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Ernst & Young steps in at failed NHS trust

16th Apr 2013
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Administrators at Ernst & Young have 145 days to produce a plan for the future of hospital services at Mid Staffordshire NHS Foundation Trust after it was declared bankrupt this week.

Health regulator Monitor put the trust into special administration to “safeguard the future of health services” currently provided after a report found it was “neither clinically nor financially sustainable in its current form”. The report noted that the trust was too small in its current form, with a patient population “significantly below guidelines” for an acute general hospital.

David Bennett, from Monitor, said: “We have taken this decision to make sure that patients in the Mid Staffordshire area have the services they need in the future.” 

Clinician Dr Hugo Mascie-Taylor and Alan Bloom of Ernst and Young will now take over the running of the NHS trust from today.

Last year the trust reported a drop in annual income of £4m and received a £20m bailout from the government, but was now “likely to become unable to pay its debts”. The report recommended the closure of its maternity unit, intensive care unit and accident and emergency department, with services being diverted to neighbouring larger hospitals in Stoke-on-Trent, Walsall and Wolverhampton.

However, Hugo Mascie-Taylor said recommendations to downgrade some services were not "set in stone" and would be looked at again. “We will derive a lot of information from the report but we arrive here starting again, looking at the whole health economy, looking at what other hospitals could do, maybe what other services like community trusts could do,” he said.

Mid Staffs is the first foundation trust to go into administration and follows South London Healthcare NHS Trust falling into administration last June. In that instance, the health secretary Andrew Lansley had to draft in a government “crisis team” to deal with the dire financial situation after it started losing £1.3m a week.

It was widely reported at the time that debts at the South London trust rocketed due to two large PFI deals (Private Finance Initiative) that cost £61m in interest payments a year. However capital projects experts told AccountingWEB that you can't blame the structure of PFI.

“I expect there are a number of issues at play here but as ever it is the now soft target of PFI contracts that take the blame. There were clearly strategic errors that were made when the building of these hospitals were committed to a number of years ago," said Nick Prior of Deloitte.

In January health secretary Jeremy Hunt announced the trust’s three hospitals would be taken over by a neighbouring institution, sparking local protests when it emerged that Lewisham Hospital would have its A&E and maternity services downgraded.

Monitor said the decision to put Mid Staffs into special administration had nothing to do with the recent public inquiry which highlighted neglect, abuse and incompetence in the four years up to 2009. The trust has been at the centre of a three-year public inquiry into appalling standards of care at Stafford Hospital, following concerns over high death rates.

Replies (5)

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By abelljms
17th Apr 2013 14:45




it is a nonsense to claim a government department can't pay its debts, we'll be told a country can't pay its debts next.....!


And on top of that, a bunch of leeches are going to be paid £giga to bleed the tax-payer of even more money for absolutely nothing.... OR is the NHS REALLY going to bin a bunch of un-secured creditors?? we should be told the truth not waffle-speak.


Obviously the dozy shower running  the Trust should be binned, and a new lot appointed

(i'll lead the team for £100k pa for ever).

But what is Administration about, let a civil servant near a problem and what do you get? - two problems ! The article drones about technical things, but you don't need Administration to sort them, you need a brain.


Thanks (2)
By p1bry
18th Apr 2013 11:17

Failed NHS Trust

As a supplier to NHS Trusts, are we really at risk now of not getting paid?

This will take trading relations to a new level with the need to set credit limits & put them on credit hold when payments aren't made on time

Wow !

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By mjshort
18th Apr 2013 11:46

Ernst and Young will now take over the running of the NHS trust

I used to be Finance Director for a Care organisation with 300 carers and 70 staff.

I would have been the 370th person to be called out to look after a patient.

How happy will the patients be to have Ernst & Young deciding about their future care?

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By Steve-EBL
18th Apr 2013 13:44

Start recruiting the right people. Pay a massive attention to who gets recruited. CV with relevant experience, great, relevant managerial qualifications, great, detailed psychometric testing, detailed mental aptitude testing,(these are not usually done) if the nhs management around the nation were all robustly recruited and annually reviewed you wouldnt have these problems. I've seen dross recruited time and again in the private sector.

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By Simon Sweetman
18th Apr 2013 16:40


When you go to the administrators, your troubles really begin...

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