both PCTs and Trusts (i.e. if a PCT or Trust
overspent in one year, the value of the overspend was deducted from its potential
resources the following year (the converse also applied)). This was abolished in
theory in 2006-07 but historic or ‘backlog’ RAB was not financed in full, which leaves
the London Health economy with a significant problem.
Resource Accounting and Budgeting - RAB
Just like PCTs, Trusts were faced with the challenge to return to financial balance
and repay the deficit. However, Trusts had the additional challenge to break even
cumulatively over 3-5 year period which gave rise to the “double whammy” effect.
There has been widespread criticism of this accounting principle, not least from the
Audit Commission. To demonstrate how this works a simple example is given below.
Example
A Trust starts the year in balance but makes a £5 million recurring deficit at the year
end. It has to do three things:
• Make £5 million of recurrent savings in order to return to recurrent financial
balance
• Pay back through RAB adjustments the £5 million historic deficit
• Generate surpluses within the 3-5 year period to eliminate the accumulated
deficit in order to meet the statutory break-even duty
The following illustrates this under the RAB arrangements:
Yr 1 Yr 2 Yr 3 Yr 4
Income 100 100 100 100
RAB adjustment (5)
Net Income 100 100 95 100
Base expenditure 100 105 105 100
CIP (recurrent) - - (5) -
Further saving requirement - - (5) (5)
Net Expenditure 100 105 95 95
In year surplus/(deficit) 0 (5) 0 5
Cumulative surplus/(deficit) 0 (5) (5) 0
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Board Paper December 2008
Following the abolishment of RAB for Trusts, Trusts now face a similar situation to
PCTs as illustrated below:
Yr 1 Yr 2 Yr 3 Yr 4
Income 100 100 100 100
RAB adjustment
Net Income 100 100 100 100
Expenditure 100 105 105 100
CIP (recurrent) - - (5) -
Further saving requirement - - - (5)
Net Expenditure 100 105 100 95
In year surplus/(deficit) 0 (5) 0 5
Cumulative surplus/(deficit) 0 (5) (5) 0
The DH abolished the system of RAB reductions made to Trusts on 28 March 2007:
however they did not fully resource this decision. As a consequence of the way this
was implemented in relation to London Trusts, we now have a net £187m resources
shortfall, which represents the RAB deficits of Trusts. Historical deficits/surpluses
are reflected in Trusts’ accounts and under the terms of their break even duty, Trusts
must match deficits in one year with surpluses in another over a three year (or
exceptionally five year) period, effectively repaying their cumulative deficit in future
years.
£304m of topslices were taken in order to balance out the deficit position of PCTs
and Trusts in 2006/07 and 2007/08 - to offset the resource impacts of the £187
million RAB deficits outlined above for Trusts, and the £119m RAB to be repaid by
PCTs (who are not subject to the ‘double whammy’ problem due to the absence of a
break even duty). The principle agreed with PCTs was that residual topslices would
be repaid out of the ‘payback’ of RAB deficits by deficit organisations.
However the RAB system itself acts as a barrier to ensure that Trusts (in contrast to
PCTs) cannot pay them back, therefore PCTs cannot get back their funds. We end
up with a position that could be termed ‘infinitely regressive’ or in permanent stasis -
PCTs may never get their money back and Trusts may never retrieve their RAB
positions. A solution is therefore required to solve this problem strategically and
create the resource flexibility and headroom required to move forward.
