Hospitals ordered to take ‘immediate and urgent action’ over £38million deficit

Jeff Buggle, finance director from BHRUT

Jeff Buggle, finance director from BHRUT - Credit: Archant

The trust running Queen’s and King George hospitals has been ordered to take “immediate and urgent action” to tackle its deficit by its governing body.

Barking, Havering and Redbridge University Hospitals Trust (BHRUT) has been asked to draw up a new plan by next Friday by the NHS Trust Development Authority (NTDA).

The trust – which is in special measures – has a planned deficit for this financial year of £38million. In May, government figures showed NHS trusts had a joint deficit of £822m last year compared to just £115m the year before.

In the letter from the NTDA, BHRUT – along with all other trusts in the country – has been asked to draw up an “improved plan” of how it plans to improve its financial situation.

NTDA chief executive Robert Alexander said “immediate and urgent action” was required.

“The NHS is facing an almost unprecedented financial challenge this year,” he said. “Current plans suggest the service is heading for a substantial overall deficit, of which NHS Trusts contribute about a half. As I have said elsewhere, this is unaffordable.”

Mr Alexander said all providers must deliver additional actions above current plans “with the clear intention of improving the individual financial position of each NHS Trust”.

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BHRUT’s director of finance Jeff Buggle, who joined the trust in December, told the Recorder the board was now looking at whether it could reduce its planned deficit further this year.

He said: “The NTDA require us to tell them whether we can reduce our deficit this year or not. That’s the work that we are currently doing.

“If we come back and say we can’t save a penny off the £38million and they agree with us, that’s fine. If they think actually you can, it all depends what their view is of what we can return to them.”

By stabilising its deficit – which also stood at £38million last year – Mr Buggle said the trust was able to tackle it in a structured way, through investing in improving care and saving money long-term.

Mr Buggle said the trust’s new partnership with the Virginia Mason Institute in Seattle would support this work.

“Their approach is that by focusing on clinical quality and patient experience, and doing it right first time, it is better for the patient and more cost effective than doing it quickly,” he said. “The Virginia Mason Institute is recognised as being a leader both in terms of the quality of the care it provides but also in terms of its cost leadership.

“That builds on the work that the board have started here.”

The deficit explained

Mr Buggle said there were two main reasons for the deficit – the high cost of temporary staff and money lost through incorrect “coding” of patients.

Each patient is “counted and coded” according to their condition, age, and outcomes.

The trust then receives funding from commissioners to cover treatment costs, but if the patients are not correctly “coded” it cannot claim the correct tariff.

Mr Buggle said work was being done to improve the “capturing” of information through improving computer systems.

“The causes of the deficit will be different in different trusts,” he said.

“The key driver behind the £38m is around capturing and counting and coding and then charging for the activity we undertake, as well as high temporary staffing costs.”

The coding system means commissioners and the trust can make sure money is not wasted through poor management or inefficiencies.

BHRUT has also been working to hire more nurses and doctors and improve morale to make the trust a better place to work and reduce reliance on temporary staff. Last year it spent around £50m on temporary staff, which includes agency staff, for which the trust must pay a premium.