RLBUHT Appointment Business Case

335 Pages·2013·5.66 MB·English

A New Health Service for Liverpool
World Class Hospitals, World Class Services
Volume 1 – Appointment Business Case

Royal Liverpool and Broadgreen University Hospitals NHS Trust
April 2013

Royal Liveerpool & Broadggreen Universityy Hospitals NHSS Trust
Volume 1 – Appointment Business Case
Forewword
We are pleased to ppresent this AAppointment Business Caase for the ddevelopment of a new
hospital to replace thhe Royal Livverpool Univeersity Hospitaal. The projeect is now enntering an
exciting phase with tthe start of building work scheduled foor 2013.

The neww hospital onn the Royal site (for commplex care, eemergency aand trauma) together
with thee planned fuurther development of Broadgreen Hospital (foor elective ccare and
rehabilitation) will ennsure that thhe people off Merseysidee, Cheshire aand beyond will have
access to world class health services deelivered in world classs, purpose designed
buildingss.

The neww hospital wwill make a significant ccontribution tto the continnuing renaisssance of
Liverpoool as a modeern, vibrant ccity whilst addding to the stock of lanndmark builddings that
are a feeature of thee city. The pproject also creates over four hectarres for the vvisionary,
leading edge Health and Lifescieence Campuus; the creatioon of researrcch and otherr facilities
for Lifesscience comppanies whichh in turn will contribute significantly too the city’s ccontinued
regeneraation and proofile on the wworld stage.

Trust staaff, patients, partners andd the public have been fully consulteed and involvved in the
project ssince its incception and they have ddirectly shapped the Clinical Service Delivery
Model thhat is at the heart of the project. Thiss close involvvement has continued thhroughout
the Commpetitive Dialogue processs including tthe evaluatioon of bidder ddesigns and choosing
a partneer to build thee new hospitaal.

The Truust recognisees the unwaavering support that it haas received for the new hospital,
includingg widespreaad support frrom key staakeholders inn the city (MMP’s, counciillors and
neighbourhood committees etc.)), from the loocal health eeconomy, annd from the UUniversity
of Liverrpool. The ssupport is sstrong because the Truust’s partners and stakkeholders
recognisse the significcant healthcaare and social benefits thhat will arise from the schheme.

In conjuunction with Clinical Coommissioningg Groups, rredesigned sservices will help to
reduce tthe health innequality gap that currently exists bbetween Liveerpool and ssurrounds
and the rest of Englaand. New ressearch facilities will strengthen the Trrust’s partnerrship with
the Univversity. At a time of greaat change the new hospital represennts a reassuring fixed
point in everyone’s pplans to achieeve these gooals.

People nneed their hoospital at critical points in their lives, and the neww hospital iss a potent
symbol that the Trusst and its paartners will bbe there for tthem when nneeded, withh modern
treatmennts provided in “inspiring, humane annd attractive” facilities.

As the TTrust and itss partners mmove forwardd to deliver the new heaalthcare facilities and
servicess, its central vision for thhe future will remain unchanged – too develop suustainable
world claass services and hospitaals that are reecognised ass those of chhoice for the ppeople of
Merseysside, Cheshirre and beyonnd.

On behaalf of the Trust we commeend this Apppointment Business Casee to you.

i
Royal Liverpool & Broadgreen University Hospitals NHS Trust
Volume 1 – Appointment Business Case

