Erne Hospital to be demolished

Editorial Department • Published 22 Apr 2010 10:39 0 Comments

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The Erne Hospital is due to be demolished as early as two years' time, according to a Western Health Trust document.

The full business case summary for the new acute hospital reveals that while the new acute hospital on the Irvinestown Road is due to be completed in March 2012, the Erne hospital is to be decommissioned in the following months from March to June.

The demolition at the site is due to take place between June 2012 and June 2013 with the disposal of the Erne site expected in 2012/13.

And the dependence of the new acute hospital in Enniskillen on the uncertain Omagh Hospital complex is spelled out in the full business case for the new hospital which has recently been made public.

Health Minister Michael McGimpsey said that due to budget constraints faced by his department, he could not give any firm commitment to any project in the planning stage including the £190 million Omagh hospital complex.

The business case reveals how the fortunes of both facilities are intertwined: "The delivery of the service model is dependent on the Omagh Hospital Project being operational as soon as possible after the new acute hospital to prevent diseconomies of scale in running costs, staff transfer, complexities and clinical risks".

The business case identifies non-recurrent costs such as a shuttle bus service running from Enniskillen bus depot to the new hospital, costing £112,000 for two years.

Costs were also reviewed during the procurement process as a result of the removal of soft facilities management (catering, cleaning, portering and laundry) from the core bid; reductions in the size of key workers' accommodation; a landslip occurring during the enabling works programme and an updated assessment of the revenue consequences of the running of a new facility, which took into account the Comprehensive Savings Review efficiency programme currently underway in the Trust.

The changes to the financing of the new hospital in light of the banking crisis are explained, where HSBC pulled out and the European Investment Bank (EIB) became a backer.

"As a result of the changing global market conditions which has resulted in banks significantly reducing their lending to each other because they were uncertain about how much liquidity they had and how much exposure other financial institutions had to low-quality loans, the impact on the project was three-fold.

"The bidders' original funder (HSBC) announced they would be unable to underwrite the whole of the required funding. Secondly, there were unable to provide the funding rates quoted in their final tender and finally, banks were not prepared to hold their offered terms for no longer than a matter of weeks.

"Subsequently, HSBC announced that they would be unable to act as structuring bank or to participate in the funding club.

"The Trust, Health Estates, Project advisers and SIB (Strategic Investment Board) have been working with NIHG (Northern Ireland Health Group, which is constructing the hospital) and its advisers through this period, between their appointment and financial close, in order to provide a funding package which delivers the maximum possible benefit to the Trust, whilst remaining achievable in the current volative market. NIHG have now presented the Trust with a solution, demonstrating that this will be best achieved through the creation of a club or panel of banks to provide funding, each providing a portion of the debt on an equal basis, alongside a 50 per cent funding commitment from EIB (European Investment Bank).

"The process for creating the club is designed to optimise the deliverability of the funding in an ever contracting market whilst at the same time managing the value for money of the funding in light of the current market.

"The Trust, SIB and the Trust's advisers are monitoring, and will continue to monitor up to financial close, the terms resulting from the formation of the club of banks, particularly in light of the terms currently being offered across the PFI market in the United Kingdom as a whole, whether in health or in other sectors".

This article appeared in Impartial Reporter 22 Apr 10

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