Senior managers in London are cooking up an ambitious plan to rescue Barts and the Royal London Trust from its unaffordable £1bn private finance initiative deal.

The plan involves splitting the £650m-a-year trust in two, with University College Hospital Foundation Trust in central London acquiring its specialist heart and cancerfacilities, based at the St Bartholomew site.

The deal would mean UCLH would take on liability for approximately half of Barts and the Royal London’s £1bn PFI deal.

The remaining half of the trust – the Royal London site in Whitechapel – would either attempt to go it alone and apply for foundation trust status as a general hospital, or merge with one or more neighbouring organisations, including Homerton Foundation Trust.

Health chiefs in London hope the plan can solve one of the biggest problems in managing the capital’s health economy, as Barts and the Royal London is unlikely to be able to afford the £100m a year cost of its PFI repayments itself.

The PFI repayments would take up at least 15 per cent of the trust’s annual income, limiting its scope to cope with a reduction in income and blocking its ability to become a foundation trust.

The Barts site, which includes new cancer and cardiac facilities, has the potential to cater for 343 beds. Although Barts and the Royal London could struggle to fill those beds on its own, HSJ understands that UCLH believes its reputation as a research centre would allow it to “sweat” Barts’ PFI asset more effectively and produce a surplus large enough to cope with the PFI repayments.

But the plan could spark political opposition. UCLH has recently invested £110m in its own new cancer centre so its takeover plans for Barts centre particularly on its cardiac activity, which may be controversial.

UCLH chief executive Sir Robert Naylor did not deny the plans were being discussed. He told HSJ: “There are many options and possibilities for the rationalisation of services across north London and we need to keep all of our options open.”

NHS London chief executive Ruth Carnell, who would need to approve the plan before it went ahead, said: “We would be delighted to receive proposals from the NHS setting out how they can fully exploit this fantastic capital investment [Barts] for the benefit of both the needy local population and also a much wider catchment area. We are excited about the possibilities.”

UCLH’s own cardiac facilities are located at the Heart Hospital, which the foundation trust brought from the private sector for £28m in 2001. Those facilities are now outdated and UCLH has made public its plans to sell the hospital, which is worth an estimated £75m on the real estate market.

UCLH had previously planned to put the proceeds of the sale towards the development of a new heart hospital adjacent to its other hospitals, but HSJ understands those plans are being revisited in the light of the economic down turn and the potential opportunity at Barts.

Under the new plan, the site originally earmarked for UCLH’s new heart hospital would be used instead for a new dental, ear, nose and throat hospital. This would depend on UCLH and the Royal Free Hampstead NHS Trust agreeing that UCLH could take responsibility for north London’s ear, nose and throat activity.

UCLH and Barts in numbers

UCLH annual income (2008-09) £632m
Value of existing PFI contract for new hospital: £422m
Annual PFI repayment: £43m
PFI repayment as % of income: 6.8%

Barts & the London annual income (2008-09) £614m
Value of existing PFI contract for new hospitals: £1000m
Annual PFI repayment (as of 2013-14): £96m
PFI repayment as % of income: 15.6%