“Hit Squad” for BHRUT or for East London?

Neil Zammett writes

 

The announcement by Simon Burns the former Health Minister that a “Hit Squad” is to move in on BHRUT seems to be good news. Not surprisingly the minister blames the previous government for the parlous financial state of the beleaguered Trust and he has a point because the very large investment represented by Queen’s hospital had both Department of Health and Treasury approval.

On the other hand the previous government was arguably more responsible for the performance of the overall policy of PFI rather than a few problematic cases. The Minister will be viewing events from a different perspective now-I wish him well.
Those responsible locally faced a very real dilemma in approving the Queen’s development. Of the two hospitals it replaced, Harold Wood was a largely hutted complex of buildings left over from the emergency hospital built during World War Two. There had been some new build for example the maternity unit but most were totally unsuitable for 21^st century medicine.
Oldchurch represented one of the worst examples I have seen of piecemeal development in a constrained town centre site. Buildings from various era in a poor state of repair were huddled together often with no logical functional relationship.

The original solution was to build on at Harold Wood because it was the larger site and the huts were easier to demolish. It soon became clear that NHS funding would only be available in dribs and drabs and that population and access pointed towards a development in Romford. The “Ice Rink” site represented a once in a generation opportunity to combine the two hospitals using the PFI and despite an initial “wobble” when the developers looked about to pull out the local health authority decided to recommend the development.

At the other end of the “patch” in Whitechapel the new billion pound Royal London PFI is also the outcome of a tortuous decision making process. I was peripherally involved when Colin Berry was Dean and again site problems, shortage of higher education and NHS funding and ageing buildings were strong drivers behind the PFI solution. The situation has been exacerbated by smaller scale investment at Newham and Whipps which have been merged into Barts Health because they were not financially viable.

This sort of logic is the root cause of many our current financial difficulties. As in South London we have a number of very expensive solutions to building problems which were not part of a coherent strategy which looked at long term affordability. Individually they may have made some sense, but there is now an emerging issue of whether the population in East London can generate enough “business” to pay off the debt these developments have incurred.

I share the view of many others that as central government approved the PFI schemes the final responsibility for under writing the excess costs lies with them. In the case of BHRUT we know from the Auditors’ Public Interest Report that the PFI costs about 50% more than the average, an additional cost of around £15 million per annum by my calculations. They should start paying this up front now to take some of the pressure off the Trust. You don’t need a hit squad to work that out.

The new PFI at the Royal London is part of the merged Bart’s Health now and the financial advisors estimate that the savings in back office staff will come to £30 million per annum- equivalent to about 1000 jobs. The merged Trust has an underlying deficit of £26 million for Barts and the London and £15 million for Newham and Whipps. For 2012-13 this is supported by the use of mainly non-recurrent reserves but after this the financial performance of the Trust will be largely dependent on its ability to make savings.

To me this scenario looks ominously similar to the troubled South London Trust where three financially “challenged” organisations with big PFI debts were merged only to effectively become bankrupt because the estimated savings could not be achieved. I sincerely hope I am wrong but a billion pounds sounds like a lot of money to me, you can’t even dial that on your telephone.

To add to the problems of strategy; the Royal London PFI was excluded from the Health4NEL exercise so we have no idea of its impact on either financial viability or service configuration for East London as a whole. What we urgently need now is a proper strategy for East London which looks ahead to 2022 and integrates the plans for BHRUT and Barts Health. This is what the “Hit Squad” should be concentrating on.