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Business Case for Replacement of CT Scanner at Daisy Hill Hospital Draft v0.8

Business Case to replace CT Scanner at Daisy Hill Hospital

Version 0.8

Corporate Planning Division Directorate of Performance & Reform 14th December 2009


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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ...................................................................................4

2. INTRODUCTION AND BACKGROUND ........................................................10

3. STRATEGIC CONTEXT ..................................................................................13

4. CURRENT SERVICES.....................................................................................14

5. CASE FOR CHANGE .......................................................................................19

6. PROJECT OBJECTIVES AND CONSTRAINTS .............................................21

7. DESCRIPTION OF OPTIONS........................................................................23

8. NON-FINANCIAL EVALUATION ..................................................................25

9. FINANCIAL APPRAISAL ...............................................................................29

10. RISK APPRAISAL.......................................................................................31

11. IDENTIFICATION OF THE PREFERRED OPTION ..................................32

12. AFFORDABILITY ANALYSIS ....................................................................33

13. EQUALITY AND NEW TSN ........................................................................34

14. PROJECT MANAGEMENT ..........................................................................35

15. POST PROJECT EVALUATION ..................................................................36


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APPENDICES 1 – Capital and Revenue Costs of Short-listed Options

2 – Financial Assumptions

3 – Capital Charges

4 – Discounted Cash Flow Calculations

5 – Optimism Bias Calculations


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1. EXECUTIVE SUMMARY

1.1. Introduction

This paper sets out the capital requirements associated with the replacement of the CT Scanner in the Radiology Department at Daisy Hill Hospital (DHH).

Computed Tomography (CT) imaging combines the use of a digital computer together with a rotating x-ray device to create detailed cross-sectional images or ‘slices’ of the different organs and body parts such as the lungs, liver, kidneys, pancreas, pelvis, extremities, brain, spine and blood vessels. For many patients CT can be performed on an outpatient basis without requiring admission to hospital.

1.2. CT Scanning at Daisy Hill Hospital

Under Developing Better Services (June 2002) DHH was designated as an acute hospital. DHH provides inpatient, out-patient and day case services across a range of specialties.

At present the CT Scanner in DHH is a GE High Speed Plus single-slice system produced by the medical company GE Medical. It was installed during 2000. It is a 3rd generation scanner, i.e., the design consists of a detector array and an x-ray tube both of which move in a circle with the gantry, Romans (1995, pp 45-50). It is a single-slice scanner and in technology terms is completely inadequate for an acute hospital such as DHH. The existing scanner in DHH is the only single-slice scanner in use in Northern Ireland. Due to the speed at which CT scanning technology has developed, the existing machine is technically outdated in terms of functionality and capability compared to technology now deemed as standard. This is mainly due to ‘tube cooling’ issues which result in poor quality images. The single-slice scanner takes slices 7mm apart which has significant implications for clinicians.

1.3. Limitations of CT Scanner and Key Issues

The main limitations associated with the existing CT scanner in DHH are detailed below: � Cancer patients for staging scans may have small lesions that are not

demonstrated at this slice thickness;

� Emergency patients with dissecting aneurysms require a repeat scan when transferred to Belfast for stenting. This is due to the scanner’s inability to measure the aneurysm accurately -/+ 7mm adding an additional 45 minutes prior to this critical patient reaching theatre;

� Pulmonary angiograms are of poor diagnostic quality. Pulmonary angiograms will only demonstrate a central clot. Peripheral, renal and carotid angiograms are not possible due to the slice thickness and the limitations of reconstructed images that have now become standard;

� Due to the limitations of the physical equipment the opening is 63cm and the table can take a 28 stone patient. 10 years ago this was well above any


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requirement however now larger patients have to be transferred as the standard opening is 75cm and table holds 40 stone;

� Critical difficulties arise with major trauma patients with the possibility of spinal injury. The image quality is insufficient to detect subtle fractures and reconstructions are not possible due to the 7mm slice thickness. Such patients require transfer to another site with multi-slice facilities and rescanning with the additional radiation dose in order to provide an accurate diagnosis;

� Patients with multiple injuries require complex imaging. Due to the limitations of tube cooling the examination time is much longer compared to a multi-slice scanner which leads to delays in treatment. This is extremely stressful for the trauma team;

� Tube cooling also impacts on diagnosis of specific cancers e.g. pancreas where many slices are taken in 3 consecutive phases. Optimum protocols for CT examinations of these areas cannot be carried out;

� A single-slice scanner gives the patient a higher radiation dose than a multi-slice scanner per body part as the latter has a greater number of detectors to capture the x-ray beam; and

� Patient sessions are organised to facilitate the current CT scanner in terms of tube loading (i.e. brain scan must be followed by a scan of another part of the body). Ideally the patient sessions should not be organised in such a fashion and should be organised to facilitate the patient as opposed to the scanner.

Reduced use of CT Scanner by Radiology Staff

� Issues in terms of capacity – due to the tube cooling of the machine between each scan, the capacity for inpatients and outpatients are dramatically reduced. In addition, oncology patients at DHH are transferred to CAH for their CT scanning as more accurate imaging is required, which the current CT scanner in DHH cannot provide;

� Patient throughput – patient throughput is affected by the constraints of the current CT scanner. This is having a detrimental impact on the CAH site due to having to accept more referrals from DHH which are not accounted for in the CAH capacity; and

� The age, condition and effectiveness of the machine hinders the diagnostic quality of the imaging, resulting in repeat scans, lengthened CT scanning time per patient, increased levels of radiation for patients and concerns of misdiagnosing images.

Service Developments

� The current CT scanner has limited potential to support new service developments. The existing scanner is at full capacity dealing with the current services offered in DHH. The impact is that patients from the Newry and Mourne area are having to travel to CAH to avail of improved services that should be accessible at their local hospital.


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1.4. Objectives and Constraints

The following objectives and constraints were identified in relation to this proposed investment: � Objective One – To ensure that the Trust can achieve performance targets

set by DHSSPS.

� Objective Two – To facilitate changes that result in a higher quality service for patients.

� Objective Three – To minimise disruption to patient care activities.

� Objective Four – To ensure diagnostic testing can support new and additional service developments across the Trust.

� Constraint A – The selected option must be accessible and affordable in terms of capital and revenue.

� Constraint B – The preferred option must make best use of the existing estate and service infrastructure.

1.5. Description of Options

The following options were identified: � Option 1 – Do Nothing;

� Option 2 - Do Minimum - Replace existing Single-Slice CT Scanner with new 16-Slice CT Scanner (purchase);

� Option 3 – Replace existing Single-Slice CT Scanner with new 16-Slice CT Scanner (lease)

� Option 4 - Replace existing Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (purchase); and

� Option 5 - Replace existing Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (lease).

Options 1, 2, 4 and 5 were identified for financial and non-financial evaluation

1.6. Non-Financial Evaluation of Options

The identified options were evaluated against the following non-financial criteria: � Quality of Service;

� Speed of Implementation;

� Support Achievement of Performance Targets; and

� Support Service Developments within the Trust.


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1.7. Risk Appraisal

The New Green Book explicitly addresses project risks following a study by Mott

MacDonald1 which identified the tendency for project appraisers to be overly

optimistic, overstating benefits and understating timescales and costs. To redress

this tendency, HM Treasury have developed an approach which requires appraisers

to make explicit adjustments to determine a suitably optimism biased adjusted

capital cost and NPV for each option.

� Appendix 4 illustrates the risk factors for this project and the extent to which the Trust considers it can mitigate against them. This evaluation has generated the following optimism bias adjustment factor, 24.4%.

1.8. Identification of Preferred Option

Table 1.1 below indicates results of the financial and non-financial evaluations:

Table 1.1 – Summary of Costs and Benefits

Option 1 Option 2

Option 4 Option 5

Capital Costs excluding

Optimism Bias

(£)

- 459,500 559,500 159,500

Baseline Average Capital

Charges (£) 37,778 60,743 72,318 26,018

Additional Annual Recurring Revenue

Costs (£)

- 59,500 74,500 167,050

Non-Financial Benefit Score

520 590 960 960

Net Present Value

(£’000) – Baseline 525 1,452 1,666 1,836

Net Present Value

(£’000) – Risk Adjusted 543 1,599 1,841 1,934

The Project Group has considered the options and has concluded that the preferred

option is Option 4 - Replace existing Single-Slice CT Scanner with Multi-

Slice (64 slice) CT Scanner (purchase). This option has been identified as the

preferred option for the following reasons:

� Option 4 achieved the highest non-financial score of 960 (joint highest with Option 5);

� Option 4 proposes the purchase of a 64 slice CT scanner whereas Option 5 proposes the lease of this equipment;

� The capital costs (excluding optimism bias) of Option 4 are £559,500 (Option 5 £159,500);

� The additional revenue costs associated with Option 4 are £74,500 (£167,050 for Option 5);

1 Mott MacDonald (2002), Review of Large Public Procurement in the UK, Mott MacDonald (2002)


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� The baseline average capital charges associated with Option 4 are £72,318 (£26,018 for Option 5);

� The Net Present Value (baseline) of Option 4 was £1,666k (10% lower than that of Option 5 which was £1,836k);

� The Net Present Value (risk adjusted) of Option 4 was £1,841k (5% lower than that of Option 5 which was £1,934k);

On the basis of the net present value calculations Option 4 is identified as the

preferred option.

