THE FINANCE chief at Dorset County Hospital has reassured fellow board members that the cash flow situation is stable despite the hospital missing out on a multi-million-pound loan.

Director of finance Bill Boa told a meeting of the Foundation Trust’s board that the hospital had finished the financial year with a deficit of £3.1million, compared to the £3.5million deficit it had predicted.

However, he said the hospital’s financial struggles over recent years had meant it still faced a significant cash flow problem.

He said: “One of the key issues facing the Foundation Trust is cash liquidity.

“Lots of companies disappear because they fail to manage their cash properly, not necessarily their profits.

“One of the issues the Trust has faced is the fact that the accumulated deficits of the trust has created a cash flow issue and we have, for a long time, been managing cash very tightly.”

Mr Boa said the hospital had been hoping to secure a ‘working capital facility’ – a kind of agreed overdraft – of between £6million and £8million from the Foundation Trust Financing Facility to ease the hospital’s cash flow situation.

He said: “We found out on March 31 that the Department of Health is unable to support a working capital facility for foundation trusts.

“That effectively means we have a cash issue at the trust.”

Mr Boa said the hospital was hoping for another £5million from the FTFF in the form of a capital bridging loan and will find out this week if that will come through.

However, Mr Boa said the Trust was currently in a strong cash position, with a balance of around £500,000 and forecast a £2million surplus for 2011/12.

He said reductions in capital spending and stretching out payments to creditors meant the Trust would be able survive in terms of cash flow even if it did not receive the £5million loan.

He said the Trust had also applied for a £4million loan to fund capital projects and was still in discussions over the funds.

Mr Boa said: “At the start of the year we forecast a deficit of £3.5million so we can take some solace in the fact that the position has improved but at the end of the day it is still a deficit.

“The trajectory of the Trust is back towards recovery, there are signs of a Trust that I would say is on track.”