Health watchdog Monitor is to draw up an action plan to ensure the long-term financial health of Peterborough City Hospital.
The regulator is putting together a team of experts to recommend a long-term solution for the financial viability of Peterborough and Stamford Hospitals NHS Foundation Trust, which runs the £289million Bretton-based hospital.
News of the action comes just hours before MPs on the House of Commons’ Public Accounts Committee are due to quiz trust chiefs about the decision in 2007 to build the new hospital.
Since the opening of the hospital in November 2010, the trust has faced a multi-million pound deficit.
In a recent report by the National Audit Office, the PAC committee chairman, Margaret Hodge MP, said that mismanagement, poor procurement and inadequate oversight had placed a stranglehold on the trust’s financial future.
But the report, which will fuel the committee’s questions, was critical of the trust, Monitor, the Department of Health and the Treasury for overlooking facts that indicated the hospital would be built at an unaffordable cost.
A Monitor spokesman said: “Monitor has been working with the Trust, the Department of Health and local NHS commissioners for some time on initiatives to bring down the Trust’s underlying deficit of about £45 million while maintaining the delivery of quality services for patients.
“The problems are partly due to the unaffordable private finance initiative (PFI) scheme on which the Trust embarked in 2007 to build the hospital, but also to wider issues within the local health economy.”
Monitor is appointing a Contingency Planning Team (CPT) to develop a plan which ensures the sustainability of services for patients and minimises the need for further funding from the taxpayer.
The team is expected to be appointed at the beginning of the New Year and report to Monitor in the spring.
Dr David Bennett, chief executive of Monitor said: “The reality is that the Trust has a significant underlying deficit and even if it achieves challenging annual cost savings it will continue to need substantial financial support from the Department of Health.
“It is therefore time for us as the sector regulator to step in and look for a solution that ensures services are provided for local patients on a sustainable basis.
“We have an open mind about the form that solution might take, but it must meet the needs of patients and taxpayers.”
Peter Reading, the trust’s interim chief executive of Peterborough and Stamford Hospitals NHS Foundation Trust, said: “This support from Monitor addresses the requirements the Trust board identified in August 2012 in our Summary Financial Plan, concerning the need for all organisations involved in the local health system to work together towards a more sustainable and efficient future.
“Indeed, the recent National Audit Office report said the Trust’s deficit was too great for us to resolve on our own, and called on us to work together with the Department of Health, Monitor and local commissioners on urgent action to help the Trust return to financial sustainability.
“This solution requires a package of measures across the wider health economy of Peterborough, Cambridgeshire and Lincolnshire.
“The Trust has appointed eight new directors since 2010 and the new team has had a very positive impact on patient care, clinical engagement, financial management and efficiency.
“In recent months the Trust has achieved all its performance and quality targets and is performing better than its financial plan.”