3. Board Report Refurbishment/Replacement of Theatres 1-4 ...

Quality care – for you, with youBoard ReportOutline Business Case for Refurbishment/Replacement ofTheatres 1 – 4 Craigavon Area HospitalVersion 1.0Presented to Board of Directors 27-May-10Author of report:Sandra WaddellPresented by:Dr Gillian RankinFor information/approvalBoard Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 1

TO:FROM:Board of DirectorsDr Gillian Rankin, Acting Director of Acute ServicesDATE: 27/05/10SUBJECT:Business Case for Refurbishment/Replacement ofTheatres 1 – 4 Craigavon Area HospitalPURPOSE – This outline business case is for the replacement of the existingmain theatres 1 – 4 at Craigavon Area Hospital.SUMMARY OF KEY POINTS The main theatres at Craigavon Area Hospital have been in use since thehospital was built in the early 1970s and the accommodation is no longer fitfor purpose; The condition of the facilities has been identified as a major risk for theTrust; Four new theatres, recovery and associated support accommodation need tobe provided.RECOMMENDATIONS The Trust’s preferred option is to purchase 2 theatres which are currentlyon hire (for the Trauma and Orthopaedic service); construct a third theatre;and provide the fourth theatre, recovery ward, staff changing and othersupport accommodation by refurbishing within the existing theatre block. The estimated capital cost of this project is £10,263,940Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 2

WHICH TRUST CORPORATE OBJECTIVE DOES THIS PAPER PROGRESS ORCHALLENGE?Provide safe, high quality care. Be a great place to work. Maximise independence andchoice for our patients andclients.Support people andcommunities to live healthylives and improve their healthMake the best use of resources.Be a good social partner within ourlocal communities.and wellbeing.(Indicate which of our key strategic objectives are progressed (P) orchallenged (C))WHICH TRUST VALUES DOES THIS PAPER PROGRESS OR CHALLENGE?We will treat people fairly and withrespect.PWe will value and giverecognition to staff and supporttheir development to improveour care.We will embrace change for thebetter.We will listen and learn.We will be open and honest and actwith integrity.We will put our patients, clients, carers Pand community at the heart of what wedo.(Indicate which of Trust values are progressed (P) or challenged (C)RISKS, CONTROLS AND ASSURANCERisk1) Disruption to theatre and other servicesduring the project.2) Potential for guidance relating to theatredesign to change during the project.Control1) Risk will be mitigated by carefulplanning and phasing of the works.2) Good communication will be maintainedwith Health Estates Agency.Assurance1) Trust staff, the Design Team and theContractor have considerableexperience in planning andimplementing similar projects on theCraigavon site.2) The new theatres will be designed tocomply with current standards, andwhere possible any changes toguidance will be implemented.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 3

REVIEWED BY:(Name of Committee etc. if appropriate)DateDateUser forums/Community groups whose views have been soughtDateBoard Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 4

1. CONTEXTThe main theatres at Craigavon Area Hospital have been in use since the hospitalwas opened in 1972. There are five main theatres providing theatre sessions for: General surgery (including breast surgery, colorectal surgery,gastrointestinal surgery, vascular surgery); ENT; Gynaecology; Urology; Oral surgery.A business case for the replacement of main Theatre 5 was approved in May 2007and new Theatre 5 has been operational since May 2009.This business case is for the replacement of the remaining 4 main theatres. Thecase provides an interim solution, prior to major redevelopment on the hospitalsite.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 5

