A hospital has been brought back into public ownership which will save millions of pounds of taxpayers’ money to be reinvested in frontline patient care.
Hexham General Hospital has transferred to Northumbria Healthcare NHS Foundation Trust after the organisation terminated the private finance initiative (PFI) contract which enabled it to be built more than a decade ago.
Earlier this year, the trust announced that it had been given approval from the Government and Monitor, the independent regulator of NHS Foundation Trusts, to buy out the crippling financial £51m contract, with the hospital having now changed hands.
The move, which will save around £3m a year, was made possible due to a £114.2m loan from Northumberland County Council, believed to be the first of its kind in the country.
Jim Mackey, chief executive of Northumbria Healthcare NHS Foundation Trust, said: “As we become the rightful owner of Hexham hospital, this is an important milestone for our trust and our patients.
“We are immensely proud that we are the first trust in the country to buy back a hospital in this way and deliver significant savings for taxpayers which will enable us to continue to invest in patient care.
“With ever-increasing financial pressures on the NHS, we must continually look at innovative ways to deliver best value for money and bring down our borrowing costs.
“It is down to our stable financial position which we’ve built up due to prudent financial management over many years, coupled with our excellent working relationship with the council, which has enabled us to bring this deal to fruition.”
The arrangement with the council has been used to buy out the PFI at Hexham hospital and support capital infrastructure. It has been made possible as the council is borrowing the money from the Public Works Loan Board and will not impact on any other public council resource.
Steven Mason, lead executive director, Northumberland County Council, said: “This is great news for the people of Northumberland and demonstrates what can be achieved when organisations work in partnership.
“We have always prided ourselves on finding innovative ways of working and we are delighted to have played such a key role in this nationwide first.
“The more we can work together at a local level across all public services the more we can reduce costs – vital when the public sector is facing unprecedented funding cuts.”
Northumbria Healthcare NHS Foundation Trust has the lowest and best financial risk rating available from Monitor, meaning it foresees no financial issues for the organisation.
It is the first NHS foundation trust in the country to have been given a rating by independent global ratings agency ‘FitchRatings’.
It was assigned the best possible rating figure which is another endorsement for its stable financial position.
Guy Opperman, MP for Hexham, said: “This innovative deal is a positive step forward. The new agreement will benefit our local trust greatly and ensure a better deal for taxpayers across Northumberland.”
A spokesperson for Northumbria Healthcare NHS Foundation Trust said: ”This unique arrangement with our local authority partner is a gain share agreement. So in effect, the trust saves £3.5 million per year which can be reinvested directly in frontline patient care and the council also benefits through the deal.”
This win-win situation comes about because the council is able to lend money to the trust at a hugely preferential rate while making a small income from the deal.