• Gloucestershire Hospitals Foundation Trust moved out of special measures
  • Trust spent two years in financial special measures after damning report into financial governance
  • Trust ran underlying deficit for years before it was revealed

A hospital trust has moved out of financial special measures, two years after it revealed a large, unexplained deficit.

Gloucester Hospitals Foundation Trust was last week moved out of the financial special measures designation by NHS Improvement, which said the trust’s financial governance had improved.

The £509m-turnover organisation was placed into the most severe category by the regulator in October 2016, shortly after its finance director Helen Simpson and chief executive Frank Harsent left.

The board has been substantially overhauled since then, with a new chief executive, finance director, chief operating officer and the replacement of all non-executive directors.

The trust reported surpluses in 2014-15 and 2015-16. But, in March 2016, it had to ask for a loan from the Department of Health, followed by distressed provider funding in September 2016.

The trust’s 2016-17 position moved from a predicted surplus of £5.6m to a deficit of £18m. Analysis from an accountancy firm later revealed the trust had actually been running deficits of more than £14m in both these years.

A summary of a report from Deloitte, ordered by the regulators, said: “It became increasingly apparent to board members in the course of 2016 that the trust has an underlying financial issue.

“The extent of the underlying problem has apparently come as a surprise to a number of current and former board members.”

Deloitte added: “We have received a number of accounts in relation to [financial] accounts in relation to reports being refined by the former FD or senior members of the finance team prior to them being presented to board or committees, with these changes motivated by a desire to present a positive picture to the board.”

It also said Dr Harsent had “managed the information shared with non-executive directors and actively curtailed NED challenge”.

Even then, the board should have been able to spot signs the situation was not as rosy as presented, the report said.

“There were a host of indicators in financial reports for the duration of our review period… including: significant swings in divisional performance; non-recurrent delivery of cost improvement programmes; overspend on agency costs; a consistently low cash level; and deterioration in the Better Payment Practice Code”, it said.

The BPPC says trusts should pay 95 per cent of their suppliers within 30 days. The trust’s performance fell from 95 per cent to 39 per cent over an 18-month period.

Deloitte’s report continued: “A number of incorrect accounting adjustments were also made, all of which made the reported position more favourable. The former finance director had overall responsibility for these actions.”

A new finance director, Sarah Stansfield, was appointed in June this year, after two years as director of operational finance.

The trust is now predicting a deficit of £22.7m, £3.8m worse than its control total for 2018-19.

NHSI’s deputy chief executive Stephen Hay said in a statement: “This reflects the hard work of all staff – from board level right through to the front-line clinical staff and support teams – to really address the underlying financial issues of the organisation.

“There is still more to do, but we are confident the trust has the capability to continue to deliver its plan and work towards financial balance, as well as delivering high quality care for local patients.”

Trust chair Peter Lachecki said: “This is a significant achievement and the board would like to thank all of our staff who have helped to embed a culture of robust financial management whilst continuing to deliver increasingly high quality and sustainable patient services.”