1.9. Affordability Analysis

The estimated capital cost of this scheme adjusted for optimism bias is £696,018. The affordability analysis associated with the proposed investment is summarised in Table 1.2 below.

Table 1.2 – Affordability Analysis

Average Annual Revenue Costs (Risk

Adjusted) £

Average Annual Capital Charges (Risk

Adjusted) £

Total £

Option 1 – Base Case 63,315 46,995 110,310

Option 4 – Preferred Option 134,000 89,963 223,963

Additional Revenue Consequences

70,685 42,968 113,653

1.10. Equality and New TSN

The developments proposed within this outline business case have been considered in terms of their equality of opportunity implications against each of the four criteria detailed above. The proposal to replace the CT Scanner at DHH has limited scope to impact differentially on any of the nine equality groupings, as the standard of care for all service users and staff will be improved.


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1.11. Project Management

A project management structure will be established to ensure efficient delivery of

the proposed investment.

Table 1.3 below sets out the major project stages and tasks and the envisaged

timescales.

Table 1.3 – Project Timescales and Milestones

Phase Component Target Date

Business Case Submitted to DHSSPS End Dec 2009

Business Case Approved by DHSSPS End Jan 2009

Tender Process Commenced Mid Feb 2010

Equipment Installed and Minor Works Complete Mid May 2010

Initial Post Project Evaluation December 2010

Full Post Project Evaluation June 2011

1.12. Post Project Evaluation

Following the implementation of the project, an assessment will be made of the

effectiveness of the CT Scanner by carrying out a post project evaluation (PPE).

The main objective of the PPE will be to assess the benefits that are being or have

been derived from the project, compared with those that were envisaged.


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2. INTRODUCTION AND BACKGROUND

2.1. Introduction

This paper sets out the capital requirements associated with the replacement of the CT Scanner in the Radiology Department at Daisy Hill Hospital (DHH).

Computed Tomography (CT) imaging combines the use of a digital computer together with a rotating x-ray device to create detailed cross-sectional images or ‘slices’ of the different organs and body parts such as the lungs, liver, kidneys, pancreas, pelvis, extremities, brain, spine and blood vessels. For many patients CT can be performed on an outpatient basis without requiring admission to hospital.

During its 25-year history, CT has made great improvements in speed, patient comfort and image resolution. As CT scan times have got faster, more anatomy can be scanned in less time.

CT is one of the best tools for studying the lungs and abdomen. It is an invaluable tool in the cancer diagnosis process and is often the preferred method for diagnosing lung, liver and pancreatic cancer. CT imaging and CT angiography are finding a greater role in the detection, diagnosis and treatment of heart disease, acute stroke and vascular diseases which can lead to stroke, gangrene or kidney failure. Additionally, CT can be used to measure bone mineral density for the detection of osteoporosis. It is an essential requirement for major trauma cases and other emergencies.

2.2. Overview of Daisy Hill Hospital

Under Developing Better Services (June 2002) DHH was designated as an acute hospital.

DHH provides inpatient, out-patient and day case services across a range of specialties. The key specialties provided in DHH are:

� general medicine;

� stroke unit;

� coronary care;

� respiratory unit;

� general surgery;

� obstetrics;

� gynaecology;

� paediatric medicine;

� paediatric surgery and ENT;

� geriatric medicine;

� renal medicine; and

� Consultant-led 24-hour accident and emergency unit.


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A wide range of community and Allied Health Professional services are also provided from the DHH site. There are currently 270 beds plus 6 special care baby cots, in addition 30 renal dialysis stations are provided as part of the sub-regional haemodialysis service.

2.3. CT Scanning at DHH

At present the CT Scanner in DHH is a GE High Speed Plus single-slice system produced by the medical company GE Medical. It was installed during 2000. It is a third generation scanner, i.e., the design consists of a detector array and an x-ray tube both of which move in a circle with the gantry, Romans (1995, pp 45-50). It is a single-slice scanner and in technology terms is completely inadequate for an acute hospital such as DHH. The existing scanner in DHH is the only single-slice scanner in use in Northern Ireland. Due to the speed at which CT scanning technology has developed, the existing machine is technically outdated in terms of functionality and capability. This is mainly due to ‘tube cooling’ issues which result in poor quality images. The single-slice scanner takes slices 7mm apart which has significant implications for clinicians.

2.4. Project Team

This business case has been prepared by the Southern Health and Social Care Trust. The members of the Project Team were as follows:

� Dr Gillian Rankin – Interim Director of Acute Services;

� Dr Stephen Hall – Associate Medical Director, Cancer & Clinical Services;

� Mr Ronan Carroll – Assistant Director of Acute Services, Cancer & Clinical Services;

� Mrs Alexis Davidson – Head of Diagnostic Services;

� Mrs Jeanette Robinson – Radiography Manager;

� Mrs Claire Kelly – Head of Capital Planning;

� Mrs Sinead Rowe – Senior Financial Management Accountant;

� Mr Dennis Quinn - Assistant Head of Estate Development and Capital Works.

2.5. Structure of this Document

This Business Case is set out as follows: Section 3 the strategic and policy context for the development, outlining relevant

national, regional and professional guidance;

Section 4 the need for the investment in the context of the existing services provided and the existing equipment;

Section 5 key issues relating to the proposed investment;

Section 6 a number of business case objectives;

Section 7 the long list and short list of options;


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Section 8 the non-financial benefits of each option;

Section 9 the capital and revenue costs associated with the short-listed options;

Section 10 the risks associated with the development and the scale of the optimism bias adjustment;

Section 11 the rationale for the selection of the preferred option;

Section 12 the economic appraisal of the preferred option and affordability issues;

Section 13 discusses the equality and new TSN considerations;

Section 14 the project management arrangements; and

Section 15 the post project evaluation arrangements.

A series of appendices provide further information and detail, and are referred to as appropriate in the text.


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3. STRATEGIC CONTEXT

3.1. Introduction

This section outlines key strategic drivers relating to the replacement of the CT Scanner in DHH.

3.2. DHSSPS Performance Targets

In April 2009 with the focus on improving health and wellbeing, key ministerial targets which are directly and indirectly linked to the provision of CT scanning in the Trust stated the following: � Stroke Services: By March 2011, ensure that 50% of patients attending

hospital within one hour of the onset of stroke symptoms receive a CT scan and report within a maximum of a further 90 minutes to inform the appropriate use of thrombolysis;

� PSA 1.11 - By 1 April 2010, a comprehensive bowel screening programme for those aged 60-69 should be in place, with a view to achieving a 10% reduction in mortality from bowel cancer by 2011;

� PSA 3.2 – From April 2009, no patient will wait longer than 9 weeks for a first outpatient appointment, 9 weeks for a diagnostic test and 13 weeks for inpatient or day case treatment, working towards a total journey time of 25 weeks by 2011;

� Diagnostic Reporting – From April 2009, all urgent diagnostic tests should be reported on within two days of test being undertaken, with 75% of all routine tests being reported on within two weeks and all routine tests within four weeks;

� Cancer (PSA 3.4): From April 2009, all urgent breast cancer referrals should be seen within 14 days, 98% of cancer patients should commence treatment within 31 days of the decision to treat, and 95% of patients urgently referred with a suspected cancer should begin their definitive treatment within 62 days; and

� A&E: From April 2009, 95% of patients attending any A&E department should be either treated and discharged home, or admitted within 4 hours of their arrival in the department.

3.3. IRMER Regulations

Ionising Radiation Medical Exposure Regulations (IRMER) regulations and the local rules require the Trust to use as low a dose of radiation as possible. This new technology would allow this to be achieved.


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4. CURRENT SERVICES

4.1. Introduction

This section provides an overview of the:

� principles of CT scanning;

� uses of CT scanning;

� clinical benefits of CT scanning;

� advances in CT scanning;

� advantages of multi-slice CT scanning;

� CT scanning within SHSCT;

� CT scanning within DHH;

� CT scanning activity at DHH; and

� proposed developments in CT Scanning at DHH.

