Evidence submitted by West Hertfordshire
Hospitals NHS Trust (Def 55)
1. INTRODUCTION
1.1 This paper summarises the scale of the
financial problem in West Hertfordshire NHS Trust (WHHT). It describes
the reasons for the problem, our proposed solutions and the associated
benefits. Our approach builds on the principles established in
Investing in Your Health[119]
and reflects national policy around the new direction for community
services.
1.2 West Hertfordshire is located to the
north of London, and covers an area of approximately 634 square
miles. WHHT provides acute health services to the residents of
Dacorum, Watford, Three Rivers, St Albans and approximately a
third of the Hertsmere population, a total catchment population
of around 463,514.
1.3 The Trust operates from four sites throughout
West Hertfordshire at: Watford (Watford General Hospital), Hemel
Hempstead Hemel Hempstead General Hospital), St Albans (St Albans
City Hospital) and Northwood (Mount Vernon Hospital). Each of
the acute hospitals at Watford and Hemel Hempstead serve a catchment
population of 200-225,000.
1.4 Burns and Plastics services are provided
from Mount Vernon, and as a supra regional service, the catchment
population is approximately two million. This service is likely
to transfer to the Royal Free Hospital later this year.
2. FINANCIAL
CONTEXT
2.1 The Scale of the Financial Problem
The Trust has to reduce its costs by over £40
million over the next two years, from its annual expenditure of
£230 million. This is illustrated in the diagram below.
| 2006-07
| 2007-08 |
| In year deficit 2006-07 | £18m
| Brought forward 2007-08 | £12m
|
PCT Intentions, CIP,
PbR |
£9m
| Pressures: CIP, PbR, fye
PCT Intentions, Plastics
|
£13m |
| Deficit | £27m
| Deficit | £25m
|
| | |
|
Actions in year:
Turnaround Plans
|
£12m | Trust would need a total CIP of
around 18%
| |
| Capacity Reduction | £3m
| | |
| Savings | £15m
| This is unachievable withous redesign and
reconfiguration
|
| Agreed Deficit | £12m
| | |
| | |
|
2.2 Failure to address the financial problems now will
result in the Trust's position deteriorating even further—an
accumulated deficit in excess of £100 million has been forecast
by 2010 if no action is taken.
2.3 Financial stability is essential if the Trust is
to sustain services and retain the prospect of the new hospital.
The challenge for the Trust is maintaining and improving clinical
quality and meeting NHS performance standards whilst reducing
costs.
2.4 Why is the Deficit so Large?
2.5 West Hertfordshire has a history of financial deficit
going back to the early 1990's. This is attributable to a number
of factors, including: activity levels above those anticipated
given the good health status of the population; outflow of patients
and resources to London; difficulty in recruiting staff to a high
cost area and a consequent high usage of agency staff; loss of
income during GP Fundholding, which was widely adopted in the
area; an infrastructure in the acute sector—acute services
being provided on four sites—which is too large to be sustained
with the available income base. The history of deficit in West
Herts, has led to a lack of investment in core services, buildings,
site infrastructure and equipment. As a consequence, despite the
best efforts of our staff, this situation has resulted in a variable
patient experience that is in danger of deteriorating further.
The gap between income and expenditure existed even before the
Trust's inception in 2000. Figure 1 below illustrates the financial
health of the Trust over the last six years. It describes the
Trust's financial position at the end of each year since 2000
when the Trust was formed. A positive financial position was achieved
only in 2002-03; this was due to a one off allocation of £20
million by the NHS Bank. This cleared the 2001-02 deficit and
brought the Trust back to a cumulative breakeven position. The
position at the end of 2005-06 is provisional pending publication
of the final accounts in July.
Figure 1
THE FINANCES OF THE TRUST 2000-06
2.6 In addition, the Trust has suffered from poor financial
management, a lack of operational control arising from the three
mergers that have taken place in the last 14 years and a high
turnover of leadership. There is also an underlying structural
problem in the economy (see 2.4 above), the root causes of which
have not been fully addressed previously.
2.7 In line with the experience of many other Trusts,
the WHHT position has also deteriorated considerably in 2005-06.
This is as a consequence of inter alia increased workforce costs,
eg the new consultant contract, agenda for change, working time
directive etc.
