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West Hertfordshire Hospitals NHS Trust heading for debts of £30 million
The NHS trust responsible for Watford General Hospital faces a financial crisis which could lead to it ending up with loan debts of nearly £30million.
The “worst case scenario” for West Hertfordshire Hospitals NHS Trust would see it going from having a current cash balance of £14m to being overdrawn by £10m in April 2014, putting staff pay at risk, were it not to seek financial help now.
In the Trust’s board meeting finance report on July 25, it was revealed “the forecast shows that, assuming all other events are as planned, cash will be overdrawn by January unless the Trust receives a loan or other cash support”.
The report added: “This situation would be unacceptable. The Trust continues to negotiate for further funding with the Department of Health.
“This has not been agreed. However, the NHS Trust Development Authority (TDA) has provided assurance the Trust will receive emergency cash funding if this is required.”
The Trust already has two historic loans (dating back to March 2008 and March 2010) with outstanding debts currently totalling £16.6 million.
In June, it applied for £12.7m which it may have to pay back too, depending on whether it is classed as a loan or a public dividend capital payment.
If it is classed as a loan, that would take the Trust’s debt up to £29.3m.
In a statement, the Trust said: “The current £14m cash ‘surplus’ includes £7m of ringfenced funding we have received from the Department of Health, which has been allocated for the link road, and a £6m prompt payment from our commissioners that we anticipate will reduce during the year.
“The £24m movement in the cash balance is a result of: n The £7m allocated for the link road being spent n The £6m prompt payment being reduced as we move through the year n Plans to spend £12.7m on improving the health and safety of our hospital estate (over and above our normal capital programme), subject to receipt of funding from the Department of Health applied for in June.
“Our projected closing cash balance does not, as would be expected, currently include the receipt of £12.7m funding from the Department of Health (as it has not been confirmed yet) and, therefore, is the reason for it showing as minus £10m.
“Our foundation trust application was temporarily delayed in the autumn of 2012 in agreement with our Primary Care Trust and Strategic Health Authority.
“We are now in the process of developing a revised clinical strategy which, combined with updated financial modelling, will allow us to agree a new timetable for achieving foundation trust status.
“As a trust, we forward plan the amount of cash we require and work with our clinical commissioning group and TDA colleagues to ensure suitable funding is available to enable us to meet our liabilities.”
The statement concludes: “Our cash balance does not affect our role within the Watford health campus project.”
In a statement, the Trust Development Authority, which sets out how hospitals can provide high quality services for their patients, said: “We are currently working with the trust on a capital and revenue loan application.”
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