4.2. Principles of CT Scanning

Computed Tomography (CT) imaging combines the use of a digital computer together with a rotating x-ray device to create detailed cross-sectional images or ‘slices’ of the different organs and body parts such as the lungs, liver, kidneys, pancreas, pelvis, extremities, brain, spine and blood vessels. For many patients, CT can be performed on an outpatient basis without requiring admission to hospital. CT is based on the x-ray principal: as x-rays pass through the body they are absorbed or attenuated (weakened) at differing levels creating a matrix or profile of x-ray beams of different strength. This x-ray profile is registered on film, thus creating an image. In the case of CT, the film is replaced by an electronic detector that measures the x-ray profile.

During its 25-year history, CT has made great improvements in speed, patient comfort and image resolution. An entire chest (forty 8mm slices) can be scanned in 5-10 seconds using the most advanced multi-slice CT system. As CT scan times have got faster, more anatomy can be scanned in less time. Faster scanning helps eliminate artefacts from patient motion such as breathing or peristalsis.

4.3. Uses of CT Scanning

Among the various imaging techniques such as MRI and x-ray, CT has the unique ability to image a combination of soft tissue, bone and blood vessels.

CT can provide detailed cross sectional images and diagnostic information for nearly every part of the body including:

� the brain, vessels of the brain, eyes, inner ear and sinuses;

� the neck, shoulders, cervical spine and blood vessels of the neck;


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� the chest, heart, aorta, lungs and mediastinum;

� the thoracic and lumbar spine;

� the upper abdomen, liver, kidney, spleen, pancreas, and other abdominal vessels;

� the pelvis and hips, male and female reproductive systems, bladder and GI tract; and

� the skeletal system including bones of the hands, feet, ankles, legs and arms.

4.4. Clinical Benefits of CT Scanning

Unlike other medical imaging techniques CT enables direct imaging and differentiation of soft tissue structures such as liver, lung tissue and fat. It is especially useful in searching for large spaces occupying lesions, tumours and metastasis and can not only reveal their presence, but also the size, spatial location and extent of a tumour.

CT imaging of the head and brain can detect tumours, show blood clots and blood vessel defects, show enlarged ventricles (caused by a build up of cerebrospinal fluid) and image other abnormalities such as those of the nerves or muscles of the eye.

Due to short scan times of 500 milliseconds to a few seconds, CT can be used for all anatomical regions, including those susceptible to patient motions and breathing. For example, in the thorax, CT can be used for visualisation of nodular structures, infiltrations of fluid, fibrosis (for example, from asbestos fibres), and effusions (filling of an air space with fluid).

CT is one of the best tools for studying the lungs and abdomen. It is an invaluable tool in the cancer diagnosis process and is often the preferred method for diagnosing lung, liver and pancreatic cancer. CT imaging and CT angiography are finding a greater role in the detection, diagnosis and treatment of heart disease, acute stroke and vascular diseases which can lead to stroke, gangrene or kidney failure. It has excellent application in trauma cases and other emergencies.

CT is used extensively for diagnosing problems of the inner ears and sinuses because of its ability to generate very high resolution images. The anatomy of the inner ear and sinuses is made up of delicate soft tissue structures and very fine bones. CT is excellent for imaging tumours or polyps in the sinuses and diseases that cause degeneration of the small bones in the inner ear.

CT has been the basis for interventional work like CT guided biopsy and minimally invasive therapy. CT images are also used as the basis for planning radiotherapy cancer treatment. CT is also used to follow the course of cancer treatment to determine how the tumour is responding.

CT imaging provides both good soft tissue resolution as well as high spatial resolution. This enables the use of CT in orthopaedic medicine and imaging of bony structures including prolapses of vertebral discs, imaging of complex joints like the shoulder or hip as a functional unit and fractures, especially those affecting the spine. The image post-processing capabilities of CT-like multi-planar reconstructions


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and 3-D display – further enhance the value of CT imaging for surgeons. For instance, CT is an invaluable tool for surgical reconstruction following facial trauma.

4.5. Advances in CT Scanning

Multi-slice CT scanners can now image entire anatomical regions like the lungs in a quick 3-4 second breath hold instead of the current 20-30 scan breath hold time. Single-slice acquires a stack of individual slices that may be misaligned due to slight patient motion or breathing in between each slice acquisition, spiral CT acquires a volume of data with the patient anatomy all in one position. This volume data set can then be computer-reconstructed to provide 3-D images.

In addition to creating images of internal anatomy, these 3-D reconstruction techniques enable a number of non-invasive ‘virtual endoscopy’ procedures to be performed. Endoscopy involves the use of an endoscope to see inside organs of the body such as the colon or the bronchi of the lungs. Virtual endoscopy allows doctors to see the inside of these same structures without the use of an invasive endoscope. Some virtual endoscopy procedures can even be performed with CT that cannot be undertaken using conventional endoscopy. This technique (sometimes described as fly-through) can also be applied to cardiac applications.

New ‘multi-slice’ CT scanners have been developed that can collect up to 64 slices of data. These systems can create a higher throughput due to the speed of rotation. Multi-slice CT scanning will allow non-invasive imaging and diagnosis of a wider range of conditions in less time and with greater patient comfort.

4.6. Advantages of Multi-slice CT Scanning

The advantages of the multi-slice CT scanning in spiral/helical geometry are as follows:

� complete organs or volumes can be scanned in short times because of continuous data acquisition synchronized with continuous patient transport through the gantry aperture;

� gapless scanning is possible because a volume of tissue is scanned rather than a slice as in conventional, non-spiral CT systems;

� artefacts caused by patient motion are reduced;

� slices can be obtained for any arbitrary position with the volume;

� the effects of different levels of respiration are removed. There is no shifting of anatomic structures between the slices, and lesions can be localised accurately;

� new perspectives in contrast medium studies are possible because contrast medium administration times are shorter and small amounts are required;

� in spiral/helical CT, contrast enhancement is more uniform throughout the scanning sequence and lesion detection is optimised. This is not the case with conventional, rapid sequential CT;

� there is greater accuracy in multi-planar reconstruction and 3D processing;


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� multi-dimensional imaging including CT fluoroscopy, 3D imaging, CT angiography, and CT endoscopy. These techniques expand the scope of clinical applications; and

� multi-slice scanners ensure reduced radiation for patients.

4.7. CT Scanning within the SHSCT

The Southern Health and Social Care Trust provides CT scanning at Craigavon Area Hospital, Daisy Hill Hospital and South Tyrone Hospital. In September 2002 South Tyrone Hospital installed a 16-multi-sliced Toshiba CT Scanner to treat outpatient referrals. In February 2007 Craigavon Area Hospital replaced their single-slice CT Scanner for a 68-multi-slice Toshiba CT scanner.

4.8. CT Scanning within Daisy Hill Hospital

The existing scanner in DHH is the only single-slice scanner in use in Northern Ireland.

Due to the speed at which CT scanning technology has developed, the existing machine is technically outdated in terms of functionality and capability compared to technology now deemed as standard.

CT scanning is used for the following functions:

� diagnosis of head, neck, chest, abdomen and pelvis malignancy;

� staging of cancer patients;

� diagnosis of stroke;

� assessment of trauma injuries;

� biopsies of lesions under CT control;

� assessment of head injuries prior to transfer to neurosurgery, with imaging of neck, chest, abdomen and pelvis as per RVH request;

� imaging of aortic dissections prior to transfer;

� limited spinal imaging;

� ENT requests including sinuses, IAMs, neck;

� facio-maxillary;

� respiratory imaging; and

� renal referrals – to assess the renal tracts and identify calculus.

4.9. CT Scanning Activity at Daisy Hill Hospital

The table below shows the number of CT scans performed at DHH.

The scanner is now working at maximum capacity with an outpatient waiting time of 7-8 weeks. An average of 20 scans per day is made up of 10 outpatients and 10 inpatients. The limiting factors are the tube cooling.


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The table below outlines a decrease in activity from 2007/08 through to 2009/10. This is mainly attributable to the undiagnostic quality of the current CT Scanner which has meant that large proportions of the DHH oncology patients are transferred to CAH for their CT scan. This is neither appropriate nor equitable for Newry and Mourne locality patients to have to travel to another hospital to receive diagnostic testing which should be available in their local hospital. In addition increased referrals from DHH to CAH for CT scanning is putting added pressure on CAH staff and equipment. Table 4.1 below sets out recent activity data for CT scanning at DHH and shows that activity has remaining quite steady at approximately 4,200 – 4,400 patients per annum.

Table 4.1 CT Scans at DHH

2006/07 2007/08 2008/09 2009/101/4/09 -

30/9/09

2009/10Full year

estimate

Patients Patients Patients Patients Patients

Inpatients 1754 1,977 1,815 912 1,824

Outpatients 1695 1,712 1,850 943 1,886

A&E patients 453 432 270 210 420

Day case patients - - 58 39 78

GP - - 185 107 214

Others 314 268 24 9 18

4,216 4,389 4,202 2,220 4,440

4.10. Proposed Developments in CT Scanning at Daisy Hill Hospital

The Trust wishes to develop the technological facilities available by providing a multi-slice scanner for both adult and paediatric examinations of the musculoskeletal system including spine as well as head and body applications. The provision of a multi-slice scanner will also support the development of cardiac, angiography carotid for stroke / TIA and trauma alongside cancer staging, another potential application would be CT colonograhy2.

