The Royal National Orthopaedic Hospital Trust

Minutes of the Trust Board Meeting

Held onThursday, 27th March 2008

Present:Trust Board Members

Ms H FarrowVice-Chair

Mr A WoodheadChief Executive

Mrs S PuckettDirector of Operations & Service Improvement

Mr R HurdDirector of Finance

Mrs K CorderActing Director of Nursing

Mr A WatsonNon-Executive Director

Mr G BillingtonNon-Executive Director

Mr L MilstedNon-Executive Director

Mr T BriggsJoint Medical Director

Associate Directors

Mr M VaughanDirector of Human Resources & Corporate Affairs

Mr M MastersDirector of Projects, Estates & Facilities

Apologies:Mr D HoodlessChairman

Prof S ShorvonNon-Executive Director

Dr N MitchellJoint Medical Director

Dr S PatelDirector of IM&T

Prof D MarshInstitute of Orthopaedics

In attendance:Ms E CockshootMinute-Taker

Mrs S WilliamsPatient & Public Involvement Forum

Mr T RaymondStanmore Residents Association

PART ONE (Open)

  1. Apologies for Absence

All Apologies noted.

  1. Minutes of the meeting held on Thursday, 28th February 2008

The minutes of part one of the meeting held on Thursday, 28th February 2008 were agreed as a correct and accurate record of the meeting.

  1. Matters Arising
  • Clinical Governance Key Indicators

Mrs Corder advised the Board that the percentage of patients who were pre-assessed will be included in the Clinical Governance key indictors report that will be presented to the Board at the April 2008 meeting.

  • Spinal Surgeon Business Case

Mr Hurd advised the Board that the business case for a spinal surgeon would be presented to the Board at the April 2008 meeting.

  1. Chairman’s Report

No report given.

5.Chief Executive’s Report

Mr Woodhead presented his Chief Executive’s report dated 27th March 2008. Key points included:

  • Foundation Trust Status

Mr Woodhead confirmed that the Trust’s target date of April 2009 has been agreed with the NHS London. Mr Woodhead said his paper details the key risks, which he outlined as:

  • Resolving the issue with the tariff
  • Private patient income cap
  • Approval of the Trust’s outline business case (OBC)

He said the Trust would review the status of the risks as the year progresses to ensure that when the Trust has its Board to Board review with Monitor solutions will be in place or at least agreed.

Mr Woodhead advised the Board of feedback that had been received in relation to a Board to Board meeting the Royal Free have had with Monitor recently. The overall message is that Monitor are setting the bar higher for Trusts in terms of FT applications, whereby they may not accept action plans to resolve certain issues, but now want to see that an action planis near completion with evidence that plans are working.

In response to Mrs Farrow’s query, Mr Hurd said he believed the Trust would need to commit to the April 2009 target date during October 2008 as this is the time the Trust will need to agree a final timetable with the Strategic Health Authority (SHA).

In response to Mr Billington’s query, Mr Woodhead said the SHA were currently in agreement with the Trust’s target date of April 2009 as they believed it is not an unreasonable target date despite the issues that remain unresolved.

  • Barking, Havering and Redbridge Project

Mr Woodhead advised the Board that the Trust was not ready to present a recommendation on how the RNOH should proceed in relation to this project. The clinicians at Barking, Havering and Redbridge (BHR) are not keen on the franchise approach the RNOH has suggested. Mr Woodhead said he felt that the franchise approach was the right way forward, however, the RNOH and BHR will continue to explore other options, such as focussing on the issue of clinical leadership.

In response to Mr Milsted’s query, Mr Briggs said he believed that the clinical leadership approach would not work because the RNOH could not affect proper change at the BHR Trust. He concluded by saying that he believed the RNOH should not become involved in this project if this is the only option being considered. Mr Woodhead said the RNOH needed to agree the model approach for its involvement and be prepared to walk away from the project entirely if theRNOH’s agreed approach is not acceptable to BHR Trust.