2. ASSESSMENT OF NEEDAn assessment of need highlights the deficiencies with the current theatreaccommodation and clearly demonstrates a requirement to retain five main theatres atCraigavon Area Hospital.Condition of Existing Facilities The theatre ventilation plant (including design configuration and air changerates) does not meet Departmental standards; Theatre design does not meet Departmental standards in terms of space,layout or quality of finishes; There are significant electrical services issues including only one source ofelectrical supply; emergency back-up is fully loaded and the distributionnetwork contravenes standards.Demand Assessment The number of allocated theatre sessions is currently 48 per week out of anavailable 50; Main theatre activity has increased over the last three years, particularly interms of the numbers of more complex surgery. The number of surgicalepisodes with a procedure carried out has increased from 6,331 in 2005/06 to9,569 in 2008/09, an increase of 51%; Whilst the Trust is currently meeting the Priorities for Action target of 13 weeksfor inpatient and daycase treatment, this has required significant use of theindependent sector to provide additional capacity. In 2008/09 826 inpatient and3,005 day case episodes were provided by the independent sector; Planned service developments will give rise to the need to increase theatresessions further; Population demographics show a 23.8% increase in the overall number ofpeople in the Southern area by 2021 and more significantly an increase of43.7% in those aged 65 years and over. This increase will have a considerableimpact on the requirement for theatre capacity because a large proportion ofinpatient episodes are attributable to the 65+ age group; Projected inpatient surgical activity is forecast to increase to 12,024 FCEs by2020/21, a substantial increase of 25% between 2008/09 and 2020/21.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 6

3. OPTIONSA long list of ten options was identified and explored by the Trust. These ranged fromcontinuing to use the existing theatres as they are to constructing a complete newtheatre suite with all the associated support accommodation. This long list of optionswas sifted using objectives and constraints to give a short list of five options. The fiveoptions are described in the paragraphs below.The Southern Trust is currently leasing two volumetric modular theatres withsupport accommodation. These theatres have recently been vacated by thetrauma and orthopaedic service as the new trauma and orthopaedic unit has beencompleted and commissioned. As the replacement of main theatres 1-4 will be atemporary solution until major redevelopment of the Craigavon Area Hospital site anumber of the options considered include the purchase and upgrade of these twovolumetric theatres.Option 2 - Do Minimum – Minimal refurbishment of existing 4 theatres,replacing the ventilation system and upgrading the electrical supply.This option proposes to conduct the minimum work required to the existingtheatres to meet some of the requirements of the Department of Health buildingguidance. This would involve replacement of the ventilation system and upgrade ofthe electricity supply. Decant of two theatres at a time and also decant of recoveryward would be required for the duration of the works.Option 3 - Purchase 2 volumetric theatres. Extend theatre block into acourtyard & refurbish to provide 2 theatres, new recovery, upgraded staffchanging and support accommodation.This option involves purchasing the 2 volumetric theatres. Two theatres andrecovery facilities which comply with the Department of Health building guidancewould be provided by building an extension in an adjacent courtyard andrefurbishing within the existing main theatre suite. The staff changing facilitieswould also be upgraded and additional storage would be provided.Option 7 - Purchase 2 volumetric theatres and construct 2 theatres.Refurbish existing theatre block to provide new recovery, upgraded staffchanging and support accommodation.This option involves purchasing the 2 volumetric theatres. Two theatres andrecovery ward which fully comply with the Department of Health building guidancewould be constructed. Some minor re-alignment of the hospital ring road would berequired. The staff changing facilities would also be upgraded and additionalstorage would be provided.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 7

Option 8 - Purchase 2 volumetric theatres, construct 1 new theatre.Refurbish existing theatre block to provide 1 theatre, new recovery,upgraded staff changing and support accommodation.This option involves purchasing the 2 volumetric theatres. A third theatre wouldbe constructed. The fourth theatre would be provided by refurbishing within theexisting main theatre building. A new recovery ward, staff changing facilities,storage etc would be provided by refurbishing within the existing main theatre area.Option 9 - Construct 4 new theatres and new recovery ward. Refurbishexisting theatre block to provide upgraded staff changing and additionalsupport accommodation.This option involves the construction of four theatres and new recovery ward whichfully comply with the Department of Health building guidance. The proposed site iscurrently occupied by the histocytology laboratory and laboratory officeaccommodation. These 2 units would be re-provided prior to constructioncommencing. The staff changing facilities would also be upgraded and additionalstorage would be provided.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 8

