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FOUNDATION TRUST BLAMES DEFICIT ON PCT - AUDIT COMMISSION ISSUES WARNING OVER£8M DEFICIT

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By Helen Mooney...
By Helen Mooney

Harrogate and District foundation trust is facing a£9.2m deficit this year, according to the trust's latest financial report submitted to its board of governors last week.

In the document, finance director Jonathan Coulter admitted that the sum would represent a worst-case scenario for 2006-07, but that even the best case would leave the trust£4.2m adrift.

Mr Coulter blamed the debt on Craven, Harrogate and Rural District primary care trust's plans to cut the amount of work given to the hospital by£7m for 2006-07.

The report says that the trust will have to implement a 'significant cost-improvement programme' on which the trust needs to focus 'as a matter of urgency'.

Although Mr Coulter made no mention of job cuts, the report concludes that the cost-improvement programme will 'necessarily impact on the level of capacity available within the trust'.

A trust spokesperson said the organisation was facing a 'gap between its income from the local PCT and the ongoing costs of delivering its services of£4.2m-£9.2m'.

The news came as the trust's chief executive, John Lawlor, prepared to present acting NHS chief executive Sir Ian Carruthers with the outcome of his independent review into the government's payment by results tariff-setting process.

AUDIT COMMISSION ISSUES WARNING OVER£8M DEFICIT

By Alison Moore

A trust which has had four chief executives in a year is expected to report a deficit of£8m for the last financial year, the Audit Commission has warned.

George Eliot Hospital trust in Nuneaton, Warwickshire, lost its permanent chief executive last May and has had interim and acting ones since then. Current chief executive Graham Smith is on a short-term contract which runs out in the summer. The trust is also advertising for a permanent chair and new non-executive directors.

Now the Audit Commission has issued a public interest report warning that 'the trust's financial position has deteriorated to such an extent that it cannot be managed simply through local measures'.

The trust expects to report a deficit of between£7.8m and£8.7m for the last financial year, and the gap between income and expenditure could grow to£11.7m this year unless savings are made.

The report highlights numerous financial problems, including cash-flow issues which forced the trust to delay paying bills; a recovery plan being rejected by the strategic health authority; and only a small proportion of the likely overspend in 2005-06 recovered through cost-cutting.

Auditor PricewaterhouseCoopers also questioned whether payment by results would return the trust to balance in 2008-09, given the situation in the local health economy.

The trust has already been assessed as 'high risk' by the Department of Health, and is one of those targeted with turnaround teams.

Mr Smith said: 'The report provides a helpful contribution, pointing out the things that need to happen to bring about financial balance, and those which can be done by the George Eliot alone have already started.'

The trust has had many changes in its senior management over the last two years. Tucson Dunn was appointed chief executive in October 2003 but suspended in May 2005. He and the trust later agreed to part company and he returned to work in South East Asia.

Deputy chief executive Duncan Phimister was then appointed acting chief executive, but late last year David Roberts, chief executive of University Hospitals of Coventry and Warwickshire trust, became interim chief executive, combining both roles.

A merger between the trust and the smaller George Eliot trust seemed likely, but in February Mr Smith became interim chief executive. University Hospitals still provides management support to the trust and Mr Smith said: 'The intention to work with University Hospitals continues'.

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