  • Decontamination unit project

Mr Woodhead briefed the Board on the recent developments in relation to the North West London decontamination collaboration project. The collaboration comprises of 6 local Trusts; Lister Hospital, Luton & Dunstable Trust, Barnet & Chase Farm Trust, the North Middlesex, Watford Hospital and the RNOH. The collaboration has been working on a proposal for a centralised decontamination unit (super centre) which the Department of Health has been supporting, however, in recent months two of the members have pulled out of the project. The RNOH has remained in the collaboration because its current on-site service is not fully compliant and provision for the service has not been included in the Trust’s outline business case.

Mr Master said the RNOH has a number of options, one of which would be to have the super centre built near the RNOH as the other core members are within a short distance of Stanmore. Mr Masters said he would prepare a report for the next meeting outlining his recommendations on how the RNOH should proceed.

Actions: Mr Masters

Mr Woodhead went on to brief the Board on his visit to ASPIRE to attend their 25th Anniversary reception. He said he believed the Trust should work on strengthening its links with ASPIRE

Mr Woodhead concluded his report by advising the Board on a recent article that had been published in the Independent newspaper which listed the top 10 specialist hospitals. The RNOH was identified as one of these hospitals and the Trust’s role as training orthopaedic surgeons was highlighted. The Trust’s performance in relation to the Healthcare Commission ratings (“fair”) was also mentioned. Mr Woodhead said he felt that this reflected the Trust’s on-going problem with achieving the waiting time targets.

For Presentation & Discussion

  1. Outline Business Case – Stanmore Redevelopment

Mr Woodhead said that a short presentation would be given to brief the Board on the Strategic Health Authority’s requirements in terms of the outline business case (OBC) documentation, the project timetable, the financial appraisal and the testing of the Trust’s case.

Mr Woodhead gave his presentation and outlined the key sections that are required to be included in the OBC documentation and said that individual sections will be given to specific individuals within the SHA to review. Mr Masters said the OBC will be issued to Board members to review once the comments from RKW have been received and incorporated. He suggested the Board agree to a Chairman’s action to approve the OBC, once Board members have submitted their comments, as approval is required prior to the next Trust Board meeting so the document can be submitted to the SHA as soon as possible.

Mr Woodhead went on to outline SHA evaluation tests and the project timetable.

  • Key SHA evaluation tests
  • The case demonstrates multi-stakeholder support

  • The case clearly fits within strategy for local health economy

  • The case contributes to local delivery plan

  • The case is affordable within the local health economy and costs no more than 12% of turnover

  • The preferred option is robust and clearly deliverable

  • The case includes a convincing and robust non-financial benefit analysis and a convincing and robust financial and economic appraisal

  • Project Timetable

  • RNOH Completion of OBC – April 2008
  • RKW complete review of draft OBC - 2 April 2008
  • Trust Board members final review W/C 7 April 2008
  • Chairman’s action W/C 14 April 2008
  • OBC submission W/C 21 April 2008

  • OBC submission for approval SHA – April 2008
  • (NHS London meetings - CIC 17 June & Board 25 June 2008)

  • OJEU advertisement (assuming OBC approved within three months) – 1st quarter of 2009

  • Full business case approval – 1st quarter 2011

  • Financial close – 1st quarter 2011

  • Commence construction – 2nd quarter 2011

  • Commissioning of the new facility – 4th quarter 2013

Mr Masters said the timetable had been developed based on the assumption that the SHA will take 2 months to make a decision. Mr Masters went on to outline the stages of the PFI Procurement route.

Mr Hurd continued with the presentation and explained the financial appraisal the OBC will be tested against.

  • Maintaining strong financial risk metrics (I&E, balance sheet & cashflow)
  • Historic & current performance
  • Forecast
  • Impact of preferred option
  • Capital Costs (including PFI unitary payment) <12% turnover
  • “Base case” (realistic and reasonable assumptions)
  • £62m PFI Finance requirement
  • £7.2m annual unitary payment
  • c£2.1m annual net impact on I&E
  • I&E Bottom line
  • £0.4m surplus year 1
  • £2.9m surplus year 2
  • Sensitivity testing (worst case/downside financial outcome)
  • NHS Activity growth
  • PbR Tariff
  • Private Patient Income
  • Savings (CIPs)
  • R&D Income
  • Cost Pressures
  • Capital Costs & land sale receipts (timing & value)
  • Mitigation strategies to deal with worst case scenario
  • Total worst case impacts potentially £22.1m
  • Expected value of pessimistic case £3.6m i.e. potential £0.7m year 2 deficit
  • Mitigation
  • NHS activity growth (patient choice)
  • Productivity improvements (reduced bed & theatre requirements)
  • Capital financing options (private sector partnerships)
  • Land sales and construction timing
  • Phase the main build
  • Financial appraisal conclusion: base case affordable and costs, including unitary payments within 12% turnover, however, worst case scenarios continue to indicate affordability risk

