THE redevelopment of Watford General Hospital will face significant difficulties unless the local health trust can balance its books, a meeting heard on Monday, August 1.

Chief executive of West Herts Hospital Trust, David Law, said: "If we do not get into balance we will not be attractive to the private sector."

He was speaking at a meeting of the West Herts Patient and Public Involvement Forum held at Watford Town Hall.

About 40 people attended, listened to Mr Law's presentation and then quizzed him on issues ranging from the structure of the trust's recovery plans to cleanliness in its hospitals.

Chair of the forum, Edith Glatter, said: "I very much hope Watford gets a new hospital.

"I really hope the trust sorts out its finances, but on the basis of past performance I am not confident they will be able to do this.

"I would like to have seen a much more in-depth study on the causes of this overspending before all these changes were decided."

The trust needs to attract private investors for the new hospital to be built in 2013, but finished its last financial year with a £13m deficit.

It forecasts that this deficit will increase to about £30m by the end of this financial year in 2006, if the trust's management does not attempt to rectify the situation.

Mr Law said he was confident the trust would achieve financial stability and determined that the new hospital will be built.

He said some of the problems, which have led to 15 years of overspending on health in this area of Hertfordshire, were no longer intractable and the trust could now address them with the help of the Investing In Your Health agreement.

When it was formed five years ago, the trust had an overhanging deficit of £17m written off, but overspent in 2001/02 by £11.5m.

In the following financial year, the trust benefited from a £20m NHS cash injection, masking its £8.5m deficit for that year.

The £11.6m surplus left over from that injection did not prevent the trust failing to balance its books the year after, ending the period with a deficit of £4.6m.

In 2004/05, the deficit increased to £10m, but the trust remains confident that it can halt this trend.

Mr Law said: "We can improve our financial management.

"We have had seven finance directors in seven years, which does not help to foster stability. We need to improve our financial systems and controls, develop a stronger focus on value for money and ensure clinical staff are 0financially aware."

Aside from improving its financial management the trust is looking at various options to solve the problems in west Hertfordshire.

It is currently engaged in a feasibility study, which will conclude later this month, to see whether it would be possible to move some of its acute services from Hemel Hempstead to Watford.

This would reduce the duplication of services across hospitals in the area and cut costs.

Concerns were raised by members of the public that the study could find in favour of moving services irrespective of the impact on the Watford site. Mr Law said the move would provide a better service to patients in the area but was not a done deal.

He said the impact of multi-site working on the trust was about £5m each year. Other problems faced by the trust include a high level of clinical staff vacancies, the poor state of repair of existing facilities and the Government's focus on meeting access targets, all of which cost money.

Other drains on trust resources include new nationally negotiated payments to consultants, a pension shortfall and investment in emergency care.

It was announced in May that 90 beds would be lost across the trust as a result of the deficit, of these, Watford General will lose 50.

Last week the trust was awarded one star out of three by the Healthcare Commission.

Nationally, a third of acute healthcare trusts, which deal with patients using emergency facilities, are in deficit.