Greater Glasgow NHS Board
Acute Services

THE FUTURE OF GLASGOW’S HOSPITAL SERVICES

REPORT ON FIRST PHASE OF CONSULTATION

 

  1. THE FINANCIAL POSITION AND AFFORDABILITY
    1. In our original consultation we made the point that GGNHSB was willing to invest significantly more revenue into acute services in order to pay the higher capital changes for modern buildings replacing heavily depreciated old buildings. For the Southside alone we were willing to invest an extra £11 million per year for new buildings that would offer a greatly improved patient experience. We also envisaged increased revenue costs in North Glasgow but not on the same scale (see leaflet 15).
    1. In considering options for the Southside we estimated that the Cowglen option would cost an extra £18.4 million in revenue per year (see leaflet 16). The difference between this and the option of replacing the old Southern General Hospital buildings is around £7.3 million. We expressed the opinion that this opportunity cost of £7.3 million was too high a price to pay for having bricks and mortar in place A rather than place B. We pointed out that £7.3 million would pay for better primary care, shorter waiting times, better rehabilitation services, more effective treatment for addictions, better services for children, more district nurses. £7.3 million would pay for around 350 front-line health care staff (nurses, physios etc). We felt using money these ways would be significantly more in the interest of people’s health and quality of service.
    1. It was disappointing that the responses to the consultation have almost universally ignored this fundamental issue of choice which has a real impact on what care can be provided for vulnerable people.  

The majority of responses have had the tone of demanding that the extra cost of the Cowglen option be met and if necessary GGNHSB should demand that the Scottish Executive simply provide the extra money. This displays a lack of recognition that Health Board revenue funding is essentially formula-driven.

       

    1. One major development since the consultation began has been the UK Chancellor’s March budget and his announcement of significant additional funding for the NHS. We have reviewed the financial prospects for this decade in the light of that announcement. We have also taken stock of known financial pressures and the implications of the government’s challenge to the NHS that extra funding must secure a transformation in the NHS’s responsiveness and quality – drastically shorter waiting times, for example.
  1. The money allocated to Health Boards is shared between them on a formula basis. The Arbuthnott Report published in 1999 has been subject to consultation and has recently published revised proposals. These are currently being considered by the Minister. The Arbuthnott revised proposals include an illustrative projection of what GGNHSB’s allocations might be over the period up to and including 2003\4. In developing a financial framework we have used that illustration but must await Ministerial announcements before we can confirm the framework.
    1. Our financial framework allows some sense to be made of what money is likely to be available for particular types of service development. The model has several features:
        1. its baseline is the current position for 2000\1. It does not yet include any of the "Tobacco Tax" money (£26 million nationally) that the Minister has earmarked for a "Public Health Fund". Some of it is being used for national projects but around £13 million is flowing through to Health Boards. GGNHSB’s share varies year from year but is around £2.5 million per year – to be used on local public health initiatives, over half of which will have been specified nationally by the Minister. Nor does this baseline include any additional money that might possibly be allocated to GGNHSB later in 2000\1 as a first step in moving us towards our new Arbuthnott target.
        1. its baseline includes GMS cash limited funds, ACT Research funding, GP out of hours, HIV\AIDS, and distinction awards funding which were not included in the baseline given in the most recent Arbuthnott Report "illustration".
        1. the model incorporates a comparison of current spending with the service programme component originally developed by Arbuthnott in building up the new national formula in his review group’s first report. Since we do not yet know what revisions have been made to the Arbuthnott formula following the national exercise of consultation and further work this comparison is subject to revision. However, what it shows is this:

Programme area

Current spending 2000\1
£m

Current GGNHSB
Spending (%)

Target population in Arbuthnott Formula (%)

Comment

Acute services

347.6

56.77%

53.43%

GGNHSB currently spending more on acute services than the Arbuthnott share suggests.

Mental Health

81.1

13.57%

17.38%

GGNHSB spending below what Arbuthnott share suggests.

Community Health Services

80.2

13.10%

9.96%

GGNHSB spending above what Arbuthnott share suggests, but this element of the Arbuthnott formula was the one subject to the most adverse criticism (i.e. in underestimating the Community Health Service needs and costs elements within the formula).

Maternity Services

27.6

4.51%

4.67%

No increase\decrease indicated, but present spending in Glasgow on maternity services is unbalanced between hospital delivery services and pre and post-natal care, with the balance threatening to worsen unless we reduce from three delivery units to two in line with falling birth numbers.

Learning Disabilities

38.7

6.32%

6.38%

No increase\decrease indicated on a formula basis. Existing JCCP agreements see fundamental re-shaping of services (including resource transfer to local authorities) as part of the plans to close Lennox Castle, RSNH and similar hospitals in Lanarkshire.

