THE £11 million refurbishment of the Purley Memorial Hospital will be contributing to Croydon's overall NHS Trust deficit, it transpires, as the valuation of the site drops to £5.6 million less than the cost of the development.
Although the prediction is the "worst case scenario", according to the new Croydon Health Services NHS Trust, the adjustment will have to be included in the 2013/4 accounts which are already facing an £8.8 million operational deficit, bringing it to almost £14.5 million.
Tarsem Flora, a resident of Purley who sits on the hospital's board, is mystified that officials have not notified anyone of the multi-million pound gap.
"We had our Purley Residents' Association AGM on June 11 and we were given a presentation about the hospital which said everything was fine.
"Then we find out from the Advertiser that the contractors have been paid £5.6 million more than the valuation of the site.
"The contract was £11.1 million with around £600,000 for contingencies. No-one has said we are over budget but it looks like the contractors have been overpaid. If this is the case then it is very serious.
"We think there is something quite suspicious about this."
A spokesman from the trust said: "After the major refurbishment of a building every NHS Trust is required, under accounting standards, to have that building revalued by an external professional valuer once the works are completed.
"It is common for an impairment to be recognised after major works."
However, Croydon South's MP, Richard Ottaway, who campaigned for the hospital's refurbishment funding, said: "I'm no expert on NHS finances but I see no reason why the hospital has dropped in value so steeply.
"The trust is already spending £8.5 million more than they have this year to improve services and specialist staffing – and this will be an unwelcome additional financial burden.
"I am, however, assured by the trust that their long-term spending plan will cut the deficit in the coming years as the quality of healthcare for the people of Croydon improves."
The trust also said the ultimate figure could be considerably less than the current £5.6 million estimate but that it would "depend on the property market when the hospital reopens later in the summer" and "the building could also increase in value in subsequent revaluations".
Despite this, a spokesman said the current estimate would have to be included in this year's accounts, adding to the already large deficit of £8.8 million..
"The final impairment figure will be a 'technical', non-cash adjustment in the trust's accounts in 2013/14," he said.
The trust also defended its choice of construction company, saying it was carefully selected from suppliers on a Department of Health procurement framework.
The trust has also insisted they are on-budget.
