Revealed: Huge cost of failed trust merger

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Merger between Nottingham University Hospitals Trust and Sherwood Forest Hospitals FT cost £10m
Trusts paid more than £6m for consultancy advice and £1m for clinical support
Both trusts have been reimbursed for the costs after a control total adjustment was made for Sherwood Forest Hospitals

Work to prepare for the now-abandoned merger of a flagship teaching hospital with its struggling neighbouring trust cost £10m, NHS Improvement has revealed.

A breakdown of spending by Nottingham University Hospitals Trust and Sherwood Forest Hospitals Foundation Trust on the project shows it included £6.6m on professional advice fees alone. Of this, HSJ understands £6.1m was paid for consultancy advice with £500,000 on legal fees.

To offset the cost to the trusts, NHS Improvement said it had adjusted Sherwood Forest’s control total by £10m, meaning it can record a £10m larger deficit in 2016-17 than it would have done otherwise - effectively passing on the cost of the collapsed merger to the NHS as a whole. Nottingham’s share of the £10m cost will be paid by Sherwood.

NHS Improvement said that while the merger has not gone ahead it has led to improvements at Sherwood Forest Hospitals, which has had serious care quality and performance problems, and the two trusts will continue to work closely together.

In response to a Freedom of Information Act request from BMA News, NHS Improvement said the total cost of spending on the merger by the two trusts was £10m which included:

Nottingham professional adviser fees: £6.6 million
Clinical support: £1 million
Nottingham backfill costs: £1.5 million
Sherwood backfill costs: £0.9 million

In addition, NHS Improvement incurred external costs of £36,665 but this does not include its internal costs such as staff time or travel expenses.

Sherwood Forest was placed into special measures in July 2013 following the Keogh review of trusts with high mortality and it was rated inadequate by the CQC following an inspection in June 2015.

After the trust said it needed a long term partner NUH was chosen in February to begin the process of merging into a single organisation.

The merger was scrapped in November with both trusts citing the need to focus on operational challenges.

Rupert Egginton, director of finance at NUH, said: “The trust‘s financial position has not been adversely affected by the costs of the work associated with the long-term partnership. NUH has received financial support and reimbursement for the costs incurred.”

A spokesman for NHS Improvement said: “This work has contributed to the significant turnaround in performance achieved by Sherwood Forest Hospitals over the past year, with the trust having recently come out of special measures.

”Both trusts are committed to a working closely together, but have agreed not to pursue a merger at this time to enable Nottingham to focus on improving waiting times in its A&E department.”