Geriatric Long Stay

35.0

5.72%

8.18%

Issues of definition arise here. The Arbuthnott category "geriatric long stay" cannot be seen in isolation from the pattern of complementary services for the elderly in acute hospitals and community health services. Glasgow currently has a relatively high level of hospital continuing care provision for the elderly.

It should be noted that the Arbuthnott formula does not have a separate programme element for children. In terms of using these comparisons to guide future investment choices in service delivery it makes sense to form three aggregations:

 

2000\1 spend  £m

Current GGNHSB proportion

Arbuthnott

Difference  £m

  • Acute services

347.6

56.77%

53.43 %

-20.5

  • Mental health

83.1

13.57%

17.38 %

+23.3

  • Other programmes

181.5

29.66%

29.19%

- 2.8


612.2

100.00%

100.00%

0

Such an aggregation will allow flexibility in the ‘Other Programmes’ category in developing primary care community health responses to children, elderly people, people with physical or learning disabilities, problems of addiction and building capacity for healthy living in deprived communities. These areas of need would mainly be met from the ‘Other Services’ category. The cost of children’s hospital services is currently reflected in the Acute Services category and would therefore access some development money through it.  Similarly some (but not all) elements of addiction services are reflected in the cost of Mental Health Services.

  1. the model provides for the funding of pay and price inflation at a level above the GDP deflator, which reflects the experience of recent years. Thus in 2001\2 the GGNHSB allocation is expected to increase by £49.4 million, of which £18 million will be earmarked to cover the costs of inflation in hospital and community services and £12.2 million for inflation in the ‘unified budget’ which includes GP prescribing. In 2002\3 the model also provides for the increase in NHS employers’ superannuation contributions which falls due that year (at a recurrent cost of £5.8 million).
      1. although the Comprehensive Spending Review announced by the Chancellor runs only to 2003\4 we have assumed that 2004\5 would have a similar profile.

The model ignores some year on year movements in the Joint Community Care Plan (JCCP) financial envelope. Principally in 2002\3 the JCCP shows a recurrent "surplus" of £1.7 million which restores transitional funding invested by GGNHSB in earlier years of the JCCP.

TABLE A

 

2000\1
£m

2001\2
£m

2002\3
£m

2003\4
£m

2004\5
£m

INCOME

         

1. GGNHSB income base

776.8

827.8

877.2

929.4

978.5

2. Increase over previous year

51.0

49.4

52.2

49.1

48.9

3. Total Income

827.8

877.2

929.4

978.5

1027.4

4. Expenditure base

784.9

827.

877.2

929.4

978.5

5. Unified budget inflation (GP prescribing etc)

11.2

12.2

13.4

14.7

16.0

6. Provision for inflation in Trusts

17.4

18.0

24.4­

19.7

20.4

7. Available for service development ¬

14.3

19.2 ®

14.4

14.7

12.5

8. Total Application of funds ¯

827.8

877.2

929.4

978.5

1027.4

    1. Line 7 in this model is the money available to meet the great array of competing service priorities already identified in previous Health Improvement Programmes or still to be developed in response to the National Plan for the NHS in Scotland which is expected to be published later this autumn.
    1. The question is how best to deploy the resources available in line 7 to meet the number of requirements:
    1. whatever requirements emerge from the National Plan for the NHS in Scotland. Reduction in waiting times and improved cancer services are likely to be main features and will almost certainly entail a significant increase in the number of doctors, nurses, radiographers, physiotherapists and other professions supplementary to medicine. To give a sense of orders of magnitude, 25 to 30 extra consultants would cost around £1.5 million to £2.0 million in salary costs alone. Each incremental increase of 50 more nurses, physiotherapists, radiographers etc., would cost around £1.25 million to £1.5 million. Extra linear accelerators for treating cancer will be expensive to maintain.
    2. implementation of the GGNHSB’s existing plans for the Mental Health Framework, including services for Mentally Disordered Offenders.
    3. improving services for the management of chronic disease such as epilepsy, diabetes, multiple sclerosis, chronic fatigue syndrome, the effects of head injury, and so on.
    4. strengthening the range and quality of primary care.
    5. investing in public health measures, service improvements and community development aimed at tackling inequalities in health and the problems associated with socio-economic deprivation, especially among children, people with addictions and those experiencing homelessness and social exclusion.
    6. providing a wider range of locally accessible health care in communities such as the East End, Rutherglen, Cambuslang, Castlemilk, Drumchapel and Clydebank.
    7. the extra cost arising from replacing old hospital buildings with new buildings.
    1. Experience demonstrates that if money for some of these services is not ring-fenced, cost pressures within acute hospital services tends to consume any available cash. Table B shows two different approaches to ring-fencing money for development during the planning period to 2004\5. One approach assumes that line 7 in Table A is distributed on the basis of current share of spending; the second shows a distribution based on the Arbuthnott formula proportions.

