South Tees Hospitals racks up £30m deficit

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A TEESSIDE hospital trust expects to have racked up a near £30m deficit in the next 12 months.

The South Tees Hospitals NHS Foundation Trust envisages a £29.6m deficit in 2022/23 as part of its planning for the financial year.

This would be an increase of more than £6m on the £23.4m figure recorded in 2021/22 up to the end of March.

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The trust continues to be saddled with an expensive Private Financial Initiative (PFI) agreement put in place in the late 1990s to finance the building and maintenance of the James Cook University Hospital, in Middlesbrough’s Marton Road, which opened in 2003.

Last year this cost £59m and the sums to be paid by the organisation increase every year until the final payment is due in 11 years time.

A report to its board of directors also revealed costs related to clinical delivery, including the trust’s response to the covid-19 pandemic.

In 2021/22 £95.2m was spent on clinical supplies and services, £78.6m on drugs and £12.9m on healthcare purchases.

However, the trust said costs from covid-19 swab tests and vaccinations against the virus had been reclaimable from NHS England.

The trust’s biggest expenditure overall was on staff pay, which amounted to more than £475m, including £137m to nursing and midwifery staff.

Operating expenses, excluding staff pay, totalled £327m.

In the plus column the trust had an operating income from patient care activities of £740.2m, which included £493.6m paid by clinical commissioning groups for its services and £243.4m that was paid by NHS England.

The report said the trust had delivered savings of £13.1m, which was £1.3m higher than it planned in 2021/22.

Its capital spending in the 12 months to the end of March was £47.1m, more than £18m of which went on its estate – broadly hospital buildings – £11.6m on medical equipment and more than £14m on IT.

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It expects operating income from patient care in 2022/23 to fall to £719m, staff pay to come in at £471.4m and other operating expenses to amount to £313m.

The trust’s financial plan for 2022/23 assumes a gross capital spending programme of more than £33m, including £5m to be spent on developing the Friarage Hospital, in Northallerton, £9.5m on estates schemes and £3m on medical equipment.

The report said the pandemic had a “significant impact” on the trust’s activity, cost base and how its services were configured.

A trust spokeswoman said the historic PFI scheme was the single largest contributor to the trust’s deficit.

She said: “In total the James Cook University Hospital will have cost the trust £1.7 billion to build and run since it opened in 2003.”

The spokeswoman said the terms of the contract meant that when hospital upgrades were carried out, the trust had to fund £1 out of every £4 on the work.

She added: “As in previous years, the trust’s financial control total for 2022/23 is agreed at NHS system-level and takes into account reductions in funding provided during the earlier phases of the covid-19 pandemic in 2021/22.”

 

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