3. STRATEGIC CONTEXT
3.1 The financial pressures within the NHS have been
widely reported over the last few months, with a significant number
of Trusts and PCTs throughout the country experiencing financial
deficits.
3.2 Financial stability within the Hertfordshire health
economy has not been achieved for a number of years. This has
led to the wider health community in Hertfordshire agreeing a
Strategic Health Authority (SHA) wide strategy—Investing
in Your Health, which was fully consulted upon in 2003.
3.3 The agreed IiYH option proposes the following service
configuration for West Hertfordshire:
— the centralisation of acute services to a new
hospital on the Watford General Hospital (WGH) site;
— the provision of planned surgical services, outpatient,
diagnostic, intermediate care and urgent care services on the
Hemel Hempstead site; and
— the provision of outpatient, diagnostic, intermediate
care and urgent care services on the St Albans Hospital site.
3.4 The overall timescale for the full implementation
of IiYH is 2013. However given the worsening financial position
across Hertfordshire, coupled with the national focus on financial
balance, it has become necessary to explore how the benefits of
IiYH can be delivered in advance of the new PFI hospitals.
4. THE TRUST'S
APPROACH TO
ACHIEVING BALANCE
4.1 The Trust fully acknowledges the need to embed high
quality financial management and operational control into the
organisation. This will be achieved by a radical re-structure
of the Finance Department including investment in new posts and
a rigorous professional development programme to improve financial
management and planning skills both within the finance and business
planning teams and those of the operational managers. This will
be set against the implementation of a robust performance management
regime throughout the organisation focusing upon accountability
and achievement of key financial and service targets.
4.2 The Trust has also explored a number of other strategies
over the last twelve months to deliver financial stability. Whilst
this has led to some cost reductions being implemented amalgamation
of these strategies into an overall package offers the greatest
service and financial benefits. These strategies fall into three
main categories as described below:
Improving Operational Efficiency—Turnaround Programme
4.3 The Trust has worked on a standard savings plan known
as the Turnaround Programme. This has resulted in cost reductions
in 2005-06 of £4 million and a programme of savings for 2006-07
with a target of over £12 million. Work is ongoing to find
further savings in order to align cost reduction with income reductions.
Improving Clinical Effectiveness—"Best Practice,
Best Value"
4.4 The Trust has reviewed its clinical practice and
has identified that further savings can be achieved by improving
clinical performance and has set a target to perform at the level
of the top 20% of the hospitals in the country, in terms of clinical
practice. It should be noted that in some areas the Trust's current
level of clinical effectiveness is high, with the opportunity
for improvement in others.
Reconfiguring Services—Interim IiYH Measures
4.5 Improving both organisational efficiency and effectiveness
goes some way to reducing the Trust's financial deficit. However,
this still leaves an unacceptable gap.
4.6 The scale of the financial problem suggests that
the Trust's workforce needs to be reduced by in excess of 500
posts. Whilst approximately 100 of these can be achieved by redesigning
how clinical services are delivered, the remainder requires a
significant reduction in service duplication. To this end the
Trust has explored a number of options to reconfigure services
as rapidly as possible.
4.7 Originally the Trust explored three options for service
reconfiguration. However, the Overview and Scrutiny Committee
(OSC) held on 8 June urged the Trust to discount one option (centralisation
of acute services to Hemel Hempstead) as this configuration is
counter to IiYH. The formal Consultation process has been agreed
with the OSC period will commence on the 10 July for a period
of 100 days.
5. DESCRIPTION OF
POTENTIAL OPTIONS
5.1 Option A
Centralisation of acute services at Watford and the majority
of planned services at St Albans, withdrawal of WHHT operated
services from Hemel Hempstead.
Watford General Hospital (WGH)
5.2 All the acute services, such as A&E, ITU, complex
surgery and acute medicine would be located at WGH in addition
to Women's and Children's services. Clinical support services
and outpatient facilities would need to be enhanced to support
increased activity. An Acute Assessment Unit adjacent to A&E
will be provided. Investment would be required to improve the
existing infrastructure and facilities to enable the site to accommodate
the additional activity.
St Albans City Hospital (SACH)
5.3 SACH would be the focus of elective short stay and
Day case surgical activity in advance of the Surgicentre. Outpatient
Services and the Minor Injuries Unit would remain. The PCT would
continue to provide Intermediate Care.
