Troubled health trust ‘will need millions in subsidies for years’

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HOSPITAL services at a troubled Yorkshire NHS trust facing a takeover by a bigger rival will need subsidies worth tens of millions of pounds for at least five years.

Officials have announced plans for the York NHS trust to take over the Scarborough and North East Yorkshire trust, which has been beset by a range of problems for a decade.

The trust has needed top-up funding running into tens of millions of pounds since 2001 and last year received a subsidy of £8.5m, with a similar amount expected to be given this year, as it also battles to make nearly £6m in efficiency savings.

Senior NHS managers have agreed it cannot become an elite foundation trust because of its financial problems and has no viable long-term future on its own.

Now details of a tripartite agreement between the Department of Health, the regional health authority and the two trusts have revealed extra funding will be needed through a transitional five-year period and even beyond.

Negotiations to agree the scale of investment and timescale involved could be finalised by Christmas.

The chief executive at York, Patrick Crowley, said the acquisition of the Scarborough trust would ensure it was “clinically safe and on a financially viable footing”.

He added: “The Department of Health has recognised that this will require time and the continuation of existing investment to become sustainable in the long term.”

Scarborough and Whitby MP Robert Goodwill said he was “very supportive” of the merger but the Scarborough trust was underfunded and a long-term solution was needed.

“I would like the Department of Health to look at the overall funding formula in North Yorkshire to ensure Scarborough is getting a fair bite of the cherry,” he said.

The takeover bid has been referred to the Co-operation and Competition Panel (CCP) for NHS-funded services which must approve the move due to take place in April.

A submission by bosses at York to the CCP said the Scarborough trust, which also runs Bridlington’s hospital, had been unable to meet financial or performance requirements without outside help for the last 10 years, requiring subsidies every year since 2001.

“Additionally there has been considerable concern regarding the quality of services provided,” it said.

The financial difficulties had led to short-term cost cutting and significant failures meeting performance targets. Problems with higher-than-average death rates had emerged and the Care Quality Commission had identified major failings last year which had been addressed, although continuing financial problems meant the improvements were “potentially fragile”.

Much of the trust’s buildings were no longer suitable for clinical services and there were also problems with staff shortages among doctors and nurses. High management turnover had also added to difficulties, with six chief executives and eight finance directors since 2005.

The document claimed the takeover to form a single organisation with an income of £400m and around 8,000 staff would create a trust “with a vision to be a healthcare provider that is recognised locally and nationally as delivering outstanding clinical services that meet the needs of its varied population and supports services that matter to patients”.

But it said it would face “significant” financial challenges including an efficiency target of around £84m over the first five years, at the same time as demand grows mainly due to a huge increase in elderly patients.

It adds: “The transaction is not without risk to either of the existing trusts. The greatest risk is perceived to be the risk of failure to achieve the acquisition and integration of services and staff into a single organisation.”

The plans do not include changes to services, although these will be needed. The Scarborough trust will continue to provide a full range of services including accident and emergency, trauma care, general surgery, emergency medicine and maternity care.