2 Additional revenue funding may be required to facilitate implementation of some of the potential applications of the CT Scanner at DHH.


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5. CASE FOR CHANGE

5.1. Introduction

This section provides an overview of the key issues associated with the current CT Scanner.

5.2. Current Limitations

The main limitations associated with the existing CT scanner in DHH are detailed below: � cancer patients for staging scans may have small lesions that are not

demonstrated at this slice thickness;

� emergency patients with dissecting aneurysms require a repeat scan when transferred to Belfast for stenting. This is due to the scanner’s inability to measure the aneurysm accurately -/+ 7mm adding an additional 45 minutes prior to this critical patient reaching theatre;

� pulmonary angiograms are of poor diagnostic quality. Pulmonary angiograms will only demonstrate a central clot. Peripheral, renal and carotid angiograms are not possible due to the slice thickness and the limitations of reconstructed images;

� due to the limitations of the physical equipment the opening is 63cm and the table can take a 28 stone patient. 10 years ago this was well above any requirement now larger patients have to be transferred as the standard opening is 75cm and table holds 40 stone;

� critical difficulties arise with major trauma patients with the possibility of spinal injury. The image quality is insufficient to detect subtle fractures and reconstructions are not possible due to the 7mm slice thickness. These patients require transfer to another site with multi-slice facilities and rescanning with the additional radiation dose in order to provide an accurate diagnosis. This is extremely stressful for the trauma team;

� patients with multiple injuries require complex imaging. Due to the limitations of tube cooling the examination time is much longer compared to a multi-slice scanner which leads to delays in treatment.;

� tube cooling also impacts on diagnosis of specific cancers e.g. pancreas where many slices are taken in 3 consecutive phases. Optimum protocols for CT examinations of these areas cannot be carried out;

� a single-slice scanner gives the patient a higher radiation dose than a multi-slice scanner per body part as the latter has a greater number of detectors to capture the x-ray beam; and

� patient sessions are organised to facilitate the current CT scanner in terms of tube loading (i.e. brain scan must be followed by a scan of another part of the body). Ideally the patient sessions should not be organised in such a fashion and should be organised to facilitate the patient as opposed to the scanner.


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5.3. Key Issues

Reduced use of scanner by Radiology Staff

� issues in terms of capacity – due to the tube cooling of the machine between each scan, the capacity for inpatients and outpatients are dramatically reduced. In addition oncology patients at DHH are transferred to CAH for their CT scanning as more accurate imaging is required, which the current CT scanner in DHH cannot provide;

� patient throughput – patient throughput is affected by the constraints of the current CT scanner. This is having a detrimental impact on the CAH site due to having to accept more referrals from DHH which are not accounted for in the CAH capacity; and

� the age, condition and effectiveness of the machine hinders the diagnostic quality of the imaging, resulting in repeat scans, lengthened CT scanning time per patient, increased levels of radiation for patients and concerns of misdiagnosing images.

Service Developments

� the current CT scanner has limited potential to support new service developments. The existing scanner is at full capacity dealing with the current services offered in DHH. The impact is that patients from the Newry and Mourne area are having to travel to CAH in order to access services that should be accessible at their local hospital.


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6. PROJECT OBJECTIVES AND CONSTRAINTS

6.1. Project Objectives

This section sets out the main objectives for the project together with the main constraints that might apply.

The Trust must ensure that any developments deliver maximum value for money for Health and Social Care. Value for money will reflect a judgement on the balance of financial and economic costs set against the achievement of non financial benefits and the levels of risk to which the Trust will be subjected. It reflects that the Trust’s objective is not to minimise cost but to achieve an appropriate balance between capital investment and long term running costs, and return on that investment and expenditure.

Based on this focus a set of business case objectives have been developed. These objectives are set out below:

6.1.1. Objective One

To ensure that the Trust can achieve performance targets set by DHSSPS in particular compliance with meeting 9 weeks target for diagnostic testing, targets for diagnostic reporting of urgent and routine tests and targets associated with urgent cancer referrals.

Measurable Outcomes:

� Achievement of DHSSPS targets as noted in Section 3.2.

6.1.2. Objective Two

To facilitate changes that result in a higher quality service for patients to improve the quality of the service for patients and to minimise the risk of misdiagnosis. Equitable services should be provided across the acute hospitals of the Southern Trust where possible to ensure patients from the Newry and Mourne locality have equality of access for all new services available to the Trust.


� Analysis of log of incidents of insufficient quality;

� Increase in the scanning activity levels at DHH; and

� Decrease in the number of Newry and Mourne locality patients being asked to attend CAH for investigations.

6.1.3. Objective Three

To minimise disruption to patient care activities, it is important that continuing care for patients is provided during the works/installation period.


� Analysis of log of incidents detailing when building/installation work caused disruption to services.


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6.1.4. Objective Four

To ensure diagnostic testing can support new and additional service developments across the Trust.


� Analysis of use of CT Scanner in new service developments.

6.2. Project Constraints

A number of constraints were also agreed as the basis for limiting the choice of options to be considered. Thus selected options must be capable of overcoming the following constraints:

A – The selected option must be accessible and affordable in terms of capital and revenue B – The preferred option must make best use of the existing estate and service infrastructure.


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7. DESCRIPTION OF OPTIONS

This section examines the possible options relating to the replacement of the CT Scanner at DHH. Options identified are detailed below.

7.1. Long List of Options

The Trust considered the range of plausible options to produce a long list of options, these are outlined below:

7.1.1. Option 1 – Do Nothing

This option would involve no change from the existing arrangements. The existing CT Scanner would not be replaced. Issues pertaining to the constraints and quality of the existing CT scanner would remain.

7.1.2. Option 2 - Do Minimum – Replace existing Single-Slice CT Scanner with new 16-Slice CT Scanner (purchase)3

This option would ensure a new 16 slice multi-slice CT scanner could be procured for use in DHH. This option would involve an interim solution to be provided whilst the new CT scanner is installed, the provision of a mobile CT scanner would be acceptable for the time period associated.

7.1.3. Option 3 – Replace existing Single-Slice CT Scanner with new 16-

Slice CT Scanner (lease)

This option would ensure a new 16 slice multi-slice CT scanner could be leased for use in DHH. This option would involve an interim solution to be provided whilst the new CT scanner is installed, the provision of a mobile CT scanner would be acceptable for the time period associated.

7.1.4. Option 4 – Replace existing Single-Slice CT Scanner with Multi-

Slice CT Scanner (64 slice) (purchase)

This option would ensure a 64 slice multi-slice scanner could be procured for use in DHH. This option would involve an interim solution to be provided whilst the new CT scanner is installed, the provision of a mobile CT scanner would be acceptable for the time period associated.

7.1.5. Option 5 – Replace existing Single-Slice CT Scanner with Multi-

Slice CT Scanner (64 slice) (lease)

This option would ensure a 64 slice multi-slice scanner could be leased for use in DHH. This option would involve an interim solution to be provided whilst the new CT scanner is installed, the provision of a mobile CT scanner would be acceptable for the time period associated.

3 This option has been deemed to be the Do Minimum option as it is no longer possible to purchase a Single-Slice CT Scanner.


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7.2. Evaluation of Options

A short-listing process has been carried out to identify any option(s) that would not support the stated objectives of the project and, therefore, should not be subjected to a detailed Cost Benefit Analysis.

Major factors that were considered during the initial evaluation of options included:

� ability to meet the stated needs and objectives

� ability to overcome the project’s constraints

� cost effectiveness of the option

The results of this exercise are illustrated in Table 7.1.

�� = fully addresses objective

�� = meets most of the objective �� = partially meets the objective x = option does not meet objective Y = option does overcome the constraint N = option does not overcome the constraint Table 7.1 shows that Options 1, 2, 4 and 5 have been short-listed for evaluation. Whilst Options 1 and 2 do not meet the project objectives these options have been shortlisted to act as Do Nothing and Do Minimum.

Table 7.1 Preliminary Sift of Options

Objectives Constraints Short-list?

1 2 3 4 A B

Option 1 x x �� x Y Y Yes

Option 2 �� x �� x Y Y Yes

Option 3 �� x �� x Y Y No

Option 4 �� Y Y Yes

Option 5 �� Y Y Yes


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8. NON-FINANCIAL EVALUATION

A set of non-financial criteria were derived from the objectives described in Section 6.1 above. Each option has then been measured against these criteria. The non-financial criteria are described below.

