Health secretary promises loans to hospitals in trouble

BMJ 2011; 343 doi: (Published 27 October 2011) Cite this as: BMJ 2011;343:d7000
  1. Nigel Hawkes
  1. 1London

The health secretary has undertaken to provide support to hospitals crippled by debt, providing they meet a set of conditions.

Denying this was a backroom deal, a bailout, or a “sticking plaster solution,” Andrew Lansley said that the problem had been ignored by Labour for a decade. Speaking at a conference organised by the right leaning think tank Reform on 26 October, he said: “We need to be honest about the problems—burdensome debts and onerous private finance initiative payments—and transparent about how we go about fixing them.” He promised one-off loans to help recapitalise hospital trusts “where they face difficulties through no fault of their own.”

To qualify for the loans, a hospital’s problem must be exceptional and long standing, and it must show there is a clear plan to manage resources in future. Services must be of high quality and clinically viable, including the delivery of low waiting times, and to qualify hospitals must show they are delivering high annual productivity savings.

Mr Lansley made no estimate of how many might qualify, and a Department of Health spokeswoman also declined to give a figure, saying that nobody yet knew the number.

Calling it a “transparent and open process” Mr Lansley sought to make a distinction with the long tradition of bailouts of various sorts under preceding health secretaries. Not everyone in his audience was persuaded. “A bung’s a bung whatever he chooses to call it,” one told the BMJ—on condition of anonymity—as he left the hall afterwards.

But Mr Lansley gave a thinly veiled warning to any hospital managements who think the loans will free them from pressure. Although the root of the problem lay for many in the wider health community, for some it lay in poor management.

“For them, I have a stark warning. You have signed agreements telling us and your local communities by when you will be clinically and financially viable. If your hospitals are not there by the time you say, you’re not getting there at all. The secretary of state has the power to remove and replace management teams that fail to deliver and I will not hesitate to use that power if needed.”

Mr Lansley said that he was determined to drive out poor care, and had ordered an additional 700 unannounced inspections by the Care Quality Commission. These would follow up 100 inspections of hospital and care homes already carried out whose results, published last month, had revealed half gave cause for concern, and 20 were not delivering care that met the essential standards the law requires.

The health secretary was speaking at a conference on making clinical commissioning work, which had already heard a warning from shadow health minister Andrew Gwynne MP that the progress the NHS had made under Labour could go into reverse as a result of the coalition government’s reforms. Mike Farrar, chief executive of the NHS Confederation, questioned the wisdom of cutting management numbers in order to save money. The risk was of a “dangerously low” level of expertise in managing clinical commissioning, he said.

Various speakers, including Mr Farrar, questioned whether payment by results was any longer the right payment method. While it had provided incentives for hospitals to increase activity and clear waiting lists, it now created perverse incentives to treat too many patients in acute care. Others, including Matthew Swindells, senior vice president of global consulting at Cerner, agreed that payment by results inhibited moves towards integrated care, while Viggo Birch, vice president Europe for Novo Nordisk, also laid blame on foundation trusts as “one of the biggest barriers” to integrated care.

Lord Warner, a health minister under Labour, questioned whether NHS services could ever be reformed while MPs and even ministers joined public protests outside hospitals that faced any change, while Nick Bosanquet of Imperial College suggested that the hospital loans would look better if redesignated as a fund for service redesign.

Mr Lansley responded by saying that such a fund already existed, and that people were too pessimistic about reconfiguration. “I can think of six places where reconfiguration is happening now,” he said. He declined to name them because he said if he did somebody would go and investigate and cause trouble.


Cite this as: BMJ 2011;343:d7000

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