Memorandum by North Durham Health Care
NHS Trust (PS 40)
Historically, there is evidence of substantial
under investment in hospital buildings in County Durham and Darlington,
relative to the rest of the health economy in the Northern and
The area has an extremely poor capital asset
base in terms of its hospital buildings. It was clear that, whatever
the direction for development, the NHS locally needed to take
action to ensure a reasonable asset base, so that services could
be modernised and improved.
Capital Schemes in County Durham and Darlington
£97 million University Hospital, North
£67 million replacement of Bishop Auckland
General Hospitalopens 2002 (PFI).
£8 million refurbishment of Shotley Bridge
Community Hospitalto be completed in 2002 (publicly funded).
£8.5 million Chester-le-Street Community
Hospitalopens in 2003 (PFI).
£8 million Sedgefield Community Hospitalopens
in 2002 (PFI).
£15 million Adult Mental Health Unit South
Durhamopens in August 2004 (PFI).
£4 million Mental Health Unit for Older
Peopleopened October 2001 (publicly funded).
£1 million Stanhope Community Hospitalopens
in 2002 (publicly funded).
Adult Mental Health Unit North Durhamplans
in development for the longer term.
Out of these schemes, three involve North Durham
Health Care NHS Trust. Two of these are funded through the private
finance initiative (PFI):
in August the Trust completed the
move into the new £97 million University Hospital of North
Durham. The hospital is a step change from the old Dryburn Hospital,
built as a temporary hospital during the second world war;
contracts are due to be signed on
a £8.5 million scheme to replace Chester-le-Street Community
Hospital. There, old buildings are also well past their sell-by
date. The new hospital should be complete in 2003; and
the Trust is carrying out an £8
million publicly funded refurbishment of Shotley Bridge Community
Hospital, near Consett.
The University Hospital of North Durham was
one of the first PFI hospitals to be agreed. From the early 1990s,
it was Government policy that major projects should be tested
for PFI, and as a first wave PFI hospital, North Durham Health
Care NHS Trust helped develop the process for a completely new
method of financing in the NHS.
With a new initiative, there is always a steep
learning curve. A standard contract now gives managers a much
better focus, so that schemes can proceed much more swiftly. The
Trust's professional advisers believe that the Chester-le-Street
Community Hospital scheme is one of the fastest PFI agreements
there has been.
The University Hospital of North Durham has,
in effect replaced two district general hospitals.
In the early 1990s, an outline business case
was developed for a new hospital that would replace Dryburn Hospital
in Durham City and Shotley Bridge General Hospital, near Consett.
Neither of the hospitals were sustainable on
their own, and, following public consultation, it was decided
that a new hospital should be built in Durham City to provide
acute hospital services for the whole of North Durham.
This would be supported by community hospitals,
including one at Shotley Bridge:
the 1994 outline business case proposed
bringing together the two hospitals and building a new 507-bed
hospital on a site adjacent to Dryburn Hospital; and
the full business case followed in
1997 with more detailed work concluding that the number of general
and acute beds needed by the Trust would be 484 (including keeping
30 beds at Shotley Bridge).
These figures were later subject to an independent
review by management consultants Sigma.
The work by Sigma included a review by an independent
clinical panel. The review concluded that the bed numbers were
right, but that there needed to be improvements in performance.
Since this review, the NHS Plan has been published,
and new targets in the plan may require further capacity.
In total, the Trust now has 681 beds, 32 fewer
than before the move into University Hospital (713 beds). Reductions
have been made in:
community (eight beds);
neonatal unit (two beds);
paediatrics (three beds);
gynaecology (two beds); and
day surgery and investigations (two
In Medical and Surgical specialities, beds have
been reorganised significantly. Overall there has been a reduction
of a further three beds across medical and surgical specialities.
A schedule of beds at North Durham Health Care
Trustincluding the new University Hospital of North Durham,
is attached as Appendix 1.