8.1. Non-Financial Criteria

8.1.1. Quality of Service

The provision of adequate scanning facilities to meet the needs of the Trust staff and patients would ensure that all patients will be investigated via the use of modern, properly functioning equipment (giving good quality images), thus reducing the risk of misdiagnosis and reducing the levels of radiation exposure to patients. Where possible patients from the Newry and Mourne locality should have equality of access to all existing and new services available within the Trust.

8.1.2. Speed of Implementation

As access to CT scanning in DHH is limited due to the constraints of the equipment, it is imperative that adequate CT scanning facilities are provided as soon as possible and with minimal impact on patient care activities, ensuring interim arrangements are included to ensure patient waiting times are not adversely affected.

8.1.3. Support Achievement of Performance Targets

The Trust must achieve the performance targets set by the DHSSPS. The introduction of a comprehensive bowel screening programme across Northern Ireland over the coming months will also increase demand for scanning facilities. In addition targets associated with cancer referrals will impact upon diagnostics and their ability to enable cancer services to achieve the targets set.

8.1.4. Support Service Developments within the Trust

Diagnostic facilities in the Trust must provide adequate support to enable new service developments to be implemented to improve patient pathways and services. CT scanning is an integral element to the implementation of various new services and therefore reliable quality imaging is imperative.

8.2. Weighting

The allocation of a weighting factor to each of the criteria is a means of reflecting the relative effect of the success of each option in the scoring. The weightings agreed by the Project Team were as follows:

A Quality of Service 30 per cent

B Speed of Implementation 20 per cent

C Support Achievement of Performance Targets 25 per cent

D Support Service Developments within the Trust 25 per cent


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Quality of Service was deemed to be the highest ranking criteria as the Trust strives to ensure that appropriate clinically effective equipment is in place to support the delivery of a high quality service to all patients across all Trust localities.

Support Achievement of Performance Targets was allocated a weighting factor of 25 per cent as the Trust must achieve performance targets, the availability of appropriate equipment would assist the Trust in using its resources in the most efficient way.

Support Service Developments within the Trust was also allocated a weighting factor of 25 per cent as new service developments are an important means of enhancing choice and care for patients. The provision of appropriate equipment is often necessary to facilitate delivery of a service development.

Speed of Implementation was allocated a weighting factor of 20 per cent as there is an urgent need for the provision of equipment of an improved standard to support implementation of service developments, achievement of performance targets and improve the quality of service.

8.3. Benefit Analysis

Each of the options was rated on a score between 1 and 10, with 10 meaning that the option fully met the non-financial criteria. The results of this analysis are recorded in Table 8.1 below.

8.3.1. Quality of Service

Option 1 Do Nothing scored 4 as the existing CT scanner is providing a reasonable quality service, however the constraints of the existing equipment (poor image quality, tube cooling time etc.) are resulting in some patients being transferred to CAH for their diagnostic imaging. Option 2 Purchase of a 16-slice CT scanner, would partially improve the quality of the service provided, however there would be limitations in terms of diagnostic quality and functional capabilities. Option 2 has scored 6. Option 4, purchase new multi-slice scanner, and Option 5, lease new multi-slice scanner, scored 10 as both options would ensure improved quality and capabilities through the provision of a multi-slice scanner (faster reconstruction, faster transmission of volumes to the workstation for isotrophic reconstructions, improved tube life, less heat output, high level of diagnostic ability and shorter scanning times).

8.3.2. Speed of Implementation

Option 1 Do Nothing scored a 10 as this option is already in place and would not require any additional works. Option 2 Purchase of a single-slice scanner, Option 3 Purchase of a multi-slice scanner and Option 5 lease of a multi-slice scanner scored 8 equally as all options would involve the development of an interim solution to facilitate the replacement of the existing scanner.

8.3.3. Support Achievement of Performance Targets

Both Option 1 Do Nothing scored 5 as there would be no upgrade to the existing equipment and adequate equipment to support the achievement of performance targets would not be in place. Option 2 Purchase of a 16-slice


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scanner scored 6 as this option would provide limited improvement to the existing equipment, equipment of this standard would be insufficient to meet the needs of an acute hospital such as DHH, as such the challenges posed in achieving the performance targets would continue to be faced by the Trust. Option 4 Purchase of a multi-slice scanner and Option 5 lease a new multi-slice scanner both scored 10 as both options would ensure that adequate equipment was in place to support the achievement of DHSSPS performance targets. Capacity would be increased4 as DHH would be able to work on all CT scanning waiting lists as the quality of scans would be acceptable to all clinicians throughout the Trust.

8.3.4. Support Service Developments within the Trust

Both Option 1 Do Nothing scored 3 as the existing equipment would not be able to support the delivery of all existing and new service developments across the Trust. Option 2 Purchase of a 16-slice scanner scored 4 as a there would be limited improvement to the existing equipment. Option 2 scored 4 against this criteria. Option 4 Purchase of a multi-slice scanner and Option 5 lease a new multi-slice scanner both scored 10 as both options would enable increased diagnostic testing ability and improved quality that would support the delivery of new services within the Trust.

8.4. Option Ranking

The ranking of the options is recorded in Table 8.1 as follows:

1 Option 4 Score 960




4 Additional revenue funding may be required to facilitate implementation of some of the potential applications of the CT Scanner at DHH.


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Table 8.1 - Non-Financial Evaluation

Weight Option 1 Option 2 Option 4 Option 5 Benefit Criteria

Score Weighted Score




Quality of Service 30 4 120 6 180 10 300 10 300

Speed of Implementation 20 10 200 8 160 8 160 8 160

Support Achievement of Performance Targets

25 5 125 6 150 10 250 10 250

Support Service Developments within the Trust

25 3 75 4 100 10 250 10 250

Total 100 520 590 960 960

Ranking 4 3 1 1


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9. FINANCIAL APPRAISAL

9.1. Introduction

The following section outlines the costs associated with the replacement of the CT Scanner at DHH.

� Capital Costs;

� Capital Charges;

� Revenue Consequences; and

� Economic Costs (NPVs).

9.2. Capital Costs

The capital costs associated with each of the short-listed options are detailed in Table 9.1 below. Detailed capital costs are provided in Appendix 1.

Table 9.1 - Capital Costs (excluding Optimism Bias) Option

1 Option 2 Option 4

Option 5

£ £ £ £

Equipment - 364,500 464,500 64,500

Enabling Works - 95,000 95,000 95,000

Total - 459,500 559,500 159,500

9.3. Capital Charges

The total capital charges associated with each of the short-listed options are detailed in Table 9.2 below.

Table 9.2 - Capital Charges (excluding Optimism Bias )

Option 1

£

Option 2

£

Option 4

£

Option 5

£ Baseline Average Capital Charges

37,778 60,743 72,318 26,018

An analysis of capital charges is included as Appendix 2.


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9.4. Revenue Costs

The revenue costs associated with each of the short-listed options are detailed in

Table 9.3.

Table 9.3 – Recurring Revenue Costs

Option 1 Option 2 Option 4 Option 5

£ £ £ £

Baseline Revenue Costs 61,000 61,000 61,000 61,000

Additional Revenue Costs:

Lease Costs - - - 92,550

Service Costs - 45,000 60,000 60,000

License Costs - 14,500 14,500 14,500

Total Additional

Recurring Revenue Costs

- 59,500 74,500 167,050

Rationale for Recurring Revenue costs is included as Appendix 1.

9.5. Economic Costs

Discounted cash flows for each of the options are presented in Appendix 3. Table

9.4 below gives a summary of the net present value (NPV) of each option.

Table 9.4 – Net Present Values

Option 1

£’000

Option 2

£’000

Option 4

£’000

Option 5

£’000

Net Present Value 525 1,452 1,666 1,836


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10. RISK APPRAISAL

10.1. Introduction

Large capital developments carry significant risk.

This section discusses key areas of risk in relation to the options, their significance

and potential ameliorating action.

10.2. Optimism Bias Adjustment

The New Green Book explicitly addresses project risks following a study by Mott

MacDonald5 which identified the tendency for project appraisers to be overly

optimistic, overstating benefits and understating timescales and costs. To redress

this tendency, HM Treasury have developed an approach which requires appraisers

to make explicit adjustments to determine a suitably optimism biased adjusted

capital cost and NPV for each option.

Based on this guidance, an uplift is required to the capital costs (based on HM

Treasury recommended adjustment ranges). There is no specific uplift required for

revenue costs.

The Green Book enables optimism bias to be reduced according to the extent to

which each of the contributory factors have been managed. Appendix 4 illustrates

the risk factors for this project and the extent to which the Trust considers it can

mitigate against them. This evaluation has generated the following optimism bias

adjustment factor, 24.4%.

Discounted cash flows for each of the options were recalculated following

application of these uplift factors. In applying the optimism bias percentage to

capital costs, planning contingencies have been ignored and the optimum bias

applied to the remaining capital costs. Table 10.1 below gives the net present value

of each of the options after optimism bias adjustments.

