Broomfield 'put at risk' by loan repayment deal
BROOMFIELD Hospital is "on the brink of financial collapse" as it struggles to meet the rising cost of the loan that paid for its new £148 million wing.
The Mid Essex Hospitals Trust borrowed £160 million from a private company, Bouygues, to finance the new wing as part of a private finance initiative (PFI).
It must also pay the firm a projected £158 million interest over 33 years, bringing the total taxpayers' bill to £318 million.
Health Secretary Andrew Lansley named Mid Essex as one of 22 NHS trusts across the country whose "clinical and financial stability" is at risk. His announcement came after Broomfield bosses apparently called him to say they were struggling to meet rising repayment costs.
Neil Pudney, a nurse at Broomfield Hospital for 17 years who now sits on the NHS Mid Essex Panel, said: "They should never have started these PFIs in the first place.
"Broomfield looks very nice, but they haven't used the space well, and if they can't pay their bills they will have to cut services.
"It's not inconceivable that the hospital could close. Or they could privatise it. Broomfield could be taken over by a private company and run alongside the NHS, which would not be good for patients.
"The PFI was like a Pandora's box. It's opened a real can of worms and it fills me with horror."
Local MPs are worried the bills could spell financial ruin for the hospital.
Witham MP Priti Patel said: "It is outrageous that our local hospital is tied down to paying these excessive costs while there is an unacceptable shortage of healthcare provision elsewhere in Essex."
Simon Burns, the Chelmsford MP and Health Minister, said: "I agree with Mr Lansley that the trust is on the brink of financial collapse and its clinical and financial stability is at risk.
"There is an impact because of the high monthly payments that the trust has to make, but I don't think it is struggling to the point where it is having serious problems functioning.
"We need to negotiate better financial deals in future and try to finetune the existing PFI scheme to get a better deal for mid-Essex taxpayers.
At present the trust pays an index-linked monthly unitary payment that equates to a full-year payment in 2011/12 of £15.3 million.
The Government was forced to pay higher interest rates to PFI consortiums than it would have paid to borrow on the open market.
As a result critics have said that using the PFI is like a householder relying on credit card borrowing, instead of having a bank overdraft.
The new wing was initially thought to give the trust an asset worth £161 million, but a valuation carried out on the building when it was handed over to the trust in August 2010 resulted in the asset being reduced by £32 million.
The wing is now valued at £129 million – less than the loan repayment costs.
Peter Blackman, chairman of patient group Mid Essex LINk, believes Mr Lansley got it wrong when he named the trust as being "at risk".
He said: "The trust's board meeting heard that its financial plan for this year is on track and I understand that the funding of the new building in itself is not a threat to the stability of the trust."
4 Comments
by tajmahal
Monday, October 03 2011, 12:00PM
“This Broomfield debacle smacks of the same incompetence as once displayed by Militant when they were in charge of Liverpool City Council. Hatton and Militant borrowed an eye-watering £100 million from a Jap bank and ended having to repay an additional mind-blowing £50 million interest, which crippled the city council budget and meant residents were saddled with astronomical council tax bills. Hatton and Militant were booted out for their ineptitude and so should Stamp and the board of directors at Broomfield Hospital. They have got the hospital into this mess. They are utterly useless. Sack the lot of them.
Yes, New Labour are largely to blame for the failed, discredited PFI, which we can see is a total disaster. That said, shamefull, the ConDems are pursuing the same doomed policies on the NHS (and just about everything else) as the last Labour government.
The future is very bleak for the NHS.”
by hoppityskip
Saturday, October 01 2011, 5:21PM
“I don't think it is fair to personalise it all to the current management of Mid Essex as this is an issue that has been going on far longer than the current inept management were installed. The last CEO that actiually got any reasonable work done in Mid Essex was Andrew Pike but he disappeared one day due to taking the bullet for others. Is it right to say that PFI was soley the responsibility of the last Labour government?”
by tajmahal
Saturday, October 01 2011, 5:08PM
“Broomfield Hospital and Mid-Essex PCT is 'run' by a bunch of inept clowns, chief among them Broomfield Hospital CEO, Malcolm Stamp. This is the loon who squandered tens of thousands of pounds in order to put 2 ridiculous, lunatic, insane statues in the entrance of the new entrance. It's thanks to mismanagement like this, and much more besides, that Broomfield is on the verge of becoming bankrupt.
The PFI scheme under New Labour was doomed to failure and here is the proof. It's madness that a public NHS hospital is beholden to the private sector. Combine this mad situation with the lousy management of Stamp and it's no wonder Broomfield is facing financial ruin.
The government now needs to take immediate drastic action - fire with immediate effect Malcolm Stamp and the board of directors and bring in people with both medical training, qualifications and experience (rather than these non-medical, jumped-up office clerk imbeciles) and financial crisis management experience.
What Burns and Landsley must not allow to happen is for this hospital to go under and be lost, thus hurting the people of Chelmsford and beyond, because of a stupid Labour policy and the incompetence of Stamp and senior directors.
Chances are though that the useless Stamp and his team will stay on, retire and get massive pensions paid by the rest of us.”
by hoppityskip
Thursday, September 29 2011, 8:45PM
“It's interesting to read the history of Mid Essex, a trust that has been plagued by "macho" management for years. Trust chief exec after chief exec has been bought in to try to resolve matters, but sadlyt eh trust has never really bought staff on board. The original PFI was far bigger and was gooing to be huge but government forced the Trust to revise the plans down which must be better news for local residents.
The trust has for many years used all sorts of faling strategies to make "saving" most of which were illusions.
I was involved in a project years ago that was on track to save over half a million pounds but management inertia meant that all th work went to waste.
It is not and hasnt been a well run trust for many yuears staggering from one macho management to another. Yes I have issues with Mid Essex management but mny of us at the "coal face" were ignored by managers tied to short term goals and targets not a plan!”