Following our coverage of MP Chris Grayling’s views on the financial situation at Epsom hospital, reporter Hardeep Matharu interviewed Matthew Hopkins, chief executive of Epsom and St Helier University Hospitals NHS Trust.  

Mr Grayling’s claims that there is “unacceptable financial confusion” surrounding the hospital trust and his belief that Epsom and St Helier hospitals should be split up immediately were put to Mr Hopkins, who took up his role in January 2011.

Chris Grayling has said that the £13.8 million deficit at Epsom Hospital – cited as one of the main reasons for the collapse of the merger with Ashford and St Peter’s hospital – is actually “running at a rate of only half that level”.  Is this correct?

“At the beginning of the financial year, we had a financial plan agreed with the health authority responsible for us, NHS London, and the deficit was £19.4m for the trust.

“Commissioners will say to a hospital trust ‘we want to buy this amount of work’ and ‘this will be the amount of money we will commit to pay’.  There will also be an agreement that if we see more patients then they will pay us more.  Likewise, if there were fewer than the level they commissioned they would pay us less.

“When the original papers went out to potential bidders in July 2011, the deficit was £13.1m for Epsom and when we refreshed the numbers in February, the deficit was again about £12.7m. 

“As part of the transaction, the health authorities asked for an independent, detailed audit of the finances.  Deloitte did this and went into a lot of detail, probably more detail than the finances of this hospital have been looked into previously. 

“They wanted to be absolutely confident about the amount of money that they would give Ashford and St Peter’s to deal with the deficit, and they identified that the split was £13.8m for Epsom and £5.7m for St Helier. 

“Within the report, there were potential adjustments for ‘income over performance’ - based on an assessment that commissioners haven’t commissioned enough work from us and we’re seeing more work coming into the hospital than they had planned to pay for.  Our judgement was that was going to continue in the second half of the year.

“There was absolute clarity that there might be some over-performance that the commissioners would have to pay for - £11.4m of extra performance.  The £13.8m was the worst case scenario. 

“There was also risk the other way.  For example, a £5.7m penalty for infection control which commissioners might impose, which will offset some of this benefit.  The good accounting practice is to include potential risks. 

“Those figures are just for this year.  The financial plan that Ashford and St Peter’s put together to say how they would turn Epsom from a loss-making into a break-even hospital, was across five years and Deloitte’s forecast said Epsom’s deficit would stay around £13m across the five years. 

“The bottom line is it’s a forecast, best efforts to try to understand the financial position.”

Was “subjective rather than objective evidence about the split between Epsom and St Helier” given to Deloitte, as Chris Grayling believes?

“Essentially Chris Grayling is saying is that our board is making judgements that are not in the best interests of the trust or the patients or our stakeholders which is fundamentally not the case. 

“I understand why over the years there’s been concern amongst various stakeholders that there was in some way preferential treatment to either part of our organisation.  I absolutely refute this suggestion.

“Management judgements are based on the best information you have to date.  This process went line-by-line into great detail as to the hospital’s income and cost.  The Deloitte report talks about degrees of confidence and there will always be some degree of judgement being made.  There will be some elements that are not correct, but it’s the order and magnitude.  The work that Deloitte did was the best that was available at the time. 

“We were very busy in October.  We’re likely to be very busy in December so income and cost will fluctuate.”

[The Trust Board has heard today that the trust’s deficit has been reduced by £2.6m to £16.8m, £11.1m of which is the deficit for Epsom]

Why has the Transaction Board, the body overseeing the merger process for Epsom Hospital, been disbanded?

“The Transaction Board was established by NHS London to look for partners for both Epsom and St Helier.  St Helier’s potential merger with St George’s was halted on the basis that St George’s were concerned about the uncertainty about BSBV and what services would be commissioned from St Helier in the future.  They were also concerned about the degree of its deficit.

“Ashford and St Peter’s have had the same concerns – about the amount of Epsom’s deficit, commissioning intentions, and the amount of work they can expect to rely on in the future. 

“The view that was taken to halt the process because a key issue underlying the process is a lack of clarity about exactly what the commissioning strategy for the two hospitals is and how financially stable they will be in the future.

“The process hasn’t been completely stopped, it’s been halted. 

“In the meantime, we are continuing the fantastic progress we have made in the last two years, improving quality and patient experience, but also the fantastic progress in terms of making cost efficiency savings."

Why is there uncertainty and a lack of clarity with regards to commissioning intentions?

“We’re in the midst of massive change.  The PCTs are changing to become clinical commissioning groups.  Across London, four of the five geographical areas have developed a commissioning strategy that they’ve consulted on with the public about how services will be delivered and hospitals will be configured. 

“BSBV is South West London’s equivalent to those strategies.  The uncertainty relates to exactly how hospital services will be configured, how the quality of services will be improved, and how the financial challenges due to austerity measures will be addressed.

“For example, one of the proposals that was put forward earlier in the year but never reached public consultation was the idea of St Helier no longer having an A&E or maternity unit. 

“With Epsom now part of BSBV, the question arises as to what services will be provided at Epsom, St Helier, Kingston, Croydon and St George’s hospitals.”

