Two NHS trusts could fail owing to “catastrophic” mistakes, warn MPs

BMJ 2013; 346 doi: (Published 07 February 2013) Cite this as: BMJ 2013;346:f808
  1. Adrian O’Dowd
  1. 1London

Two NHS trusts in Cambridgeshire are in danger of failing and have an uncertain future because of large debts and “catastrophic” decisions made locally and nationally, concludes a damning report by MPs.

In a report published on 7 February the parliamentary public accounts committee has warned that the futures of Hinchingbrooke Health Care NHS Trust and Peterborough and Stamford Hospitals NHS Foundation Trust are in doubt unless they can make unprecedented savings.1

The crux of the problem lies in what the MPs called a “complete lack of strategic oversight” that led to separate decisions to build a new private finance initiative (PFI) hospital at Peterborough and to award a franchise to a private company to run a nearby NHS hospital.

The report says that no consideration was given to the risks and the effects that these two decisions would have on the local health economy, even though the hospitals are only 30 km apart.

The committee’s inquiry was prompted by two National Audit Office reports published in November last year that looked at the two trusts’ financial difficulties.2 3

The PFI hospital in Peterborough was operational in December 2010, and by the end of 2011-12 the trust had accumulated a deficit of £45.8m (€53.1m; $71.9m) on a turnover of £208m, giving it the highest ratio of deficit to turnover in the NHS of 22%.

The trust, the East of England Strategic Health Authority, and the Department of Health did not act on warnings by Monitor, the independent regulator of foundation trusts, about the affordability of the PFI deal, said the MPs.

Weak financial management at the Peterborough trust made matters worse, and Monitor was not “sufficiently alert to the risks,” says the report, which adds that the trust’s financial position was now so serious that, even if it managed to make tough annual savings, it would still need financial support of as much as £26m a year for the next 30 years to remain viable.

Meanwhile, the report also details the troubles at Hinchingbrooke Health Care NHS Trust, which in February last year became the first NHS trust to be run as an operating franchise by the private company Circle Healthcare.4

The deal was agreed after the trust accumulated a deficit of £39m between 2004-05 and 2007-08 on an annual income of around £73m.

The report says that the trust would need to make substantial savings to remain viable and that Circle Healthcare, which aimed to achieve savings of £311m over the 10 year life of the franchise, had so far not achieved the savings it expected to in the first few months of operation.

Stewart Jackson, a senior member of the committee and the Conservative MP for Peterborough, said, “The PFI deal for Peterborough and Stamford has proved catastrophic, with the Department of Health now being forced to pay out nearly £1m a week of taxpayers’ money to keep the trust afloat.

“Both trusts will have to make unprecedented levels of savings to become viable. In Peterborough and Stamford’s case, this won’t be enough. The future of both is in doubt, with unknown consequences for patients in the area and the taxpayer. The reality is that there is not enough funding there for both trusts to thrive as currently configured.”


Cite this as: BMJ 2013;346:f808