Taxpayers to bail out failing hospitals

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Andrew Lansley and David CameronPaul Rogers/The Times/PA Archive/Press Association Images

You might have thought we were finished with the bail-outs - after all it's fairly clear that the cupboard is bare. However, the government hasn't finished propping up failing institutions with our cash.

Now it's the turn of more than 20 hospitals who have done such a terrible job of managing their finances that they have run out of money. So why do they deserve £1.5 billion of our cash?

Bail-out

The Department of Health announced the injection of cash for seven hospital trusts, which run 21 hospitals between them, in areas from South London to North Cumbria and Maidstone to St Helens.

They ran into trouble as a result of entering into Private Finance Initiative projects. These essentially guaranteed payments to private companies for 35 years in return for them investing in specific building projects. So, for example, they may have built a new clinic, and the public sector is duty-bound to pay off the cost of building it over 35 years, plus interest, plus the cost of maintaining the building.

In many instances the debt and interest has become a millstone, which has cost far more than simply doing the building themselves ever would have. As the recession hit, the cost of repayments soared out of control.

In return...

The trusts have now been branded "at severe risk" and Andrew Lansley, the Health Secretary, announced the bail-out in an effort to appear more transparent.

He added that the trusts in question won't get any cash unless they can prove they are being more efficient and providing good quality services.

Of course, it begs the question of who will be the judge of the standards of efficiency and care at the hospital - and just how high the bar will have to be. Can they be demanding enough to ensure this is the last of the bail outs?

What do you think? let us know in the comments.

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