New Healthcare Facilities Programme - Summary Strategic Outline Case.

STATES OF JERSEY

NEW HEALTHCARE FACILITIES SUMMARY STRATEGIC OUTLINE CASE

Presented to the States on 4th July 2023 by the Minister for Infrastructure

STATES GREFFE

2023  R.111

REPORT

Project background

This is not the first strategic case for a new hospital in Jersey, since 2012 there have been various unsuccessful attempts made to increase and improve health facilities on the island, initially with the Future Hospital Project and then in the Our Hospital Project ("OHP"); however the strategic case remains the same. The strategic case for a new hospital only strengthens as the current facilities continue to deteriorate and hence urgent action is now required.

The OHP, which was initiated in 2019, was designed to meet the clinical needs of the Island at that time and was anticipated to be delivered by 2026. Overdale was endorsed as the preferred site for the new hospital by the States Assembly in November 2020 and the Assembly approved a funding model for the project in October 2021 on the basis of the OHP Outline Business Case ("OHP OBC") produced earlier that year.

However, as the project progressed through the planning stages, it became apparent that changes in the global economy due to the pandemic would increase original costs. As a result of affordability pressures, the Government of Jersey ("GoJ"), initiated a review (Review of Our Hospital Project'), which considered whether changes could be made to OHP to deliver a more affordable and appropriate alternative. The review concluded that alternative options should be considered, one of which was the development of New Healthcare Facilities ("NHF") across multiple sites in a phased manner.

Recommendations from the review have been considered as part of the development of the NHF Programme Strategic Outline Case (or "NHF SOC").

Process for developing the NHF SOC

Business Cases in the UK (specifically England and Wales) are produced using the His Majesty's Treasury / Welsh Government Green Book Business Case / Five Case Model Guidance.

The SOC is the first stage of the Five Case Model process and largely focusses on outlining the strategic context and considering a long list of options which could address the business needs.

The NHF SOC will be structured in line with the Five Cases (further information on each Case is set out later in this briefing):

• The Strategic Case

• The Economic Case

• The Commercial Case

• The Financial Case

• The Management Case

A feasibility study will support this NHF SOC, it will consider feasible options for site agnostic solutions that are considered as one of the SOC Options.

SOC approval process and next steps including the future Outline Business Case The NHF SOC will be taken through the various Governance Groups in June 2023, including the Council of Ministers.

Following successful approval of this programme-level SOC, the next stage of the Business Case process will be to develop project-level OBCs for each of the individual projects within the NHF Programme.

The NHF SOC

A summary of the work undertaken for each of the five cases in the NHF SOC is detailed below.

The Strategic Case

The Strategic Case sets out the background to the delivery of healthcare services in Jersey and details the reasons that an intervention is required in the case for change.

Case for change

The NHF need to deliver an island-wide solution and meaningful change to the delivery of health services in Jersey which are fit for purpose today and in the future. Based on the analysis of the existing facilities and services, there is a clear case for change which is set out below:

• The condition of the estate is poor and presents significant challenges that will increase in the short term.

• Facilities are in poor conditions with the worst affected areas of the building presenting daily operational difficulty.

• In order to achieve the expected benefits of more effective ways of working and/or new models of care, a significant change will be required in the way hospital services are delivered.

• Reconfiguration of the current building will, in nearly all aspects, require significant refurbishment costs to address infrastructure issues and high ongoing lifecycle expenditure whilst at the same time not addressing the inherent space, clinical flow and adjacency issues.

There is an exciting vision for the NHF which can support and enable change across the way health services are delivered, as well as providing a facility which is fit for purpose and delivers Value for Money ("VfM") to the people of Jersey. The Strategic Case identifies objectives for the NHF, benefits, constraints, and dependencies. This has been included at Appendix A for reference.

The Economic Case

The Economic Case focusses on establishing a long list of options to deliver the objectives and business needs set out in the Strategic Case. The final output of the SOC Economic Case is a shortlist of options for further development at OBC Stage and a preferred way forward. Detailed VfM analysis will take place at the OBC stage which will identify a preferred option.

Long list of options and appraisal

The long list of options that were considered as part of the Economic Case are as follows;

• Option  1:  Business  as  Usual  ("BAU").  Keep  the  current  Healthcare Facilities open and safe, maintaining the current configuration of services

& facilities by investing in backlog maintenance and ward refurbishments.

