weddin shire council draft business case including risk

Weddin Health Hub- Business Case July 2015 [email protected]

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Weddin Shire Council

Draft Business Case Including risk management, procurement plan (DRAFT), and business model

Weddin Health Hub (Regional) 2015


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Table of Contents

Table of Contents ................................................................................................................. 2 Executive summary .......................................................................................................... 4 Introduction ........................................................................................................................ 7 Vision .................................................................................................................................. 7 Proposed project.................................................................................................................. 8 Key project issues ............................................................................................................ 8

Roles and responsibilities. .............................................................................................. 8 Scoping statement. .......................................................................................................... 8 Social Impacts ................................................................................................................. 9 Completion of the project ............................................................................................... 9 Outputs ............................................................................................................................ 9 Project Key milestones, ................................................................................................ 10 Business Model Summary ............................................................................................ 13 Overall Rationale .......................................................................................................... 15 Economic Impacts ......................................................................................................... 17 Costs .............................................................................................................................. 22

Council’s long term financial plan and asset management plans .......................... 24 Addressing need and disadvantage ............................................................................ 24 Capacity of Council ........................................................................................................ 28

Council’s project capacity............................................................................................. 28 Regional Investment Impacts and Collaboration ...................................................... 30 Council project role........................................................................................................... 34

Operational Phase – Business Model ............................................................................ 34 Identify need, plan and design ...................................................................................... 35 Possible operating models............................................................................................. 36 Risk assessment of the project including governance and management structures in

place to minimise project risks ..................................................................................... 37 Assessment of compliance requirements (e.g. Local Govt Act, EP&A Act, Heritage

Act etc) .......................................................................................................................... 39 Appointment of a steering committee ........................................................................... 39 Designating a Project Manager ..................................................................................... 40

Alternatives to the proposal .......................................................................................... 40 Do nothing .................................................................................................................... 40 Play a passive role and simply continue to advocate other levels of government ........ 40 Upgrade existing doctors’ surgeries .............................................................................. 40 Build a new purpose built Health Hub Facility ............................................................ 41 (Appraisal of alternative service delivery methods ...................................................... 42

Operating the Asset ........................................................................................................... 44 Financial Implications .................................................................................................... 45 Public Consultation ........................................................................................................ 45 Attachment One .............................................................................................................. 46

Grenfell Multipurpose Statement November 2014 Health Western NSW Local Health

District........................................................................................................................... 46 Attachment Two .............................................................................................................. 71

Peer Reviewed Cost Benefit Analysis Hill PDA .......................................................... 71 Attachment Three ........................................................................................................... 76

Weddin Council Long Term Financial Plan ................................................................. 76


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Table 1 Timeframe ................................................................................................................ 12 Table 2 Strategic directions .................................................................................................. 16 Table 3 Age distribution (ABS 2011) ................................................................................... 18 Table 4 Cost Benefit analysis and MCA............................................................................... 20 Table 5 SEIFA index comparisons all Ranks ....................................................................... 26 Table 6 Comparative business model narrative .................................................................... 36


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Executive summary

The Draft Business Case scopes the development need and economic impact of constructing a Health Hub in Grenfell, in the Shire of Weddin, Central West NSW, Australia. The Business Case is to construct a new Health Hub building serving some 4200 people in the Weddin Shire and surrounds. The Health Hub will also facilitate an eHealth delivery model as an innovative response to rural communities having limited access to diagnostic and ancillary health services. A modern facility will also be a game changer in attracting and retaining General Practioners (GP/s), who might also choose to act in an approved role as the Visiting Medical Officer (VMO) to Grenfell health service (Western Area Health Service; WAHS). Failure to provide an efficient facility will impact effective service delivery, patient comfort, safety and quality care. The provision of sustainable health services is signal to growing the Weddin economy. The ongoing attraction and retention of GPs is important to retaining labour to support local industry and the national economy by providing improved community amenity. Sound amenity that meets community expectations sustains population and retains and attracts skills. Failure to retain population comes at a high economic cost as labour ‘votes with its feet’ and moves to areas with amenity that can better compete for skills. For Weddin loss of labour would leave a community that is ageing without support services and an agricultural sector without labour. The subsequent decline in Gross Regional Product (GRP) will impact the Gross State and National Products in an industry sector that is seen as significant in filing the gap left by structural change evident in declining mining activity. The Business Case is draft since the daily operational development options will need to be crafted in concert with the facility construction and in partnership with professionals and ancillary staff. A collaborative approach ensures transparency, and provides the best possible environment to garner ownership and ongoing commitment to an emerging business model among existing and potential stakeholders. Weddin Shires main town Grenfell would expect to support three (3) or even four (4) GPs if it were to meet the standard ratio of 1 GP to 1000 people, but currently has two (2)1 GPs. Weddin was without one (1) GP for 4.5 years and without a VMO for one and a half years (1.5) of that time. During this period Weddin saw a decline in economic activity estimated in the Cost Benefit Analysis (CBA) supporting the Health Hub project at more than $1.6mil p.a. reflecting a drift of labour as local shops and services were negatively impacted. The regional effect was to create greater demand on scarce resources in the regional centres such as Orange. In periods where GPs have been under strength patients have sought services in

1 Health workforce Australia 2012, Australia’s Health Work-force series – Doctors in Focus. Health Workforce Australia, Adelaide.

https://www.hwa.gov.au/sites/uploads/australias_health_workforce_series_doctors_in_focus_20120322.pdf

https://www.hwa.gov.au/sites/uploads/australias_health_workforce_series_doctors_in_focus_20120322.pdf


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surrounding towns and cities. Professional client / patient relationships to those non-Weddin areas have taken business away at a significant community cost. High ongoing demand with limited capacity to supply GP services impacts labour sustainability; more GPs will see a return of labour and population, evidenced by similar returns with the appointment of a second doctor as reported by the Pharmacy in Weddin2. An innovative focus on an eHealth incubator or pilot approach will provide mental health support, links to social media to improve connectedness, and support community health services directly into homes. Prolonged drought is an indicator to increased mental health issues in rural communities that are ongoing once better times return indicate a need to improve such services3. A quality and connected eTraining facility will allow professionals and others in the Weddin community to better access support services and training. This will grow new business needed to support the ageing community and the agricultural sector. The Health Hub came about following extensive community consultation on the 10-year Delivery Plan and in a subsequent community survey conducted in 2014, where reliable and sustainable health services consistently emerged as the top priority for the community. The Council has resolved to build the Health Hub at a total value of $2.7mil utilising reserves and loans and private funding totalling $1.75mil (including $700,000 as an allowance for basic fit out and internet for extensive eHealth services and dental chair) and seek federal government funding of $950,000 through the National Stronger Regions Fund (NSRF).

Importantly a modern facility will overcome the problems of existing surgeries that have poor access, are ageing, have leaking roofs and on some days have patients waiting on the open veranda for a consultation. The poor state of existing facilities was significant in not being able to recruit a second GP for 4.5 years and not having a third GP, or operating without a visiting medical officer (VMO) for 1.5 years. The historical separate practitioner business model required a GP with clinical and business management skills, or was willing to be trained in those skills, exacerbating the task of finding the right candidate. The impact of not sustaining GP services on the local economy saw more than $9 mil lost economic benefit to the Shire as extrapolated from the attached CBA.

2 Notes on interview September 2015 3 http://www.sciencedirect.com/science/article/pii/S0013935114000607

http://www.sciencedirect.com/science/article/pii/S0013935114000607


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Photos showing some of the issues with the existing facilities follow:

The Health Hub will provide very significant saving and cost benefits estimated at a benefit cost ratio (CBR) of 4.19 as against not building the Facility a ratio of anything above one (1) indicates a sustainable project.

Council will embark on construction of the health Hub in November 2015 subject to the National Stronger regional Fund Outcomes for funding. Council will undertake meetings with Key stakeholders from September 2015 on operational matters and develop an implementation strategy for an operational outcome that is based on key deliverables and facilitate market testing by completion of the physical facility leading to contractual arrangements with GPs and allied health professionals ready to operate the Hub by June 2016.


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Introduction

A 2012 report by the Australian Medical Association contests that “there is a strong preference amongst much of the current medical workforce to live and work in major cities – with particular preference for the inner suburbs…[given] the educational background and the demographics of the current medical workforce.” It goes on to say that the average age of general practitioners in the rural sector is 55 years and, for specialists, 60.4 There is a clear preference for younger doctors to work in the cities. Yet the bulk of the future wealth and national income over the next 20 years is predicted by the federal Secretary to the Treasury in 2012 to come from agriculture and mining in rural areas.5 The advent of “fly in, fly out ” work forces has seen services provided by itinerants, in mining economies. However, the Australian Centre of Excellence for Local Government argues that this model is failing rural economies6 and, according to the Australian Institute of Family Studies, increasing health risks among many employees and their families7. Continued attraction of resident agricultural labour is not likely to be well served by a ‘drive in drive out’ option nor is it logically practical.

The sustainability of the agricultural sector, the support of the digital economy and the provision of services to an ageing population are interdependent with comprehensive and integrated health services. The services need to be provided in physical surroundings that support delivery and facilitate integration with allied services. This demands that the health facilities and service models need to be synergistic or work hand in glove. Attraction of GPs is improved where the business model allows flexibility and appeals to professionals for their clinical skill in a collegiate model that recognises early career development needs, is collaborative and facilitates ongoing learning. Business acumen is useful but should not present a barrier to gaining clinical skills personnel to operate the new Weddin Health Hub.

The Case for the Weddin Health Hub and eHealth facility is strongly supported from a community development, economic development and service perspective.

Vision

The Weddin Health Hub: Delivering an efficient and effective quality, integrated and collaborative health outcome that drives economic development in the region.

4 Australian Medical Association, “Regional/Rural Workforce Initiatives – 2012”,

https://ama.com.au/position-statement/regionalrural-workforce-initiatives-2012

5 Australian Government Treasury, “Challenges and Opportunities for the Australian Economy”,

http://www.treasury.gov.au/PublicationsAndMedia/Speeches/2012/Challenges-and-opportunities-for-the-

Aust-economy

6 Australian Centre of Excellence for Local Government, “Scoping Study: Impact of Fly-In, Fly-Out”,

www.acelg.org.au/file/1582/download?token...BU4q-LqU

7 Australian Institute of Family Studies, “Fly-In Fly-Out Workforce Practices in Australia”,

https://www3.aifs.gov.au/cfca/publications/fly-fly-out-workforce-practices-australia-effects/introduction

https://ama.com.au/position-statement/regionalrural-workforce-initiatives-2012

http://www.treasury.gov.au/PublicationsAndMedia/Speeches/2012/Challenges-and-opportunities-for-the-Aust-economy

http://www.treasury.gov.au/PublicationsAndMedia/Speeches/2012/Challenges-and-opportunities-for-the-Aust-economy

https://www3.aifs.gov.au/cfca/publications/fly-fly-out-workforce-practices-australia-effects/introduction


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Proposed project

The project proposes to construct a new Health Hub building to provide interdisciplinary healthcare services to the residents of the Weddin Shire and to actively facilitate increased eHealth service provision.

Key project issues

In order to meet the future needs of Weddin, make better use of the existing health workforce and attract and retain a full complement of medical professionals an integrated model of care is desirable. The project key elements are:

It is proposed that the general practice component of the Health Hub would be “walk-in, walk out” as well as pre-booked for clients and patients

There is to be a special focus on staff professional training that will continue to attract and retain GPs, dentists and para-medical staff.

Capacity for GP eHealth consultation is envisaged and is subject to a ‘charge’ review under the Medical Benefits Scheme (MBS).

The changing role of the practice nurse has seen an additional consulting room space, with design capacity facilitating the role of a medical receptionist, with an expanded health support role.

The building will be constructed on a cleared site that once housed a garage and dilapidated shops as well as integrating an historic façade, as identified in the heritage study, into the overall development. As the site is a former garage site soil has been fully remediated and is the site certified for construction.

The project has a complete and approved development consent with conditions that are deliverable.

The business model will be developed through a competitive tender process targeting likely proponents or a collaboration and will seek expressions of interest addressing deliverables set out in a brief.

From a sustainability perspective the brief will be based on a financial return to council equivalent to the depreciation costs on the building.

Roles and responsibilities.

The key stakeholders are: o The community of Weddin In Central West NSW and neighbouring

shire residents o The medical profession o Western Area Health Service (WHAS) o The Primary Health Network (PHN) o The Council of Weddin Shire o The contract project manager for the council o Project reporting group o The funding bodies o Rural Business in need of a consistent and supported workforce to

deliver the national economic targets o The construction contractors

Scoping statement.

Business need and business problem o The need for a Health Hub is both social and economic. International


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research indicates that the multiplier effect of output and labour each range from 1.2 to 1.3 of direct medical expenditure. The Cost Benefit Ratio at 7% is 4.19 not including the multiply effect, and

o The healthcare industry is a critical employer in the rural Weddin community and serves as a significant driver of economic development, supporting labour to a number of key industry sectors and the aged slated to be 27% of the population by 2031.

The healthcare sector plays a major roles in Weddin’s economic development:

o The local healthcare system serves local residents, healthcare expenditures stay local, and as a result, the dollars stay within the local economy.

o Healthcare systems attract external dollars into a community from outside a local area, largely through payments from private insurance companies and Medicare, as well as neighbouring shire residents. Business source has the potential with eHealth to extend to other communities and into the future internationally, subject to excellent delivery on a fee for service basis8.

o The existence of a quality local health care system is important to retaining existing local businesses as well as attracting new industries into a community.

o A local healthcare system can support and promote a healthy and productive workforce within a community9.

Social Impacts

The construction of the facility enhances community amenity, it allows for people from the ageing farm sector to see the Weddin Shire as a place where they can retire and remain connected to the community to which they have often had a lifetime connection, or they can return to that community to retire. The population of over 70s will increase by 27% by 2031. All other age cohorts will decline by as much as 30% unless action is taken to preserve services, improve amenity and reverse the current trend.

Completion of the project

The building project will be completed after final council inspection by June 2016

Outputs

Four consulting rooms, minor operations room, practice manager room, practice nurse room, medical meeting rooms, reception area, kitchen, dental consulting spaces, ambulance bay, storage facilities and office spaces.

Spaces to attract medical and dental staff.

8 eHealth has a capacity to build an industry that can service clients at a great distance and internationally as technologies

for diagnosis change. Such a model is employed already by the flying doctor service and has a capacity to be extended over

time.

9 http://cedik.ca.uky.edu/files/Bell_County.pdf a study on the economic impacts of health services on rural centres

and communities

http://cedik.ca.uky.edu/files/Bell_County.pdf


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The facility will ensure ongoing medical services identified as critical to sustaining the regional farming, warehousing and education and health communities as well as a possible enhanced mining sector.

It is proposed that the facility will also include links with university medical and health science faculties training and education programmes.

In line with community expectations, the Health Hub will be of a high standard and flexibly designed to serve the community for some 20 years.

eHealth capacity with excellent digital integration facilitating collaboration and connectivity between the health Hub, Grenfell hospital and the Orange health service (hospital) as well as outlying farms and properties and potentially remote or international service delivery options.

eHealth facilitating digital connectivity with increasing in home support and service delivery (via Skype or similar link to home nursing and social connectivity)10.

Project Key milestones,

The project has development consent and associated architectural plans to facilitate competitive tendering or contracting.

Full construction plans and specifications have been prepared for Construction Certificate approval.

The development will be progressed by the use of several Individual Contracts covering the various components of the construction and development process improving local contractor access. Council determines contracts through a tendering /quote process driven by its Procurement and Local preference policies.

The Project Reporting Group will carry coordination of the process.

A team of internal and external providers will oversee the project construction. The practical and professional experience of the group in building projects will ensure a proper oversight of all aspects of the development including appropriate probity process and implementation, onsite building and coordination control, legislative compliance, and budget and contract management.

Appointed by the General Manager the Council’s Director of Environmental Services will act as project manager/superintendent with the appointment of an experienced architectural firm to provide the contract management component of the development. An Onsite Building Supervisor will also be appointed to control and coordinate the construction process on the development site. This group shall form the Project Reporting Group meeting regularly to review all contractual and operational activities and processes for the development. Reporting from this group will be provided to Council as appropriate.

Draft Business Plan and Model advertised for comment.

Brief for facility operation prepared and peer reviewed and process determined.

Brief advertised and tender process enacted.

Weddin Health Hub operational tender awarded or no tender accepted and contracts negotiated as appropriate to ensure that GPs and allied

10 http://www.centralwesterndaily.com.au/story/3383719/telehealth-a-magic-bullet/?cs=103

http://www.centralwesterndaily.com.au/story/3383719/telehealth-a-magic-bullet/?cs=103


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professionals are available as soon as practical following commissioning of the building.


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Baseline deliverables building and target dates. Detailed Project Plan - Weddin Regional Health Hub Nov-15 Dec-15 Jan-15 Feb-15 Feb-15 Mar-15 Apr-15 May-16 Jun-16 Activity Tender expression of Interest

Tenders Close

Tender evaluation

Tender determination

Finalise tender determination

Prepare brief and appoint project supervisor

Loan Application

Lead time for contractors

Site preparation

Excavation

Construction

Amenities Construction

Building Fit Out

Landscaping

Operational Tender

Commissioning Opening

Table 1 Timeframe


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Business Model Summary11

The Weddin Health Hub business model will be defined by a number of conditions. The Weddin Shire Council has determined that it wants a delivery model that ensures the ongoing attraction and retention of doctors and allied professionals. While Dr Hambeldon has indicated in his report to the Federal Government that professionals with broad clinical experience and a diverse skills base are best placed to deliver services to rural communities this ideal is not always possible. Historically Weddin and similar communities attract younger newer market entry professionals who are required to utilise there excellent yet emerging medical skills while rapidly developing business skills to manage and run practices that focus in a large part on clinical service delivery. (See - Regional Investment Impacts and Collaboration.) The challenge that a separate practice delivery model presents is that when a General Practitioner (GP) leaves or retires, attracting a new GP is fraught with difficult especially when the Council provides much of the infrastructure. Under this model the current GP may have a perception that the existing practice is a business for sale carrying ‘goodwill’ that has a significant economic value. This can be a false expectation as the patient pool is mobile and would readily move to a new practitioner. Such a position can leave an existing GP desiring to ‘move on’ frustrated, cradling an unmet desire to sell and take a start up pool of funds to another place or simply gain a capital profit. This is an unlikely outcome. Conversely should an the existing GP be offered an attractive alternative in another place outside of Weddin or decide to move for family or career reasons, the community is left to attract a new GP to a single practitioner model requiring business and clinical skills. Again Dr Hambelton argues that the delivery models need to be centered around a service that provides the best outcomes for the patients and the community in the short, medium and long term and should, while respecting existing clinical skills, not be created to meet the needs of the existing clinicians. There are inefficiencies in GPs devoting considerable time to operating a business. Clinical skills are of a high value and daily business operations tackling complex rebate and government reporting undertaken by the GP can be difficult to justify on economic grounds. This has given rise to well accepted business models that free the GP from these tasks. They are collegiate models based on collaborative principles set in developing trust, goodwill and commitment with a business model. Such models are centered on practice managers, medical receptionists and a practice nurse, in collaboration with allied service providers increasingly using eHealth service delivery modalities. These models come in a variety of forms with some forms still emerging. They include but are not limited to corporate and cooperative models provided externally and in which the clinicians work allocating a

11 A comprehensive assessment of alternatives and rationale are set out later in this

business plan see -

Possible operating models


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percentage or some other agreed return to the practice as a management fee. Others might be in businesses established by the GP working in collaboration. In summary models of delivery that Weddin Shire Council would have available to it in the new Health Hub facility include:

• A separate practice Model, where each GP and allied professional operates in quarantined environments not in the Health Hub or with just one service provider in the new Health Hub.

• A shopping centre model, where there are separate practices but shared overheads operating from the Health Hub

• One stop shop model, where there are multiple service providers in the facility with a central practice manager and single patient records with shared overheads

• Bespoked model, this is similar to the one stop shop model but also includes patient nominated Electronic Medical Records (EMR), and tailored elements that reflect emerging community need with a diverse range of allied professionals accessed in house or though eHealth and encouraging a strongly funded preventative health capacity.

The Council has a vision that the model of service delivery will ensure the integrated services and support the retention of labour and grow the Weddin Shire community. As elsewhere argued in the business plan health services are critical to the local economy and will be enhanced by attracting another GP to the Shire to complete a minimum compliment of three. More importantly expansion of allied health services and integration with; acute services, pharmacy supply, community health support, psychology, psychiatry, aged care rehabilitation, chiropractic, and youth services (such as Headspace) and eHealth connectedness will deliver comprehensive health and economic benefits to the community. Integrated services will retain a conservatively estimated $12mil in todays dollars over the next 20 years, not including potential multiplier effects. Health services will grow as an industry beyond current activities as those over 70 will account for 27% of the Weddin population by 2031. The overall population will need to expand to deliver these services as financially the Weddin aged population will find it difficult to buy into and compete against demand in regional centers and consequently remain in Weddin till necrosis. There will be little capacity to move to major coastal and capital city to access aged facility and service markets as costs become increasingly prohibitive based on an analyses of existing capacity of declining superannuation returns exposed in the Australian Bureau Statistics data (see Addressing need and disadvantage.) The Business Model that best fits the objectives of the Business Plan and those of the Weddin Shire Council will be that which meets defined deliverables that flexibly service the medium and long term needs of the community. It is proposed that the Council go to the market seeking models that provide the following outcomes: 1. A sustainable model of health service delivery that will enable the Weddin Shire

to attract and retain GP’s and allied services into the future


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2. A model that facilitates collaboration between the various health services/stakeholders fostering an integration of health service delivery to achieve better health outcomes for residents of the Weddin Shire

3. Ensure community engagement around the Health Hub that facilitates preventative health, early intervention and health education as a community leader promoting better health outcomes

4. Provide for training and capacity building opportunities to develop the skills of the health services workforce within the Weddin Shire as a model that can provide leadership to regional facilities worldwide.

5. Embrace the use of technology including eHealth to support the innovative delivery of health services including aged care services, the Grenfell Hospital and outreach services.

6. Monitor and be accountable for achieving the desired outcomes and patient

satisfaction by establishing ‘dashboard’ or similar reporting on a regularly

defined basis. 7. Identify innovative options that can deliver exceptional and flexible health

services and have a capacity to respond to changing health delivery options. 8. Timely delivery of a variety of services to the community of Weddin and eHealth

services to isolated communities (both in Weddin and beyond) 9. On delivering non-acute and preventative health services to housebound and

remote locations in the Weddin Shire and then utilising these learnt and emerging modalities to extend services on a commercial basis to state, national and international delivery on a fee for service basis as appropriate.

10. Seek opportunities to link eHealth and digital services to broader economic development opportunities within the community.