In response to Mr Milsted’s query, Mr Hurd agreed that the worst case impact of £22.1m is a significant risk, however, this impact is based on all the sensitivity factors coming to fruition. He went to advise that the SHA will analyse the detailed financial appraisal information provided in the OBC documentation. They will also assess the Trust’s judgement in terms of its response to the sensitivity testing and mitigation factors. Mr Woodhead agreed and said that if the SHA approve the OBC they will include a number of caveats that will relate to the resolution of certain issues. The Trust will also be subjected to a number of Gateway reviews that will also test the assumptions made in the OBC.

The Board went on to discuss the timetable for reviewing and submitting the OBC to the SHA. The following timetable was agreed:

  • Board members to receive a copy of the OBC document for comment
  • Board members to discuss their comments at the Trust Board away day on the 7th April
  • Chairman’s action to be taken on the 14th April

Performance Reports

  1. Integrated Performance Report (Finance, Human Resources and Activity), including a summary update on the 18 week Programme Plan

Mr Hurdpresented the integrated performance report (1st April 2007 – 29th February 2008) which he said had been reviewed by the Finance and Performance Committee.

Targets - Green status:

2)Payroll cost to be kept below £3,523k per month by 31st March 2008

3)Activity target – 9968 inpatients treated by 31st March 2008

6a)Zero MRSA bacteraemia contracted within the RNOH

8a) Limit loss making activity to level of transitional funding (maintain target ratio of R03 to R10)

Targets – Red status:

1)£2.5m surplus achieved by 31st March 2008

4)No breaches of current access target (inpatient and outpatient)

5)18 week target achieved by interim date, 1st March 2008. Final deadline is December 2008

6b)zero Clostridium difficile cases contracted within RNOH

7)Zero pressure sores incurred within RNOH

8b)Limit loss making activity to level of transitional funding - limit soft tissue sarcoma activity to 2004/05 levels

9)Hit all milestones in Foundation Trust timetable

10)Gain approval from SHA for hospital rebuild

  • Target 1 - £2.5m surplus achieved by 31st March 2008

Mr Hurd advised the Board that the Trust achieved an underlying in-month surplus of £71k in February. The £885k year to date surplus includes a £255k benefit from the Bolsover Street land sale.

Mr Hurd went on to highlight the current concerns, which he said included the likelihood that the Trust will receive a “weak” rating for the Healthcare Commission standard – Use of Resources. This is because the Trust achieved a lesser surplus than its planned surplus target of £2.5m. Mr Hurd advised that he had not highlighted this to the Board previously because he had only recently been made aware of the Trust’s position in relation to this standard. He concluded by asking Board members to note the other issues as indicated in his report.

  • Target 2 – Payroll costs to be kept within financial plan and below £3,473k for March 2008

Mr Hurd advised that the number of staff employed (including bank and agency) stood at 1001 at the end of February (7 behind target).The pay bill was slightly under budget (£41K) in February 2008.

The current concerns include the pressure of the extra activity required to meet the 18 week access target which could result in an increase in temporary staff employed especially in theatres and some wards. The ban on the use of agency staff continues, however, some exceptions have been made on a time limited basis.

  • Target 3 – Activity Target, 9,968 inpatients discharged

The number of discharges in February 2008 was 19(2%) behind target but 1% ahead of target for the year to date.

  • Target 4 – no breaches of current inpatient and outpatient access targets

No breaches in February 2008. Mrs Puckett advised the Board that there would be 4 breaches reported at the end of March 2008. The total for the year will be 8 inpatient breaches, all of which were spinal patients.