ii
Royal Liverpool & Broadgreen University Hospitals NHS Trust
Volume 1 – Appointment Business Case
Overview
 This Appointment Business Case takes the Trust closer to the pivotal point of choosing
a partner to build the new Royal Liverpool University Hospital
 Underlying impetus for change is business interruption risk:
 Deteriorating engineering infrastructure (heating, electrical, ventilation, water)
 Fire safety issues
 Clinical Model:
 Aligned with national, regional and local strategies
 Streamlined service delivery through separation of emergency and elective workloads
 Optimised service delivery through more effective use of the Royal, Broadgreen and
outside hospital locations
 Activity, Performance and Capacity:
 Activity – activity projections to 2026-27
 Performance targets benchmarked against leading teaching hospitals
 646 new build beds v 643 at OBC (RLUH), 100% inpatient single bedrooms
 Option Appraisal:
 Technical assessment of alternative sites, refurbishment and new build
 Rigorous, inclusive process identified new build as the preferred option due to clinical
and environmental considerations, timescale, disruption and value for money
 Health economic benefits assessment shows significant potential benefits
 Project Scope:
 Development of a new hospital and demolition of the existing RLUH
 Bidders’ Masterplan includes PFI Works plus Cancer Centre and Health and
Lifescience Campus
 Provision of hard FM to new and retained facilities
 Provision of “inspiring, humane and attractive“ facilities
 Concession term of 30 years
 Sustainability, Regeneration and Corporate Citizenship:
 Sustainability integral to the redevelopment and Trust operations
 Contribution to regeneration, corporate citizenship, reduced carbon footprint, local
procurement
 New building expected to score “Excellent” on BREEAM1 2011 scale
 Freeing up of four hectares for the visionary Health and Lifescience Campus – for the
creation of health, research and other facilities
 Procurement Strategy:
 PFI evaluated as better value for money than conventional procurement route
 Fully developed procurement strategy and documentation
 Due diligence advisors appointed
 Funding Competition protocol agreed
 Minimal scope creep and robust commercial positions
 Final Bid evaluation completed and Preferred Bidder (Minded to Appoint) identified

1 Building Research Establishment Environmental Assessment Methodology
iii
Royal Liverpool & Broadgreen University Hospitals NHS Trust
Volume 1 – Appointment Business Case
 Workforce:
 The Trust has developed a workforce strategy that responds to internal and external
drivers
 Role redesign, linked to service redesign
 Staffing projections identified, with reductions focused on non-clinical posts, and
integrated with financial plans
 Pace of change has been evaluated to confirm the realism of the Trust’s plans
 Affordability and Financial Risk Management:
 Base case assessed as affordable
 Significant downside scenario considered and fully mitigated
 Detailed CIPs developed for 2013-14 and 2014-15 and identified at summary level for
2015-16 to 2021-22
 Monitor ratios achieved
 Unitary Payment represents less than 6% of Trust turnover
 Achieves DH ratio test of 12.5%
 45% of the construction cost of the new RLUH will be met by public sector capital
 Risk:
 Active management of project risk
 Seven key risks identified and mitigation strategies developed
 Benefits:
 Business continuity risk eliminated, new care pathways, improved facilities, healing
environment,
 Detailed and measurable Benefits Realisation Plan developed
 Site created for strategic redevelopment
 Consultation:
 Outstanding clinical engagement commended by Gateway Review 1
 Involvement of patients and public, including development of a Patient Brief
 Formal public consultation 14 July 2008 to 20 October 2008, signed off by Liverpool
PCT and Overview & Scrutiny Committee
 Further period of public engagement 5 May 2009 to 12 June 2009 – reaffirmed by
Liverpool PCT in July 2009
 Comprehensive and vibrant user involvement, including patient representatives, in
Competitive Dialogue design development
 Over 500 staff involved in design development and evaluation
 Commissioner support and approvals to DABC secured
 Timetable:
 OJEU date March 2010
 Competitive Dialogue commenced February 2011, concluded April 2013 – Preferred
Bidder appointment June 2013, Financial Close January 2014
 Construction begins 2014 – new Royal Liverpool University Hospital opens 2017.

