Kent and Medway ICB £198m Deficit: Financial Crisis, Governance Failures and Hospital Performance Ratings Revealed

Exclusive analysis reveals severe financial pressures across Kent and Medway’s health system, with deficit support funding withdrawn and emergency measures implemented

Financial Crisis Deepens

NHS Kent and Medway is confronting one of the most serious financial crises in its history, with the Integrated Care Board (ICB) now forecasting a deficit of £198 million for the 2025/26 financial year—a dramatic deterioration that has triggered emergency intervention and external scrutiny.

The scale of the problem became clear in the organisation’s latest board papers, which reveal that the system has lost its eligibility for Deficit Support Funding (DSF)—a form of emergency financial assistance from NHS England provided to struggling organisations. This loss, combined with poor performance against targets, has created what the organisation describes as a “materialised risk.”

The £198 million deficit comprises three components: £148.7 million from adverse performance against plan, £49.3 million from the lost deficit support funding, and a further £9 million deterioration driven primarily by Medway Foundation Trust’s worsening financial position.

Emergency Review Commissioned

In response to the crisis, external consultancy firm EY has been commissioned to conduct two urgent reviews. The first examines the “drivers of the deficit”—essentially determining what has gone wrong and why costs have spiralled so dramatically beyond expectations. The second investigates the financial governance arrangements across the ICB and its partner organisations.

These reviews are expected to report by the end of January 2026, with findings formally presented to the Board in February. According to the documents, the review aims to ensure “robust governance structures are in place and that financial processes are transparent and accountable across the system.”

The need for such scrutiny became particularly apparent when Medway Foundation Trust reported a £9.6 million deterioration “very late in the process,” which documents describe as “strong evidence of poor financial forecasting and controls.”

System-Wide Performance Issues

The financial crisis is compounded by widespread operational challenges across Kent and Medway’s NHS providers. A sophisticated national oversight framework assigns each NHS trust a score from 1 (high performing) to 5 (requiring intensive support), based on performance across multiple domains including access to services, patient safety, workforce, and finances.

The latest quarterly assessments reveal concerning patterns:

Medway Foundation Trust has been placed in Segment 5—the Recovery Support Programme—reserved for “the most challenged providers in the country.” The trust scored 4 (low performing) overall, with particularly poor ratings for access to services, effectiveness and experience of care, and patient safety. Its performance league table position places it 133rd out of 134 acute hospital trusts nationally.

Key failures include being in the lowest quartile for cancer treatment waiting times, significant delays in discharging patients (averaging 1.5 days from when they’re medically ready to leave), and worrying patient safety metrics including infection rates.

East Kent Hospitals University Foundation Trust is rated Segment 3 (below average), scoring 96th out of 134 acute trusts nationally. The organisation has particular challenges with patient experience (scoring 4) and safety (also 4), alongside persistent problems with 12-hour waits in emergency departments.

Dartford and Gravesham NHS Trust, while slightly better positioned at 92nd nationally, has also been assigned Segment 3 status, with concerns about patient safety and cancer treatment times.

In contrast, Maidstone and Tunbridge Wells NHS Trust and both Kent Community Health NHS Foundation Trust and Kent and Medway Mental Health NHS Trust achieved Segment 1 ratings, indicating high performance.

Notably, —Dartford and Gravesham —fell from “fully compliant” to “substantially compliant” status due to changes in Data Security and Protection Toolkit (DSPT) standards, rather than deteriorating performance.

Why Deficit Support Funding Stopped

Deficit Support Funding is not automatic. NHS England provides it conditionally to organisations that demonstrate they are taking credible action to address their financial problems while meeting performance targets. The withdrawal of DSF from Kent and Medway indicates that NHS England has determined either that the organisation is not making sufficient progress, or that the scale of the problem has become unsustainable.

The documents reveal this became clear following a “Q2 close” review—the second quarter financial assessment covering July to September 2025. At an October meeting of the Productivity and Investment Committee, this cessation of DSF, combined with “compromised CIP [Cost Improvement Programme] delivery,” prompted serious questions about whether the organisation could realistically deliver its annual plan.

