Nepean Blue Mountains LHD Chemotherapy Seats Business Case 2019

This business case, prepared for the Nepean Blue Mountains Local Health District (NBMLHD), outlines the proposal to acquire 15 additional chemotherapy seats for Nepean Hospital's cancer care center. The report details the background, including the increasing demand for oncology services and the hospital's role as a referral facility. It presents the aims of the project, which include improving efficiency, reducing patient waiting times, and increasing revenue. The business case analyzes the financial implications, such as the costs of the seats, additional staffing, and the potential revenue generated by treating more patients. It also addresses the risks associated with the proposal and outlines the implementation process, including resource requirements and reporting of outcomes. The project is part of a larger redevelopment funded by the NSW government.

Nepean Blue Mountains
Local Health District
Chemotherapy Seats
Business Case
October 2019
Unnamed LHD Business Case version 2 31/08/2024 pg. 1

Executive Summary
Nepean Blue Mountains Local Health District has been allocated $1.2 billion by the New
South Wales government. The money will be applied to redevelop Nepean Hospital so as
to enable it to continue to maintain its status as an outstanding referral and a teaching
hospital in the region. The locality of the health facility is a fast growing area whose
population is putting pressure on the hospital’s ability to provide quality health service
to its residents.
The NSW grant will fund the redevelopment of the facility in two stages. Stage one will
include the creation of more space at the cancer centre and the purchase of 15 additional
chemotherapy seats.
The demand for oncology service has steeply risen in recent years and the coming
expansion is intended to meet that demand. At the moment the number of patients lined
up for chemotherapy is large and it is expected that the arrival of the extra seats will
reduce the queue.
When the project is completed the cancer care centre will be able to break even and
make profits.
Unnamed LHD Business Case version 2 31/08/2024 pg. 2

Contact details (key contact)
Department:
Name:
Position:
Telephone
Email:
No sections should be deleted, but deemed not applicable insert N/A.
Unnamed LHD Business Case version 2 31/08/2024 pg. 3

Contents
CONTACT DETAILS (KEY CONTACT)------------------------------------------------------------------------2
INTRODUCTION------------------------------------------------------------------------------------------------------4
THE PROPOSAL-----------------------------------------------------------------------------------------------------4
RISKS--------------------------------------------------------------------------------------------------------------------5
PROCESS--------------------------------------------------------------------------------------------------------------5
RESOURCES----------------------------------------------------------------------------------------------------------6
RESOURCE DETAILS----------------------------------------------------------------------------------------------6
REPORTING OF OUTCOMES------------------------------------------------------------------------------------6
FINANCIAL INFORMATION---------------------------------------------------------------------------------------6
OPTIONS----------------------------------------------------------------------------------------------------------------8
INTELLECTUAL PROPERTY-------------------------------------------------------------------------------------8
OTHER IMPLICATIONS--------------------------------------------------------------------------------------------8
IMPLEMENTATION PROCESS-----------------------------------------------------------------------------------8
IMPLEMENTATION PLAN-----------------------------------------------------------------------------------------9
SUPPORTING DOCUMENTATION------------------------------------------------------------------------------9
Sign Off by Executive----------------------------------------------------------------------------------------------- 10
Unnamed LHD Business Case version 2 31/08/2024 pg. 4

