Select Committee on Health Minutes of Evidence

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 Yorkshire Region.

  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 Durham—opened 2001.

  £67 million replacement of Bishop Auckland General Hospital—opens 2002 (PFI).

  £8 million refurbishment of Shotley Bridge Community Hospital—to be completed in 2002 (publicly funded).

  £8.5 million Chester-le-Street Community Hospital—opens in 2003 (PFI).

  £8 million Sedgefield Community Hospital—opens in 2002 (PFI).

  £15 million Adult Mental Health Unit South Durham—opens in August 2004 (PFI).

  £4 million Mental Health Unit for Older People—opened October 2001 (publicly funded).

  £1 million Stanhope Community Hospital—opens in 2002 (publicly funded).

  Adult Mental Health Unit North Durham—plans 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:

    —  maternity (12 beds);

    —  community (eight beds);

    —  neonatal unit (two beds);

    —  paediatrics (three beds);

    —  gynaecology (two beds); and

    —  day surgery and investigations (two beds).

  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 Trust—including 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 it replaced.


  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 repair—this 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 System—PACS for short—means 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 less justified.

  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 begun;

    —  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 3.

October 2001

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