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Peterborough and Stamford Hospitals NHS Foundation Trust is financially unsustainable in its current form, according to an independent report presented to health sector regulator Monitor.

The Contingency Planning Team (CPT) sent in by Monitor to protect the interest of local patients has found the Trust is clinically and operationally sustainable. In the CPT’s opinion clinical quality of patient care is appropriate and, on the whole, within expected performance levels.

However, the Trust built up a deficit of £37 million by the end of 2012-13, and needed one-off support from the Department of Health of £44.1 million. The Trust’s forecasts for the next five years show a continuing deficit of £38 million or more each year, and a cash shortfall of at least £40 million a year.

If there were no further support from the Department of Health, the Trust would not be able to pay its bills (such as for wages and supplies) as they fall due. Monitor is responsible for ensuring the continuity of services for patients and has been working with the Trust and commissioners to address this poor financial performance. We asked the CPT to work closely with patients’ representatives, commissioners and clinicians in the local area to identify options to make the Trust financially sustainable.

The CPT will shortly make an independent recommendation on the future configuration of services currently supplied by the Trust to ensure that they are delivered on a sustainable basis for the benefit of the local population.

Other findings of the report are:

• The estate issues contributed an estimated £22 million to the deficit and include the under-utilisation of Peterborough City Hospital. This figure will increase with the effect of inflation in coming years. The Trust has identified that three additional wards could be sited on the fourth floor of the hospital, potentially generating around £9 million of extra contribution.
• Peterborough City Hospital is provided under a PFI agreement that is costing £40m a year and has 31 years left to run. With inflation, the PFI is likely to represent a greater proportion of Trust costs in future years. However, ending the arrangement would trigger a very substantial one-off payment.
• In addition to the estates issue, the CPT identified that the deficit was partially caused by operational issues (such as £5 million of unpaid medical activity and £10 million of performance improvements which could be made) and are now factored in to the Trust’s forward plan.

Stephen Hay, Managing Director Provider Regulation said: “This report clearly shows that Peterborough and Stamford Hospitals NHS Foundation Trust is not financially sustainable. We now expect the CPT to advise us what practical options are available to close the financial gap and ensure continuity of service to patients.

"Monitor is ensuring the voice of patients and the local community are listened to, and that the health needs of local people will continue to be met for years to come."

Notes to editors

• For media enquiries please contact Emma Shepherd, Media Relations Manager, on 020 7340 2438 or (emma.shepherd@monitor.gov.uk)
• The report is available here.
• In 2007 Monitor expressed concerns about the affordability of the PFI deal, but our advice was not acted on by either the Trust, the Strategic Health Authority or the Department of Health
• Monitor is the sector regulator of NHS funded health care services. Under the Health and Social Care 2012 Act its main duty is to protect and promote the interests of patients
• Information about Monitor's role can be found here.
• Follow us on Twitter - @MonitorUpdate