Balancing the Books with a Shared Care Approach

Minimise Overheads, Maximise Throughput

Managed Services - Derby

Kevin Downs, Director of Finance & Performance

A Managed Equipment Service (MES) is a Solution to manage all medical equipment within a given department or departments within a hospital including the ownership, provision, purchase, installation and commissioning, user training, asset management, maintenance and replacement.

A Managed Service is similar to the above but can also incorporate the provision of staff and consumables.

WHAT IS MES?

Radiology

Imaging

Endoscopy

Pathology

Surgery

CSSD

£3.6m pa – 6 Yrs

Scopes/CamerasTheatres etc

£2.4m pa – 5 Yrs

£0.5m pa– 5 Yrs

£5.4m pa – 10 Yrs

£4.5m pa

Types of ServicePer Annum Total

Managed Equipment ServiceRadiotherapy and Imaging £5.4m £54.0m

(Asteral – 10 Years)Scopes/Cameras Etc

Theatres

(Storz – 5 Years) £0.5m £2.5m

Endoscopy - Scopes

(Pentax – 5 Years) £2.4m£12.0m

Managed ServicesPathology – Roche – 6 Years £3.6m £21.6mCSSD – Synergy – 5 Years £4.5m £22.5mSoft FM – ISS – 10 Years £15.0m £150.0mHard FM – Skanska – 5 Years £5.3m £26.5m

MANAGEMENT EQUIPMENT SERVICESGovernance Process

Is the Asset contracted as a REPLACEMENT OF CURRENT NEW ASSET OUTSIDE OF CONTRACT/

MES ASSETS MAINTENANCE

Private partner is responsible to replace and maintain this equipment. The trust will need to dispose of the current asset, the liability should have been fully utilised. The Trust will recognise a new asset and a new associated ‘loan’ liability. Cash neutral to the trust, however with the new asset depreciation charges will once again cover in part the cash impact of the unitary charge.

Trust will need to buy this new equipment and either maintain as their own asset or negotiate a new contract with the private partner to buy this equipment. Medical Devices Committee will need to approve and find the funding for any replacement in order to fund the liability associated with the contract.Any new asset, either owned or under MES, will become an asset on the balance sheet. MES assets will also need the contract liability to be recognised.Funding Strategy will be based on financial assessment. Buy/Maintenance/PDC costs versus Managed charge.

Benefits

OPERATIONAL

Risk Transfer

Managed by the Manufacturer

On Site Support

Trust Staff – Doing Their Own Job

Maintenance and Service

Service Operates as required – Maximises Uptime

Scaleable in Short Time Frames

“FIRE & FORGET”

Benefits

FINANCIAL Matches Costs With Income

Capital Expenditure When Needed

Cash Flow Improvement

Penalties For Non-Performance

Technology Uplift as Required

Flexible Financing Operation

VAT

Section 45 – Managed Services Equipment/PFI/Managed ServiceSection 31 – Pathology Section 37 – Maintenance/Cleaning of EquipmentSection 32 – Linen & Laundry

FINANCEThe Accounting Regime• IFRIC 12 – Service Concession Arrangements

Does the Trust control or regulate the services (use of)

the asset

Does the Trust have entitlement to any residual

value OR is the asset contracted to the Trust for its

whole life

Did the Private Partner buy the asset for the purposes of

the contract OR was it an existing asset used to meet

the requirements of the contract?

Within the scope of IFRIC12.

Operator (Private Co) does not have an asset

Therefore;

NHS body DOES have an asset & liability for the ‘loan’ element of the contract

Depreciation charges assigned to the asset will create cash benefit to Trust. This will at least in part cover the cost of the unitary payment.

Release of the liability repayment each year will negate the service reporting impact of capital repayment from the unitary charge

Revenue will be left with the cost of maintenance / service element of the unitary charge

QUESTIONS