A top NHS manager drafted in to troubleshoot at a London trust facing a £6m deficit has admitted his own trust has run up a £3m bad debts loss.

St Mary's trust in Paddington is advertising this week for a permanent chief executive, following the revelation that under its acting chief executive, David Highton, the finances of Chelsea and Westminster Healthcare trust went 'from bad to worse'.

Chelsea and Westminster trust, where Mr Highton has been chief executive since 1994, has had to write off£3m in uncollected debts from health authorities and GP fundholders.

Under internal market rules, if a trust fails to send out its invoices within six weeks, the money is permanently lost. Only about half of the amount is covered by the trust's bad debt provision.

Mr Highton, who joined St Mary's in September, admitted it was 'upsetting' to be facing a deficit at Chelsea and Westminster.

'We didn't chase health authorities and fundholders promptly, we made mistakes, the computer made mistakes, and, as happens in these matters, things slipped from bad to worse.'

Mr Highton, a qualified accountant, added: 'Any chief executive, whether they had a financial background or not, would find this a little bit embarrassing. I don't think it has affected my secondment to St Mary's.

'We have hit our financial targets for the last four years and it grieves me that we may not this year.'

St Mary's chair, Trevor Campbell-Davis, was drafted in last summer by former health minister Alan Milburn to 'sort out' the trust's financial problems, which resulted in the departure of former chief executive Pat McCann.

Mr Campbell-Davis told HSJ that he had only recently found out about Chelsea and Westminster's financial difficulties. 'I'm as surprised as everybody else.

'Surprised and concerned because it requires David to go back and spend time at Chelsea and Westminster as well as here. It's another reason why we are advertising this week for a substantive post.'

Asked if he still believed Mr Highton had been the right choice for St Mary's, Mr Campbell-Davis replied: 'It's an impossible question to answer. He was put forward to me very early on as a credible candidate, and I was satisfied. One really couldn't say.'

A study by Finnamore Management Consultants has revealed that the trust's recovery plan failed to generate the hoped-for level of improvements in this financial year.

A deficit of nearly£6m, instead of the planned£5m, is now expected. Mr Campbell-Davis emphasised the recovery plan had succeeded in shaving£2m off the deficit.

The consultants' report found core services were underfunded by purchasers and it also identified failings in financial controls, performance management and strategic thinking.

'Our purchasers are being very helpful about the funding issue, but they want evidence of increasing financial controls.

'We are working with them to ensure financial management is made much stronger,' said Mr Campbell-Davis.

He added that the management team has been strengthened by two new appointments, finance director Simon Milligan and head of information technology Gerard Traynor.

Meanwhile, an internal action team is tackling the deficit at Chelsea and Westminster and will report to the board on 28 January.

Better invoicing and a new computer system are the keys to its recovery plan.

'We have now stopped the rot,' insisted Mr Highton.