A brief will be prepared that seeks to deliver on these parameters and following peer review it is proposed to call for expressions of interest followed by a tender process.

Overall Rationale

The Weddin Health Hub Business case is drawn from Council’s community strategic plan, delivery program, and operational plan

The Weddin Shire Community Strategic Plan 2013-2023 was developed in collaboration with the community and prepared under the prescribed Integrated Planning and Reporting framework. The Weddin Health Hub Business Plan is based on meeting community expectations and aspirations that were further reinforced and identified through a community survey, forums and other forms of engagement.

The consultation undertaken by Council in the development of its Integrated Planning and Reporting documentation identified the overarching objective: “To grow our total resident population to in excess of 4,700 people by 2023”.

The Community Strategic Plan has six strategic objectives entails a:

1. Strong, diverse and resilient local economy 2. Healthy, safe and educated community 3. Democratic and engaged community 4. Culturally rich, vibrant and inclusive community


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5. Cared for natural, agricultural and built environments 6. Well-maintained and improving Shire assets and services

The project is consistent with these strategic objectives as contained within the Plan and feeds into the Delivery Program and Operational Plan as outlined in the following table:

Community Strategic Plan

Strategic Objective Strategy Consistency of Proposal

Strong, diverse & resilient Local Economy

1.3 Provide infrastructure & services to support business activity

Provision of medical services in town stops residents travelling out of town for medical appointments supporting economic activity in town and increasing spending in the Shire

Strong, diverse & resilient Local Economy

1.7 Support expanded aged care facilities & services

Provides the opportunity to expand & improve accessibility to medical services provided to aged residents

Healthy, safe and educated Community

2.1 Encourage the provision of quality medical facilities

Provides the opportunity expand and improve medical services accessible to residents

Healthy, safe and educated community

2.4 Support provision of adequate aged care service

Directly supports medical services used by aged residents

Healthy, safe and educated Community

2.6 Provide lifelong learning opportunities

Proposed links with university medical training faculties support lifelong learning opportunities

Cared for natural, agricultural & built environments

5.6 Preserve the heritage of built areas

Council has consulted with a heritage adviser to ensure the design of the Health Hub is in keeping with the heritage of the area.

Well maintained & improving shire assets & services

6.1 Ensure Council operations meet reasonable community expectations

Community has clearly expressed a desire for a the Health Hub

Table 2 Strategic directions

In addition to the alignment of the project with the strategic objectives of the Community Strategic Plan as outlined above, the “big ideas” put forward by the


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community were prioritised as part of the Delivery Program. As a result of this the Health Hub emerged as the number one priority of the Weddin Shire Community.

The Business Plan reinforces the following outcomes of a range of community inputs and consultation with a strong focus on sustainability:

Continuing concerns at a recurrent risk of losing medical service reflecting on the experience when the town was without a second GP and a VMO.

Demonstrates overwhelming supports for sustainable ongoing provision of medical services to the Weddin Shire.

A demonstrable demand for increases access to medical services for the disadvantaged in the community so that current travel is not required, including eHealth options.

Coherent and interdisciplinary healthcare services provision and coordination, perhaps including interagency delivery.

Ongoing support for an ageing population ensuring that service delivery is sustainable and ongoing.

Sustainability needs to be delivered by ensuring that the physical facility and its management remain agile and continues to meet short and long-term supply. Management needs to be accessible to clinicians who may not be interested in managing a business and encouraging of students with a view to long term attraction and engendering acceptance of rural health service delivery. Dr Steve Hambelton argues that medical students who study or train in rural locations have a much higher likelihood of looking to locate or establish practice in a rural area12. The facility will include links with university medical and health science faculties’ training and education programmes. The community expects a high standard heath care centre with appropriate services to deliver superior healthcare supported by highly skilled medical professionals. Depending on the business model Council will be encouraging the GP(s) to undertake accreditation to supervise trainee practioners.

The Health Hub will bring together general and specialist medical practitioners, a dentist, nurses, a physiotherapist, podiatrist, visiting medical specialists and other healthcare professionals to deliver integrated healthcare tailored to the needs of the local community.

During formative stages ongoing discussion has been undertaken on the development process. Council has consulted extensively with a number of industry specialists in project management, design and construction and on health facility planning. In addition, Council has consulted with Grenfell’s existing health practitioners and several prospective practitioners, eHealth providers. The business design and models for health and eHealth delivery need to match with the outcomes of these collaborative deliberations.

Economic Impacts

Construction of a Weddin Health Hub would provide new infrastructure that would

12 Independent Expert Panel Report to the Australian Government, Rural Health Services, January

2015:9


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contribute to economic growth in the region by delivering a modern facility that is designed to attract and retain medical professionals to service the region. The expected client base of this facility is 4,200 with 500 of that estimate accounting for rural clients in neighbouring Shires. Population Distribution for Weddin indicates a higher proportion of aged persons to the State average while the under 15s are close to the NSW average (see table three below). Delivery of services to an aging population will generate new business and attract population provided the entry price of housing and the availability of employment is appropriate to demand.

Table 3 Age distribution (ABS 2011)

The Health Hub will also generate additional income for the Weddin Shire as an eHealth Incubator by providing growth opportunities for private businesses which focus on eHealth.13 The Rural Health alliance has argued,

E-health is fundamental to the well-integrated, multidisciplinary, primary health care teams coordinated with other parts of the health system that the National Rural Health Alliance recommends for effective health care delivery in rural and remote Australia. 14

Across Australia, a large and growing number of e-health projects are being developed in local regions, in primary and acute care settings and within the public and private sector. Many are delivering localised benefits such as radiology advice online, electronic discharge or medication information, outreach services for mental health consumers and patient information recall systems to support chronic disease self management. Such services are already reported through CareWest in the Central Western Daily as being delivered in the region15.

13

http://www.ehealth.nsw.gov.au/__data/assets/pdf_file/0013/231061/eHealth_Corporate_Plan_201

4.pdf 14 http://ruralhealth.org.au/sites/default/files/position-papers/position-paper-09-07-23.pdf

15 http://www.centralwesterndaily.com.au/story/3383719/telehealth-a-magic-bullet/?cs=103


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The e Health model has the capacity to assist in stemming the current predicted rate of population decline of 30% in all age cohorts below 70 by 2031. The development of an eHealth training facility supported by sessional ancillary staff would see the provision of services via the internet from the Health hub for clients to providers remotely located. It would also facilitate services to rural homes and contribute towards building regional amenity by improving service access. This would be assisted by electronic links to Orange as a service provider and will not only help sustain and attract employment and skills in the regional centre but also improve services to farming communities well beyond the existing reach of Weddin Shire. Some 1,533 emergency presentations at Grenfell Hospital in 2013/14 were dealt with by the local GP acting as the VMO. The majority of these presentations were of a low-acute nature with acute or critical care patient support being provided via video link with Orange Health Services facilitating a diagnostic reporting and assessment. If there were no VMO and more especially no second GP, medical diagnosis was challenging, resulting in a greater number of patients transported to acute facilities, such as Orange, via helicopter, community transport or ambulance services. These arrangements have resulted in significantly higher costs than necessary and are addressed in the cost benefit analysis (CBA). It has been demonstrated that failure to provide the Health Hub will undermine economic growth, by losing potential income in the region, as people move to centres that can guarantee non-acute medical and ancillary services. Without the Health Hub, Weddin will be significantly less attractive to General Practioners (GP) and ancillary health workers – leading to a reduction in economic activity and a loss of trade which will impact the farming capacity and economic sustainability both in the Shire and across the Central West New South Wales (CWNSW) region. A social Cost Benefit Analysis indicates a positive economic impact of the Health Hub construction with a benefit cost ratio (BCR) of 4.19 at 7% and 3.49 at 10% (see table three below). A Multi Criteria Analysis (MCA) was also undertaken to rank the most beneficial outcomes in terms of four options:

Health Hub and closing one existing surgery (preferred option),

Health Hub and existing surgeries remain,

Health Hub both existing surgery closing, to

Closing all centres and passing responsibility to the private sector. While the CBA indicates that building the Health Hub and retaining existing surgeries remain beneficial, it is likely that the preferred option of building the Hub and closing one surgery is the better outcome the best outcome would be to integrate all the surgeries into the new Health Hub. This would also benefit the existing GPs financial returns (Attachment Three – CBA peer review assessment by HillPDA).


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Economic Analysis Health Hub Weddin NSRF

Summary Table

Wednesday, July 29, 2015

Develop Hub - Existing facilities

remain

7% 4% 10% 42%

Appraisal period (years) 20 20 20 20

Capital Costs $2,500,000 $2,500,000 $2,500,000 $2,500,000

Whole of Life Costs $3,532,650 $3,532,650 $3,532,650 $3,532,650

Cost-benefit analysis of monetary costs and benefits at the Public Sector Discount Rate

Present Value of Benefits $12,466,152

Present Value of Costs $2,861,439

Benefit Cost Ratio 4.36 5.59 3.49 1.00

Net Present Value $9,604,713 $14,190,682 $6,678,612 $0

Multi-Criteria Analysis ranking of intangible costs and benefits (if any)

Hub Dev Close one GP office

Dev Hub Existing remain

Hub Dev Close Both GP office Close all

Impact on labour to aged services 1.50 2.00 1.00 3.50

Impact of labour to Agriculture 0.50 1.25 2.00

Increased health risk 0.30 0.30 0.30 1.20

impact on tax income 0.10 0.30 0.10 0.80

Weighted Score 2.4 3.85 1.40 7.50 Table 4 Cost Benefit analysis and MCA

Benefits The assumptions underpinning the CBA are as follows:

Benefits of the preferred project option, as measured against the base case, may include direct benefits (being benefits to users) and indirect or external benefits (being benefits to other parties or sectors of the economy). Benefits can be also quantifiable (some non-financial benefits are quantifiable) and non-quantifiable (or difficult to quantify). Below is a description of the benefits identified, organised by those quantified and those not quantified.

Industry Value Added

The largest benefit of the preferred option is the Industry Value Added (IVA). This refers to the market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry. The components include compensation of workers, net taxes on production and imports and gross operating surplus. IVA may be referred to as the contribution made to the local economy or GRP and consequently the GDP.


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In the case of the preferred option it is assumed that the Health Hub will be operated by a full time GP, a full time administrator and one part time dentist and then up to 3 GPs in the third year operating Grenfell (not all at the Health Hub) as well as ancillary and eHealth staff increases. Based on these staffing levels the IVA was estimated at $660,486 per annum using data sourced from IBIS World industry reports 2015.

Travel Time Savings

The next largest benefit is the travel cost savings. In the base case Weddin residents will need to travel to other towns such as Cowra and Orange for medical services. The preferred option will arrest some of this escape expenditure. The addition of a third GP will improve the outcome beyond that assessed in the model as there continues to be utilisation as a hang over from the previous period of low doctor supply when patients built relationships with GPs outside Weddin. As the data only assumes trips to Cowra, which is closer than, Orange by some 60 mins the CBA is further conservatively estimated. Grenfell has a catchment area of around 4,165 people (population of Weddin plus 500 surrounding residents). Based on 4.6 visits to the doctor per person per annum16 and assuming one trip to the dentist and a 50% capture rate, we estimate the preferred option would reduce the amount of trips to other towns by 11,662 each year. Assumptions in travel costs include the following: Distance to Cowra (alternative town) = 55km; Time to Cowra = 50 minutes; Opportunity cost of travel time = $27.14 per vehicle per hour17; Assuming half of the GP and dentist visits are redirected from Cowra to Grenfell then the annual travel time-savings amount to $263,756 per annum not factoring Orange trip alternatives.

Vehicle Operating Cost Savings

Vehicle operating cost = $0.16/km18 annual vehicle operating cost savings amount to just over $101,471

Accident Cost Savings

The weighted average cost of accidents = $.059/km4. Total accident cost savings per annum is estimated at $37,781. Terminal Value Terminal value is included at the end of the project life (20 years) and is calculated as the preceding year’s net benefit capitalised at 12.0%.

16

http://theconversation.com/factcheck-does-the-average-australian-go-to-the-doctor-11-times-a-year-26242 17 RMS Economic Parameters

18

RTA Rural road crash rates by road stereotype Tech Manual 22 April 2004 (escalated to 2015 dollars)

http://theconversation.com/factcheck-does-the-average-australian-go-to-the-doctor-11-times-a-year-26242


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Costs

Capital Costs

Capital costs were sourced from Council and assumed at $2.7m to be spent in Year 2016-17.

Recurrent Costs

Recurrent costs include maintenance at $30,000 per annum and net operational costs at $24,350 per annum sourced from Council.

The construction of the Weddin Health Hub will contribute to economic growth in the region by improving access to and expanding a variety of health outcomes with improved personal and eHealth services. The existing provision of health facilities in Weddin Shire is inefficient, with the existing buildings utilisation to deliver General Practioner (GP) and ancillary services underperforming. Each of the existing facilities houses a General Practitioner and support staff at a minimum with one having optic services, podiatrist, aged rehabilitation among other services. The two GP health service buildings are owned and maintained by the Weddin Shire Council (WSC). The cost to remedy deficiencies in the buildings in order to improve service provision at an acceptable level is uneconomical and would fail to resolve essential service delivery outcomes. The existing GP health service facilities are of a low standard, which sees one, situated in an older house on the edge of the CBD. This house has poor disability access, inadequate soundproofing, non-compliant toilet access, a small waiting room that spills onto the external veranda and has limited opportunity to link to eHealth services. The second facility is a dated revamped office space in the main street with the primary concerns of this location being; client privacy and structural deficiencies which include a leaking roof and non-compliant toilet facility (with existing use rights). On a per capita basis the Weddin Shire remains below the standard doctor to population ratios by one practitioner and possible two (2) as previously reported. This contributes to fewer services, as poor access, old buildings without the capacity to provide an eHealth service means that the attraction and retention of practioners burdened with high client ratios is both compromised and difficult. Integration of emerging eHealth technology offers an opportunity for an innovative health service delivery to achieve the best economic impacts and improve health outcomes at all levels; from preventive health, specialist and acute care and self-management of chronic conditions, to home monitoring for people living with disabilities. As previously argued by Dr Hambelton rural areas generally attract younger or GPs in training. Dr Hambelton argues that the actual rural demand is for diverse skills and experience. The Health Hub seeks to create a collegiate business space that can more effectively support clinical as well as managerial capacity improving health outcomes.


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A home monitoring capacity linked to the Health Hub would support Federal and State policy objectives that recognise, for social and economic reasons, there is greater benefit the longer the aged can stay in their own homes. It also addresses the Regional Development Australia Central West (RDA) regional plan (2013-2016) objectives to:

“Facilitate partnerships and support initiatives that aim to improve the overall quality and standard of living across the Central West region”.

Deliver on “Growth Sectors – Health: Specialty medical services, healthcare services, aged care”.

Address “Challenges in the region – declining health services in smaller centres” as well as a “high demand for aged care services” and lastly, to capture “Opportunities for the region – expansion of health and aged care facilities”.

The health hub will immediately create three new jobs (in the CBA) as well as seeing another three new jobs after three years. The General Practioner(s) apply to act as the Visiting Medical Officer (VMO), and as such the ongoing attraction and retention of this role is central to Grenfell hospital as a non-acute facility. This facility will also be responsible for directly managing the existing 28 (with a view to doubling in 2 years) aged hostel beds to service the anticipated 27% increase in over 70s by 2031 and provide an extensive role in a variety of other community health support services. The provision of the Health Hub supports the retention of current labour supply in the emerging sectors of agriculture and aged services in the Weddin Shire. During the period when no second GP or VMO was available or designated, labour was difficult to procure even given the drought, and there was a discernable downturn in economic activity, as reported by local business and the Chair of the Weddin Economic Development Committee, and Health Board Mr Peter Moffit. Simply people voted with the feet and as discussed previously people are now drifting back to support improved agricultural prospects and access to health services. The ageing population feeds the development of a new industry that will require lower skilled support labour which will complement the farming sector. A growing aged population also supports existing supply networks and regional produce consumption. Equally an ageing work force will participate in part time employment much of that in agriculture19. Commentary surrounding the benefits delivered (but not quantified in the CBA):

The Health Hub will save travel cost and time by retaining the residual 50% of the visits in Weddin but also by minimizing the visits to ancillary service.

Lower cost benefits by not having professionals travel to Grenfell administering non-physical services such as counselling, psychiatry, oncology review among other services, increasingly offered through eHealth at lower cost points.

Reduction in emissions leading to positive environmental impacts (A UK study found patient travel accounts for 16% of health services emissions –more significant in Weddin) not in CBA.

19 Productivity Commission, An Ageing Australia: preparing for the future November 2013)


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The assumption that there are some 900 visits attributed to neighbouring Shires clients into Grenfell means that the avoided economic loss is extended to this cohort as well.

There will be an increase of productivity in the local workforce: driven by better health prevention outcomes.

FTE employment impact during (and post) construction;

Project management will be completed by way of small contracts impacting local wealth and not factored in the CBA.

eHealth and collaborative approach delivers better health outcomes more productively and efficiently.

Savings will also occur due to less patient transfer by community transport, ambulance, and helicopter and again, this is not factored into the CBA but its importance should be noted

Addresses emerging/future demand driven by an increased aged population;

A prevention and/or early approach will be far less expensive than reactive/late intervention

Council’s long term financial plan and asset management plans

The building of a the Health Hub was incorporated into the Asset management Plan and then modelled in the Long Term Financial Plan

The most recent cost estimate for The Health Hub structure proposal is $2.7mil million with an allowance of a basic fit out of $700,000 including dental chair

The Multi Criteria Analysis (MCA) is based on an assessment of non-quantifiable criteria derived and then deliberated by the project assessment team. The weightings provide a subjective view of the importance of the importance of:

o The impact of loss of labour to the aged sector by the Health Hub not proceeding

o The impact of loss of labour to the agriculture and transport sector by the Health Hub not proceeding

o The affect on preventative health o The impact on tax receipts to government

The MCA results (see Table 4 Cost Benefit analysis and MCA) supports the benefit of constructing the Health Hub and closing one of the surgeries. The MCA also supports the better result in the CBA.

Addressing need and disadvantage

The extent to which the Weddin Health Hub supports or addresses disadvantage in the region is informed by an analysis of key data that indicates existing and/or rapidly emerging disadvantage. The Weddin population is ageing and in decline with NSW Department of planning figures indicating decline in all population categories, excepting over 70 by as much as 30% by 2031. The population of those over 70 will increase by 27% by 2031. The current SEIFA indices report lower Australian ranked scores for Weddin Shire in comparison to its neighbours, except for Education and Occupation. The SEIFA index is the ABS data that ranks in four factors; disadvantage, disadvantage and advantage, resources, and educational and employment.


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The spread of population decline heralds an ageing, financially under-resourced (declining superannuation income) population underscoring a deterioration of economic capacity. The existing lack of available and supported accommodation for the aged and vulnerable communities as well as supporting health services needs to be urgently addressed. Nine hundred of the working age population participates in unpaid voluntary work and of this, 200 provide supported care for people with a disability. This is indicative of a high level of need. The unemployment rate was below the state average in 2011 by 1% however personal income per annum was 67% of the state average at $35,858 (Weddin) against the NSW average of $53,917. There has been a decline in average superannuation income from $26,500 in 2009 to $22,514 in 2011. Some 30% of the Weddin population also receive some form of pension or support payment while only 7% is reported for NSW.20 Unemployment is impacted by structural change and is difficult to assess in small country towns where people move to locations that can provide employment during downturn and/or seasonal periods. The nature of traditional farm work is transitory. However, this trend is not sustainable as farming becomes more intensive and more technically advanced with the aggregation of properties and new efficient farming methods that demand higher skilled labour. In 2011, nationally the median age of farmers was 53 years, compared to 40 years for people in other occupations.21 Sustaining economic activity and improving economic health relies heavily on the agricultural sector representing, along with its supply chain (transport) nearly 41% of employment. The difficulty in attracting skilled employees into the evolving farm business can be resolved by ensuring adequate health services in Grenfell so that diverse skills can be captured and retained. Costs associated with travel to access health services, will increase thereby burdening the public purse, if the current facilities in Grenfell are not replaced. Population and concomitant service decline can be reversed should the underlying reasons for the population decline be challenged. Failure to address health amenity threatens the very future of the community, potentially increasing social dislocation in the region and the economic contribution it makes to the greater region, NSW and the Commonwealth. These challenges do not sit in isolation as the regional centres see the closure of manufacturing facilities and look to emerging industries such as agriculture. Action needs to be taken to underpin health services to address and reverse the predicted structural shift and foreseeable needs of the region. The provision of the Health Hub at Grenfell in the Weddin Shire is both necessary and urgent. The SEIFA indices allow comparison of social and economic conditions across Australia where lower ranks are more disadvantaged, the following compares Weddin and Mosman (a recognised advantaged LGA in Sydney) to explain disadvantaged and advantaged indices, with the inclusion of Orange as a rural

20 (ABS Socio Economic Indexes for Area, 2011, released 18 July 2013) 21

http://www.abs.gov.au/ausstats/[email protected]/lookup/4102.0main+features10Dec+2012

http://www.abs.gov.au/ausstats/[email protected]/lookup/4102.0main+features10Dec+2012


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comparison. On advantage, disadvantage and Economic Resources score Weddin is similar to its neighbours:

Index of relative Socio-Economic Advantage & Disadvantage Weddin – 180 / Mosman – 559;

Index of Relative Socio- Economic Disadvantage Weddin – 157 / Mosman – 559;

Index of Economic Resources Weddin – 222 / Orange – 292; Index of Education and Occupation Weddin – 96/ Orange – 83.22

Table 5 SEIFA index comparisons all Ranks

On another set of indices Weddin LGA has higher health risks than the NSW average health risk and is benchmarked against 100 in 4 key areas:

Body mass attributions (135.7)

Smoking related (104.8)

Alcohol attributed (114.5) and

Ambulatory care (107.8). These conditions indicate a need for integrated community engagement and education supported by the Health Hub in delivering a range of services directly and through the eHealth model adding value to social media utilisation. They also indicate disadvantage and an ageing population.23 It is clear that the current trends indicate that Weddin’s population will continue to decline however there is evidence that with the improved seasonal rainfalls and the push factors of high housing costs in the regional and major cities, that this may be changing. Weddin lost a number of people during the period when there was no VMO, and the situation was compounded by a drought. People are now drifting

22

(ABS Socio Economic Indexes for Area, 2011, released 18 July 2013)

23 Attached MPS report p 14


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back with 58 new houses constructed between 2010 and 2013 with the average new construction value increasing from $285,000 in 2009 to $355,000 in 2013. At a 3.5% annual inflation over the same period it would be expected that the cost would be $316,000 in 2013 when in fact it is $40,000 more after inflation. Investment by retiring famers in their primary residence seek to reduce their non-primary home capital holdings in order to access aged pension benefits. In the March quarterly rental data from NSW housing 2015 there has been a 7.5% increase in rental price for the Lachlan Valley, going against the trend of declines in nearby regional centres, indicative of a resurgent agricultural sector as a pull factor and increased cost in cities as a push factor. Unless an event occurs which greatly shifts current population predictions, the current trends indicate that without intervention Weddin LGA will experience a population decline. Despite the NSW Department of planning figures indicates general population decline by 2031- Overall Weddin will continue to decrease by 13.9% in 2031. The number of persons aged 0-19 will decrease by 13.3%; The number of persons aged 20-49 by 18.3%; The number of persons 50-69 by 31.8%; with the remainder of the people over 70 increasing by 26.5% This will result in demands on health services that cannot be met by the projected population decline in the other cohorts24. Destructive structural change in rural communities can be mitigated if community amenity is retained. Jacquie Dwyer et al in a paper prepared for the RBA (RBA 2002) indicates that the labour market movement during periods of change or shock events (e.g. the global financial crisis [GFC]) is to move to areas with greater community amenity. Good community amenity includes health services and facilities that improve quality of life. Another paper by D’Arcy et al indicates that for industries that lose ‘lasting’ skills, such as those found in health services, the capacity to renew is severely diminished. The Health Hub seeks to attract and retain skills in order to provide a sustainable economic future for the Shire25. The Health Hub seeks to address social disadvantage emerging from health services inundated with an ageing population. If the Visiting Medical Officer (VMO) is lost it will severely diminish current health services. This would also lead to increased economic cost of travelling to find health services as set out in the CBA. More importantly, this adds to the living cost of low skilled and disadvantaged remaining in Weddin for the purpose of supplying labour to agriculture and its support services, exacerbating retention or attraction. The positive impact of improved eHealth access was recognised with Medicare making provisions from 2013 to pay higher Medicare benefits for Telehealth services provided by GP referred specialists. A review of the MBS would beneficially extend this service to GPs at least for initial or triage consultation and this appears possible. eHealth increases health access, improves productivity and delivers better health outcomes by addressing disadvantaged needs in Weddin

24 Source: Regional Development Australia – Central West “Investment Opportunity Assessment

August 2013” 25 Labour Market Turnover and Mobility, RBA Dec 2012:6.


