Major threat to future of hospital

A key report has found that the internationally-renowned hospital is no longer financially viable as an independent health trust.

And it is now unlikely to be able to continue as an independent organisation in the face of mounting competition from a new private treatment centre.

The NOC embarked on a £42m building development scheme, borrowing heavily under a Private Finance Initiative.

But it has now emerged that the specialist hospital will struggle to attract sufficient numbers of patients to the new facilities, leaving it with a bleak financial future.

The newly-formed strategic health authority today strongly denied that the NOC was facing closure.

But it appears that the NOC is no longer capable of standing on its own feet, with many of the services offered unaffordable.

And it now looks to be faced with having to merge with another trust, most likely the Oxford Radcliffe Hospitals Trust, which runs the county's main hospitals.

The report was commissioned by the Thames Valley Strategic Health Authority in the face of growing concerns about the financial future of the region's main specialist orthopaedic hospitals.

It warns that the NOC is faced with losing a large number of patients needing routine knee and hip replacement operations to the private orthopaedic treatment centre, which recently opened in Banbury.

And with the NOC having to concentrate on specialist services, it says the hospital trust will be too small to survive.

The report says: "The trust has an underlying deficit and no reasonable prospect of eliminating this, under the present tariff."

It suggests that the hospital looks to have expanded beyond its means.

It says: "There has recently been extensive and expensive capital investment.

"The PFI appears to be larger than required and so presents a major long-term financial problem in funding the unitary charge, making reductions in capacity a more difficult option.

"We recognise that a minority of the workload is highly specialist, but we do not anticipate an overall increase in this work."

The hospital's problems are compounded by the loss of work to Capio Horton, the new private orthopaedic treatment centre set up in Banbury.

The report says: "The trust believes that patients will not choose the Capio Horton ISTC. But in our view, there will inevitably be a significant flow which will impact on the trust. The trust has a strategy for increasing market share, but there is no evidence or prospect of doing so.

The report concludes: "The NOC is not viable as a separate organisation. It needs to and will shrink so its remaining work is far more specialist.

"It will be far too small to survive on its own and should merge with a larger organisation, probably the Oxford Radcliffe on terms that are reasonable to that organisation."

The NOC's acting chief executive, Jan Fowler, moved to dismiss fears of closure.

She said: "We are concerned to hear reports about possible closure of the NOC and we want to assure patients that this is not being planned.

"The NOC has a new PFI building that is due to be completed in 2007 which will provide state-of-the art facilities. The trust is also engaged in a strategic review of its specialist services, which is being done in partnership with the strategic health authority and that work will report at the end of March."

Mark Britnell, the chief executive of the new strategic health authority, South Central SHA, said no NOC-Radcliffe merger had yet been discussed. But he said a study was now under way to establish the "the strategic direction for the NOC" which would be completed in March.

He said: "The board of the NOC is very aware of the issues the organisation faces under payment-by-results and the specialist tariff and accepts that, unless addressed, this threatens the future financial viability of its specialist services."

The NOC Trust was bitterly disappointed not to win foundation hospital status giving it greater independence.

The NOC earlier this year headed a campaign with Oxfordshire MPs for more Government funding for specialist orthopaedic hospitals.

New Government rules created a system of payments-by-results that has created a crisis of underfunding for complex operations, the trust argued.

The report will confirm the worst fears of the Oxford Keep the NHS Public campaign, which warned that the competition of the private sector locally could threaten NHS hospitals and staff.