Introduction
If you are providing a business case, please provide a short outline (single paragraph) including, but
not limited to, the following:
what is to be achieved?
what is the value to the LHD in this proposal?
core information and reasoning (eg rollout of MoH Policy, introduction of new process, new
procurement, etc
Acquiring additional chemotherapy seats would expand the capacity of the hospital to provide
oncology services. The hospital serves a population of about 400,000 which lives within the
expansive neighbourhood of the hospital measuring about 380,000 square kilometres. The
hospital stands as a referral facility and the addition of 15 chemotherapy seats would improve
the efficiency of services to cancer patients. With the additional cancer patients to be served
there will also be an increase in revenues.
At the moment there are many patients who are referred to this facility from the neighbouring
hospitals but only a small proportion of them are served because of limited facilities. A number
of them are forced to remain on the waiting list for longer periods because the available
chemotherapy seats cannot accommodate them. The additional 15 seats would drastically
diminish the patients jam and significantly reduce waiting time for chemotherapy patients.
With improved flow, the number of patients who would get attended to per day would be bigger.
It is estimated that one patient spends about $ 63,000 on cancer treatment annually, NCBI (2018).
The additional seats would therefore attract more patients which would translate to more
revenues to the hospital.
Background
Provide background information to this business case, in order that the reader can clearly understand
the reasoning and purpose of same. It should look to include an outline of any current processes/costs,
contracts, equipment and impact at the local as well as LHD level, as applicable. Include any date(s)
when any contract expires, as applicable
Back in 2016 the government of New South Wales committed $500 million for redeveloping
NBMLH. The development would be in two stages and it would include the purchase of 15
additional chemotherapy seats for the hospitals cancer care centre. The need had been identified
because of the rising prevalence of cancer cases and increased demand for oncology services
by patients. Tenders for the redevelopment programme have been awarded and the contractor is
at work. The seats will be procured through the established procurement process.
The purchase of the seats will also impact on LHD because they will be able to refer more cancer
patients to Nepean hospital. One additional chemotherapy seat has patient turnover and revenue
implications. The more the seats the more the patients that are treated and the more revenue
realized. No chemotherapy treatment may take place without the use of those seats which allow
patients to undergo chemotherapy while lying on them.
Unnamed LHD Business Case version 2 31/08/2024 pg. 5

The redevelopment began when the NSW government made an announcement in 2016 of its
intention to fund the redevelopment of the hospital which would be done in two stages. Stage 1
would cost $ 576 and would involve the construction, among others, of the clinical building
which would also house the cancer care centre where the chemotherapy seats would be located.
CBP Contractors won the tender and were awarded the contract which runs until 2021.
Please ensure you demonstrate consultation having been undertaken with relevant departments,
facilities, etc across the LHD and/or other external bodies as appropriate. Also, include any trial/research
information and or experiences from other LHDs in this background information if it is deemed relevant to
the business case
The funding from NSW came at a very opportune time after doctors had warned of a looming
crisis. There was a feeling that the government had neglected the facility, and when facing
elections in 2016 the government decided to commit funds to save its face.
.
The Proposal
The need for oncology services has increased over the years and there is need to expand the
hospital’s cancer care centre and purchase 15 chemotherapy seats.
Insert a single sentence outlining the proposed business case strategy include any recommendation. List
the department(s), facility, etc included by this proposal.
Aims
Briefly outline the aims or goals of rolling out this proposal, what are you trying to achieve? eg improve
efficiency, improve management, increase revenue, reduce costs, reduce number of contractors.
Benefits
Efficiency gains
What are the efficiency gains in this proposal?
With the additional seats there will be an increase of the patients seen. The long list of patients
waiting for their turn to be served in the facility would significantly go down. When the number of
patients treated increase the cash in flow to the hospital would also go up. Before the
redevelopment of this hospital it was estimated that the median wait for elective surgery in this
hospital was very high at over 310 days as compared with the national average of about 50 days.
The example of the median wait for elective surgery is symptomatic of an inefficient hospital
caused by in adequate facilities. The addition of 15 chemotherapy seats would make a positive
difference, at least in the cancer care centre.
Potential savings/increased costs
What are the projected savings in this proposal? What is the estimated decrease in costs or are there
increase costs but associated savings in productivity?
The new chemotherapy seats will come with additional charges and costs. The first expense is
the cost of purchasing them. One seat is estimated to cost about $300,000 and once installed
Unnamed LHD Business Case version 2 31/08/2024 pg. 6

