Annual State of NHSScotland Assets and Facilities Report for 2014

Annex E

Transport and Fleet Management Review

Background

The NHSScotland (NHSS) Transport and Fleet Management Review is progressing well under the direction of the Facilities Review & Shared Services Programme Board.

The three elements of the review include;- Fleet Management, Car Leasing and Logistics. The objectives of this workstream are:

Fleet Management Review: to investigate and identify the potential synergies to be gained from greater collaboration between the 22 NHS Boards in Scotland, with regards to the provision and management of the Fleet.

Car Leasing: to identify opportunities to standardise the schemes, removing unwarranted variation and improving cost recovery, and collaborate on their management.

Logistics: to review the current NHSScotland logistics infrastructure, including understanding routes and types of logistics functions that are provided, and identify opportunities to ensure best utilisation of vehicles and maximise the efficiency and effectiveness of the Fleet.

Fleet/Transport is an integral part of many of the services which NHSS provides, whether by front line staff or support services, and can have a direct impact on the safety and quality of patient care. Fleet acquisition and operating costs - Fuel, Maintenance and Leasing - continue to rise, which is creating cost pressures on budgets. There are a number of reviews planned within NHSS, which will have a direct impact on the operational requirements of the NHSS fleet and it is, therefore, imperative that the Fleet/Transport structure is flexible and resilient and is able to respond positively to any planned changes that are required.

NHSS fleet replacement value is in the region of £226m, of which £113m is for the pool and commercial fleet and £113m is for the Lease Car fleet. The annual operating costs for the total fleet is £62m, of which the majority of the spend - £41m, is for the pool and commercial fleet. These costs do not include Drivers associated costs. With such a large replacement cost and associated annual operating costs, NHSS must ensure that best value and robust equitable service delivery standards are being achieved.

Fleet Management

The aim of the Fleet Management Review was to investigate and identify the potential synergies to be gained from greater collaboration between the 22 NHS Boards in Scotland, with regards to the provision and management of the Fleet.

An Options Appraisal process for the future delivery of the Fleet Management structure was undertaken during the summer of 2013The preferred option to develop the shared management of NHS Board fleets within regional areas, supported by the creation of a National Support Unit, was approved by the Facilities Review & Shared Services Programme Board on 25th March 2014. The Programme Board also endorsed the need to procure national Telematics and Fleet Management systems. The report proposed that the fleet management support function would sit within NHS National Services Scotland (NSS).

The main features of a Regional Model with National Support are:

• The shared management of Board fleets within a regional area supported by a national support function
• A lead NHS Board provides the Fleet Management operation for the region and is responsible for ensuring that all Fleet requirements are met
• The Regional Managers (line managed by the lead NHS Board) form part of a national Fleet Management Team, coordinated by the national support function, to ensure that collaborative opportunities are fully explored and executed
• The National Support Function includes a Fleet Management and Fleet Engineering arm, responsible for carrying out duties that are currently undertaken locally, which could be carried out centrally. For example, Telematics support, vehicle procurement, technical specifications, vehicle trials etc.
• Vehicles remain in the ownership of the individual NHS Boards. Boards agree vehicle replacement requirements in advance for a pre-determined period and remain responsible for vehicle acquisition funding

Benefits of the proposals include;-

Financial benefits

• Appropriate structures / structural reorganisation combined with a national approach, and a wider introduction of telematics and fleet management, has the potential to significantly influence the service provision and costs through improvements in efficiency, effectiveness, and economies of scale, and realise savings in the region of £6m over the next 5 years, with anticipated additional below the line savings.
• Reduction in insurance premiums; The NHSS fleet insurer has advised that the use of telematics may result in a reduction in loss ratio, which could result in reduced premiums over time. One of the current telematics providers has advised that this reduction could be as much as 12%. Within NHSS this figure has been discounted to 5% subject to improvements demonstrating an overall reduction in the loss ratio.
• Reduction in accident damage and excess paid; With an increasing trend towards a mobile workforce, taking steps to mitigate accident risk extends an employer's duty of care profile and can reduce claim costs, generating cash releasing savings.
• Increase in fuel efficiency (MPG); Case studies show that there is significant potential to reduce fuel costs substantially if telematics were to be introduced across the fleet, especially where current manual systems for recording are in place. Case studies show that savings can be up to 15%. This in turn not only reduces costs, but reduces the amounts of harmful emissions that are produced by the vehicle fleet, including a similar % reduction in CO2.
• Reduction in mileage and associated fuel costs; Telematics is a powerful tool for managing and reporting on vehicle asset utilisation. Through better management of the fleet there is potential to reduce the number of miles that are travelled, which could increase the utilisation of the vehicles, and in turn reduce the amount of fuel used, the number of vehicles that are required and the cost of maintenance.
• National Joint Fleet Procurement; Co-ordination and standardisation of vehicle specifications for NHSScotland will result in greater buying power, better utilisation of vehicle assets, reduced operating costs etc. Initial analysis indicates potential to reduce commercial and pool vehicle replacement and leasing costs by £175k - £500k per annum if all NHS Boards agreed to standardise specifications and commit to joint procurement and replacement numbers.

