Only six of London’s 18 non-foundation hospital trusts will be viable in their current form in 2014-15, HSJ can reveal.
An NHS London report said: “A maximum of six are in a viable long-term financial position in their present form in 2014-15.”
The analysis found only St George’s Healthcare, The Royal Free Hampstead, Kingston Hospital, Croydon Health Services, Lewisham Healthcare and Barnet & Chase Farm Hospitals trusts could avoid going into the red by then, even if all the trusts achieved 18-20 per cent savings.
The other 12 hospital trusts either needed longer to become viable or had no hope of doing so without changing form or getting outside support, the report said.
The Department of Health had wanted all trusts to achieve foundation status by April 2014 but has acknowledged that in some cases this will not be possible.
The report, written by NHS London’s finance director Paul Baumann and strategy director Hannah Farrar using modelling from consultants McKinsey, put the combined “productivity opportunity” at the 18 trusts between £1.167bn and £1.27bn.
The comparison to a peer group of similar-sized trusts saw the consultants conclude that “doing nothing was not an option”.
More than a third of the £1.1bn saving could be found in nursing, the report said.
There were £421m in savings to be made from “optimising skill mix, reducing agency use, increasing share of patient-facing time, and aligning staffing levels with clinical need”, it said.
The report found “no clear evidence that investment in simply increasing the number of nurses as the mechanism to increase the quality of nursing care is a guarantee of good patient care”. It added: “Many of the best health organisations in the world combine high productivity and excellent quality.”
The report also showed eight of London’s 18 non-foundation trusts only avoided deficits last year after being bailed out.
The document, the Sustainable and Financially Effective review, showed that although only Newham University Hospital, South London Health Care and Barking. Havering and Redbridge University Hospitals trusts had official deficits in 2010-11, another eight only avoided it after receiving “non-recurrent support and cost reductions”.
These were: St George’s (£3.9m), Lewisham (£1.9m), Imperial College Healthcare Trust (£16.6m), Whittington Hospital Trust (£0.1m), West Middlesex University Hospitals Trust (£1.9m), Whipps Cross University Hospital Trust (£4.8) North West London Hospitals Trust (£11.7m) and Epsom and St Helier Hospitals Trust (£5.9m).
The total underlying deficit across London was £108m and the projection shows that growing to £170.2m by the end of 2014-15, even if the trusts make high levels of savings.
The projection shows the number of trusts in deficit at that point rising to 13 as Barts and the London and Kingston slip into the red.
The report describes this as an “optimistic assessment”, as it doesn’t assess the ability of trusts to respond to decreases in activity or keep their costs within the inflation allowed for in the tariff.
The bleakest conclusion in the report, which was revealed revealed exclusively in HSJ in November, is that “a one per cent cost inflation sensitivity test increases the financial gap, with all but two trusts in underlying deficit amounting to £358m”.
The two trusts are St George’s and the Royal Free Hampstead.
The analysis put the trusts into four categories:
“Financially viable if productivity opportunities equal to their top quartile peer are achieved”
Royal Free Hampstead
“Financially viable if productivity opportunities equal to the average of the top 3 peers are achieved”
Croydon Health Services
Barnet and Chase Farm – if some additional capital expenditure is modelled in, in view of significant estate deficiencies.
“Financially viable if given a longer period to achieve the highest level of productivity opportunities”
Imperial College Healthcare – has a significant productivity opportunity; however, it is beyond the 20 percent threshold assumed achievable in 4 years. In theory, Imperial could achieve a 1 percent net surplus in 2016-17, but would have a cumulative deficit of at least £85m by this point.
Barts and The London – has a significant productivity opportunity beyond the 20 percent threshold. In theory, it could achieve a 1 per cent net surplus by 2017-18, but would have a cumulative deficit of at least £23m by this point. Achieving this improvement will be challenging while the Trust relocates to its new buildings.
Whittington Health – is able to achieve a 1 percent net surplus by 2017-18 including a 3 per cent surplus on its integrated community services. It will remain in cumulative breakeven in the intervening period.
Ealing Hospital – is only in Category 3 because of the integration of community services, which are assumed to be able to achieve a 3 per cent net surplus. With this assumption, Ealing can achieve a 1 per cent net surplus by 2015-16. It will remain in cumulative breakeven in the intervening period.
“Not financially viable with productivity opportunities alone”
West Middlesex – large PFI
North Middlesex – large PFI
Barking, Havering and Redbridge Hospitals – large PFI
South London Healthcare – large PFI
Newham – large PFI
Whipps Cross – some additional capital expenditure modelled in, in view of significant estate deficiencies
North West London Hospitals – may require additional capital expenditure (not modelled)
Epsom and St Helier – impact of hospital redevelopment comes in period beyond this analysis
- Acute care
- Acute care
- Agency staff
- BARKING, HAVERING AND REDBRIDGE HOSP NHS TRUST
- BARNET AND CHASE FARM HOSPITALS NHS TRUST
- Croydon Health Services NHS TRUST
- EALING HOSPITAL NHS TRUST
- EPSOM AND ST HELIER UNIVERSITY HOSPITALS NHS TRUST
- Foundation trust status
- IMPERIAL COLLEGE HEALTHCARE NHS TRUST
- KINGSTON HOSPITAL NHS FOUNDATION TRUST
- LEWISHAM AND GREENWICH NHS TRUST
- LONDON NORTH WEST HEALTHCARE NHS TRUST
- NEWHAM UNIVERSITY HOSPITAL NHS TRUST
- NORTH MIDDLESEX UNIVERSITY HOSPITAL NHS TRUST
- ROYAL FREE LONDON FOUNDATION TRUST
- SOUTH LONDON HEALTHCARE TRUST
- ST GEORGE'S HEALTHCARE NHS TRUST
- THE WHITTINGTON HOSPITAL NHS TRUST
- WEST MIDDLESEX UNIVERSITY HOSPITAL NHS TRUST
- WHIPPS CROSS UNIVERSITY HOSP NHS TRUST