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demonstrated by a generally poor SEIFA index, low annual average income, higher than average proportion of welfare recipients, population decline and major structural shift in agriculture and an ageing community26. As indicated through the SIEFA indices and pensions, incomes in the LGA are relatively low – people simply cannot afford to travel to access health care in other regional centres such as Young/Cowra/Orange resulting in health issues not being attended to early, thereby resulting in higher costs at a later date. Poor support for aged services means that aged care is more likely to be only provided outside of Weddin resulting in a higher cost as it forces families to travel in order to provide support. The waiting period for a local aged unit can sometimes be 3-7 years – meaning that family support can end up being quite costly. The issues being faced by Weddin are not isolated, as stated in the AEC Group report “The challenge of attracting and retaining young people is not isolated to the Central West region but represents an issue for many regional economies. The high dependency ratio will undoubtedly increase demand for age care, residential facilities, nursing homes and extensive health and community services within the region.”27 Economic ‘refugees’ moving to regional centres or cities from country towns simply transfer the problems and increase demand in those centres cross regional services are a cheaper solution and simply balance the fact that consumers do not pay the true cost of production provided to the regional centres and the cities28. As reported by ID profile in September 2015 there is a discernable shift from Sydney to regions will impact service delivery29. Superannuation investments in regional centres, as well as for exit strategies from Sydney on retirement, affect long-term health needs and service provision30.

Capacity of Council

Council’s project capacity

Sustainability and viability sit within a broader context. The recent review of local government in NSW undertook a wide-ranging assessment of local government sustainability. This was seen as a part of its Fit For The Future review to determine the viability of local governments in NSW, where the Council was assessed as having scale and capacity to be sustainable. Weddin Council has developed a viable and comprehensive Assets Management Plan (AMP) informing a Long Term Financial Plan (LTFP), both of which are supported by financial Ratios that indicate sustainability over the long term. (LTFP attached)

26 http://www.medicareaustralia.gov.au/provider/incentives/telehealth/information-for-health-

professionals.jsp 27 Source: AEC Group “NSW Central West Export / Import Contribution Study, 2014

28 http://press.anu.edu.au//anzsog/fra/html/ch04s02.html

29 http://blog.id.com.au/2015/population/australian-demographic-trends/migration-between-capital-

cities-and-regional-australia/ 30 http://www.afr.com/real-estate/investor-demand-rising-for-regional-property-as-yields-tighten-

20150512-ggzo6j


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Weddin Shire Council also made an application this year for a Special Rate Variation (SRV). The Shire Council was also required to demonstrate its capacity to be sustainable through a rigorous Independent Pricing Review Tribunal (IPART) process as part of the SRV and Fit for the Future (FFTF). The documents and the submission were placed on public exhibition for 28 days and it resulted in the Council successfully gaining approval for a rate increase over the next 4 years. This effectively brought the Council’s income stream in line with the surrounding councils and thus, into the future. Council has a long history of asset management and service delivery for the LGA of Weddin and has undertaken annual multi-million dollar contracts for roads and infrastructure construction. The council is debt free and has recently decided to undertake the construction of a new Aquatic Centre to replace the existing that has reached the end of its useful life. The Aquatic Centre and the Health Hub formed part of the special rate variation application service delivery obligations. These projects seek to improve the quality of life and provide community amenity crucial to retaining skills and professionals including health care staff in the Shire.

As already discussed the operating costs for the Weddin Health Hub are included in Councils operating budget and also make up expenditure elements of the attached Cost Benefit Analysis prepared by Stephen Sykes MBA Principal, Sykes Peer Review and peer reviewed by Adrian Hack, BTP (Hons), MLE, MPIA Principal, HillPDA. The CBA shows a positive return taking into account external costs that would emerge when the community lost the Visiting Medical Officer (VMO). The Cost Benefit ratio is 4.19 at 7% and the supporting MCA.

The Council also holds funds in reserve that will form part of the funding base for the Weddin Health Hub. As indicated in the LTFP, Council has some capacity to borrow and retain financial ratios that meet NSW State Government financial ratios benchmarks, however funding depreciation will see a return to a book surplus in 2018 so while Council has capacity it will remain financial cautious in extending borrowing for this project beyond the budget and the funding. On this basis Weddin Shire Councils deficit is not clear until 2025 when funding depreciation.

The costing for construction has been verified by a qualified quantity surveyor and forms a sound basis for delivering the project. Council has prepared a comprehensive Risk Management Plan and as a precaution, removed an old building to verify soil remediation requirements. The site was previously a historical host to petrol fuel tanks. The remediation is complete and is risk free and completed in accordance with the best practice principles. The cost of demolition and remediation are not included in the total project cost for the purpose of the application for federal funding.

The capital expenditure review for the Health Hub has been completed and lodged with the Office of Local Government as required by the NSW Government for projects over $1million. The Weddin Shire Council is now free to undertake the construction of the Health Hub.

Recent examples of delivery of similar projects includes the building of a fit for purpose Council Depot – it was delivered on time and on budget and provides a


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base for delivering over $10million annually in major road and infrastructure projects.

Plans have been developed in consultation with various stakeholders. The draft business case will form the basis of further engagement with stakeholders to build comprehensive ownership of the Health Hubs ancillary service development. The operational elements of the plan provide service options that need to be flexible to meet the likely management models that will emerge and change over time. However, the options are in place and will greatly benefit from further engagement during the construction phase. This will ensure existing commitments (see letters of commitment attached) are delivered in an environment that fosters trust, goodwill and spiralling commitment.

The project is shovel ready with construction able to commence immediately, post the grant funding announcement.

The operation of the facility will generate a range of economic benefits and is self-sustaining.

Regional Investment Impacts and Collaboration

A number of partners have provided strong support for the construction and operation of a new Health Hub in Grenfell, Weddin Shire. The initial capital investment is important to the project; however the ongoing collaboration is crucial. Key players include Grenfell Hospital, local GPs, the business community, community chemist, a physiotherapist, a dental clinician, WHAS Care West, PHN, HACC, community transport and the community health service. This project is made necessary by market failure. In capital cities, regional centres, and larger communities, the private sector is able to attract and retain professionals who supply medical services. The lead role of the GP and the appointment of the doctor as the VMO is to provide support at the local hospital and in rural areas, this is essential. However, the attraction and retention of GPs or any professional is plagued by the perception that community amenity and quality of life in rural communities is lower and considered isolating, both socially and professionally. There are other factors and research for Rural Health West undertaken by The University of Western Australia in August 2013 indicates rural training, facility availability, and rural management experience as important elements. A model that provides peer support in the form of a team is essential in rural GP’s in order to capture and to support higher levels of skill development. The Independent Expert Panel Report to the Australian Government, January 2015, chaired by Dr Steve Hambelton argued that a simple increase in the number of doctors might not address the problem; the skill-set required in a rural location was higher and many rural doctors were new, training or re-entering the work force. A viable alternative is to provide an environment where those skills are available through eHealth in a facility that also has accessible ancillary practitioners. The Weddin Health HUB provides a facility that can foster this model.


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The GPs act as the signal point for ancillary services and capital investment impacting economic development as well as community amenity that attracts and retains a wide variety of skills. The largest impact on the Weddin GRP, at $156 Million, is in the Agricultural sector. This sector acknowledges that access to a town with supporting business and infrastructure such as ATM’s, primary schools, aged care facilities, local government, aquatic centres and farm supplies is crucial. This infrastructure is protected and investment opportunities enhanced with a strong health service. The existing eHealth links to Orange medical support service delivery by video diagnosis and triage helps to improve the sustainability of the health services in Grenfell in Weddin Shire. Further, it also supports the regional health service as a whole by dissipating demand at different price points, for both health services and in general. The greatest investment a consumer can make is in housing, and services and housing costs can be made more accessible by ensuring that health services are available across the region. The investment in new construction in Grenfell indicates that rural lifestyle is still a sought after investment option by retirees, as Weddin’s affordability is enticing. The Health Hub can be a catalyst for effective collaboration, allowing practitioners and planners to improve discussion around how best to provide health and related services, and support. Trust, goodwill and commitment will be generated as various players continue to participate in the Hub development and service delivery models. Improved partnership between health providers and the aged care industry will provide more appropriate and effective services; thereby meeting the broad needs from clients to families, and ancillary or volunteer support. The capacity to build upon the eHealth element in the Health Hub is designed to improve community connectedness and build transferrable skills that can be used as a model in other rural centres as well as to generate industry and growth as an eHealth incubator. Engagement with residents online will assist improving health outcomes and accessibility. This outcome will quickly emerge as the new generation of ‘a highly digitally connected’ ageing community comes along. The Health Hub model is designed to meet rapidly changing community needs and will improve regional engagement through social media lifestyle campaigns. This ‘digital alternative’ program could include, as an example, a healthy lifestyle campaign. This is one of many processes that will change the behaviour and approaches to regional communication and inter-rural community collaboration; sharing approaches on the health model and moving to other models of doing business which are constructed on inter-organisational learning and capacity building. This is a successful approach for international developing country aid programmes and has been used in NSW as part of the waste management collaboration with NetWaste across 26 councils in NSW for 20 years31.

31

Sykes, 2010, (http://www.austlii.edu.au/au/journals/ComJlLocGov/2010/30.pdf)


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Figure One explains the framework to a collaborative process this will inform Weddin Shire Council approach to determining the delivery model. The council will follow a tender process that informs the various stakeholders and encourages them to work collaboratively to achieve a more integrated delivery of service and grow the local economy32. The Weddin Health Hub building, coupled with a collaborative delivery model, will retain and attract new skills into communities. New skills will generally bring new life partners that will add to economic opportunity33. Proactively offering integrated health and eHealth amenity will facilitate a sustainable health service and community. Dr Steve Hambelton argues in his report on rural health services to the Australian Government:

The political and public rhetoric has changed to encompass imperatives such as community needs, continuity of care, need for social and health capacity building within communities, appropriate practitioner training and skill sets, vertical and horizontal integrated care and viable models of practice.34

The importance of fostering an innovative environment cannot be underestimated as such an environment attracts and retains skilled practitioners and partners. These spouses/life partners and families may have, or develop, a capacity to create new industry and attract investment in a rural location.

32 Collaboration Blueprint 2013 NSW Public Service Commission, NOUS Group. http://www.psc.nsw.gov.au/reports---data/other-publications/collaboration-between-sectors 33 http://seeseeeye.csu.edu.au/eastwest-2013/is-evocities-worth-its-weight/

34 Independent Expert Panel Report to the Australian Government, Rural Health Services, January

2015:9

http://www.psc.nsw.gov.au/reports---data/other-publications/collaboration-between-sectors


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The construction of the Weddin Health Hub will open the way to economic benefits by way of improved partnership and efficiency in the utilisation of professional skills. It will see the integration of a general medical practice, physiotherapy, oral care (the current closest is a forty minute drive to Cowra), mental health (youth and aged), preventative health programs, palliative care support, and rural finance counselling; all with a community development and community engagement focus. The Health Hub facility will boast a strong eHealth backbone with dedicated digital cabling the health industries preferred access technology, not wifi for clinical purposes. Opportunities to better integrate with the Community Health Centre will be enhanced as part of a Health Hub that will drive productivity by ensuring service delivery is appropriate to specific individual needs, better meeting health needs at the best price. Council has had discussion with Headspace on facilitating eHealth access to and marketing of services in the Weddin area. 35 A major objective is to be a space that becomes a Health and eHealth provider of choice. The Weddin Health Hub will operate from a building that has been designed to engage providers and facilitate regional partnership and collaboration. Shared treatment rooms, group meeting spaces, and training areas are designed for discussion, encourage commitment to shared service delivery models built on trust and goodwill. The implementation of the Health Hub presents the opportunity to foster a collaborative approach to the delivery of health services to the Weddin Shire that has traditionally operated in a relatively isolated manner. Dr Steve Hambelton states:

Implicit in a viable practice model is sustainable delivery of services in rural and remote communities that are comprehensive and continuing across primary care / general practice into extended settings. Inherent in the model must be scope for adequate succession planning and system solutions that go beyond individual commitment, skills and personalities.”

A business model that addresses key deliverables centred around health, social economic and business sustainability objectives will go a long way to meeting the vision set out by Dr Hambelton. Such a model must also support potential to develop health-training links and engagement with broad training as can be found within the rural doctor training programmes. This would have a positive impact on health services within the LGA as well as in rural and remote areas as students who complete part of their training in rural areas are more likely to return to practice in these areas once their studies are completed.36

35 http://www.starobserver.com.au/opinion/soapbox-opinion/mental-health-services-crucial-for-lgbti-

youth-in-rural-areas-headspace-ceo/128672 36

(Independent Expert Panel Report to the Australian Government, January 2015:9)


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Council project role

The following lifecycle model forms the basis of the business case assessment:

Figure 1 Asset Life Cycle

The need has been developed and supported by a CBA and the MCA as well as the analysis of the SEIFA indices. The existing facilities are not fit for purpose and the councils has undertaken to plan a facility design that can better accommodate future health needs and encourage improved integration. The facility is designed to provide for a new model of service delivery and to access eHealth Services. Importantly the facility will also link into programs that facilitate connectedness and a climate that encourages digital business development around health as a model eventually influencing other Weddin Shire business activity.

The facility will be constructed utilising an array of funding streams and be subcontracted by council to improve procurement access to local firms. In the lead up to the commissioning phase the Council met with practitioners and allied health professionals that will be impacted by the development. These professionals have advised that there is a need to improve the quality of the health service facilities and a number have indicated an active interest in working towards a business model that improves efficiency and integration in utilising the Health Hub Facility.

The business model needs to deliver on a number of key outcomes for health in Weddin Shire as well as ensuring sustainable operation and competent and agile evaluation, review and modification of service delivery over time to meet changing technologies, demographics and psychographics. The business model must be dynamic and responsive.

Operational Phase – Business Model

This section of the Business Case provides a more comprehensive assessment of alternatives considered and the rationale as to a preferred approach. The business Case has two fundamental elements as set out in the cycle. Council has determined to provide a building for the operation of an integrated Health Hub. The Council does not propose to operate the business but to interrogate the market to ascertain the best model that delivers on the deliverables. This approach is likely to


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generate private sector or cooperative ‘shopping centre model’ or a “Bespoke’ styles of operation that is tailored to the deliverables in collaboration with interested stakeholders (see (Appraisal of alternative service delivery methods), however potential Health Hub practioners may seek differing models following a collaborative assessment process and responses to this Draft Business plan following exhibition. The bespoke model is the base case position.

The responsibilities and financial implications associated with the various phases are summarised below:

Identify need, plan and design

The need has been driven by an ongoing challenge in attracting and retaining medical professionals to service the region. This is part of an international challenge for rural communities. The Australian Medical Association (AMA), the rural doctors network (RDN), as well as a number of studies in the USA have identified that the provision of quality buildings are critical to attracting and retaining medical professionals. Services need to be provided in purpose-built facilities that have a multidisciplinary focus. Negotiations with practioners on facilities in Grenfell evidence a need for a variety of integrated services.

Procure/build and commission

The Council has procured a site that has been made ready for construction of the Health Hub. The Health Hub has development consent and plans have been prepared meaning that the project is shovel ready.

Operate, maintain and monitor performance

Upon completion and commissioning of the Health Hub, the project moves into the service stage of its life cycle process. There are a variety of models described by Western NSW PHN including “separate practice,” “shopping mall” and “one stop shop” and the emerging Bespoke style.

There are practical challenges to the preferred one stop shop model, so to ensure initial success, the “Bespoke Model is a likely model following the tender process completion.


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Possible operating models

“Separate Practice” Model

“Shopping Mall” Model “One Stop Shop” Model Bespoke

Key Features Multiple service providers in multiple locations

Separate practices (GP, Allied Health, Dental)

Separate medical records

Multiple service providers under the same roof

Separate practices (GP, Allied Health, Dental)

Separate medical records

Shared overheads (rent, power and water)

Multiple service providers under the same roof

Central practice management

Single medical record per patient

Central practice nursing

Shared overheads

One stop features

EHealth connectedness

Business focus beyond shire overtime

Outcomes defined by deliverables

Advantages/ Disadvantages

Disadvantages

Higher overhead costs

Inconvenience for patients

Advantages

Cost savings on overheads

Convenience for patients

Advantages

Additional cost savings on overheads

Convenience for patients

Holistic model of care

Accommodates transient medical staff and suitable for GPs (Who increasingly might be drawn from Gen Y) who just want to deal with patients.

Advantages

As for one stop shop

Grow regional business through eHealth

Improve connectedness

Comments Current model in Grenfell.

Easiest model for Council to implement but the benefits to the patients are limited. Very little improvement to what’s currently being offered to the community.

Provides a long-term holistic approach to primary healthcare. This model requires central practice management. This could be undertaken by Council or by a third party provider. Private sector has the capacity to provide this management function.

As for One stop shop

Improved flexibility

Market defined will allow greater flexibility to respond to change in meeting deliverables

Table 6 Comparative business model narrative

Comment [VTN1]: I’ve

changed the table so it looks like the

other one


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Risk assessment of the project including governance and management structures in place to minimise project risks

A risk register / matrix was developed which identified the major risks associated with this project.

The risks were grouped in accordance with the Capital Expenditure Guideline headings of:

· Completion / construction risk · Compliance risk · Demand /market risk · Design risk · Environmental risk · Investment / planning risk · Management / operations risk · Other risks · Reputation risk · Workplace health and safety risk

These risks and their corresponding risk treatments are detailed below:

Task or activity type

List of hazards associated with the activity (risk source)

What could actually happen/ (event)

What is the risk treatment if the level of residual risk is between high and extreme?

Completion / construction

Weather and seasonal implications

Construction delay due to unfavourable weather conditions

This is within Council’s risk appetite and is a latent condition of contract

Demand / market risk

Insufficient funds

Insufficient funds to complete the program to community expectations

This will be monitored throughout the project with regular community updates used to manage community expectations

Construction / design risk

Site stability issues

Maintenance issues &/or premature asset failure due to inappropriate design / construction techniques given site attributes

Geotechnical investigations will be undertaken prior to the tender for construction so that site constraints can be considered as part of the construction design

Design risk Appropriateness of specifications

A lack of understanding of specifications or scope

Effective consultation at all phases will be undertaken to ensure appropriate


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specifications. This is within Council’s risk appetite

Design risk Project scope Scope of project not well defined and communicated. Scope of work does not meet stakeholder’s expectations

Effective consultation at all phases will be undertaken to manage expectations. This is within Council’s risk appetite

Investment / planning risk

Cost control Prices exceed allocated budget

Contingencies to deal with increased project cost could include reduced scale & facilities or modified fit out, a staged construction process and increased borrowing. A Project manager is to be engaged to actively manage the construction budget


Insufficient funds

Insufficient funds to complete the project to community expectations

Effective consultation at all phases will be undertaken to manage expectations. This is within Council’s risk appetite


Bankruptcy during construction

Contractor involved on project becomes bankrupt

This is within Council’s risk appetite. Contingency measures such as insurance may be considered to minimise possible project delays

Management / operations risks

Program delay. Critical milestones not met on time

This will be monitored throughout the project with regular community updates. A project manager will actively oversee the construction process

Other risks Political Other competing projects may be deemed more important for the community and be prioritised

Effective communication between community and councillors will be undertaken at all phases to manage expectations and determine priorities


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Business case Business GPs are not inclined to participate in Bespoke model if that is where the market goes

Tenderers can negotiate with GPs and allied health providers and resolve in tenders to council. Council can choose to not accept tenders if they fail to meet deliverables and negotiate

Assessment of compliance requirements (e.g. Local Govt Act, EP&A Act, Heritage Act etc)

Capital Expenditure Guidelines – December 2010

The Health Hub project has an estimated capital cost of approximately $2.7 million (including a fit out allowance and contingency). This document provides the required notification to the Department of Premier and Cabinet, Division of Local Government in accordance with the Capital Expenditure Guidelines issued in December 2010.

Council has lodged a Capital Expenditure review Plan based on the Draft Business Case with the Office of Local Government in NSW (OLG) and Weddin Shire Council is now free to undertake the Health Hub construction.

Local Government Act

Charter obligations – Council will fulfil its Charter obligations as detailed in Section 8 of the Local Government Act 1993.

Environmental Planning and Assessment Act

The Health Hub project will be undertaken under the State Environmental Planning Policy (Infrastructure) 2007 policy and thus it does not require the preparation and lodgement of a development application (DA) and construction certificate (CC).

Appointment of a steering committee

Council has appointed the Director Environmental Services as the manager of the Health Hub project.

While Council have taken the decision to invest responsibility for the control of the project with the Director Environmental Services, it has also in conjunction with senior staff engaged an informal steering committee.