Do you agree with Chris Grayling that now Epsom is part of the BSBV review its future is more uncertain than ever?

“Part of the intention is to have absolute clarity as to which hospitals will do what functionally.  It will actually deal with a lot of the uncertainty because it will give a clear commissioning strategy for Epsom.

“It’s not quite true to say that it increases the uncertainty.” 

Once the BSBV review has been completed could the Transaction Board be reinstated?

“There is the potential.  If, at that stage, it still makes sense to look for a merger partner in Surrey and in South West London for St Helier, that’s what we will do.

“But, if we continue to run the transaction team without them having anything to do for six months we would be accused of wasting taxpayers’ money.

“There’s a lot of effort going into getting BSBV done quickly so this doesn’t drag on.”

The possibility does still exist that both Epsom and St Helier could be stripped off their acute services as part of the BSBV review?

“There is a possibility that services will change at all five of the hospitals.  The one which is least likely to be affected in terms of losing services is St George’s and rightly so because it’s a high-quality, teaching hospital where all the most sick adults go. 

“I can understand anxieties about what it will mean for services.  I’ve been leading my staff at St Helier through the uncertainty when it was announced in May that St Helier would be chosen to lose acute services. 

“But we must remember that we’re an organisation that isn’t financially stable.  There isn’t a ‘no change’ option. 

“We can’t continue to rely on funds borrowed from other parties to continue to pay our suppliers and our staff. 

“We also need to remember there’s no point us, as a trust, being financially in profit if our commissioners are in debt.  We’ve got to get to a point where there’s a balance in the local health economy so clinical commissioning groups are able to meet their financial obligations. 

“We work together, rather than having a situation where the underlying deficit keeps being passed back and forth from commissioner back to hospital, which is the feature of the last decade or more in this local area. 

“My ambition is working with the clinical commissioning groups, as part of, and beyond, the BSBV review, try to make sure we’re delivering sustainable, good quality healthcare services for the population and we’re not doing that to the detriment of the clinical commissioning groups and they are not commissioning services at the detriment of our trust.”

Epsom is a hospital in Surrey.  Where does it fit in within the BSBV review of hospitals across South West London?

“One of the features of trying to give this hospital trust a sustainable future has been the discord between Surrey and London that has existed in the past.  I would predict that most people don’t really know the difference, along the borders, where the line is between South West London and Surrey. 

“If you look at the flow of patients from the Surrey Downs clinical commissioning group, 85 per cent of them have their treatment in a South West London trust – Epsom and St Helier, Kingston or St George’s. 

“Therefore Surrey Downs clinical commissioning group has a real interest in what BSBV concludes and it’s right a proper that they are included.  It’s not as simple as saying BSBV is just about South West London.” 

Chris Grayling believes revenue streams into the hospital need to be increased, more private work should take place on the site, that more needs to be done to recover the money lost to the services provided by the primary care sector, and that “proper leadership” is required which has been “woefully lacking”.  What does the trust have to say to these suggestions?

“I’ve spent the best part of my two years here trying to separate Epsom, St Helier, and to find a safe haven for Epsom so we haven’t necessarily been focused on some of the issues which Chris has raised, but they have been around a long time.

“GPs locally to Epsom hospital have been very entrepreneurial and developed a range of different provider organisations where things like out-patient procedures and minor day care procedures have been diverted away from the hospital.  That’s a feature which has built up over a decade and been highly successful.  So over the years some of the work that Epsom hospital would expect to come to it has gone to other providers and the question for the commissioners is whether it would work clinically or financially to refer that work back to Epsom. 

“You can’t have it both ways.  People have to make some decisions.  They either want a sustainable hospital or they want a range of choice and that’s a conversation we’ll need to get into in the next months. 

“This is longstanding, deeply embedded and will be difficult to address, but it’s something we’re in discussion with the clinical commissioning groups about.

“In terms of private interest, one of the things that Ashford and St Peter’s had planned to do as part of its vision for Epsom was to bring a private healthcare provider onto the site to look at developing the private facilities.  We already have a private ward and we’re going to proceed with the plans that Ashford and St Peter’s started to think about anyway.

“In terms of a private healthcare provider coming in and taking over the running of the site, when there is greater clarity about the commissioning strategy it is quite possible that a private firm would be interested at that stage. 

“In the meantime, we will appoint a senior director whose portfolio would be specifically of business development, to hopefully be in place by the new year.”

Should Epsom and St Helier hospitals be split up now?

“We mustn’t forget that it’s not as straight-forward as cutting a loaf of bread in half.  Our services are integrated across the hospitals. 

“It was going to be very complicated, but we were doing it because we had a plan with regards to Ashford and St Peter’s which was progressing.  I don’t think it stacks up to go through all that change with our staff without a clear route to foundation hospital trust status for our hospitals. 

“The hospital has achieved a number of care and quality targets in the context of this massive strategic uncertainty and while running a deficit.  I pay tribute to the staff who have delivered all of this in the context of uncertainty and am looking forward to addressing that uncertainty so they can just concentrate on the patients and giving them the best deal.”