iv
Royal Liveerpool & Broadggreen Universityy Hospitals NHSS Trust
Volume 1 – Appointment Business Case
Contennts
1  Executive Summary ....................................................................................................... 11 
1.1  Introduuction ........................................................................................................... 11 
1.2  The Strategic Context ........................................................................................... 44 
1.3  Case ffor Change .................................................................................................. 77 
1.4  Futuree Service Requirements............................................................................. 100 
1.5  Optionn Appraisal aand Preferredd Option ............................................................. 133 
1.6  Procurement Routte ............................................................................................ 166 
1.7  Procurement Scoppe ............................................................................................ 177 
1.8  Procurement Strattegy, Bidder Competition & Selection................................... 177 
1.9  Affordability ......................................................................................................... 188 
1.10  Projecct Timetable and Manageement Arranggements ......................................... 244 
1.11  Risk MManagementt .............................................................................................. 255 
1.12  Beneffits Realisatioon and Evaluuation .................................................................. 266 
1.13  Sustainability, Reggeneration annd Corporatee Citizenshipp ................................... 299 
1.14  Workfforce ........................................................................................................... 299 
1.15  Consuultation, Stakkeholder Invoolvement andd Approvals .................................... 322 
Part A –– Introductioon and Strattegic Case ............................................................................. 355 
2  Introduction .................................................................................................................. 377 
2.1  Purpoose of the Appointment Buusiness Casse ..................................................... 377 
2.2  Structure of the Apppointment BBusiness Casse ................................................... 377 
2.3  Introduuction to theTrust ..................................................................................... 388 
2.4  Historical Development of the Project ............................................................... 411 
3  Strategic Coontext .......................................................................................................... 477 
3.1  Introduuction ......................................................................................................... 477 
3.2  Nationnal Context aand Governmment Policy ......................................................... 477 
3.3  Local Context and Health Strattegy ................................................................... 533 
3.4  Trust CContext ...................................................................................................... 677 
4  The Case foor Change ................................................................................................... 777 
4.1  Introduuction ......................................................................................................... 777 
4.2  The RRoyal – Physiical Condition ........................................................................ 799 
4.3  Nationnal Policy Coontext ...................................................................................... 799 
4.4  Local Context ..................................................................................................... 800 
4.5  Reseaarch ............................................................................................................ 811 
4.6  Improvved Patient aand Staff Envvironment .......................................................... 811 
4.7  New MModels of Deelivery and Immproved Performance ........................................ 811 
4.8  Improvved Morbidity and Mortallity ...................................................................... 822 
4.9  Sustainable Development .................................................................................. 822 
4.10  Concluusion .......................................................................................................... 822 
5  Future Serviice Requiremment ........................................................................................ 833 
5.1  Introduuction ......................................................................................................... 833 
5.2  Futuree Service Delivery ...................................................................................... 833 
5.3  Activitty Drivers .................................................................................................... 877 
5.4  Activitty Projectionss ............................................................................................. 933 
5.5  Perforrmance Improvement ................................................................................. 977 
v
Royal Liveerpool & Broadggreen Universityy Hospitals NHSS Trust
Volume 1 – Appointment Business Case
5.6  Capaccity Requiremments .................................................................................... 1044 
5.7  Nationnal Clinical AAdvisory Teamm Review ......................................................... 1077 
5.8  Concluusion ........................................................................................................ 1077 
6  Project Objeectives ...................................................................................................... 1099 
6.1  Introduuction ....................................................................................................... 1099 
6.2  Projecct Aim and OObjectives .............................................................................. 1099 
6.3  Key CConstraints ................................................................................................ 1111 
Part B –– Economic Case ....................................................................................................... 1133 
7  Option Apprraisal ......................................................................................................... 1155 
7.1  Introduuction ....................................................................................................... 1155 
7.2  Identiffication of thee Shortlist off Options ........................................................... 1155 
7.3  Description of the Shortlisted OOptions ............................................................. 1199 
7.4  Concluusion ........................................................................................................ 1233 
8  Benefits Apppraisal ...................................................................................................... 1255 
8.1  Introduuction ....................................................................................................... 1255 
