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Cumbrian hospitals trust pays ex-boss £19,000 a month

North Cumbria’s debt-stricken hospitals are still paying the salary of their former chief executive who left last June in a deal that will cost the taxpayer more than £450,000.

Carole Heatly photo
Carole Heatly

Related: What North Cumbria trust bosses say about the report

A secret report, leaked to The Cumberland News, also reveals the troubled trust that runs hospitals in Carlisle and Whitehaven stands to need a bailout of up to £45 million next year unless the funding gap is addressed by a planned takeover. 

Carole Heatly stepped down as boss of the Cumberland Infirmary and West Cumberland Hospital eight months ago to take up a new post at a new quango, Advancing Quality Alliance North West.

But the 58-page report reveals the trust committed to pay her salary – at a cost of about £19,000 a month – for two years under the terms of a severance agreement.

Current bosses would not say whether the money would stop if she takes up a new job in New Zealand this month, as previously announced.

A spokeswoman did say, however, that, as part of the takeover process, a number of senior posts will be reviewed.

She added: “The trust’s chief executive is seconded to the Strategic Health Authority. As such, the trust continues to pay her and is reimbursed through the SHA’s strategic support.”

It is just one of a number of revelations in the leaked report, which shows for the first time the true extent of the financial crisis within the troubled health trust.

It also highlights the importance of a deal that will see the ailing hospitals become part of a more successful organisation later this year.

The report shows the trust would need another bailout of up to £45m next year if the planned takeover does not go ahead.

To date this financial year, the North Cumbria University Hospitals NHS Trust has agreed a bailout of at least £18.7m from regional health bosses so it can break even.

But the report predicts that if the hospitals carry on as they are, the situation will spiral in 2012/13 – the worst case scenario meaning the Strategic Health Authority could need to plough in as much as £45.6m.

The trust is in the process of being taken over as a result of its long-standing money troubles. A deal currently being thrashed out is expected to see control handed over to neighbouring Northumbria Healthcare NHS Foundation Trust, which has a strong financial record, later this year.

But the report, compiled by global audit firm KPMG, details the true extent of the challenge faced by new management, who must come up with a long-term plan to plug the financial leak and turnaround the fortunes of the ailing trust.

It was drawn up to demonstrate the trust’s financial position to the parties hoping to acquire it. The findings are based on forecasts from the trust’s own accounts and estimated income, as of December last year.

Key findings include:

  • The trust is committed to payroll costs for two years to the previous chief executive under the terms of a compromise agreement;
  • The trust is likely to rack up at least £1m more in professional fees, such as consultant costs, than budgeted for this financial year;
  • The trust could require £45.6m of SHA support in order to deliver a surplus of £1m (as required) in 2012/13;
  • The trust would have a target to save £16m in 2012/13. It has to date only found about £8m of the £15.2m savings it needed in 2011/12;
  • The cost of Carlisle’s PFI hospital are forecast to be £20m in 2012/13 – £10m of which are operating expenses;
  • It highlights issues surrounding short-term cash flow forecasts, warning there is a level of uncertainty in their accuracy;
  • The trust has been trying to improve its cashflow by “stretching” trade creditor payment times to 45 days while at the same time agreeing to receive immediate payments from NHS debtors;
  • £3.4m allocated for the West Cumberland Hospital has been spent elsewhere;
  • The trust has taken the tower block on the Cumberland Infirmary site out of the current PFI agreement and is working with a developer to explore opportunities for the building;
  • The trust has given notice on its lease at Reiver House – a step up/step down unit in the infirmary grounds. It has instead offered to relocate these community services in the main hospital building;
  • The trust has identified two pockets of land for sale and has secured offers, but deferred sale due to a fall in land prices.

The report is only a forecast. It also highlights a number of factors that could reduce the trust’s predicted deficit, such as increased income from NHS Cumbria and potential multi-million pound funding earmarked by the Government to help trusts struggling to meet costly PFI repayments.

It suggests ways that new bosses could make savings, such as merging back room and management costs across the trusts. It also says they could consider ward and theatre closures, something current managers have always denied was a possibility.

Commenting on the report’s findings, Estephanie Dunn, of the Royal College of Nursing, called for more detail to be made public about how Northumbria plans to resolve the Cumbrian trust’s financial crisis if the takeover goes through.

“I think there are lots of questions that need answered,” she added.

“People have a right to understand why someone who no longer works in the hospital is being paid £19,000 a month when we have got nurses and other hospital staff on pay freezes.”

Have your say

The whole NHS needs some serious reform!

Posted by Craig on 24 February 2012 at 09:26

Katie. Write and ask the Trust under the Freedom Of Information Act. How many Directors and how much ahs been paid out to them, over the Last 5 Years. its Millions of pounds.and still going on all over the Different Trusts

Posted by Jimbop on 21 February 2012 at 11:08

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