Hospital bosses in Newcastle believe they are halfway to plugging an £80 million cash shortfall.

The Newcastle upon Tyne Hospitals NHS Foundation Trust, which runs the Royal Victoria Infirmary and Freeman Hospital, recently warned that it was facing serious financial trouble after failing to make sufficient savings.

Trust chief executive Sir James Mackey reported in March that it was at risk of running out of money this September had it continued at its previous rate of spending and that bosses were working “rapidly to address that situation”.

City councillors have now been told that cost-cutting plans have managed to slash the hospitals’ estimated deficit for 2024/25 from £80 million to £40 million.

Rob Harrison, the trust’s new managing director, told the local authority’s health scrutiny committee on Thursday that bosses were hoping to get “as close as possible” to a balanced budget and that there was a “clear focus on doing it without affecting direct patient care”.

Mr Harrison outlined how the problem had arisen as the trust was meant to deliver £33 million in recurrent savings during the previous financial year – but had only managed to find £6 million of repeating, year-on-year savings and had been forced to rely on one-off cuts to balance the books instead.

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That came amid a backdrop of a damning Care Quality Commission (CQC) report and major management upheaval, with inspectors having downgraded Newcastle Hospitals from  ‘outstanding’ to ‘requires improvement’ earlier this year.

The trust had previously indicated to the Local Democracy Reporting Service that the required savings would be sought through removing waste and getting better value for money on contracts – and that redundancies were not under consideration.

Mr Harrison said on Thursday: “We are really focused on doing everything we can to protect frontline services. There are efficiencies we can make in clinical areas, but that is not the same as cutting those services.”

Suggesting that some buildings could be closed down to cut costs, he added: “We are looking at the estate we use. Buildings cost money and if there are opportunities to change how many buildings we use and keep their services, but run them in a different way, then we are going to look at that.”

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The CQC report issued in January criticised a  “significant deterioration” in leadership at the hospitals, which had previously been considered among the world’s best.

Inspectors highlighted particular concern over the Freeman’s cardiothoracic department, with claims of serious incidents being “deliberately covered up” and a culture of bullying.

The watchdog’s findings also included worries about a shortage of staffing in the RVI’s maternity unit, which left it unable to provide “basic fundamental standards of care”, as well as accusations of favouritism and nepotism within the trust.