Table 10.1 – Net Present Values

Option 1

£’000

Option 2

£’000

Option 4

£’000

Option 5

£’000

Baseline Net Present Value

525 1,452 1,666 1,836

Adjusted Net

Present Value 543 1,599 1,841 1,934

5 Mott MacDonald (2002), Review of Large Public Procurement in the UK, Mott MacDonald (2002)


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11. IDENTIFICATION OF THE PREFERRED OPTION

The selection of the preferred option is a process drawing on the results of both the

financial and the non-financial assessment of the short-listed options. The desirable

outcome of this process is a preferred option.

A summary of the scoring and costing exercise is outlined in Table 11.1 below.

Table 11.1 – Summary of Costs and Benefits

Option 1 Option 2

Option 4 Option 5

Capital Costs excluding

Optimism Bias (£)

- 459,500 559,500 159,500

Baseline Average Capital

Charges (£) 37,778 60,743 72,318 26,018

Additional Annual Recurring Revenue

Costs (£)

- 59,500 74,500 167,050

Non-Financial Benefit

Score 520 590 960 960

Net Present Value (£’000) – Baseline

525 1,452 1,666 1,836

Net Present Value

(£’000) – Risk Adjusted 543 1,599 1,841 1,934

The Project Group has considered the options and has concluded that the preferred

option is Option 4 - Replace existing Single-Slice CT Scanner with Multi-

Slice (64 slice) CT Scanner (purchase). This option has been identified as the

preferred option for the following reasons:

� Option 4 achieved the highest non-financial score of 960 (joint highest with Option 5);

� Option 4 proposes the purchase of a 64 slice CT scanner whereas Option 5 proposes the lease of this equipment;

� The capital costs (excluding optimism bias) of Option 4 are £559,500 (Option 5 £159,500);

� The additional revenue costs associated with Option 4 are £74,500 (£167,050 for Option 5);

� The baseline average capital charges associated with Option 4 are £72,318 (£26,018 for Option 5);

� The Net Present Value (baseline) of Option 4 was £1,666k (10% lower than that of Option 5 which was £1,836k);

� The Net Present Value (risk adjusted) of Option 4 was £1,841k (5% lower than that of Option 5 which was £1,934k);

On the basis of the net present value calculations Option 4 is identified as the

preferred option.


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12. AFFORDABILITY ANALYSIS

The sections below demonstrate the affordability of the preferred option under the

following headings.

12.1. Capital Funding Requirements

The preferred option selected in the previous section envisages replacing existing

Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (purchase).

The estimated total capital cost of this scheme adjusted for optimism bias is

£696,018.

12.2. Revenue Consequences

The revenue consequences of the preferred option, Option 4 – Replace existing

Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (purchase)

are summarised in Table 12.1 below.

Table 12.1 – Affordability Analysis

Average Annual Revenue Costs (Risk

Adjusted) £

Average Annual Capital Charges (Risk

Adjusted) £

Total £

Option 1 – Base Case 63,315 46,995 110,310

Option 4 – Preferred Option 134,000 89,963 223,963

Additional Revenue Consequences

70,685 42,968 113,653


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13. EQUALITY AND NEW TSN

Section 75 of the Northern Ireland Act (1998) requires public authorities in carrying out their functions relating to Northern Ireland, to have due regard to the need to promote equality of opportunity:

� between persons of different religious belief, political opinion, racial group, age, martial status or sexual orientation;

� between men and women generally;

� between persons with a disability and persons without; and

� between persons with dependants and persons without.

As part of ensuring compliance with the statutory duty, the SHSCT have produced an Equality Scheme demonstrating their commitment to equality of opportunity and to carrying out Equality Impact Assessments on policies which may have a differential impact on any of the categories noted above. The existence of a differential impact is determined by reference to the following four criteria:

� is there any evidence of higher or lower participation or uptake by different groups?

� is there any evidence that different groups have different needs, experiences issues and priorities in relation to the particular policy area?

� is there an opportunity to better promote equality of opportunity or better community relations by altering the policy or working with others in government or in the larger community? or

� have consultations in the past with relevant groups, organisations or individuals indicated that particular policies create problems that are specific to them?

The developments proposed within this outline business case have been considered in terms of their equality of opportunity implications against each of the four criteria detailed above. The proposal to replace the CT Scanner at DHH has limited scope to impact differentially on any of the nine equality groupings, as the standard of care for all service users and staff will be improved.


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14. PROJECT MANAGEMENT

This section reviews important aspects associated with the replacement of the CT Scanner at DHH.

14.1. Management Arrangements

The following project management roles have been identified:

� Project Owner: Mrs Mairead McAlinden (Acting Chief Executive)

� Project Director: Mr Ronan Carroll (Assistant Director of Acute Services – Cancer & Clinical Services)

� Project Manager: Mrs Alexis Davidson (Head of Radiology Services)

� User Group:

Members to be confirmed.

14.2. Major Tasks and Timetable

Table 14.1 below sets out the major project stages and tasks and the envisaged

timescales.

Table 14.1 – Project Timescales and Milestones

Phase Component Target Date

Business Case Submitted to DHSSPS End Dec 2009

Business Case Approved by DHSSPS End Jan 2009

Tender Process Commenced Mid Feb 2010

Equipment Installed and Minor Works Complete Mid May 2010

Initial Post Project Evaluation December 2010

Full Post Project Evaluation June 2011


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15. POST PROJECT EVALUATION

This section presents the post project evaluation plan. This may be further refined

as the project proceeds.

The post project evaluation will be undertaken under the auspices of the Project

Board which includes senior executive directors of the Trust. It will be managed by

the Project Director with individual evaluations being undertaken by business/clinical

areas supported as necessary by the project team. Consideration will be given as to

the need to involve staff from other HPSS organisations or from the DHSSPS, or to

include patient representatives.

15.1. Capital Project Monitoring

The key issues that will be addressed in the monitoring the implementation of this

capital investment will be:

� was the project completed on time?

� was it completed at budget cost?

� what were the reasons for any delay?

� what action would management recommend to prevent future problems?

15.2. Project Evaluation

Following the implementation of the project, an assessment will be made of the

effectiveness of the CT Scanner by carrying out a post project evaluation (PPE).

The main objective of the PPE will be to assess the benefits that are being or have

been derived from the project, compared with those that were envisaged.

15.2.1. Responsibilities

The Post Project Evaluation (PPE) will be carried out by the Project Manager.

15.2.2. Timing

The PPE will be carried out initially in December 2010 with a follow-up in June 2011. (these dates may be subject to change as dependent on official award and commencement of project)

15.2.3. Benefits Realisation Plan

A summary of the Benefits Realisation Plan to be reviewed as part of the Post Project Evaluation is illustrated in Table 15.1 below.


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Table 15.1 – Benefits Realisation Plan

Benefits to be Achieved

Evaluation Method Frequency of Data Collection

Baseline Information Individuals Responsible for Monitoring & Evaluation

Achievement of relevant

DHSSPS Performance Targets

Analysis of information in monitoring returns. Monthly Current rates of achievement

of DHSSPS performance targets (as at date of

submission of business case)

Project Manager

Improved quality of

service for patients

Analysis of log of incidents of insufficient

quality.

Monthly Current log of incidents of

insufficient quality (as at date of submission of

business case)

Project Manager

Improved quality of service for patients

Increase in the scanning activity levels at DHH Monthly Current level of scanning activity at DHH (as at date of

submission of business case)

Project Manager

Improved quality of

service for patients

Decrease in the number of Newry and Mourne

locality patients asked to attend CAH for investigations

Monthly Current level of N&M locality

patients asked to attend CAH for investigations (as at date

of submission of business case)

Project Manager

Minimal disruption of

patient care activities during works/installation

period

Analysis of log of incidents detailed when

building installation work caused disruption to services.