each one would require extra space, supplies, additional nurses and other clinical staff. It is
estimated that the additional seats would require five new nurses who would cost the hospital an
additional $ 350, 0000 in salaries per year and $ 120,300 for new clinical staff. However, the seats
will bring in more additional revenues to offset the increased costs. One additional cancer patient
brings in gross revenue of about $63,000 per year.
Term of proposal
The redevelopment programme started in 2016 and it is expected to be completed in 2021
Rebates/revenue potential
Is/are there any revenue or rebates available on this process?
Revenue potential is plenty. Refer to attached spreadsheet.
What are the expected benefits of this proposal?
Factor Benefits
Patients
The waiting period for patients to use chemotherapy will reduce
Facility Its reputation as a leading referral and teaching hospital will be enhanced
Clinicians Many more will get jobs
Other Insert benefit
Risks
List the risks (in the table) that are associated with this proposal either perceived or real
Risk Issue Severity code as
per MoH Risk
Impact Mitigation Plan Notes
Financial risk N/A N/A N/A N/A
Delegation levels N/A N/A N/A N/A
Procurement N/A N/A N/A N/A
Patients N/A N/A N/A N/A
Insurances N/A N/A N/A N/A
Other N/A N/A N/A N/A
Unnamed LHD Business Case version 2 31/08/2024 pg. 7

Process
Action
(Insert as a flow chart as attachment 1)- N/A
Outline the action process, nominating the staff members responsible, actions to be undertaken in
relation to this proposal. Who will manage this plan going forward in implementation and over the life of
the plan/contract?
This plan is part of the larger one of redeveloping Nepean Hospital. When the need arose for the
expansion and addition of facilities, the hospital management forwarded a proposal to the New
South Wales government which received very positive response. The NSW government
committed $1.2 million to put up new structures and add facilities which included the purchase of
the 15 chemotherapy seats. The entire process of reconstruction was driven by the NSW
government. The government procurement procedures were followed and tenders were awarded
to qualified bidders. The CEO of the health facility plays the role of a coordinator between the
hospital and NSW, but the management of the plan and its implementation is overseen by the
Ministry of Health
Reference any relevant policies eg LHD or MoH, clinical guidelines, provide link. For example a change
in standards for anaesthetic machines requires an upgrade, reference the new standard and the
directive and link to documentation.
Provide a list of any additional resources required by this proposal, describing briefly the extent of the
extra requirement as well as the impact of same.
Not applicable in this case of chemotherapy seats
Resource Details
Resources
The additional resources which will be required include extra space for the new chemotherapy
treatment chairs and additional facilities for clinical staff who are managing the patients. To
accommodate the increased population of the patients, additional chemotherapy drugs will also be
needed. These extra resources are already factored in in the redevelopment process. Stage 1 of the
redevelopment program includes construction of more clinical rooms and that include the cancer
centre.
Unnamed LHD Business Case version 2 31/08/2024 pg. 8

Training and sup
Does this proposal require any training or support to be untaken by staff? Indicate who will provide any
such training and support and who will be the recipients.
FTE requirements and costs
Briefly list any FTE requirements along with projected costs, such as training for staff. This will be
covered more in the financial section of this proposal.
No training is required. Should there be a need additional qualified staff will be recruited
Reporting of outcomes
Who will monitor and report on the outcomes, savings, and any decreased costs for this proposal? How
often and who will the report be sent to?
The head of the chemotherapy unit will be responsible for monitoring and reporting on all the
outcomes of this proposal
Financial Information
The cost of one chemotherapy seat is estimated at $ 300,000. The fifteen new ones
acquired would cost a total of $4,500,000. Assuming that their useful life would be 20
years and residual value $450,000 the costs apportioned to each year (depreciation)
would be $ 202,500. On average a cancer patient who attends chemotherapy spends
about $ 63,000,000 per year.
The financial considerations for this proposal will be required in detail
The figures given below refer to the income and expenses after the chemotherapy seats have
already been procured, received and put in use. The entire process of purchasing the equipment
is in the hands of the NSW government and, therefore, it is beyond the scope of this proposal
Total net cost of this proposal shown as total net cost = total cost minus any revenue
Total costs per year: $ 34,351,082.08
Doctors: $ 444,288.00
Unnamed LHD Business Case version 2 31/08/2024 pg. 9

