Tuesday. 2 September 2014

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Two NHS trusts set to spend £6m on merger costs, letter reveals

MP presses NAO to investigate as NHS prepares to spend millions on mergers across UK

This is not why we give money to the NHS

Fiona MacTaggart, MP on public accounts committee

Taxpayers face spending more than £6 million on costs for the proposed merger of two hospital trusts in the UK’s National Health Service.

The staggering figure is revealed in a document obtained by Exaro, prompting one senior MP to slate it as a “complete waste of taxpayers’ money”.

She is calling on the National Audit Office to investigate as the NHS faces spending millions of pounds across the country on merger advisors instead of health care.

The Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust and the Poole Hospital NHS Foundation Trust are expecting to spend £6.1 million on the costs of their planned merger. And this is even though competition regulators are gearing up to block the merger.

Jane Stichbury and Angela Schofield, chairwomen of the two NHS trusts respectively, outlined the costs in a letter in June to Fiona MacTaggart, a Labour MP on the House of Commons public accounts committee.

The two chairwomen explained that they represent the first NHS foundation trusts to merge.

They wrote: “We can confirm that the advisor costs to date (May 2013) for the competition process is £1.43 million, estimated to rise to £1.67million in August 2013, in line with the [Competition Commission’s] statutory deadline.

“In addition, we would like to take this opportunity to emphasise the length and complexity of this process.

“The overall cost of the competition and merger control process with regulators, including in-house project management and administration costs, is forecast to be in the region of £6.1 million.”

Such mergers, they admitted, were an “extensive and costly process”.

But the costs of their merger “were funded by NHS South of England, the strategic health authority covering Dorset prior to its dissolution on March 31, 2013.

“While the cost of merger has been funded through public money, funding allocated for patient care at the Royal Bournemouth, Poole or Christchurch Hospitals has not been used.”

MacTaggart, a former Home Office minister, told Exaro: “This is not why we give money to the NHS. Money that we think is going to health care is going to go to lawyers, whose expertise, and therefore whose fees, will be equivalent to those in mergers of private companies.”

The letter was written after MacTaggart raised questions about the costs with Jeremy Hunt, health secretary, after hearing that other NHS trusts were seeking advice from costly competition lawyers about possible mergers.

“It is a complete waste of taxpayers’ money,” she said.

“They are being firmly advised that they have to have competition lawyers there from the start.”

“This simply should not be an issue for competition authorities, in my view, because we have a single NHS.”

Questions over the costs have been heightened because the Competition Commission condemned the merger in provisional findings earlier this month.

The Office of Fair Trading referred the merger to the commission in January.

In provisional findings a fortnight ago, the commission “concluded that the proposed merger would reduce choice in a number of clinical specialities for local patients.”

Roger Witcomb, chairman of the Competition Commission, said: “This is the first NHS merger that we have looked at, and, while we are conscious that there are important aspects of the NHS that distinguish it from other sectors, health policy has for some time been that patient choice has an important role in incentivising hospitals to maintain and increase quality.”

“Our concern is that this merger would weaken this incentive across a wide range of the hospitals’ activities and remove one important driver of healthcare quality.”

The Competition Commission suggested “possible remedies” to address its concerns, and invited the trusts to provide evidence of the benefits of a merger before it makes its final decision in August.

The trusts said that they were “bitterly disappointed” by the findings, and that the merger process was “not fit” for the health service.

They say that they have spent £4.8 million on merger costs so far, but that merging would save more money. Poole Hospital warns that it faces a deficit if the merger fails.

The developments come after Exaro revealed last November how senior figures in the NHS are pressing for hospitals that face financial shortfalls to be run by private companies.

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