Ripping Off The Primary Care Trusts
When I was Finance Director of St George's Healthcare NHS Trust my directorate was responsible for working out the costs of the various clinical services that St George's provided. The basic method of funding for an NHS Hospital Trust is that each year the Primary Care Trust's that send their patients to your hospital give you exactly the same amount of money that they gave you the previous year, plus an allowance for inflation, additional sums to fund any particular NHS initiatives that you have to undertake and then deducts the cost efficiency target that the government requires you to make in order to bridge the gap between what the government expects the NHS to provide and what it is prepared to pay for. None of this relates to the actual procedures or treatments that take place within the hospital. The only adjustment that is made to the income an NHS Hospital Trust receives is that Trust's can claim for the marginal costs that they incur in respect of any additional activity that they undertake for particular PCT's. These costs should of course be calculated for each hospital by their Finance Department who have a professional duty to correctly calculate the marginal costs for each diagnosis or procedure. This is important, as the Government funds PCT's on the basis of a weighted capitation allowance, which is intended to give equal access to healthcare resources to every citizen regardless of where they are geographically located and if NHS Trusts who provide the clinical care, falsely over state their costs, it completely negates the purpose trying to share out healthcare resources equally as. At St George's Ian Hamilton the Chief Executive, in line with several other NHS Trust's it has to be said, could not resist the temptation of profiteering from the Primary Care Trust's by overcharging them for those procedures, particularly in the field of cardiac medicine, where he felt that he could overcharge in those areas where he felt the PCT's would have no alternative buy to continue to send patients to St George's regardless of the amount of money that he would charge them for clinical services.
To facilitate this process Ian Hamilton took the task of finalising the marginal costs away from the Finance Directorate and instead gave the task to Barbara Ghodse the Trust's Contract Manager who embraced the concept of cheating the PCT's with enthusiasm and relish. An e-mail from Barbara Ghodse dated 26th June 2002 confirms that overcharging the PCT's had raised a "net profit" for St George's of over £1.5 million in the 2001/02 financial year and confirms that she is looking for areas where clinical activity is low because she says that raising the costs in those areas is the "best bet for increasing income". Her detailed calculations of how the PCT's were overcharged to the tune of more than £1.5million is shown in the attached detailed spreadsheet.
Occasionally a Primary Care Trust would pick up that it was being overcharged. In 2001 the Nelson Primary Care Trust picked this up and St George's was forced to make a refund. As a result of this I e-mailed the Chief Executive on the 11th December 2001 (copy to Barbara Ghodse) to warn him that this is what happened if you increased costs without proper justification. As was usual with Ian Hamilton he took no notice and continued to rip the PCT's off wherever he could, so that St George's financial situation was improved at the expense of other NHS organisations. This is a practice that continues right up to the present day if the answers given by Acting Financial Director Kevin Harbottle at the St George's public board meeting held in July 2003 where he was unable to confirm that the Trust were now calculating it's variable costs in line with the NHS costing manual.