TABLE B - USING MONEY FOR SERVICE DEVELOPMENT

Option 1 – based on current spending share.

 

 

2001\2
£m

2002\3
£m

2003\4
£m

2004\5
£m

a) Acute 56.77%

10.9

8.2

8.3

7.1

b) Mental health 13.57%

2.6

2.0

2.0

1.7

c) Other programme 29.66%

5.7

4.2

4.4

3.7

 

19.2

14.4

14.7

12.5

Option 2 – based on Arbuthnott formula proportions

 

2001\2

£m

2002\3

£m

2003\4

£m

2004\5

£m

a) Acute 53.43%

10.3

7.7

7.9

6.7

b) Mental health 17.38%

3.3

2.5

2.5

2.2

c) Other programme 29.19%

5.6

4.2

4.3

3.6

 

19.2

14.4

14.7

12.5

  1.  When this framework is put alongside the service requirements identified in paragraph 9.8 above it looks adequate in addressing issues for mental health and other programmes as measured by the aspirations set out in 2000\1 Health Improvement Programme but taking into account also the Board’s commitment to see significant improvements in primary care and child health above levels signalled in the Health Improvement Programme.
  1. The framework is under pressure in relation to acute services especially in 2001\2 where there are major extra costs associated with junior doctors’ hours, the Working Times Directive and loss of Trust income (£2million gross) to reflect reductions in the inflow of patients to Glasgow hospitals from Lanarkshire Health Board. In addition North Glasgow Trust still has an unresolved deficit of around £10 million that needs to be addressed, possibly involving extra income from GGNHSB.

Beyond 2001\2 however the money available for acute services would allow only some relatively modest service developments. In both 2002\3 and 2003\4 further significant income reductions are expected in respect of continuing reductions in Lanarkshire cross-boundary flow (£2.9 million and 3.9 million respectively).

  1. As far as choices about meeting the cost of new hospital buildings is concerned we were expecting the major revenue costs of a new Southside hospital to fall due at the beginning of the 2006\7 (if Cowglen) or in 2005\6 (if new build at the Southern General). The profile we gave in leaflet 15 was:

TABLE C

 

Net increase in cost £ million

 

(a)

(b)

(c)

(d)

(e)

 

2001\2

2002\3

2003\4

2004\5

2005\6

  • GRI maternity, plastic surgery and

emergency receiving

1.7

       
  • Gartnavel : new linear accelerators

1.2

       
  • Stobhill Ambulatory Care Centre
 

1.1

     
  • GRI – new orthopaedics unit
   

0.3

   
  • West Glasgow – new buildings
     

3.0

(5.0)

  • Victoria Ambulatory Care
     

3.0

 
  • Southern General new build
     

6.0 *

 
 

2.9

1.1

0.3

12.0

(5.0)

* Money reserved in 2004\5 to be available in 2005\6.

The balance of the Southern General option revenue cost would fall to be met in the period between 2006\7 and 2010.

  1. The consultation period has highlighted the importance of moving faster in centralising the Beatson Oncology Centre at Gartnavel and so we would expect the requirement in column (d) to be higher.
  1. If the Cowglen option were pursued, the increased revenue cost of £18.4 million would fall due to be met sometime towards the end of the decade, if town planning problems could be overcome that is.
  1. The projection given in Table B, when put alongside the revenue requirements for new buildings illustrated in Table C shows how the cost of new buildings would in 2004\5 or 2005\6 (depending on when the money needed to be deployed) consume virtually the whole of the year’s development monies for acute services altogether.  The Cowglen option revenue cost would, by itself, require more than the total of development monies available for acute services development. It would consume money otherwise earmarked for mental health and the other programmes (primary care, child health, community health etc).
  1. Furthermore we need to bear in mind that the levels of real term growth in NHS spending for the four year period 2000\1 to 2003\4 are at an all-time historic high, far surpassing anything we have seen sustained at that level since 1948. There can be no guarantee that this unusually high level will be continued in 2004\5 and beyond. If growth fell back to its more historically usual levels the total amount of money available for all types of service improvements (after provision for inflation), would more typically be around £10 million per year. 
    1. There is, therefore, a very real risk that the Cowglen option would be unaffordable within the GGNHSB formula allocation from the Scottish Executive. Indeed even the Southern General option will require careful financial stewardship if its additional revenue costs are to be met.

 

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