Super merger plans let down by £116m PFI shortfall

A document obtained by HSJ reveals the merger between Barts and the London, Whipps Cross and Newham trusts in east London, creating an organisation with a £1.1bn turnover, would require a £93.5m cash injection, plus £22.5m to cover private finance initiative costs. The PFI funding would need to continue at the same level in future years.

Consultants McKinsey were asked to assess 22 trusts, including Barts, earlier this year to determine how much of an obstacle the PFI deals were to foundation status.

Barts’ business case said “early conclusions” of the McKinsey report were that “there is likely to be a shortfall from the figure set out in the outline business case to cover Barts’ PFI”.

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The merger would result in £7.1m of savings from 126 “back office” jobs and £4m from estates, the business case states.

It said if PFI support was not received “the additional cost improvement programme requirement [would be] 2 per cent in the period under review”. The trust is already planning a 7 per cent saving this year.

Meanwhile, more than 50 hospital trusts are waiting to have their plans for achieving foundation status signed off by the Department of Health ahead of a September deadline.

As revealed last Friday by HSJ, George Eliot Hospital Trust is the fifth trust to consider being managed as a private franchise. It is understood to have abandoned plans to remain independent by becoming a foundation trust.

It is also considering a merger with Heart of England, South Warwickshire or University Hospitals of Leicester trusts.