Peterborough City Hospital chiefs defend PFI scheme decision

Nigel Hards - chariman of Peterborough and Stamford NHS Foundation Trust.
Nigel Hards - chariman of Peterborough and Stamford NHS Foundation Trust.
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Health chiefs have defended a decision to push on with a loan scheme to build the city’s hospital despite warnings it could leave it financially crippled.

The debt-ridden Peterborough and Stamford Hospitals NHS Foundation Trust is predicting a £54.3 million deficit this year due to a combination of the high costs of running the £289 million Peterborough City Hospital; a focus on more healthcare being provided in communities; and the massive repayments for the Private Finance Initiative used to fund PCH.

Last week an audit carried out by KPMG, commissioned by foundation trust regulator Monitor, revealed that Monitor had written to the trust’s board in January 2007 warning it not to go ahead with the PFI scheme, stating it could lead to huge deficits in the future.

The report shows the letter sent to then hospital trust chairman Dr Clive Morton expressing concern over the PFI.

Dr Morton wrote back, telling Monitor that the trust had carried out work testing financial predictions.

Monitor’s reply suggested the regulator was reassured by the trust’s efforts but warned it would keep a close eye on developments.

Five years on and history shows Monitor’s concerns were well-founded, with the Government forking out £41 million earlier this year to bail out the trust and the eventual cost of the PFI potentially rising to 
£1.9 billion at the end of the contract.

But Dr Morton said there was no way the board as it was could have foreseen the massive government cutbacks and a change in policy to more community-focused healthcare.

He said: “Since the PFI was agreed, the commissioning priorities of the Department of Health and in particular NHS Peterborough have dramatically changed as a result of the economic circumstances, so the hospital is not being funded for the treatments they were predicting in 2007.

“It was not something we could have foreseen. Another point that seems to be forgetten is there was not a ‘do nothing’ option, we had two hospitals which were not fit for purpose and we would have had to spend tens of millions we didn’t have to improve the buildings.

“We were backed in our decision by HM Treasury and the Department of Health.”

Another criticism was that the actual deficit problems at the hospital trust were not reported until June 2011, eight months after PCH opened.

KPMG argued the deficit could have been predicted up to two years earlier, but current trust chairman Nigel Hards is adamant that this is not the case, though did admit more checks could have been applied.

He said: “The board was very conscious that this was a difficult environment.

“We could have probably spotted the hole slightly earlier but I don’t believe it could have been two years. Either way it would not have made a difference to the deficit, just given us more time to plan our recovery.

“Looking back, I would have checked more rigorously the management of our forward accounts as clearly they did not reflect what was coming.”