Monday, May 21, 2012

NHS 'bank style' Bailouts Reach £805,000,000 and are expected to rise by £billions

The graph above shows the total cost of the NHS Bailouts (accumulative) since 2009. In the first year of the figures, the NHS Bailouts totalled £187m, and from April 2010- March 2011, the figure jumped to £223m. Much worse than that however was the last financial year, and the first proper year of Tory cuts. The total cost of NHS Bailouts that year came to £415,000,000 which is more than the previous two years added together. 

It is the case that some of these costs are linked to the costs of PFI. Take Peterborough NHS Trust for example who needed £46m of a bail out. There's no doubt that this was as a result of a new £289m hospital opening in 2010. We cannot, however, say that all, or even a majority of the bailouts are PFI related, after all how could bailouts in one single year jump so dramatically? The truth is that there has been tougher NHS settlements as a result of government cut backs. As a proportion of GDP, health spending is falling, and we know this because McKinsey identified £20bn of cuts that had to be found. This is why hospitals such as Coventry University Hospital (here) had to ask for a £10 million pound bail out. Coventry justify their bailouts by saying that they have treated a higher number than expected of emergency patients in 2011.

To combat some of the rising costs of NHS Bailouts, the government have set aside a £1.5billion fund to deal with 7 NHS Trusts. Much of those debts (South London, Barking etc) are PFI related. What the government has refused to do is set aside money for your rank and file NHS Trusts that are ending up in difficulty as a result of tighter spending limits. They are all expected to seek/achieve Foundation Trust status by 2014. If they fail, they could be sold off or forced to merge to survive. What is by any measurement a terrifying development is the fact that 50% of Trusts who have applied for Foundation Trust status thus far have been rejected. These rejections are precisely the mechanism that will trigger the large scale privatisation of the NHS. 

If a failure to achieve Foundation Trust status does not kill off the NHS, then the government have another trick up its sleeve. They have asked McKinsey to review the Prudent Borrowing Controls (which are currently set at 40% of a NHS Trust's budget). The government plan to reduce that limit to make the financial running of the Trusts even harder to achieve. This will see more end up in financial difficulty seeking bailouts. This will make Andrew Lansley God, the final arbiter in these NHS Trusts future. I would not hold my breath in expectation that he will look upon them favourably.

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