The must read stories and analysis from Tuesday

Unexpected financial turn

“If it’s too good to be true, it probably is.”

We all have experience of that principle, and unfortunately it applies to the NHS as well.

Earlier this year HSJ analysed published financial information that suggested Gloucestershire was the only STP footprint that reported a net surplus in 2015-16.

We might have to return to that analysis after the county’s biggest provider, Gloucestershire Hospitals Foundation Trust, significantly revised down its financial position on Tuesday.

The trust had forecast to finish 2016-17 with a £5.3m surplus, but at the end of August it already had a deficit of £11.1m-£13.4m worse than planned for the month. Gloucestershire Hospitals will finish the year in deficit, though we don’t yet know how large this will be.

The “material change” was made to the trust’s finances after an “independent review of its financial position and financial reporting arrangements”, triggered by “concerns raised at a number of levels within the trust about its financial position and the deterioration of its cash reserves”.

The review found “changes to some key financial planning assumptions [had] offset an underlying loss of financial control and a failure to fully deliver improvement plans”.

It also said the trust had spent “significantly more money developing and improving its equipment and buildings that it had available”.

The situation is so serious that Gloucestershire Hospitals has been forced to arrange a £20m loan to maintain its cash flow.

How and why did such a serious governance failure take place?

That’s not yet clear, but Deborah Lee, the trust’s chief executive, has promised a “full independent financial governance review to inform how we govern our finances going so this cannot happen again”.

Ms Lee took over in June from Frank Harsent, who led the trust since 2007.

She accepted the resignation of finance director, Helen Simpson, whose departure from the trust was announced to staff last week.

We await the outcome of the financial review with great interest, but in the meantime we mourn the loss of what was supposedly the NHS’s only health economy in surplus.

Vanguards in retreat?

It appears that vanguard sites have only been given about a third of the cash they said they needed to develop new models of care.

HSJ’s analysis of more than half of the vanguards’ “value proposition” documents – which were used by national leaders to decide how transformation funding should be allocated – found that sites that between them received less than £70m had requested nearly £216m.

As a result, many vanguards have had to scale back their plans or relax their timescales for bringing about new care models.

The main exceptions to this we’ve found are North East Hampshire and Farnham – also known as the Frimley Health PACS – which unusually received about 85 per cent of its allocation, and Salford, which got nearly all it asked for, but spread across four years rather than three.

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More Manchester mergers

The leaders of the three CCGs for Manchester have committed to a formal merger by next April, according to an options appraisal by Deloitte.

Subject to board approval, North, South and Central Manchester CCGs will also seek to formally establish a “single commissioning function” for health and social care with Manchester City Council. Progression of the plans is subject to formal approval by the organisations’ boards.

The report suggests the commissioning functions may transfer to the council in the longer term, but this would depend on legislation and the “maturity” of the new arrangements.

The developments mirror significant changes taking place among Manchester’s two hospital trusts, which are also planning to merge by April, as well as the planned creation of a single organisation to deliver out of hospital care in the city.