MRI Scanner: Funding for replacement

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A decision made on 25 April 2016:

Decision Reference: MD-HSSD-2016-0031
Decision Summary Title :	Funding for replacement MRI Scanner		Date of Decision Summary:	2nd April 2016
Decision Summary Author:	Planning Accountant		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Increase in Revenue Budgets and Revenue to Capital Transfer		Date of Written Report:	2nd April 2016
Written Report Author:	Assistant Director of Finance – Planning		Written Report : Public or Exempt?	Public
Subject: Approval to increase the revenue income and expenditure budgets within Health and Social Services (H&SS) and the transfer from revenue to the Replacement MRI Scanner (J00MF15025) capital head of expenditure.
Decision(s): The Minister approved the creation of up to £750,000 additional income and expenditure budgets within the Health and Social Services revenue head of expenditure, and the subsequent internal budget transfer in 2016 of up to £750,000 from the Health and Social Services revenue head of expenditure to the MRI scanner capital head of expenditure, as detailed in the attached report.
Reason(s) for Decision: Article 18(1)(a) of the Public Finances (Jersey) Law 2005 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be transferred from a revenue head of expenditure to a capital head of expenditure, or vice versa, in order to comply with accounting standards issued for the purposes of Article 32(2). Delegation 1.2 delegates authority for non-contentious transfers between revenue and capital heads of expenditure (and vice versa) with no financial limit where the transfer is solely to ensure that financial transactions are accurately reflected in the States’ Accounts in accordance with accounting standards issued under Article 32(2) of the Law.
Resource Implications: The Health and Social Services revenue head of expenditure will show an additional income budget of up to £750,000 and an additional expenditure budget of up to £750,000, a net nil change. This expenditure budget will subsequently be transferred to the Replacement MRI Scanner (J00MF15025) capital head of expenditure, increasing it by up to £750,000 and reducing the Health and Social Services revenue head of expenditure by up to £750,000.
Action required: The Assistant Director of Finance (H&SS) to request the approval of the Treasury Minister or Treasurer in accordance with Finance Direction 3.6 for the transfer as described above.
Signature:		Position: Minister for Health and Social Services
Date Signed:		Date of Decision (If different from Date Signed):

MRI Scanner: Funding for replacement

Health and Social Services

Ministerial Decision Report

Increase in revenue budgets and revenue to capital transfer

Purpose of Report

To enable the Minister to approve the creation of up to £750,000 income and expenditure budgets within the Health and Social Services head of expenditure, and the subsequent internal transfer of budget from the Health and Social Services revenue head of expenditure to the Replacement MRI scanner (J00MF15025) capital head of expenditure.

Background

The present MRI Scanner was commissioned in December 2007 and funding has been approved by the States Assembly in September 2015 (as part of the 2015 Budget debate) to replace it.

The use and reliance upon MRI is increasing and the department needs to respond to this by ensuring that Radiology does not become a “bottle-neck”.
Prompt MRI examinations can improve the outcome for patients, promote timely discharge and help get people back into work.
Weekend and evening work is currently routine. The service operates from 07.30 hours to 20.00 hours Monday to Friday and from 08.30 hours to 18.00 hours every Saturday with occasional Sunday lists.
The average waiting time for a routine MRI is 17.4 weeks; this has risen over the past 2 years (13 weeks in 2013, 14 weeks in 2014).
The demand for the service increases year on year by approximately 3%.
The MRI scanner is operating close to capacity: if the unit breaks down, waiting times will increase.
The complexity of some cases has increased resulting in the need for longer scanning times and therefore less patients can be scanned in the same time.

The budget allocated to replace the MRI scanner is not sufficient to pay for a second system and the associated building work as space has to be created; it is sufficient to replace or convert the existing scanner as had originally been anticipated in 2007.

The need for two MRI scanners has been identified and a Feasibility Report has been submitted. The result of the analysis has demonstrated that the space for a second scanner cannot be created within the replacement budget already allocated.

It is therefore proposed that rather than replace the existing MRI scanner, with the disruption of the service and the requirement for a mobile scanner for the duration of the works, ~~that~~ a second scanner is installed. It is recognized that the original scanner will be older and should be used largely as a contingency. This proposal will give security of service to the island, will enable us to realistically address some waiting list issues and helps us to prepare for a two scanner model of care that will be in place in the new hospital.

The original capital allocation is £2,277,000 and the cost of the proposal is approximately £3,000,000, leaving a shortfall of £723,000.

A very generous donation of £750,000 has been promised by Mr Michael and Mrs Maureen Depper that is specifically to be donated for a 2nd scanner and this has made the possibility of creating the physical new location a financially viable option.

Recommendation

The Minister approves the use of income and the creation of up to £750,000 additional income and expenditure budgets within the Health and Social Services revenue head of expenditure, and the subsequent internal budget transfer in 2016 of up to £750,000 from the Health and Social Services revenue head of expenditure to the Replacement MRI scanner (JM00MF15025) capital head of expenditure. The transfers will be made only once the donation has been received and for a value equivalent to the total donation (up to the approved amount).

Reason for Decision

Under International Financial Reporting Standards (IFRS) expenditure that meets the definition of capital expenditure must be capitalised. This budget transfer is the movement in budget between revenue and capital required to align the budgeting treatment of expenditure with the accounting treatment, in order to comply with IFRS.

Section 5.1 of Financial Direction 3.6 Variation to Heads of Expenditure states that Departments wanting to transfer funds between heads of expenditure must obtain the approval of their Minister prior to obtaining approval from the Treasury Minister or Treasurer.

Article 18(1)(a) of the Public Finances (Jersey) Law 2005 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be transferred from a revenue head of expenditure to a capital head of expenditure, or vice versa, in order to comply with accounting standards issued for the purposes of Article 32(2). Delegation 1.2 delegates authority for non-contentious transfers between revenue and capital heads of expenditure (and vice versa) with no financial limit where the transfer is solely to ensure that financial transactions are accurately reflected in the States’ Accounts in accordance with accounting standards issued under Article 32(2) of the Law.

Resource Implications

The Health and Social Services revenue head of expenditure will show an additional income budget of up to £750,000 and an additional expenditure budget of up to £750,000, a net nil change. This expenditure budget will subsequently be transferred to the Replacement MRI Scanner (J00MF15025) capital head of expenditure, increasing it by up to £750,000 and reducing the Health and Social Services revenue head of expenditure by up to £750,000.

Report author :

Assistant Director of Finance - Planning

Document date : 02 April 2016

Quality Assurance / Review :

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Director of Finance and Information