NHS trusts are hoping for bailouts totalling £376m this financial year, figures published by the NHS Trust Development Authority reveal.
Twenty non-foundation trusts have either already submitted requests to the Department of Health’s independent trust finance facility, or planned to do so this month. So far 14 applications have been approved, totalling £247m. Another six were due to be considered this month.
The news comes as documents released to HSJ under the Freedom of Information Act revealed the cases that have been made by trusts seeking funding from the finance facility this year (see case studies, below).
The TDA’s report gives a regional breakdown of the requests made for revenue funding across the trust sector, with the largest overall sum requested by London trusts. Seven trusts in the capital requested a total of £125m for 2013-14, with £58m agreed across four organisations so far.
In the north of England, two trusts requested a total of £70m with one £28m payment currently approved.
Documents obtained by HSJ show the successful trust was Mid Yorkshire Hospitals, which has a recovery plan requiring a further £17m in 2014-15 and £8m in 2015-16.
The Midlands and East region saw six applicants receive approval for support totalling £109m. Meanwhile, five trusts in the south of England have requested a total of £73m, with a total of £52m for three trusts approved to date.
The facility is the new incarnation of the foundation trust finance facility, which was set up to assess capital funding applications from foundation trusts on quasi-commercial grounds. It has taken on responsibility for assessing revenue funding applications following the abolition of strategic health authorities, which organised bailouts for trusts in previous years.
The TDA must support applications to the facility from non-foundation trusts. Foundation trusts can apply for funding on their own or with the support of Monitor.
Fifty-four of England’s 141 hospital trusts are now predicting deficits at the end of the year and the sector anticipates a net deficit of £373m.
Twenty-four of the 54 deficit trusts are in the Midlands and East, nine in London, 13 in the north and eight in the south.
Midlands and East trusts are responsible for £311m of the total £630m deficit predicted by the 54 trusts.
In his report to a TDA board meeting last Thursday, chief executive David Flory said the financial position of the sector “remains a significant challenge” and its sustainability was at “very significant risk”.
The case for extra funding
Documents released under the Freedom of Information Act have revealed trusts’ justifications for applying for independent trust finance facility funding this year.
They show that East Sussex Healthcare asked for £39.4m from the independent trust finance facility to cover a long-standing deficit while it reconfigures from two sites to one.
Its application said: “The trust requires cash financing in order to fund its operating deficit position (£19.4m), reduce the trust creditors (£15m) and provide critical capital expenditure (£5m).”
It said East Sussex had made “significant improvements in the quality and safety of care” but this had “contributed to a worsening of the underlying financial position. The trust’s commissioners also face significant financial challenges.”
In December, Plymouth Hospitals asked for £13m, with the TDA saying in support that it had “concluded that debt finance is unaffordable given the projected deficit position of the trust and that cash support is required immediately in order to finance the trust’s working capital commitments in the current financial year”.
The £408m-turnover trust has received between £12m and £15m in each of the past three financial years.
It aims to return to financial surplus by the end of 2016-17 and attributes its financial problems in part to the proportion of its population aged 85 or over “growing ahead of the national average by approximately 10 years presenting the trust with a challenge to provide services to a market segment of patients who consume a large amount of healthcare resources where margins have been demonstrated as difficult to earn”.
Meanwhile, George Eliot Hospital in the West Midlands asked for £7.9m in “immediate cash financing in order to fund its operating deficit position until a strategic partner can be found”.
The document shows George Eliot received a £2.3m bailout in 2011-12 and £5m in 2012-13 from its lead commissioner primary care trust.
Foundation trusts have also made significant bids for funding this year. In January, the facility considered a request from University Hospital of South Manchester FT for a £25m “smoothing” loan to mitigate peaks in its private finance initiative payment schedule and a £30m working capital facility to help with its “deteriorating liquidity position at a time when it must achieve significant recovery plan savings”.
The trust’s PFI agreement, signed in 1998, sees a spike in repayments over the next 10 years, before falling to a lower level.
The document reveals the trust hired consultant KPMG to investigate a “full termination of the PFI contract, backed by a loan from a new source” or “refinancing the existing PFI contract”, but it concluded neither were likely to provide value for money.
- David Flory
- Department of Health and Social Care (DHSC)
- EAST SUSSEX HEALTHCARE NHS TRUST
- Foundation trusts
- GEORGE ELIOT HOSPITAL NHS TRUST
- MID YORKSHIRE HOSPITALS NHS TRUST
- NHS Trust Development Authority
- UNIVERSITY HOSPITAL OF SOUTH MANCHESTER NHS FOUNDATION TRUST
- University Hospitals Plymouth NHS Trust