Administration fears for cash-strapped hospital
12:00pm Wednesday 20th February 2013 in News
BOLTON NHS Foundation Trust could go into administration if its financial situation does not improve.
From April, health watchdog, Monitor, will be given more powers by the Government under the Health and Social Care Act 2012, making it the regulator of all NHS providers. It means, under a new financial risk ratings system, Monitor could place trusts with the lowest score of one, such as Bolton, into administration.
Bolton was first classed as “red risk” by Monitor in April, 2012, for failing its governance duty and healthcare targets and had a score of two out of a possible five.
In August last year, when Monitor placed the Trust in “red risk” for financial failings, its score fell to one.
In a report, presented to the Trust’s board members, the new criteria for a level one says: “In extreme cases Monitor may consider the level of risk represents financial distress and initiate contingency planning to ensure continuity of services and access in the event of special administration.”
But Bolton NHS Foundation Trust’s interim chairman David Wakefield said the Trust, which under the current system is in “significant breach” and is a level one for financial risk, had an “ambitious” plan to “get out of breach” within the next 12 months to prevent it going into administration.
He added: “But if we don’t, we face the possibility where they say we have to protect A&E and children’s services and put the hospital into administration. That would include bringing in private providers.
“We are going to avoid that.”
Each month, Bolton loses between £1.5 million and £1.7 million.
The reasons for the losses are complex, but are mainly due to contracts, which means the Trust does not receive payment for all of its work but is capped at a certain level.
It was revealed earlier this month that the Trust’s debt has increased to £14.5 million with bosses preparing to be £18.6 million in deficit by the end of the financial year.
Monitor will only place a trust into administration after it has failed to deliver a “robust turnaround plan” and watchdog chiefs believe Bolton is on target to achieve that.
A spokesman for Monitor said: “Bolton is currently preparing a turnaround plan to put the Trust back in a position where quality services can be delivered on a sustainable basis. This is due at the end of March.
“If a trust with ongoing financial difficulties was not able to come up with and deliver a robust plan, Monitor could eventually decide to put a Contingency Planning Team in to develop a stronger plan. If a CPT was put in, it might under certain circumstances recommend the appointment of an administrator.”
The changes, which come into force in April, give Monitor more powers and include introducing a licence for trusts.
It is expected trusts in “significant breach”, including Bolton, will be given a licence with conditions.
Under the current system, financial risks are rated one to five, and governance risks are rated using a traffic lights system.
Bolton has the worst rating for both its financial state and its governance.
Of the country’s 144 NHS Foundation Trusts, only eight — including Bolton — have both a red risk and the risk level of one.
Trust bosses have been meeting every month with Monitor.
Bolton chairman, David Wakefield, who was appointed in August by Monitor, has been having monthly meetings with the watchdog, which he says have been “positive”.