THE AUDIT Commission report, which covers the 2009/10 financial year, criticises the previous trust board at the Dorset County Hospital NHS Foundation Trust but also raises concerns over the actions of the current board.

It describes the trust’s financial position as weak and says the hospital could face running out of cash to pay suppliers and staff.

The auditor states: “The previous trust board displayed poor financial leadership; it did not undertake effective strategic and capacity planning; did not achieve cost improvement plans; allowed staff costs to increase faster than income and failed to address issues of capacity and productivity.

“The current board has yet to efficiently tackle this situation and finalise a plan to achieve a stable financial position.”

The report says the trust only achieved £3million of its planned £6.8million efficiency savings over the year.

It says if no corrective action is taken a further deficit of £9million could be incurred in 2010/11, with the figure rising to £26million by March 2015.

The auditor says that the trust’s current recovery plan to achieve savings without any compulsory redundancies carries a number of risks.

These include not being able to predict accurately which staff will choose to leave and when, and potential increased short-term costs due to changes in the organisational structure.

The report states: “The fundamental weakness of the current plan is that it does not show how the trust’s finances will be brought back into balance.

“Despite proposing significant savings, the trust forecasts ongoing deficits and planned cost reductions will not bring spending in line with income in any of the following five years.

“This is clearly not sustainable.

“At the most basic level the trust will run out of cash to pay its creditors and staff without external support.”

A hospital spokesman responded: “We have put processes in place to manage our cash flow more effectively.

“We can assure staff and contractors that they will continue to be paid.”

* THE AUDITOR claims the large fees spent on consultants and interim directors has contributed to the hospital’s financial problems.

The report states that the hospital spent nearly £2million on interim directors and consultants in the 2009/10 financial year.

The Echo revealed exclusively that interim chief executive Derek Smith alone cost the hospital £248,041 for just 97 days work.

The auditor states: “The trust has spent nearly £2million on interim directors in 2009/10 and yet, as highlighted elsewhere in this report, has not made satisfactory progress with addressing the financial problems that it faces.

“I am also of the view that the trust paid insufficient attention to the cost of these interim appointments and consultants and whether this represented good value for money.”

The report adds: “Such costs on interims and management consultants are not sustainable in the long term and have contributed to the trust’s financial deficit.”

* THE HOSPITAL’S appointments of consultants and interim directors also come under scrutiny in the report.

It claims that there is no evidence that the contract for consultants working on the recovery plan was properly advertised in accordance with European Union rules.

The auditor states the matter has been referred to the hospital regulator Monitor for further consideration.

The report also states the trust had not demonstrated it had considered a range of options before appointing interim directors or how it considered whether the proposed rates were reasonable to ensure it achieved value for money.

The auditor identifies further ‘procedural weaknesses’ in the interview process.

The report added that there were ‘some significant weaknesses in some of the trust’s processes’ in dealing with the termination of contracts of previous employees.

A hospital spokesman said that the report outlined how the trust had since undertaken training on EU procurement regulations and a review was being conducted by the director of finances and resources.

A spokesman for Monitor said: “The terms of authorisation for all NHS foundation trusts require them to comply with the law.

“As Dorset County Hospitals NHS Foundation Trust has already been found in significant breach of its terms of authorisation and is in the process of strengthening its executive team, it is not Monitor’s intention to take further action at this time.

“However, the Audit Commission made several specific recommendations within its report, which we would fully expect the trust to implement.”