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Business Case

Developing a Business Case

The prospect of developing a Business Case can be daunting. The structure and approach described here can be used and adapted as necessary to ensure that the case is robust and offers the best chance of success. Developing a robust Business Case will help to clarify the current position and determine what is required to improve existing services or develop a new one.

A business case template and costing model has been provided that can be tailored and can be used to secure approval, particularly where additional investment is required, and provides information to demonstrate a clear rationale, the benefits to patients, the service and the Trust, financial effectiveness and affordability. This template reflects the findings from our implementation sites and outlines the main chapter headings and areas to consider when constructing a Business Case. The level of detail required will depend on the scale and complexity of the proposal, the approvals route and the intended audience.

As a minimum it should provide a concise and robust case to persuade someone who is unfamiliar with the service that investment is justified. In addition, some Trusts have standard templates or report formats, which will also determine how information should be presented.

Cost Impact Report of Implementing Doppler Guided Intra-Operative Fluid Management

IMPORTANT NOTE: Please enable macro's to make full use of the Cost Savings Model tool.

NTAC commissioned York Health Economic Consortium to undertake an analysis of the potential impact of ODM in terms of the financial savings, improved patient outcomes and the capacity to provide additional care through releasing NHS resources, based on the findings of the NTAC Implementation Programme

The main findings based on the national patient population from the model are as follows:

Overall financial savings range between £135.5m and £360.4m can be realised by accruing these benefits;
This equates to financial savings of between £462 and £1,229 per patient;
The released hospital beds provide the capacity to undertake up to an additional 103,300 major surgical procedures per annum (if the financial savings were not realised);
The results of the model are highly sensitive to the length of stay estimates. The NTAC Implementation Programme demonstrated a 17.3% reduction in the overall length of stay for patients with ODM;
The use of ODM resulted in reducing re-admission and re-operative rates by approximately a third each.

Click here to access the report

Economic Model to Calculate the Operational and Financial Impact of Doppler Guided Intra-Operative Fluid Management

An economic model has been developed for the NHS Technology Adoption Centre by York Health Economic Consortium (YHEC) to assist decision makers, operational managers and clinicians to calculate the operational and financial impact of Doppler guided intra-operative fluid management implementation for an individual NHS Trust and / or regional health economy.

The model was developed in Microsoft Excel and can be used to estimate the potential benefits at national, regional or organisational level. The economic analysis uses a decision tree approach to determine the potential benefits of adopting ODM at the intra-operative phase for patients during major surgery relative to patients who undergo major surgery without ODM. A decision tree allows the prediction of the number of patients who are likely to follow a particular pathway. Each pathway generates a unique outcome in terms of costs and health benefits. The outcomes can then be combined with the number of patients that experience each end state in order to calculate the expected cost and benefits accrued for the patient cohort.

This model's focus was from the perspective of a health service payer, i.e. the NHS. As such, it seeks to take into account direct healthcare resource costs but makes no attempt to capture information on indirect costs such as productivity losses or costs which fall on the patient. The time horizon of the model is one year. Due to the model only considering the immediate outcomes, discounting of costs is not deemed to be necessary.

NTAC's implementation programme provides several types of data for the model, such as length of hospital stay, complication rates and critical care admission rates. Cost data were obtained from established published sources such as NHS Reference Costs and the CIPFA Health Database.

Click Here to access the model

Business Case Format

Executive Summary

The executive summary previews the main points of the in-depth business case; it is written for non-technical senior management and other decision makers who don't have time to read the main report. The executive report contains enough information for a reader to get familiarised with what is discussed in the full report without having to read it

Consideration of the following points can act as a quick checklist as you prepare the executive summary for your business case:

