Peterborough City Hospital PFI cost threat to Trust

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Media captionFinancing a PFI agreement is costing Peterborough City Hospital £40m a year

A new hospital built under a private finance initiative (PFI) is set to lose so much money it threatens the future of a health trust, it has been claimed.

Health watchdog Monitor has concluded Peterborough and Stamford Hospitals NHS Trust is "not financially sustainable".

Inspectors said the trust worked well "clinically" but would lose £38m a year under present arrangements.

The Trust said it was awaiting a second Monitor report on options it faced but had already made savings of £13.4m.

The Trust added: "Our twin priorities remain delivering the very best patient care, day in, day out, and finding a further £13m in cost improvement savings over the course of this financial year."

Monitor's Contingency Planning Team (CPT) found the trust had built up a deficit of £37m by the end of 2012-13 and needed one-off support from the Department of Health of £44.1m.

The trust's forecasts for the next five years show a continuing deficit of £38m or more each year and a cash shortfall of at least £40m a year.

Penalty payment 'substantial'

Without further support from the Department of Health, the trust would not be able to pay its bills or staff wages, the CPT inspectors conclude.

The inspection team is to recommend changes to the ways services are currently supplied by the trust later.

The inspectors found under-utilisation of Peterborough City Hospital was costing the trust £22m a year when three additional wards could be sited on its fourth floor potentially generating an extra £9m.

The Peterborough City Hospital PFI is costing £40m a year and has 31 years left to run but ending the arrangement would trigger a very substantial one-off payment, the CPT report concluded.

Stephen Hay, from Monitor, said: "This report clearly shows that Peterborough and Stamford Hospitals NHS Foundation Trust is not financially sustainable.

"We now expect the CPT to advise us what practical options are available to close the financial gap and ensure continuity of service to patients."

Peter Reading, Trust interim chief executive, said: "The report confirms that the financial challenge we face remains perhaps the biggest in the NHS.

"Part of the solution - ever greater efficiency - is in our own hands, more than half of the problem can only be tackled by broader measures across the local health economy and wider NHS.

"We now await the outcome of the CPT's second report which will present and evaluate the options for the Trust."

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