NHS in the red: Hospitals forced to beg Government for equipment loans and electricity bills
Charlie Cooper is Health Correspondent for The Independent, i, and The Independent on Sunday, writing on the NHS, medical advances, and international health. Since joining the papers as an editorial assistant, he has been nominated for young journalist of the year at both the Press Awards and the British Journalism Awards.
Wednesday 21 May 2014
The intense financial pressure faced by NHS hospitals has been laid bare in a series of letters, which range from pleas for bailout loans to replace defunct equipment, attempts to fend off legal threats from suppliers and even requests to pay off electricity bills.
Details of requests for short-term financial aid sent to the Department of Health reveal that one NHS trust was threatened with having the electricity supply shut off at a building on their hospital site, while another said it faced an “untenable level of equipment breakdown and obsolescence”.
The 15 loan requests, made in February and March this year, which were released following Freedom of Information requests from the Health Service Journal, reveal the impact of the NHS financial crisis for England’s most hard-up hospitals.
65 NHS trusts in England are already in financial deficit. A recent survey of NHS finance directors revealed that two thirds are concerned their trust will go into the red in the year of the General Election.
The NHS is in the middle of the biggest funding squeeze in its 66-year history. Experts have warned that the future of the health service as we know may be at risk unless more money is found.
All three political parties are under pressure to declare their plans for the future of NHS funding, with an “NHS tax” understood to be under consideration by both Labour and the Conservatives.
In one of the loan requests sent to the Department of Health’s independent trust finance facility, North Cumbria University Hospitals (NCUH) Trust bid for £47m, £7.4m of which it said would be needed to pay off overdue bills.
Their letter said that the trust was being charged interest for late payments, that suppliers had threatened legal action, and that the electricity supplier had threatened power could be cut off to a building on the trust’s West Cumberland Hospital site.
The hospital also warned that more than 70 per cent of its medical equipment would be “beyond its expected life” without a significant injection of cash to buy new hardware within the next 12 months.
The hospital’s accounts payable department was described as “spend[ing] most of their working day dealing with telephone calls from suppliers who are chasing payment.”
Meanwhile a loan request sent by University Hospitals of Coventry and Warwickshire (UHCW) Trust for £9m warned of an “untenable level of equipment breakdown and obsolescence”, with important medical equipment such as dialysis machines for patients with kidney failure, crucial care beds and surgical instruments all coming to the end of their operable life.
Several trusts which sent loan request predicted a bleak financial outlook for the years ahead. Medway Foundation Trust said it projected a £15m deficit in 2014/15 from an annual turnover of £250m, while Bedford Hospital Trust expected be in deficit by £7.6m by next year.
A spokesperson for the NCUH trust said that the building threatened with having its electricity supply cut off was a “domestic building” where “to the best of their knowledge” no clinical activity took place.
Steve Shanahan, director of finance for NCUH, said that the trust’s bid for support was successful, allowing the trust to deal with “immediate cash flow issues”.
“We have also secured additional capital to replace a number of pieces of medical equipment,” he said.
Gail Nolan, chief finance officer for the UHCW Trust said: “While the majority of our equipment is replaced as part of our Private Finance Initiative (PFI) contract, there is one off capital expenditure which falls outside this programme. At the beginning of the 2013/14 financial year our plans included a small element of external finance required to facilitate this replacement.”
A Department of Health spokesperson said: “We have increased the NHS budget in real terms and while we understand some trusts are facing more demands, deficits must be gripped and we will hold poor performers to account.”
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