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Up your game or risk erosion of your freedoms, foundation trusts warned

Performance to be rated on sliding scale for first time, pledges Monitor

Caroline White

Monday, 06 July 2015

The head of Monitor has told foundation trusts to up their game to bring down their collective debt mountain or risk the erosion of the freedoms they currently enjoy.

Addressing delegates last Friday at the annual conference of the Healthcare Financial Management Association, which represents the finance directors of all NHS organisations, Dr David Bennett, Monitor’s chief executive, said that foundation trusts had no option but to redouble their efforts to make a dent in their £989 million projected deficit for 2015-16—a sum that was simply unaffordable, he said.

Foundation trusts had generally not taken advantage of their freedoms to improve performance fast enough, and had been too slow to adopt best practice in efficiency, he said, promising to rate all foundation trusts on a sliding scale for the first time as part of a further clamp down on poor financial and operational performance.

He suggested that individual trusts would have to cooperate with their neighbours and commissioners to organise services in the most efficient way possible, even if that sometimes meant giving up the provision of some medical specialities to others.

“The NHS is in the difficult position of having to design its future at the same time as fixing its present. The Five Year Forward View sets out a vision for how the NHS needs to change but it is going to be hard work getting there, especially as we have a huge challenge on our hands right now,” he said.

“I recognise that just because deficits mostly sit with providers doesn’t mean they are the only NHS organisations that need to up their game. Nevertheless, current plans are unaffordable, and all providers have to make a major contribution to efficiency improvements, even those who aren’t currently forecasting to be in deficit.

“This means hospitals leaving no stone unturned, and adopting best and better practice everywhere; avoiding unnecessary expenditure, and adopting new ways of working,” he emphasised.

While he acknowledged that, on balance, foundation trusts were the best managed NHS providers, they would have to do better if they didn’t want to see their freedoms eroded.

“We have to do better, especially if freedoms are not to be completely eroded. We want to work with you to redesign patient services across organisational boundaries, where there may be some winners and some losers.

“We are not advocating the closure of vital hospital services, but we recognise that in some places they can be run better on a shared basis by trusts within a geographical area, for example through clinical networking arrangements,” he said.

Dr Bennett said that Monitor would act sooner over underperformance and demand faster responses. Trusts found in breach of their licence would be ranked according to the seriousness of their financial and operational problems, echoing the Special Measures regime for inadequate care.

But he also promised more practical support for foundation trusts in difficulty, through buddying arrangements, and the creation of a pool of troubleshooters to turn round struggling trusts. 

He also backed those trusts willing to take over the running of others in difficulty – although he warned it could take years to establish successful chains of hospitals.

Acknowledging that the NHS payment system had put the onus on providers to make efficiencies in the past, Dr Bennett signalled that commissioners would have to play an increasing part, managing demand and redesigning services, so that they could be delivered more efficiently whilst also better meeting the needs of patients.

And he insisted that central controls on foundation trust spending like agency staffing and management consultancy must be applied.

“We must be careful not to throw the baby out with the bathwater. The idea that we have empowered local leaders to focus on what they need to do, not bombard them with requests for information, or worse still try to manage their trusts for them, remains critical to the FT model,” he said.

Chris Hopson, chief executive of NHS Providers, said the network shared Monitor’s concern over the size of the financial challenge facing the NHS in 2015-16, but commissioners, the Department of Health and the arms length bodies also had a collective responsibility to ensure that the NHS stayed within budget.

But there was a distinction to be made between long-term efficiencies, which required time, investment and planning and short-term efficiencies, which demanded urgent action.

If current plans to reduce overheads proved insufficient to plug the spending gap, “as a system, tough choices will be needed as well as honesty and realism about the severity and speed with which action is needed,” he said.

“If the NHS budget cannot be increased, we need to come together as a single system to work out what else can be changed, be it planned commissioner surpluses or contingencies, staff numbers, waiting lists / access to services or capital spend. NHS Providers and its members are already discussing what further contribution the provider sector could make here.”

But he cautioned: “Whatever is decided and however great the pressure, we need to resist the temptation to think that these issues are best addressed by reverting to command and control and eroding provider freedoms. The way to meet this challenge is to enable, support and empower providers, rather than threatening or neutering them.”

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