Essential insight into England’s biggest health economy, by Ben Clover

Fat and rich?

Are the university hospitals “fat and rich”?

The received wisdom is that they are, and that this is another systemic bias in favour of London’s NHS over the rest of the country.

In an interview with HSJ published yesterday, Bob Bell, chair of the University Hospitals Association (formerly the Association of UK University Hospitals) – and chief executive of the Royal Brompton – said the perception existed in the centre that they were large and well-funded – and, by extension, due a trimming.

There is some truth to both extremes of the argument: university hospitals with their plethora of professors and income streams from research and education are not as efficient as they could be, distracted as they are by their own expertise. Part of the point of district general hospitals was to make sure the bread-and-butter procedures actually needed by large swathes of the population weren’t deprioritised by specialists.

On the other hand, education budgets have been and remain outside the ringfence for NHS funding, and of course it’s more expensive to perform complicated work with expensive equipment than it is to provide standardised care with more junior staff. There are price variations for a bone marrow transplant across providers which can look like inefficiency, when in fact the work being done is genuinely varied.

What is for sure is that the university hospitals in London are looking at some pretty hefty funding cuts through the market forces factor next financial year. 

University College London Hospitals Foundation Trust broke cover this week to say the MFF changes would cost it £7m in 2019-20 and £36m annually by the time they have taken full effect in 2024-25 (full story coming soon). 

Other big name trusts are equally affected.

Losses this large would soon dwarf even the amounts trusts sometimes win in arbitration cases with NHS England over specialised work.

Barts Health Trust recently came out on top (sort of) in an expert determination with NHS England, with the independent expert saying the trust had correctly coded £14m of excess income that NHS England disputed.

But, because of a term in the standard contract, the trust will not see this money until at least April 2020, which means it will have to borrow more money from the centre to cover its larger than expected deficit.

To be fair to NHS England’s specialised commissioners, it can’t be fun managing relationships with organisations that invoice £50m more in a year than you expected (as Barts did in 2017-18 – though it, in turn, could have been set an unrealistic contract plan by NHSE).

Back on the MFF changes – part of the intention of this is surely to run down the surplus the bigger foundation trusts in the capital built up over the better years. But, as the UHA points out, these organisations are complicated, and sometimes delicate, with knock-on effects on research and education.

Is it too cynical to suggest that no one ever got sacked for a medical breakthrough that didn’t happen because of reduced funding?

It’s definitely not too cynical to suggest education budgets are an easy target, though one increasingly in the spotlight amid severe workforce shortages.

The UHA also complains that its university partners sometimes fail to appreciate the pressure trusts’ NHS income is under.

UCLH said the cash taken from the London health system by the MFF changes would “run into many hundreds of millions of pounds”.

One trust put this total loss of income at £300m – roughly the turnover equivalent of shutting down the Whittington, but much more subtly.

What happens with this will be an interesting test of the new regional boss for London Sir David Sloman, who until now would have sat on the trust side of the fence on this one.