West Herts NHS Trust needs a cash injection "to become financially viable" after it finished the financial year with a £13.4 million deficit.
The ailing trust was left with just £1million in the pot on Monday, March 31 - enough to cover two days worth of running costs, and severely below the ten days’ operating expenditure that trusts are required to hold by the Department of Health.
But it recorded a year-end cash balance of £6.3million - the equivalent of eight days of operating expenditure - after holding back more than £5million owed on capital spending.
Now NHS executives are seeking funds from the NHS Trust Development Authority (NTDA) in a desperate bid to resolve its debilitating financial situation.
West Herts, which was given the worst possible financial risk rating, will as a minimum be subject to monthly reporting and could require performance management intervention.
In a statement to the board, Clare Stafford, acting chief financial officer, said the trust needs to "recover its financial credibility" and that it continues to work with the NTDA to "ensure sufficient cash is available to operate".
They will be submitting an application for cash to cover the deficit plan and capital spending, and detailing the trust’s existing financial commitments, to the NTDA no later than the end of June.
West Herts, along with all NHS Trusts, is legally required to break-even in terms of expenditure and income taking one year with the next. Should it not agree a resolution with the NTDA, West Herts will have failed in that obligation.
The trust has blamed the shortfall on a £7.4million "slippage on savings" and increased nursing costs.
The financial report states: "The deficit is mainly driven by underperformance against savings and expenditure above budgeted levels within nursing, medical pay and on drugs/clinical supplies."
West Herts achieved £7.6million of savings over the 12-month period - just 51 per cent of the planned savings.
Clare Stafford’s report said: "If continued, this will impact on the trust’s ability to become financially viable."
Samantha Jones, trust chief executive, said: "As a trust we are committed to providing the people of St Albans, Watford, Hemel Hempstead and surrounding areas with the best possible care in a safe and welcoming environment.
"With this in mind, over the past financial year we have invested an additional £7.9 million in schemes to improve the care we provide to our patients and to ensure we meet all of the required quality and safety standards. This included spending an additional £3.9million to recruit 160 new nurses to ensure our wards are staffed at appropriate levels.
"This significant investment, together with an increase in the number of emergency patients we treated which, in turn, impacted on the number of planned operations we were able to perform, led to the trust ending the financial year 2013/14 with a deficit of £13.4million.
"We are currently predicting to end the financial year 2014/15 with a £14million deficit and we are working with NTDA on an application for cash support.
"Moving forward, we are working with our doctors, nurses, midwives, other staff, patient representatives and NHS partners to develop a long term clinical strategy for our hospitals which will help ensure we are both clinically and financially viable for the longer term."