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In this week’s North by North West:

  • Several trusts drowning in debts
  • Bailing out the Royal Liverpool
  • Blackpool’s cash solution
  • Wigan’s council solution
  • Lancashire’s pathology problems

Cash borrowings overtake PFI liabilities

One of the big questions to be answered by the long term NHS plan will be what to do about the huge debts being amassed by dozens of providers.

According to NHS Improvement’s annual report, the cash support paid out to trusts by the Department of Health and Social Care, in the form of interest bearing loans, reached £11bn at the end of 2017-18.

These cumulative borrowings, largely used by deficit trusts to maintain payments to staff and suppliers, were up from around £8bn the previous year, and for the first time overtook private finance initiative liabilities as the largest source of provider borrowings.

Several trusts in the north west are stuck in the deep end of this, with each of their revenue borrowings now reaching around 40 per cent of turnover.

It has been known for years that the likes of University Hospitals of Morecambe Bay Foundation Trust (which owes £140m); Tameside and Glossop Integrated Care FT (£75m); Southport and Ormskirk Hospital Trust (£71m); and East Cheshire Trust (£61m) are unsustainable in their current form and the current funding system, and they haven’t a hope of paying off these debts.

The suspicion when the loan system was introduced in 2014-15 (replacing the old free money system) was that it would lead to a dramatic reduction in the number of providers, but if this was the plan it hasn’t been terribly successful.

What these trusts now need is some clarity over their future, and some sort of financial reset that brings them back to the shallow end.

A Royal bailout

A more surprising name on the bailout list, Royal Liverpool and Broadgreen Hospitals University Trust, which reported surpluses in 2015-16 and 2016-17.

Things have slipped dramatically since then, with the trust having to draw down a massive £77m in cash support in 2017-18.

This suggests the trust’s underlying deficit is likely to be significantly worse than the £26m reported for last year.

Blackpool borrowings

Notably absent from the list is Blackpool Teaching Hospitals FT, which has managed to avoid going cap in hand to the DHSC (and the regulatory attention that brings) by borrowing money from its local authority.

It has also effectively been borrowing from its non-NHS suppliers, by delaying invoice payments beyond the statutory 30 day limit (a practice described as “outrageous” by the former NHS Improvement chief executive).

More than two thirds of its invoices, worth around £80m, were paid late in 2016-17. The FT’s figures for 2017-18 are not yet available, because almost uniquely, it does not publish a finance report within its public board papers.

It will have to publish its payment performance in the imminent annual report, however.

Toxic

Local government is supposed to be far more squeezed than the NHS, but another authority which seems to have cash going spare is Wigan Council.

In a highly unusual development, Writhington, Wigan and Leigh FT has now dropped plans to transfer hundreds of non-clinical staff into a subsidiary company after the Labour-led council offered a one-off payment of £2m not to do it.

On the surface, this suggests the health and social care integration has come a long way in Wigan, but in reality the politics had gotten so toxic that the trust must have felt like it had to accept the offer.

While the £2m solves the short term financial dilemma – in that it can now hit its “control total” and access the provider sustainability fund – the health economy will now have to find recurrent savings to replace those that the subsidiary was supposed to deliver.

Location Location

Lancashire’s pathology collaboration had already upset lab staff in the south of the county, after a proposal to create a centralised “hub” in the north (Lancaster).

But now Lancaster staff are getting exercised because they’ve realised the location of the preferred hub is still up in the air, and could potentially be in the south.

Initially, the project (and the economic modelling that resulted in the preferred site) involved only three providers, with the exclusion of East Lancashire Hospitals Trust. But after ELHT were “put in” the collaboration by NHSI (in the words of a formal Q&A document), the process to select the preferred location has had to be restarted.

Meanwhile, efforts to recruit a managing director for the project have so far been unsuccessful, with ELTH said to be unwilling to support the appointment.

And with tensions already among staff in the south of the county, a suggestion from project leaders that the current configuration leads to blood tests being interpreted differently at separate sites (which made the local press) has raised temperatures even further.