FINANCE: Hull and East Yorkshire Hospitals Trust faces financial challenges as it battles to deliver a surplus this year and to plan for cost reductions in 2012-13.

A report to the board in January said: ‘We remain off track for the delivery of our planned surplus in 2011-12 with the main reason for the current shortfall being failure to achieve our CRES programme.’

Four health groups are significantly overspent but the trust is predicting a surplus in the range of £2m to £4m.

However, its financial problems are impacting on plans to move to foundation trust status with the SHA saying it needs more time to demonstrate its financial delivery before it can progress,

The trust is now looking at a tough financial plan for the coming year with a surplus target of £4.8m. However, to achieve this is will have to make cost savings of at least £22m and attract more work and achieve higher quality standards.

This would enable it to cope with a likely decline in income of £18m, partly due to reduced tariffs.