Clinical staff: $ 224,640.00
Other over heads (electricity, water, heaters, supplies)= $ 48,412.00
This is to be shown in dollars ($ total = $ cost- $ revenue) please show all workings eg FTE, costs and
revenue projections (See attached spread sheet for details)
List the Cost Centre(s)
What is the name and number, of the cost centre(s) that is to be used for this proposal.
Not applicable
Source of funding
Are there any other sources of funding for this proposal and is the cost centre favourable?
The source of funding for the purchase of the equipment (chemotherapy seats) is the
government of New South Wales and there is no other source under consideration. The NSW
government, facing an election in 2016, committed $ 1.2 billion to develop Nepean hospital after
many years of being in state of apparent neglect.
Resource requirements (Set up)
What are the set up costs/impacts for this business case including any FTE? Complete the FTE spreadsheet
template as attached if required (label as attachment 4 FTE costs
Not required
Recurrent costs
Are there any recurrent costs? If yes, please list eg consumables costs, service costs, and how these
costs will be met, within the cost centre budget. List any advice from other resources such as BME,
TAM, Contracts and Procurement, etc.
The redevelopment of NBHD is fully financed by the NSW government and that heavy capital
development process is beyond the scope of this proposal.
How will these recurrent costs impact on goods and service budget for the cost centre(s)?
Identify revenue potential
Are there any opportunities for revenue from this proposal? Has the option for revenue been discussed
with NBMLHD Strategic Revenue?
This proposal focuses only on the purchase of chemotherapy seats. It is a proposal whose
intention is to solve a humanitarian problem. The issues of revenue and profitability are not the
motivations behind this proposal.
Unnamed LHD Business Case version 2 31/08/2024 pg. 10

 Cost reduction
Is there any cost reductions with this proposal from any current arrangements? This could include
reduction in costs for the new process/equipment compared to current process/equipment; include any
productivity savings, etc.
The matter of cost reduction is also beyond the scope of this proposal. The purchase of
the 15 chemotherapy seats is part of the redevelopment of the hospital and it is fully
funded by the NSW government.
What are the proposed costs over the life of this proposal?
Apart from the purchasing cost and the annual depreciation there are no full life cycle costs
associated with this proposal.
--No attachment would be necessary---
 Offset costs and other factors
Current process
Existing
process step
1
Action step
2
Action step
3
Action step
4
Action step
5
Action step
6
Allow the
NSW
government to
purchase the
required
chemotherapy
seats
Wait for the
completion of
space
expansion by
NSW
Receive and
install the
seats
Employ
additional 15
support staff
Increase the
supply of
consumables
by 20%
Increase
supply of
drugs by
15%
New process
New Process
step 1
Action
Step 2
Action
Step 3
Action
Step 4
Other steps Other steps
Get the money
from the NSW
and purchase
the seats on
your own
Wait for the
completion of
space
expansion by
NSW
Procure the
seats and
install them
Employ
additional 8
support staff.
Increase
consumables
by 20%
Increase
supply of
drugs by
15%
Unnamed LHD Business Case version 2 31/08/2024 pg. 11

Options
Options List implications List net cost
position
Comments
Do nothing option N/A N/A N/A
Outline option most
preferred
N/A N/A N/A
Outline the second best
option
N/A N/A N/A
Outline the least
preferred option
N/A N/A N/A
Any other options N/A N/A N/A
Intellectual Property
No intellectual property issues involved
Are there any intellectual property (IP) implications in this proposal? If so, please outline these as well as
provide any recommendations from the Manager Strategic Performance which ensure appropriate
protection and commercialisation opportunities are covered.
Other implications
Are there any implications for other services such as ICT that require input? Please insert any
recommendations. Need to go to open market, request for quote, request for tender as applicable?
Unnamed LHD Business Case version 2 31/08/2024 pg. 12

No other implications
Implementation Process
List the implementation options of this process/procurement. List the options for the implementation of
this new process/procurement from the preferred to less preferred option with 1 being the preferred
option.
Option No. Benefit Risk Comments
1N/A N/A N/A N/A
2N/A N/A N/A N/A
3N/A N/A N/A N/A
4N/A N/A N/A N/A
Implementation Plan
The whole process is financed by the government of NSW and the entire procurement process is
in their control. The hospital will pick the process from the time the seats are delivered.
ACTION PROPOSED
DATE
PROPOSED
OUTCOME OR
COMMENT
FOLLOW-UP RESPONSIBILITY
First action required Date Name of responsible
officer(s)
NSW government
commits money for
the project
2016 Redevelopment of
NBMLH which
include purchase of
15 chemotherapy
seats
Co-operate with
NSW
government, if
required, in the
procurement
process
CEO, NBMLH
Completion of
construction
2021 Additional space
created at Cancer
care centre
NSW government Contractor
Supply of
Chemotherapy seats
2021 Availability of
additional 16 seat
at the cancer
centre
CEO, NBMLH NSW government
Unnamed LHD Business Case version 2 31/08/2024 pg. 13