Non- financial benefits:

• Investment in the establishment of a National Support Unit, together with the procurement of fleet systems, will ensure that agreed Fleet Management and Fleet Engineering duties, currently undertaken in multiple instances at NHS Board level, are carried out once nationally and consistently for NHSScotland
• Improve resource utilisation; National support function has potential to significantly reduce duplication and achieve better utilisation of staffing resources. Tasks undertaken by the National Support Unit will reduce pressure on NHS Boards.
• More efficient use of staff time; efficiencies in the car leasing function would be realised through standardising processes moving all NHS Boards toward the upper quartile of performance, and enhanced through the automation of manual processes, in particular obtaining quotes.
• Reduce variation; ensure a common national approach to fleet management through adoption of consistent practices and procedures across NHSScotland. Consistency of Fleet Management and Telematics systems in use across NHSScotland providing the ability to analyse data consistently across NHS Boards.
• Operational resilience and control; national systems and central support unit introduce the ability to manage functions on a regional or national basis. Potential to improve resilience through a larger joint operation, working closely with a national support function that can draw on a wider range of shared expertise. Recognition of gaps and weaknesses within current operating structures and ensure that transport governance standards are achieved.
• National visibility and robust management information; will provide a wealth of information including utilisation, fuel consumption, vehicle location etc. allowing for proactive decisions to be made based on real-time management information allowing NHS Boards to manage local fleets more effectively.
• National expertise; provide the ability to develop dedicated national expertise to carry out Fleet Management and Fleet Engineering duties, currently undertaken multiple times, once nationally and consistently for NHSScotland. The formation of a dedicated professional service specialising in functional areas, such as, telematics analysis and reporting, development of technical specifications, vehicle procurement etc. to meet current and Option 2: Regional with National Support

Car Leasing

Car lease policies have been developed since the late 1980s and have grown organically. The adoption of Trust Status introduced the provision of a lease car under certain terms as a "benefit" which was available to some sections of staff leading to further variation in the terms and conditions of lease car arrangements. When examining the car leasing arrangements which existed in NHS Boards it was noted there were 21 different policies covering 21 NHS Boards.

There are obvious opportunities to standardise the schemes and collaborate on their management. To this end, the car leasing workstream has analysed the various policies that exist across NHSScotland and has considered options for a more joined up and standardised approach.

A report was submitted to the Facilities Review & Shared Services Programme Board and the recommendations were approved on the 25th March 2014. The Recommendations focused on opportunities for the removal of variation and improved cost recovery associated with the adoption of a common set of principles for the assessment of financial viability of a car lease scheme; potential efficiencies to be realised through an automated Car Leasing Management Fleet Management System for NHSScotland; and potential efficiencies through changes to the management structure for the delivery of the car leasing function.

1. NHS Boards phase in all core principles upon renewal of existing leases (i.e. next 3-4 years) and new arrangements to commence for all new leases from no later than 1st April 2015. This recommendation is designed to remove variation when considering the financial viability of car lease schemes while also accepting there may be sound operational reasons to adapt policies in the knowledge that there are practical, and service requirements necessitate making car lease schemes more attractive to staff. However, this would be carried out knowing that the scheme adopted was not financially viable.

2. To seek funding for the initial purchase/ development of a Car Leasing Fleet Management System for NHSS. (Preferably, this will form part of the Commercial Fleet management system). This will improve efficiency through automation of various tasks to allow all NHS Boards to attain improved national level of performance, introduce consistency of Car Leasing Fleet Management Systems, allow data to be analised consistently across NHS Boards, introduce resilience into the operations and introduce the ability to manage the function on a regional or national basis.

3. Explore opportunities to increase collaboration leading to the potential for a virtual national team. This service would be enhanced by a single instance reporting system (i.e. a common Car Leasing Management System. This has the potential to improve resilience and make the operation more efficient.