Monthly - Project Manager

Availability of diagnostic

testing to support new and additional service

developments across the Trust

Analysis of use of CT Scanner in new service

developments

Monthly Use of existing CT scanner in

delivery of new service developments. (as at date

of submission of business case)

Project Manager


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Appendix 1 Capital and Revenue Costs


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Business Case to Replace CT Scanner at DHH

Option 1

£

Option 2

£

Option 4

£

Option 5

£

Capital Costs

Equipment costs - 364,500 464,500 64,500

Enabling Works / Infrastructure - 95,000 95,000 95,000

Total Capital Costs - 459,500 559,500 159,500

Annual Recurring Revenue Costs

Lease costs - - - 92,550

Service costs - 45,000 60,000 60,000

Licence costs - 14,500 14,500 14,500

Total Annual Recurring Revenue Costs - 59,500 74,500 167,050


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Southern Health & Social Care Trust


Option 1 - Do Nothing

£

Capital Costs

Equipment costs -

Enabling Works / Infrastructure -

Total Capital Costs -


No additional revenue costs -

Total Annual Recurring Revenue Costs -


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£

Capital Costs

Equipment

16-slice CT Scanner 300,000

Interim CT Scanner solution 64,500

Total Equipment Costs 364,500

Enabling Works

- Building & Attendances 40,000

- Electrical Elements 25,000

- Mechanical Elements 10,000

- Bed Sit Relocation 5,000

- Consultant Services 15,000

Total Enabling Works 95,000

Total Capital Costs 459,500


Service costs (annually after year one) 45,000

Licence costs 14,500

Total Annual Recurring Revenue Costs 59,500

Option 2 - Do Minimum - Replace existing Single-Slice CT Scanner with new 16-Slice CT

Scanner (purchase)


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£

Capital Costs

Equipment

Multi-slice CT Scanner (64 slice) 400,000



Enabling Works









Service costs (annually after year one) 60,000



Option 4 - Replace existing Single-Slice CT Scanner with Multi-Slice (64 slice) CT

Scanner (purchase)


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£

Capital Costs

Equipment

Multi-slice CT Scanner (64 slice) -



Enabling Works









Lease costs 92,550

Service costs 60,000



Option 5 - Replace existing Single-Slice CT Scanner with Multi-Slice (64

slice) CT Scanner (lease)


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Appendix 2 Financial Assumptions


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SHSCT - DHH CT Scanner Financial Assumptions

1. The useful economic life of the CT Scanner is estimated as 10 years, as such discounted cash flow calculations have been calculated over 10 years;

2. Lease costs are calculated on the basis that after 5 years the asset will be owned by the Trust. I.E. for Option 5 after 5

years lease costs cease and annual revenue costs decrease by £93k;

3. Revenue sensitivity bias is calculated at 3.5% (prudent estimate);

4. Interest on capital charges is calculated at 3.5%.


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Appendix 3 Capital Charges


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SHSCT - CT Scanner Case

Estimated Capital Charges - Baseline Costs


Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £

Group 2 & 3 Equipment

Opening NBV 73,000 36,500 0 0 0 0 0 0 0 0

Additions

Depreciation 36,500 36,500 0

Closing NBV 36,500 0 0 0 0 0 0 0 0 0

Average NBV 54,750 18,250 0 0 0 0 0 0 0 0

Interest 1,916 639 0 0 0 0 0 0 0 0

Sub Total 38,416 37,139 0 0 0 0 0 0 0 0

TOTAL CAPITAL CHARGES 38,416 37,139 0 0 0 0 0 0 0 0 37,778

Option 2 - Do Minimum - Replace existing Single-Slice CT Scanner with new 16-Slice CT Scanner (purchase)

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £

Group 2 & 3 Equipment (depn 10yrs)

Opening NBV 73,000 450,050 367,600 321,650 275,700 229,750 183,800 137,850 91,900 45,950

Additions 459,500

Depreciation 82,450 82,450 45,950 45,950 45,950 45,950 45,950 45,950 45,950 45,950

Closing NBV 450,050 367,600 321,650 275,700 229,750 183,800 137,850 91,900 45,950 0

Average NBV 261,525 408,825 344,625 298,675 252,725 206,775 160,825 114,875 68,925 22,975

Interest 9,153 14,309 12,062 10,454 8,845 7,237 5,629 4,021 2,412 804

Sub Total 91,603 96,759 58,012 56,404 54,795 53,187 51,579 49,971 48,362 46,754

TOTAL CAPITAL CHARGES 91,603 96,759 58,012 56,404 54,795 53,187 51,579 49,971 48,362 46,754 60,743


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Option 4 - Replace existing Single-Slice CT Scanner with Mutil-Slice (64 slice) CT Scanner (purchase)

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £

Group 2 & 3 Equipment (Depn 10yrs)

Opening NBV 73,000 540,050 447,600 391,650 335,700 279,750 223,800 167,850 111,900 55,950

Additions 559,500

Depreciation 92,450 92,450 55,950 55,950 55,950 55,950 55,950 55,950 55,950 55,950

Closing NBV 540,050 447,600 391,650 335,700 279,750 223,800 167,850 111,900 55,950 0

Average NBV 306,525 493,825 419,625 363,675 307,725 251,775 195,825 139,875 83,925 27,975

Interest 10,728 17,284 14,687 12,729 10,770 8,812 6,854 4,896 2,937 979

Sub Total 103,178 109,734 70,637 68,679 66,720 64,762 62,804 60,846 58,887 56,929


Option 5 - Replace existing Single-Slice CT Scanner with Multi - Slice (64 slice) CT Scanner (lease)

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £


Opening NBV 73,000 180,050 127,600 111,650 95,700 79,750 63,800 47,850 31,900 15,950

Additions 159,500

Depreciation 52,450 52,450 15,950 15,950 15,950 15,950 15,950 15,950 15,950 15,950

Closing NBV 180,050 127,600 111,650 95,700 79,750 63,800 47,850 31,900 15,950 0

Average NBV 126,525 153,825 119,625 103,675 87,725 71,775 55,825 39,875 23,925 7,975

Interest 4,428 5,384 4,187 3,629 3,070 2,512 1,954 1,396 837 279

Sub Total 56,878 57,834 20,137 19,579 19,020 18,462 17,904 17,346 16,787 16,229



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SHSCT - CT Scanner Business Case

Optimism Bias - Capital Equipment 1.2440

Estimated Capital Charges - Adjusted for Optimism Bias Optimism Bias (from Sensitivity Analysis) - Revenue Costs1.0350


Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £


Opening NBV 90,812 45,406 0

Additions 0 0

Depreciation 45,406 45,406 0

Closing NBV 45,406 0 0

Average NBV 68,109 22,703 0

Interest 2,384 795 0

Sub Total 47,790 46,201 0 0 0 0 0 0 0 0

TOTAL CAPITAL CHARGES 47,790 46,201 0 0 0 0 0 0 0 0 46,995

Option 2 - Do Minimum

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £


Opening NBV 90,812 559,862 457,294 400,133 342,971 285,809 228,647 171,485 114,324 57,162

Additions 571,618 0

Depreciation 102,568 102,568 57,162 57,162 57,162 57,162 57,162 57,162 57,162 57,162

Closing NBV 559,862 457,294 400,133 342,971 285,809 228,647 171,485 114,324 57,162 0

Average NBV 325,337 508,578 428,714 371,552 314,390 257,228 200,066 142,905 85,743 28,581

Interest 11,387 17,800 15,005 13,004 11,004 9,003 7,002 5,002 3,001 1,000

Sub Total 113,955 120,368 72,167 70,166 68,165 66,165 64,164 62,163 60,163 58,162



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Option 4

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £


Opening NBV 90,812 671,822 556,814 487,213 417,611 348,009 278,407 208,805 139,204 69,602

Additions 696,018 0 0

Depreciation 115,008 115,008 69,602 69,602 69,602 69,602 69,602 69,602 69,602 69,602

Closing NBV 671,822 556,814 487,213 417,611 348,009 278,407 208,805 139,204 69,602 0

Average NBV 381,317 614,318 522,014 452,412 382,810 313,208 243,606 174,005 104,403 34,801

Interest 13,346 21,501 18,270 15,834 13,398 10,962 8,526 6,090 3,654 1,218

Sub Total 128,354 136,509 87,872 85,436 83,000 80,564 78,128 75,692 73,256 70,820


Option 5

Year 0 1 2 3 4 5 6 7 8 9

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

£ £ £ £ £ £ £ £ £ £


Opening NBV 90,812 223,982 158,734 138,893 119,051 99,209 79,367 59,525 39,684 19,842

Additions 198,418 0

Depreciation 65,248 65,248 19,842 19,842 19,842 19,842 19,842 19,842 19,842 19,842

Closing NBV 223,982 158,734 138,893 119,051 99,209 79,367 59,525 39,684 19,842 0

Average NBV 157,397 191,358 148,814 128,972 109,130 89,288 69,446 49,605 29,763 9,921

Interest 5,509 6,698 5,208 4,514 3,820 3,125 2,431 1,736 1,042 347

Sub Total 70,757 71,945 25,050 24,356 23,661 22,967 22,272 21,578 20,883 20,189



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Appendix 4 Discounted Cash Flow Calculations


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Option 1 - Status Quo/Do Nothing

