08 October 2004
The Mid Yorkshire Hospitals NHS Trust pledged this week to achieve 'financial balance' by 2006, despite warnings from auditors that its £20m deficit could escalate to more than £40m.
The Audit Commission has referred the trust to Health Secretary John Reid, which means it believes there is little prospect of it reaching its statutory break-even duty in the next three to five years.
The trust, which has a £248m annual budget, has been beset by financial problems and received a no-star rating this year, largely due to its poor financial management.
Created two years ago from a merger of Dewsbury Health Care NHS Trust and Pinderfields & Pontefract Hospitals NHS Trust, it recorded a positive balance in 2002/03 only after a £12m cash injection from the strategic health authority. The Audit Commission said the merger had escalated the costs of running the trust, due to the number of its sites, while 'management issues' had ensured its financial problems went unresolved.
The trust, which was criticised in the commission's special interest report for not completing a recovery plan sooner, expects a £15.9m deficit this year and plans to break even by March 2006. However, it can meet this target only with severe cuts to staff pay and services. It has already earmarked £13m for 'savings'.
'There is no easy solution to the financial challenge,' said finance director Tony Waite. 'There are basically three ways to achieve service and financial balance – working more efficiently, increasing our income and reducing our expenditure. We are making progress in all three areas with the aim of achieving financial balance next year.'
A spokeswoman for the trust said its financial recovery plan would be complete by November and that the trust would not be cutting large parts of its services.
The special interest report is the first under new criteria for auditors set by the Audit Commission after North Bristol NHS Trust ran up a £60m deficit two years ago. Mike Langley, the acting associate director of the commission's auditor support team, said the scale of deficits was no longer the principal focus for auditors.
'If we have a body in financial difficulties we need to focus not on numbers but on the processes behind them and on how good the financial management process is.'
PFoct2004
