New city hospital: Trust failed to recognise costs

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A report has been published which exposes a catalogue of errors that led to the construction of Peterborough City Hospital at a price that could not be paid.

The 44-page document released by the House of Commons’ National Audit Office shows a trail of unrealistic financial forecasts, a failure to hit business targets and inadequate monitoring that began in 2007 when the go-ahead for the new hospital was given.

Now Peterborough and Stamford Hospitals Trust’s interim chief executive Dr Peter Reading, who was not in post when the hospital was built, has been ordered to appear before MPs on the Public Accounts Committee on December 10 to explain the financial situation.

The report says that although the cost of building the 611-bed hospital was £289 million, the trust’s real liability through the private finance initiative scheme was actually £411 million. And the trust’s repayments, which cost it £41.6 million last year, began as its financial situation deteriorated.

The report also states in 2007 the trust failed to recognise the scheme would place considerable strains on its finances for years.

It also said monitoring by the Department of Health and health regulator Monitor were also inadequate and that Government officials who evaluated the scheme were not sceptical enough about its affordability.

Dr Reading said the board “acknowledges its shortcomings and over the past year has put in new structures and systems to improve our financial forecasting”.

He added: “We are also on track to deliver £13.2m of cost savings in 2012-13. Our patients can be assured we are working to our turnaround plan which focuses on delivering savings and efficiencies while maintaining consistently high standards of quality care.”