Logistics

The logistics element of the review is considering the utilisation of the commercial vehicle fleet, the associated staffing resource, and the Boards interface with the National Distribution Centre.

Current processes, procedures, routes, and functions across NHS Boards are being evaluated in order to ascertain and gain a better understanding of the total cost and potential synergies that exist within the many Logistics operations.

Considerable opportunities exist for a more joined up approach across Scotland, with potential to realise better utilisation of the vehicle and logistics resources and improve the effectiveness and efficiency of the operations.

The main objective of the logistics work stream was to review the current NHSScotland logistics infrastructure, including the understanding of routes and types of logistics functions delivered.

Specific areas of focus were:

• Understanding the mapping and routes driven for NHS Boards
• Identification of fleet base lines, total in-scope vehicles, estimated costs etc
• Sharing of best practice examples and opportunities for efficiencies
• Identify areas where we can increase vehicle utilisation and maximise efficiency and effectiveness of the transport fleet
• Produce recommendations on future delivery of logistics operations
• Give consideration to wider changes to services e.g New South Glasgow Hospital, Soft FM Review

This work builds upon a pilot undertaken in NHS Grampian. The scope of the project included transportation of goods and services focussed on the commercial fleet (excluding patient and people transport) across NHS Scotland.

A data collection exercise was undertaken in September 2013 to capture vehicle assets and journeys travelled during a 4 week period across NHSScotland. This included all vehicles concerned with the transportation of goods and services across mainland territorial NHS Boards (partial data available for NHS Highland), Scottish National Blood Transfusion Service (SNBTS) and National Distribution Centre (NDC). Warehousing, sub-contracted volume and patient and staff transport e.g. porters / Scottish Ambulance Service (SAS) were considered out of scope.

Over the period from November 2013 to February 2014 the dataset was cleaned, validated and analysed by Information Services Division (ISD) working with individual NHS Boards.

Radial Distribution modelling on the dataset was carried out by DHL between February and June 2014. This produced a set of models which can demonstrate potential efficiencies which could be achieved in terms of fleet size, total kilometres travelled, and hours worked by varying base parameters.

The following opportunities have arisen for consideration and implementation:

• NHS Boards should consider the use of multi use vehicles as a means to reduce overall fleet cost and size
• Consideration should be given to the sharing of estates vehicles across trade
• NHS Boards should share plans on the replacement of fleet and share capacity of under-utilised fleet
• NHS Boards should consider in-sourcing the use of some couriers and taxis used for non-staff/patient transport by better utilising the fleet
• Efficient and Safe driving standards should be introduced across the fleet.
• Soft / Hard FM services review should consider the appropriate logistical model to support future cross boundary services
• NHS Boards to review detailed re-sequencing and other routing models to optimise local routes with the goal of achieving £1m/pa saving/cost avoidance.
• Central coordination for logistics within a Board would be beneficial in terms of accountability and driving efficiency.
• Commercial vehicles should follow a standardised national specification
• There is potential in some NHS Boards to offset the requirement for agency staff through re-sequencing of current driving routes

Next Steps

• Funding is being sought to set up a National Fleet Management Support operation
• Funding is being sought to procure and introduce a standardised Telematics system and Fleet Management system, both of which will be rolled out across NHSS commercial fleets
• The Car Leasing recommendations will be submitted to the NHS Boards Chief Executives' Group in August 2014. Following approval from the Efficiency Portfolio Board, the recommendation for NHS Boards to phase in all core principles upon renewal of existing leases will be passed to Scottish Government to facilitate negotiation at national level and, if necessary, prepare guidance to NHS Boards
• Funding is being sought to procure a quoting system for the NHSScotland leased car operation
• A report on the Logistics review will be submitted to the Facilities Review & Shared Services Programme Board in August 2014.

Conclusions

Significant progress has been made within the Transport and Fleet Management Review working within the QuEST Facilities Shared Services Programme. Subject to funding, the proposals will:

• Create a Fleet Management/ Transport national strategic function operating at best in class standards, reducing variation and delivering efficiency savings for future investment in front line patient services to support local Fleet operations
• Ensure more effective and efficient use of NHSScotland fleet resource and deliver service improvements in areas which are weak
• Ensure consistent governance and resilience is embedded across NHSScotland Fleet Management/ Transport/ Car Leasing operations and the function has the ability to adapt and respond to a changing Health & Social Care environment