FINANCE: Debt and liquidity issues at West Hertfordshire Hospitals are listed as factors in an agreement about the trust’s foundation trust application.
The trust’s tripartite formal agreement with the Department of Health and East of England strategic health authority said the trust had “debt/liquidity issues” caused by:
- A cash loan of £11.2m taken out in March 2007 after the trust’s breakeven duty was recalibrated.
- A further liquidity loan for £7m taken out in March 2010 “to enable the Trust to achieve 10 days liquidity, the minimum required to become an FT”.
- A loan of £27m in 2007-08 to finance the Acute Admissions Unit (AAU). “The Trust expected this to be funded through [public dividend capital] but this was subsequently changed to a 10 year loan (though the life of the AAU is 60 years) at a high rate of interest of 5.5 per cent.”
The document said: “These factors have meant that the Trust has had to make very high levels of savings in order to generate sufficient surplus to address the £11.4m recalibrated deficit and to provide the cash needed to finance the loans resulting from the historical deficit. In addition, the AAU debt treatment and profile is much more onerous than had been expected.”
The trust has a cost improvement programme target of £19.3 for the 2011-12 financial year, equal to 7.5 per cent of the total income.