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PCTs to bail out London hospitals

Wiped-out deficits to put all trusts on an 'even keel'

OnMedica Staff

Monday, 08 December 2008

Money from PCTs in London may be diverted to pay off £275m in hospital debts.

London’s 31 primary care trusts have drawn up proposals to work together to wipe-out deficits in 10 hospital trusts and Hillingdon PCT. The diversion of funds means that 26 PCTs in London without debts will see 1.3% of their budgets go to this use.

A further £304m will be top-sliced from NHS London’s budget to pay off the debts.

NHS London said the move would ensure that all trusts were on an 'even keel' and warned that without action debt across the capital would reach £579 million by 2011.

If put into practice, the proposal will see PCTs take a unified approach investing a proportion of their funding over the next two years and forgoing the return of a similar amount of topslice – which was a proportion of PCT funding held by NHS London, the Capital's strategic health authority (SHA) to manage risks during the period of financial recovery across London.

According to NHS London all but five PCTS are already debt free and four more will complete their recovery programmes by 2010. However six trusts remain ‘financially challenged’ and another five are unlikely to exit debt before 2011.

Unless action is taken it is estimated that the 11 trusts and one PCT will be faced with a historic debt of £392 million in 2011.

Ann Radmore, Chief Executive of Wandsworth Teaching PCT is leading London's PCTs through this proposal.

“The capital's 31 PCTs are clear that they need to work together as one NHS to improve health and healthcare for all Londoners. This is challenging for us and PCTs are being asked to consider wider issues beyond their borough boundaries,” she said.

The proposal will see PCTs invest in a collective fund over the next two years from existing resources. The collective fund will consist of the non-return of the £304 million top-slice and a non-returnable levy of 1.3% on PCT funding for two years to fund the remaining historic debt of £275 million. The non-returnable levy will be applied to all PCTs except the five still repaying debts.

Paul Baumann, Finance Director at NHS London, said: “Failure to deliver this proposal would mean that a number of organisations would be unable to deliver the improvements promised in Healthcare for London and healthcare across London would remain patchy. By taking this action PCTs will have much greater leverage to demand better performance from their providers. This decision has not been taken lightly by the PCTs and they are determined to ensure that there is no return to this deficit position in the future.”

PCTs will discuss the proposal and make a decision on whether it should be implemented at their own Board meetings, which will run from 8-19 December.

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