Together with the Director Environmental Services, the project has been managed through the design and planning stage by the steering committee with input from Council’s management executive (including the General Manager and directors), councillors, consultants and community stakeholders / interest groups where required.


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Designating a Project Manager

Council has placed the Health Hub redevelopment project under the control of the Director Environmental Services. However, it has undertaken to engage a Project Manager who has the specialist skills to actively and effectively manage the delivery of the construction stage of the project

Alternatives to the proposal

The following points were considered in determining which option provides the best outcome for the residents of Grenfell and the Weddin Shire.

Do nothing

Do nothing: ignore the situation and disregard the identified health needs and aspirations of our residents. As previously outlined, the community has expressed its desire for Council to build the Health Hub to support the ongoing provision of health services to the Weddin Shire. A ‘do nothing’ approach would mean disregarding community expectations, the potential effect being a reduction in the accessibility of health services as existing health services are reduced or closed. The cost to the economy is high estimated annually at some $800,000 lost to surrounding areas; with multiplier effects this could be as high as $1.6mil. A ‘do nothing’ option is therefore not considered appropriate.

Play a passive role and simply continue to advocate other levels of government

Play a passive role and simply continue to advocate other levels of government to provide such services and facilities. Historically other levels of government have been either unwilling or unable to respond to Weddin’s community’s health needs and aspirations and, as a result, the community has suffered. In the current environment of fiscal tightening, it is unlikely this situation will change.

As Weddin Shire has a relatively small population the political pressure it is able to exert when undertaking an advocacy role is minimal and consequently, this alternative offers little traction and is not considered appropriate as it will not satisfy community’s expectations.

A passive role might simply be a do nothing role driven by inertia.

Upgrade existing doctors’ surgeries

Upgrade the existing doctors’ surgeries owned by Council and rely on them to support health services provision. Due to the current site constraints, the upgrade of the existing doctors’ surgeries does not allow scope for expanded health services. The installation of containers or other temporary arrangements to house records and increase space for clinicians or similar is likely to face community opposition and concern.


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Further, because of the shortage of health practitioners able and prepared to operate in rural and regional areas, competition for such skills is high. To ensure Weddin is able to compete with other areas in attracting these services, it is imperative that the facilities offered are up-to-date and able to accommodate the demands of modern healthcare delivery models.

Upgrading the existing doctors’ surgeries is not considered to fulfil this requirement and is seen to leave the Weddin Shire at a disadvantage in attracting and retaining health services. Thus, while in the short term it is important to maintain and upgrade the current facilities (where practical and required), this is not a viable long term option that will satisfy the community’s expectations of Council in relation to the provision of healthcare services in the Weddin Shire into the future. This option fails to deliver a business model that can allow new professionals and service providers ready access, especially where they only bring clinical and not business management skills.

Assessment of alternative methods of acquisition

Consideration of the purchase of an existing building was undertaken. However, there are no suitable premises available for purchase.

Given the specialised nature of the services, the Council is to provide bespoke tailored planning and design of a purpose built facility. This will offer the benefit of a design customised to local industry and customer specific service delivery requirements, with a special focus on privacy needs of emerging delivery models including a medical receptionist and a practice nurse. An off-the-shelf design (if available) was determined to potentially compromise service delivery outcomes and, accordingly, was not appropriate.

Build a new purpose built Health Hub Facility

A comprehensive option is building a new purpose designed Health Hub to support the provision of necessary and potentially expanded health services to meet with community expectations. There are a number of options that sit within this approach and are dealt with as part of the mult-criteria analysis (see: Table 4 Cost

Benefit analysis and MCA). The Weddin Shire community’s strategic priorities include the building of a fit for purpose Health Hub to support, maintain and improve the provision of healthcare services. The building of a new purpose built Health Hub further enhances the capacity to attract and retain health service providers. The negotiated inclusion of links with educational institutions is designed to further enhance the ability of the Weddin Shire to continue to attract and retain medical practitioners to the area as health service students are exposed to the Weddin community.

The Health Hub also offers the opportunity to move towards a best practice, ‘Bespoke’ approach to the provision of primary healthcare services as recommended by Western NSW Primary Health Network (PHN).

The building of the new Health Hub offers considerable advantages over other options and satisfies community expectations. Therefore, Council sees this model as the more likely, subject to the market testing process.


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(Appraisal of alternative service delivery methods

The following procurement strategy is intended to cover the full range of options and the relative advantages of each option. These options will be considered in regard to the Health Hub development and the best evidenced-based option selected by the Council. Criteria used in the procurement strategy analysis include;

Affordability – the extent to which alternative methods of procurement make the project more affordable (construction and operation)

Risk transfer – how risk allocation varies according to the method of procurement (construction and operation)

Service delivery – does the procurement model satisfy the service delivery objectives and the deliverables? (Operation)

Efficiency – how can the procurement be structured to maximise benefits of efficiency and innovation. (construction and operation)

Appraisal of alternative service delivery methods needs to consider two elements:

1. Getting the asset constructed; and 2. Operating the asset

Getting the asset constructed

Alternative forms of procurement for the construction of the Weddin Health Hub considered the following options:

Construct only Design and construct Design, construct and maintain Construction management Full privatisation

Construct only

Under this form of contract, Council has responsibility for completing a detailed design of the facility. Council then separately procures a contractor to deliver the construction component of the project. The design documentation forms part of the tender specification for this procurement process. The contractor tenders a price for the works subject to any adjustments, such as variations, provided for in the contract. Irrespective of the actual cost of the works, the contractor is entitled to be paid the contract sum as agreed between the parties prior to commencing the works. In practice, the construct-only contract may exceed the original contract sum if the project is not properly planned and managed by Council. Council also retains the design risk.

It is not considered that Council has the resources to deliver a detailed design for what is a specialised construction project. Consequently this procurement method is not considered a viable option.

Design and Construct (D&C).

For a design and construct contract, Council develops a design brief outlining the functional specifications and key user requirements. This is less fully developed


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than the design documentation required for a construct-only contract. Council then tenders out the D&C as a package to a contractor, who is required to provide a detailed design and the undertake the subsequent construction of the works described in the design brief. Council passes the design risk to the contractor and this method also provides scope for the private sector to offer alternative designs. This may help offer innovative solutions which deliver efficiencies around costs or improved service delivery. Council is less directly involved but can mitigate the loss of control through oversight and consultation. As Weddin Shire Council is a smaller council, it has no surplus resources to actively manage a large construction contract. While a D&C contract is considered an appropriate procurement method, there is a risk that the investment of resources required to actively manage the project delivery may detract from the Council’s other service delivery activities.

Design, Construct and Maintain (DCM).

Council adds the requirement to maintain the Health Hub as an additional part of the design and construct package. In this model, as the contractor has ongoing maintenance obligations, some of the asset lifecycle risk is transferred to the contractor. This encourages design efficiency and quality construction to reduce long-term costs. The objective is to fix maintenance costs for a defined period of , for example, 10 years. The extra risk being borne by the contractor may result in a risk premium being included in any tenders but Council’s longer-term interests may be protected by the cost certainty.

Weddin Shire Council considers that it has some internal maintenance capability and, additionally, that the construction contract would also provide a level of protection from maintenance issues resulting from poor quality construction. Thus the additional risk premium that would be built into any tender for a DCM contract is not warranted and is expected to result in a more expensive service delivery.

Construction Management.

In the construction management approach, Council engages a construction manager (a contractor or consultant) to manage the construction works on its behalf. Council manages the project scoping and engages the designer directly. Council also engages the construction contractors directly, although the construction manager as Council’s agent may also enter into these contracts. The construction manager performs a managerial and coordination role (without delivery risk) and is generally paid a fee based on a percentage of the value of the works.

As Weddin Shire Council is a smaller council, it has no surplus resources to actively manage a large construction contract. Given these constraints, Council have successfully used this procurement method in the past and favour this approach with the Health Hub.

Full Privatisation.

The development rights to the Health Hub together with all existing assets and land would be transferred to the private sector. The sale agreement would be specific about the obligations on the private sector.

The private sector would need to determine how it could make the business profitable including being able to service loans or, failing that, some form of


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agreement for an ongoing subsidy would be negotiated. It is likely any ongoing subsidy would need to be significant in order to attract a suitable private investor.

Given public interest considerations and scant private provider interest in fully funding and constructing a Health Hub, Council is of the view that they must choose another option which ensures ongoing medical service provision.

Preferred Procurement Option

After consideration of the various options Council has determined the preferred method is the Construction Management method. This method has been assessed as offering the most efficient service delivery.

Operating the Asset

Previous reference is made to Western NSW Medicare Local report “Issues paper for the Planning of The Health Hub”. As outlined in this report there are a number of options but the following are the remaining likely approaches that are likely to emerge from going to the market, the options open to Council for the management of the Health Hub are:

1. Lease of premises only with health service providers to organise their own practice management (“shopping mall” model)

2. Lease of the premises with central practice management (“one stop shop” model)

The advantages and disadvantages of the management options are summarised below:

Lease of premises only (“shopping mall” model)

Advantages Disadvantages

Easiest model for Council to implement Very little improvement to what is currently being offered to the community. Limited benefits to patients.

There are cost savings on overheads for the health service providers when compared to multiple service providers operating from multiple locations

Does not easily accommodate transient health service practitioners or practitioners who just want to deal with patients

Convenience for patients with multiple service providers under the same roof

Lease of premises with central practice management (“Bespoke” model)

Advantages Disadvantages

Additional cost savings on overheads achieved

More complicated for Council to implement

Convenience for patients Grenfell’s existing practitioners may not want to adopt this model

Holistic model of care Greater capacity to integrate services including eHealth base on a ‘deliverables’ contract model

There will be additional costs incurred if difficulties are experienced in attracting health service practitioners and the Health Hub is not operating at capacity

Accommodates transient health service


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practitioners and practitioners that just want to deal with patients. Therefore replacement professionals can more easily be located based on clinical not business skills

In addition to the improved primary healthcare outcomes the “one stop shop or Bespoke” model is currently considered to offer Council the best opportunity to attract health service practitioners. However, following consultation in the period of construction the shopping mall model or a hybrid may emerge based on the market response (see: Table 6 Comparative business model narrative).

Accordingly, the likely management option is the “one stop shop - Bespoke” model with central practice management to be provided by a third party either in a contracted practice manager model or a cooperative model.

Assessment of the consequences of not proceeding with the proposal

The community has clearly indicated their expectation and desire for council to build the Health Hub. Should the project not proceed, then community expectations will not be met and the community will be forced to travel significant distances to access practioner services, leading to inefficient use of more costly hospital services subject to there being a practical VMO service available without GPs in the city willing and capable of delivering such a service into the future.

If the Health Hub project does not proceed, it is highly probable that ongoing difficulties will be experienced in attracting health service practitioners. In such a situation, there is the potential that the Grenfell Hospital could face closure, having a hugely detrimental effect on access to health services and also the wider social and economic wellbeing of NSW. Not proceeding with the project would also see anticipated improvements in health service delivery and potential economic development flow-on benefits stymied.

As previously suggested, a do-nothing approach by not proceeding with the Health Hub is not an option.

Financial Implications

Since whole of life service provision is the responsibility of the practioners working in the Health Hub, and the premises is provided at a discounted price, it is anticipated that the Health Hub’s operations are sustainable. Funding sources are $950,000 coming from the Federal Government with the remainder coming from, private sector, Council reserves and loans. The Council is debt free with capacity to service the loan.

Public Consultation

There has been extensive consultation leading to the Health Hub being identified as having the highest community priority as already discussed.


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Attachment One

Grenfell Multipurpose Statement November 2014 Health Western NSW Local Health District

Grenfell Multipurpose Service Service Statement November 2014

Western NSW Local Health District

Grenfell MPS Service Statement

Grenfell MPS Service Statement V2 Page 2 of 23

1. Introduction

Grenfell Multipurpose Health Service (MPS) is one of 24 MPSs located within the Western NSW Local Health District (Western NSW LHD). Development of this Service Statement has been facilitated by the Planning and Service Development Branch with input from the Grenfell MPS Health Service Manager and Weddin Health Advisory Committee (HAC). The range of community services included in the model was determined through consultation with the community, service providers and other funding agencies.

The HAC consists of key stakeholders representing the local community, including health professionals, local on-site management and other actively interested community members. The key responsibility of the Council is to:

Provide advice and make recommendations in relation to the health of the community

Consult with the Weddin community to gain feedback on current service provision and identify changes required to meet current and future needs

1.1 Description of the MPS

Grenfell is a small rural town within the Weddin Shire Local Government Area (LGA) and is

located 56 kilometres west of Cowra, 162 southwest of Orange, and 367 kms from Sydney. The Weddin LGA also includes the villages of Caragabal, Quandialla, Greenethorpe and Bimbi. It adjoins the LGAs of Cowra, Bland and Forbes in Western NSW LHD and Young, which is in Murrumbidgee LHD In the 2011 Census, there were 2,583 people in Grenfell (State Suburb). Of these 49.6% were male and 50.4% were female. Aboriginal and Torres Strait Islander people made up 1.5% of the population. The population of Grenfell town represents about 70.5% of the total population of the Weddin LGA1. The Grenfell MPS opened in 2001 and is a 42 bed facility with seven acute/subacute beds, 28 high care residential aged care places, eight low care residential aged care places, a respite care subsidy and six community places (level 2) funded by the Commonwealth under the existing funding agreement. Grenfell MPS provides integration of emergency services, acute and subacute inpatient services, residential aged services and primary and community services under one organisational structure. Grenfell MPS is managed and operated by Western NSW LHD. The Chief Executive is responsible for delivery of health services to the population of the LHD. Grenfell MPS, on a day to day basis, is managed by the Nurse Manager who reports to the Health Service Manager of Cowra Health Service, who in turn reports to the Director Operations through the General Manager, Southern Sector. The current Health Service Manager and Nurse Manager both have an “open door policy” and both residents and relatives make use of their accessibility. To some extent, this has negated the need for monthly formal resident’s meetings. Formal meetings are now held quarterly.

1.2 Partnerships with the Community

Grenfell MPS provides services and promotes activities in formal and informal arrangements with government and non government agencies and community organisations. Informal partnerships exist with Home and Community Care (HACC) to improve services to specific groups. HACC provide services assisting and supporting the frail, aged or disabled to live

1 Australian Bureau of Statistics (ABS) 2011 Census – place of usual residence population data




independently in their own homes. There is active co ordination of client case management between this organisation and Grenfell MPS. The following arrangements exist with two providers who deliver regular services out of Grenfell MPS. These are:

Sureway Employment and Training a leading employment services provider and training organisation that works in partnership with employers, industry Government, and community organisations

A private podiatrist one day a fortnight

The Grenfell MPS uses the following mechanisms to communicate and consult with the community regarding aged care needs, services and feedback:

Monthly meetings of the Weddin Health Advisory Council

Articles in the local newspaper throughout the year – for example recently there was a photo of the Melbourne cup visit to the MPS photo in the paper paper

Community Health quarterly Healthy Happening Newsletter communicates what is happening in community Health

Information in the local press regarding special initiates and programs (for example health promotions activities)

Information is provided to the Weddin Shire Council to add to the Community Directory

Patient surveys random samples

2. Current Service Profile

2.1 Acute/Sub Acute Care

The following acute services are provided:

Level 1 emergency services

Acute/subacute inpatient services

On call General Practitioner (GP)

Twice a week (Tuesday & Thursday 5-6 hrs )a week radiography service

Pathology services 7 days a week with a courier service to Cowra Health Service Pathology collection clinics are held weekly out of community health - Pathology West

Pharmacy services are supplied by Cowra Health Service via courier services

Sterilisation services are provided from Orange Health Service and stores purchasing occurs through the Western NSW LHD Procurement and Logistic Service

Patients requiring care above the role delineation of Grenfell MPS are able to be stabilised in the emergency department prior to transfer to the closest rural referral service or, depending on their needs, to higher level services. Transfers are coordinated through the Western NSW LHD Patient Flow Unit or the Ambulance Retrieval Services, including NSW Newborn and Paediatric Emergency Transport Service (NETs).




Table 1: Facility Activity – Five Years Historic

Grenfell 2010/11 2011/12 2012/13 2013/14

Bed Occupancy

Occupancy % n/a 0 0.04% 23%

Presentations

Acute 4 0 0 93

Subacute 0 0 1 3

Facility Total 4 0 1 96

Occupied Bed Days

Acute 13 0 0 515

Subacute 0 0 7 77

Facility Total 13 0 7 592

Deliveries

Number of Deliveries n/a 0 n/a n/a

Occupied Bedday Daily Average

Acute 0.0 0 0 1.4

Subacute 0.0 0 0.02 0.21

Facility Total 0.0 0 0.02 1.62

Average Length of Stay

Acute 3.3 0 0 5.3

Subacute 0 0 7 25.7

Facility Total 3.3 0 7 5.9

Avoidable Admissions

Number 0 0 0 10

Occupied Bed Days 0 0 0 37 Source: HIE V1.4/3.2/3.5, Prepared by Organisational Performance Management on

The recent engagement of a General Practitioner/Visiting Medical Officer (VMO) has significantly increased activity with bed occupancy for the first four months of 2014/15 equal to 45% occupancy.

2.2 Emergency Services

The emergency service is equipped to provide initial first aid, treatment and resuscitation whilst awaiting transfer or retrieval of patients to larger centres for definitive care. Registered nursing staff (nine in total) are accredited under the First Line Emergency Care standard,. The service operates 24 hours a day. General Practitioner VMOs provide 12 hour on call service to the MPS. A Critical Care Advisory Service is provided by Orange Health Service. A high resolution remote controlled camera is used in the emergency area at Grenfell and is linked to a camera at Orange Health Service to support clinicians in their management of seriously ill patients. All interfacility transfers are managed by the Patient Flow and Transport Unit (PFTU) which is available 7am to 11 PM. PFTU services include:

Patient Flow

Critical care Advisory Service

Patient Transport

Remote Medical Consultation Service

RAAS

Isolated Patient Travel and Accommodation Assistance Scheme (IPTAAS)

Teleconferencing

Available data indicates that Emergency Department presentations were: 1,222 in 2011/12, 730 in 2012/13 and 1,533 2013/14 indicating an increase in activity. However, the majority of these presentations are for lower acuity conditions some of which may be more effectively managed in a primary care or booked ambulatory care setting.




2.3 Ambulance Services

NSW Ambulance Service provides an emergency service to all residents of the Weddin LGA and has a base at Grenfell with four locally based officers. They provide a 24-hour service with on-call coverage outside of business hours. An excellent working relationship exists between the Ambulance Service and Grenfell MPS.

2.4 General Practice Services

Local medical support includes two general practitioners located in private surgeries. One general practitioner has visiting and admitting rights to the facility. There is a 12-hour general practitioner on-call roster.

Western NSW ML

The Western NSW Medicare Local (ML) is one of the coordinating bodies for primary care services, gathering information about the health needs of the region, and connecting local services. Western NSW ML works with communities and service providers to help consumers to access the right care in the right place at the right time. Western NSW ML has a commitment to work with the Western NSW LHD to improve the patient journey between health care services in the community and hospital and has a critical planning coordination and integration role, to bring all parts of the primary health care system together.

The Western NSW ML provides a number of services including primary health services. The objectives of the Western NSW ML primary health services include:2

Provide and maintain access allied health and primary health care services

Promote coordinated, multidisciplinary team-based approaches and support for integrated primary health care services

Establish and maintain effective community consultation practices

Provide and maintain access to relevant health promotion and health programs to promote health and wellbeing

Encourage people in rural and remote Australia to adopt or modify behaviours to better manage their health and wellbeing

2.5 Aged Care Services and Support Services

A range of services are available to the aged residents of the Weddin LGA. These include community based programs such as:

Home and Community Care (HACC) – Ageing, Disability and Home Care (ADHC) is part of the Department of Family and Community Services. The aim of the Department is to provide better and more integrated services for vulnerable client groups in NSW. The Home Care Service of NSW (Home Care) is a statutory authority administered by this agency. Home care provides services assisting and supporting the frail, aged or disabled to live independently in their own homes. The Grenfell HACC Multi Service Outlet provides services to the Grenfell community. Under the auspice of the Weddin Shire Council. Programs include community and health related transport, food service, carers’ respite, neighbour aid (which incorporate Telelink), a handy person service and social support. They are currently servicing 75 clients with 70% receiving domestic assistance and 30% receiving assistance with personal care and domestic care.

2 Western NSW Medicare Local website




Cowra Home Modifications Service - provides a home modification service to enable aged care clients and clients with disabilities to remain in the community. This is subject to assessment by an Occupational Therapist (OT).

Community Options – provides case management for clients requiring support to maintain independent living.

Weddin Community Transport – provides health related transport services for members of the Weddin community. This service is provided through the HACC Program and run by Weddin Community Transport (WCT). It operates a service for the residents of Weddin for social and health care activities seven days a week. This service is available for people who live in their own homes. The funded target group includes the frail aged, younger persons with a disability and their carers who need support to enable them to live comfortably in their homes for as long as possible. The transport program also gives some assistance to people who are transport isolated or disadvantaged. Assessment is necessary to ensure the applicants are within the funding target group. Staff and volunteers provide these services.

Meals on Wheels - The Weddin Meals on Wheels service is coordinated by Home Care Services, auspiced to Grenfell MPS. One of the local hotels provides nutritional meals to frail, aged people with disabilities and carers within the Grenfell area. The service is available seven days a week with frozen meals also available for collection from the HAC Centre

Weddin Neighbour Aid and Social Support - functions to provide support which enables people to maintain their independence and quality of life, while living at home

Grenfell and District Senior Citizens Welfare Committee

ComPacks- is a case-managed package of care for up to six weeks after discharge from hospital. This service has been established for people who need two or more community services in place to enable them to return home safely. The concept is to case manage community support jointly with a multidisciplinary hospital team, commencing prior to discharge and continuing for a short time after discharge. The aim is to facilitate access to mainstream community services. The service (together with the hospital clinical team) involves:

Community assessment and case management of targeted people being discharged from public hospitals

Rapidly assembling individualised community care packages to meet each person’s assessed clinical and support needs.

There is some flexibility regarding access to packages across the service area, with services allocated according to need. District ComPacks services are provided by Care West. Residential Aged Care Facilities

In addition to the residential aged care beds located in Grenfell MPS, Weddin Shire residents also access aged care facilities in surrounding towns. Currently, (as at October 2014) there are 15 Grenfell residents residing in the following facilities:

Weroona Nursing Home, Cowra (three)

Moyne Nursing Home, Canowindra (four)

Mater Misericordia Nursing Home, Forbes) (two)

Jemalong Nursing Home, Forbes (one)

Bilyara Hostel, Cowra (one)

Mercy Place Mount St Joseph’s, Young (two)




Southern Cross Young Apartments, (two) The reasons for the decision to relocate is multifaceted and include, the lack of an appropriate dementia facility in Grenfell, family convenience, lack of available residential beds at Grenfell MPS at the time of need. and during the time of limited General Practitioner services Grenfell, some residents chose to have their medical needs met by GP services in surrounding towns. Dementia Services

Some dementia services are provided on a per case basis.

