Trust cash crisis

IN September 1999, David Peat, then the chief executive of the now defunct East Lancashire Health Authority announced a vision of one body running all of the area's hospitals.

He said: "The aim of bringing together Burnley and Blackburn would be to reduce costs, but maintain the standards of health services and clinical standards."

Four years, and a lot of talking later, Blackburn, Hyndburn and Ribble Valley NHS Trust and Burnley Healthcare Trust finally merged.

And five years later -- March 2004 -- the new 'cost-reducing' trust returned its first set of accounts ... and was nearly £4million in the red.

Now, four months off the end of its second financial year, the Trust is predicting debts an extra £1.5million, taking the total to £5.5million.

And that is despite implementing a cost-saving package of cuts designed to get rid of the debt.

For Richard Gildert, the acting chief executive of the Trust, it is a position he describes as 'difficult'. In many ways, it is a position he wouldn't have been dealing with had the Trust's actual chief executive, John Thomas, not gone off on long-term sick leave.

He was previously the chief executive of the Blackburn Trust, but went off sick within months of the new Trust launching.

Prior to the merger, he said: "We believe that even more could be achieved by merging the two organisations, which would improve services to patients."

His opposite number at Burnley, Brian Foster, said: "It will make the best and most effective use of financial resources."

Now concerns are growing that the other aim of the merged trust -- maintaining the standards of health services and clinical standards -- is in jeopardy because of the cash crisis.

In one last bid to balance the books before April -- something every health body is supposed to do -- Mr Gildert has announced a range of measures which will lead to up to 140 beds being axed.

So how did the Trust get into this situation?

Mr Gildert charts the debt back to the day of the merger: "We inherited a small amount of debt from the Burnley side and faced a lot of challenges in the first year, which have led to these difficulties."

Money problems for the trust began with a £1million debt left over by Burnley Trust from the previous year before it merged with Blackburn last April.

The debt meant that the Government stripped the Trust of the 3* top-score rating the old Blackburn trust had, and replaced it with 2*.

By November 2003, the inherited debt of £1million had become £2million, a factor put down to an increase in spending to meet waiting list targets and an increase in the number of in-patients. That meant the Trust had to spend more money drugs.

By the end of the financial year the debt had risen to almost £4million.

This year's increased debt of £5.5million has been blamed on the effects of renegotiating contracts with consultants, more high-spending on drugs, and the fact the Trust has performed more operations than it is contracted to provide on behalf East Lancashire's three primary care trusts.

They, in effect, are the health service's paymasters, and choose which hospitals to buy services from for patients.

That over-performance had led to an extra £2million going to the hospitals from the PCTs, which left the Trust with just £3.5million to find to make sure its predicted £5.5million debt was wiped out by the end of the financial year.

Mr Gildert said: "We did put into place a savings plan which if it had worked would have done the trick, but we haven't been able to deliver without impacting on patients' care, which is something we aren't prepared to do."

In fact, by the end of October, £3.8million of savings should have been found.

The reality was that just £1.5million had been saved, £2.3million short of the £6.6million target.

Mr Gildert said: "The review we have in place, we think, will mean we can get this money back without affecting patient care. We don't know for certain how many beds are involved.

"We do have to break even and we do have other reviews in place. One thing which has hampered us has been not having the chief executive in.

"It is quite possible that, at the end of the first year of the new Trust, we may have restructured management because of lessons learnt, but that is something we can't do at the moment.

"Things have been difficult and I don't like being involved in making decisions like this. But our priority is the same as ever, patients come first and then staff a close second."

For some though, questions remain unanswered. Hyndburn MP Greg Pope said: "I don't understand how two financially stable trusts can merge and become so unstable at a time when the Government is putting more money than ever into the NHS."

Mollie Manthorpe, chairwoman of the East Lancashire Patients' Forum, said: "We haven't seen the final proposals but a lot of these plans cause us concern, and I think they will affect patients' care either with waiting lists getting longer or, as we are more concerned about this, people going home too soon to clear beds."

Coun Ron O'Keeffe, who sits on Blackburn with Darwen Council's health scrutiny committee, said: "Our big concern is that once you lose the beds, it is very hard to get them back."

Mr Gildert added: "This isn't just a hospital issue, it is one for the whole health economy. Government statistics suggest we need £30million in East Lancashire so we get as much as people in the South. That's a big part of the problem."