Cost Improvement Programmes are essentially efficiency savings that NHS organisations must make each year. The failure to deliver these, combined with what documents describe as “non-recurrent and over ambitious measures,” means the organisation has been spending money it doesn’t have on temporary fixes rather than addressing underlying structural problems.

Governance Failures and Procurement Concerns

Beyond the headline deficit figures, the board papers reveal significant concerns about basic governance and control systems.

The Audit and Risk Committee, which provides independent oversight, has escalated three serious concerns to the main Board:

Slow response to audit recommendations: Internal auditors expressed alarm at the “slow response to their reports and recommendations, even those marked urgent,” plus “reluctance to engage with audit planning.” The Committee warned that insufficient audits have been completed this year for the head of internal audit to form an opinion—a serious governance red flag that will inevitably trigger further external scrutiny.

Board Assurance Framework not maintained: The Committee emphasised that the Board Assurance Framework—a critical tool for tracking and managing strategic risks—”is only useful if it is kept up to date and focused on the risks in hand.” The implication is clear: it hasn’t been.

Pandemic preparedness concerns: Despite the recent COVID-19 pandemic, the Committee expressed concern that “the ICB has not learned lessons from the pandemic,” noting a tendency to wait for national inquiries and guidance rather than proactively preparing. With significant loss of “corporate memory” expected as staff leave during restructuring, the Committee requested urgent consideration of how the organisation would respond to a future pandemic “in the absence of national guidance.”

Additional concerns emerged around procurement. The Productivity and Investment Committee received a “Procurement Situation Report” in December and explicitly stated it “was not assured by the reports received.” This remains “a focus of the committee.”

In response, the Chief Executive has commissioned “an external review of procurement and contracting” to examine compliance with best practice and value for money. This review is expected to report by mid-February 2026.

Fraud Prevention Measures

On a more positive note, following the introduction of a new criminal offence of “Failure to prevent fraud,” the organisation commissioned a review of its anti-fraud policies and procedures. The Audit Committee confirmed that “systems are rigorous and the policies of the ICB have been updated to ensure compliance,” providing assurance that the organisation is “not unduly exposed to this new legislation.”

Mental Health Services Under Scrutiny

The financial and governance problems exist alongside significant quality and safety concerns in some services. The Improving Outcomes and Experience Committee raised particular alarm about adult mental health provision.

Kent and Medway Mental Health NHS Trust (recently renamed from KMPT) was inspected by the Care Quality Commission (CQC) in April 2025 and again in summer 2025. During and after this inspection phase, “inpatient deaths had been reported as well as a cluster of community deaths.”

A provisional CQC report outlined “serious concerns in adult mental health services in several areas,” resulting in a Section 29a warning notice—a formal regulatory intervention used when inspectors identify significant problems requiring immediate action. Enhanced oversight is now being implemented while the full report is awaited.

The Committee reflected that it “had been assured regarding adult mental services” previously, but that “sufficient concerns existed in April to warrant CQC review at that time”—suggesting warning signs may have been missed or downplayed.

These concerns have been formally escalated to the main Board, with the Committee requesting “a full report that would outline KMMH’s response (including timelines and outcomes) to the CQC findings regarding Adult MH services.”

Additionally, the Committee asked the Board to “consider enhanced support for the transition of children’s MH services to KMMH,” given the wider concerns about the organisation’s current state.

The Restructuring Context

These financial and performance problems are unfolding against a backdrop of massive organisational upheaval. NHS England has mandated a 50% reduction in ICB running costs, requiring Kent and Medway to operate within a £19-per-head-of-population allowance from April 2026.

The organisation is in the middle of a 45-day restructure consultation launched on 26 January 2026. The workforce is being reduced from 740 to around 320 staff by mid-2026. Already, 129 colleagues have agreed to leave through voluntary schemes, with further compulsory redundancies expected.

