A hospital which became a foundation trust just six months ago has admitted to being in 'acute' financial difficulty, and management consultants specialising in turning around failing institutions are now looking at the trust's books.

The intervention has come after Bradford Teaching Hospitals NHS Foundation Trust informed the independent regulator that it could overspend its budget of £180 million by more than £4 million by the end of the financial year in March 2005.

The regulator, now known as Monitor, has had to use its regulatory powers for the first time and is working with the trust to agree a financial action plan.

William Moyes, chairman of Monitor, said the financial difficulties would not affect patient care but that a robust plan was needed to clear the trust's deficits.

David Jackson, chief executive of the trust said the hospital would address the problems by seeking out efficiency gains and cost savings and stressed it would not mean fewer patients are treated.

He said  implementing the new NHS pay scheme Agenda for Change, the new consultant contract and other inflationary pressures were affecting not just Bradford, but all trusts.

"Additionally, as an NHS Foundation Trust, we are piloting the new funding systems for NHS hospitals and we no longer have access to financial support from the wider system," he said.

The new funding system, Payments by Results, links the amount of money a trust receives to the number of patients treated. Foundation trusts are piloting the system ahead of the rest of the NHS, and Bradford says its impact and a "continuing lack of understanding" about its workings has been financially damaging.

The hospital says fewer patients than expected have been put forward by its PCTs for elective treatment, while the hospital is treating more acute admissions (including A&E cases) than have been budgeted for.

Moyes disagreed with the trust, however, and said the problems were due to a range of factors, including more general cost control issues.

The decision on whether to approve the next 20 applicants for foundation trust status has now been pushed back by two months and subsequently rests on assessing the impact of next year's NHS price lists on the hospital's finances.  

A spokesman for Bradford's three PCTs - Bradford City Teaching PCT, Bradford South and West PCT and North Bradford PCT - said the news should not detract from achievements across the local health service,  and said all the trusts would work together to resolve teething problems.

"Like Bradford Teaching Hospitals, we are still feeling our way with the new financing system that we began to pilot just six months ago. We recognise that the early stages of any new system can often bring a degree of uncertainty."

The news is a huge political embarrassment for the government, which has made the creation of foundation hospitals one of its flagship reforms, claiming that giving top-performing trusts greater financial freedom would allow them to serve their local community more effectively.

In May 2003, over 130 Labour MPs signed a Commons motion opposing legislation which would allow the creation of foundation trusts, and the government succeeded in passing the bill with only the narrowest of margins.

Frank Dobson, the former health secretary and a staunch critic of foundation trusts said the early appearance of such problems was indicative that "the system isn't working".

Bradford is not the only foundation trust to hit problems. Regulator Moyes told the Financial Times that "one or two" of the other ten established foundation trusts were experiencing financial difficulties, although these problems were not on the same scale as in Bradford.

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Wednesday, July 21, 2004

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