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Friday 28th October 2016

Accounting changes to cost hospitals £146m

8th August 2008

Changes to accountancy rules for the NHS look set to cost hospitals millions of pounds a year.

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Under the new criteria, an additional £16 billion of extra debt will be shown on the NHS balance sheet in a move that could cost hospitals additional millions.

Current rules require most NHS trusts with private finance initiatives to report only the annual amounts they pay to the contractor to cover the service charge and debt repayments in their accounts, as opposed to the full value of their liabilities.

But from April 2009, hospitals will have to state assets and liabilities on the balance sheet of the organisation that controls them and owns them at the end of the contract period.

The data is contained in a Department of Health report, obtained under Freedom of Information legislation by HSJ.

Accountancy firm Deloitte and Touche drew up the report, which gives examples of the impact of change.

A hospital with a £250m scheme, for example, would show an annual payment of £28m at present but under the new rules that £250m would move onto the trust’s balance sheet.

The Department of Health estimates overall this will mean an extra cost of £146m a year for the NHS.

However, Deloitte and Touche suggest that this may be actually an underestimate as the Department of Health figures do not include the debts in areas such as those associated with independent sector treatment centres, leases on equipment such as dialysis machines and deals made under the national IT programme.


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