- Kingston Hospital FT depended on working capital facility from commercial bank for cash flow
- Trust initially made arrangement with Lloyds Bank to qualify for FT status
- Provider applied to ITFF so it could stop using the bank deal
A London foundation trust was relying on a working capital facility from Lloyds Bank to pay staff each month, documents released to HSJ reveal.
Kingston Hospital Foundation Trust, in the south west of the capital, originally made the arrangement with the commercial bank to qualify for FT status, according to papers submitted to the Department of Health’s independent trust finance facility.
In February, the £250m turnover provider made a £10m application to the ITFF so it could stop using the arrangement with Lloyds.
The documents submitted to the ITFF committee, obtained under the Freedom of Information Act, showed Kingston had an underlying deficit of £4.2m in 2016-17 when sustainability and transformation funding payments of £8.1m were stripped out.
The ITFF report said: “The trust is drawing upon the Lloyds working capital facility and repaying again each month in order to maintain cash levels above £1m. This is in addition to managing the creditor position very tightly, with payments currently being made approximately two weeks after due date.
“Whilst this alleviates the cash position temporarily, as the year progresses the trust is continuing to incur higher costs associated with increasing levels of activity without payment for overperformance from commissioners.
“This means they anticipate the need to seek an alternative, more permanent level of funding to support cash flow.”
The report said the trust originally took out the £6m working capital facility to become a foundation trust, which it did in 2013.
The trust confirmed it had paid £147,000 in fees over the four years the arrangement ran and £33,499 over the two years it was utilised, 2016-17 and 2017-18.
The £10m loan from the Department of Health has now been agreed.
The only other trust in south west London to achieve foundation trust status is St George’s University Hospital FT. This process was subsequently revealed to have been significantly flawed when the organisation plunged into deficit shortly after authorisation.
A subsequent report into St George’s, which the trust refused to release, found significant issues in financial management, Monitor’s approval process and auditing.
A spokeswoman for the trust said: ”The facility with Lloyds Bank was utilised as planned while the trust negotiated an alternative arrangement with the Department of Health and was a temporary, short term measure.”
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Information provided to HSJ