22 October 2004
A flagship foundation trust has lost its finance director and faces action from its regulator after it was revealed it could overspend by £4m this year.
Regulator Bill Moyes issued his first formal notice to a foundation trust after becoming worried about the financial position of Bradford Teaching Hospitals Foundation Trust. The regulator will work with the trust and external advisers to form a financial recovery plan over the next two weeks.
'The current financial position at Bradford in no way affects the quality of care for patients,' Moyes stressed. 'However, it is important that there is a robust plan in place to improve the trust's financial position.'
Moyes has the power to remove directors and governors and appoint interim replacements. However, he has not exercised these at Bradford – finance director Paul Earp said he had chosen to leave of his own accord to improve his work-life balance.
'I had been thinking of leaving the trust for quite some time but was determined to help the trust in the run-up to, and immediate period following, its creation as a foundation trust. Now it is established, and is six months into its new life, I feel the time is right to leave,' he added.
The intervention comes as doubts increase over the pace of the foundation programme roll-out. This week, Moyes also announced that he was deferring the third and fourth waves by two months.
Nine trusts will now hear the results of their bids on January 1 rather than November 1, while a further 11 will have to wait until April 1 rather than February 1.
Moyes said he had taken the decision to allow the trusts more time to assess the impact of the 2005/06 tariff for treatment under the new payment by results system. The Department of Health published the tariff on October 20.
The Bradford trust put its financial problems down to a number of factors.
These included early implementation of the payment by results initiative and cost pressures that are affecting the rest of the NHS, such as the new consultant contract.
While costs have risen, there has been a shortfall in its income. An 'antiquated' IT system affected its cash flow by delaying accurate invoice and activity information.
Trust chief executive David Jackson said that it had treated 1,200 patients more than planned so far this year but this increased activity was in acute admissions. As a result, the trust had treated 988 fewer elective patients than planned.
Since the acute admissions had exceeded commissioners' expectations, the trust may not necessarily be paid for them. And it could lose the 988 elective patients, and the income they would have brought in, to other units.
Unlike non-foundation trusts it could not access loans from other parts of the NHS to help with cash flow problems.
Jackson said: 'While we remain on course to drive down waiting times and waiting lists, we recognise that alongside this achievement we do face a number of financial uncertainties.'
PFoct2004
