Dorset County Hospital has taken another major stride forward in its financial recovery.

The Dorchester hospital, which was saddled with a deficit of over £5million just two years ago, has been recognised for its efforts in turning around its fortunes by independent regulator Monitor.

The Dorset County Hospital NHS Foundation Trust board has been informed by Monitor that its financial risk rating is now at three and its governance rating is green.

Trusts are rated between one and five for their finances, with one the highest risk and five the lowest.

At the start of the 2011/12 financial year Dorset County Hospital has one rating for finance and a red governance rating.

The trust has made considerable efforts to turn around its finances, with a surplus predicted for the current financial year in stark contrast to the situation where the hospital was at the start of 2010/11 with a deficit of £5.1million.

The trust’s chief executive Jean O’Callaghan said: “These latest ratings show just how far we have come in the last year.

“We are delighted that the green rating for governance recognises that, despite the financial pressures the trust has been under, we have improved the quality of patient services. Full credit for this goes to our staff who have worked extremely hard to ensure that we can make savings without impacting on standards of patient care.”

Mrs O’Callaghan added that, although the news of Monitor’s rating was welcome, the hospital would not be resting on its laurels as it faced a difficult challenge to continue to keep up with its finances and maintain high standards of patient care.

She said: “Despite this success, we recognise that there is no room for complacency and the year ahead will be no less challenging.”

Chairman Dr Jeffrey Ellwood also welcomed Monitor’s recognition of the efforts made by the trust.

He said: “This could not have happened without the total support and commitment of all our staff, the board, Council of Governors and stakeholders, all of which have played a vital role in securing the future of Dorset County Hospital as a leading acute provider for the local community.”