Hemel Hempstead General Hospital (HHGH)
5.4 The independent sector treatment centre (ISTC) is
planned to be operational on site in early 2008. The hospital
would be used by the PCT to develop local community services.
This would include an urgent care centre; out patients; diagnostics;
and intermediate care services. Clinical support services would
be retained at Hemel in order to support the Surgicentre and other
services on site.
Mount Vernon
5.5 Burns and Plastics services are subject to a separate
process currently underway and the remaining WHHT services, such
as histopathology, would be repatriated, thereby withdrawing fully
from the site.
5.6 Option B
Centralisation of acute services at Watford; the majority
of planned services at Hemel; PCT operated services at St Albans.
Watford General Hospital (WGH)
5.7 All the acute services, such as A&E, ITU, complex
surgery and acute medicine would be located at WGH addition to
Women's and Children's services. Clinical support services and
outpatient facilities would need to be enhanced to support increased
activity. Investment would be required to improve the existing
infrastructure and facilities to enable the site to accommodate
the additional activity.
Hemel Hempstead General Hospital (HHGH)
5.8 Short stay and day surgery would be centralised at
the Hemel site and undertaken within existing buildings at Hemel,
with an increased compliment of theatres installed on site. There
would be a considerable consolidation of services within the site.
Intermediate care beds would be on site and other services dependent
on PCT commissioner intentions, eg Urgent Care Centre. The independent
sector treatment centre (ISTC) is planned to be operational on
site in early 2008.
St Albans City Hospital (SACH)
5.9 Services at St Albans would be largely dependent
on PCT plans for the development of community services. However,
are likely to include intermediate care beds, as currently provided,
outpatient and diagnostic services and a minor injuries unit.
Mount Vernon
6. As option A.
7. CONFIGURATION POST
ISTC SURGICENTRE
7.1 Once the Surgicentre is operational, the majority
of elective surgical services will be transferred to Hemel. Whilst
health services will be provided on all three sites, it is likely
that WHHT will only operate services directly on the WGH site.
This is broadly consistent with Option 2 of IiYH.
Watford General Hospital (WGH)
7.2 All the acute services, such as A&E, ITU, complex
surgery and acute medicine would be located at WGH addition to
Women's and Children's services.
Hemel Hempstead
7.3 Short stay and day surgery would be centralised at
the Hemel site and undertaken within the Surgicentre. Clinicentre,
an independent provider, will operate the Surgicentre. Intermediate
care beds would be on site and other services dependent on PCT
intentions, eg Urgent Care Centre, Diagnostics and Outpatient
Services.
The future provision of birthing centres on the Hemel Hempstead
site is currently under independent review.
St Albans City Hospital (SACH)
7.4 Services at St Albans would be largely dependent
on PCT plans for the development of community services. However,
are likely to include intermediate care beds, as currently provided,
outpatient and diagnostic services and a minor injuries unit.
8. SAVINGS
8.1 The indicative level of net savings achievable from
each of the options along with the associated indicative capital
costs is described below in table 1. The income consequences as
a result of the catchment changes have been taken into consideration.
| Net Saving
£m
| Capital Cost
£m |
Option A:
Centralisation of acute services at Watford and the majority of planned services at St Albans, withdrawal of WHHT operated services from Hemel Hempstead
|
11.2 |
31.4
|
Option B:
Centralisation of acute services at Watford; the majority of planned services at Hemel; PCT operated services at St Albans
|
10.5 |
33.2
|
| | |
8.2 Capital costs are indicative and represent a worst
case scenario; further review of these costs will take place as
the detailed service planning and design for the selected option
evolves and the business case is developed.
9. SUMMARY
West Herts Trust is in a health economy that has experienced
financial difficulties for many years. The Trust faces the task
of reducing its cost base by 18% and is approaching this on three
levels: improving operational efficiency; improving clinical performance;
reconfiguring services. These actions together provide the basis
for achieving financial balance and stability, to provide the
platform for a much-needed redevelopment of the hospital at Watford.
West Hertfordshire Hospitals NHS Trust
June 2006
119
Investing in Your Heath Beds and Herts SHA 2003 www.bhsha.nhs.uk/investinginyourhealth Back
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