  • 18 week target achieved

Mrs Puckett briefed the Board on the progress to date. Key points included:

  • 61% of admitted patients achieved the 18 week access target
  • Data completeness – 47% for admitted patients and 88% (90% target) for non-admitted patients
  • The Trust has had to make immediate plans to fill the post of the clinical expert on the data cleansing team following the departure of this member of staff. This issue is a significant risk
  • There has been some slippage in the data completeness validation priority due to a new directive from the Department of Health whereby they are asking the Trust to focus on maximising performance in March
  • Target 6a – Zero MRSA bacteraemia cases contracted within the RNOH

Mr Hurd confirmed that there had been no cases of MRSA bacteraemia during the month and no cases during the last calendar year.

  • Target 6b – Zero Clostridium difficile cases contracted within the RNOH
  • Zero pressure sores incurred within RNOH

Mr Hurd confirmed that there had been no cases in February 2008 of clostridium difficile but 3 pressure sores.

It was agreed that a review of the top ten targets would be undertaken as priorities will change for 2008/09.

Action: Executive Team

  1. 2008/09 Business Plan& Budget

Mr Hurd presented the 2008/09 Business Plan and Budget, which he said included the final draft business plan agreed with the NHS London Provider Agency, the Trust Board self declaration and the recommended 2008/09 revenue and capital budget.

  • Annual Business Plan and Self Declaration

Mr Hurd asked the Board to review and note the Annual Business Plan and Self Declaration (Appendix 1). He also asked the Board to note the areas in which the Trust has declared non-compliance as detailed in the executive summary, see below:

  • Contracts have been signed with commissioners – non compliant
  • The activity assumptions underpinning the annual plan are consistent with the Trust’s contracts – non compliant
  • The Board is satisfied that plans are in place to ensure that all relevant national core standards and targets can be met going forwards, including all national core standards and targets due to come into force within the following 12 months – non compliant

The Board agreed to the self declaration and the declaration of non-compliance in the areas listed above.

  • Revenue and Capital Budget 2008/09

Mr Hurd said the Trust was proposing a realistic revenue surplus target for 2008/09 of £1.0m on a planned turnover of £84m and a £1.6m capital programme leaving a fixed asset base of £72m at the end of the year. He said this will represent a 6.6% increase in turnover from 2007/08 and is based on the assumptions listed in the executive summary attached to the Board paper.

The Board discussed the position PCTs have taken with regard to activity levels and noted Mr Woodhead’s comment that the Strategic Health Authority will need to pressure PCTs to sign contracts with Trusts as achievement of the 18 week access target is an issue for both PCTs and Trusts. Mr Hurd agreed and said he believed that a sensible compromise needed to be reached as PCTs are willing to fund on a “pay as you go” basis but not sign up to an increase in activity up front.

In response to Mr Raymond’s comment, Mr Hurd agreed that PCTs could be reluctant to over commit their resources, but the access target needs to be achieved and the Trust is undertaking the extra activity.

The Board approved the 2008/09 Business Plan and Budget.

9.Capital Expenditure Plan 2008/09

Mr Hurd presented the Capital Expenditure Plan 2008/09, which he said had been drafted by the Capital Planning Team and included the associated processes for managing the risk of the continued funding constraints.

He said the 2008/09 Business Plan indicates that capital funds are currently limited to £1.1m plus any cash funding available due to under spend against the 2007/08 programme, which gives a total of £1.6m. Additional capital funds may be available later in the year if the Trust’s surplus is above £1m for the year and in 2009/10 there will be a step increase in funding.

Mr Hurd referred to the executive summary and attached timetable which he said detailed the recommendations made by the Capital Planning Team (CPT). He asked the Board to approve the recommendations made by the CPT and note that the progress of the programme will be monitored through the Finance & Performance Committee.

Mr Woodhead said the Trust faced difficult decisions with the limited resources available to fund the capital programme and that the health and safety issues were the first priority to ensure the safety of patients, staff and visitors. He said he believed the process the CPT have followed has been correct and that it should be noted that priorities may change during the year to accommodate any unforeseen circumstances.