Paper 4

NHS Grampian

AberdeenCity Community Health Partnership

Health Service Redesign for Children with Complex Needs

Service Design and Costing Group – Revenue Cost Comparison

  1. Introduction

The remit of this Group is to:

  1. Identify the current revenue investment in the service to deliver the status quo.
  2. Identify the revenue funding required to establish and deliver the new model.
  3. Identify any revenue funding deficit or surplus comparing 1 and 2 above.
  4. Assume capital financeand associated revenue implications associated with conversion from the present locations and buildings of the status quo to the new model are cost neutral. (A separate stream of work is considering these.)

As there will be a considerable period of transition as the service moves from the status quo to the new model, there is a requirement to do the costing at a specific point in time. This paper basis all costs on present 2010 costs and does not attempt to project either changes in funding or inflationary pressures over the time required to deliver the changes. The conversion process will take some time and is best measured over a period of 2 – 4 years.

Certain possible costs have not been included in this paper – which aims to cost the recurring revenue cost of the redesigned service. These costs include:-

  • Non-recurring revenue, and possibly capital costs,that may arise where interim arrangements are necessary to ensure continuity of the service through the change process.
  • Any potential cost associated with protection or redundancy
  • The issue of equitable funding across Grampian, but particularly with Aberdeenshire.

2.Revenue Cost of Status Quo

The current budget underpinning the present service is drawn from a number of NHSG budgets. They are summarised in Appendix 1 and disaggregated in more detail in Appendix 2.

The total expenditure budget as at 1st April 2010 is £1.737m. The income budget of £150k is a charge made to Aberdeen City Council for the use of accommodation at Raeden from where the Council runs a nursery for children with special needs for 3 to 5 year olds.

Under the re-designed service NHSG would lose this income stream, consequently, the funding available to finance the new service must be reduced to £1.587m (£1.703m-£150k).

The Service Manager for Combined Child Health (CCH) has agreed all budgets with the exception of Facilities where £66k of budget has been identified.

3.Recurring Revenue Cost of Proposed Re-designed Service

The composition of the teams has been agreed between the Service Manager for CCH and the relevant manager for each staff group.

Appendix 3 shows:

  1. the locations of each of the teams
  2. the staffing configuration of each teamby designation, grade, whole time equivalents (wte) and cost
  3. the cumulative staffing requirement by function
  4. Estimated non-pay budgets for each team reflecting the increase in travel costs within AberdeenCity.

Also, all staff will be managed within the present management structure ensuring compliance with the ethos of a safe and affordable workforce.

The re-designed pay and non-pay costs total £1.593m. Of this sum £1.473m is to fund 3 teams of 12.19 wte each at a cost of £491k per team. Non-pay costs of £40k per team are estimated giving a total cost per team of £531k.

4.Comparison of Cost between Status Quo and Re-design

The three columns to the right on Appendix 4 highlights (1) the funding of the present service , £1.587m, (2) the funding requirement for the re-designed service of £1.593m and (3) the funding shortfall of £6k required to deliver the re-designed service.

  1. Financial Risks

The main financial risks are:-

  • The timing of the conversion to the new service. Should there be any significant budget reductions during that time, or significant cost increases cost pressures will arise.
  • The level of workforce change. Although there is only a funding shortfall of £6k there is significant requirement to redesignate elements of the budget e.g. how the reduction of Nursing funding of £239k is achieved, to be converted to fill the deficits e.g. Occupational Therapy which requires additional investment of £109k.
  • A further unquantifiable financial risk is the basis of any arrangement between Aberdeen City Council and NHSG with regard to locations and buildings to deliver the re-designed service.

6.Conclusion

This exercise would indicate that there is sufficient funding within the current NHSG budget to finance a re-designed service in AberdeenCity as long as the re-designed service does not change to any great extent in the interim and further annual budget reduction targets do not reduce the current budget base.

H. Norton

Finance Manager

24/05/10