Queen Elizabeth Hospital NHS Trust in London could be £100m ($172m; €145m) in the red within five years, auditors have warned. The cumulative debt could climb to £99.8m by 2009, say the auditors in a public interest report which says the trust is likely to fail to meet its duty to break even. “The trust’s cash position is extremely serious. The trust faces a very severe challenge to balance its recurring income and expenditure,” says the report, compiled by PricewaterhouseCoopers.
Queen Elizabeth Hospital NHS Trust, an acute trust serving the population of southeast London, moved to its current site in Woolwich as part of a large public finance initiative. Ongoing costs associated with that initiative are identified in the report as a particular problem. It says that the trust has calculated that it has excess costs under the scheme of about £9m.
“Reducing costs will be particularly difficult as the trust has a high level of fixed costs under the . . . scheme. The fixed amount payable to the . . . partner is approximately £15m a year, increasing annually with inflation,” says the report.
The report says that within five years, the trust could have a cumulative deficit of £99m—76% of its estimated total income: “It does not appear possible for the trust to generate the necessary level of saving and maintain income levels to recover this cumulative position. As a result, we do not consider it possible for the trust to achieve its breakeven duty without significant further financial support. Nor could the trust provide the existing level of services expected of an NHS acute trust if it were required to recover the deficits.”
Michael Robinson, a partner with PricewaterhouseCoopers, said, “The trust’s recovery plan relies on significant income growth, through population expansion and the development of new services, combined with tight control of its costs. There are significant risks associated with this.”
In a statement, the trust said, “The trust accepts the report as a clear and fair summary of the state of its finances and welcomes the absence of any criticism of the trust board or its systems of financial control. As the report makes clear, the trust understands the nature and scale of the financial problem it faces and is implementing a programme of action to address it.
“Good progress is being made in implementing this programme, however the trust accepts that, without external financial support, it will not be able to recover its accumulated deficit. The trust is continuing to work with the strategic health authority and the Department of Health to find ways to secure such support.”
The report is available at www.audit–commission.gov.uk/pir/index.asp.