Aged Care Assessment Program (ACAP) – is funded under the Commonwealth guidelines to help people and their carers determine the type of care that will best meet their needs when they are no longer able to manage at home without assistance. ACAP provides information on suitable care options and can help arrange access or referral to appropriate residential or community care services such as HACC services. An ACAP assessment and approval is required before people can access residential or community aged care places. The Grenfell MPS is the only provider in the LGA of Weddin. Analysis of Grenfell MPS residential aged care bed occupancy (table 2) indicates a consistently high level over the past three years. In 2011/12 the occupancy rate was 93%, in 2012/13 82.3%, and in 2013/14 93%. There are currently two vacant beds. There are 32 people who have expressed an interest in a future placement, of these 32 17 remain at home supported by their families and community based services. Fifteen are residing at other residential aged care facilities that have also expressed the desire to return to Grenfell to take up a place at the MPS when a bed becomes available.

Table 2: Grenfell MPS Residential Aged Care Occupied Beddays 2011/12 to YTD 2013/14

Source: HIE Prepared by Organisational Performance Management, 8/4/14

There have been no residents that have formally identified themselves as being of Aboriginal and/or Torres Strait islander over the reporting period. However there is known to be an under reporting of cultural heritage.

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2.5.1 Grenfell MPS Aged Care Services Residential Aged Care

The Grenfell MPS is a 42 bed facility. Flexible care subsidy provided by the Commonwealth, have been allocated on the basis of 34 flexible aged care places consisted of 28 flexible high care places and 8 flexible low care places. MPS resident accommodation consists of 28 single and three double rooms (high care section) with ensuites, ample storage, light and ventilation. Residents have access to laundry, sitting room, dining room and quiet room amenities. Pleasant gardens and grounds surround the MPS and a small section of the garden is fenced and suitable for residents with low care dementia needs. The MPS employees an activity officer who is available 28 hours a week they provide a wide range of activities to enhance the lives of residents.

Community Aged Care Services Home Care Packages

On the 1 August 2013, the Australian Government introduced the new Home Care Packages Program to replace the former community and flexible packaged care programs [Community Aged Care Packages (CACPs), Extended Aged Care at Home (EACH) packages, and Extended Aged Care and Home Dementia (EACHD) packages], as part of its Living Longer Living Better reform package. A Home Care Package (HCP) is a coordinated package of services tailored to meet the consumer's specific care needs. The package is coordinated by a home care provider, with funding provided by the Australian Government. There are four levels of HCPs:

Home Care Level 1 – to support people with basic care needs.

Home Care Level 2 – to support people with low level care needs.

Home Care Level 3 – to support people with intermediate care needs.

Home Care Level 4 – to support people with high care needs. A range of services can be provided under a HCP, including care services, support services, clinical services and other services to support a person living at home. The objectives of the HCPs Program are:

To assist people to remain living at home for as long as possible; and

To enable consumers to have choice and flexibility in the way that care and support is provided at home.

Existing consumers receiving CACP, EACH or EACHD packages at the 1 August 2013 continued to receive home care. Existing consumers will not need to be re-assessed by an ACAP. The transitional provisions in the legislation mean that existing consumers receiving a CACP will receive services under a Home Care Level 2 package, those receiving an EACH package will receive services under a Home Care Level 4 package and those receiving an EACHD package will receive services under a Home Care Level 4 package.

The following table shows the HCPs available to residents of Weddin LGA, however it must be noted that these packages are not specific to the residents of Weddin alone, but are also for the residents of the Bathurst, Blayney, Boorowa, Cabonne, Cowra, Forbes, Orange, and Parkes LGAs.




Table 3: Home Care Packages (HCP) available to the residents of Weddin LGA

Approved Provider Name HCP Level 2

(Formerly CACP) HCP Level 4

(Formerly EACH)

Baptist Care Home Services Central West 55 23

Uniting Care Community Care Central West 0 74

Total 129 23 * As at 11/9/14

Since April 2012, all HCPs allocated to MPS facilities within the Western NSW LHD have been centrally managed by the LHD Aged Care Service. This allows for greater flexibility in the allocation of packages through the District, that is packages, although allocated to a particular MPS, can be utilised elsewhere in the LHD if there are no clients awaiting packages in that particular location. Grenfell MPS has six level two home care places, managed by Baptist Care locally. Analysis of current utilisation indicates:

Two packages are vacant awaiting placement

One package is being provided locally

Three packages are being provided to people in other towns

2.6 Palliative and Respite Care

People requiring palliative care are admitted into the acute section of the MPS. A single room is available which has been designed specifically to meet the needs of patients and their families. Respite care for Weddin residents is also available at the Grenfell MPS. The Grenfell MPS provides respite for people with disabilities, dementia and those who are frail aged, when required. There is also a Commonwealth respite program available for people in the community.

Table 4: Palliative Care and Residential Aged Care Respite Care Summary – Grenfell

MPS 2011/12 to 2013/14

Siam clinical group - Palliative Care 2011/12 2012/13 2013/14

Palliative care related overnight

Sum of Separations N/A 1 2

Sum of Bed days N/A 7 64

Residential Aged Care Respite related overnight

Sum of Separations N/A N/A 15

Sum of Bed days 7 263 254

Source: Organisational Performance Management data source HIE

2.7 Community Based Health Services run from the MPS

A range of primary and extended care services are provided to meet local health needs by Grenfell MPS Primary and Community Health Services. These include:

Child and family health

Primary and community health nursing service, including a centre based wound clinic

Occupational therapy

Physiotherapy

Social work

Pathology ( hospital)

Imaging

Weddin day therapy and dietician

Audiometry and health promotion programs




Health promotion and healthy lifestyle activities and programs currently undertaken include:

Healthy Life Style Program targeting people requiring cardio-pulmonary rehabilitation. This Program is provided in six week blocks four (4) times per year

Aqua aerobics for prevention of falls and healthy ageing. These sessions are held twice a week from November through to April

Tai Chi classes are held in six week blocks four times a year for people requiring rehabilitation and to promote healthy ageing

Diabetic education classes are held eight (8) times each year

Domestic Violence Awareness programs consistent with National Campaigns are held once a year

Pole walking sessions for fitness and prevention of falls are held weekly

Heart Moves - a moderate intensity fitness program held twice weekly

A diversional therapy aide provides a wide range of therapy services to the frail aged in the community and in Grenfell MPS

Memory gym - a six week program running one day a week which promotes healthy brain activity ,targeting the elderly

Maxi Kids’ - a joint program with Western Medicare Local for children between the ages of three and seven, a maximum of four children per session over six weeks with a focus on children reaching general developmental milestones

The hours of operation for Community Health are Monday to Friday from 8.30am to 5pm. 2.6.1 Visiting Specialist Health Service

Outreach services to Grenfell include:

Generalist mental health

Sexual assault councillor

Psychology

Drug and alcohol worker

Womens’ health

Palliative care nurse

ACAP

A community pharmacy is located in Grenfell. The closest dental practice is located in Cowra. The closest Aboriginal Health Services are located in the towns of Peak Hill and Condobolin.

2.6.2 Outpatients Services

Grenfell MPS currently provides a range of outpatient services. These include pathology collection services, electrocardiograph (ECG) recordings, administration of intravenous antibiotics, plaster removal, and an afterhours wound clinic to cater for those individuals who are unable to attend the clinic offered by community health staff during office hours. Currently the MPS is expanding its ambulatory care focus which will see an increase in the number and type of conditions that can be managed in the ambulatory care setting.




2.8 New health services introduced since last Funding Agreement

Recognising that falls are a major recurring issue for the residents, Grenfell MPS staff and clients developed a quality project aimed at reducing falls and minimising falls risks. The project, called ‘Little Changes make Big Impact’ was entered into the 2012 Western NSW Local Health District Quality Awards and won the ‘Keeping People Healthy to Avoid Unnecessary Hospitalisation’ category. This project is continuing. Data demonstrates an improvement from 82 recorded falls in 2011-2012 to 39 recorded falls in 2012-2013. This improvement in fall rates has been maintained. Another clinical innovation has been the participation in the District’s smaller hospitals ‘Grand Rounds’ project. This project provides the opportunity for nursing staff to present and participate in peer review education sessions that are video conferenced around smaller hospitals across the District. Additional education opportunities for all staff have been provided by the Mobile Simulation Van which visits health services across the District on a rotating roster throughout the year. This custom built, mobile training classroom allows staff to practise in safe but ‘real life’ situations on computerised mannequins, learning how to communicate effectively and make timely and accurate decisions in stressful situations. A partnership with the Orange Trauma team commenced at the beginning of 2012/13, with an invitation from the Orange Trauma team to participate in their monthly meetings via videoconference. This meeting reviews trauma cases that have presented to Orange Health Service Emergency Department. These cases have often included Grenfell patients, so this is an excellent learning opportunity and allows the staff of the Grenfell MPS to follow the patient’s journey and see the outcome of the treatments that started at Grenfell.

2.9 Role of Volunteers and Carers

The Grenfell MPS Hospital Auxiliary is very active within the Health Service and community. They proudly hold the title of the oldest organisation in Grenfell presenting their very first Annual Report in 1931. Each year the Auxiliary provide on average of over $4,000 worth of equipment and furnishing, including in 2012/13 new trolleys for the kitchen, blinds to reduce heat in one of the hallways in summer, a salon quality hairdryer and outdoor setting and gardening supplies for the resident’s raised flower beds. Aside from street stalls, the Auxiliary run a ‘shop’ trolley for the residents every second week, a service greatly appreciated by the residents who look forward to these fortnightly visits. The best sellers are chocolate and lollies. The Auxiliary meets on the third Wednesday of even months at 2pm in the Day Care room of the MPS.

2.10 Staff accommodation

Staff accommodation is available in a self contained, two bedroom, demountable building on the grounds of Grenfell MPS, near Community Health. This provides accommodation for locum VMOs, agency staff and overnight accommodation for staff that live out of town. It is considered a very valuable resource and is well utilised.

3. Changing Community Needs

3.1 Population, Population Projections

In the 2011 Census, there were 3665 people in Weddin LGA. Of these 50.8% were male and 49.2% were female, Aboriginal and Torres Strait Islander people made up 1.5% of the population.




Table 5: People — demographics (based on Usual Place of Residence)

Weddin LGA % New South Wales %

Total peoples 3,665 -- 6,917,658 --

Total Males 1,860 50.8 3,408,878 49.3

Total Females 1,805 49.2 3,508,780 50.7

Total Aboriginal peoples 67 1.8 172,621 2.5

0-4 years 226 6.2 458,736 6.6

5-9 years 220 6.0 434,608 6.3

10-14 years 239 6.5 439,168 6.3

15-19 years 204 5.6 443,416 6.4

20-24 years 123 3.4 449,685 6.5

25-29 years 123 3.4 473,160 6.8

30-34 years 165 4.5 468,336 6.8

35-39 years 185 5.0 488,124 7.1

40-44 years 212 5.8 483,502 7.0

45-49 years 253 6.9 481,428 7.0

50-54 years 266 7.3 469,024 6.8

55-59 years 274 7.5 419,612 6.1

60-64 years 307 8.4 390,678 5.6

65-69 years 271 7.4 304,327 4.4

70-74 years 216 5.9 237,362 3.4

75-79 years 150 4.1 186,032 2.7

80-84 years 135 3.7 150,724 2.2

85 years + 98 2.7 139,735 2.0

Median age 47 -- 38 --

Source: Australian Bureau of Statistics, 2011 Census data

The 2011 census indicates that the median age of people in Weddin LGA) was 47 years. Children aged 0 - 14 years made up 18.7% of the population and people aged 70 years and over made up 16.4% of the population.

Table 6: People characteristics - Aboriginal and Torres Strait Islander

Weddin % NSW % Australia %

Total Aboriginal and Torres Strait Islander peoples

72 -- 172,620 -- 548,368 --

Aboriginal Males 39 54.1 85,080 49.3 270,331 49.3

Aboriginal Females 33 45.9 87,540 50.7 278,037 50.7

Median age 37 -- 21 -- 21 --

Source: Australian Bureau of Statistics, 2011 Census data

For the 2011 Census in Weddin LGA, there were 72 Aboriginal and Torres Strait Islander people. Of these, 39 (or 54.1) were male and 33 (or 45.9%) were female. The median age was 37 years.




Table 7: Population Projections Weddin LGA (Estimated Resident Population ERP) Age 2011 ERP 2016 2021 2026 2031

0-4 218 216 211 204 192

5-9 218 223 219 214 206

10-14 240 208 212 206 200

15-19 204 198 173 173 165

20-24 139 149 137 119 117

25-29 136 158 158 144 130

30-34 175 156 170 164 150

35-39 189 177 166 175 166

40-44 219 192 180 173 179

45-49 261 214 189 177 173

50-54 265 250 209 186 175

55-59 286 257 241 205 184

60-64 315 270 247 232 200

65-69 275 289 251 232 219

70-74 226 245 260 229 213

75-79 154 191 210 225 201

80-84 135 119 149 167 182

85+ 104 133 138 160 188

Grand Total 3,759 3,644 3,518 3,385 3,238

Source: NSW Department of Planning and Environment (28 May 2014).

According to the projections, the population of the Weddin LGA is projected to decline from the 2011 baseline by 3.1% in 2016, 6.4% in 2021, 9.9% in 2026 and by 13.9% in 2031 (see table 7). Projected population trends over the period 2011–2031 indicate the following:

The overall population of the Weddin LGA area will continue to decrease

The number of persons aged 0 – 19 years will decrease from 880 (23.4%) of total Weddin LGA population in 2011 to 763 (23.6%) of total Weddin LGA projected population in 2031, which is a decrease of 13.3%

The number of persons aged 20 - 49 years will decrease from 1,119 (29.8%) of total Weddin LGA population in 2011 to 914 (28.2%) of total Weddin LGA projected population in 2031, which is a decrease of 18.3%

The number of persons aged 50 - 69 years will decrease from 1,141 (30.4%) of total Weddin LGA population in 2011 to 778 (24%) of total Weddin LGA projected population in 2031, which is a decrease of 31.8%

The number of persons aged 70 years and over will increase from 619 (16.5%) of total Weddin LGA population in 2011 to 783 (24.2)% of total Weddin LGA projected population in 2031, which is an increase of 26.5%.

The current population profile and the predicted population profile support the current service configuration.




3.2 Overview of Trends and Emerging Health Needs of the Population

The NSW Chief Health Officers reported on a number of health indicators by LGA in The general status of the area is characterised with Socio-Economic Indexes for Areas (SEIFA). These indexes allow comparison of the social and economic conditions across Australia. Compared with a SEIFA of 1,000 for Australia, Weddin LGA has significantly lower scores, namely:

Index of Relative Socio-Economic Advantage & Disadvantage – 939

Index of Relative Socio-Economic Disadvantage – 945

Index of Economic Resources – 971

Index of Education and Occupation - 9753 The report identifies a number of conditions which attribute to hospitalisations in smoothed Standardised Separation Ratio (sSSR). This indicator can be interpreted as a “relative risk”. Compared to the NSW average, which is 100. Weddin LGA has a rate slightly higher than the NSW Average for high body mass attributable hospitalisations (135.7) and falls related injury hospitalisations is neither significantly higher nor lower than the State at (92). The LGA has higher than state rates for smoking attributable hospitalisations (104.8), alcohol attributable hospitalisations (114.5), and ambulatory care sensitive conditions hospitalisations (107.8). This indicates a need for health promotion activities and community based services to prevent avoidable hospital admissions. At the 2011 ABS Census, 1.5% of the Grenfell State Suburb residents identified themselves as being of Aboriginal descent. Analysis of the age of this population group indicates that it is a young population with the median age being 37 years. Whilst the proportion of the population identifying as of aboriginal descent is small the relative socio-economic disadvantage experienced by Aboriginal people in NSW continues to place them at greater risk of exposure to behavioural and environmental health risk factors. Aboriginal people generally have poorer health than the than the rest of the population. The Aboriginal population experience a higher infant mortality, lower life expectancy, higher rates of chronic disease risk factors, higher prevalence and earlier onset of chronic illnesses (in particular respiratory illness, diabetes and renal disease), higher rates of hospitalisations and deaths from injuries and assaults and higher rates of sexually transmitted diseases.

Aboriginal people are more than three times as likely as non-Aboriginal people to die as a result of diabetes and more than one and a half times more likely to die from injury and poisoning than non-Aboriginal people. Aboriginal people are admitted to hospital at about 1.7 times the rate of non-Aboriginal people and renal dialysis accounts for the largest number of hospitalisations for Aboriginal people. Compared with rates for non-Aboriginal people, hospitalisation for Aboriginal people in NSW are 200% higher for diabetes, 70% higher for cardiovascular disease, and 100% higher for respiratory disease and 60% higher for injury and poisoning.

Reported rates of current smoking for Aboriginal adults are around double those of the general population across all age groups. Reported rates of risk drinking are around 1.4 times the general population rates across all age groups4.

3 Australian Bureau of Statistics, 2033.0.55.001 Socio-economic Indexes for Areas (SEIFA), Data Cube only, 2011,

released 18 July 2013 4 NSW Health, The health of the people of NSW – Report of the Chief Health Officer. Summary Report, 2010




Table 8: Weddin LGA Avoidable Admissions for 4 targeted Diagnostic Related Groups (DRGs), Total Demand (number of separations)

Target DRG Description 2010/11 2011/12 2012/13

E65B Chronic Obstructive Airways Disease W/O Catastrophic CC 8 20 25

E62C Respiratory Infections/Inflammations W/O CC 9 16 14

J64B Cellulitis W/O Catastrophic or Severe CC 8 10 6

F63B Venous Thrombosis W/O Catastrophic or Severe CC 4 3 0

Grand Total 29 49 45 Demand = Locals + Outflows Source: FlowInfo V13 excludes Renal Dialysis, Chemotherapy and Unqualified Neonates

The above data demonstrates that chronic disease management presents a challenge for health care providers. Whilst it is acknowledged that chronic disease management is not just a primary health care agenda, for Grenfell MPS and their primary health care partners chronic disease management is a major driver of health care provision. Interventions aimed at managing and preventing chronic disease will provide a real opportunity to improve the health and well being of the Weddin community. Of the four targeted DRGs for avoidable admissions it can be seen that respiratory conditions account for the majority of separations. This is commensurate with the reported smoking rates

3.3 Trends and Emerging Aged Care Needs of the Population

Table 9 provides an estimate of the requirements for residential and community aged care places for Weddin LGA to 2021. This is based on the Commonwealth benchmark of 44 high care places per 1,000 population 70 years and older, 44 low care places per 1,000 population 70 years and over and 25 HCPs per 1,000 population 70 years and older. It should be noted that benchmarks are based on applications to larger geographical areas and are not accurate when used for specific LGAs as additional aged care beds may be located in neighbouring LGAs. The Aboriginal population aged 50-69 years has been included in the table. Projections are calculated on projected population growth rates for the same age groups in the Weddin LGA. The limitations in this modelling are noted and it is recognised that the actual population change may be less than that indicated. Table 9: Weddin LGA Aged Care Service Requirements to 2021

2011 Census data

2016 Population Projected

2021 Population Projected

Aboriginal Population 50 years but <70 years (PUR)

15 26 29

Population 70 years (ERP) 619 688 757

Total Target Population 634 714 786

Residential High Care Places (estimate)

28 31 36

Residential Low Care Places (estimate)

28 31 36

HCPs (estimate) 16 18 20 Source: ABS, 2011 Census of Population and Housing Source: Centre for Epidemiology and Evidence. Health Statistics New South Wales. Sydney: NSW Ministry of Health. Available at: www.healthstats.nsw.gov.au. Accessed 25/02/14.

The current allocation of high care residential places at Grenfell MPS (26) is commensurate with that required under the Commonwealth formula. The current allocation of low care




residential places (8) is also less than that required under the formula, with an additional 20 places required. The formula also indicates a current requirement for 16 HCPs. In 2021, the need for additional residential places in addition to the current allocations is

projected to be eight (8) high care residential and twenty eight (28) low care places. This

however assumes that the population will continue to change at the same rate as projected. Residents of Weddin will require access to 20 HCPs.

Table 10: Weddin LGA Separations by Service Related Group - 70 Years and Over

(Locals + Inflows)

SRG 2010/11 2011/12 2012/13

23 Renal Dialysis 142 154 150

11 Cardiology 44 41 61

49 Orthopaedics 37 39 43

50 Ophthalmology 37 47 43

24 Respiratory Medicine 28 44 36

27 Non Subspecialty Medicine 25 30 35

84 Rehabilitation 20 26 32

15 Gastroenterology 27 37 31

16 Diagnostic GI Endoscopy 32 32 31

52 Urology 28 18 31

21 Neurology 17 16 27

12 Interventional Cardiology 11 18 25

54 Non Subspecialty Surgery 26 26 22

51 Plastic and Reconstructive Surgery 10 15 15

Other 76 80 90

Grand Total 560 623 672 Source: FlowInfo V13 excludes Renal Dialysis, Chemotherapy and Unqualified Neonates

Acute care admissions in the over 70 years of age group for Weddin LGA have increased over the last three years, with an SRG profile commensurate with the age group. 3.4 ACAP Data and Waiting List Information

2.6.3 Waiting List for Residential Aged Care Services Currently Grenfell MPS has 32 people waiting residential aged care placement (assessed as ready for care). Table 11 provides a summary of the number of people in Grenfell MPS catchment area recommended by ACAP for residential aged care from 2010/111 to 2013/14. Whilst technically people seeking placement in a MPS residential aged care bed are not required to have under gone an ACAP assessment; it is the policy of the Western NSW LHD that ACAP recommendation and approval process must be completed prior to placement.




Table11: Total ACAP Summary Recommendations for Residential Aged Care – Grenfell MPS 2010/11 to 2013/14

2010/11 2011/12 2012/13 2013/14

Private residence 23 22 25 29

Residential aged care service-low level care 17 15 10 10

Residential aged care service-high level care 10 9 12 7 Total Assessments 52 55 47 57

Source: Western NSWLHD - ACAP

Table 12: ACAP Summary Recommendations for Residential Aged Care Individual Classified with a Dementia Condition – Grenfell MPS 2010/11 to 2013/14

Grenfell 2010/11 2011/12 2012/13 2013/14

Referrals with a dementia condition 4 3 3 0

Residential aged care service-low level care with a dementia condition

1 1 1 0

Residential aged care service-high level care with a dementia condition

2 0 2 0

Referrals with a Amnesia (memory disturbance, lack or loss)

15 14

Total Assessments 52 55 47 57

Source: Western NSWLHD - ACAP

Table 13: ACAP Summary Recommendations for Community Aged Care – Grenfell MPS 2010/11 to 2013/14

Grenfell 2010/11 2011/12 2012/13 2013/14

Total Assessment

CACP (Level 2) 3 6 3 11

EACH & EACHD (Level 4) 4 3 2 5

HACC 5 12 9 8

Veterans Home Care 1 1 1 0

National Carer Respite Centre Program (respite approvals)

9 3 1 6

Transition Care 0 1 0 3

Total ACAP Assessments 52 55 47 57 Source: Western NSWLHD - ACAP

The Weddin Health Council has expressed concern that there is an unmet need for dementia specific services and so an analysis of separations of Weddin residents from health facilities with a dementia related DRG from between 2009/09 and 2010/11 was undertaken. Whilst the numbers of separations are static, the length of beddays is highly variable, and clearly demonstrates for some patients the diagnosis of a dementia condition can greatly extend length of stay.

