Published: 04/04/2002, Volume II2, No. 5799 Page 7

Coventry health authority is warning of a possible£16m shortfall once the city's new 'superhospital' opens in 2006.Contracts on the£330m PFI deal are due to be signed by University Hospitals Coventry and Warwickshire trust later this month.

Speaking days before the HA was abolished, finance director Bob Hazell said financial projections based on assumptions over cash allocations suggested there will be funding pressures in the hospital's first four years.

The figures have been accepted by regional office as 'robust', and it has suggested a series of meetings to monitor the situation.

Mr Hazell told HSJ: 'We are not talking about a crisis here, but it is a situation that has to be carefully managed. We do not want to get into a situation where we have to delay spending on parts of the NHS plan, like mental health or community services.'

He added: 'Even a small change in inflation can have an impact on outcomes to the point that we could end up with a surplus or end up with a significant deficit. The extent of future hypothecation for services will also be important.'

He also stressed that the calculations had been based on the hospital being procured through the public sector rather than PFI which has to demonstrate it is the cheaper option. He said he expected the health economy - made up of Coventry primary care trust and the acute trust - to reach financial balance only from 2010.

The costs of the hospital itself have risen substantially since first estimates - principally because of a 25 per cent increase in capacity.

Trust chief executive David Loughton said the changes were needed to take into account the national beds inquiry, which had meant an increase of 70 more beds.

Other factors included an increase in consultants and shifting demographics which meant a 'big hike' in the number of people over 75 into the next decade.

But Mr Hazell stressed the expense of the PFI deal - which means the trust will be paying back over£40m a year - was not the reason for the possible shortfall the health economy faced.

'The scheme has been very carefully audited, ' he said.