Figures acquired by Monitor indicate that the Heart of England Foundation Trust is suffering from a serious financial deficit.
According to the health regulator, a lack of rigorous financial control at the foundation trust will lead to a deficit in the region of £63 million during the fiscal year.
Monitor has emphasised that it is essential for the Heart of England Foundation Trust to implement a recovery plan as soon as possible.
Papers published ahead of a board meeting show that spending on clinical staff has increased by 10 per cent this year alone at the Birmingham trust.
The documents indicate that the trust overspent by nearly £6.5 million in September, with a £7 million overspend in August.
Figures acquired from the Birmingham-based foundation trust indicate that the year-to-date deficit of the organisation is in the region of £36 million.
Mitigating action is clearly required immediately, with a likely deficit of £63 million resulting even if such initiatives are implemented.
A financial recovery plan, now being validated by consultancy EY and the trust’s new leadership, seeks to cut this to £32.8m.
Just last month, Dame Julie Moore and Jacqui Smith, the chief executive and chair of neighbouring University Hospitals Birmingham Foundation Trust respectively, were named as the new bosses of Heart of England Foundation Trust.
Based on documents provided by the board of the foundation trust, the deficit is reflective of the fact that investment has been required during the financial year in order to improve performance.
But Monitor stated that the deficit also indicated that the foundation trust had failed to display rigorous financial control during the assessed period.
Monitor sent improvement director Diane Whittingham to the trust in February to address Heart of England Foundation Trust’s failures against a range of performance targets.
Yet despite financial warnings from Monitor, the health regulator noted that the total medical expenditure of the foundation trust has risen by 10 per cent over the last 12 months.
Nursing spending had also shot up significantly, with Monitor assessing this as having increased by 11 per cent.
As a result of the deficit, cash reserves at the foundation trusts are significantly lower than anticipated.
The Heart of England Foundation Trust had a cash balance of just over £34 million in September. This was £37.5 million worse than expected.
With the foundation trust struggling with financial difficulties, the health regulator has put a financial recovery plan in place.
This initiative centres around measures to cut the volume and variations in price between locum doctors and temporary nursing staff.