Table 14: All Separations All Residents All Facilities With Dementia related DGR 2008/09-2012/13

DRGs 2008/09 2009/10 2010/11 11/12 12/13

Sum of Separations

Cowra 1

2 3

Forbes

1 1




DRGs 2008/09 2009/10 2010/11 11/12 12/13

Grenfell 1 1

1

Mercy Young

1

1

Orange 1

1

Wagga Wagga(Coll. Care)

1

1

Sum of Bed days(LOS days)

Cowra 7

10 13

Forbes

25 25

Grenfell 5 22

22

Mercy Young

30

30

Orange 10

102

Wagga Wagga(Coll. Care)

9

9

Total Sum of Separations 3 3 3 0 8

Total Sum of Bed days(LOS days) 22 61 35 0 201

Source: FlowInfo V13

3.5 Community Consultation

As part of the strategic planning process, the Western NSW LHD sought community input into identifying health concerns and needs of their community and suggestions on how they may be addressed. The Weddin HAC played an active role in this consultation process. The consultation period occurred April – June 2012. Community Input Forums were held at six (6) key geographic locations across the LHD – Bathurst, Dubbo, Nyngan, Orange, Parkes and Walgett.

The forums were facilitated by either the Chief Executive or Director of Operations. For community members unable to attend the forums but still wished to participate. A survey form was developed which could be accessed either online through Survey Monkey via a link placed on the LHD internet site or accessed as a paper based copy made available at the Local Health Service.

Three key questions where posed for the communities to focus their responses around:

Major issues affecting the health and well being of your communities

Gaps in services provided to their community

Priorities to improve the health and well being of the people in their community.

Forum and survey responses were collated and themed, and the following priorities for action were identified:

1. Visiting Medical Officer recruitment 2. Health Promotion 3. Transport 4. Drug and Alcohol Services 5. Aged Care Services 6. Mental Health Services

The most significant health related concerns regarding Grenfell raised at the community forums in 2012 were:

VMO Recruitment

The need for more services e.g. Physiotherapist, Palliative Care




More information on what is available for the aged

Consultation, feedback and communication with the Grenfell community also occur via the following mechanisms:

Quarterly meetings with residents and their personal carers

Monthly meetings of the Weddin Health Advisory Council

Annual Have Your Say Survey – to assist in determining community priorities

3.6 Needs and priorities identified by the community

The health related concerns raised during the District community consultation in 2012 remain current issues with the addition of the need for a greater number of residential aged care places. A key area of focus for the Weddin HAC is to work in partnership with the Weddin Shire Council and Western MCL to develop additional medical and health services for the community. Staff have identified potential future gaps in chronic care services with the uncertain future of services currently provided by Western NSW ML. Of specific concern are physiotherapy, social work and counselling services. There are no other providers of these services locally. Of equal concern is the need for services for the three to ten year age cohort with increasing demand being experienced by local staff, notably occupational therapy and speech therapy.

4. Proposed New Services and Configuration

4.1 Proposed Service Configuration

It is proposed to retain the current Grenfell MPS service profile.

4.2 Service Gaps

Prior to European settlement Grenfell was home to the Wirajuri people. Gold was discovered in 1866 by 1870 Grenfell was producing more gold than any other NSW town. By the mid 1870 gold was in decline and the growing of wheat as a major industry took over.

As a community now predominantly reliant on agriculture the town of Grenfell faces considerable economic development challenges with the town losing population and economic activity. Traditionally, rural communities have relied on the farm sector for their economic well-being. But since the 1970s (at least), the farm sector has changed dramatically. Increased mechanisation for example has led to a need for a reduction in workforce. In addition to such adjustment stresses, farmers have also had to contend with major droughts, inconsistent and declining commodity prices, a cost-price squeeze and increased farm debt. Farm profitability for many has declined, and a lot of farm businesses are now supplemented by off-farm income. A majority have sold out to move closer to services such as education.

The consequences for rural communities have been equally stark. The need for fewer farm workers has led to out-migration, the nature of the services provided to farms by the communities has changed and their level diminished. For example, recruitment and retention of health care staff remains a challenge for the health service. The District remains committed to providing services to the Weddin LGA.

Areas where health service interventions are likely to provide the greatest population outcome gains are:

Smoking prevention and cessation




Nutrition and physical activity interventions, including obesity prevention

Diabetes prevention and management

Well child care during the first 1000 days of life, particularly for Aboriginal children

Mental health, through increased community care and support

Falls prevention strategies

4.3 New Health Services Proposed for Introduction

The District is currently undertaking a review of allied health services, discipline by discipline. The review aims to assess the current distribution of services throughout the District, to identify where service realignment may be necessary to better meet the needs of its communities as outlined in the 2013 Health Needs assessment and the Districts Strategic Health Services Plan. An area of specific concern is that of paediatric oral health care.

4.4 Role Delineation Proposed For Next Three Years

There are no proposed changes to the current role delineation of services provided by the Grenfell MPS.

Table 15: Role Delineation – Grenfell MPS

Service Level Service Level

Clinical Support Services Surgery

Pathology 1 Orthopaedics 1

Pharmacy 2 Plastic Surgery 1

Diagnostic Imaging 2 Urology 1

Nuclear Medicine 0 Vascular Surgery 1

Anaesthetics 1 Maternal and Child Health

Intensive Care 0 Maternity 0

Coronary Care 1 Neonatal 0

Operating Suites 0 Paediatric Medicine 0

Core Services Paediatric Surgery 0

Emergency Medicine 1 Family & Child Health 2

Medicine Integrated Community & Hospital Services

General Medicine 1 Adolescent Health 2

Cardiology 1 Adult Mental Health (Inpatient) 0

Dermatology 1 Adult Mental Health (Community Care) 1

Endocrinology 1 Child/Adolescent Mental Health (Inpatient) 0

Gastroenterology 1 Child/Adolescent Mental Health (Community Care)

1

Haematology – clinical 1 Older Adult Mental Health (Inpatient) 1

HIV/AIDS 1 Older Adult Mental Health (Community Care)

1

Immunology 1 Child Protection Services (PANOC Services)

1

Infectious diseases 1 Drug & Alcohol Services 1

Medical oncology 1 Geriatrics 0

Neurology 1 Health Promotion 2

Radiation oncology 0 Palliative Care 2

Renal medicine 1 Rehabilitation 0

Respiratory medicine 1 Sexual Assault Service 1

Rheumatology 1 Community Based Health Services

Surgery Aboriginal Health 0

General Surgery 1 Community Health General 3

Burns 2 Community Nursing 2




Service Level Service Level

Thoracic / Cardiothoracic 1 Genetics 0

Day Surgery 0 Multicultural Health 1

Ear, Nose & Throat 1 Oral Health 0

Gynaecology 1 Sexual Health 1

Neurosurgery 1 Women's Health 2

Ophthalmology 0

4.5 Proposed Residential Aged Care Places (for next three years)

The current allocation of residential aged care places at Grenfell MPS is working at capacity, the average occupancy being 93%, with 32 currently on the waiting list. Of these 32 people fifteen are currently residing in nursing homes out of Grenfell and have expressed a desire to return when a bed becomes available

The current allocation of residential aged care places does not currently meet the Commonwealth bench mark and this deficit is predicted to continue to increase. By 2021 an additional eight high care, and 28 low care places will be required to meet the current Commonwealth bench mark.

Acute care bed occupancy has been historically low due to the lack of medical staff. Since the successful recruitment of a permanent VMO the occupancy rates has steadily risen and it is not envisaged that there will be spare acute care bed capacity to convert to residential aged care accommodation. Significant capital work funds would be required to build additional capacity. It is therefore proposed to retain the current residential aged care places until such time as capital funds become available.

4.6 Proposed Home Care Packages (for next three years)

Current utilisation of the six Community Aged Care packages does not indicate a need to increase these packages not withstanding that the current allocation is below the Commonwealth benchmark of sixteen.

The Western NSW LHD currently across the District has 50 level two packages and 10 level 4 packages which are funded by the Department of Social Services through the MPS facilities; these are classed as “flexible funding”.

In the past a number of these packages were at times underutilized due to the lack of service providers in some towns. As a consequence, the LHD requested more flexibility across the LHD for those packages; i.e. packages; although allocated to a particular MPS could be utilised elsewhere in the LHD if there were no clients awaiting packages in that particular area and the need arose.

Permission was received from The Commonwealth in April 2012 to allow the above to occur.

Packages are now centrally managed through the LHD Aged Care Service and there is a central waiting list for these packages.

It should be noted at this stage that there is a marked lack of available level 4 packages with a growing number of clients being assessed as eligible for those services, and the demand for these services will be closely monitored

It is recommended that the number of community packages for Grenfell MPS is retained, and that they continue to be centrally managed by the LHD Aged Care Service. However by 2021the residents of Weddin are predicted to require access to 20 HCPs




4.7 Grenfell MPS Proposed Operating Budget

PROPOSED OPERATING BUDGET Annual Budget Budget Over 3 Yrs

INCOME:

State's Contribution $3,267,895 $9,803,685

Commonwealth's Contribution $622,944 $1,868,832

Commonwealth/State Contribution (eg HACC) $0 $0

Revenue from aged care resident's fees etc $1,791,124 $5,373,372

TOTAL INCOME $5,681,963 $17,045,889

EXPENDITURE:

Total Salaries/Oncosts Expenditure $4,149,112 $12,447,336

Total Non Salary Expenditure $1,532,851 $4,598,553

TOTAL EXPENDITURE $5,681,963 $17,045,889

*Based on Recurrent Budget as at 31 Aug 2014

**Client Charges based on rates per Information Bulletin IB2014_016 as at 20 Mar 2014

5. Summary

The discussions with primary health care providers will provide opportunities to continue to build the capacity of primary health care to reduce the demand on acute services and increase the co-ordination and integration of chronic and aged care services. The recently launched Western NSW District Strategic Health Services Plan 2013/14 - 2015/16 identifies a number of priorities, for example Priority 1: Develop a coherent Western NSW system of care which will likely further enhance services provided to Shire residents and Priority 2: Support high performing primary health care. The Commonwealth benchmark indicates that additional high-care and low-care aged care places required by 2021 would be well utilised by Weddin residents. However, capital funds are required to increase the existing footprint of the Grenfell MPS. Strategies to allow ageing at home should be supported. Therefore, it is recommended that:

1. The current configuration of high-care residential aged care places at Grenfell MPS (28) be retained

2. The current configuration of low-care residential aged care places at Grenfell MPS (eight) be retained

3. The respite subsidy be retained

4. Six Home Care level 2 packages continue to be allocated to Grenfell MPS, for management by the Western NSW LHD Aged Care Service

Occupancy rates and the numbers of people on the waiting list will be monitored to assess the need to make further recommendations.




6. Appendices

6.1. Grenfell MPS Floor Plan


71

Attachment Two

Peer Reviewed Cost Benefit Analysis Hill PDA

Stephen Sykes Weddin Shire Council

Email:[email protected]] .

27 July 2015

Dear Stephen

Subject: Grenfell Medical Centre - Economic Appraisal

We have prepared an economic appraisal of the proposed Grenfell

medical centre. This letter describes the methodology of the

appraisal, the assumptions adopted and the key findings.

Please note that this letter is not a full economic appraisal. A full

economic appraisal requires a statement of project objectives and

some assessment on unquantified impacts and on risks and

uncertainties.

Methodology

The methodology selected for the economic appraisal is Cost Benefit

Analysis (CBA), generally in accordance with NSW Treasury Guidelines

2007. Similar to financial appraisals, CBA utilises the Discounted Cash

Flow (DCF) method for determining the net present value of the

options. However, an economic appraisal differs from a financial

appraisal in that it measures the costs and benefits to the whole of

the community (both financial and non-financial), and not just the

costs and revenues to the financial sponsor.

In order to compare the likely costs and benefits of the options, a

bespoke CBA model in MS Excel was prepared. This model is a

modification of the model that you originally forwarded to us. The

model incorporates all of the quantified costs and benefits for each

year of the project life against the base case or “do nothing” option.

The resulting costs have been subtracted from the total benefits to

identify the net impacts. These impacts have then been discounted to

2015 dollars and summarised as a Net Present Value (NPV).

The Base Case selected was the ‘Do Nothing’ or business-as-usual

option. This is the case or scenario that the preferred option is

measured against. A positive NPV for any option implies a net

economic gain over the Base Case while a negative NPV implies net

economic loss compared to the Base Case. The scenario with the

highest NPV is considered to provide the highest net benefit to NSW

economy (measured in absolute 2015 dollar terms).

Ref: Grenfell Medical Centre Cost Benefit Analysis C16025 Draft HillPDA Page 2 | 4

Project Options

The Base Case

This is the Base Case by which the preferred option is measured

against. In the case of the proposal, the Base Case is the “do nothing”

or “no up-grade option”.

The Preferred Option

The preferred option is the construction and operation of a new

medical centre in Grenfell at a capital cost of $2.5m.

Parameters

The Standing (the economy being measured) = the Shire of

Weddin

Project Commencement = 2015-16 financial year;

Project Life = 20 years but with a terminal value at Year 20;

Discount Rate = 7% plus sensitivity testing at 4% and 10%.

Benefits

Benefits of the preferred project option, as measured against the

base case, may include direct benefits (being benefits to users) and

indirect or external benefits (being benefits to other parties or

sectors of the economy). Benefits can be also quantifiable (some

non-financial benefits are quantifiable) and non-quantifiable (or

difficult to quantify). Below is a description of the benefits identified,

organised by those quantified and those not quantified.

Industry Value Added

The largest benefit of the preferred option is the Industry Value

Added (IVA). This refers to the market value of goods and services

produced by an industry minus the cost of goods and services used in

the production process, which leaves the gross product of the

industry. The components include compensation of workers, net

taxes on production and imports and gross operating surplus. IVA

may be referred to as the contribution made to the local economy or

GDP.

In the case of the preferred option it is assumed that by 2018-19 the

medical centre will have a staff of 2 full time general practitioners

(GPs), two administrators and one dentist. Based on the staffing


levels the IVA was estimated at $660,485 per annum using data

sourced from IBIS World industry reports 2015.

It was assumed that half this level of staff will be working in the first

year of operation being 2017-18.

Travel Time Savings

The next largest benefit is the travel cost savings. In the base case

Weddin residents will need to travel to other towns such as Cowra

and Orange for medical services. The preferred option will arrest

some of this escape expenditure.

Grenfell has a catchment area of around 4,165 people (population of

Weddin plus 500 surrounding residents). Based on 4.6 visits to the

doctor per person per annum1 and assuming one trip to the dentist

and a 50% capture rate, we estimate the preferred option would

reduce the amount of trips to other towns by 11,662 each year.

Assumptions in travel costs include the following:

Distance to Cowra (alternative town) = 55km;

Time to Cowra = 50 minutes;

Opportunity cost of travel time = $27.14 per vehicle per hour2;

Assuming half of the GP and dentist visits are redirected from Cowra

to Grenfell then the annual travel time savings amount to $263,756

per annum.

Vehicle Operating Cost Savings

Vehicle operating cost = $0.16/km3 annual vehicle operating cost

savings amount to just over $101,471

Accident Cost Savings

The weighted average cost of accidents = $.059/km4. Total accident

cost savings to per annum is estimated at $37,781.

Terminal Value

Terminal value is included at the end of the project life (20 years) and

is calculated as the preceding year’s net benefit capitalised at 12.0%.

1 http://theconversation.com/factcheck-does-the-average-australian-go-to-the-doctor-11-times-a-year-26242 2 RMS Economic Parameters 3 Ibid 4 RTA Rural road crash rates by road stereotype Tech Manual 22 April 2004 (escalated to 2015 dollars)


Costs

Capital Costs

Capital costs were sourced from Council and assumed at $2.5m to be

spent in Year 2016-17.

Recurrent Costs

Recurrent costs include maintenance at $30,000 per annum and net

operational costs at $24,350 per annum sourced from Council.

Economic Performance

Overall the performance of the preferred option in the Weddin

economy is very strong with an NPV of $9.1m and a benefit cost ratio

(BCR) of 4.2 at a discount rate of 7%. The IRR is 35% and the BCR

remains above three to one at a 10% discount rate as shown in the

table below.

Discount Rate

4.0% 7.0% 10.0% 35.1%

NPV ($m) $13.7 $9.1 $6.2 $0.0

BCR 5.43 4.19 3.31 1.00

NPV/$ $0.00 $0.00 $0.00 $0.00

Feel free to call me if I can be of further assistance.

Sincerely

Adrian Hack BTP (Hons), MLE, MPIA

Principal, HillPDA


76

Attachment Three

Weddin Council Long Term Financial Plan



LONG TERM FINANCIAL PLAN

2016 - 2025


LONG TERM FINANCIAL PLAN Page 3 Update: 19 Jan 2015

1 Executive Summary

1.1 Introduction The Long Term Financial Plan (LTFP) is one of three components of the Resourcing Strategy under the NSW Integrated Planning and Reporting framework (IP&R), and is an important part of Council’s strategic planning process. The LTFP is the document that tests long-term community aspirations and goals against financial realities.

Weddin Shire Council’s LTFP details Council’s expected income, recurrent and capital expenditure, and the external environment that Council is expected to face in the coming ten years. The LTFP is in effect Council’s financial road map for the ten year period commencing with the 2015/16 financial year. This long term financial plan provides a framework in which the Weddin Shire Council can assess its revenue building capacity to meet the activities and level of services outlined in the Community Strategic Plan. The plan has identified key financial issues and provides a means of ensuring that the Council can remain financially sustainable in the longer term. Weddin Shire is a well-connected region within the Central West of New South Wales. With excellent connections to regional centres such as Forbes and Cowra, and within 2 hours of Orange, Canberra, Wagga Wagga and Dubbo, Weddin Shire combines the benefits of a rural location with proximity to a wide variety of regional centres.

The service Centre of Grenfell, at the heart of the region, has experienced significant growth over the last few years, attracting professionals seeking a high quality, low stress lifestyle. There is a strong sense of community in Weddin Shire. While Weddin Shire’s economy is focused around agriculture, which makes up 37% of the economy, other important sectors include education, public administration, transport and warehousing and healthcare. The Council is custodian of $152 million of community built and natural assets and a key aspect of the financial plan is the development of strategies to ensure appropriate and affordable funding of maintenance and renewal of these assets over the next ten years.



1.2 Background to the Long Term Financial Plan Weddin Shire’s agriculturally-based economy is comprised of many family-owned farms specialising in grain and lamb production. While agricultural activity underpins the region’s economy, there has been recent growth in the heritage tourism and the professional business sectors. The most recent Census data (2011) estimates a population of 3665 that roughly equates to the 2006 data when the population of the Shire was 3,797. Males represent 50.7% of the population. Recently, the end of the drought has brought a return to some semblance of a healthy economy for the local rural producers.

The 2011 census indicates that there are 1832 private dwellings and 1045 families in the Shire.

Integrated Planning & Reporting (IP&R) Under the IP&R framework councils are required to draw together the various plans (that is the Community Strategic Plan, LTFP, Asset Management Plans and Workforce Plan) to understand how these interact and ensure maximum leverage by planning holistically for the future. The Community Strategic Plan provides a vehicle for expressing long term community aspirations. However these aspirations can only be achieved if sufficient resources - time, money, assets and people – are allocated.

Includes:

Long Term Financial Plan

Asset Management Strategy/Plans

Workforce Strategy



The Shire’s 2012 – 2023 Community Strategic Plan expresses the community’s priorities and aspirations for the future and presents the vision, objectives and strategies for achieving a more sustainable Shire. The Council and the community worked together in the development of this plan that has six interlinked key focus areas:

1. Strong, Diverse & Resilient Local Economy 2. Healthy, Safe, And Educated Community 3. Democratic And Engaged Community 4. Culturally Rich, Vibrant And Inclusive Community 5. Cared For Natural, Agricultural & Built Environments 6. Well Maintained & Improving Shire Assets And Services

The Community Strategic Plan was reviewed in 2013 as required by the Integrated Planning & Reporting legislation, with the determination that all assumptions were still valid. Delivery Program & Operational Plan Through the Delivery Program the Council outlines how the objectives of the Community Strategic Plan will be implemented through projects and services during the term of office of Council. The implementation will be within the resources identified in the accompanying Resourcing Strategy. Resourcing Strategy The Resourcing Strategy that underpins the community strategic plan consists of three components:

1. long term financial planning, 2. asset management planning and 3. Workforce planning.

The Resourcing Strategy is the critical link between the community strategic plan and the Delivery Program. Each component of the Resourcing Strategy is crucial to achieving the goals and objectives of the strategic plan. The Resourcing Strategy is reviewed each year in line with preparation of the annual Operational Plan. It details the provision of resources required to implement strategies for which Council is responsible. Long Term Financial Plan The Long Term Financial Plan (LTFP) is a decision making tool. It is governed by a series of financial strategies and accompanying performance indicators that Council considers and adopts. The LTFP is not intended to be a document that specifically indicates what services/proposals funds should be allocated; rather it addresses the impact of the Council’s ability to fund its services and capital works, whilst living within its means i.e. achieving financial sustainability. It establishes the financial framework upon which sound financial decisions are made in order to meet the levels of services outlined in the Shire’s Community Strategic Plan. The LTFP can be viewed as a roadmap of how Council will finance the expectations of the community as detailed in the Community Strategic Plan, and what the long term (over a ten year horizon) cost of these outcomes will be to the community.

The starting point for the LTFP is Council’s expectations in relation to revenue that will be available to the council over the next ten years. The LTFP forecasts the projected revenue that Council will be able to obtain based on general planning assumptions such as demographic, economic and political trends and specific factors that affect individual



revenue line items (e.g. rate pegging, projected new sources of revenue, and the future of individual grant programs).

Once Council has determined the level of revenue projected to be available over the ten year time frame, the next step is to assess the level of expenditure that will be required to meet the day to day cost to Council of providing services to the community. Expenditure projections depend on both the future level of service forecast to be provided, the planning assumptions, as well as expectations regarding input costs such as expected salary increases, movements in materials costs, and movements in financing costs.

