Hospitals cash crisis talks

TWO HAMPSHIRE MPs are today demanding answers from Southampton health bosses as to why they have sunk so far into the red.

In September it was revealed that the health trust which runs Southampton General, the Royal South Hants and the Princess Anne hospitals had fallen even further into debt, despite months of massive cutbacks.

So, while Labour MPs John Denham and Alan Whitehead sit behind closed doors with chief executive of Southampton University Hospital's NHS trust Mark Hackett, the Daily Echo lays bare the figures behind the controversial financial crisis.

In May this year the Daily Echo revealed how Southampton's hospitals had launched a bid to save £15m by April 2005, after ending the last financial year £5m in the red.

But in September, five months into the plan, every single money-saving scheme was missing its target, and, despite being almost halfway to their deadline, trust chiefs admitted they had still to agree plans that would save the full £15m.

Former health minister John Denham blamed bad management, and demanded a meeting with health bosses.

He wanted to know why the trust was so severely in debt, despite receiving record funding from the government.

"Why, when so much money has been pumped into the National Health Service and the trust over the past few years, are they having these financial problems?" he asked.

Taking a different view on the matter, however, Liberal Democrat MPs Mark Oaten and Sandra Gidley both firmly believed the financial crisis faced by both Southampton's NHS trust and Winchester and Eastleigh Healthcare Trust, was down to a gap between healthcare funding in the north and that in the south.

Last month bosses at Winchester and Eastleigh's trust admitted they were in almost as bad a financial shape as their Southampton counterparts and feared that by next spring they would miss their £13m savings target - from a £100m budget - by £3m.

Talking about the Royal Hampshire County Hospital in Winchester, Mr Oaten told the Daily Echo: "In the eight years I have been an MP the hospital has lurched from one financial crisis to another.

"It's a sad reflection on the level of funding from government and has nothing to do with efficiency.

"More money is going into the NHS but more to northern areas and southern places like Winchester lose out in the funding formulas because it's perceived to be affluent."

However, a Daily Echo investigation has looked at the budgets for every single PCT (Primary Care Trust) in the country, and has found no significant disparity.

So if hospitals in the north can hit their budgets with the cash available, the question has to be asked, why are some hospitals in Hampshire struggling?

Today Southampton Labour MPs John Denham and Alan Whitehead intend to find out.

But what about Mr Oaten and Mrs Gidley's claims?

Funding for the 304 PCTs throughout the country is governed by the Department of Health and based on a formula which takes into account such factors as the cost of living, age profile, labour costs, levels of deprivation and differing health needs.

Southampton City PCT, which buys the majority of its acute services from Southampton hospitals, this year received £969 for each member of the population it serves. Mid-Hampshire and Eastleigh and Test Valley PCTs received £864 and £805 respectively, while New Forest PCT received £951.

These figures are short of the national average of £996. But so too are many northern PCTs, including Central Cheshire (£903), East Yorkshire (£909), North West Leeds (£873) and Selby and York (£876).

In addition, many PCTs receiving well in excess of the national average are in the south, including the Isle of Wight (£1,085), Plymouth (£1,011) and Brighton and Hove City (£1,064).

One northern PCT which receives comparatively similar funding per person to that received by Mid-Hampshire is Selby and York.

This trust receives £876 per head of population - just £12 less than Mid-Hampshire. However, while Winchester and Eastleigh Healthcare NHS Trust ended last year £13.1m in the red, York Hospitals NHS Trust, Selby and York PCT's main provider of acute services, balanced its books.

Firm in his belief that the disparity does exist, Mark Oaten said: "I am still convinced that the north is getting a fairer deal than the south. All the health professionals I speak to are concerned that the formula does not take into account Winchester's high cost of living, the high cost of employing staff and the high cost of property.

"These are major factors in creating financial problems for hospitals.

"It is not just about the allocation of money, but the costs involved in living in these areas," he added.

"The cost of what they have to pay staff, and the cost of land and property is very much higher than it is in the north."

But a spokeswoman for the Department of Health said that the varying costs of labour across the country are one of the considerations factored into the formula used to allocate funding. "Funding is allocated using a weighted capitation formula, to enable them to commission similar levels of health services for populations in similar needs," she said.

"The formula takes into account age distribution of the population, additional need and unavoidable geographical variations in the cost of providing services. It aims to get the balance right between the areas of high health need and those with high labour costs.

"Funding is allocated to PCTs on the basis of the relative needs of their populations and not along geographical lines," she added.

"Many PCTs in the south have a relatively high per head of population funding."

John Denham said: "The figures seem as though they show there is no simplistic explanation that says all the money has gone to the north."

A spokesman for Hampshire and Isle of Wight Strategic Health Authority said: "We have received unprecedented levels of funding in the NHS - nationally more than £64 billion in 2003-04 - with real term growth of nine per cent year on year over the three years from 2003 to 2006.

"The three-year allocations have allowed PCTs to plan with certainty and commit money to development and to meeting a very challenging agenda. All this has been really good for the NHS across the whole country."

So with Southampton's NHS Trust currently struggling to save £15m by next April, and Winchester and Eastleigh's NHS trust £13m, what is going wrong?

Hampshire PCTs may not be getting significantly less than the north, but are they getting enough?

While the Daily Echo researched the figures some people suggested the formula used to calculate funding was wrong - that it doesn't put enough emphasis on the high labour costs incurred by southern healthcare trusts, or that too much emphasis is put on the health inequalities in the north.

Phil Wood, Unison regional secretary for the south and south-east, said: "I think if we are getting the same cash amounts as other trusts we must be getting a raw deal because the costs in the south are significantly higher. I don't think it is an effective formula that is used to decide funding.

"Some areas in the south probably have similar costs to those in the north, but Winchester, for example, is a high-cost area. The formula doesn't take these costs into account enough."

Others have suggested that by using the formula, the south probably gets more than its fair share in terms of health needs, but less than it needs to meet the costs of labour, so that ultimately the distribution is "about fair".

But whatever the problem, two major healthcare trusts in the south look to be chronically under-funded, are failing to meet targets and, rather than improving with time, are sinking further and further into debt.