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Warning over "financially unsustainable" hospital

A hospital which has been crippled by private finance initiative repayments would not be able to pay its staff or buy any more medical supplies if the Department of Health does not intervene, financial experts have suggested.

Experts warn Peterborough and Stamford NHS Foundation Trust is "financially unsustainable"

A hospital which has been crippled by private finance initiative repayments would not be able to pay its staff or buy any more medical supplies if the Department of Health does not intervene, financial experts have suggested.

An independent team of experts appointed by health regulator Monitor found that Peterborough and Stamford NHS Foundation Trust is "financially unsustainable" in its current form.

The trust had a deficit of £37 million by the end of the last financial year, despite receiving a one-off payment from the Department of Health of £44.1 million.

But the Contingency Planning Team (CPT) found that if there were no further support, the trust "would not be able to pay its bills (such as for wages and supplies) as they fall due".

The CPT criticised the "under utilisation" of the trust's main hospital - which is also the source of the massive PFI debt.

Peterborough City Hospital, a 611 bed hospital, is provided under a PFI agreement that is costing £40 million a year and has 31 years left to run.

The Department of Health approved the PFI scheme in June 2007, even though Monitor raised serious concerns about the affordability of the scheme.

In February, the Department was criticised for allowing the PFI deal to go at the same time as awarding a franchise to a private firm to run the nearby Hinchingbrooke Hospital.

The Commons Public Accounts Committee (PAC) said there had been a "complete lack" of strategic oversight over the building of the hospital in Peterborough while allowing Circle healthcare to run Hinchingbrooke which is just 23 miles away.

The CPT estimated that for the next five years the trust will show a "continuing deficit of £38 million or more each year, and a cash shortfall of at least £40 million a year", the team said.

Despite the financial struggles it is still providing appropriate patient care, the CPT said.

The team will soon make a series of recommendations as to the future of the hospital, a Monitor spokeswoman said.

"This report clearly shows that Peterborough and Stamford Hospitals NHS Foundation Trust is not financially sustainable," said Stephen Hay, managing director provider regulation at Monitor.

"We now expect the CPT to advise us what practical options are available to close the financial gap and ensure continuity of service to patients.

"Monitor is ensuring the voice of patients and the local community are listened to, and that the health needs of local people will continue to be met for years to come."

The trust was awarded foundation trust status - a supposed marker of excellence in the NHS - by 2004.

It provides services to patients in Cambridgeshire and Lincolnshire and employs around 3,400 staff.

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