East London NHS trust faces 'cash risk' if budget gap grows

Barking, Havering and Redbridge University Hospitals NHS Trust, which runs both hospitals, spent £78.7 million this financial year and expects a budget gap of £10 million by December.

At a meeting on February 9, the trust’s board heard its current forecast overspend was “manageable within the system” but that it needed to cut £16 million of waste by April 2022.

However, deputy director of finance Michael Gilham said “early numbers from January” suggest the possibility of an even larger overspend, which would “introduce some cash risk”.

It is estimated that the extra costs of the Covid-19 pandemic, which double the monthly overspend, have set back the trust’s financial recovery by a full calendar year.

The trust's plan for next year

In a report prepared for the meeting, chief executive Tony Chambers said: “We want to put behind us the days when we had an inadequate grip on our finances.

“We will focus on reducing our spend on agency staff; improving efficiency in our planned (elective) work; and moving elsewhere the work that doesn’t need to be done inside a hospital.”

He added that the trust’s national funding was double what it received in the previous year and that it is embarking on a £47.5 million capital programme, using national funding.

This includes buying a second £1.9 million surgical robot for King George Hospital, which the trust hopes will “attract high calibre staff” and support its vision for the hospital becoming an elective surgery “hub”.

Mr Chambers added that “it had been challenging to make progress on financial improvement with the associated costs of Covid-19, including monetary incentives to fill shifts”.

Read more: Covid outbreaks at King George Hospital rose as tests failed to catch UK variant

Paying for temporary staff to cope with staff shortages is one of the trust’s biggest cash drains, along with inefficient use of operating theatres and “corporate ICT”.

The trust spends £80 million a year on temporary staff, of which £20 million is at “premium” rates, and has been unable to reduce this figure “despite good recruitment” because it is losing staff faster than it can hire them.

In November 2019, BHRUT chief financial officer Nick Swift announced his resignation after just 14 months in the job, citing the failure to deliver savings fast enough.

A month later, he reversed the decision after “extensive discussions with the board, clinical leaders and NHS London”, who were “keen for him to remain in post”, a trust spokesperson said.

Healthcare in Barking, Havering and Redbridge has been historically underfunded, although this situation has improved significantly in the past five years.

Read more: Outer east London boroughs complain of NHS underinvestment

In the 2016/17 financial year the combined area received almost £46,000 less than it needed to treat its population. It now receives an amount equivalent to other east London areas.

In December, Henry Black, chief finance officer for north east London NHS, said the correction of the “historic imbalance” had “by no means fixed everything” at the trust.

He said: “Clearly there is a legacy of underinvestment that won’t be fixed overnight but does mean we will have a much better opportunity to fix it going forwards.”

He explained that funding allocations were “largely driven by central government” and based on a “complex formula worked out using various demographics”.

The north east London NHS was asked why this formula inaccurately estimated the need in Barking, Havering and Redbridge but did not respond.

An earlier version of this article incorrectly stated the trust needed to make £16 million in savings by April 2021 rather than April 2022.

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