Debt-laden Peterborough and Stamford Foundation Trust is “financially unsustainable in its current form”, independent investigators have concluded.
A report by the accountancy firm PwC, appointed by Monitor in February to investigate the trust’s finances, said it would not be able to pay its bills without continuing external support.
The trust’s perilous financial position, principally the result of the disastrous Peterborough City Hospital private finance initiative agreement, which is costing £40m a year and has 31 years left to run.
Monitor said PwC, drafted in as the trust’s contingency planning team, was poised to make recommendations on the future configuration of the trust’s services to ensure they are delivered on a sustainable basis for the benefit of the local population.
Stephen Hay, managing director provider regulation at Monitor, said: “This report clearly shows [the trust] is not financially sustainable.
“We now expect the [contingency planning team] to advise us what practical options are available to close the financial gap and ensure continuity of service to patients.
“Monitor is ensuring the voice of patients and the local community are listened to, and that the health needs of local people will continue to be met for years to come.”
The trust, which regulators expressed concerns about as far back as 2006, built up a deficit of £37m by the end of 2012-13, and needed one-off support payment from the Department of Health of £44.1m.
The trust’s forecasts for the next five years show a continuing deficit of £38m or more each year, and a cash shortfall of at least £40m a year.
Other findings of the report are:
- The estate issues contributed an estimated £22m to the deficit and include the underuse of Peterborough City Hospital.
- This figure will increase with the effect of inflation in coming years.
- The trust has identified that three additional wards could be sited on the fourth floor of the hospital, potentially generating around £9m of extra contribution.
- With inflation, the PFI is likely to represent a greater proportion of trust costs in future years. However, ending the arrangement would trigger a very substantial one-off payment.
- Investigators also identified operational issues including £5m worth of unpaid medical activity and £10m of performance improvements which could be made.
- The report authors said clinical quality of patient care was “appropriate and, on the whole, within expected performance levels”.
A Monitor statement added: “We asked the contingency planning team to work closely with patients’ representatives, commissioners and clinicians in the local area to identify options to make the trust financially sustainable.
“In 2007, Monitor expressed concerns about the affordability of the PFI deal, but our advice was not acted on by either the trust, the strategic health authority or the DH.”
7 June 2013