New approaches within the Health Sector

Andrew NicholsonBusiness Advisor

May 2007

Aims

• To provide an overview of the Trust Foundation Trust status

• To describe the application process and impact for the Mobility Service

NTW Overview

• Formed through merger of three Trusts in April 2006

• Covers population of 1.4 million; wider for specialist services

• Financial budget of circa £280m• Five clinical Directorates; Mobility part of

Children, Young People and Specialist Services

• Aim to be FT in April 2008

Foundation Trust Freedoms

• Financial Freedoms – Freedom to retain surpluses– Freedom to borrow (but very limited use)– Freedom from over-regulation (not the experience yet)– Freedom to set own strategy and manage implications (but

within a requirement to fully meet NHS targets)– Freedoms very much dependent on overall risk rating

• Restructured Governance– Greater public involvement– Greater staff involvement

Planning Framework

Service Development

Strategy

Integrated Business Plans

Service Development Plans

Defining Service Lines

• Service Lines should be:– The building blocks of the business model– Providing a distinct service offering– Governed by common standards/outputs– Of sufficient size to enable effective service/

business modelling-manageable no. overall– Governed by specific policy

• Proposal to use distinct parts of pathway• Single service units serving multiple markets

Service Lines

Children Specialist Neuro

Tier 4 Forensic

Tier 4 Inpatient

Tier 3

Eating Disorders

Affective Disorders

Mother & Baby

Services for the Deaf

CBT

CAT

Psychotherapy

Gender Dysphoria

Neurorehabilitation

Mobility

ECS

Communicate

Neuropsychiatry

Service Line Analysis

• Need a plan and risk/market assessment for each service line.

• For Mobility these included:– Satellite service in Cumbria– Closure of national tertiary service– Replacement and renewal of car fleet– Waiting times– etc

What is Monitor looking?

• Realism – not optimism nor pessimism• Forward understanding of tariff (market

awareness)• Detailed understanding of service line

profitability• Bottom up planned CIPs not balancing figure!• Reflects strategy (joined up story)• Thought through balance sheet – not flat lined!

Example of using Service Line Analysis

0

0.5

1

1.5

2

-40 -30 -20 -10 0 10 20 30 40 50 60

Relative size of speciality

EBITDA margin

Bubble size corresponds to total costs of the speciality

Improve cost position

Benchmark setter

Consider de-emphasis

Potential grower

Paediatrics

Ophthalmology

T&O

Endocrinology

Rheumatology

Obstetrics

Gynaecology

Plastic Surgery

Geriatric Medicine

Cardiology

General Medicine

Gastroenterology

General Surgery

Dermatology

Clinical Haematology

DISGUISED DATA

How can Trust build its profitable Neurology service line further?

What measures could improve paediatrics profitability?

Neurology

Summary

• Financial targets can be met by expansion not just cost cutting

• FT status includes terms like ‘market analysis’ and ‘profit’

• FT application leads to more detailed planning at an individual service level

• FT rewards profitable services achieving targets with freedom to develop