Plan to create a summary for each section of the business case as it is developed. Write the summary after you have completed the main business case and make sure it is no more than 1/10 the length of the main report
List the main points the summary will cover in the same order they appear in the main report
Write a simple declarative sentence for each of the main points
Add supporting or explanatory sentences as needed, avoiding unnecessary technical material and jargon
Read the summary slowly and critically, making sure it conveys your purpose, message and key recommendations. You want readers to be able to skim the summary without missing the point of the main report
Check for errors of style, spelling, grammar and punctuation. Ask a colleague to proof-read and edit the document
Ask a non-technical person - for example, a colleague in another specialty - to read the document. If it confuses or bores them, the summary probably will have the same effect on other non-technical readers

Strategic Context

This section sets the scene for the case for change and demonstrates how the proposal fits with and contributes to achieving relevant national and local NHS policy and priorities, as well as relevant research and professional body reports/guidance. It is critically important to provide evidence on how the current service and proposal is aligned with the Trust's short and long-term strategic plans and objectives for the coming year. If it is inconsistent or a poor fit it may be wise to question whether to proceed.

Case for Change

A significant element of the case is to provide an overview of the key pressures driving the case for change. Tools that are widely used to establish a clear understanding of the current service, what may be required in the future and indicate potential options are PEST and SWOT analyses.

Using these techniques it will be possible to distil the key drivers for change and highlight the consequences of doing nothing.

Objectives

Establish a clear set of objectives that will be used to judge the success of the investment.

Future Service Requirements

Future service requirements can be determined through service redesign, activity, performance and capacity modeling.

The potential for improvement through service redesign should be examined such as changing working practices, improving patient pathways and consideration given to whether services could be delivered in the outpatient setting.

The first step in activity modeling is to establish an accurate baseline by identifying activity by Health Resource Group (HRG) and attendance by point of delivery (elective, non-elective, day case, outpatient, new or follow-up attendance).

Current performance in terms of average length of stay, day case rates and a description of current facilities should be included.

The timeframe re-modeling services should be developed. When projecting activity both demand and capacity factors need to be taken into account.

The extent to which greater clinical efficiency can improve performance should then be factored in. Current performance should be benchmarked.

Ensure that assumptions regarding performance improvement are consistent with those included in the Trust Business Plan or other short-term strategic plans.

The capacity required (number of inpatient beds, day case trolleys/chairs, theatre sessions, outpatient sessions etc) to support the future service are derived from the service model, activity modeling and projected performance improvements.

Options Appraisal

Options appraisal is an objective way of comparing the costs and benefits of different options. There are four main stages; developing options, scoring the non-financial benefits, identifying the capital and revenue implications and finally identifying the preferred option.

Additional income should be calculated from the activity forecasts. NHS activity by HRG or attendance is multiplied by the relevant national tariff and where appropriate take account of the estimated contribution to corporate services to give a net income figure.

The final step is to select a preferred option by weighing up the relative benefits and costs of each option. The preferred option is likely to be the option that offers the most benefits for the least cost.

Capital Implications

The main aim of this section is to establish the viability of the case, consideration should be given to any set up costs, ongoing revenue against activity including full breakdown of costs including - individual equipment inc. VAT, maintenance, staff, disposables etc., these should be in an appendix with a summary in text. Identify how costs will be met for year 1 and afterwards. Identify clearly any assumptions.

A crucial part of any business case is, of course, the financial model for the proposed project. This consists of a number of parts, including the expenditure costs at both investment and operational levels. This is often thought to be one of the most difficult parts of business case management - and not just because it demands the use of accounting skills and techniques. The ability to construct a financial model also requires the user to populate that model with accurate data about processes, activities, transactions, staffing levels, current costs, expenditure and income, and those likely in the near and longer term if the project goes ahead.

For these reasons, considerable effort will be needed in obtaining accurate assessments of the current baseline and likely future costs. Moreover, assumptions need to be made about operational issues and such matters as efficiency savings and staff redeployment - assumptions that will need to be discussed with a range of stakeholders.

Revenue Implications

An assessment should be made of the economic costs and benefits of the proposal as a whole, and spans the entire period covered by the proposal including :

Capital and recurring costs and benefits (real terms basis)
Option costs/ benefits on a 'total cost' basis
Exclude 'non cash' costs, e.g. depreciation and cost of capital
Costs/benefits should be relevant. Costs which have already been incurred are 'sunk' and therefore not relevant to any future decision making
'Opportunity costs' and residual values
Life of the programme/ project. An assessment of the staff costs involved in the change.