Expenditure of a capital nature such as on the construction of new assets and capital renewal will also impact on the future sustainability of Council. Capital expenditure is dependent on community expectations regarding service levels, as well as the future costs of inputs such as staff costs and material costs (e.g. fuel and bitumen). Capital expenditure is dealt with separately in great detail in the AMP, and assumptions around the future cost of asset construction and rehabilitation from the AMP have been incorporated into the LTFP. This information is captured in the ten year capital program from the AMP, which has been included in the LTFP.

The LTFP also deals with projected movements in balance sheet items such as the payment of loans, and projected movements in working capital. The LTFP includes the financial statements for Council’s base scenario (i.e. income statement, balance sheet, cash flow statement) and alternative scenarios that address weaknesses in the current position of Council.

A risk analysis and sensitivity analysis has been undertaken to strengthen the strategies arising from the plan.



1.3 Current Financial Position In conducting financial sustainability reviews, NSW TCorp relies upon the following definition of sustainability to provide guidance: "A local government will be financially sustainable over the long term when it is able to generate sufficient funds to provide the levels of service and infrastructure agreed with its community." As a result, the key elements of any NSW TC review will be:

Evidence of community engagement on service levels and costs

An ongoing infrastructure renewal program consistent with community expectations

An ongoing operating surplus position.

NSW TC regards the recent history of the Council as being more reliable than the financial forecasts that have been provided. This is not unusual and many councils fail to demonstrate consistency between forward financial forecasts and actual planning processes and responses, including annual budgets. The analysis utilises the 2014-15 & 2015-16 budgets as a starting point and forecast data for the period 2017-16 to 2024-25. As seen in Scenario 1 being the current position, Council’s financial position would currently be regarded as weak with a negative outlook. It is clear however that Council has the capacity to alter its forecasts and improve its financial outlook. The key aspects to the improvement are: 1. A plan to return to an operating surplus position, and

2. Reduce Service levels and community expectations for asset renewal.

3. Seek operating efficiencies where possible

It is possible for council to revise its current practices and underlying policy settings to improve its sustainability outlook as outlined in Scenario 2 & Scenario 3. Council needs to consider a greater allocation of funding for renewals, either through use of its own cash and investments or through borrowings. Council also needs to consider the forecasts associated with its asset management plans (AMP’s). It is expected that as Council’s asset management practices improve the data underlying the AMP’s will be increasingly accurate and facilitate enhanced strategic asset management planning. In reviewing the AMP’s an interactive process is needed that will:

Match renewal funding requirements against available funding in the current LTFP, and

Revise the renewal program to match available funding in the LTFP.

In balancing renewals with available funding, the Council will need to consider service and service level impacts and be prepared to make consequential changes to the asset register to incorporate the changes to expected remaining useful lives.



Council should seek to incorporate a balanced capital renewal program arising from its asset management planning processes with the LTFP. Changes made to the asset register will affect forecast depreciation expense. Changes made to balance renewal expenditure to available funding will affect Infrastructure WDV forecasts and associated cash flows. Council may need to reconsider all planned new /upgrade capital expenditures for the period of the forecast and consider renewal funding as a priority, other than for those infrastructure programs that are funded from contributions received previously. Council needs to consider the operating position and the annual cash position and seek to reduce the annual operating deficit to sustainable levels.



1.4 Long Term Financial Plan Objectives In accordance with the Division of Local Government’s Long Term Financial Plan Guidelines (2013), the objectives of the Council’s LTFP are to:

establish a greater transparency and accountability of the Council to the community;

provide an opportunity for early identification of financial issues and any likely impacts in the longer term;

provide a mechanism to: o solve financial problems as a whole o see how various plans fit together o understand the impact of some decisions on other plans or strategies;

provide a means of measuring the Council’s success in implementing strategies;

confirm that the Council can remain financially sustainable in the longer term; and

Meet the requirements of the Division of Local Government’s Integrated Planning & Reporting (IP&R) framework.

The LTFP links to the Organisation’s key strategies in the following ways: Asset Management Strategy and Strategic Asset Management Plans - through the capital works program figures and projected adjustments in future years, in particular;

The Asset Management Strategy guides the planning, construction, maintenance and

operation of the assets essential for the Council to provide services to the community.

Funds have been allocated to achieve this in each year of the LTFP from sources such

as grants, borrowings, revenue from special variations etc.

The implementation of the Asset Management Strategy will ensure improved financial

and asset management capacity within the Council.

Asset Management Plans (AMPs) identify key expenditure priorities based on asset

condition and risk.

HR Strategy

Additional budget has been allocated to accommodate cost rises in the future for superannuation

Scrutiny on employment costs will ensure the organisation tightly monitors future operational employment costs

Delivery Program

Details initiatives, performance measures and resources required to deliver activities for the four years of the program.



1.5 Performance Monitoring and Review Council has at its disposal a wide array of financial performance measures that can be used to track and measure Council’s long term financial viability and financial performance. Council will utilise the financial ratios associated with the Fit for the Future (FFTF) reform process as they are the ratios being used to measure our performance and thus to effectively determining our future. Within the LTFP these ratios are calculated on an annual basis. The FFTF Ratios are: 1. Operating Performance Ratio 2. Own Source Revenue Ratio 3. Building and Infrastructure Asset Renewal Ratio 4. Infrastructure Backlog Ratio 5. Asset Maintenance Ratio

6. Debt Service Ratio

7. Real Operating Expenditure Per Capita These ratios are further explained as follows:

Operating Performance Ratio

Operating performance ratio is an important measure as it provides an indication of how a Council generates revenue and allocates expenditure (e.g. asset maintenance, staffing costs). It is an indication of continued capacity to meet on-going expenditure requirements. Ongoing operating deficits are unsustainable and they are one of the key financial sustainability challenges facing the sector as a whole. While operating deficits are acceptable over a short period, consistent deficits will not allow Councils to maintain or indeed increase their assets and services or execute their infrastructure plans. It is recommended that all Councils should be in an at least break even operating position or better, as a key component of financial sustainability. Consistent with this recommendation the benchmark for this ratio is greater than or equal to break even over a 3 year period.

Own Source Revenue Ratio

Own source revenue measures the degree of reliance on external

funding sources (e.g. grants and contributions). This ratio measures

fiscal flexibility and robustness. Financial flexibility increases as the

level of own source revenue increases. It also gives councils greater

ability to manage external shocks or challenges.

Councils with higher own source revenue have greater ability to

control or manage their own operating performance and financial

sustainability.

All Councils should aim to meet or exceed the benchmark of greater

than 60 per cent of total operating revenue over a three year period.



Building & Infrastructure Asset Renewal Ratio

The building and infrastructure renewals ratio represents the

replacement or refurbishment of existing assets to an equivalent

capacity or performance, as opposed to the acquisition of new

assets or the refurbishment of old assets that increase capacity or

performance. The ratio compares the proportion spent on

infrastructure asset renewals and the asset’s deterioration.

Performance of less than one hundred percent indicates that a

Council’s existing assets are deteriorating faster than they are being

renewed and that potentially council’s infrastructure backlog is

worsening. Councils with consistent asset renewals deficits will face

degradation of building and infrastructure assets over time.

Given this a ratio of greater than one hundred percent is adopted. In

recognition of the fact that capital expenditures are sometimes lumpy

and can be lagged, this ratio is averaged over three years.

Infrastructure Backlog Ratio

The infrastructure backlog ratio indicates the proportion of backlog

against the total value of the Council’s infrastructure assets. It is a

measure of the extent to which asset renewal is required to maintain

or improve service delivery in a sustainable way. This measures

how councils are managing their infrastructure which is so critical to

effective community sustainability.

It is acknowledged, that the reliability of infrastructure data within

NSW local government is mixed. However, as asset management

practices within councils improve, it is anticipated that infrastructure

reporting data reliability and quality will increase.

The benchmark for this ratio is less than 2 per cent reflecting the

State Government’s focus on reducing infrastructure backlogs.

Asset Maintenance Ratio

The asset maintenance ratio reflects the actual asset maintenance

expenditure relative to the required asset maintenance as measured

by an individual council.

The ratio provides a measure of the rate of asset degradation (or

renewal) and therefore has a role in informing asset renewal and

capital works planning.

The benchmark adopted is greater than one hundred percent, which

implies that asset maintenance expenditure exceeds the council

identified requirements. A ratio of less than one hundred percent

indicates that there may be a worsening infrastructure backlog. In

recognition of the fact that capital expenditures are sometimes lumpy

and can be lagged, this ratio is averaged over three years.



Debt Service Ratio

It is appropriate for Councils to hold some level of debt given their role in the provision and maintenance of key infrastructure and services for their community. Prudent and active debt management is a key part of both funding and managing infrastructure and services over the long term. Prudent debt usage can also assist in smoothing funding costs and promoting intergenerational equity. Given the long life of many council assets it is appropriate that the cost of these assets should be equitably spread across the current and future generations of users and ratepayers. Effective debt usage allows councils to do this. It is considered reasonable for Councils to maintain a Debt Service Ratio of greater than 0 and less than or equal to 20 per cent.

Real Operating Expenditure Per Capita

The capacity to secure efficiency improvements can be measured

with respect to a range of factors, for example population, assets,

and financial turnover. Assuming that service levels remain constant,

decline in real expenditure per capita indicates efficiency

improvements (i.e. the same level of output per capita is achieved

with reduced expenditure).

It is acknowledged that efficiency and service levels are impacted by

a broad range of factors, and that it is unreasonable to establish an

absolute benchmark across Councils. It is also acknowledged that

council service levels are likely to change for a variety of reasons

however, it is important that councils prioritise or set service levels in

conjunction with their community.

Councils will be assessed on a joint consideration of the direction

and magnitude of their improvement or deterioration in real

expenditure per capita. Given that efficiency improvements require

some time for the results to be fully achieved and as a result, this

analysis will be based on a 5-year trend.

The financial projections associated with the LTFP will be reviewed at least annually and whenever a major adjustment is made to the agreed budget.



1.6 Planning Assumptions Under the LTFP the Council sets out the approach it has developed as part of the Fit for the Future (FFTF) reform process to improve its ongoing financial sustainability. This will assist it to be in a better position to accommodate asset renewal needs as these fall due. The key strategies under the LTFP are:

Rates - A Special Rate Variation (SRV) incorporated into Scenario 3 of 4% above the rate peg introduced in 2015-16 (6.4%) and continued in 2016-17 (7%), 2017-18 (7%) and 2018-19 (7%). Thereafter the forecast rate increases return to the assumed rate peg of 2.5%.

Operating Grants - An increase of $1,500,000 in 2018 in the Financial Assistance Grant (FAG) allocation to improve support for disability in Rural Council areas.

Salaries & Wages – An ongoing reduction of $70,000 in Salaries & Wages expenses forecast in 2017 & 2018 from anticipated staff retirements.

Materials & Contracts – An ongoing reduction of $60,000 in the cost of the plant & vehicle fleet cost in 2017. An ongoing reduction of $30,000 in 2017 representing a reduction in operating costs of health assets as Council seeks full funding or alternate service delivery models for health services. An ongoing reduction of $180,000 in procurement costs being anticipated savings as council matures it procurement model towards best practice. An ongoing reduction of $100,000 targeted from bulk purchasing and resource sharing arrangements established as part of the FFTF reform process.

Depreciation - A revaluation of Infrastructure assets taking into account current asset performance is expected to reduce depreciation based on the extension of asset useful lives, adoption of proper componentisation and residual value where appropriate. Council is also reviewing the inclusion of Rural Fire Service Assets given the substance of the current arrangement entails a maintenance agreement and thus these assets are deemed to be under Council control. Initial forecasts indicate this could be in excess of a 30% reduction in annual depreciation. Further note on the assumptions underpinning the depreciation reductions is contained within A5 Attachment – Assumptions.

Other – A reduction of $45,000 in 2017 as a direct result of a planned reduction in Councillors to 5.

By following the above strategies and ensuring that services are not expanded without corresponding revenue increases, by 2024-2025 the Council will be in a much stronger financial position.



1.7 Policy Assumptions As with economic trends, the impact of political trends is extremely hard to measure. Council has assumed that the current political risks that Council faces include:

Risk relating to grants and contributions from State and Federal government;

Pressure on local Councils to amalgamate or share services;

Increased federal and state pressure for local government to provide increased services without the commensurate financial support (cost shifting).

The main measurable impact of these trends on Council’s financial position relates to the risk around Federal and State support. As Council receives roughly 65% (2014 figures, - 55% from 2015 onwards) from grants and contributions it faces significant revenue risk due to this heavy reliance on support from other levels of government.

For the purpose of this plan it has been assumed that there will be no amalgamations that affect Weddin Shire Council within the next ten years, and that the level of service sharing can’t be estimated, nor can the potential financial impact that this would entail.

Although there may be a trend towards the responsibility for the provision of certain services being passed down to local government, Council is currently unable to predict what responsibilities would be transferred to Council, nor the financial impact of such transfers and has therefore not addressed this issue in the LTFP.

Rate Pegging

The Minister for Local Government regulates the growth of annual rates revenue through ‘Rate Pegging’. Rate pegging determines the maximum amount by which Councils can increase their annual rates income. This limit applies to Council’s total rates base, and individual rates may increase above the limit. Commencing from the 2011/12 financial year, responsibility for determining the annual rate peg has been delegated to the Independent Pricing and Regulatory Tribunal (IPART). Under this framework a new local government cost index has been established by IPART and this index, less a productivity coefficient, forms the basis for the rate peg each year. The projections in the LTFP assume a rate peg of 2.4% for the 2015/16 financial year and later years (Source: 2015/16 Rate Peg Local Government Fact Sheet December 2014).

A policy framework is necessary to help guide the development of Council budgeting and long term financial planning. Future resource use and decision making by the Council can be guided by the structure provided in the policy framework. Council’s Long Term Financial Plan has been drafted to comply with the following policies: Certain policy assumptions have been applied in creating the scenarios.

Debt All Scenarios have assumed that the projected capital works program will be partly funded by loans and new borrowings will continue to have a 20 year repayment term. This has been the case in recent years.

Employment All scenarios have assumed the employment establishment will not be constrained except as a direct result of reduced service levels.



Service Levels The Scenarios include budget constraints that may impact service levels. The FFTF process has forced Council to review non-core service provisions and the way in which service provisions generally are delivered.

Special Variations

Scenario 3 includes allowance for a special rate variation

Maintenance An assumption has been made that asset maintenance will continue at the current level despite the fact that some service provisions may be reviewed resulting in a reduced maintenance requirement.

Grant Income Only recurring Grant Income has been included with the exception of an increased Financial Assistance Grant (FAG) allocation anticipated for Rural Councils.



1.8 Financial Management Strategies The emphasis on asset management planning in local government arises as a result of the reliance that councils have on infrastructure to deliver services and support communities, particularly through the road and bridges network but also through community buildings, water and sewerage networks and stormwater management systems. This emphasis, combined with the broad range of estimates and assumptions associated with valuing and depreciating infrastructure, means that asset management planning practices and financial projections for renewal, maintenance and operations expenditures are critical to understanding and managing the financial position of any council. Financial sustainability for a council means being able to manage likely developments and unexpected shocks in future periods without having to introduce substantial and economically significant or socially destabilising income or expenditure adjustments. Expressed a different way, the decisions made by Council must ensure that the needs of the present generation are met without compromising the ability of future generations to meet their own needs1. The financial sustainability evaluation of a local government is undertaken with reference to a properly developed and complete long term financial plan. The financial plan should:

be based on the achievement of projected performance against carefully developed

financial sustainability targets

fully accommodate in quantum and timing all expenditures as included in the asset

management plans for the council’s infrastructure assets

Include a sensitivity analysis highlighting key factors or assumptions most likely to

impact on achievement of plans’ financial targets.

Financial sustainability indicators are used to support the analysis of a council’s long term financial plan. Evaluations based on the use of the ratios seek to identify whether the infrastructure assets of the council are being maintained whilst the council remains financially viable in the long term (operating surplus) and retains financial capacity to manage risks and unexpected events. In balancing renewals with available funding, the Council will need to consider service and service level impacts and be prepared to make consequential changes to the asset register to incorporate the changes to expected remaining useful lives. Council should seek to incorporate a balanced capital renewal program arising from its asset management planning processes within the LTFP. Changes made to the asset register will affect forecast depreciation expense. Changes made to balance renewal expenditure to available funding will affect Infrastructure written down value (WDV) forecasts and associated cash flows.

1Drawn from Brundtland Commission report “Our Common Future” 1987.



Council may need to reconsider all planned new/upgrade capital expenditures for the period of the forecast and consider renewal funding as a priority, other than for those infrastructure programs that are funded from tied contributions received previously. Council needs to consider the operating position and the annual cash position and seek to reduce the annual operating deficit to sustainable levels. A focus on the asset register and depreciation expense will be beneficial in this regard.



1.9 Risk Analysis The Long Term Financial Plan assumptions have been tested through a risk assessment process. Issues considered include:

The accuracy of projected estimates of expenditure;

The certainty of revenue streams;

Scenarios which could impact on revenue and expenditures;

The reliability of investment returns and borrowing costs. The Council has considered a variety of options and alternatives and has chosen the option that is most likely to succeed whilst being able to manage current and emerging risks.

1.10 Sensitivity Analysis The preferred strategy (Scenario 3) is sensitive to three primary elements: 1. A Special Rate Variation of 4% above the rate peg introduced in 2015-16 (6.4%) and

continued in 2016-17 (7%), 2017-18 (7%) and 2018-19 (7%). Thereafter the forecast rate increases return to the assumed rate peg of 2.5%. Council currently has a SRV application before IPART for assessment.

2. An ongoing increase in the allocation of Financial Assistance Grant totaling $1.5 million

introduced in 2018. Anecdotal evidence is that there is an appetite for an adjustment to the distribution of the FAG Grant in acknowledgement of the unfunded externalities in agricultural and mining production borne inequitably by Rural Councils.

3. A reduction in operating expenditure achieved via the identified FFTF strategies. It must

be noted that as part of the FFTF reform process Council has also identified numerous visionary strategies to achieve cost reductions and/or additional income. Whilst some of these visionary strategies may be considered challenging to implement achievement of any of these strategies would further enhance Council’s financial sustainability.



2 Summary of Planning Scenarios Under this LTFP, a number of scenarios have been modelled to assist the Council in developing the best plan to meet community requirements and expectations as well as the requirements of the FFTF reform process. In summary, these scenarios are: 1. Base Scenario (Scenario 1) – identifies the current position and outlook from

maintaining “business as usual” policy settings 2. Achievable FFTF Scenario No SRV (Scenario 2) – Incorporates the achievable FFTF

strategies identified by Council however excludes a SRV. 3. Achievable FFTF Scenario including SRV (Scenario 3) – Incorporates the achievable

FFTF strategies and a SRV. Each of these positions is outlined in the following sections of this Long Term Financial Plan. Preferred Strategy The preferred scenario is Scenario 3, which provides a number of strategies for the Council to achieve a sustainable financial position. Financial Sustainability Evaluation – Preferred Strategy – Scenario 3

The additional revenue and cost reductions result in Council moving to a breakeven position over the forecast period.

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Base Case



The Council remains in a solid position to borrow additional funds as needed with the Debt Service Ratio within the upper limit at all times within the forecast period. The move to funding capital expenditure with debt is a significant strategic change in a Council which has traditionally been debt averse. Council is conscious of being able to meet debt servicing costs and accordingly the levels of borrowings will be managed closely. On the basis of Scenario 3, Council would be regarded as being in a financially sustainable position enabling it to maintain its asset base and consequently meet its ongoing service provision requirements in accordance with community expectations

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Debt Service Ratio

Debt Service Ratio

Upper Limit



3 MODEL - Base Scenario/Current Position (Scenario 1) BASE CASE ASSUMPTIONS - Summary The starting point for the analysis of strategic options available is the Base Case which sets out Councils current position and highlights the challenges ahead. The Base Case is the business as usual approach with no changes factored in. Assumption percentages have been applied to all projection years. The percentages are an indication of the change in value on average over the ten year period, including CPI, and have been determined based on historical trends and external indicators.

INCOME

Rates 2.4% in 2015-16 in accordance with the rate peg, 3% thereafter being the assumed rate peg

Charges 2.5%

Grants – Operating Purposes 2.5%

Grants – Capital Purposes 2.5%

Investment Income 2.5%

Net Gain from Disposal of Assets

Nil expected

Other 2.5%

EXPENSES

Salaries & Wages

2.5%

Materials & Contracts 2.5%

Depreciation Based on current asset management plan data

Borrowings Costs Based on current loan projections - 5%pa over 20 year term

Net Loss from Disposal of Assets

Nil Expected

Other 2.5%



-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target



0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025


Building & Infrastructure AssetRenewal Ratio

Target

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target



93.00%

94.00%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%

101.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Debt Service Ratio

Debt Service Ratio

Upper Limit



Financial Sustainability Ratios – Base Case


Remains negative throughout the forecast period. An average ratio of -39.91% over the ten year forecast highlights the need for change. Ongoing operating deficits are unsustainable and will not allow Council to maintain its asset base over the long term.


With the inclusion of the Financial Assistance Grant (FAG) as

allowed for Rural Council’s this ratio exceeds the 60% benchmark

throughout the forecast period with an average of 66.25%. Excluding

the FAG sees the ratio drop below the benchmark to a 10 year

average of 44.08% with the final year ratio of 46.00%. Given the

unique ‘Rural Council’ characteristics with which Council is faced it

will always be reliant on external funding sources.


This ratio does not meet the target benchmark of 100%. Asset

renewal is a challenge which Council needs to address. Council is

looking to undertake several strategies to improve its asset

management performance as part of the Fit for the Future reform

process. It is also expected that as Council’s asset management

practices improve the data underlying this ratio will be increasingly

accurate and facilitate enhanced strategic asset management

planning.


This ratio does not meet the target benchmark of 2%. The ratio is

also trending slightly negatively starting at 4.35% in 2016 and ending

at 4.93% in 2025. Despite this negative trend the challenge in front of

Council to bring this ratio under the target benchmark of 2% is not

unachievable. Council is looking to undertake several strategies to

improve its asset management performance as part of the Fit for the

Future reform process. It is also expected that as Council’s asset

management practices improve the data underlying this ratio will be

increasingly accurate and facilitate enhanced strategic asset

management planning.

2,350.00

2,400.00

2,450.00

2,500.00

2,550.00

2,600.00

2,650.00

2,700.00

2,750.00

2,800.00

2,850.00

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Real Operating Expenditure per Capita

Real Operating Expenditure perCapita




This ratio does not meet target benchmark of 100% averaging

96.89% over the forecast period and ending at 95.90% in 2025.

