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Bailouts top £870m as trusts struggle to pay bills

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The Department of Health issued £874m in bailouts to trusts in 2014-15, LGC’s sister title Health Service Journal can reveal.

  • DH issued £874m in bailouts to providers last financial year
  • Applications for funding show trusts struggled to pay suppliers
  • TDA says pay controls on senior management have been implemented at some bailout trusts

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Information released by the DH

shows it made dozens of payments over the course of the year to support trusts, some of which were struggling to pay energy and agency bills (see box, below).

The DH made £518.3m in “additions public dividend capital revenue support NHS temporary” to NHS trusts and £204.1m to foundation trusts, data published by the department shows.

A further £151.6m was paid to 13 NHS trusts as “policy payments” over the financial year, each described in the DH information as “support for the provision of health services”.

The NHS Trust Development Authority’s report for the year said that to qualify for policy payments trusts “must be on track to deliver their agreed financial plan for 2014-15, having delivered the required level of productivity savings and have a clear plan to manage their resources in the future”.

The authority also said that to receive this funding trusts were subject to conditions including “controls” on senior management pay, moving to shared back office services, and taking part in procurement and commercial initiatives. The TDA declined to tell HSJ which 13 trusts had implemented restrictions on management pay.

Sivakumar_Anandaciva

Siva Anandaciva said more transparency is needed

The £518.3m trust payments and £204.1m to FTs - labelled as “temporary” payments - under DH rules, must either be repaid in the same year, or reclassified as “permanent” revenue support after a DH subcommittee has approved it.

The data showed the DH agreed to £439m of the total becoming “permanent” revenue support in 2014-15.

The single biggest “permanent” payment in 2014-15 was £90m to Barts Health Trust. The east London acute trust has a turnover of more than £1bn and ended the financial year with a deficit the TDA recorded as £79.6m.

Worcestershire Acute Hospitals Trust received £26.5m of “permanent” support, the DH data showed.

King’s Fund director of policy Richard Murray said the scale of the payments raised questions about the tariff system and the relationship between providers and the centre.

Mr Murray, a former chief analyst at NHS England and DH director, said: “This underlines the extent of DH cash support going out direct to NHS providers. This raises a whole set of further questions: the credibility of tariff as a payment system when so much money has to flow outside of it [and] the real extent of foundation trust independence when organisations have become dependent on DH cash injections – just to name two.”

NHS Providers head of analysis Siva Anandaciva said: “We need more transparency on whether these additional costs and revenue are being accounted for appropriately in national payment and funding systems and thinking.

“Many health systems are highly dependent on the resilience funding that was issued last year. This year the funding is ‘in the baseline’ but if you are a board that received money last year to help your urgent and emergency care service this year you may be unclear about how much funding you will receive and the process by which it will flow. This planning certainty is essential if we are to deliver better value for money for this investment.”

In March the DH changed its rules on payments to trusts so that in some cases public dividend capital must now be repaid with interest. It said this was “to incentivise the development and implementation of recovery plans”.

A DH spokesman said: “We know the NHS is busier than ever and trusts are facing challenges; however we expect them to show tight financial grip and live within their means. We have backed the NHS’s own plan for the future by investing the £8bn needed to deliver it.”

Trusts struggling to pay for energy and staff

Papers from the Department of Health’s independent trust finance facility committee covering the last quarter of 2014-15 show the difficulties faced by trusts forced to ask for additional funding.

Many organisations said they needed help to pay temporary staff to cover shifts, while one was struggling with energy bills. The papers have been published by the DH following requests by HSJ.

Some suppliers to Shrewsbury and Telford Hospital Trust put its account on hold because of delayed payments. In January the trust asked for £7m to pay its creditors and said £280,000 of was due to a legal claim against an energy supplier.

Minutes of an ITFF meeting in February said Barnsley Hospital Foundation Trust had been threatened with the “cessation of the supply of key drugs, doctors from the trust’s preferred medical locum agency and catering” by suppliers.

In February Medway FT told the committee that staff agency NHS Professionals were “considering withdrawing agency staffing services as a result of the continuing level of overdue debt the trust holds with [them]”.

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