29 April 2015
The full article can be read here: "Whipps Cross in Intensive Care"
Until 2012, the 100-year-old Whipps Cross University Hospital was an independent hospital serving a large area of East London, with one of the busiest A&E departments in the country. After just 3 years in the Barts Health NHS Trust, the hospital has been rated ‘inadequate’ in a recently published CQC (Care Quality Commission) report, while Barts Health NHS Trust has fallen into ‘special measures’.
Much of the blame for this sudden decline in the hospital’s fortunes can be laid at the door of a hugely expensive PFI debt, incurred by the £1.1 billion rebuilding of the Trust’s Royal London Hospital. Repayments are in excess of £100 million a year, yet Barts only receives half this amount from the NHS centrally, starting each year some £50 million in debt.
But this is only part of the story. The lesser-known but even more damaging culprit in this long-running saga is a tariff system known as Payment by Results (PbR).
In a 2011 study of services at two South East London hospitals for The King’s Fund, Keith Palmer, ex-chairman of Barts’ Hospital and ex vice-chairman of N M Rothschild investment bank, explains that Payment by Results means that NHS Trusts are reimbursed for their costs according to an average, rather than according to their actual costs.
Today, Barts Health Trust makes annual PFI capital repayments of 11%-12% of its income, but because of PbR, its annual reimbursements of 5.8% from NHS England are only half of what it needs to break even, a shortfall of some £50 million.
Because PFI repayments are legally protected and take priority over treating patients or paying staff, Whipps Cross administrators have been forced to implement a range of unpopular and damaging financial cutbacks which threaten the viability of the hospital.
Nationally, all hospitals with a PFI are in serious financial trouble. Those with older hospital buildings, and hence lower capital costs, have large net cash balances.
At the end of March 2014 the National Audit Office stated an overall surplus for all trusts of £4.3 billion.
Michael Gold said:
“To actually reimburse the hospitals the amount they pay out, as opposed to continuing with this financial farce of the average, wouldn’t cost a penny more, since it is just a redistribution of exactly the same pot of money. It is entirely possible to fund the NHS properly, but Instead of protecting it, politicians from all the main parties have made it look like a financial basket case.”
Payment by Results is a device which benefits private healthcare companies. An average price is effectively a fixed price and provides a commercial certainty for the private sector in tendering for NHS contracts.
Michael Gold concluded:
“The majority of the public widely support a publicly owned and publicly run NHS, free at the point of delivery. Payment by Results has been the main cause of its decline. For the common good, this appalling system must be scrapped immediately.“
