Jo Revill, health editor 

NHS hospitals sink into debt to pay off PFI

At least 10 NHS hospitals, built with private-sector funds, are facing deficits amounting to more than £40 million, says a new report from health campaigners.
  
  


At least 10 NHS hospitals, built with private-sector funds, are facing deficits amounting to more than £40 million, says a new report from health campaigners.

One hospital has had to close a ward, another has raised its car-parking charges for visitors, and several others are cutting back on agency staff to save money. The large monthly sums they have to pay to their private consortium partners, along with the rising number of emergency admissions, has put them under financial pressure.

There are growing concerns that the Government's private finance initiative (PFI), under which NHS hospitals are built and run by private companies, is leaving many trusts facing large debts - without the flexibility to offset their costs.

Worst hit is the Worcestershire Royal, which opened in March 2002. The 550-bed hospital, which cost £95m to build and equip, is facing a £15m debt. Chief executive John Rostill said the main factor was a rise in emergency admissions, leading to pressure on beds and new facilities having to be opened overnight, with extra staff costs. More than 800 operations had to be rescheduled, some into the private sector.

'I don't believe there is a case for blaming the PFI for the deficit, but it does hamper my flexibility,' he said. Increasing staff costs were his greatest concern.

The fixed monthly payments that a trust has to make to the private consortia that build and run its hospital are usually fixed for 30 years. The schemes are expensive because they involve spending thousands on legal and management consultant advice. Some health experts are worried about being left with little leeway to meet other, unavoidable costs.

A 'snapshot' survey of 10 hospital trusts in England and Scotland found combined deficits of almost £50m and a succession of problems owing to the reduced numbers of beds in the new hospitals, all of which have opened since 2000.

One, the £93m Queen Elizabeth in south-east London, had to close a ward last year to save money towards its £4.6m deficit - even though this added hundreds more patients to its waiting lists.

A spokeswoman said: 'Closure of the surgical ward has led to a small increase in the number of patients on the trust's waiting list. We are confident, however, of achieving the Government's target of having no patients waiting more than nine months by the end of this financial year.'

At the West Middlesex in south-west London, a deficit of £2.6m is forecast for the end of March. A spokesman said a sharp rise in the number of emergency admissions was largely to blame.

But the other financial pressure has been the cost of new contracts for consultants. Senior Department of Health officials are trying to help to bail out the most in-debt trusts with special arrangements for consultants' contracts, under which doctors will receive more money for doing extra work. Some of the worst-hit hospitals may be allowed to defer the costs of the new arrangements into the next financial year, a move widely seen within the NHS as an 'accountancy fudge'.

John Lister of campaign group London Health Emergency, which carried out the survey, said the hospitals built in the first wave of PFI face a unique handicap in the new competitive environment from April.

'They have to pay a monthly index-linked fee to the consortium to cover the lease of the new building and the provision of all non-clinical services and maintenance. This means that, if the trust runs into financial difficulties, the only parts of the budget the trust itself still controls are clinical services: doctors, nurses and patient care.'

Nigel Edwards of the NHS Confederation, which represents health service managers, said it was not yet clear whether a rise in emergency admissions was responsible for the deficits.

'If you set a target of only a four-hour wait in casualty, you might expect more people to be admitted,' he said. But when it comes to PFI, he said there was a question over the procurement method, and how affordable the capital was under the current regime. He said that trying to balance all the different requirements from the NHS 'makes affording capital quite tough - you are paying more for the assets than you were when you had the old one [hospital].'

There is also concern that the move towards setting up foundation hospitals will exacerbate problems. Professor Alysson Pollock of University College London said: 'The annual charges to the consortia are biting very hard, and one of the few ways they can meet them is to close other services. The problem is the PFI charge takes away a lot of their flexibility, and on top of that they still have to meet the waiting-list targets.

'What is worrying is that the foundation hospitals will be given subsidies that won't go to the other trusts, so the financial situation will look even more bleak.'

 

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