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Collapsed hospital merger costs 'eye-watering' £10m

Two struggling hospital trusts spent an ‘eye-watering’ £10m preparing for a collapsed merger which was scuppered by rushed deadlines and financial and legal complexities.

NHS leaders spent £6.6m in ‘professional adviser’ fees alone while working on a deal to bring NUH (Nottingham University Hospitals) NHS Trust and SFH (Sherwood Forest Hospitals) NHS Foundation Trust together earlier this year

The merger was announced in February but collapsed in November. Publicaly the breakdown was blamed on poor accident and emergency performance and financial challenges at NUH, which runs Nottingham's Queen's Medical Centre, but BMA News revealed last month that the deal was mired in practical issues, such as how to transfer liabilities from the dissolved trust into another which was heavily in deficit.

Patient representative group Healthwatch Nottingham chair Martin Gawith described the figures as ‘ridiculous’.

He said: ‘It’s astounding. You believe we have a professional NHS in this country but to see we’ve spent more than £6m on private consultants simply to be back at square one is horrendous.’

The figures, released to BMA News after a Freedom of Information Request, show NHS Improvement was forced to reimburse the two trusts £10m in total, with £1m going to clinical support, and £2.4m spent on backfilling positions of seconded staff.

The £6.6m spent on professional advisers comprised £6.1m in consultant fees and £500,000 legal fees.

NHS Improvement told BMA News the huge costs of the deal ‘reflect the accelerated timeline’ for the deal, which was given a nine-month target time despite no similar process ever having been carried out.

BMA council chair Mark Porter said: ‘It is matter of supreme irony that these ‘eye-watering’ amounts of money have been spent on management consultants in the pursuit of financial savings forced because of the restrictions on resource from central Government.’

 

High death rate

The merger was supposed to be the rescue package for the struggling SFH, which was placed in special measures in 2014 after a review of mortality by NHS medical director Professor Sir Bruce Keogh identified higher numbers of deaths than expected in the trust. It was subsequently rated inadequate by the Care Quality Commission. The deal would have created the second-largest trust in the country.

BMA News understands NHS Improvement was desperate to avoid the trust, which is now out of special measures, falling into administration – or even having to cancel vitally needed local services – and set the ambitious target in a bid to speed up NHS employees they felt were not used to working at pace otherwise.

A source close to the deal said a long-term partnership, or merger – rather than forcing the trust into administration – would have been cheaper, would help to recruit and retain staff and would avoid the ‘sheer trauma that a trust goes through’ in administration.

But progress was difficult and senior managers at NHS Improvement made the decision to cancel the merger eight months after its announcement. No detailed talks about the financial package needed to make the rescue bid work had been held with the Department of Health in that time.

NUH director of finance Rupert Egginton said: ‘The trust‘s financial positon has not been adversely affected by the costs of the work associated with the long-term partnership. NUH has received financial support and reimbursement for the costs incurred.'

NHS Improvement repeatedly failed to divulge the figures when approached by BMA News but eventually revealed them on deadline day of an FOI request sent in November.

A spokesperson for the national health body claimed the money spent has contributed to improvements at SFH, with the trust coming out of special measures in November.

They said: ‘Both trusts are committed to a working closely together, but have agreed not to pursue a merger at this time to enable Nottingham to focus on improving waiting times in its emergency care department.'

The merger was also at the heart of Nottinghamshire’s plans to save more than £500m from its health and social care budget as part of NHS England’s STP (sustainability and transformation plan) process – local schemes being drawn up to transform and integrate care, and cut costs.

Nottinghamshire’s STP was published after the merger’s collapse was announced and a risk register document described the deal failing as a concern for the project.

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