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I am writing to you with further information about what is happening about Epsom Hospital. I have enclosed below the content of a letter that I have just sent to Ruth Carnall, who is the Chief Executive of NHS London, the body which is ultimately responsible for Epsom Hospital. The letter is pretty self-explanatory, and will give you an indication of the unacceptable financial confusion that now appears to surround the Epsom and St Helier Trust.

I am now reconvening the Epsom Hospital Campaign group, which has representatives of local councils, MPs, businesses, and patient groups. This was the Group that organised, with me, all of the protests across the past decade. There is no need right now to move into full campaign mode. At the moment the NHS is planning a further series of reviews to decide what happens now, and this will involve assessing the future of Epsom alongside the broader review of services that has been taking place across South London. However I will be asking people locally to make their views firmly know to that review process and I will come back to you shortly with more information.

In the meantime my frustration is that a process of eighteen months of discussion that looked to be on track to deliver a good solution for the future of Epsom has been unnecessarily abandoned on the basis of what appears now to be incorrect financial analysis. You will see from my letter that I strongly disagree with the NHS decision to halt the process that they have been going through, and that I asked them earlier this week not to disband the team that has been working on the future of Epsom. Unfortunately they have not agreed to do so, which is why I am releasing this letter generally.

I will keep you updated about what happens, and I remain as committed as ever to ensure that Epsom has a strong future. There are many different pressures and changes within healthcare at the moment generally, and it is obviously important that patients get the best possible treatment. However I do not accept that it is impossible in today’s world for a small hospital to continue to do many things for its local community.

With best wishes Chris Grayling

Dear Ruth,

I am writing to you further to our recent discussions about the future of Epsom Hospital and the ongoing process to establish where it will fit in the NHS.

I wanted to raise with you my very great concern about the recent decisions regarding the future of the transaction process, and about the apparent lack of understanding of the financial position in which Epsom finds itself. I intend to make this letter public later this week, once the Epsom and St Helier Board Papers have been published and the information to which I will be referring is in the public domain.

I had intended to wait until then to write, but the imminent disbanding of the transaction team means that this letter cannot be delayed. Because of the new information that has emerged, I want to formally request, and urge you in the strongest possible terms to halt the disbanding of this team, and if necessary to convene emergency board meetings this week to take that decision. I hope that by the time I release this letter publicly that decision will have been taken.

At the heart of my concern is the position that the Epsom and St Helier Trust appears to find itself in financially. You will recall that at the time the proposed merger between Epsom and Ashford St Peter’s was abandoned a month ago, the transaction board was told that Epsom had an annual deficit of £13.8 million, and that it would not be possible to realise sufficient efficiencies for the merger to go ahead.

Over the past few days it has become clear that this figure was far from accurate, and that in fact the underlying deficit for Epsom for the current year is running at a rate of only half that level. I had heard several well-informed rumours to this effect, but it was confirmed to me confidentially by the Epsom and St Helier Trust on Friday. This figure may be adjusted upwards if Epsom is fined by the Commissioners over the level of infection outbreaks, but that is clearly a one-off and needs to be addressed by any future management of the hospital and need not and should not affect the transaction process.

In addition, I have now read the Deloitte report into the Trust’s finances, which clearly contained considerable amounts of subjective, rather than objective evidence about the split between Epsom and St Helier in calculating the deficit. Deloitte made clear that the management information they were given was out of date, and so their report relied on the judgement of individual managers in allocating costs between the two sites. Given the fact that most departmental managers are based at St Helier, which faces being downgraded as a result of the Better Services Better Value process, this would seem a less than satisfactory way of assessing the cost and deficit split between the two sites.

It seems now therefore that the financial information on which the decision to halt the transaction and disband the transaction team was based was flawed. You will understand how surprised I am by the way that the figures for Epsom can yo-yo in this way in a matter of weeks, and in particular in the way they are jeopardising its future.

I am aware that at the Partnership Board this week the option of a rapid move to remove acute services from both Epsom and St Helier was discussed, leaving them both as “cold” sites. I cannot stress how strongly the public in the Epsom area would react if that were to happen. It would leave a huge and unacceptable gap in provision across a wide area. But such a move would be inexplicable if it were taken on the back of a set of financial projections which already seem to have been a long way from accurate. If nothing else it would leave the NHS open to huge and unnecessary legal risks.

There is no doubt that Epsom faces major challenges to address its financial position. Above all it needs proper leadership to rebuild revenue streams – something that has been woefully lacking over the past decade. It needs to recover some of the £14m a year of activity that used to be carried out on the site, but which has been taken into the primary care sector by local GPs. That will require a smart strategy to improve services on the site, but it can certainly be done.

It also needs to attract new services and providers onto a site that is inefficiently used. And it needs to rebuild the income that it once received from private patients. That will require consultants working at Epsom Hospital to make a determined effort to bring much more of their private work to the site – something I am actively encouraging them to do.

I am therefore formally asking you to do the following:

Firstly to halt the break-up of the transaction team, and to reopen the transaction process. This time they need an unconditional mandate to find new partners to take over the management of the Epsom site on behalf of the NHS or within another NHS Trust, retaining its core of NHS hospital provision.

Secondly, there needs to be a complete open book process as regards the Trust’s finances, with potential partners given full access to the Trust’s accounts so they can prepare detailed models to understand its real underlying financial position. The current position where no one seems to have a clear idea about what the financial situation is has to stop, and no serious decisions can be taken about the future of Epsom Hospital until this situation is properly resolved.

Thirdly, because of the short term risks of Epsom losing work to the Primary Care sector, the private sector and other Surrey trusts, a small development board should be established with the specific remit of securing additional short term revenue streams to the site. I am all in favour of patient choice in the NHS, but it seems to me that far too little is being done locally to ensure that services at Epsom Hospital are part of that choice.

In addition, I will be asking the South Coast Strategic Health Authority this time to devote serious effort into helping secure the right outcome for Epsom Hospital. As you will know, many of those in the process have told me that there has been inadequate interest by their leadership team in what happens.

I cannot stress strongly enough that I will resist at all levels any attempt to subsume Epsom into the Better Services Better Value process and take instant decisions about services on the basis of a flawed or uncertain prospectus. Clearly what happens to Epsom needs to be seen against the background of what is happening in South West London, for example in terms of future patient flows. And the lack of interaction between Surrey and London in the transaction process has been unfortunate to say the least. But if there is a rapid process that simply decides that South West London can go from five acute centres to three without the processes I have described above, there will undoubtedly be a strong and hostile reaction. Furthermore it would be mad to throw away eighteen months of expensive work by the NHS in both South West London and around the future of Epsom and St Helier in circumstances where the deficit figures are so uncertain. I hope and trust that you will take rapid action to address the issues I have outlined, and I will hope to receive confirmation of this during the week. I am copying this letter to Sir Paul Beresford MP, Crispin Blunt MP, Sir Ian Carruthers, Chief Executive of the South Coast Strategic Health Authority, Matthew Hopkins, Chief Executive of Epsom and St Helier, Jan Sawkins, Chair of the Transaction Board, Anne Walker, Chief Executive of NHS Surrey, and Dr Claire Fuller of the Surrey Downs Commissioning Group. Yours sincerely

Chris Grayling