Takeover of first NHS hospital- Good Hope becomes the Heart of England
The first takeover of an insolvent NHS hospital by one of Labour's flagship foundation trusts will formally take effect next Sunday, the health service announced at the weekend - paving the way for similar solutions for a number of other, effectively bankrupt, NHS institutions.
The formal takeover - as opposed to a more traditional NHS merger - also marks one more step down the road of the health service operating in a more commercial and market-like environment.
Heart of England, one of the first foundation trusts, which in its first full year of operation recorded a small £5m surplus on its £265m turnover, is taking over the nearby Good Hope Hospital in Birmingham. By last April, Good Hope had an accumulated deficit approaching £20m on a turnover of just over £100m. Its own board judged it "no longer financially viable".
No other identical takeovers are immediately in the pipeline, according to Monitor, the foundation trust regulator. However, South Staffordshire foundation trust is in the process of taking over mental health services from its local primary care trust.
There are some 15 to 20 NHS trusts which are effectively insolvent, having deficits so large they look to be irrecoverable within 10 years.
Patricia Hewitt, the health secretary, told the Financial Times last week that takeovers of such institutions "won't be the solution in every case". But "they may well be the solution in some cases". She noted in particular that London had set up separate commissioning and provider arrangements which might help drive such acquisitions.
Ms Hewitt is determined not to present the deal as writing off deficits. The new NHS financial framework requires trusts that overspend to take on interest-bearing loans. "We will no longer have a system where hospitals overspent, the deficit got huge, then got written off against a recovery plan, but the overspending just started up all over again," she said.
But in reality, Good Hope's deficit has had to be dealt with. Heart of England has received a few millions in one-off payments as a "sweetener" to take Good Hope on. And more than £17m of Good Hope's historic deficit has been turned into public dividend capital - capital that is in effect underwritten by the Treasury.
Heart of England pays a permanently low interest rate on that, and it is technically repayable. In practice, however, public dividend capital is rarely repaid. The local health authority has in effect accepted that it will never see the money back from Good Hope's overspending.
The future now depends on the financial disciplines to which Heart of England is subject having the desired effect. In future it will have to generate a surplus, and borrow for its own capital needs, to survive.
It has, however, taken on the liability in spite of the fact that the government still has no regime in place that spells out what happens should a foundation trust fail. None of the current 62, though, is yet close to that.
The Heart of England's takeover of Good Hope Hospital in Birmingham involved "exactly the same merger and acquisition priniciples . . . and level of detail that you would apply to any FTSE 250 company", according to Corinne Slingo, a partner at the commercial lawyers Beachcroft, which acted for Heart of England.
The difference, she said, was working out the specific National Health Service risks. These included the impact of payment by results, which increasingly pays hospitals for each individual treatment, and the limited number of buyers of NHS care.
Without the local primary care trusts and health authority on board, indicating that they would commission services at a level to sustain the new trust, "it would be a much riskier exercise", she said.
From:
http://www.ft.com/cms/s/253bf6d4-e0b6-11db-8b48-000b5df10621.html
Last year, (Oct 02, 2006) Health Direct noted on that the first NHS hospital privatisation was announced and that 60 more may follow when a foundation hospital trust planned to "takeover" a smaller cash strapped NHS hospital in what is thought to be the first privatisation of its kind. The Heart of England NHS Foundation Trust in Birmingham hopes to acquire Good Hope Hospital, which is £15m in debt.
Labour's policy of outsourcing NHS staff, facilities and responsibilities is an abject admission of it's inability to manage properly a health service in the UK.
As such it is the end of the National Health Service. From the proud boast of "24 hours to save the NHS" to "10 years to kill the NHS off".
On Nov 11, 2005 Health Direct warned that Labour's policy is 'fatally flawed' a majority of PCT claim when the Labour government's policy on primary care provision has become 'fatally flawed' because of poor handling, a poll of primary care trust chief executives suggests. More than three quarters of respondents to an HSJ survey agreed with the statement that 'a badly communicated policy has now become a fatally flawed policy due to government panic'.
Ninety five per cent of those polled said 'the government badly underestimated how much opposition would be created by the transfer of staff out of the NHS'.
