Hinchingbrooke: A victim of its own success

HINCHINGBROOKE Hospital was built in the early 1980s and opened in 1983. The then new Huntingdonshire MP John Major pressed hard for it, but it was always one of the country s smallest district general hospitals, originally serving fewer than 150,000 pati

HINCHINGBROOKE Hospital was built in the early 1980s and opened in 1983. The then new Huntingdonshire MP John Major pressed hard for it, but it was always one of the country's smallest district general hospitals, originally serving fewer than 150,000 patients - compared with an optimum catchment of 250,000 for a successful and efficient DGH.

Although it was always on the back foot on patient numbers, it thrived on innovation, such as sharing consultants with neighbouring hospitals. It became very efficient and was so successful that overworked GPs referred patients to Hinchingbrooke rather than treating them in their own surgeries.

By last year, Hinchingbrooke was seeing 40 per cent more patients than the national average, even though Huntingdonshire's population has for generations been significantly healthier than average.

With NHS cash being directed towards less healthy areas, such as Scotland and the north-west, that level of over-provision became financially unsustainable. The former Huntingdonshire Primary Care Trust, disbanded last October to be replaced by a county-wide trust, did not have enough money to pay for all the work Hinchingbrooke was doing.

In that respect, it was a victim of its own success. It was carrying out procedures so effectively - and far more cheaply than the national average - that GPs carried on sending more patients there without the extra cash from Whitehall to pay for their operations or their physiotherapy, their scans or their drugs.

Hinchingbrooke muddled along with small deficits, bailed out by grants or loans from the PCT, until two things changed. The first was a new civil service accounting convention aimed at stopping departments exceeding their budgets. It was never designed for hospital trusts, but it hit some of them hard.

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It effectively reduced the hospital's income by 23 per cent to £60million.

Then there was the £25million treatment centre, paid for through a PFI (Private Finance Initiative). In the new world of hospital patients being home within 24 hours of admission, it should have been full from day one. But neighbouring PCTs under the previous structure failed to deliver on promises of patients to be operated on. Even 70 or 80 per cent usage was not enough to cover the bills, and the losses started to mount.

Worse was to come. The Government decided to pay every hospital the same money for the same service. So, for example, everyone got the same tariff for a particular hip replacement procedure. But it wasn't as straightforward as that. Foundation Trusts, such as Addenbrooke's and Peterborough got the full whack.

But there were "interim arrangements" in which inefficient hospitals with high costs were subsidised by efficient hospitals, such as Hinchingbrooke, which got only around 80 per cent of the tariff. This is called Payment by Results (PBR)

Hinchingbrooke could have lived with that if someone had not got the numbers wrong. The result was that the Huntingdon hospital paid back £19.5million to the Department of Health last year - £11million more than it should have done. By the time the mistake was discovered, the money had been reallocated and Hinchingbrooke was told to whistle for it.

So what had started the year as a predicted £5million deficit, subsequently revised to £8million, rapidly became a disastrous £30million forecast for March 2007, on top of the £10million of inherited historic debt.

But suddenly, three months ago, the DoH relented. The accounting convention was lifted and the penalty restored to the budget, and most of the PBR error repaid, leaving Hinchingbrooke with a 2007/08 deficit projected at less that £5million.

The rescue package, aimed at saving £14.5million, will see break-even the following year and even surplus beyond.

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