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Smaller FTs face viability reviews

Monitor has ordered a review of the financial viability of a number of small and medium-sized foundation trusts, in a process described by one chief executive as “cloak and dagger”, HSJ can reveal.

The foundation trust regulator would not confirm the number of organisations subject to the review, which is being undertaken by consultancy firm McKinsey. However, the chief executives of three trusts privately confirmed to HSJ their trust was included.

All have an annual turnover of £230m or less and are district general hospital trusts, but not all foundations trusts smaller than this are being assessed.

The investigation was triggered by the annual plan review process, under which foundation trusts submit three-year plans each June. Monitor will order a “second stage review” of some of these plans if specific concerns emerge about its contents.

The regulator’s summary of the annual plan reviews, released last month, said 13 trusts had been selected for

the second stage reviews but “this year [it had] further developed this stage of the process, resulting in a more targeted and in-depth review, with an emphasis on diagnosing underlying problems”.

It would not confirm how many of the 13 were part of the viability review.

The summary document said: “We expect trusts will also need to be making significant changes in the way services are delivered, including through system reconfiguration and consolidation of suppliers.”

The viability reports are due to be submitted to Monitor by the end of September.

The news comes after the Department of Health indicated that challenging efficiency savings could continue to be required beyond the 2015 end-point originally set out under the quality, innovation, productivity and prevention programme.

A Monitor spokeswoman declined to comment on the viability review’s terms of reference but said its “findings will be shared with the sector later this year”.

Burton Hospitals Foundation Trust chief executive Helen Ashley told the £165m-turnover organisation’s board meeting last month that Monitor had asked it to “provide a progress update in the development of a strategy to address concerns over its future sustainability” -  although Monitor has denied that Burton is one of the trusts facing a viability review.

Three days after asking the trust for a response chief executive Helen Ashley said in a statement: “The trust is developing a stategy to address future sustainability and we are updating Monitor on the progress of key work streams at our monthly progress review meetings.

“Work on this strategy is due to be completed in November when it will be presented to the board.”

One trust’s chief executive told HSJ the process had been “very cloak and dagger” and the consultants had asked for large amounts of workforce and activity data.

The past week has also seen one non-foundation trust announce it was not viable as an independent organisation, while another declared its preferred partner for merger. Barnet and Chase Farm Hospitals Trust selected the Royal Free London Foundation Trust as its preferred partner and Bedford Hospital Trust has announced it was looking to partner with a foundation trust.

Readers' comments (15)

  • Can't we find Monitor an office actually inside McKinseys? It would save on travel, paperwork and pretence.

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  • McMonitor?

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  • so will they also review wannabe Community FTs with turnovers of less than £100m?

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  • Monitor have since been in touch to say Burton isn't one of the trusts facing a viability review, although as their CE says in the board paper it is updating them
    "to address concerns over its future sustainability".
    It is also in significant breach

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  • David Hooper

    There is an unevidenced conventional wisdom that smaller is not viable. The exact opposite of government policies in the private sector, where entrepreneurial small organisations are pictured as the saving of our future.
    Why does Monitor not have an integrated approach that looks for sustainability of high quality services with regard to all FTs, big and small? But then do McKinsey know how to measure efficiency when quality of service is an output, as well as its quantity?

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  • I heard McKinseys call Richmond House their Westminster office.
    If we use the same big four firms, the thinking won't change. And community FTs can't meet one of the criteria about future income as most contracts under TCS end next year, which is why Laing and Buisson describe them as a huge opportunity for the private sector. Yes, CCGs may renew them but if Richard Branson loses his train franchise, he may start pushing Virgin Health more. Not so much for income as for something new to get into.
    Poor Nye Bevan. Did he ever forsee this?!

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  • Anonymous 1.59
    Of course they will review wannabe community FTs. They will review their FT applications in great detail following previous detailed reviews by SHAs DH and NTDA. That's what the wannabe bit means!

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  • and when will they admit the Peterborough problem (largest deficit as % of t/o in thre NHS) is a problem of Monitor's making?

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  • McMonitor..."would you like lies with that?"

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  • Hi Anonymous 1.59, On community trusts it looks like some of them may be falling before the Monitor stage.
    Of the 10 trusts supposed to submit their FT applications to the DH betwwen July and September 1, only one has done. Most of the delay-ees are community trusts, as are lots of the trusts that have been escalated. Story coming soon

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  • Are they reviewing the viability of some of the big ones too? Or perhaps they already know the answer - the big FTs include plenty with serious questions about their viability. And will they also look at the sustainability of some of the multi-site behemoths, before they try to get some of the big London laggards through? And maybe examine whether others currently viewed as sustainable might be more sustainable still if they were demerged?

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  • Monitor have have been really busy in the summer months publishing huge amounts of consultation-type documents which upon reading suggests they are not fit for purpose and are clueless (also remember their chief made reference to dismembering the NHS). Maybe they thought people were too busy to ready them during the Olympics.

    Scrap Monitor (aka Off-sick) Just give all their work to McKinsey, at least that would be upfront and transparent for a change

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  • Two questions.
    1. By what criteria is viablility judged?
    2. Is PbR, in its current form, viable?

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  • I went to an event recently where the representative from Monitor described a situation where Monitor staff had moved back to the big accountancy firms. When asked about how Monitor would deal with the 114 Trust (more likely 70) that will need to go through FT by 2014 (DH target), if was revealed that the Monitor workforce would expand to acomodate - the suggestion being from the consultancy firms. I just wish it was more transparent and we just had McDelKPMG-CapGem

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  • It is unlikely that a Trust who is already under escalation to Monitor or receiving any form of regular review, intervention, will be having the Phase 2 sustainability review e.g. Burton. They are already undergoing the type of scrutiny that the sustainability reviews are undergoing. These reports to Monitor i am sure were off the shelf, pre prepared pieces of work that naturally align to an agenda that only some folks are privvy to.

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