• Option  2:  Services  to  be  delivered  across  multiple  sites  for  Acute, Ambulatory and Mental Health on a phased basis with JCM principles .

• Option  3:  Services  to  be  delivered  across  multiple  sites  for  Acute, Ambulatory and Mental Health on a phased basis with the Health Minister's Care Model Framework.

• Option 4: Services to be delivered at a single site with JCM principles.

• Option 5: Services to be delivered at a single site with Health Minister's Care Model Framework.

Options 2-5 are currently site agnostic, so far as the split of services between Overdale and Kensington place are not confirmed but these locations will be the sites for the main healthcare  hubs  with  some  services  also  being  delivered  at  St  Saviour  and  Les Quennevais.

 An assessment was carried out on the long list of options against the Critical Success Factors ("CSF") along with the objectives identified in the Strategic Case and was subject to a SWOT assessment. CSFs are bespoke criteria that have been established for assessment against the options for the NHF and articulate what success would look like'. A list of CSFs has been included at Appendix B and the full appraisal of CSFs against Options at Appendix C. A summary of this assessment has also been provided below. A Red, Amber, Green scoring was provided against each Option and this was tested by both the Programme team and wider stakeholders.

Table 1: CSF vs SOC Options

1 * CSF3 considers the affordability of the NHF Programme, not the affordability of the projects which will be delivered within the programme, which will be assessed as the relevant project business cases are brought forward.

This process concluded that the multi-site option with the Health Minister's Care Model Framework (Option 3) enables a phased approach that is likely to be more affordable and flexible to future requirements and also scores more favourably across many other CSFs. It is therefore taken forward for further assessment against the BAU option. The BAU option did not meet a number of the CSFs, however, in line with Green Book guidance this is used as a baseline comparator against other shortlisted options. The shortlisted options will be subject to further development as part of the process to produce multiple OBC's in line with the phased delivery approach.

High-level costing of shortlisted options

High level costings have been prepared by Cost Consultants for the preferred way forward. These include capital costs and considerations for revenue costs. The capital costs include the following:

• Works Cost, including Departmental costs and all external Works and Services

• Digital strategy

• Client Direct Costs

• Design Fees

• Site Acquisitions

• Equipment (Supply Only of Group 2 and Supply & Fix of Group 3)

In addition provisions are made for:

• Contingency

• Optimism Bias

• Tender and Construction Inflation

The works costs are based on benchmark data from similar schemes.

The Commercial Case

A programme, as opposed to project, approach has been taken with the NHF preferred way forward as identified in the Economic Case. This fundamental change creates opportunities for the local supply chain and changes the risk and funding profile for GoJ. However, the implementation will still be a significant exercise for the GoJ and the Programme team. As the largest construction programme ever undertaken by the GoJ, the scale and complexity of the facilities represent a significant inherent delivery risk.

Contracting and tender strategy options

The  main  contract  strategy  options  available  are;  Traditional,  Design  and  Build, Construction Management and Management Contracting. Tender strategies can broadly be classified as either single-stage or two-stage. Both procedures can be based on competition or negotiation. A workshop was held with the GoJ to determine the most appropriate contracting and tendering options for the NHF. It was determined that programme should retain flexibility in terms of individual project delivery whilst ensuring a consistent approach. This approach will be further developed as the projects are  defined/refined,  using  the  programme  CSFs  and  wider  objectives  to  develop procurement drivers to quantify the best approach.

Alongside this work, there will also be market involvement to better understand the supply chain capacity and broader island logistics. The economic position globally has been volatile since the pandemic and has worsened with conflicts and uncertainties. The programme approach that is being taken will help to reduce the risk by separating the scheme into smaller constituent parts. This in turn will open more opportunities to the local supply chain as well as a wider spectrum of UK national and international suppliers.

Commercial opportunities

The  GoJ  is  seeking  to  explore  potential  commercial  opportunities  as  part  of  the programme, which could provide either an upfront capital receipt to help fund the development  or  provide  an  ongoing  revenue  stream  to  support  the  servicing  or repayment of long-term debt. Such opportunities will be considered by the GoJ in more detail at OBC stage. These commercial opportunities may also be deferred in order to deliver other GoJ benefits, i.e. keyworker housing and therefore captured as a benefit.

