Health regulators have stepped in at a debt-ridden NHS trust because it lost almost £6m in the first three months of the financial year.
Monitor – which regulates NHS Foundation Trusts – announced it was taking action at Sherwood Forest Hospitals NHS Foundation Trust in Nottinghamshire because its financial performance has deteriorated.
The trust, which is grappling with private finance initiative (PFI) repayments, was found to be in “significant breach of two terms of its authorisation”, Monitor said.
NHS Foundation Trusts are a supposed marker of excellence within the NHS.
Monitor said the trust had breached the terms of its “governance duty” and the general duty to exercise its functions effectively, efficiently and economically.
The regulator’s chief operating officer, Stephen Hay, said: “Monitor has stepped in because the trust’s financial performance has deteriorated.
“It failed to deliver recurrent savings of £10m in the last financial year and made a £5.9m loss in quarter one this year.
“We had already increased our regulatory scrutiny because of financial and governance concerns.”
A spokeswoman said Monitor’s board would meet to consider what regulatory action to take against the trust.
The news comes just days after it emerged that Monitor would not award Foundation Trusts status to 11 other trusts if they were to apply for it today.
Those trusts are also in serious financial difficulties, the regulator’s chief executive, David Bennett, told MPs.
He also said that Peterborough and Stamford Hospitals NHS Foundation Trust is struggling with PFI repayments along with Sherwood Forest.
Sherwood Forest, which was awarded Foundation Trust status in 2007, serves a population of 418,000 people across Nottinghamshire as well as parts of Derbyshire and Lincolnshire.
The trust runs King’s Mill Hospital in Sutton-in-Ashfield, and Newark Hospital.
Chairman Tracy Doucet said: “We fully acknowledge the importance of delivering our cost-reduction plans. At the same time, however, we must ensure we can safely meet additional demand for our services and ensure we deliver efficiencies and plans at a pace which maintains safe and high-quality care.”