Health watchdog Monitor has put forward four recommendations to help Peterborough and Stamford Hospitals Trust reduce the deficit it faces as it tries to pay off the public finance agreement used to build Peterborough City Hospital.
The trust is fighting to reduce an annual deficit of £40m, which the Department for Health is currently making up.
The recommendations are to invite tenders from private and public providers to make better use of the Peterborough City Hospital site; for the trust to make efficiency savings of £10m per year; to form a regional steering group to encourage more co-operation between neighbouring health services; and seek Government funding to make up any residual deficit.
Monitor has secured a formal agreement with the trust to make sure these recommendations are followed over a period of five years.
Chairman and chief executive officer of Monitor Dr David Bennett said: “The plans proposed by the team of experts we sent in, which the trust has committed to implement, represent the best possible answer to an otherwise intractable financial problem.
“It secures services for patients in the long run, and also offers the opportunity for new treatments and services to be developed in the future.”
The tendering process could see several partners, both public and private, brought in to develop the hospital site and fill extra capacity.
The trust has agreed to make better use of its facilities in Peterborough.
The hospital currently has 600 beds. Monitor believes an extra 100 could be created by converting the fourth floor, which is primarily offices, bringing in an estimated £9m per year.
More could be created by building three extra wards outside the main building.
And in the future more beds could be freed up by moving hospital-based services into the community.
The trust has been encouraged to work more closely with neighbouring facilities to achieve its aims.
To help with this a Peterborough Region Steering Group will be set up, comprising clinical commissioning groups, the trust and other stakeholders.
Monitor believes over time up to 300 extra beds could be created, bringing in extra revenue for the trust.
The watchdog also found the trust was not paid for £5m of the services it delivered in the last financial year.
Interim chief executive at the trust Dr Peter Reading said: “It is good news for our patients that both our hospitals will stay open and hopefully deliver an even wider range of services in the future.
“However, we owe it to the next generation of taxpayers to minimise the deficit where we can.”