Landmark city hospital merger expects to save £100m

The plans to merge Central Manchester University Hospitals Foundation Trust, University Hospital of South Manchester FT and North Manchester General Hospital – run by Pennine Acute Hospitals Trust – suggest efficiency savings would be made on workforce, back office and estates costs, as well as activity reduction.

In addition to the organisational changes, the plans involve significant reconfiguration of several specialties, including the centralisation of elective orthopaedics at Trafford General Hospital and vascular surgery at Manchester Royal Infirmary. This work is expected to deliver savings of 8-10 per cent within eight specialties.

A report published by the Greater Manchester devolution team said cumulative gross savings of £105m have been estimated between 2017-18 and 2020-21. This appears to be over and above the efficiency savings planned under the normal course of business.

However, delivery of the savings assumes receipt of £56m of transformation funding. Around £24m of this funding would cover “restructuring costs”, with due diligence accounting for £9m.

Most of this investment would come from the region’s £450m transformation fund, with around a third potentially provided by local commissioners and NHS Improvement.

The recurrent net savings by 2021 are then estimated to be £42.6m.

Health think tanks have frequently highlighted how trust mergers and clinical reconfigurations have failed to deliver the level of savings predicted. In 2014, the King’s Fund said evidence to support the impact of large scale reconfigurations of hospital services on finance is “almost entirely lacking”.

The trusts said in a statement: “The expected savings of £105m between 2017-18 and 2020-21 were identified as part of a comprehensive cost benefit analysis carried out in early 2017.”

Meanwhile, documents submitted to the Competition and Markets Authority as part of its investigation into the proposed merger of CMFT and UHSM have revealed more detail about the services run by both trusts to be consolidated on a single site.

These services are:

• Cardiology (acute coronary syndrome, heart rhythm abnormalities, acute aortic surgery) – Manchester Royal Infirmary or Wythenshawe Hospital.
• Vascular Surgery – Manchester Royal Infirmary.
• Urology surgery – Manchester Royal Infirmary or Wythenshawe.
• Urology kidney stone removal – Wythenshawe.
• Orthopaedics elective surgery – Trafford General Hospital.
• Orthopaedics (fractured neck of femur) – Manchester Royal Infirmary or Wythenshawe.
• Head and neck cancer and maxillofacial surgery – Manchester Royal Infirmary or Wythenshawe.

The trusts’ statement added: “The Manchester locality plan and Sir Jonathan Michael’s independent single hospital service review identified the need to address variation in the way hospital services are provided in Manchester.

“There is robust evidence that certain services achieve improvements in outcomes when a larger volume of patients are treated within a service.

“Outpatient clinics, diagnostics and follow up services will continue to be provided at a wide range of sites.

“Where the benefits case refers to centralisation or relocation of services, these proposals would still be subject to staff and public consultation where appropriate.”

Greater Manchester Health and Social Care Strategic Partnership, which controls the transformation fund, has so far approved £27m of funding for the project, with a maximum envelope of £42.5m.

Another £12m would come from clinical commissioning groups, providing NHS England allows them to access money set aside as a “risk reserve” in 2016-17. Discussions are ongoing with NHSI about the possibility of the regulator covering due diligence costs.

The trusts are also in the process of integrating their out of hospital services, to create a “local care organisation” for the city.