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Struggling FTs may face insolvency regime in 2013-14 - Hay

Monitor may need to place some NHS foundation trusts in administration as soon as 2013-14 – the first year its powers to do so take effect, the regulator’s chief operating officer has suggested.

Stephen Hay told a conference of private healthcare executives this week: “We’ve got to get away from this concept that the FTs are some kind of elite, and are going to be immune to failing to take out costs and falling revenue lines which will result in potential financial failure.

“But we now have a failure regime that’s designed to address those problems.”

Asked if – given FTs’ current financial position – he expected Monitor to have to place FTs in special administration in 2013-14, Mr Hay replied: “I think there has to be a chance the answer to that question is ‘yes’.”

Under the 2012 Health Act, Monitor will have the power to place “failed” FTs in “trust special administration”, a form of insolvency procedure intended to protect continuity of essential NHS services. This power will not come into force until the regulator has issued FTs with licences under the act, which it expects to be ready to do by April 2013.

The legislation will also give Monitor responsibility for setting the national “tariff” prices for NHS services.

Mr Hay told the Laing & Buisson Independent Healthcare Forum it was “not going to be straightforward” in future years for Monitor to manage the balance between reducing tariff prices and avoiding bankrupting FTs.

“There is no doubt that the sector is under significant financial strain,” he continued. “And of course what’s really going to matter in the price setting process over the coming years is the level of efficiency requirement that is inherent in the tariff, and the ability of the FT sector and the NHS trusts to cope with it.”

He added: “I don’t think it’s credible that we can have a portfolio of 145 foundation trusts and rising, and that there won’t be a tail that will get into difficulty and will need to be rescued by the failure regime.”

Earlier this year, South London Healthcare became the first NHS trust to be put into special administration, under current failure regime legislation. 

Readers' comments (6)

  • South London is not the only insolvent FT, it's only the figure head. There is already a "tail" that is in difficulty.

    And Monitor need to pull their finger out and take assertive action on the others.

    The current excuse is that the 2012 legislation has not yet been enabled, and everyone needs to wait... while more public money gets flushed away. I thought that the FT regime was supposed to make Boards accountable for taking the necessary difficult decisions, no sign of that happening yet.

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  • The contributor above must have his/her head in the sand ! A large number of FT are making very difficult decisions as they strive to meet Cost Improvement Programs. Would it not be better if this moaners got on with some work rather than spread doom and gloom.

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  • Steven Burnell

    The best (perhaps only sustainable) way to deliver Cost Improvement is to deliver sigificant improvements in Health & Care.

    We need to shift the focus onto delivering the best interests of Patient & the Public.

    Commissioners & Service Providers (by whatever label) must explain how they are collectively delivering greater Health & Care within the given overall Funding.

    Please cross reference to other HSJ Article on QIPP.

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  • What happened to the idea of creating a national health and scial care organisation?

    Pool the budgets, remove the perverse incentives and end this nonsense.

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  • Monitor is about to put Mid Staffs into special administration. They have asked the big four acccounting firms and given their unhealthy closeness, (alumni Bennet et el) probably McKinsey to submit bids to manage the process.

    As i understand it, these insolvency advisors are sworn to particulrly tight non disclosure agreements - HSJ go FOI them - but is this just window dressing and a proxy for action prior to Francis 2 . Monitor has failed to move on MSFT for 6 years. I wonder how many 'salmon' letters have been received by Monitor? Moyes and Hay personally? Surely Monitor corporately. Too little, too late to save your credibilty.

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  • For the commentator 1:32 who thinks that Monitor is not holding boards to account yet and they need to pull their finger out....believe me from what I hear Monitor are doing that in fact, (I would describe it on the whole as bullying tho' rather than holding to account), the amount of pressure, personal indignity, name calling, behind the scenes 'influencing'. Exactly what effective regulation shouldn't be, if change and improvement should thrive and certainly not in either the taxpayer or patients interest. Old boys club to keep the big 4 in business.

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