However as with some of the other asset management challenges

the closing of the asset maintenance gap and achieving the 100%

target benchmark is not unachievable. It would only require an

additional $62,000 to be spent on asset maintenance per year on

average over the forecast period to meet the shortfall and achieve

the benchmark. Strategies Council is looking to implement to

improve its asset management performance as part of the Fit for the

Future reform process will have an impact on this ratio. It is also

expected that as Council’s asset management practices improve the

data underlying this ratio will be increasingly accurate and facilitate

enhanced strategic asset management planning.

Debt Service Ratio

This ratio remains within the upper limit throughout the forecast period which indicates Council has the capacity to increase borrowings to address some of the asset management challenges with which it is faced. Council is however conscious of improving the operating position to ensure debt servicing requirements can be met.


The positive trend in this ratio shows a decline in real operating

expenditure per capita over the forecast period which indicates some

efficiency gains over the forecast period.

BASE CASE - OPERATING DEFICITS

The projected cumulative operating deficit (excluding capital revenues) for the base case for the period 2015-16 to 2024-25 is ($38.4) M. The council remains in deficit over the entire projected period. The operating deficit results in a deficit of ($3,560,000) for the final year 2024-25.

-3,580

-3,560

-3,540

-3,520

-3,500

-3,480

-3,460

-3,440

-3,420

-3,400

-3,380

-3,360

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Operating Result

Operating Result



Other Scenarios The remaining two scenarios are based on improving weaknesses in the Base Case. Adjustments have been made to show the impact on the Council from the adoption of revised financial management and asset management strategies. These are discussed in the following sections.



4 MODEL – ACHIEVABLE FFTF SCENARIO NO SRV (Scenario 2) ACHIEVABLE FFTF SCENARIO NO SRV ASSUMPTIONS - Summary The Achievable FFTF Scenario No SRV (Scenario 2) includes a number of strategies to reduce the operating deficit and manage community expectations over the course of the LTFP as follows:

Rates - No special rate variations (SRV) is incorporated into Scenario 2.

Operating Grants - An increase of $1,500,000 in 2018 in the Financial Assistance Grant (FAG) allocation to improve support for disability in Rural Council areas.

Salaries & Wages – An ongoing reduction of $70,000 in Salaries & Wages expenses forecast in 2017 & 2018 from anticipated staff retirements.

Materials & Contracts – An ongoing reduction of $60,000 in the cost of the plant & vehicle fleet cost in 2017. An ongoing reduction of $30,000 in 2017 representing a reduction in operating costs of health assets as Council seeks full funding or alternate service delivery models for health services. An ongoing reduction of $180,000 in procurement costs being anticipated savings as council matures it procurement model towards best practice. An ongoing reduction of $100,000 targeted from bulk purchasing and resource sharing arrangements established as part of the FFTF reform process.

Depreciation - A revaluation of Infrastructure assets taking into account current asset performance is expected to reduce depreciation based on the extension of asset useful lives, adoption of proper componentisation and residual value where appropriate. Council is also reviewing the inclusion of Rural Fire Service Assets given the substance of the current arrangement entails a maintenance agreement and thus these assets are deemed to be under Council control. Initial forecasts indicate this could be in excess of a 30% reduction in annual depreciation. Further note on the assumptions underpinning the depreciation reductions is contained within A4 Attachment – Assumptions for Depreciation Reduction.

Other – A reduction of $45,000 in 2017 as a direct result of a planned reduction in Councillors to 5.



Assumption percentages have been applied to all projection years. The percentages are an indication of the change in value on average over the ten year period, including CPI, and have been determined based on historical trends and external indicators.

INCOME

Rates 2.4% in 2015-16 in accordance with the rate peg, 3% thereafter being the assumed rate peg

Charges 2.5%

Grants – Operating Purposes 2.5%




Nil expected

Other 2.5%

EXPENSES

Salaries & Wages

2.5%



Borrowings Costs Based on current loan projections - 5%pa over 20 year term


Nil Expected

Other 2.5%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Base Case



0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target



0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target

93.00%

94.00%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%

101.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target




This ratio is a key indicator of financial sustainability. The strategies implemented as part of the FFTF reform process see the ratio return to a greater than breakeven position in 2018 exceeding the target benchmark at this time and for all subsequent years.


As with the base scenario including FAG sees the 60% benchmark

exceeded with a 10 year average of approximately 68%. However if

the FAG is excluded the 10 year average drops to 39.82% which is

under the target benchmark. The reality is that Weddin Shire as a

‘Rural Council’ will always be reliant on external funding for its

financial sustainability.


This ratio fluctuates above and below the target benchmark over the

forecast period exceeding the benchmark in 5 of the 10 years.

Council is looking to undertake several strategies to improve its

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Debt Service Ratio

Debt Service Ratio

Upper Limit

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

1 2 3 4 5 6 7 8 9 10





asset management performance as part of the Fit for the Future

reform process. It is also expected that as Council’s asset



management planning. As the operating position improves and

Council builds a surplus, additional Asset maintenance and renewal

expenditure is achievable which will have a positive impact on the

Asset Management ratios. Additional expenditure on these items has

not been factored into the current modelling however this will be

reviewed as part of the asset management improvement process.


The infrastructure backlog ratio does not meet the target benchmark

of 2% but sits at a relatively consistent 4 – 4.5% over the 10 year

forecast. It is expected that as Council’s asset management



planning. As the operating position improves and Council builds a

surplus, additional Asset maintenance and renewal expenditure is

achievable which will have a positive impact on the Asset

Management ratios. Additional expenditure on these items has not

been factored into the current modelling however this will be



This ratio does not meet the benchmark however closing the gap

and exceeding the benchmark is not unachievable. It is expected

that as Council’s asset management practices improve the data

underlying this ratio will be increasingly accurate and facilitate

enhanced strategic asset management planning. As the operating

position improves and Council builds a surplus, additional Asset

maintenance and renewal expenditure is achievable which will have

a positive impact on the Asset Management ratios. Additional

expenditure on these items has not been factored into the current

modelling however this will be reviewed as part of the asset

management improvement process.

Debt Service Ratio

This ratio remains within the upper limit throughout the forecast period which indicates Council has the capacity to increase borrowings to address some of the asset management challenges with which it is faced. Council is however conscious of improving the operating position to ensure debt servicing requirements can be met.







SECNARIO 2 - OPERATING RESULT

Compared to the base case there is an improvement in the operating result with an operating surplus achieved in 2018 and for all subsequent years. The forecast operating surplus in 2024-25 is a healthy $1,035,000. The projected cumulative operating deficit (excluding capital revenues) for Scenario 2 for the projection years is ($3.3) M.

-4,000

-3,500

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Operating Result

Operating Result



5 MODEL – ACHIEVABLE FFTF SCENARIO INCLUDING SRV (Scenario 3) ACHIEVABLE FFTF SCENARIO INCLUDING SRV ASSUMPTIONS – Summary This scenario uses identical assumptions from Scenario 2 however also includes a Special Rate Variation of 4% above the rate peg introduced in 2015-16 (6.4%) and continued in 2016-17 (7%), 2017-18 (7%) and 2018-19 (7%). Thereafter the forecast rate increases return to the assumed rate peg of 2.5%. Assumption percentages have been applied to all projection years. The percentages are an indication of the change in value on average over the ten year period, including CPI, and have been determined based on historical trends and external indicators.

INCOME

Rates 2.4% in 2015-16 in accordance with the rate peg, 2.5% thereafter being the assumed rate peg

Charges

Grants – Operating Purposes




Nil expected

Other 2.5%

EXPENSES

Salaries & Wages

2.5%



Borrowings Costs Based on current


Nil Expected

Other 2.5%



-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Base Case

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target



0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target



93.00%

94.00%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%

101.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025



Target

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Debt Service Ratio

Debt Service Ratio

Upper Limit

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025






Like scenario 2 a greater than breakeven ratio is achieved in 2018 with the ratio exceeding the benchmark at this point and for all subsequent years.


As with the previous scenarios including FAG sees the 60%

benchmark exceeded with a 10 year average of approximately 68%.

However if the FAG is excluded the 10 year average drops to

approximately 41% which is under the target benchmark. The reality

is that Weddin Shire as a ‘Rural Council’ will always be reliant on

external funding for its financial sustainability.


This ratio fluctuates above and below the target benchmark over the

forecast period exceeding the benchmark in 5 of the 10 years.

Council is looking to undertake several strategies to improve its

asset management performance as part of the Fit for the Future

reform process. It is also expected that as Council’s asset



management planning. As the operating position improves and

Council builds a surplus, additional Asset maintenance and renewal

expenditure is achievable which will have a positive impact on the

Asset Management ratios. Additional expenditure on these items has

not been factored into the current modelling however this will be



The infrastructure backlog ratio does not meet the target benchmark

of 2% but sits at a relatively consistent 4 – 4.5% over the 10 year

forecast. It is expected that as Council’s asset management



planning. As the operating position improves and Council builds a

surplus, additional Asset maintenance and renewal expenditure is

achievable which will have a positive impact on the Asset

Management ratios. Additional expenditure on these items has not

been factored into the current modelling however this will be



This ratio does not meet the benchmark however closing the gap

and exceeding the benchmark is not unachievable. It is expected

that as Council’s asset management practices improve the data

underlying this ratio will be increasingly accurate and facilitate

enhanced strategic asset management planning. As the operating

position improves and Council builds a surplus, additional Asset

maintenance and renewal expenditure is achievable which will have

a positive impact on the Asset Management ratios. Additional

expenditure on these items has not been factored into the current

modelling however this will be reviewed as part of the asset

management improvement process.

Debt Service Ratio This ratio remains within the upper limit throughout the forecast



period which indicates Council has the capacity to increase borrowings to address some of the asset management challenges with which it is faced. Council is however conscious of improving the operating position to ensure debt servicing requirements can be met.





In scenario 3 Council moves into an operating surplus in 2017-18 and increase this trend for the remainder of the projected period, resulting in a $1,612,000 surplus for year 2024-25. The projected cumulative operating deficit (excluding capital revenues) for Scenario 3 is extinguished in 2023-24 with a cumulative surplus of $0.7 M established in the final year 2024-25.

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Operating Result

Operating Result



A1 Attachment – Financial Statements – Base Scenario/ Current Position (Scenario 1)

Year Ending 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Operating Revenue

Rates 2,376 2,417 2,490 2,564 2,641 2,720 2,802 2,886 2,973 3,062 3,154

Charges 1,485 1,990 2,040 2,091 2,143 2,197 2,252 2,308 2,365 2,425 2,485

Grants - For Operating Purposes 3,420 3,161 3,240 3,321 3,404 3,489 3,576 3,666 3,757 3,851 3,948

Grants- For Capital Purposes 6,155 6,671 2,465 2,527 3,355 3,420 2,721 2,789 2,859 2,930 3,003

Investment Income 251 140 168 147 137 114 88 72 66 64 50

Net gain from disposal of Assets 5 5 0 0 0 0 0 0 0 0 0

Other 109 186 191 195 200 205 210 216 221 227 232

Total Operating Revenue 13,801 14,570 10,593 10,845 11,880 12,145 11,649 11,936 12,241 12,558 12,873

Operating Expenses

Salaries & Wages 3,680 3,670 3,762 3,856 3,952 4,051 4,152 4,256 4,362 4,472 4,583

Materials & Contracts 2,917 3,254 3,335 3,419 3,504 3,592 3,682 3,774 3,868 3,965 4,064

Depreciation 3,494 3,538 3,605 3,625 3,641 3,666 3,691 3,707 3,723 3,740 3,760

Borrowing Costs 0 123 119 115 111 107 102 97 92 87 81

Net loss from disposal of Assets 0 0 0 0 0 0 0 0 0 0 0

Other 840 754 773 792 812 832 853 874 896 919 942

Total Operating Expenses 10,931 11,339 11,594 11,806 12,021 12,248 12,480 12,708 12,942 13,182 13,429

Operating Surplus / (Deficit) 2,870 3,231 (1,001) (961) (140) (103) (830) (772) (701) (623) (557)Operating Surplus / (Deficit) less Capital

Grants (3,285) (3,440) (3,466) (3,487) (3,495) (3,523) (3,551) (3,561) (3,560) (3,553) (3,560)

Cumulative Impact (3,285) (6,725) (10,191) (13,679) (17,174) (20,696) (24,248) (27,808) (31,368) (34,922) (38,482)

Physical Resources Free of Charge 0 0 0 0 0 0 0 0 0 0 0

Amounts specifically for new or

upgraded assets 0 2,425 (79) (83) (87) (91) (96) (101) (106) (111) (117)

Gain (loss) on revaluaion of I,PP&E 282 289 296 304 311 319 327 335 344 352 361

Net Surplus / (Deficit) 3,152 5,945 (784) (740) 84 125 (599) (537) (464) (382) (313)

Other Comprehensive Income

Total Comprehensive Income 3,152 5,945 (784) (740) 84 125 (599) (537) (464) (382) (313)



As at 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

ASSETS

Financial Assets

Cash and Cash Equivalents 5,498 5,635 4,831 4,419 3,491 2,463 1,810 1,556 1,487 948 539

Current Trade & Other

Receivables 852 873 873 873 873 873 873 873 873 873 873

Current Other Financial Assets 15 15 15 15 15 15 15 15 15 15 15

Inventories 175 179 179 179 179 179 179 179 179 179 179

Total Financial Assets 6,540 6,704 5,899 5,487 4,559 3,531 2,878 2,624 2,555 2,016 1,607

Non Financial Assets

Inventories 0 0 0 0 0 0 0 0 0 0 0

Non-current Receivables 0 0 0 0 0 0 0 0 0 0 0

Infrastructure, Property, Plant &

Equipment 138,965 142,439 142,339 141,908 142,875 144,040 144,113 143,818 143,391 143,621 143,791

Other Non-current Assets 0 0 0 0 0 0 0 0 0 0 0

Total Non Financial Assets 138,965 142,439 142,339 141,908 142,875 144,040 144,113 143,818 143,391 143,621 143,791

Total Assets 145,505 149,143 148,238 147,395 147,434 147,572 146,990 146,442 145,946 145,638 145,398

LIABILITIES

Current Liabilities

Trade & Other Payables 971 995 995 995 995 995 995 995 995 995 995

Borrowings 0 0

Provisions 1,486 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523

Other Current Liabilities 0 0 0 0 0 0 0 0 0 0 0

2,457 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518



2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Non-current Liabilities

Trade & Other Payables 0 0 0 0 0 0 0 0 0

Borrowings 0 0 0 0 0 0 0 0 0 0

Provisions 609 624 624 624 624 624 624 624 624 624 624

Other Non-current Liabilities

609 624 624 624 624 624 624 624 624 624 624

Total Liabilities 3,066 3,143 3,143 3,143 3,143 3,143 3,143 3,143 3,143 3,143 3,143

Net Assets 142,439 146,000 145,095 144,252 144,291 144,429 143,848 143,300 142,804 142,495 142,255

EQUITY

Retained Earnings 117,759 120,703 119,919 119,179 119,263 119,388 118,789 118,251 117,787 117,405 117,092

Asset Revaluation Reserves 24,680 25,297 25,297 25,297 25,297 25,297 25,297 25,297 25,297 25,297 25,297

Other Reserves 0 0 0 0 0 0 0 0 0

Adjustment to Cash &

Borrowings for effects of inflation(121) (224) (268) (256) (238) (248) (281) (207) (134)

Total Equity 142,439 146,000 145,095 144,252 144,291 144,429 143,848 143,300 142,804 142,495 142,255



A2 Attachment – Financial Statements – Achievable FFTF Scenario No SRV (Scenario 2)

Year Ending 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Budget

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Operating Revenue

Rates 2,376 2,417 2,490 2,564 2,641 2,720 2,802 2,886 2,973 3,062 3,154

Charges 1,485 1,990 2,040 2,191 2,246 2,302 2,359 2,418 2,479 2,541 2,604





Other 109 186 191 195 200 205 210 216 221 227 232


Operating Expenses

Salaries & Wages 3,680 3,670 3,692 3,714 3,807 3,902 4,000 4,100 4,202 4,307 4,415


Depreciation 3,494 3,538 2,454 2,474 2,490 2,515 2,540 2,556 2,572 2,589 2,609

Borrowing Costs 0 123 119 115 111 107 102 97 92 87 81


Other 840 754 728 746 765 784 803 823 844 865 887


Operating Surplus / (Deficit) 2,870 3,231 988 2,740 3,683 3,846 3,245 3,431 3,631 3,839 4,038Operating Surplus / (Deficit) less Capital

Grants (3,285) (3,440) (1,477) 213 329 426 524 642 772 909 1,035

Cumulative Impact (3,285) (6,725) (8,202) (7,989) (7,661) (7,235) (6,711) (6,069) (5,297) (4,387) (3,353)



upgraded assets 0 2,425 (79) (83) (87) (91) (96) (101) (106) (111) (117)


Net Surplus / (Deficit) 3,152 5,945 1,205 2,960 3,908 4,074 3,476 3,665 3,868 4,080 4,282


Total Comprehensive Income 3,152 5,945 1,205 2,960 3,908 4,074 3,476 3,665 3,868 4,080 4,282



As at 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

ASSETS

Financial Assets

Cash and Cash Equivalents 5,498 5,635 5,648 7,643 9,119 10,488 12,223 14,347 16,642 18,452 20,373


Receivables 852 873 873 873 873 873 873 873 873 873 873


Inventories 175 179 179 179 179 179 179 179 179 179 179



Inventories 0 0 0 0 0 0 0 0 0 0 0



Equipment 138,965 142,439 143,490 144,210 146,328 148,644 149,868 150,724 151,448 152,829 154,150



Total Assets 145,505 149,143 150,206 152,921 156,514 160,200 163,159 166,139 169,158 172,349 175,591

LIABILITIES

Current Liabilities


Borrowings 0 0

Provisions 1,486 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523


2,457 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518



2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000



Borrowings 0 0 0 0 0 0 0 0 0

Provisions 609 624 624 624 624 624 624 624 624 624 624


609 624 624 624 624 624 624 624 624 624 624


Net Assets 142,439 146,000 147,064 149,778 153,372 157,058 160,016 162,996 166,016 169,206 172,448

EQUITY





Borrowings for effects of inflation(141) (387) (701) (1,089) (1,606) (2,291) (3,140) (4,030) (5,070)

Total Equity 142,439 146,000 147,064 149,778 153,372 157,058 160,016 162,996 166,016 169,206 172,448



A3 Attachment – Financial Statements – Achievable FFTF Scenario including SRV (Scenario 3)

Year Ending 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Budget

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Operating Revenue

Rates 2,376 2,502 2,677 2,865 3,065 3,157 3,252 3,349 3,450 3,553 3,660

Charges 1,485 1,990 2,040 2,191 2,246 2,302 2,359 2,418 2,479 2,541 2,604





Other 109 186 191 195 200 205 210 216 221 227 232


Operating Expenses

Salaries & Wages 3,680 3,670 3,692 3,714 3,807 3,902 4,000 4,100 4,202 4,307 4,415


Depreciation 3,494 3,538 2,454 2,474 2,490 2,515 2,540 2,556 2,572 2,589 2,609

Borrowing Costs 0 123 119 115 111 107 102 97 92 87 81


Other 840 754 728 746 765 784 803 823 844 865 887


Operating Surplus / (Deficit) 2,870 3,316 1,175 3,044 4,119 4,304 3,726 3,936 4,159 4,392 4,615Operating Surplus / (Deficit) less Capital

Grants (3,285) (3,355) (1,290) 518 764 884 1,005 1,147 1,300 1,462 1,612

Cumulative Impact (3,285) (6,640) (7,930) (7,412) (6,648) (5,763) (4,758) (3,612) (2,311) (850) 762



upgraded assets 0 2,425 (79) (83) (87) (91) (96) (101) (106) (111) (117)


Net Surplus / (Deficit) 3,152 6,030 1,393 3,265 4,343 4,532 3,957 4,170 4,397 4,633 4,859


Total Comprehensive Income 3,152 6,030 1,393 3,265 4,343 4,532 3,957 4,170 4,397 4,633 4,859



As at 30 June: 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

ASSETS

Financial Assets

Cash and Cash Equivalents 5,498 5,635 5,831 8,112 9,981 11,744 13,874 16,392 19,082 21,286 23,599


Receivables 852 873 873 873 873 873 873 873 873 873 873


Inventories 175 179 179 179 179 179 179 179 179 179 179



Inventories 0 0 0 0 0 0 0 0 0 0 0



Equipment 138,965 142,439 143,490 144,210 146,328 148,644 149,868 150,724 151,448 152,829 154,150



Total Assets 145,505 149,143 150,389 153,390 157,376 161,456 164,809 168,185 171,598 175,183 178,818

LIABILITIES

Current Liabilities


Borrowings 0 0

Provisions 1,486 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523 1,523


2,457 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518 2,518



2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year 0

Actual

Year 1

Budget

Year 2

Plan

Year 3

Plan

Year 4

Plan

Year 5

Plan

Year 6

Plan

Year 7

Plan

Year 8

Plan

Year 9

Plan

Year 10

Plan

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000



Borrowings 0 0 0 0 0 0 0 0 0

Provisions 609 624 624 624 624 624 624 624 624 624 624


609 624 624 624 624 624 624 624 624 624 624


Net Assets 142,439 146,000 147,247 150,247 154,234 158,314 161,667 165,042 168,456 172,040 175,675

EQUITY





Borrowings for effects of inflation(146) (411) (767) (1,219) (1,823) (2,618) (3,600) (4,649) (5,873)

Total Equity 142,439 146,000 147,247 150,247 154,234 158,314 161,667 165,042 168,456 172,040 175,675



A4 Attachment – Assumptions for Depreciation Reduction

Assumptions for Depreciation reduction

The following numbers are a high level analysis by Jeff Roorda & Associates taking into account current asset performance. Any actual changes in useful life should be conducted with the help of a professional valuer and should highlight the changes in future service levels, potential risks and be based on the best available evidence.

Transport reduced by 40%

Sub Base non depreciable

K & G increase life to 90 years

All Bitumen Seals to 30 years

Gravel re-sheets to 20years

Culverts to 120 years Buildings reduced by 30%

Council Chambers Superstructure to 80 years

Council Chambers floor to 20 years

Depot, Library and Bank - componentised and lives extended. Residual added

Doctors Surgery componentised and life extended

Museum componentised and life extended

Grandstand componentised and life extended

swimming pool life extended Drainage reduced by >30%

Componentisation of pipework, trenching to become non-depreciable and a preferred strategy of pipe re-lining for future works.

Lives extended to 100 years for all pipes and pits Parks & Rec reduced by 20%

memorials to 120 years

playgrounds to 20 years

Skate park to 80 years

Fencing to 30 years

BBQ's 40 years Plant & Equipment reduced by 20%

Large plant to have lives extended to between 12 – 15 years Sewerage reduced by 20%

Extend lives to 100 years


49

weddin shire council draft business case including risk

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