Hinchingbrooke Health Care Trust has forecast a £14m deficit for 2014-15 – nearly double the size of its deficit for the first eight months of the financial year.
- Hinchingbrooke forecasts a £14m deficit for 2014-15 – up from £7.2m in January
- The trust returned to the NHS on 1 April after being run by private provider Circle under a franchise agreement
- Circle: “In the round, the taxpayer still got an excellent deal from the franchise”
The deficit is significantly adrift of the £2m surplus the trust predicted at the beginning of the financial year while still under the management of private provider Circle. It is also well above the £12.2m “pessimistic” forecast for year-end the trust made in January.
Hinchingbrooke, which posted revenues of £112m in 2013-14, returned to NHS control on 1 April following the termination of Circle’s franchise agreement in January.
The finance report for the trust’s April board meeting attributed the deterioration in its financial position to a combination of external pressures, a substantial agency staff bill driven by increased demand, and failure to achieve its cost improvement programme.
The report, by new interim chief finance officer Ian O’Connor, said: “For the 2014-15 financial year Hinchingbrooke is reporting a deficit of £13,993,000 on its income and expenditure. As a consequence of reporting a deficit the trust has not delivered its statutory duty to break even.”
- “during commissioning negotiations reductions in local prices cost the trust in excess of £3m”;
- a high demand for agency staff generated by “increased volumes and acuity of non-elective patients” has seen the trust’s “interim staffing bill for the year [reach] nearly £12m”;
- “external pressures on trust finances have been exacerbated by the impact of failed [cost improvement programme] schemes. In addition to the failure of the original programme, the recovery programme that was initiated in quarter 3 has not delivered the necessary reductions in interim staffing costs”; and
- the trust has also had to pay an estimated £1.3m towards the Transforming Pathology Partnership joint venture it owns with six other trusts, which was considerably more than had been budgeted for. The pathology provider has estimated a £4.5m loss in its first year and members are sharing the cost burden.
The forecast is nearly double the £7.2m deficit position the trust reported in January – the same month Circle announced it was withdrawing from the franchise, and that the Care Quality Commission rated the trust “inadequate” and recommended it be put in special measures.
The CQC this month upgraded the trust’s rating to “requires improvement” but it remains in special measures.
Circle will contribute £160,000 to funding the deficit – a figure arrived at because its losses for the contract were capped at £5m and it had already contributed £4.8m to the trust to cover losses in the last two financial years.
Minutes from a trust board meeting on 1 April said it had been successful in its bid for a £9.6m government bailout, called public dividend capital funding. It applied to the NHS Trust Development Authority for the money earlier this year to help plug the deficit.
Hinchingbrooke by numbers
- £14m – forecast deficit for 2014-15 in April finance report
- £2m – the trust’s forecast surplus for 2014-15 at the beginning of the financial year
- £7.2m – deficit position in January 2015
- £1.3m – the trust’s deficit in the last full financial year of 2013-14
A Circle spokesman said: “In the round, the taxpayer still got an excellent deal from the franchise.”
“The original tender projected that after three years in the ‘no franchise’ scenario, the trust would have lost a total of £33m.
“The taxpayer lost nothing in 2012-13 and 2013-14 as Circle made up the deficit; in 2014-15 the loss is about £13.5m, as Circle puts in a further £160,000 and some transition costs count as income for the trust. So the net difference between ‘no franchise’ loss and actual loss is £19.5m.”
“When we announced our intention to withdraw from the franchise in January, we said the main financial pressures were unprecedented [accident and emergency] demand and tough commissioning – both outside our control. These figures certainly support that picture, and confirm our belief that only structural reform across Cambridgeshire will sort the trust’s finances for the long term.”