Financial evaluation of the options was undertaken as part of the investment evaluation. A final conclusion on the best option based on both socio-economic and financial criteria was reserved until after the completion of the investment evaluation.
The purpose of this report was to assist DHS to determine and evaluate procurement options for the delivery of the project by:
● providing a summary analysis of the RWH redevelopment options (as documented in the feasibility study)
● making a recommendation on a preferred procurement option based on an evaluation of project risk and associated costs and benefits to the state (including examination of a Partnerships Victoria approach)
● identifying the potential for capital and recurrent cost savings available to the state through the co-location of the RWH and Royal Melbourne Hospital
● evaluating the risk and return of various commercial opportunities linked to the RWH project (such as car parking, retail precinct and consulting suites).
The investment evaluation report for the new hospital was presented to government in March 2003 and recommended that the preferred option was to build the new hospital at the Royal Melbourne Hospital site.
The key reasons for this decision were:
● clinical outcomes-given the age and functional deficiencies of the existing RWH facility, patient safety and services would be improved for acutely ill patients, through co-location with a general adult tertiary facility that has an adult Intensive Care Unit and associated medical support
● synergies and cost efficiencies-a number of opportunities were available to integrate both clinical and non-clinical services to improve efficiencies and annual cost savings up to $10 million
● capital funding-the relocation of the RWH to a site that is owned by the state (through Melbourne Health) would allow the disposal of the existing RWH site and a number of ancillary property assets
● retention of specialised women's health care-the proposed new RWH would deliver a 'world-class' specialist women's health care facility for Victoria. This was seen to be an extremely important outcome given the results of community consultation, which indicated that women in Melbourne and Victoria place a high value on a dedicated facility
● overall network reform-the project would facilitate the reform of the former Women's and Children's Health and Melbourne Health (MH), to achieve cost savings and a specialist focus on women's health.