Hospital’s financial cloud will be lifted

THE financial threat that has loomed over Hinchingbrooke Hospital looks to have finally been lifted as millions of pounds have been effectively added to its budget. While the NHS formulated a plan to secure the Huntingdon hospital s long-term future, the

THE financial threat that has loomed over Hinchingbrooke Hospital looks to have finally been lifted as millions of pounds have been effectively added to its budget.

While the NHS formulated a plan to secure the Huntingdon hospital's long-term future, the Department of Health has had a change of heart that will be a vital boost for local healthcare.

The hospital could have been facing a deficit of more than £60million in the year that started this week - almost its entire annual budget.

But two 11th-hour changes by the Department of Health mean that it could not only make an operating profit in 2008/09, but also see the way to eliminating its historic debt, currently estimated at up to £40million. And all without earning or saving a single penny.

It means for the year just ended the hospital's projected deficit has dropped from £30.5million to £13.4million - a sum that would have generated a £26.8million penalty under old rules. This method of penalty has now been scrapped, saving the hospital millions.

Consultant radiologist Catherine Hubbard said the news would boost staff morale at the hospital, which had been slowly strengthening as ways of keeping keys services at the site emerged late last year and in January.

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"A lot of consultants felt that the underlying finances were not as bad as the strategic health authority thought. Once these corrections have been made, it is good to see that the health of the finances is reasonable. It bodes well for the future," she told The Hunts Post.

"People are still quite shocked at the moment about their jobs. Once they learn this news, they will feel more confident about staying."

But she warned that some key people were leaving, though not necessarily for reasons related to the recent crisis.

"Morale has been dented but never sunk. The wonderful thing is that people are still hard at work."

Dr Hubbard praised the Hunts Post campaign, backed by clinicians and other staff at the hospital, the district's two MPs and politicians of all parties, to protect the future of Hinchingbrooke from downgrading, effectively to cottage hospital status.

"It has been very successful, and there has never been a complete loss of morale or a hysterical response - just some mild gloom - but the wobbly bits were tempered by a stream of good news."

There were still concerns about further job losses, she added, but managers had promised they could be achieved by "natural wastage".

Six months ago, the hospital was seen as a financial basket case offering superb medical services, but at risk of downgrading because of its finances.

Now, with a clinical rescue plan almost certain, it is starting also to look financially healthy.

Two things have changed in the last fortnight.

The first related to a serious accounting error that led to the hospital giving the NHS £13.6million more than the £6.5million it should have paid. Initially, the Department of Health refused to return the cash, which had been allocated elsewhere. But two weeks ago it relented and said Hinchingbrooke could have £9million of it back. From next year it will no longer be paid less for treating patients than hospitals such as Addenbrooke's.

The second has changed the way Hinchingbrooke gets its money, and no longer will it face huge fines for overspending. This has already produced an £8.1m repayment in the hospital's favour.

The system called Resource Allocation Budgets (RAB), designed to address minor overspends in multi-billion-pound Whitehall departments, which was also applied to acute hospital trusts was last week canned by the DoH, helping hospital trusts such as Hinchingbrooke and a raft of other threatened hospitals across the country.

The new rules have achieved some sanity in NHS financing.

The changes also mean the hospital can cancel an agreed £27.3million loan facility and is likely to transfer the outstanding debt into public dividend capital.

The phrase "a victory for common sense" is usually the last bastion of the defeated scoundrel, but in this case it fits rather well.

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