Consideration should be given to the financial cost of the chosen solution(s) in the business case, as good solutions are rarely cost neutral and will impact on other costs within the division and across the organisation.

Outline any additional costs related to the preferred option to assess whether it is affordable in the long term. Often the staff costs are only part of the cost of the changes and this requires the unit (and/or trust) to consider where additional costs or savings may occur and whether there are recurring costs or savings.

Using a business case requires a Trust to assess costs and benefits using a formal standardised process including contingency plans.

Preferred Option

The final decision on which solution or combination of solutions is best for an individual specialty unit should be taken by a multidisciplinary group. Input should be sought from strategic management and finance leads in consultation with commissioners, and specialties that may be affected by the chosen solution or solutions.

The business case provides rigour to the choice and decision making process

The preferred option should include the rationale for this choice. A description of the change, who will be involved, what the new service and team will look like, skill mix, training needs, resources, staff and stakeholder involvement. The potential impact on: the quality of care, other services/teams, other specialties should be described together with any required changes to ways of working and/or the development of new roles. A full description of the outcomes to be achieved will also be included here.

This will include an outline of the key benefits and which policies/procedures and local/national targets it will impact upon

Affordability

Demonstrating that the case is affordable will be critical to its success. Affordability analysis examines the price impact of the development taking account of the revenue funding available and existing commitments.

Additional income is compared with additional revenue costs to determine affordability. If there is a mismatch between income and costs it will be necessary to reduce the scope of the case, expand the timeframe or consider whether additional funding can be sought from other sources.

Timescale and deliverability

Outline a realistic timeline and implementation plan indicating the main phases and tasks of the project, including completion dates and individuals responsible.

Risk Analysis and Management

A risk management strategy will help to gain an understanding of the uncertainties and unwanted consequences of the proposal. Identifying the main risks, evaluating their impact should the risk occur, and outlining the actions necessary to mitigate against them will improve the likelihood of the project's success.

Writing up

A Business Case should be a clear and concise document containing section headings, sub-headings and numbered paragraphs to enable the reader to pin point specific text. Detailed supporting information should be relegated to the appendix. Avoid jargon and highly technical language and provide a clear explanation or glossary for clinical or professional terminology.

Fitness for purpose checklist

Consideration of the following questions can act as a quick checklist to ensure that the proposal is worth doing and achievable:

Is the need clearly stated?
Does the proposal contribute to the achievement of NHS policy and priorities and Trust objectives and plans?
Are the benefits clearly stated?
Is it clear how the benefits will be realised?
Are the demand and capacity and income forecasts robust?
Are the capital and revenue costs robust?
Is it clear why the preferred option has been selected?
Is it affordable?
Are the risks and plans to mitigate against them explicitly stated?
Do the main stakeholders support it?
Does the team have the capacity and capability to deliver it?

Approval

The scale and nature of your proposal will determine the route of approval. If it is affordable within the Directorate budget the General Manager may be prepared to agree the proposal.

However, larger, more complex cases that require capital or revenue investment are likely to need Executive level approval. Meeting dates and deadlines for papers can then be used to determine the process and timescale for developing the Business Case.

Resources

The complexity of the case will determine who will need to be involved, support from the line manager is essential and help from information analysts, finance, estates and planning staff may be required.

Conclusions

Conclude by briefly highlighting the main items that point to success of your plan and why your organisation is in a position to execute it.

Finally, add any appendices that are relevant and will support the plan.

This is the best section to transmit your optimism without exaggerating.

Additional resources

References

NHS Executive. Capital Investment Manual. London: HMSO; 1994.
HM Treasury. The Green Book: Appraisal and Evaluation in Central Government. London: HMSO; 2003.
Stevenson VL, Jarrett L, editors. Spasticity Management: A Practical Multidisciplinary Guide. London: Informa Healthcare; 2006.