12 May 2011
On Friday (May 6), the Trust Board met to agree the organisation’s financial plan for 2011-12 and acknowledged that the Trust faces a very challenging position.
£38 million gap
Based on our latest assumptions, which includes the income we expect to receive from our two main primary care trusts (PCTs), we estimate that we will spend £38 million more than we will earn over the coming year - that's 12% of our total turnover.
Chief Executive Matthew Hopkins said: "Obviously, this is a very big gap and, as far as we know, the largest percentage for any trust in the country.
"However, it should not come as a total surprise, as this is the main reason why we can't achieve foundation trust status in our current form and why we are exploring alternative options for our future, including the likely demerger of our hospitals."
The challenge explained
There are three main reasons for the severity of the financial challenge the Trust faces.
Matthew continued: "First, whilst we did well to balance our books last year (making a surplus of £3.3 million), it was based on what is, in financial speak, called 'non-recurring savings'. In plain English, it's from savings that don't continue into the future, for instance holding off on hiring staff that we have now recruited. The total impact of not being able to roll these savings into 2011-12 is £10.9 million.
"Second, is what you might call national austerity measures. These are things that the Department of Health have put in place to control NHS spending and to make hospitals more efficient. This includes reducing the amount we get paid for treating patients by four per cent.
"In addition, starting from this year, we will not be paid for treating patients who are readmitted to our hospitals within 30 days of being discharged. The total cost to us of these 'national' measures is estimated to be £18.3 million.
"Third, are local austerity measures being used by our PCTs to cut the amount of money they spend with us. This includes reducing the number of patients who are treated in hospital, with a specific focus on providing care closer to where they live, for instance in GP surgeries. The total estimated cost of these 'local' measures is estimated at £10.9 million."
Closing the gap
Matthew added: "If we were facing one, or even two, of these challenges, we are confident we could have met them by being more efficient and improving the quality of the care we provide to our patients. All three together is a challenge too far.
"Following detailed analysis of the way we work and by comparing ourselves to other trusts, we know that the most realistic amount we can save over the year is £18.7 million."
Planning for a deficit
As such, the Trust Board agreed that the organisation will formally plan to end the year with a deficit of £19.3 million, subject to approval by our strategic health authority, NHS London.
Matthew continued: "This was not an easy decision for the Trust Board to take and it will undoubtedly have significant implications for us, in particular on our reputation as an organisation.
"Having said that, it would be wrong of us to say we can close such a big gap when we know we can't. And, importantly, we have to be realistic with our staff, patients and local people."
Quality and cost improvement plans
To help deliver the savings, the Trust has a quality and cost improvement plan for the year, with the main focus on:
- Reducing the amount of money we spend on agency and bank staff;
- Ensuring our operating theatres are as efficient as they can be;
- Reducing the amount of time patients spend unnecessarily in our hospitals;
- Getting the best value when we buy goods and services.
Planning for a deficit will undoubtedly have a big impact on the organisation. However, meeting our £18.7 million quality and cost improvement plan will help to lessen and repair that impact.
St Helier redevelopment
Matthew added: "Patients and local people are likely to ask what planning for a deficit means for the redevelopment of St Helier Hospital. As such, I would like to reassure you that the initiative remains a top priority of the Trust Board and continues to have the full support of our NHS partners and other key stakeholders, including our local MPs."
