FINANCE: West Hertfordshire Hospital Trust will need to improve operational efficiency if it is to have the money to support strategic change, the board heard.

Finance director Anna Anderson said that estate rationalisation would be needed to reduce costs and that space should be seen as a “free good”. The trust wants to redevelop its Watford site but funding constraints meant that this would be likely to be done incrementally, partly funded by estate sales.

The trust has loans of £24m which is it looking to reschedule over a longer period, if the Department of Health agrees. It took out a large loan to finance its acute admissions unit at Watford which it has had to pay back over 10 years at 5.5 per cent interest.

The trust needs to change its loan terms to improve its cash balance position - it is applying for foundation trust status and is required to have 10 days’ cash in hand. A finance report to the board suggested that could be £6.5m but without changes to the loan terms the actual cash balance could fall as low as £0.5m at the end of the year. 

Ms Anderson warned that any additional borrowing would need to guarantee savings and offer rapid payback.