MANAGERS at Oxfordshire's largest hospital trust want to offer more private treatment to more overseas patients to help avoid cost-cutting measures later in the year.

The Oxford Radcliffe Hospitals NHS Trust has started a formal review of its finances after recording a deficit at the end of August and September - despite budgeting for a rolling surplus throughout the year.

Although the trust had forecast a £7m year-end surplus, a reduction in income from Oxfordshire Primary Care Trust has prompted directors to take action to prevent cuts in beds and staffing.

Plans to negotiate deals for treatment among foreign patients could help the situation, by increasing private income by £1m in 2007/8.

ORH spokesman Helen Peggs claimed that any increase in private work would not impinge on NHS care, and the opening of the cancer centre at the Churchill Hospital next summer would increase space for paid-for treatment.

She said: "We get a number of private patients from abroad all the time and we're looking to see if we can pull in some more because it's very lucrative.

"At the moment we don't have any big contracts from overseas, but when the cancer centre opens we'll have more capacity for private patients.

"There are very strict rules for how much private capacity we can do at an NHS hospital. We have to keep the NHS and private capacities separate, and at the moment we're waiting for the cancer centre to open for our private care to expand.

"We'd like to work with countries that traditionally send their patients here, such as some of the Arab states, but it's quite unpredictable why people choose to come here.

"There would be an opportunity to get overseas government contracts from places that pay for their patients to come here."

Although ORH directors started the 2007/8 financial year on a stable footing, they recorded a £282,000 deficit in August, compared to a budgeted £890,000 surplus, while in September the deficit was £950,000 - a £1.76m difference to the planned £810,000 surplus.

The sudden downturn in fortunes has been blamed on the PCT, which pays for all NHS treatment at the ORH and 'challenged' its invoice for the first financial quarter by £1.1m.

As a result, the ORH has initiated stricter controls around staff recruitment at its three hospitals, Oxford's John Radcliffe and Churchill Hospitals, and The Horton, Banbury. And top executives are heading discussions with their counterparts at the PCT, who have challenegd the quarter two payment.

Despite the financial problems, ORH managers have increased consultancy fees to private 'cost reduction experts' Kingsgate - fees that the trust is refusing to disclose to the public.

In a report to ORH board members yesterday, ORH finance director Chris Hurst warned that the budgeted £7m year-end surplus should be reduced to £4m to prevent cuts to both "capacity and operating costs".

He explained that the trust could not just do more NHS work to bring in extra revenue.

He said: "It is now clear there is a significant risk that the £7m planned surplus will not be achievable by the year-end without immediate management intervention.

"This is because the physical capacity limits of our services will act to increasingly constrain the required increase in monthly income as each month passes."

In a statement, the trust said the Kingsgate consultant had supported it through its successful £35m savings plan during 2006/7, and challenged many of the traditional ways the trust did things.

It continued: "Much of this work is continuing, and we continue to benefit from the advice of a representative of Kingsgate.

"He is currently working with staff to consider new areas where our systems and processes might be made more efficient.

"The fee is commercially confidential, but represents an extremely small percentage of the efficiencies already achieved."