Hospital trusts needed financial help last year to fend off legal threats from suppliers, update “obsolete” medical equipment and even keep electricity supplies flowing, according to a raft of pleas for bailouts seen by HSJ.
Details of these and other requests for financial assistance were released to HSJ under the Freedom of Information Act by the independent trust finance facility, which is part of the Department of Health.
The pleas lay bare the extent of financial pressure on some of England’s hardest pressed trusts. HSJ has seen details of 15 loan requests to ease short term financial cash flows. One hospital claimed it was threatened with the disconnection of its electricity supply after failing to pay a bill. It also faced legal action after suppliers suspended deliveries for late payments. Another trust admitted its operating theatres had reached “the end of their useful life” after maintenance budgets were frozen (see boxes, below and right).
Fifteen of the loan applications seen by HSJ which were considered by the ITFF in February and March, were from trusts seeking financial aid. Many required help to plug financial gaps at the end of the 2013-14 financial year. Many trusts also failed to meet savings targets.
The disclosures come at the end of a difficult financial year for NHS providers. Twenty-six of the 99 non-foundation trusts delivered year-end deficits totalling £460m, the NHS Trust Development Authority revealed in board papers last week.
While most trusts are yet to make firm predictions of their 2014-15 financial position, the papers show that several foresee continued or worsening deficits.
Medway Foundation Trust, which has a turnover of £250m, projected a £15m deficit in 2014-15, while Bedford Hospital Trust, which has a £150m turnover, anticipated going £7.6m into the red by the end of this financial year. The trust said it had lost income when its paediatric service was suspended last year. It was also penalised by commissioners for missing targets and had to deal with increased activity.
Before the Health Act 2012 came into force, trusts could request financial support from the DH, strategic health authorities or their primary care commissioners. Now the TDA or Monitor must channel all requests to the ITFF, which allocates DH funds.
James Wilson, managing director of financial consultancy Assista, said loan requests were now subject to greater scrutiny. “I partly question whether the reasons [the applicant trusts] have given are the real reasons or are just what they think will get them the money,” he added.
A provider source said clinical commissioning groups appeared to be “tighter” in withholding income through penalties than PCTs. A report to the TDA’s latest board meeting supported this view. It said: “A commissioner rules based approach result[ed] in a decrease in non-recurring income this year compared to other years.”
Emergency pleas made for defribillators, dialysis machines and surgical instruments
Two trusts reported significant problems replacing medical equipment because of low cash flow, according to the loan fund requests seen by HSJ.
University Hospitals of Coventry and Warwickshire Trust’s application for £9m said the trust faced an “untenable level of equipment breakdown and obsolescence” for dialysis machines, critical care beds, pathology analysers and surgical instruments. Its patients faced “increased clinical risk” from endoscopy systems and examination couches “failing to meet appropriate standards”. The bid, which was approved by the Department of Health’s independent trust finance facility, did not include measures to address the £15m replacement of operating theatres that “have in effect reached the end of their useful life”. The trust said its poor cash flow forced it to restrict spending on capital projects not covered by its private finance initiative agreement. This led “to a significant proportion of the trust’s non-PFI assets being fully depreciated”.
North Cumbria University Hospitals Trust was ordered to review its replacement programme for medical equipment following concerns raised by inspectors. Its March bid for £5m said: “Without significant investment within the next 12 months, more than 70 per cent of the medical equipment will be beyond its expected life.”
Equipment listed as a priority for replacement included anaesthetic machines and defibrillators.
Its bid was approved by the ITFF.
Trusts delay payments to suppliers
North Cumbria University Hospitals Trust was so late paying its bills an electricity company threatened to cut off the supply to its West Cumberland Hospital site.
According to its loan application, only 19.5 per cent of the trust’s non-NHS suppliers had been paid on time at the end of January, against a target of 95 per cent.
The trust, which has a turnover of £225m, bid for £47m, £7.4m of which was to pay overdue bills.
The application described an accounts payable department that “spend most of their working day dealing with telephone calls from suppliers who are chasing payment” while “other senior managers up to director level also have to field calls and deal with emails from suppliers”.
It added: “Interest has been charged for late payment of commercial debt and many suppliers are threatening and taking legal action.”
The trust’s bid was successful and finance director Steve Shanahan said the organisation had dealt with the “immediate cash flow issues”.
This week a spokeswoman said the bid submitted in February had been “worded incorrectly” and supply had only been threatened to “a property associated with the hospital” over a “low value” bill.
- Acute care
- Acute care
- BEDFORD HOSPITAL NHS TRUST
- Department of Health and Social Care (DHSC)
- MAIDSTONE AND TUNBRIDGE WELLS NHS TRUST
- MEDWAY NHS FOUNDATION TRUST
- NHS Trust Development Authority
- NORTH CUMBRIA ACUTE HOSPITALS NHS TRUST
- THE QUEEN ELIZABETH HOSPITAL KING'S LYNN NHS FOUNDATION TRUST
- UNIVERSITY HOSPITALS COVENTRY AND WARWICKSHIRE NHS TRUST