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Board Paper December 2008
Appendix C
Estimated Impact of the Historic Debt Levy for PCTs
Scenario 2 Scenario 3
Scenario 1
DH support of 50% of DH support of 100%
No Support for RAB
RAB of RAB
1.3% 1.2% 0.9% 0.8% 0.4% 0.4%
Total Contribution to Total Contribution to Total Contribution to
Deficit Deficit Deficit
£000 £000 £000
2009/10 2010/11 2009/10 2010/11 2009/10 2010/11
Barking And Dagenham 3,576 3,699 2,422 2,347 1,183 1,129
Barnet 6,170 6,381 4,178 4,049 2,040 1,948
Bexley
Brent 5,904 6,107 3,998 3,875 1,953 1,864
Bromley 5,406 5,591 3,661 3,548 1,788 1,707
Camden 5,342 5,525 3,617 3,506 1,767 1,686
City And Hackney 5,581 5,772 3,779 3,662 1,846 1,762
Croydon 6,143 6,353 4,160 4,031 2,031 1,939
Ealing 6,444 6,665 4,364 4,229 2,131 2,034
Enfield
Greenwich 4,988 5,158 3,377 3,273 1,649 1,574
Hammersmith And Fulham 3,836 3,967 2,597 2,517 1,268 1,211
Haringey 5,025 5,197 3,403 3,298 1,662 1,586
Harrow 3,699 3,826 2,505 2,428 1,223 1,168
Havering 4,434 4,585 3,002 2,910 1,466 1,400
Hillingdon
Hounslow
Islington 4,874 5,041 3,301 3,199 1,612 1,539
Kensington And Chelsea 3,986 4,123 2,699 2,616 1,318 1,258
Kingston 3,037 1,927 927
Lambeth 6,765 6,997 4,581 4,440 2,237 2,136
Lewisham 5,754 5,951 3,897 3,776 1,903 1,816
Newham 6,081 6,290 4,118 3,991 2,011 1,920
Redbridge 4,253 4,398 2,880 2,791 1,406 1,342
Richmond And Twickenham 3,252 3,363 2,202 2,134 1,075 1,027
Southwark 5,809 6,008 3,934 3,812 1,921 1,834
Sutton And Merton 6,659 6,887 4,510 4,370 2,202 2,102
Tower Hamlets 5,297 5,479 3,587 3,477 1,752 1,672
Waltham Forest 4,652 4,811 3,150 3,053 1,538 1,469
Wandsworth 5,626 5,818 3,810 3,692 1,860 1,776
Westminster 5,316 5,498 3,600 3,489 1,758 1,678
Total 134,873 142,527 91,332 90,439 44,604 43,502
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Board Paper December 2008
Appendix D
Impact of the MTFS Proposal for Havering PCT
Assessment of local impact
In addition to assessing the impact of the medium term financial strategy at London
level, it is also necessary to identify the impact at local level. This appendix identifies
the impact of the MTFS on the PCT, together with the steps that will be taken by the
PCT to minimise the impact.
Summary of overall impact of the MTFS on the PCT
Havering’s contribution to the MTFS will be:
- to forgo return of its existing topslice - £6.1m
- to contribute under Scenario 1 (see Appendix C) via a levy of - £9.0m over 2
years
The levy reduces to £5.9m in Scenario 2 and to £2.9m in Scenario 3.
Summary of impact on equalities
While the strategy will have an impact on the overall availability of funds to the PCT
in 09/10 and 10/11, it is considered that the MTFS will have no significant negative
impact from an equality perspective. In other words, the MTFS will not have an
adverse impact on discrimination on the basis of age, gender, disability, race, religion
or sexuality.
Mitigation of impact
The PCT has recently produced a commissioning strategy plan (setting out plans for
the coming 3 years) and is currently preparing an operating plan for the coming year.
The planning process for developing the operating plan will ensure that any potential
adverse impact is minimised/mitigated.
The flexibility available to PCTs within sectors, and across London, regarding the
phasing of the historic debt levy will enable the PCT to plan and manage their
contribution to minimise the impact. Discussions have already taken place with the
other PCT’s in North East London on this issue. Some of these PCT’s would be
prepared to take a larger levy in 2009/10 which would enable Havering to reduce its
levy in that year and pay a higher levy in 2010/11 thus allowing more time to plan in
the impact.
In addition, the PCT will be eligible to apply to the sectoral investment fund for
support with HfL and reconfiguration investments. The PCT does have a number of
planned HFL investments in its CSP. This includes its GP led Health Centre and
Stroke/Trauma Initiative of £1.6m in 2009/10 and £2m in 2010/11. Obviously the
PCT will have to be sure it can meet the repayment of any support in future years
before accepting the support.
In drawing up its Operating Plan for 2009/10 will need to re-assess its savings plans
and review the phasing of its initiatives to accommodate the levy.
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Board Paper December 2008
Glossary
Comprehensive In-depth examination of the Government's spending
Spending Review priorities to establish long-tem aims and objectives for each
department covering 3 year period
CTB Challenged Trust Board: governance mechanism for Trusts
receiving funds to clear cumulative debt
Financially Challenged Organisations with long standing and significant deficits with
Trust no firm plan in existence for their resolution in the
foreseeable future
FT Foundation Trust: A public service organisation established
as a ‘public benefit corporation’ with freedoms to innovate
and forge partnerships in the public interest and governance
arrangements designed to help Trusts better reflect the
needs of the communities they serve
HfL Healthcare for London
Historic debt Deficits generated by Trusts in prior years which has not
been repaid subsequently
Investment Fund Sector-based fund made up of contributions from PCTs
depending on funding gap in their sector for implementing at
least the minimum HfL requirements and reconfiguration
ISTC Independent Sector Treatment Centre
Lodgings PCT surpluses that are held with the SHA but returnable to
PCTs
MPET Multi-Professional Education and Training
RAB Resource Accounting and Budgeting (see Appendix B)
6.3.2 MTFS Proposal.doc - 22 -
