How can this volume change best be measured?

The number of patients provided in the Annual Reports of the NNUH are for four different categories - in-patients, day-cases, out-patients and accident/emergency. The numbers for 1996/97 to 2007/08 are shown in Table 9.7 below.

We can see that the annual growth rates for the PFI period have varied between 2.5 per cent (for A&E) to 5.7 per cent for day-cases. A useful guide to choosing the category or categories to measure the volume of activity is provided by the unit usage fees. As shown in table A1.4 (in appendix 1 to this report), the unit price (as from April 1, 2003) set out in the Project Agreement is almost five times as high for in-patients (per bed-day) and for day-cases as it is for out-patients. Therefore it seems sensible to measure the volume by the number of bed-days of in-patients plus the number of day-cases. These figures for selected years are shown in Table 9.8 below.

As shown in the table, the average annual growth rate for the combined inpatient bed-days and day-cases between 2000/01 and 2007/08 was 2.2 per cent. This growth rate of 2.2 per cent per annum over gives an increase over the seven years up to and including 2007/08 of 16 per cent. Here we assume a generous 18 per cent.

Plugging these figures into Table 9.6 gives table 9.9 below.

It is time to recap this section which been trying to attempt to account for the increase in operating costs between the last full year before PFI (2000/01) and the latest year (2007/08). The increase (in money of the day) totalled £170 mn after subtracting the PFI set-up costs of £2.2 mn incurred in 2000/01. The general rise in prices over the seven years accounts for £32.5 mn, leaving £137.5 mn to be explained.

The rise in rent as a result of the PFI contract (in 2007 prices) accounts for a further £18.0 mn leaving 119.5 mn to be accounted for. £12.2 mn of this £119.5 mn can be accounted for by the increase in costs associated with the medical school (education, training and research costs). A further £27.7 mn is accounted for by the rise in prices at the hospital over and above the general rate of inflation. Finally a further £52.9 mn can be accounted for by the rise in the number of patients treated at the NNUH over the seven years.

After all of this, we are left with £26.8 mn which is 'unexplained' by the three factors of 'medical school', 'hospital-specific inflation' and 'patient volume'. The largest 'unexplained' increase is for clinical supplies where the gap is £17.6 mn or 61% of the £29.0 mn total for clinical supplies in 2000/01. I wrote to Anna Dugdale (now Chief Executive of the NNUH Trust) on 12 June 2008 and to Andrew Stronach (Head of Communications at the NNUH Trust) but no satisfactory explanation was forthcoming.

It is clear that cost control has been (and has been seen to be) something of a problem at the NNUH. In 2005, Chris Humphris (then Chief Executive of the Southern Norfolk Primary Care Trust) was reported to have said that "the new Norfolk and Norwich Hospital had cost more than anticipated in the short term" (second page of the minutes of a meeting of 11 February 2005); then, in 2006, David Stonehouse (the then Director of Finance of West Norfolk PCT) was reported as saying "the NNUH has a very limited track record in reducing costs" (Eastern Daily Press, 24 August 2006).