8.2  Methoodology ..................................................................................................... 1255 
8.3  Beneffit Criteria .................................................................................................. 1255 
8.4  Resultts of the Nonn-Financial OOption Appraisal ............................................... 1277 
8.5  Sensittivity Analysis ........................................................................................... 1377 
8.6  Concluusion ........................................................................................................ 1377 
9  Economic AAppraisal ................................................................................................... 1399 
9.1  Introduuction ....................................................................................................... 1399 
9.2  Methoodology ..................................................................................................... 1399 
9.3  Costs ................................................................................................................ 1400 
9.4  Risk AAssessment .............................................................................................. 1433 
9.5  Net Prresent Cost aand Equivaleent Annual CCost Analysiss ................................. 1444 
9.6  Sensittivity Analysis ........................................................................................... 1444 
9.7  Determmining the Preferred Opttion ................................................................... 1455 
9.8  Healthh Economic BBenefits Asssessment .......................................................... 1455 
9.9  Concluusion ........................................................................................................ 1500 
Part C –– Commercial Case ................................................................................................... 1511 
10  Procuremennt Route .................................................................................................... 1533 
10.1  Introduuction ....................................................................................................... 1533 
10.2  Qualitative VfM Asssessment ............................................................................ 1533 
10.3  Quanttitative VfM AAssessment .......................................................................... 1699 
10.4  Potential for Futuree Changes ........................................................................... 1722 
10.5  Concluusion ........................................................................................................ 1733 
11  Project Scoppe ............................................................................................................. 1755 
11.1  Introduuction ....................................................................................................... 1755 
11.2  The Site ............................................................................................................ 1755 
11.3  Overvview of the Trrust Requiremments - Design Approachh ................................ 1777 
11.4  Overvview of Trust Requiremennts - Town Pllanning ......................................... 1800 
11.5  Overvview of Trust Requiremennt - Site Strattegy............................................... 1822 
11.6  Overvview of Trust Requiremennts - Energy && Sustainability ............................ 1866 
vi
Royal Liveerpool & Broadggreen Universityy Hospitals NHSS Trust
Volume 1 – Appointment Business Case
11.7  Overvview of Trust Requiremennt - ICT Strategy ............................................... 1866 
11.8  Equipment Strateggy .......................................................................................... 1866 
11.9  Hard FFM ServicesStrategy .............................................................................. 1877 
11.10  Soft FM Services SStrategy ................................................................................ 1888 
11.11  Incomme Generation Opportunitties ................................................................... 1899 
11.12  Concluusion ........................................................................................................ 1899 
12  Procuremennt Strategy, BBidder Comppetition and SSelection ....................................... 1911 
12.1  Introduuction ....................................................................................................... 1911 
12.2  The PProcurement Strategy ............................................................................... 1911 
12.3  Pre-QQualification ............................................................................................... 1922 
12.4  Comppetitive Dialoggue Processs ........................................................................ 1933 
12.5  Interimm and Draft/FFinal Bid Subbmissions annd Evaluationn ................................ 1933 
12.6  Comppetitive Dialoggue Commennces ................................................................. 1966 
12.7  Interimm Bid Evaluaation ...................................................................................... 1977 
12.8  Schemme Developmment and Furrther Dialoguue .................................................. 1988 
12.9  Draft BBid Evaluatioon .......................................................................................... 1999 
12.10  Final BBids .......................................................................................................... 2000 
12.11  Evaluaation and Seelection of Prreferred Biddder ................................................. 2011 
12.12  Financcial Close ................................................................................................. 2011 
12.13  Key Project Milestones ..................................................................................... 2022 
12.14  Procurement Docuumentation............................................................................ 2022 
12.15  Standard Form Coompliance ............................................................................. 2044 
12.16  Final BBid Requiremments .................................................................................... 2066 
12.17  Approoach to Funding Competittion and Duee Diligence .................................... 2066 
12.18  Planning Permission ......................................................................................... 2077 
12.19  Certificate of Title ............................................................................................. 2088 
12.20  Transffer of Underttakings and PProtection off Employmennt ............................... 2088 
12.21  Bidderr Selection ............................................................................................... 2088 
12.22  Qualitative Evaluation ....................................................................................... 2088 
12.23  Key DDifferentiatorss and Rationaale for Scorees .................................................. 2099 
12.24  Financcial Evaluatioon ......................................................................................... 2100 
