FINANCE: A ‘lack of rigorous financial control’ at Heart of England Foundation Trust will lead to a £63m deficit this year unless a new recovery plan can improve its position, its latest reports show.
Papers published ahead of a board meeting tomorrow show that spending on clinical staff has increased by 10 per cent this year at the Birmingham trust.
The papers show that the trust overspent by £6.4m in September – a small improvement on the £7m overspend the month before. This meant the trust ran a year to date deficit of £35.9m in the first half of 2015-16.
Without mitigating action, HEFT would finish the year £63m in the red, against a planned deficit of £9.9m at the start of the financial year. A financial recovery plan, now being validated by consultancy EY and the trust’s new leadership, seeks to cut this to £32.8m.
It was announced last month that Dame Julie Moore and Jacqui Smith, the chief executive and chair of neighbouring University Hospitals Birmingham FT respectively, are to take over the running of HEFT.
The board papers say the trust’s deficit “partly reflects the investment required during the year to improve our performance and significantly reduce our performance fines going into 2016-17, but it also reflects our current lack of rigorous financial control over how we commit our funds”.
The trust is understood to have opened new wards, bought additional capacity from the private sector and hired extra staff in its emergency department in a bid to improve performance on emergency and elective waiting times.
Monitor sent improvement director Diane Whittingham to the trust in February to address HEFT’s failures against a range of performance targets.
However, as a result the trust’s total medical expenditure has risen by 10 per cent over the past 12 months, while nursing spend increased by 11 per cent.
The financial recovery plan includes measures to cut the volume and variations in price between locum doctors and temporary nursing staff.
HSJ understands that moving from a locally negotiated block contract to the “payment by results” tariff has also contributed to the deficit, as the trust is now incurring fines for poor performance, while it is also believed that some activity is not being properly recorded or billed.
As a result of the deficit, HEFT’s cash balances are running much lower than planned. At September the trust had £34.1m in cash – £37.5m worse than planned. The trust has developed a plan to protect cash balances, the board papers say.
Board papers and information provided to HSJ