The Financial Case

This section sets out the proposed funding solution for the NHF SOC. Where a programme approach, as opposed to a single project approach, will be taken with the development of the NHF, each individual development will form its own financial case to evidence the funding solution.

The Programme will utilise Target Value Design. This is a collaborative process that involves the design team, cost managers, client, and other stakeholders working together to design and deliver healthcare facilities within a predetermined budget. The over- riding ethos of this target value design process will be to deliver a design that is affordable, meets its objectives, to an acceptable quality and within timelines.

Proposed funding mechanism

The GoJ have a Revolving Credit Facility ("RCF") which expired on the 5th May 2023 and the Treasury and Exchequer performed a full review of the financing solutions available to support future budget requirements. The objectives of the new funding scheme were outlined as follows:

• Ensure the programme can proceed with confidence.

• Maintain the States' credit rating at the most optimum level.

• Identify the most economically viable solution.

• Maintain flexibility for the States' balance sheet.

Following an options appraisal, advice identified that securing medium term funding for a period of 5 years was the most suitable financing option, as it was the only option that would support the above objectives. The review then considered whether funding should be provided through existing reserves or through debt facilities. Appraisal of the options available identified that the preferred funding method was an RCF for an initial period of 5 years with the option of further extensions for an additional 2 years.

The Management Case

This section sets out the proposed governance structure, programme delivery and risk management approach for the NHF.

Outline Roles and Responsibilities

The programme governance and reporting structure has been developed to follow the principles set out in the Public Finances Manual, Corporate Portfolio Management Office  ("CPMO")  guidelines  and  HM  Treasury  Green  Book  guidance.  These arrangements  have  been  established  to  support  the  governance,  monitoring,  and successful delivery of the programme. The key responsibilities of each of the groups involved is as follows:

• Ministerial Group: To oversee the delivery of the programme, with External Non-Executive Directors ("NEDs") providing advice, with responsibility for overseeing the range of activities associated with delivering the NHF.

• Senior Officer Steering Group: This group will act as the Programme Board. It will oversee and direct the programme to support the successfully delivery of NHF for Jersey.

Other forums have been established with key stakeholder groups to ensure that user and supplier perspectives are appropriately engaged and take into account the developing plans and designs. This will ensure that the requirements for the NHF Programme are defined sufficiently for the successful delivery of healthcare services and that those requirements  are  defined  sufficiently  for  the  successful  delivery  of  island  wide infrastructure.

A programme of this scale and complexity requires that the necessary skills and capabilities  are  leveraged  to  maximise  the  potential  of  delivering  facilities  that successfully provide healthcare services. In this case, the key GoJ senior officers are engaged in the programme, as well as the GoJ Client team who oversee the work of specialist advisors. These specialist advisors have been recruited or procured for areas

such as Project Management Office, Design, Cost Consultant, Healthcare Planning, Legal, and Commercial.

Programme Delivery

The  overall  timeline  has  been  developed  for  the  pre-construction  stages  and  the construction phases utilising knowledge and benchmarking based on major healthcare projects. The programme for the feasibility options for the preferred way forward for Option B is provided in Appendix D. It should be noted that these are for the fastest delivery but can be amended dependent on financial and economic circumstances, such as any decision to deliver phases over a longer period of time, for example, due to affordability.

Risk Management approach

A robust risk management process and procedure has been established, to identify risks and put in place management actions to mitigate these risks. These risks will be reviewed no less than on a monthly basis.

Set out below is a list of programme risks which have been identified at the SOC stage which are broadly split into three categories. Mitigations have been developed for each to reduce the probability and/or impact of each:

• Business Risks – these risks remain with the procuring organisation and cannot  be  transferred  by  the  organisation  and  include  political  and organisational risk:

• Political environment and required approvals
• Risk  of  the  Programme  not  obtaining  appropriate  level  of stakeholder support, including community support
• Risks of delays or need for significant change due to failure to achieve regulatory consent
• Confirmation of funding approach and availability of funding
• Failure  risk  of  critical  elements  of  existing  healthcare  facilities during construction phase
• Risk of delay to the programme from dependent Island strategies (for example, healthcare strategies) where principles or detail are not agreed in time or change significantly
• Risks associated with land assembly / acquisition
• Risks around poor communication / consultation
• Risk that demand projections are not sufficiently accurate and the new healthcare facilities are wrongly sized
• Environmental opposition
• Supply Chain insolvency risk
• Limited time contingencies owing to ambitious programme

