Memorandum by Royal Berkshire and Battle
Hospitals NHS Trust (PS 51)
CONSOLIDATION PROJECT
1. BACKGROUND
1.1 The Royal Berkshire and Battle Hospitals
NHS Trust provides acute services for the residents of West Berkshire
and surrounding areas from two hospital sites situated three miles
apart in central Reading, The Royal Berkshire Hospital and the
Battle Hospital. The population served is ca. 500,000.
1.2 In 1989, following a strategic review
by the Oxford Regional Health Authority (ORHA), an option appraisal
exercise to determine the future location of acute services within
West Berkshire was concluded by West Berkshire Health Authority
(WBHA). This resulted in the selection of a single site acute
hospital based on the Royal Berkshire Hospital site. Proposals
for the scheme, then known as Prospects III, were submitted to,
and rejected by, ORHA in 1993.
1.3 Following the creation of the Royal
Berkshire & Battle Hospitals NHS Trust in 1993 the scheme
was renamed "The Consolidation Project". A strategic
review of the scheme was carried out and a revised proposal was
developed and agreed, at "Concept" stage, by ORHA in
the same year.
1.4 A Full Business Case (FBC) was submitted
in June 1994.
2. PRIVATE
FINANCE INITIATIVE
2.1 Between 1994 and 1997 the Trust investigated
the possibility of private finance. In 1994 (the very early years
of PFI), and acting on the advice of the Private Finance Panel,
the Trust appointed consultants to search for private finance
for the whole consolidation scheme.
2.2 Twenty financial institutions and two
FM operators responded however, only one organisation, the London
Financial Group, made a proposal which appeared to satisfy Treasury
requirements for value for money and risk transfer. On further
investigation by the Anglia and Oxford Regional Office the proposal
was rejected as failing to meet the necessary standards.
2.3 In investigating the option of private
finance for the whole scheme it was noted that the private sector
was generally unwilling to invest large sums of money on the refurbishment
of an existing and badly run down site. So, rather than try again
for the whole project it was decided, by the Private Finance Unit,
that various discrete elements of the scheme should be identified
for PFI testing, but the body of the scheme would be publicly
funded.
2.4 Following a successful search the Trust
selected the Proteam 2 Consortium in April 1995, to develop proposals,
which encompassed car parking and offices, with a revenue stream
from private patient facilities, retail facilities and a health
and leisure club. Approval to the FBC was granted in May 1995,
on the assumption that it would include private finance for these
elements.
2.5 After two years of negotiation with
Proteam 2, a final proposal was received and rejected on the grounds
that:
— it failed the value for money test
and was unaffordable;
— the facilities offered were below
specification in both quantity and quality;
— risk transfer was not proven;
— the income streams were not firm.
2.6 An addendum to the original business
case was subsequently submitted, in July 1997, asking for public
funding. The addendum was approved in November 1997 and forms
the basis for the current project.
3. CHANGES
TO THE
CONSOLIDATION PROJECT
3.1 Since the inception of the Consolidation
project in 1994, the Trust has built in review periods to ensure
that opportunities exist to make changes consistent with altered
national and local requirements. This has been achievable largely
as a result of the phased nature of the project (see section 4).
There have been a number of revisions to the original scheme content
as a result of:
— Layout changes to incorporate and
maximise the benefits of PFI proposals;
— Hospital process redesign;
— Changes arising to accommodate the
needs recognised in the Trust's strategic review in 1996;
— A further "Whole System"
review completed in 1999, which confirmed increased requirements
for acute Medical, Oncology and Haematology beds.
3.2 The 1997 FBC was supported by Berkshire
Health Authority on the proviso that a further review of requirements
was undertaken prior to final confirmation of acute Medical bed
numbers.
3.3 Following the "Whole System"
review bed numbers were increased from 722 to 806. The forecast
of activity levels, and bed numbers was agreed by the whole healthcare
system, and took into account the need for the system to provide
additional facilities and schemes in the community, to ensure
efficient usage of Trust acute beds.
3.4 The Trust is currently operating with
ca. 780 beds, and continues to experience significant difficulties
as a result of delayed transfers of care.
4. PHASING
AND CONTENT
OF THE
CONSOLIDATION PROJECT
4.1 The nature of the RBH site is such that
a phased redevelopment programme is required to enable completion
of the scheme. The project is a combined new build and refurbishment
with a programme of works as follows:
1997-98 Contract 1
Refurbishment of Maternity block, undertaken
to enable early decanting of surgical wards, to meet compliance
with junior doctor's hours targets.
1998-99 Contract 2A
Development of multi-storey car park to free
up land in the centre of the site.
1999-02 Contract 2B
New build centre site development comprising
six new wards, Radiology department, four new theatres, outpatient
support services, new Accident and Emergency department and main
entrance block.
1999-03 Contract 2C
Phased refurbishment of the South Wing and Eye
Block to provide outpatient facilities, additional and modernised
theatres and a day bed unit.
This phase has been delayed as a result of the
failure of Christiani and Nielsen, who were JV partners on the
originally tendered contract. The Trust repudiated their contract
in August 2000, re-tendering the contract in three phases to mitigate
loss of time.
2002-04 Contract 3
The demolition of existing buildings on the
north end of the site to allow a new build programme providing
seven new medical wards, a Cardiac Care Unit, Oncology/Haematology
unit and a Therapy centre.
2004 Sale of Battle Hospital
On completion of Contract 3 the Trust will transfer
all services currently located in the Battle Hospital to new or
refurbished accommodation on the RBH site. Thereafter the Battle
site will be sold.
The Trust has been granted planning permission
for the redevelopment of the Battle Hospital site for retail and
housing. Since 1999 the Trust has been investigating the options
for an advanced sale of the property and has begun to discuss
possibilities with developers.
4.2 The approximate percentage split between
new build and refurbishment is 58 per cent: 42 per cent based
on floor area.
5. PROJECT COSTS
5.1 Since approval in May 1995 the gross
scheme cost has increased from £59.3 million (£56.3
million construction plus £3 million land and property) to
£105.5 million for the following reasons:
| |
£m |
| Initial scheme cost | 59.3
|
| Functional content changes | 17.3
|
| Inflation uplifts | 25.9
|
| Accounting adjustments | -.8
|
| Repudiation of contract 2C | 3.8
|
| Current scheme cost | 105.5
|
Land sale proceeds
5.2 The above costs are offset by the sale of the Battle
Hospital site, originally assumed to be valued at £13 million,
and now valued at £35 million.
6. REVIEW OF
OPTIONS
6.1 In 1989, when the original option appraisal was undertaken,
the cost of locating and building on a "Greenfield site"
(at Battle Hospital) was estimated at ca. £94 million.
6.2 In order to verify the findings of the earlier option
appraisal a review of "Greenfield" site costs was undertaken
in 1996. This confirmed that forecast costs had increased to £196
million. Current costs are estimated at £282 million (MIPS
325).
SUMMARY
The Royal Berkshire and Battle Hospitals NHS Trust Consolidation
Project is to see the Trust's acute services (consolidated) onto
one site, the Royal Berkshire Hospital site, enabling the sale
of the Battle Hospital site.
It is a substantial, complex capital project with a current
cost of £105 million and will be completed in late 2004.
The sale of the Battle Hospital site is expected to contribute
about £34 million to the capital cost, but the remainder
of the scheme is funded from public capital. Between 1994 and
1997 the Trust negotiated to find a PFI partner but the final
proposal was rejected on the grounds that:
— It failed the value for money test and was unaffordable.
— The facilities offered were below specification
in both quantity and quality terms.
— Risk transfer was not proven.
— The income streams were not firm.
| 