One chief executive said: 'The Stalinist regime at the DoH increasingly appears to have lost touch with reality. In my 20 years at the top I have never known anything to affect morale to such an extent.'
The formal takeover - as opposed to a more traditional NHS merger - also marks one more step down the road of the health service operating in a more commercial and market-like environment.
Heart of England, one of the first foundation trusts, which in its first full year of operation recorded a small £5m surplus on its £265m turnover, is taking over the nearby Good Hope Hospital in Birmingham. By last April, Good Hope had an accumulated deficit approaching £20m on a turnover of just over £100m. Its own board judged it "no longer financially viable".
No other identical takeovers are immediately in the pipeline, according to Monitor, the foundation trust regulator. However, South Staffordshire foundation trust is in the process of taking over mental health services from its local primary care trust.
There are some 15 to 20 NHS trusts which are effectively insolvent, having deficits so large they look to be irrecoverable within 10 years.
Patricia Hewitt, the health secretary, told the Financial Times last week that takeovers of such institutions "won't be the solution in every case". But "they may well be the solution in some cases". She noted in particular that London had set up separate commissioning and provider arrangements which might help drive such acquisitions.
Ms Hewitt is determined not to present the deal as writing off deficits. The new NHS financial framework requires trusts that overspend to take on interest-bearing loans. "We will no longer have a system where hospitals overspent, the deficit got huge, then got written off against a recovery plan, but the overspending just started up all over again," she said.
But in reality, Good Hope's deficit has had to be dealt with. Heart of England has received a few millions in one-off payments as a "sweetener" to take Good Hope on. And more than £17m of Good Hope's historic deficit has been turned into public dividend capital - capital that is in effect underwritten by the Treasury.
Heart of England pays a permanently low interest rate on that, and it is technically repayable. In practice, however, public dividend capital is rarely repaid. The local health authority has in effect accepted that it will never see the money back from Good Hope's overspending.
The future now depends on the financial disciplines to which Heart of England is subject having the desired effect. In future it will have to generate a surplus, and borrow for its own capital needs, to survive.
It has, however, taken on the liability in spite of the fact that the government still has no regime in place that spells out what happens should a foundation trust fail. None of the current 62, though, is yet close to that.
The Heart of England's takeover of Good Hope Hospital in Birmingham involved "exactly the same merger and acquisition priniciples . . . and level of detail that you would apply to any FTSE 250 company", according to Corinne Slingo, a partner at the commercial lawyers Beachcroft, which acted for Heart of England.
The difference, she said, was working out the specific National Health Service risks. These included the impact of payment by results, which increasingly pays hospitals for each individual treatment, and the limited number of buyers of NHS care.
Without the local primary care trusts and health authority on board, indicating that they would commission services at a level to sustain the new trust, "it would be a much riskier exercise", she said.
From:
http://www.ft.com/cms/s/253bf6d4-e0b6-11db-8b48-000b5df10621.html
Last year, (Oct 02, 2006) Health Direct noted on that the first NHS hospital privatisation was announced and that 60 more may follow when a foundation hospital trust planned to "takeover" a smaller cash strapped NHS hospital in what is thought to be the first privatisation of its kind. The Heart of England NHS Foundation Trust in Birmingham hopes to acquire Good Hope Hospital, which is £15m in debt.
Labour's policy of outsourcing NHS staff, facilities and responsibilities is an abject admission of it's inability to manage properly a health service in the UK.
As such it is the end of the National Health Service. From the proud boast of "24 hours to save the NHS" to "10 years to kill the NHS off".
On Nov 11, 2005 Health Direct warned that Labour's policy is 'fatally flawed' a majority of PCT claim when the Labour government's policy on primary care provision has become 'fatally flawed' because of poor handling, a poll of primary care trust chief executives suggests. More than three quarters of respondents to an HSJ survey agreed with the statement that 'a badly communicated policy has now become a fatally flawed policy due to government panic'.
Ninety five per cent of those polled said 'the government badly underestimated how much opposition would be created by the transfer of staff out of the NHS'.
One chief executive said: 'The Stalinist regime at the DoH increasingly appears to have lost touch with reality. In my 20 years at the top I have never known anything to affect morale to such an extent.'
Labels: Good Hope Hospital, Heart of England, NHS takeover, Stalinist Brown
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