12.25  Overaall Evaluationn ............................................................................................ 2111 
12.26  Concluusion ........................................................................................................ 2111 
13  Bidder Soluttion ........................................................................................................... 2133 
13.1  Introduuction ....................................................................................................... 2133 
13.2  Visionn ................................................................................................................ 2133 
13.3  Design – Key Attributes .................................................................................... 2144 
13.4  Quality in Design .............................................................................................. 2155 
13.5  Design – A Good NNeighbour ............................................................................ 2155 
13.6  Design – Natural LLight ...................................................................................... 2155 
13.7  Design – Healing EEnvironmentt ........................................................................ 2155 
13.8  Design – Staff andd Visitor Expeerience ............................................................. 2155 
13.9  Design – Accessibbility ....................................................................................... 2166 
13.10  Design – Flexibilityy ........................................................................................... 2177 
13.11  Design – Generic Ward .................................................................................... 2177 
13.12  Design – Standardd Bedroom DDesign ............................................................... 2177 
vii
Royal Liveerpool & Broadggreen Universityy Hospitals NHSS Trust
Volume 1 – Appointment Business Case
13.13  Design – Undercrooft Car Park .......................................................................... 2188 
13.14  Addedd Value – Edwards Buildiing .................................................................... 2188 
13.15  Construction ..................................................................................................... 2188 
13.16  Facilities Managemment ..................................................................................... 2199 
13.17  Sustainability .................................................................................................... 2200 
13.18  Commmunity ....................................................................................................... 2211 
Part D –– Financial CCase ........................................................................................................ 2233 
14  Affordability ................................................................................................................ 2255 
14.1  Introduuction ....................................................................................................... 2255 
14.2  Trust Financial Position .................................................................................... 2255 
14.3  Internaational Finanncial Reportinng Standards (IFRS) ....................................... 2311 
14.4  Activitty and Incomme Assumptioons ................................................................... 2322 
14.5  Impacct on Commisssioners ................................................................................ 2322 
14.6  Revennue Implicatioons of the Prreferred Option ................................................ 2333 
14.7  Cost Improvementts .......................................................................................... 2355 
14.8  Transitional Costsand Supporrt ....................................................................... 2388 
14.9  Asset Impairment ............................................................................................. 2399 
14.10  Depreeciation on New Facilitiess ........................................................................ 2399 
14.11  Other Capital Investment .................................................................................. 2399 
14.12  Third Party Fundinng .......................................................................................... 2411 
14.13  Base CCase ........................................................................................................ 2422 
14.14  Incomme & Expendiiture Accounnt ....................................................................... 2433 
14.15  Balancce Sheet .................................................................................................. 2444 
14.16  Cash Flow Statemment ....................................................................................... 2477 
14.17  Comppliance with MMonitor Ratioos ...................................................................... 2477 
14.18  Source & Application of Fundss for the Unitaary Paymentt ................................. 2488 
14.19  PFI Fuunding Optioons ........................................................................................ 2499 
14.20  Fundinng Competitiion ........................................................................................ 2500 
14.21  Downsside Case ................................................................................................ 2500 
14.22  Trust Mitigation to the Downsidde ..................................................................... 2511 
14.23  Downsside Case annd Mitigationns – Outcomee ................................................... 2533 
14.24  DH Afffordability Raatio ....................................................................................... 2555 
14.25  Externnal Validationn ........................................................................................... 2555 
14.26  Concluusion ........................................................................................................ 2555 
Part E –– Managemeent Case .................................................................................................. 2577 
15  Project Timeetable and MManagement Arrangemennts ................................................. 2599 
15.1  Introduuction ....................................................................................................... 2599 
15.2  Projecct Plan and TTimetable .............................................................................. 2600 
15.3  Projecct Managemeent ........................................................................................ 2600 
15.4  Organnisational Structure and GGovernance ...................................................... 2622 
15.5  Externnal Advisors ............................................................................................. 2688 
15.6  Projecct Procuremeent Costs andd Funding ........................................................ 2699 
15.7  Projecct Initiation DDocument .............................................................................. 2699 
15.8  Audit aand Review ............................................................................................. 2699 
15.9  Risk MManagementt ............................................................................................ 2700 
viii