After two years at the helm of South Tees Hospitals Foundation Trust, Siobhan McArdle, announced her resignation in a letter to staff. The letter, seen by the Health Service Journal, noted that the personal cost of being an NHS CEO was too high and that the demands for cost-savings w ere “too great a challenge.”

The letter also notes that McArdle’s resignation was influenced by the “very challenging” nature of the regulatory and financial environment and that the South Tees local health economy is “underfunded and unsustainable.”

South Tees is saddled with huge debts from two Private Finance Initiatives (PFI) and long-term underfunding, and McArdle notes that the trust is unsustainable without a long-term funding plan and capital investment. Something which she said her team had been fighting for continually over the past four years.

The trust has two PFI contracts – the James Cook University Hospital and Redcar Primary Care Hospital – which have 15 and 21 years, respectively, left to run and about £1 billion left to pay by 2040. In total, the James Cook in Middlesbrough will have cost South Tees Hospitals NHS Foundation Trust £1.5 billion to build and run since it opened in 2003, with a final payment in 2034. In 2018, the trust paid a charge of £50 million for the James Cook and £4.1 million for the Redcar hospital: each year these charges increase.

McArdle is not alone in facing a seemingly impossible challenge as a CEO of an NHS trust. Saffron Cordery, of NHS Providers, which represents trusts, said: “The concerns expressed here are not unusual. In recent years trust leaders have become accustomed to demands for productivity improvements and savings that are increasingly unachievable.”

In 2019, there were 127 PFI schemes in England for hospitals and social care. A September 2019 report from the IPPR thinktank, The Make Do and Mend Health Service, noted that hospital trusts will still have to make £55 billion in payments for PFI contracts by the time the last contract ends in 2050. An initial £13 billion in private investment will end up costing the NHS £80 billion.

A few Trusts have succeeded in escaping from these contracts, including South Tees’ neighbour, the Tees, Esk and Wear Valley Trust which runs Middlesbrough’s Roseberry Park mental health hospital. In 2018, the trust won High Court battle to get out of its PFI deal. The win hinged on the finding of numerous problems with the seven-year-old building, which resulted in patients being forced to move out. The full cost to the trust if that deal ran to its end in 2039/40 would have been £323.5 million.

As well as the huge PFI debt, South Tees NHS FT, along with the rest of the NHS has been struggling for years under a regime of underfunding. The funding announcement in the Autumn budget in 2018 of £20.5 billion over five years, was very quickly shown to be insufficient. The 3.4% rise in spending is significantly lower than the 4.3% annual growth in the Office for Budget Responsibility’s projection of future cost pressures. This is an estimate that the IFS, think tanks and most economists agree is a fair measure of how much money the NHS needs just to keep up with demand, let alone improve standards.

The vast majority of the hospital trusts, including South Tees, will also not benefit from the most recent announcement of money in August 2019. This time an extra £1.8 billion in funding was promised but this was also very quickly shown to be all smoke and mirrors.

The vast majority of the money was not new at all, but money that had been promised to those NHS trusts by the Department of Health and Social Care (DHSC) after they cut their spending significantly. The promised reward for the spending cuts was then not given to the trusts by the DHSC. The ‘new’ money is primarily a release of this ‘reward’ money and will only be given to 20 projects; South Tees NHS FT is not one of these projects.

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