The boss of a Westcountry’s hospital has warned of tough choices ahead after revealing mounting deficits for the next three years parallel to predictions of dwindling income.
Angela Pedder, chief executive of the Royal Devon and Exeter Hospital (RDE), says the trust is being paid less for more work while at the same time is under pressure to make massive savings.
“We don’t want to scare people or frighten people,” said Mrs Pedder.
“We are saying that we are a good organisation and we deliver good care for patients and will continue to do so.
“But in five years time it will a different (health environment) and that is the dialogue we have to enter into.”
Since hospitals were ordered to reduce costs by the Government four years ago, the RDE has made £50million worth of savings.
However, for the first time the trust has not been able to balance the directive to make ongoing savings without dipping into the red.
The organisation has been forced to declare a £3.1million deficit this year, while next year is predicting an £8.9million deficit and the year after a £13.5million one.
Meanwhile said Mrs Pedder, the price the hospital is actually paid for its work has been similarly squeezed.
“On April 1 this year, for the same amount of work next year we will be getting paid £11million less.
“That is not sustainable without significant change.
“There are few organisations that could deliver that level of savings.”
The trust, along with others in the peninsula, is hugely disadvantaged by a national funding formula which takes geography into account and put simply means they receive less money per patient for delivering the same services as hospitals in other areas.
“If the RDE was based in Bristol, we would be paid an extra of £18million a year to provide the same levels of service we do in Exeter,” said Mrs Pedder.
The trust has reserves of £30million, but at an operating cost of £1million a day this rainy day fund would be exhausted within a month.
Mrs Pedder said she was keen to kick start the debate about how health services should be organised in the future.
She said reconfiguration - shorthand for moving or centralising services - must be part of that discussion.
“There are significant challenges ahead and the resources envelope for the acute sector means that there will, be reconfiguration.”
She said she was intensely proud of the NHS: “It is something to be treasured, but not something to be kept in aspic.
“If things do not change they are not sustainable.
“Innovation drives quality. Innovation is change. We need to embrace all aspects of change.”
The RDE is not the only hospital to be struggling to balance demands to make savings with diminishing income levels.
The region’s biggest, Plymouth’s Derriford Hospital, has already declared it is facing a financial black hole of up to £20million.
In the last financial year, the trust announced a £13 million deficit and has projected that the 2014/15 the deficit is likely to be between £13 million and £20 million.