4. EVALUATION OF OPTIONSThe five short listed options were evaluated using non financial appraisal and alsoquantifiable costs. A summary of the scoring and costing exercise is given in thetable below.Non Financial AppraisalScoreCapital Costs includingMIPS inflation uplift butexcluding OptimismBias (£)Baseline AverageCapital Charges(including thoseattributable to currentland, budilings andequipment)Additional Annualrecurring Revenue (£)Option 2 Option 3 Option 7 Option 8 Option 9500 735 750 770 7305 3 2 1 44,484,859 10,227,717 10,193,550 10,263,940 12,291,3991 3 2 4 5416,413 736,346 711,182 726,321 735,5740 79,376 92,792 80,085 97,756NPV Baseline (£000) 60,336 64,605 64,516 64,515 65,375NPV Adjusted forOptimism Bias (£000)60,883 66,010 65,934 65,951 66,973The Project Team considered the options and has concluded that the preferredoption is Option 8 – Purchase 2 volumetric theatres, construct 1 new theatre.Refurbish existing theatre block to provide 1 theatre, new recovery,upgraded staff changing and additional storage. This option has beenidentified as the preferred option for the following reasons: Option 8 has the highest non-financial benefit score of 770 and therefore willgenerate the greatest overall qualitative benefits in terms of providing four maintheatres, recovery and associated support accommodation which meetDepartmental standards; providing a clinically effective solution which has thecapacity for undertaking a wide range of procedures; minimises the disruptionto theatre and other support services; fits with the Trust’s strategic direction;and can be delivered within reasonable timescales; The capital costs (excluding Optimism Bias) associated with this option are£10,263,940. Whilst it ranks as 4 from a financial appraisal perspective themonetary difference between it and the higher ranking options 3 and 7 is notBoard Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 9

material and this will provide the Trust with theatres which will meet the currentstandards; Annual capital charges associated with Option 8 are £726,321. This is lessthan the capital charges associated with Options 3 and 9 and is not materiallyhigher than those for Option 7; Recurring revenue costs associated with Option 8 are lower than thoseindicated for Option 7 and Option 9 and are not materially different to those forOption 3; Net Present Value of Option 8 is £64,515k (risk adjusted NPV £65,951k), giventhat Option 8 achieved the highest non-financial benefit score this offers thebest benefit for investment required.5. PROCUREMENTIn line with Health Estates recommendations on best value for money inprocurement the Trust has entered into Performance Related Partnering (PRP)frameworks with a design team and a contractor for the design and construction ofacute hospital facilities. The appointed Design Team and Contractor areundertaking two projects –1. Construction of a new trauma and orthopaedics facility at Craigavon AreaHospital. This project was handed over ahead of programme for Trustcommissioning in March 2010;2. Extension and refurbishment of maternity and neonatal facilities atCraigavon Area Hospital – works commenced in July 2009 andconstruction is scheduled for completion in May 2010.The Trust is satisfied with the performance of both the design team and thecontractor and proposes to re-appoint both for this project.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 10

6. PROJECT MANAGEMENTIt is proposed to implement the organisation and management of this scheme inaccordance with the guidance contained in the Capital Investment Manualentitled ‘Project Organisation and Capital Investment Manual: Management ofConstruction Projects’ issued by the DHSSPS. Relevant expertise andexperience will be required from Trust staff and from Health Estates InvestmentGroup. The proposed project structure is summarised as follows:Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 11

7. PROJECT TIMETABLEThe table below summarises the major project stages along with the envisagedtimescales. The target dates are dependent upon business case approval by theend of July 2010.Phase Component*Target DateSubmission of business case to DHSSPS May 2010Business Case Approval July 2010Planning and Design (5 months) August – December 2010Construction/refurbishment work commencement January 2011Construction complete December 2012Initial Post Project Evaluation March 2013Full Post Project Evaluation November 2013Assuming business case approval by July 2010, the new theatres would becompleted and ready for handover to the Trust by the end of December 2012.Board Report, Outline Business Case for the Replacement of Theatres 1 – 4, CAH 12