• Service Risks – these risks fall within the design, build, financing and operational phases of the project and may be shared with others outside the procuring organisation:

• The facilities delivered are not fit for purpose
• The facilities delivered are unsafe for patients and staff
• Risk that GoJ Planning requirements require significant rework or delay
• The design cannot be delivered to the required standard
• Sufficient capacity of the construction supply chain
• Capacity of island resources, including supply chain and GoJ bodies
• Timing / delivery risk
• Risk of sub-optimal contracting arrangements
• Technology risk
• Decant risk – decanting staff / patients from one site to another

• External Non-Systemic risks – these risks affect all society and are not connected directly with the Programme. They are inherently unpredictable and random in nature and can include technological disruption, legislation, inflation and catastrophic risks:

• Inflation
• Global market conditions, including Brexit, cost of living crisis and war in the Ukraine

Appendix A – Objectives, Benefits and Constraints

Spending Objectives

1. To  provide  physical  and  mental  healthcare  facilities  that  support  the delivery of the high quality, efficient and effective care for all patients, service users, visitors, and staff.
2. To deliver NHF that provide best whole life value.
3. To deliver acute, general, mental healthcare and other services facilities that are compliant, flexible, and expandable, appropriate to deliver current and future healthcare.
4. To deliver NHF that supports the operational and financial sustainability of the health economy.
5. To ensure that the Programme is politically acceptable and sustainable.

Benefits, Constraints and Dependencies

Benefits  

Stakeholder  Examples

Patients  Safe, reliable, and quality assured care with improved and

predictable outcomes for patients and parity for mental health

• Facilities which address the healthcare needs of all patients

• A design which is flexible and future proof by offering resilience and continuity

Staff  Increased job satisfaction due to improved facilities and

physical surroundings, leading to a more attractive place to work

• Support the development of staff skills including education, training and development

HCS  Greater flexibility to changes in demand and evolving standards

in clinical practice

• First class healthcare facilities

• Deliver greater choice for patients

Wider  Provisioning for community diversity

community  

• Hospital facilities and public realm which could be used by the wider community. Facilities can be seen as a catalyst for wider community engagement/ improvements

• Creation of low carbon generating facilities

Constraints

• There is a requirement to ensure that the HSC services can continue to function safely throughout the duration of the programme

• Construction is required to commence in 2025 creating a fast-track timeline

• Whole Life costs of the Programme are affordable

• Political environment

• Jersey Sustainability Roadmap

• GoJ Planning requirements and the Bridging Island Plan

• Lack of construction supply chain choice due to industry demands  

• Capacity of island resources, including supply chain and GoJ bodies

Dependencies

• An adequate financing option is available and affordable

• Ensuring there are sufficient public transport options to the sites for patients and staff

• Planning consent for the construction of the new facilities

• Funding is approved by the States of Jersey and any other relevant bodies.

• Ability to achieve the acquisition of the land required to deliver the project.

• Supply chain interest to ensure the achievement of the programme timelines, deliverability and affordability

Appendix B – Critical Success Factors

1. Does the Programme align with HCS's continued operational delivery of services and reflect the critical priority for reprovision considering existing and emerging clinical and operational risk?
2. Does the Programme support the safety and wellbeing of staff and public in the delivery of high quality, accessible, efficient, and effective physical and mental healthcare?
3. Is the Programme affordable and enables financial and economic risks to be managed?
4. Are the proposed facilities sufficiently flexible, expandable, and able to maximise emerging technologies and innovation to deliver current and future effective and efficient healthcare?
5. Will  the  Programme  enable  construction  to  commence  in  2025  and maximise opportunities to utilise the local construction supply chain and Modern Methods of Construction (MMC)?
6. Does the Programme provide best whole life cost (including revenue and staffing costs) and provide value to the local economy?
7. Is the Programme politically acceptable, sustainable and deliverable?
8. Does the Programme align with the GoJ's policies, strategies, and current carbon neutral roadmap?

Appendix C – Critical Success Factors vs SOC Options

Appendix D - Programme Delivery Option B (Acute at Overdale)