Health sector regulator Monitor is to send a hit squad into Peterborough and Stamford Hospitals Foundation Trust to develop a “long-term solution for the financial viability” of the foundation trust.

The regulator today announced that it would appoint a “contingency planning team” for Peterborough and Stamford, a similar approach to that taken to Mid Staffordshire Foundation Trust earlier this year.

The team will be tasked with drawing up a plan for the foundation trust which “ensures the sustainability of services for patients and minimises the need for further funding from the taxpayer”.

Monitor said in a statement that it had been working “for some time” with the trust, local NHS commissioners and the Department of Health on initiatives to bring down the Peterborough and Stamford’s underlying deficit of around £45m.

It acknowledged that the trust’s board had improved the hospital’s operational and financial performance, but said: “However, all parties also acknowledge that the existing initiatives will not be sufficient to return the trust to financial sustainability, and that the problems must be examined on a wider basis across the local and regional health economies.”

It added that the trust’s financial problems were partly due to “the unaffordable [private finance initiative] scheme on which the trust embarked in 2007”, but also to “wider issues within the local health economy”.

Monitor chief executive David Bennett said: “The reality is that the Trust has a significant underlying deficit and even if it achieves challenging annual cost savings it will continue to need substantial financial support from the Department of Health.

“It is therefore time for us as the sector regulator to step in and look for a solution that ensures services are provided for local patients on a sustainable basis. We have an open mind about the form that solution might take, but it must meet the needs of patients and taxpayers.”

Peterborough and Stamford interim chief executive Peter Reading observed that the National Audit Office had concluded the trust’s deficit was “too great for us to resolve on our own”. He said returning the trust to financial sustainability would require a “package of measures across the wider health economy of Peterborough, Cambridgeshire and Lincolnshire”.