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