Filed Under (Expenditure, Localities, Resources) by Paul on 27-06-2012
First I should say that I have some historical interest here. I was an executive director in the London SHA when this trust was created by the merger of three existing trusts. The trusts that were merged were not viable. But the trust that the merger created has also turned out not to be viable and I think we should have been more aware of this at the time. When the NHS did not really know what to do it merged problem hospitals into a single institution. (As you will see from my comments below, this is something the NHS still does all the time).
For much of the last two years the South London Trust has been losing about £1 million a week. For as long as money didn’t matter, those sorts of sums never seemed to worry the NHS. But in fact the £1 million that is lost every week is money that is not being spent on health care for others. Trusts that are viable have to subsidise those that are not.
Taken as a whole the trust has a deficit of £69 million on a turnover of £424 million. In 2012 the NHS can no longer afford this scale of subsidy. The reason the threat of this hospital entering administration is so important is that the drift that has been going on in this hospital – and others – can no longer be afforded.
This is an important moment for the NHS. Over the last six months I have been engaged in weekly discussions with a range of people about whether the Government would create a fund to subsidise every hospital, however unviable, for the next three years until the next election Many people suggested to me that the Government would go on bailing out failing hospitals and the Chancellor would simply find more money.
This first use of the 2009 Act failure regime is the first sign that the Government does not have the money to do this. The international economic crisis has brought the ‘real world’ of economics home to the NHS. I think this means that the Secretary of State has been told that there is no more money for the NHS and therefore it – like most of the rest of our society – will have to live within its means.
I think this will mean that this will just be the first of many where a lack of viability will lead to administration. The Secretary of State will do this with other NHS hospitals, and I would not be surprised if in the next few months Monitor starts to do the same with some of its special measures hospitals.
What was most instructive about this was the response of the NHS Confederation to threat of administration to one of its members. Did they jump up and down and say – this isn’t fair, they need more money and support? Why is the Secretary of State being so nasty?
No, they didn’t. Because they know that the £1 million a week needs to be spent elsewhere with members who would spend it more wisely on better value health care. Instead the CEO of the Confed said, “We welcome this decision. The NHS can’t go on with short term fixes to financial problems. That might mean some tough decisions, but hopefully will deliver financial sustainability in the long term”.
Their response is as important as the threatened action by the Secretary of State. The leadership of the NHS trade association is saying to the Secretary of State that we will not support bad practice but will support you as you deal with the lack of financial sustainability of some of our members. This is a very unusual and important reaction for a trade association and is urging the Secretary of State to go further and faster.
What happens next?
First let’s be clear this is happening under existing NHS architecture. For the moment the Health and Social Care Act does not apply. So the Secretary of State is calling in the administrator and until next April it will be the SHA who will carry out his orders.
What would be best for the people of South London?
Speedily the NHS needs to make it clear that they will continue to have access to care – and that some of that will be provided by some of the best hospitals in the country. The access may not be from the same buildings, but it will be there. Personally I would say that in all three localities NHS health care will continue to be delivered. But not in the same configuration and in the same place.
The administrator needs to assure the people of South East London that the NHS will not abandon them. They will then have to look for a new owner or set of owners to ensure the provision is viable.
Let’s be clear that the answer is not another merger. Bringing this hospital together with other non viable hospitals will not solve the problem. The hospital needs to be taken over and reconstructed – not merged.
Some Foundation Trusts may want to bid for the right to run this health care. Or Circle might want a second example of having their organisation running NHS provision.
This needs to be carried out both quickly and skilfully because it is clear that others will be following this example.