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7 February 2013, 08:50 | Updated: 7 February 2013, 09:07
The Department of Health has been criticised for building Peterborough City Hospital, and saving nearby Hinchingbrooke Hospital by allowing it to be run privately.
A report by the Commons Public Accounts Committee describes the position as a 'complete lack' of strategic oversight, and found there is not enough money to fund them both by the local Strategic Health Authority.
The decision left two hospitals whose financial viability and future was in doubt, said the committee.
The building of the £289 million Peterborough City Hospital was financed by a Private Finance Initiative.
The report says the hospital had run-up debts of £45.8 million by the end of 2011/12, on a turnover of £208 million.
The Department of Health is now being forced to pay almost £1 million a week to keep the NHS Trust that runs the hospital afloat.
Meanwhile Circle, which took over the running of debt-ridden Hinchingbrooke Hospital last year, aims to achieve £311 million savings during the ten year franchise period.
Hinchingbrooke had debts of almost £40 million when the private company took over the running of the hospital.
However MPs said the company had not achieved the savings it expected in the first few months of operation, and had parted company with its chief executive only six months into the project.
The report states: "Neither trust is financially sustainable in its current form and both will have to make unprecedented levels of savings to become viable.
Events at both trusts reflect poor financial management and the failure of the SHA to exercise strategic control over local healthcare provision and capacity planning.
The poor oversight demonstrates that the department (of health) has not established a robust system of healthcare planning.
All bodies demonstrated an abject failure to accept responsibility for these decisions and their impact on the local health economy,'' said the MPs."
Doctor Peter Reading, interim chief executive of Peterborough and Stamford Hospitals NHS Foundation Trust said: "The report recommends that the work of the incoming Contingency Planning Team, appointed by our regulator Monitor, should look at the financial sustainability of the whole local health economy and be binding on all parties.
We have already identified that we alone cannot solve the Trust's financial problems.
It requires all the organisations involved in health care in the Greater Peterborough area to work together.
I welcome these findings and hope that they shape the focus of the Contingency Planning Team from day one.
Meanwhile, the board of directors and our staff at both our hospitals continue to work on making savings and creating efficiencies in everything that we do, provided, of course, that it does not impact upon the quality of care our patients receive."
A Circle spokeswoman said: "The Public Accounts Committee report makes clear that the Circle franchise has saved Hinchingbrooke from being closed or carved up to help other struggling hospitals.
When Hinchingbrooke was first given to the Circle Partnership to run, all questions were about our ability to run A&E, and alleged threats to quality.
Now, for the first time, Hinchingbrooke is consistently the best A&E performer and top full service hospital out of 46 in its region, and has received a clean bill of health from inspectors for the first time.
We believe patients have a right to high quality, local services. We?re delivering that in Hinchingbrooke, so it makes no sense to punish Huntingdon patients for Peterborough's mistakes.
The future of healthcare can't be a zero sum game of big hospital mergers and small hospital closures.
Circle offers an innovative solution to make small hospitals sustainable and maintain much-loved local services."