Department of Health : the franchising of Hinchingbrooke Health Care NHS Trust and Peterborough and Stamford Hospitals NHS Foundation Trust, twenty-eighth report of session 2012-13, report, together w

The strategic management of health resources across the East of England Strategic Health Authority has failed.

Ultimate responsibility for this rests with the Department of Health.

For many years to come, the local community as well as the NHS and taxpayers will have to live with the consequences of separate decisions to build a new PFI hospital at Peterborough and to award a franchise to a private company to run the nearby Hinchingbrooke hospital.

These decisions were taken separately despite the fact that the two hospitals are only 24 miles apart in an area where the NHS has long acknowledged that healthcare provision is running ahead of local needs.

The reality is that there is not enough funding there for both Trusts to thrive as currently configured.

Their financial viability will be further eroded if more people are treated outside hospitals, in line with present and past government policy.

Circle Healthcare, the franchisee of Hinchingbrooke, has not achieved its expected savings in its first few months and its Chief Executive has already left.

The bid was not properly risk-assessed and the successful bidder was encouraged to submit over-optimistic savings projections. The PFI deal for Peterborough and Stamford PFI hospital has proved catastrophic, with the Department now being forced to pay out nearly GBP1 million a week of taxpayers' money to keep the Trust afloat.

Both Trusts will have to make unprecedented levels of savings to become viable.

In Peterborough and Stamford's case, this won't be enough