Agenda item

(This report provides an update to the Health Scrutiny Committee for Lincolnshire on the proposed merger of Peterborough and Stamford Hospitals NHS Foundation Trust with Hinchingbrooke Health Care NHS Trust.

This report covers the engagement phase of the proposed merger programme and also provides an update on the redevelopment work at Stamford and Rutland Hospital. Stephen Graves, Chief Executive, and Caroline Walker, Deputy Chief Executive and Finance Director, from Peterborough and Stamford Hospitals NHS Foundation Trust, will be in attendance)

Consideration was given to a report from Stephen Graves (Chief Executive – Peterborough and Stamford Hospitals NHS Foundation Trust) which provided information on the proposed merger of Peterborough and Stamford Hospitals NHS Foundation Trust with Hinchingbrooke Health Care NHS Trust.  The report included the engagement phase of the proposed merger programme as well as an update on the redevelopment work at Stamford and Rutland Hospital.

Stephen Graves (Chief Executive – Peterborough and Stamford Hospitals NHS Foundation Trust) and Caroline Walker (Deputy Chief Executive and Finance Officer – Peterborough and Stamford Hospitals NHS Foundation Trust) were in attendance for this item of business.

The Committee was advised that Councillor R L Foulkes was electronically recording the presentation and subsequent discussion.  Councillor Foulkes confirmed that this was for his use only and would act as an aide memoir to brief fellow division members.

The background of the proposed merger was explained to the Committee.  In October 2015 Monitor developed a strategic outline case which suggested that savings in the region of £10m may be achieved from closer collaboration between Peterborough and Stamford Hospitals NHS Foundation Trust and Hinchingbrooke Health Care NHS Trust.  In November 2015, both Trusts agreed to explore four levels of collaboration:-

·       Option 1 – do nothing for now;

·       Option 2 – shared back office function – leading an integrated back office;

·       Option 3 – as per option 2, plus two boards, one executive team and one operational organisation;

·       Option 4 – merger in to one organisation

A project management board had been established with engagement between both trust boards followed by the development of an Outline Business Case for the proposed merger of the two trusts.  The boards agreed to the recommendations set out within the Outline Business Case in order to sustain and improve clinical services for patients and value for money for the taxpayer in Huntingdonshire, Greater Peterborough and South Lincolnshire and benefit both trusts by working as one organisation in the future.

Preparation of a Full Business Case commenced in June 2016 to be considered by both boards in September 2016 and final approved planned for November 2016 in readiness for a full merger on 1 April 2017.

Engagement of staff and members of the public had commenced in May 2016 during board meetings and would continue throughout July, August and September as part of a dedicated engagement plan.  Views of residents, GPs, commissioners and service providers in South Lincolnshire would also be sought as key stakeholders within the engagement plan.

A further period of engagement would be held following a review of the Full Business Case by both boards prior to the final approval in November 2016.

Doctors and clinicians across the local health and social care economy had been engaged as part of the Cambridgeshire and Peterborough Sustainability Transformation Plan.

The Outline Business Case included details on the populations served by each trust, turnover and surplus figures, number of sites and beds, staffing levels, overall rating of the CQC and national performance standards for the year to-date.

Services were provided to a combined population of approximately 700,000 people living predominantly in Cambridgeshire, Peterborough and South Lincolnshire.  The combined income for the 2016 financial year was £372 million with a combined forecast deficit of £54.8 million.  Although the main commissioner of services was Cambridgeshire and Peterborough Clinical Commissioning Group, almost a quarter of the activity of Peterborough and Stamford Hospitals NHS Foundation Trust was commissioned by South Lincolnshire Clinical Commissioning Group.

It was proposed that with larger combined clinical teams that there would be greater opportunities for the sustainability of services across both sites.  Activity forecasts had shown that activity demand would continue to rise in future years and the decision to merge was thought to reduce or eliminate the most barriers to flexible management of elective capacity thereby best supporting delivery of the Sustainability and Transformation Plan.  The strategy to provide a specialist 'frail medical specialist centre' would be better supported by larger clinical teams offering recruitment and retention opportunities for community and acute geriatricians.

As a result of the merger it was suggested that £9m estimated savings could be made which were associated with reductions in Board cost and corporate pay and with the total elimination of agency spend in back office areas.  The costs associated with the merger and transition into a new organisation was provided in detail within the report.

