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Everyone in Leeds agrees that High Royds and St James' Hospital's Roundhay wing should close - but plans are on hold and a row has blown up over the trust's dire financial state.

'We should have been out of there ages ago,' says nursing and quality director Peter McGinnis. His assessment of High Royds, a former 2,500- bed Victorian asylum, is one on which there is widespread agreement.

Leeds health authority, Leeds Community and Mental Health Services trust, the regional office and three consultants who went public on conditions at High Royds and St James' Hospital's Roundhay wing all say that they cannot close too soon.

Trust chief executive John Oldham admits that services at the two sites are far from ideal. Conditions at the Roundhay wing in particular are 'abysmal'.

Where the blame lies, however, is a matter of some dispute.

Consultations on closure began in 1991. The sites were due to close in 1997 - which was when Northern and Yorkshire region stopped paying its annual£8.3m to cover the 'excess fixed costs' of providing services at the sites.

But today, the two sites are still alive - if not well - and will struggle on until at least 2001, with the£8.3m shortfall partly offset by extra growth funding of£2.2m from Leeds HA and some non-recurrent regional support.

Consultant psychiatrist Professor Dick Mindham insists that the withdrawal of the excess costs funds 'plunged what had been a financially well-run trust into major deficit' and left services in a 'critical position'.

Mr Oldham argues that the decade of delays was the product of repeated consultation and 'getting caught in the private finance initiative trap'.

Since then the trust has embarked on what he calls 'a very challenging cost-improvement programme'.

Land sales in 1998-99 netted£5.6m, while£670,000 was saved on management costs, and a further£1m in non-pay costs.

Mr Oldham admits the past year has been tough but is optimistic that a financial recovery plan set by the trust and HA will bring long-term improvements.

'I think most of the pain took place in the last financial year,' he says.

Like Professor Mindham, he is clear that the withdrawal of regional excess costs funding has played a large part in the difficulties the trust faces. It 'should have remained in place until High Royds did in fact close', he says.

'We have had discussions with both the region and the HA about the withdrawal (of payments). We would argue they should not have been withdrawn until replacement services were in place.'

But the HA sees the issue differently. Finance director Robert Cooper describes the focus on excess costs funding as a 'very convenient cloud', distracting from the trust's own share of a total underlying deficit of£12m. 'I can understand why that line keeps being used - no manager really wants to say, 'We cocked up',' he adds.

When Mr Cooper joined the HA two years ago, he embarked on an assessment of the finances of both the HA and Leeds' three trusts.

When he examined the community trust's finances 'it seemed to me there was a big financial problem that wasn't in the open' - a deficit of£12m last April, hidden by a series of non-recurrent funds.

'Half of that was due to the withdrawal of excess fixed costs. But the other half was essentially a lack of financial control,' he insists.

'Yes, the withdrawal of regional excess costs funding was an issue. What we would have had is a non-recurring problem. When the buildings were gone, that would have been the end of it.'

If High Royds had closed down two or three years ago, the lack of financial control would still have been a problem, he says.

Over the past year, the underlying deficit has been brought down to£10m and Mr Cooper is adamant that implementation of the 'achieving re-engineering and financial recovery' plan will bring£5.5m in non-clinical savings by March 2002.

The plan also sets up the HA's own£1.3m modernisation fund to aid the 're-engineering of services' as well as plans to 're-prioritise' some£6m from the acute sector into community services over the same period.

'I have made it my personal responsibility to make sure this recovery plan works and is robust,' says Mr Cooper. He has rather less confidence in the trust: 'I'd rather not let this crew stand on their own,' he admits.

The recovery plan has been agreed by the trust and the HA - and is now with the City Wide Organisation - a collective group of Leeds primary care groups 'for the final stamp'.

But Professor Mindham is not convinced of the benefits to be had from a document which links plans for the re-provision of services with measures to tackle the deficit.

'It's a very inadequate document. The two issues about re-provision and dealing with the deficit are separate issues. They should not be treated together.'

Meanwhile, the job of delivering services to the 420 inpatients still on the two sites continues.

Last month consultants from the trust called for an independent inquiry to examine what Professor Mindham calls the 'critical position' of services following further closures of inpatient beds last autumn.

And last week the NHS Executive and Leeds HA ordered an independent expert group to be set up to examine the state of the city's mental health services.

A panel led by Martin Brown, head of mental health and learning disabilities at the Executive, and including the president of the Royal College of Psychiatrists, Dr Robert Kendall, will hold its review in June.