Two more foundations trusts have been placed in significant breach of their terms of authorisation, taking the total to 15 of the 78 acute trusts regulated by Monitor.

Derby Hospitals and Queen Elizabeth Hospital King’s Lynn Foundation Trusts have been told they are breaching the terms.

Both were found to have breached “the general duty to exercise functions effectively, efficiently and economically” and their “governance” duty.

Derby, which is predicting a turnover of £421m in 2011-12, has changed its year-end forecast from a £2.4m surplus to a deficit of £2.2m.

Monitor’s report on the trust said the deficit figure was dependent on £2.7m of identified savings and a further £2.7m of unidentified cost savings” and that half of the former sum was at a “high or medium risk” of not being achieved.

A worst-case scenario would see the trust £3.6m in deficit by the end of the financial year.

A forecast from the trust in November showed liquidity falling to “a low point in summer 2012, leaving little headroom for a trust of this size”.

In its notice to the trust, the regulator said: “Monitor is concerned about the extent of financial governance weakness reported by the independent review of the trust’s finances and the impact that the transformation required to strengthen processes will have on the trust’s financial recovery.

“Monitor is concerned that the financial weaknesses described in the external review of financial governance such as the need for a finance committee were not acted on more quickly by the trust themselves.

“The board’s failure to stabilise the deteriorating cash position and deliver recurrent cost improvement programmes raises concerns about the board’s ability to drive improvement at the trust.

“Monitor acknowledges that the deterioration in cash was in part due to the ability of its commissioners to pay.”

Queen Elizabeth Hospital, King’s Lynn, has hired KPMG to help develop its savings plans for 2012-13 and 2013-14.

The £164m-turnover trust said its financial performance was lower than predicted because of “reduced clinical income caused by the April and May bank holidays and back ended phasing of the CIP programme”.

But Monitor found the trust had underperformed against its annual plan submitted to the regulator and a recovery plan made in month five.

The report said: “Delivery of the 2011-12 cost improvement programmes is at risk with the board forecasting 70 per cent delivery. The board has indicated a substantially increased CIP requirement in 2012-13 and 2013-14 to return the trust to a financially sustainable position.”

THe news came as Monitor confirmed another FT, Poole, had been lifted out of significant breach.

THe south coast acute trust was found in significant breach in July 2010 for failure to comply with its “general duty to exercise functions effectively, efficiently and economically” and governance.

Announcing the news on Monday Monitor director Richard Guest said: “Since being found to have breached its terms of authorisation, Poole Hospital has significantly improved its finances and strengthened its board. As a result, the trust is now in a stronger position to focus on delivering quality services for patients. This is the ultimate objective whenever we take regulatory action, and we are pleased to confirm that Poole Hospital has addressed our concerns.”

In a statement Derby Hospitals chief executive Sue James said the trust had been aware 2011-12 would be a difficult year.

She said: “This problem has arisen for two main reasons. Firstly, we have no financial surplus with which to cushion the impact of falls in the nationally set prices we are allowed to charge for our services. Secondly, trust budgets for healthcare have overspent; in particular we have spent £4million more than planned on medical staff costs, partly as a result of the continued increase in emergency admissions that the trust has seen over the last 12 months.

“The resulting reductions in income and increases in expenditure have caused problems which concern both Monitor and the trust board, but standards of care to patients have not been affected in any way.

“Like many other parts of the NHS, the financial challenges being faced by NHS Derby City and NHS Derbyshire County, the primary organisations that commission and pay us for the services we provide, are having a significant impact on us. However, we are working closely with these organisations, and the Southern Derbyshire Clinical Commissioning Group, to ensure that improvements in the financial standing of health services in Derbyshire do not materially affect patient services.

“We were always aware that this would be a difficult financial year and warned staff early on that we needed to make efficiencies both this year and next in order to sustain our financial stability.

“The cost improvement plans we made early in the year have now been implemented with the help and support of our staff. Unfortunately, these plans have not been sufficient to fully resolve our problems, because of the unexpected increases in costs we have seen  this year. However we have introduced further strict controls on costs, including a freeze on all non-clinical vacancies, which should help us to achieve our financial plans for the year which involved saving around £20m.

“Next year we plan to save another £21 million to balance our books. Our plans for these savings are well advanced and include schemes designed to make more efficient use of beds, theatres and outpatient clinics to transform our care so patients spend less time in hospital and require fewer follow-up appointments.  

“We will share with Monitor details of our proposals to improve our financial position and effectiveness, and meet with them regularly to update them on our progress.”