ACTION PROPOSED
DATE
PROPOSED
OUTCOME OR
COMMENT
FOLLOW-UP RESPONSIBILITY
Supporting documentation
N/A
Attached is my supporting documentation in relation to this business case. These can include links to
any directives, research, policies, survey/questionnaire and/or financial documents.
Project owner:
(insert name)
Signature: Date:
Sign Off by Executive
Insert line manager:
(insert name)
Signature: Date:
General Manager /Director:
(insert name)
Signature: Date:
Director Finance Business
Information:
(insert name)
Signature: Date:
Chief Executive Officer
NBMLHD:
Signature: Date:
Unnamed LHD Business Case version 2 31/08/2024 pg. 14

(insert name)
Attachment 1
REFERENCES
Hardygroup (2018)napean bluemountains local health district [online] Available from:
https://hardygroupintl.com/uploads/information-packs/5c5138325ed86723007328.pdf [Accessed 30
September 2019
Health facility Guidelines(2019) Health facility briefing and design [online]. Available from:
http://healthfacilityguidelines.com/ViewPDF/ViewIndexPDF/iHFG_part_b_oncology_medical_chemother
apy [Accessed 3 October 2019].
Health Times(2019) Nurse salary- how much do nurses earn [online] Available from:
https://www.google.com/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwiAkcWX7__kAhVFDWMBH
WzdDtgQFjACegQIDhAH&url=https%3A%2F%2Fhealthtimes.com.au%2Fhub%2Fnursing-careers
%2F6%2Fguidance%2Fnc1%2Fwhat-do-nurses-earn
%2F605%2F&usg=AOvVaw3apx_MarPg5Bq_Bh1Z7ufL [Accessed 3 October 2019]
NCBI (2018) healthservices for cancer care in Australia [online], available from
:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6066250/ [Accessed 3 October 2019].
Nepean Development(2019) Media release[online]. Available from:
http://www.nepeanredevelopment.health.nsw.gov.au/WWW_Nepean/media/Media/Media%20releases/
Stuart-Ayres-Med-Rel-CONSTRUCTION-COMMENCES-ON-NEW-NEPEAN-HOSPITAL-CHILDCARE-
CENTRE.pdf [Accessed 3 October 2019
Nepean Redevelopment (2019) Nepean cancer care centre [online].Available from:
http://www.nepeanredevelopment.health.nsw.gov.au/Projects/Cancer-Centre [Accessed 3October 2019].
Nitchk Nancarrow (2019) How much do doctors get paid in Australia [online] Available from :
http://nitschkenancarrow.com.au/how-much-do-doctors-get-paid/ [ Accessed 3 October 2019]
Pay Scale (2019) average residential support worker [online]. Available from :
https://www.payscale.com/research/AU/Job=Residential_Support_Worker/Hourly_Rate [Accessed 3
October 2019]
Project Pipeline (2018) Nepean hospital redevelopment[online]. Available from:
https://pipeline.gihub.org/Project/ProjectDetails/173 [accessed 3 October 2019].
Unnamed LHD Business Case version 2 31/08/2024 pg. 15

The Quarter (2017) Action plan 2017-2021 [online]. Available from:
https://www.thequarter.org.au/images/action-plan/The-Quarter-Action-Plan.pdf [Accessed 3 October
2019].
Venture Magazine (2019) Excellent care is the ultimate aim [online] Available from:
https://www.theventuremag.com/nepean-blue-mountains-local-health-district-2/ [Accessed 3 October
2019].
Unnamed LHD Business Case version 2 31/08/2024 pg. 16