SUBJECT: SOFT FM SERVICES

Transcription

1 Lanarkshire NHS Board March 25th 2015 Lanarkshire NHS Board Kirklands Fallside Road Bothwell G71 8BB Telephone: SUBJECT: SOFT FM SERVICES 1. PURPOSE This paper is coming to the Board: For approval X For endorsement To note NHS Lanarkshire Corporate Management Team and Board have previously been advised of the requirements for both parties to the PFI contracts at Wishaw and Hairmyres to undertake septennial reviews of the Soft FM Services delivered at these sites. These reviews fall due on 26 May 2015 for the Wishaw contract and 1 June 2015 for Hairmyres. This report sets out the current position that has been reached following legal advice received by lawyers appointed by the Board and a report prepared by legal advisors appointed by Scottish Futures Trust (SFT). SFT were acting under instruction from the Cabinet Secretary for Health and Wellbeing to ensure that the approach taken by NHS Lanarkshire and the Special Purpose Vehicles, with whom the Board contracts, was appropriate. 2. ROUTE TO THE BOARD This paper has been prepared for consideration by Board members. Prepared Reviewed Endorsed The CMT has considered this matter on a number of occasions since September 2014 and the Board have discussed the key issues, in seminar mode, due to the commercially sensitive nature of the information. 3. SUMMARY OF KEY ISSUES The legal advice to NHS Lanarkshire, provided by Harper Macleod LLP, clearly articulates that the Hairmyres Contract requires both parties to reach agreement on future provision and pricing using a benchmarking approach. For Wishaw the advice also confirms that if the Board is satisfied that a value for money decision can be reached using a benchmarking approach then there is no requirement to undertake a market testing and tendering process.

2 Following the benchmarking exercise, the detail of which is contained in the November report to CMT and which was an aspect of the discussion on this topic at the Board seminar, it was recommended by the Director of Strategic Planning and Performance, that the negotiated settlement offer that would deliver an annual saving of 502k at Wishaw and 330k per annum at Hairmyres whilst maintaining, indeed enhancing, service quality should be accepted. At this time the Cabinet Secretary wrote to the then Chief Executive, requesting that the Board did not proceed with a decision until Scottish Future s Trust had completed an independent review to ensure that NHS Lanarkshire were compliant with the septennial review process as set out in the contract. SFT were supported in completing this review by Brodies LLP. The report from Brodies, which has previously been shared with Board members, clearly sets out what the options are for both parties within the septennial review process and their conclusions are very similar to those provided by the Board s legal advisors. Specifically the report highlights: 1) Hairmyres Hospital The advice received by SFT confirms that where there is suitable benchmarking information available then there is only one clear option within the terms of the contract. That being the negotiated settlement is agreed. Based on this it is recommended that the Board accept these offers and instruct the Director of Strategic Planning & Performance to engage relevant parties to formally conclude an agreement for the next 7 years based on the terms of the re-negotiated settlement. 2) Wishaw The advice received by SFT is the same as that received by NHSL. The main points being: If the Board agrees that the most acceptable option in terms of service quality and price is to accept the 502k per annum saving then we can proceed to conclude the benchmarking and negotiated settlement with the SPV and there is no requirement to undertake a market testing and tendering process. On the basis of the advice received from both Harper Macleod LLP (acting for the Board) and Brodies LLP (acting for SFT) the Board will need to consider the following points if it prefers to market test; i) The contract explicitly states that it is the SPV who will lead on the tendering process and also sets out what the pre-qualifying tendering criteria will be. There is a risk that an in-house bid would not meet all of these criteria and would therefore be excluded at this stage. ii) There will be a cost to NHS Lanarkshire of around 250k to 300k to operate the tendering process including setting up an in-house bid team. Those companies that choose to tender will also incur costs of this magnitude and the successful bidder will pass these costs on to the Board in their agreed price. 2

