Transfer of community services to new host

In 2010, an acute Foundation Trust was selected as the preferred bidder to acquire the community services provided to the residents of 2 London boroughs. The services were being transferred under the Department of Health’s programme to divest all PCTs of their service provider role so that they could concentrate solely on commissioning world class health services.

As part of the preparation for a full due diligence review of the proposed transaction, in September 2010, the new provider’s Board asked us for an initial assessment of the financial viability of the community services business and its potential impact on their financial strength.

We constructed a financial model that could assess the true financial position of the community services business in advance of the full Long Term Financial Model required by Monitor. The model took the last 3 years historic income and expenditure for the services, as well as the current year (2010/11) forecast outturn income, expenditure and balance sheet. It then provided a 5 year projection of income, expenditure, capital commitments, balance sheet and cash flow. It also assessed the financial risk rating of the community services business as an autonomous service division.

This enabled the Board to take an initial view as to the financial and business viability of the proposed transaction and its impact on the financial risk rating of the new provider as a whole.