Net Present Value Calculations

Year 0 1 2 3 4 5 6 7 8 9 Total

Financial Year 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 Cost

£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs

Opportunity Costs of Existing Assests

Current Land 0

Current Accomm 0

New Build - Land 0

Building\Conversion Works 0

Equipment - Group 2&3 0

Equipment - ICT 0

Sub - Total 0 0 0 0 0 0 0 0 0 0 0

Total Capital Costs (annual) 0 0 0 0 0 0 0 0 0 0 0

Revenue Costs

Baseline Revenue Costs Status Quo 61 61 61 61 61 61 61 61 61 61 610

Total Current Cost 61 61 61 61 61 61 61 61 61 61 610

Benefits

Lease costs 0

Service Costs 0

Licence costs 0

General Services 0

Building Residual Value 0

0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0

Total Costs and Benefits 61 61 61 61 61 61 61 61 61 61 610

Cumulative Costs & Benefits 61 122 183 244 305 366 427 488 549 610

Net Undiscounted Cost 61 61 61 61 61 61 61 61 61 61 610

Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337

Discounted Cash Flow 61 59 57 55 53 51 50 48 46 45 525

Cumulative Discounted Cash Flow 61 120 177 232 285 336 386 434 480 525


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Option 2 - Do Minimum - Replace existing Single-Slice CT Scanner with new 16-slice CT Scanner (purchase)


Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0


Fees - Pre-Contract 0

Fees - Post- Contract 0

Non- Works Costs 0

Equipment - Group 2&3 460 460

Equipment - ICT 0

Contingency 0

Sub - Total 460 0 0 0 0 0 0 0 0 0 460


Revenue Costs


Additional Revenue Costs

Lease costs 0 0 0 0 0 0 0 0 0 0 0

Service Costs 45 45 45 45 45 45 45 45 45 405

Licence costs 15 15 15 15 15 15 15 15 15 15 145

General Services 0 0 0 0 0 0 0 0 0 0 0

Total Additional Costs 15 60 60 60 60 60 60 60 60 60 550

Benefits

Current Land 0

Refurbishment Residual Value 0 0

Land Residual Value 0

Equipment Residual Value 0 0


0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0

Total Costs and Benefits 535 121 121 121 121 121 121 121 121 121 1,620

Cumulative Costs & Benefits 535 656 776 897 1,017 1,138 1,258 1,379 1,499 1,620

Net Undiscounted Cost 535 121 121 121 121 121 121 121 121 121 1,620

Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337

Discounted Cash Flow 535 116 112 109 105 101 98 95 92 88 1,452

Cumulative Discounted Cash Flow 535 651 764 873 978 1,079 1,177 1,272 1,363 1,452


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Option 4 - Replace existing Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (purchase)


Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0




Non- Works Costs 0


Equipment - ICT 0

Contingency 0

Sub - Total 560 0 0 0 0 0 0 0 0 0 560


Revenue Costs



Lease costs 0 0 0 0 0 0 0 0 0 0 0

Service Costs 60 60 60 60 60 60 60 60 60 540

Licence costs 15 15 15 15 15 15 15 15 15 15 145



Benefits

Current Land 0





0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0


Cumulative Costs & Benefits 635 771 906 1,042 1,177 1,313 1,448 1,584 1,719 1,855


Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337


Cumulative Discounted Cash Flow 635 766 892 1,015 1,133 1,247 1,357 1,464 1,566 1,666


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Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0




Non- Works Costs 0


Equipment - ICT 0

Contingency 0

Sub - Total 160 0 0 0 0 0 0 0 0 0 160


Revenue Costs



Lease costs 93 93 93 93 93 93 555

Service Costs 60 60 60 60 60 60 60 60 60 60 600

Licence costs 15 15 15 15 15 15 15 15 15 15 145


Total Additional Costs 167 167 167 167 167 167 75 75 75 75 1,300

Benefits

Current Land 0





0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0




Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337




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Option 1 - Status Quo/Do Nothing

Net Present Value Calculations (adjusted for Optimism Bias)


Optimism Bias (from Sensitivity Analysis) - Revenue Costs 1.0350

Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0


Equipment - Group 2&3 0

Equipment - ICT 0

Sub - Total 0 0 0 0 0 0 0 0 0 0 0


Revenue Costs


Total Current Cost 63 63 63 63 63 63 63 63 63 63 631

Benefits

Current Land 0

Current Accomm 0


Equipment Residual Value 0


0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0

Total Costs and Benefits 63 63 63 63 63 63 63 63 63 63 631

Cumulative Costs & Benefits 63 126 189 253 316 379 442 505 568 631

Net Undiscounted Cost 63 63 63 63 63 63 63 63 63 63 631

Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337

Discounted Cash Flow 63 61 59 57 55 53 51 50 48 46 543

Cumulative Discounted Cash Flow 63 124 183 240 295 348 400 449 497 543


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Option 2 - Do Minimum - Replace existing Single-Slice CT Scanner with new 16-slice CT Scanner (purchase)




Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0




Non- Works Costs 0


Equipment - ICT 0

Sub - Total 572 0 0 0 0 0 0 0 0 0 572


Revenue Costs



Lease costs 0

Service Costs 0 47 47 47 47 47 47 47 47 47 419

Licence costs 15 15 15 15 15 15 15 15 15 15 150

General Services 0


Benefits

Current Land 0





0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0




Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337


Cumulative Discounted Cash Flow 650 770 887 999 1,108 1,213 1,314 1,412 1,507 1,599


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Option 4 - Replace existing Single-Slice CT Scanner with Multi-Slice (64 slice) CT Scanner (purchase)




Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land




Non- Works Costs 0


Equipment - ICT 0

Sub - Total 696 0 0 0 0 0 0 0 0 0 696


Revenue Costs



Lease costs 0

Service Costs 0 62 62 62 62 62 62 62 62 62 559

Licence costs 15 15 15 15 15 15 15 15 15 15 150

General Services 0


78 140 140 140 140 140 140 140 140 140 1,340 134

Average

Revenue

Costs

Benefits

Current Land 0





0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0


Cumulative Costs & Benefits 774 914 1,055 1,195 1,335 1,475 1,616 1,756 1,896 2,036


Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337


Cumulative Discounted Cash Flow 774 910 1,041 1,167 1,289 1,407 1,521 1,632 1,738 1,841


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Year 0 1 2 3 4 5 6 7 8 9 Total


£ £ £ £ £ £ £ £ £ £ £'000s

Capital Costs


Current Land 0

Current Accomm 0

New Build - Land 0




Non- Works Costs 0


Equipment - ICT 0

Sub - Total 198 0 0 0 0 0 0 0 0 0 198


Revenue Costs



Lease costs 96 96 96 96 96 96 0 0 0 0 575

Service Costs 62 62 62 62 62 62 62 62 62 62 621

Licence costs 15 15 15 15 15 15 15 15 15 15 150

General Services 0

Total Additional Costs 173 173 173 173 173 173 77 77 77 77 1,346

Benefits

Current Land 0





0

Total Benefits 0 0 0 0 0 0 0 0 0 0 0




Discount Factor 3.5% 1.0000 0.9662 0.9335 0.9019 0.8714 0.8420 0.8135 0.7860 0.7594 0.7337




of 61

Appendix 5

Optimism Bias Calculations


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CT Scanner Business Case

December 2009

Optimism Bias - Capital Equipment

Contributory Factors% Contribution Mitigation Adjusted Comments

to Optimism Bias Factors OB %

Upper Bound Optimism Bias 200% Standard Equipment Capital Exp % from Green Book

Procurement

Complexity of Contract Structure

7 0.90 0.70

This is a basic contract. The Scanner has been in use in other

trusts.

Late Contractor Involvement in Design 7 0.90

0.70

The contractor will be appointed at the start of the procurement

process. Established tendering procedures will ensure that a

reliable and reputable contractor will be appointed.

Poor Contractor Capabilities

4 0.90 0.40

The Contractor has provided this equipment to other sites in NI.

The Contractor is experienced.

Information Management

5 0.90 0.50

The Trust expects to be able to manage information interfaces

effectively.

Project Specific0.00

Design Complexity 10 0.90 1.00 Equipment to be purchased is standard in nature.

Degree of Innovation

17 0.90 1.70

Equipment to be procured is standard with no innovative

features. It is moving from a single slice to multi-slice, so may

need additional training.

Client Specific0.00

Inadequacy of Business Case

18 0.90 1.80

The Trust has taken all steps to ensure that the revenue and

capital cost drivers have been identified. All stakeholders have

been involved and their needs identified.

Project Management Team

5 0.90 0.50

Those involved in the development of the CT Scanner case are

all experienced in their field.

Poor Project Intelligence

4 0.80 0.80

The business case has been developed by experienced staff

who work from day to day in the Radiology Department so will

be involved at all levels of implementation.

External Influences0.00

Legislation/ Regulations 5 0.90 0.50 The project adheres to all relevant legislation/ regulations.

Technology

18 0.80 3.60

It is currently envisaged that there should not be unanticipated

technological advancements for the equipment to be procured

for this project.

100

% Reduction in Optimism Bias 12.20

Optimism Bias Uplift Factor: 87.80

(100% - 87.8%) X 200% = 24.40%

Option 2,4,5

business case to replace ct scanner at daisy hill …...business case for replacement of ct scanner...

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