3 iii) There is a risk that the market testing process will result in a higher revenue cost than the existing price. iv) The Board would be required to divert around 2m of capital to procure the equipment required to deliver catering, portering, cleaning and switchboard services at Wishaw should an in-house bid be successful. Provision would also have to be made for replacement equipment on a cyclical basis over time. v) The Board will need to assess the risks of meeting the additional costs linked to managing the tendering process together with the potential of having a higher revenue charge than the existing baseline should an alternative provider be contracted. This level of risk needs to be considered against the guaranteed saving of 502k per annum. It should be noted that the performance reports produced by ISD using the Health Facilities Scotland monitoring standards clearly demonstrate that the current provider benchmarks well against all other sites in Scotland. vi) There is a risk that delays in reaching agreement with the providers, due to the time taken to manage the market testing and tendering process, will result in 70k per month costs due to lost savings. These costs will need to be met from other service areas to ensure financial balance is maintained. vii) Should an in-house bid be successful, they would be sub-contractors of Summit and not to the Board. This will mean that the Board will monitor Summit who will monitor the directly managed service. Any penalties currently applied by the Board to Summit, who currently pass these on to Serco, will now result in the Board applying penalties to its own directly managed staff. 3) Board Seminar At the Board Seminar on 25 February 2015, the Employee Director questioned the rigor of the benchmarking exercise which had been undertaken and raised concerns as to whether the information provided enabled the Board to conclude on the recommendations that had been presented. Reference was made to a report that had been commissioned by UNISON Lanarkshire and prepared by APSE Solutions which criticised the validity of the benchmarking process that had been taken. The APSE report was subsequently circulated to Board members. Given the content of this report the Director of Strategic Planning and Performance and Director of Finance undertook a critical appraisal of that document and the report from this review was circulated to Board members for consideration. 4. STRATEGIC CONTEXT This paper links to the following: Corporate objectives LDP Government policy Government directive Statutory requirement AHF/local policy Urgent operational issue Other The conclusion of these agreements is a fit with NHSL s requirements to provide the highest standards of clinical care in a safe and health working environment and in a value for money way. 3

4 5. CONTRIBUTION TO QUALITY This paper aligns to the following elements of safety and quality improvement: Three Quality Ambitions: Safe Effective Person Centred The delivery of high standards of Soft FM Services supports the achievement of safe, effective and person-centred care. Six Quality Outcomes: Everyone has the best start in life and is able to live longer healthier lives; (Effective) People are able to live well at home or in the community; (Person Centred) Everyone has a positive experience of healthcare; (Person Centred) Staff feel supported and engaged; (Effective) Healthcare is safe for every person, every time; (Safe) Best use is made of available resources. (Effective) 6. MEASURES FOR IMPROVEMENT Continues performance monitoring using agreed Infection Control and Environmental Cleanliness Standards. 7. FINANCIAL IMPLICATIONS Acceptance of the renegotiated settlement will deliver a combined saving of 832k per annum for the next seven years. In addition to this Serco, on the Wishaw site, will include deep cleans that are required after infection control outbreaks, as part of the core contract price. This element of service cost 15k in the last year. Serco will also introduce a hostess service to this site. The hostess service at Hairmyres was costed at 350k per annum. Given that Wishaw has 130 beds more than Hairmyres it is not unreasonable to consider that these service improvements add another 400k per annum value to this contract. This is before consideration is given to the time saved for direct nursing care when nurses are not required to plate and serve meals. Pursuing the market testing route will require around 300k of revenue and in excess of 3m of capital to support the process and fund the purchase of equipment should an inhouse bid be successful. There is also a risk that the costs of any new provider will be above the existing baseline and the savings from the re-negotiated settlement will be lost. Given the overall financial plan, as set out in the LDP, this will require the 832k savings to be realised recurrently from another service area. 4

5 8. RISK ASSESSMENT/MANAGEMENT IMPLICATIONS There is a risk that NHS Lanarkshire will be required to meet additional capital and revenue costs both for the management of the tendering process and the potential to have higher costs from the successful bidder. There is also a significant risk that the cost reductions of 5.8m over the next 7 year period will be lost. If this occurs then this level of saving will have to be realised from elsewhere in NHS Lanarkshire services. 9. FIT WITH BEST VALUE CRITERIA This paper aligns to the following best value criteria: Vision and leadership Effective partnerships Governance and accountability Use of resources Performance Equality management Sustainability 10. EQUALITY AND DIVERSITY IMPACT ASSESSMENT Existing Contracts have been EDIA assessed. A copy of the assessments can be obtained from John Paterson, General Manager, Property and Support Services Department. Telephone : or e mail john.paterson@lanarkshire.scot.nhs.uk 11. CONSULTATION AND ENGAGEMENT There has been discussion through Area Partnership Forum and CMT on the process. 12. ACTIONS FOR THE BOARD Based on all of the above the Corporate Management Team has agreed that, on balance, the re-negotiated settlement is the best option available to the Board and supports the recommendation that the Director of Strategic Planning and Performance should be instructed to engage relevant parties to formally conclude an agreement for the next 7 years. The Board is asked to consider all of the information available and approve the recommendation to accept the renegotiated settlement offer. The Board are asked to: Approval Endorsement Identify further actions Note Accept the risk identified Ask for a further report 13. FURTHER INFORMATION For further information about any aspect of this paper, please contact Calum Campbell, Chief Executive or Colin Sloey, Director of Strategic Planning and Performance on