Hospital financing review to follow damning report

A REVIEW of the guidance on financing hospital projects has been ordered by Virginia Bottomley, the Secretary of State for Health, after a damning report found that errors costing pounds 100m on the building of the new Chelsea and Westminster Hospital had damaged patient care.

The all-party Commons Public Accounts Committee said that within nine months of going ahead with the hospital, the North West Thames region's capital programme had collapsed 'to the detriment of patient services'. One hospital in a poor state of repair had to be kept open, in spite of being scheduled for closure in 1992, and 24 building schemes costing pounds 120m were cancelled.

The committee levelled its criticism at the National Health Service management executive under Duncan Nichol, chief executive.

Tory MPs have been lobbying for more money for other health authorities as shortfalls against land sales have hit hospital building schemes, and the PAC report is likely to lead to the rules on such self-financing schemes being tightened. The committee said: 'We expect the NHS in future to ensure that the financing of major projects does not jeopardise other necessary patient services.'

The region had planned to finance the pounds 230m, 665-bed teaching hospital with receipts from the sale of land from four of the five hospitals it replaced. But falling property values in the recession led to a pounds 100m shortfall. In addition, the developers completed the hospital six months late, causing a further pounds 10m increase on the cost. The committee called on the region to sue for compensation over the delay. But the MPs' main concern was the incalculable damage to patient care.

Mrs Bottomley said: 'The PAC report and our current review will produce valuable lessons for the future in helping to ensure that we achieve cost-effective, value-for- money projects.'

Ministers believe that the Westminster and Chelsea hospital should never have been built at its current size. Privately, they have described it as a 'white elephant', planned before the recent report by Professor Bernard Tomlinson recommended the closure of London hospitals to match the shift of patient demand to the outer regions of the capital.

However, ministers have accepted that it must be retained and the Government is planning to switch accident and emergency cases from the Charing Cross hospital to the new hospital.

Mr Nichol has been called to give evidence to the Public Accounts Committee in late April over mismanagement in Wessex regional health authority.