FT faces 'absolutely enormous' £56m loss

Peterborough and Stamford Hospitals Foundation Trust had expected to get £22m in assistance with its £3m a month private finance initiative costs for Peterborough City Hospital. But it will instead take £45.7m in temporary public dividend capital to provide funds for it to continue operating.

The £22m has had to be added to its projected deficit for the year, taking it to £56.3m.

The trust has an income of around £220m a year - making the deficit equivalent to 25 per cent of its turnover, proportionately far larger than the deficits at South London Healthcare or Imperial College Healthcare.

Peter Reading, who took over as interim chief executive two days ago, said there was no date for the repayment of the temporary capital.

“The deficit is absolutely enormous and is not cleared by this injection - it just clears our cash position until the end of March,” he told HSJ.

The trust is now managing its cash on a daily basis “to ensure it meets its obligations to staff and suppliers,” according to the board papers.

Without the public dividend capital - the first payment of which came in February - or some other funding the trust would have run out of cash.  A report to the board says that as a result of the tight cash position, the trust is closely monitoring its payment runs to ensure key creditors are paid.

It has a working capital facility with Barclays Bank but cannot draw on this while it is in breach of its terms of authorisation with Monitor.

Dr Reading said the challenge now would be to deliver cost improvement programmes which would reduce the £4m monthly overspend.

The trust has already announced that 300 posts will go.

Dr Reading also wants to improve relations with local commissioners and to work with neighbouring hospitals to the north and west on potential service collaboration. He insisted that the smaller Stamford and Rutland Hospital would have a future within the trust providing local services.

But Dr Reading said that, even with these measures in place, the trust was likely to have a gap of over £20m a year - partly due to the cost of the PFI deal on Peterborough City Hospital. And he said that this would not be changed by organisational restructuring.

”You could hand this over to Circle or merge it with a neighbouring trust but all you would do is hand over a huge structural deficit,” he said.

“We are going to need some form of subsidy for the foreseeable future. The reality is you have to keep the doors open. We are the only hospital for 30 miles around.”

The trust is one of seven with heavy PFI costs which are able to bid for additional government money, provided they meet four tests.

Dr Reading - who has 20 years experience as both a permanent and interim chief executive - replaces Louise Barnett, who took over as interim chief executive when Nik Patten left last year because of illness. Ms Barnett returns to her role as director of human resources and organisational development.