Transformation Unit

North East Sector

Review of Long Term Financial Models

The Client

North East Sector Commissioners.

The Challenge

The complexity of the North East Sector has meant that over a period of time there have been a number of separate exercises undertaken to understand the long term financial viability of the hospitals in the sector. Each of the financial models approached the question being posed from a slightly different perspective with a varied group of underlying assumptions and outputs.

Our Approach

Accepting that each individual report came from a slightly different viewpoint, we were able to provide an independent assessment of the financial sustainability of the sector’s hospitals and recommend an approach to achieving a new model of care.

We undertook a financial assessment of income projections based on both demographic/non-demographic growth and also factored in the implications of inflation/deflation assumptions. We reviewed assumptions in relation to bed occupancy in line with Royal College standards. The impact of capital was also assessed to understand the financial implications of any new builds being proposed.

A review of the organisation’s ability to deliver ongoing efficiency was undertaken in order to assess what level of cost improvement programme was realistic. A review of assumptions in relation to travel and access modelling was undertaken, and we identified weaknesses and outlined potential improvements which could be made to enhance the robustness of the modelling.

We also undertook a sensitivity analysis to identify the financial risks of the transformation plan. This enabled the sector to monitor these risks on an ongoing basis.

Outcome

The final report outlined refinements to the financial modelling which would need to be undertaken before proceeding to full consultation, providing the client with a single view of the financial challenge within the sector.

The report also clearly articulated the rationale for any recommended changes to existing assumptions. Our report enabled commissioners and providers within the sector to engage in more joined up discussions and take a proactive approach to develop a programme capable of driving immediate change.