Several services are being transferred to NHS provider organisations:

• All Age Continuing Care and Medicines Optimisation functions moving to Kent Community Health NHS Foundation Trust (176 staff affected)
• Cancer Alliance and Diagnostics services transferring to Maidstone & Tunbridge Wells NHS Trust (11 staff)
• Health and Care Partnership teams moving to Kent and Medway Mental Health NHS Trust (16 staff)

The restructuring aims to transform the ICB from a large operational organisation into a smaller “strategic commissioner”—focusing on planning, contracting and oversight rather than direct service delivery.

What Happens Next?

The organisation has developed a “Reset, Recovery and Transformation” programme with several immediate priorities:

January-February 2026: EY reviews on deficit drivers and financial governance completed and reported to the Board. A system-wide financial recovery director is being recruited.

February 2026: Final response to EY findings informing the recovery plan. Given the scale of the deficit, “it is likely a further submission will be required” to NHS England.

March 2026: Restructure consultation closes, with outcome reports and final redundancies beginning from April.

The Chief Executive, Adam Doyle (who took up post in October 2025), has written to all NHS chief executives across the system setting out “the scale of the issues and the next steps,” including “procuring additional support, addressing the behaviours and processes which have inhibited recovery and placing the ICS in financial recovery.”

External support has already been commissioned from Adrian Roberts, an experienced NHS finance director, who reported to the December Productivity and Investment Committee. His observations highlighted “sustainability concerns, historic approaches (noting accumulation of system finance issues over the last few financial years), and the need for two or three big impact system programmes of change (e.g. patient flow, discharge and urgent and emergency care).”

Implications for Patients and Services

While much of this story concerns financial and governance technicalities, the real-world implications are significant. The documents reveal:

Waiting times continue to deteriorate: Despite national targets to eliminate 65-week waits by December 2025, some specialties (particularly ENT at Medway) will not achieve this. Over 52-week waits are also above target, mainly due to Medway’s position.

Emergency department pressures: Both Medway and East Kent Hospitals are “outliers” for 12-hour waits in emergency departments, affecting both physical and mental health patients.

Diagnostic delays: Significant backlogs persist in audiology (partly due to a national shortage of audiologists and a Kent-wide paediatric recall), some cardiac tests, and EEG scans.

Discharge delays: The average time from when a patient is medically ready to leave hospital to when they actually go home is 1.5 days at Medway—among the worst in the country. This creates bed shortages and contributes to emergency department overcrowding.

Primary care access: Patient satisfaction with booking GP appointments in Kent and Medway (61.3% describing it as “easy”) ranks 41st out of 42 ICB areas nationally—second worst in England.

The financial crisis may constrain the organisation’s ability to commission additional capacity to address these problems, creating a vicious cycle of poor performance and financial pressure.

The Broader Picture

Kent and Medway’s problems reflect wider NHS pressures, but the scale and severity here are exceptional. The documents reveal that the organisation’s spending on acute hospital care “is the highest in the South East,” with the Chief Executive focusing on this during the 2026/27 planning round.

A striking detail: when Adrian Roberts reviewed the system finances, he noted the “accumulation of system finance issues over the last few financial years”—suggesting this is not a sudden crisis but the culmination of longstanding structural problems that have been inadequately addressed.

The loss of deficit support funding, the need for multiple external reviews, the regulatory intervention in mental health services, and the governance concerns raised by the Audit Committee all point to an organisation that has lost grip of basic controls and accountability systems.

The question now is whether the combination of new leadership (Chief Executive Adam Doyle – pictured – started in October 2025), enforced restructuring, external reviews, and NHS England intervention can arrest the decline and establish a sustainable foundation. The EY reviews reporting in late January and February 2026 will be critical in determining the path forward—and may well result in even more stringent external oversight if they uncover further systemic problems.

For the 1.9 million people served by NHS Kent and Medway ICB, the coming months will be decisive in determining whether their health system can stabilise and begin improving, or whether further intervention and restructuring will be required.

The Shepway Vox Team

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