New models for NHS delivery
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New models for NHS delivery

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Driving efficiency and contestability.

Driving efficiency and contestability.
Mr. Matthew Custance, Director - Public Sector Healthcare, KPMG

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New models for NHS delivery Presentation Transcript

  • 1. CORPORATE FINANCE New models for NHS delivery Driving efficiency and contestability 19 May 2010 HEALTHCARE
  • 2. Outline  Structure of Health and Social Care in the UK  Moving from a state-run NHS to a patient-led NHS  A bumpy ride  Templates for change © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 1
  • 3. Overview of Provision of Health and Social Care Department of (Public) Health DH Social Local Authorities DH - NHS Care Policy (Social Care) Strategic Health Public Sector Private Sector Authorities Providers Providers Commissioners Public and Private Sector Providers © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 2
  • 4. A new market The NHS has changed… System Management Oversight New NHS Providers Market Commissioners £100bn pa 380+ NHS trusts, 152 PCTs GPs, GP fundholders Private providers, Patient choice Third sector … Markets come with a regulatory framework. This framework needs to be reliable and enforceable. It needs to enhance competition and help deliver integrated, value for money end to end services. © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 3
  • 5. Outline  Structure of Health and Social Care in the UK  Moving from a state-run NHS to a patient-led NHS  A bumpy ride  Templates for change © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 4
  • 6. Moving from a state-run to a patient-led NHS Key policy drivers  Efficient procurement introducing real risk transfer  PFI  NHS Shared Business Services  Creating/commissioning a patient-led NHS (March/July 2005)  developing the idea of choice and contestability  tasking PCTs as commissioners, not providers Implications  The state operates primarily as the champion of the user of public services (the patient, the pupil, the infirm, the offender, the traveller)  Where the state is involved in delivery of public services, it is a “means” to achieving good, stable, value-for-money public services; it is not an end in itself James Stewart, Infrastructure UK, Nov 2008 © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 5
  • 7. The increasing role of the private sector 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 PFI Hospital Programme LIFT ISTC Waves 1-2 NHS shared business services Pathology outsourcing Increasing breadth of service delivery © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 6
  • 8. Outline  Moving from a state-run NHS to a patient-led NHS  A bumpy ride  Templates for change © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 7
  • 9. The rise and fall of PFI Number of deals to close by year 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Capital value of deals to close by year 2,500 2,000 £ million 1,500 1,000 500 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 8
  • 10. The Private Finance Initiative Features:  Private sector design, build, finance and maintain the facility  Payment mechanism rewards availability of facility  Transfer of lifecycle cost risk  Hard FM included  Soft FM included to varying degrees in some deals Key issues:  TUPE  Constraints on changing use of facilities  Initial overscoping of many facilities  Exhaustion of pipeline © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 9
  • 11. The rise and fall of central clinical contracting Independent sector treatment centres 800 Five year scheme value (£m) 700 Fairness in Primary Care 600 500 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 Year of full service commencement Source: Department of Health © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 10
  • 12. Independent sector treatment centres Features:  Initially take or pay contracts  Transfer of all construction (where applicable) and operating risk  The first major programme of private sector clinical provision in secondary care in the NHS Key issues:  Attracting new players  TUPE  Demand risk – estimating demand, NHS perception, new entrant issues  Clinical negligence coverage  Contract specification © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 11
  • 13. The rise (?) of NHS-led contracting Ongoing devolution to local NHS organisations has meant a loss of focus but a broader range of opportunities with greater local buy-in  Transactions of note:  Back office outsourcing  PCTs  Acutes  Pathology outsourcing – acute led  Radiology/imaging outsourcing – acute led  Community health provision  Clinical pathway management  Hospital management © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 12
  • 14. Outline  Moving from a state-run NHS to a patient-led NHS  A bumpy ride  Templates for change © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 13
  • 15. Templates for change – case studies  Guys/Serco Pathology  Great Yarmouth and Waveney Community Services  Hinchingbrooke Hospital Franchising © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 14
  • 16. GSTS pathology Guys and St Thomas NHS Foundation Trust  Improve efficiency of service delivery esp back office  Improve patient care  Develop the business Serco  Beachhead for a market leading pathology business  Opportunity to extend into a growing market  Access to NHS “family” Features  Serco control of JV  Outsourcing arrangement between Guys and JV for delivery of pathology services  Secondment of Trust Staff Allowed Serco the opportunity to enhance NHS provider efficiency, rather than to compete directly with that provider © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 15
  • 17. Great Yarmouth and Waveney Community Services Policy Background  All PCTs required to have a plan for separating provider arms by Oct 2009  Deadline then dropped…  … then changed to 31 March 2010 Great Yarmouth and Waveney (GYW) PCT  A pathfinder for externalising provision of community health  Initially planned as a procurement open to the private and third sectors  October 2009: Andy Burnham states that the NHS is the “preferred provider” of services and should be given two chances to improve poor performance before contracting out  GYW therefore switched tack and allowed only NHS organisations to bid  Challenge by ACEVO  Procurement cancelled by the DH Transactions in the NHS are rarely smooth and frequently politically complex © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 16
  • 18. Hinchingbrooke Next Steps Project Background  Hinchingbrooke Healthcare NHS Trust has a £40 million accumulated deficit on annual revenues of around £100 million  Strategic Health Authority has agreed to guarantee the future of the hospital – but on the basis that the status quo is not an option The Transaction  Operational Franchise  The Trust remains an NHS organisation but with management outsourced  Current bidders: Ramsay Health Care UK, Circle, Serco  Transfer of all financial and operational risks to the successful franchisee, subject to total liability caps and profit share arrangements  7-10 year term If successful, this transaction provides a genuinely new model for transforming performance in the NHS © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 17
  • 19. Presenter’s contact details Matthew Custance KPMG LLP (UK) +44 (0)20 7311 8140 matthew.custance@kpmg.co.uk www.kpmg.co.uk