FINANCE: Worcestershire Acute Hospitals Trust has applied to the Department of Health for a £21m loan to shore up its finances, HSJ can reveal.
The trust has asked the DH for the working capital loan as it struggles with what it describes as its “legacy debt” which built up between 2002 and 2006. This led to it reporting a net deficit of £18.4m in 2011-12.
The loan request will be considered by the DH in December and if approved will be paid back over a period of seven years at an annual cost of £3m.
Worcestershire, which is at the centre of a major review of services to save £50m by 2015, plans to return to a financial surplus during 2012-13 and raise £3m from land disposals.
The trust’s board approved the loan application in order to be able to pay its creditors within the requirements of the Better Payment Practice Code, which the trust has signed up to.
It faces a number of financial challenges including the financial close on a £24m private finance initiative scheme to deliver radiotherapy services at the Worcestershire Royal Hospital from summer 2014.
It is also likely to require significant capital investment following the outcome of its joint services review which is expected to recommend the centralisation of accident and emergency and high risk surgical, children’s and women’s services at the Worcester Royal site.
Chris Tidman, director of resources at the trust, said: “A working capital loan application has been made to the Department of Health, which is due to be considered in December 2012.
“This is to address the trust’s poor liquidity rating, which relates to the legacy debt run up by the trust between 2002-2006.”
Information supplied to HSJ