During the 1990s, the Trust had a deficit that
needed to be addressed. The measures taken by the Trust to deal
with this have mistakenly been confused with measures to re-profile
the Trust's costs in order to run the new hospital:
the Trust had developed a recurring
deficit. Services had been developed "at risk", without
agreement for funding from commissioners, and savings needed to
be made. A £4.5 million recovery package was agreed with
County Durham Health Authority and the Northern and Yorkshire
Regional Office of the NHS Executive in 1996-97. This brought
the Trust back into financial balance by the end of 1997-98;
the Trust also needed to improve
its capital assets by building a new hospital. Action therefore
needed to be taken to re-profile costs in order to run and maintain
a new hospital, which would be more expensive than the old facilities
The value for money appraisal demonstrated that,
over the 60 year life of the building, the public sector and privately
financed options would cost the same. The Trust was therefore
given the go ahead to proceed with PFI.
Contracts were signed in March 1998, with the
preferred bidder, Consort Healthcare, a consortium of Balfour
Beatty and the Royal Bank of Scotland. Building work began immediately
and work will finish on site by the end of 2001, when landscaping
and car parking areas will be completed.
Now that the new hospital has been built, the
contract with Consort costs the Trust £13.9 million this
year, rising to £14.5 million in subsequent years:
the charge includes £4.8 million
for support services. These include portering and cleaning in
non-clinical areas; catering, security, transport and telecommunications
infrastructure. Around 97 NHS staff have transferred to the private
sector as part of the arrangement;
the availability charge of £9.7
million guarantees life cycle maintenance, meaning that the hospital
will always be in a good state of repairthis was certainly
not possible with the existing facilities; and
new hospitals do cost more than old
ones due to higher capital values. The Trust estimates that capital
charges on a new publicly financed hospital would have been in
the region of £7.4 million per year. At least £1.5 million
a year would also need to be spent to ensure the standard of the
building was maintained.
The need to re-profile the Trust's costs therefore,
is not a consequence of PFI, but a consequence of investing in
and maintaining a new asset.
These costs would therefore have arisen whether
the hospital was PFI or publicly funded.
The Trust's PFI plans were criticised in a Unison
report, "Downsizing for the twenty first century, published
in 1999. The Trust's response to those criticisms is attached
as Appendix 2.
The new building has allowed the trust to make
other important developments in patient services that would not
have been possible in our old hospital:
for the first time, Durham's hospital
has an MRI scanner. This means that patients no longer have to
travel to Newcastle or Hartlepool for these tests.
the Trust now has filmless X-ray.
The new Picture Archiving and Communications SystemPACS
for shortmeans the results of all scans and X-rays are
now stored on computer and linked to all wards, and all Trust
hospitals. Doctors can therefore access the results of X-rays
and diagnostic tests at the click of a mouse;
the hospital now meets standards
for privacy and dignity. Nightingale wards have been replaced
by a combination of four bedded bays and single rooms, and washing
and toilet facilities are much improved; and
a new hospital will also make it
easier for the Trust to attract health professionals to come and
work in Durham. It will also help the Trust expand its role in
medical education and training, further increasing resources.
Since the new hospital opened, the Trust has attracted new consultants
to the radiology and medicine departments and has been successful
in attracting further nurses.
Clearly, throughout its development, PFI has
been a subject of controversy. The University Hospital scheme
has inevitably been drawn into this controversy. Some of this
is about developing an appropriate discussion about how services
and facilities are funded. However, some has been emotive and
The key issues have been as follows:
PFI has been blamed for a reduction
in beds. This is despite the fact that bed numbers would have
been the same under the public sector option. There are local
discussions over whether the Trust needs to increase capacity.
But this is a direct result of NHS Plan targets, which were published
in July 2000 long after construction of the hospital had already
there has been a number of "urban
myths" circulating, including patients being charged for
vases for their flowers and wards being charged £30 when
a porter is called, neither of which are true. The hospital was
also criticised for providing a nationally approved bedside pay-per-view
telephone and TV, which is a requirement of the NHS Plan; and
in addition, minor teething problems
have resulted in accusations of sloppy building work, although
the Trust and its private sector partner are successfully smoothing
out the early difficulties that are inevitable when moving into
such a complex facility.
The Trust's responses to many of the unjustified
criticisms that have appeared in the press are attached in Appendix