FINANCE: One of the most challenged trusts in England has applied to have its prices increased by more than £17m, arguing its remote location prevents it from operating within the national payment by results tariff.

University Hospitals of Morecambe Bay Foundation Trust - which is in special measures and planning a £19m deficit - agreed to formally ask its commissioners for the “local price modification” at its board meeting last month.

The bid is based on analysis last year by consultancy PwC, which concluded around £17m of the trust’s deficit was due to the cost of running multiple hospitals which were far apart and had low activity volumes.

Under the Health Act 2012, trusts can apply for price increases where they can demonstrate there are structural reasons they cannot provide essential services at national tariff prices.

If Morecambe Bay’s commissioners reject its request, the trust will make the application directly to regulator Monitor, board papers state.

Nigel Maguire, the chief officer of Morecambe Bay’s main commissioner, Cumbria Clinical Commissioning Group, told HSJ: “We’ll certainly formally consider it, but we don’t have the resources to hand over £12m.

“While we recognise that they have a structural deficit, we don’t have the resources to address that from our allocation. The allocations don’t take into account structural deficits in trusts.”

Mr Maguire said the trust was obliged to run three hospitals for “a population that probably only justifies one” because that population was too dispersed to centralise services on a single site.

He continued: “We can’t just turn around to the people of Furness and say, ‘by the way, we’re closing your hospital, you’ll have to take your chances in the back of an ambulance for an hour or an hour and a half’.

“We’re all for price modification, but somebody’s going to have to fund it, because we haven’t got the resources.”

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