I have a strange fascination with NHS accountancy. I don’t know whether it’s the edge it gives me over my colleagues every time we play NHS acronym bingo (their PBCs and WCCs are nothing to my IFRICs and EBITDAs) or just the opportunity to try and talk sagely about the difference between “cash” and “resource”.

But I was delighted to get the opportunity to delve into that exotic world once more this week on the subject of Modern Equivalent Asset Values, or MEAVs.

MEAV is a way of putting a value on a building – like a hospital - that appears on your balance sheet. But the crucial difference for NHS organisations is that instead of that value being based on how much it would cost to simply buy a whole new identical building, the valuation is based on what you’d actually want to replace it with if you were genuinely starting from scratch today. (A useful lay explanation is here.)

As many NHS buildings weren’t designed with modern healthcare and energy efficiency in mind, the MEAV for most will be substantially less than the like-for-like cost on which NHS balance sheets have been hitherto based. This means balance sheet devaluations and I’ve been told that for most that will involve sums of between 15 and 25 per cent. A back-of-the-envelope calculation suggests this could add up to around £5bn across all NHS trusts and PCTs.

Although it’s funny money, devaluations needed to be funded through charges to PCT operating cost statements. As these are essentially capped at the size of the PCT’s resource allocation, funny money spent on impairments for devaluations is real money that cannot be spent on things like, er, patients. And cash the Treasury doesn’t need to find.

Thus the lack of clarity on how this year’s move to MEAV will be funded is causing concern that a sneaky Treasury ploy is under way to claw back NHS funds without the political fallout associated with actually changing the headline allocations. If it is, it surely won’t be the only one. So if you spot any more, please do drop me a line, the obscurer the better; especially if they bring me the tantalising prospect of more acronyms and different types of cash.

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