The Committee had specifically requested more detail on the current position of the Private Finance Initiative (PFI) and the impact of this on finances.  The Outline Business Case included the following statement which gave context on the PFI:-

          "Since the move to the new Peterborough City Hospital site in FY2011, Peterborough and Stamford Hospitals NHS Foundation Trust has been operating at a financial deficit of around £40 million.  This is due to reliance on locum and agency staff, below tariff payments, penalties associated with the rise in emergency activity, and the national tariff not covering the premium cost of PFI buildings.  Achievement of above average cost improvement as failed to deliver a surplus position over the past four years.

          Peterborough and Stamford Hospitals NHS Foundation Trust is anticipating a reduction in its deficit largely through deliver of above average CIP [Cost Improvement Programme], and sustainability and transformation funding.  This will reduce the forecast deficit to £17.2 million by FY21.  Previous reports including the National Audit Office (2012) have identified that Peterborough and Stamford Hospitals NHS Trust also require an additional £15 million Department of Health permanent subsidy to meet the recognised gap between the tariff and the cost of the PFI.  The benefit of this additional funding is not included in the financial plan.  Including it would bring the deficit to £2 million.  The benefits of merger would move the trust into a financial surplus position."

In regard to Stamford and Rutland Hospital, it was confirmed that Peterborough and Stamford Hospitals NHS Trust remained committed to delivering services from the site in Stamford and dialogue had been maintained with South Kesteven District Council and Stamford Town Council.  Work had commenced in June 2016 to improve the infrastructure on the Stamford Hospital site and an application for planning permission for a new, permanent MRI scanner had been submitted.  The work to refurbish the 'east' end of the site was awaiting the release of capital which was national issue across the NHS.

The Trust continued to liaise with Lakeside Health Care which ran the three GP practices within Stamford regarding their future plans and developments with the aim to ensure coherent services for patients in South Lincolnshire.  The Lincolnshire Health and Care Team would be engaged following the release of the Case for Change Document on 29 June 2016.

In summing up, the Committee was reminded of the next steps of the proposed merger:-

·       September 2016 – completion of a Full Business Case for decision by both Boards;

·       September to November 2016 (six weeks) – further public engagement on Full Business Case;

·       November 2016 – implementation to commence, only if all the necessary approvals received; and

·       1 April 2017 – subject to all necessary approvals being received, the merger would formally take place.

Members were given the opportunity to ask questions, during which the following points were noted:-

·       It was reiterated that the PFI commitments of Peterborough and Stamford Hospitals NHS Foundation Trust were not financially viable;

·       There was no expectation or intention to move services or patients to Huntingdon from Peterborough as part of the proposal;

·       Hitchingbrooke Health Care NHS Trust were currently working to improve the CQC rating of "Requires Improvement" and feedback had been received that the trust had improved across the board;

·       It was confirmed that acute services for the merged organisation would remain at all three sites;

·       Further explanation was given about the deficit of both trusts.  Peterborough and Stamford Hospitals NHS Foundation Trust had reduced a £40 million deficit to £20 million.  Hinchingbrooke Health Care NHS Trust had a deficit of £10 million.  It was expected that both deficits would be eliminated within five years;

·       Subject to planning permission, it was expected that the planned refurbishment and installation of an MRI scanner at Stamford and Rutland Hospital would be completed within this financial year;

·       Clarification was provided that, despite Lakeside Health Care being a private sector company, there was a requirement to offer the sale of excess land to public bodies in the first instance.  Additionally, monies made from any sale made in Stamford by Lakeside Health Care should be put back in to the Stamford area;

·       It was noted that other overview and scrutiny committees had noted the current position and agreed to consider the Full Business Case once prepared;

·       At present there was representation on the Council of Governors from South Lincolnshire, however this was not a requirement.  The Boards would be asking the view of relevant stakeholders during the process to formalise the appointment of governors in order to have representation proportionate to the populations served.

RESOLVED

1.    That the report and comments, with particular focus on the following points be noted:-

·         Any impact of the merger of Peterborough and Stamford Hospitals NHS Foundation Trust with Hinchingbrooke Health Care NHS Trust on services to patients from Lincolnshire; and

·         The latest position with regard to developments at Stamford and Rutland Hospital

2.    That the merger proposals be noted and that the Committee reserve the right to make a full and formal response once in receipt of the Full Business Case.