Exclusive: Monitor ramps up challenge to FTs over spending

Speaking exclusively to HSJ, Monitor chief executive David Bennett this week set out the details of a new approach the regulator will take this year, in an effort to ensure there is “no stone unturned” in the search for productivity savings.

The new tack comes after the FT sector delivered the worst financial performance in its history last year and submitted draft plans suggesting the deficit would be even deeper in 2015-16.

Mr Bennett said while it was good that FTs’ plans were “more realistic than last year” – when the sector planned for a £10m deficit and ended up £349m in the red – they were “not yet as stretching as they need to be”. He would not be drawn on the likely financial outturn for this year, but said even a deficit on the scale of last year’s would be “difficult” in 2015-16.

In response to these pressures, Monitor has decided on a three pronged approach:

• Ramping up challenge to FTs’ plans. Monitor teams this year will make two-day site visits to the 40 FTs it judges to be the worst performing financially, to probe their financial plans and make sure planned productivity savings are as ambitious as possible. Mr Bennett said this had already resulted in one FT cutting its planned deficit from £47m to £14m, in significant part by stripping out contingency buffers built into the original budget. Mr Bennett said: “Our view was if their cost improvement programme was realistic, which it was supposed to be, they shouldn’t need significant amounts of contingency in case they didn’t deliver. Effectively we’re going to hold their feet to the fire in terms of delivering on the CIP.”
• Using its powers to impose tighter cost controls on FTs in breach of their licence for financial reasons. This may include requiring trusts to obtain prior approval from Monitor before commissioning any major work from management consultants, or to bring their agency spending down to the level of peers. It could also include directing such trusts to make use of a new support team – modelled on the Emergency Care Intensive Support Team – that will help trusts achieve best practice in agency use.
• Increasing the support available for providers with financial problems: A suite of measures, ranging from training for medical directors on leading transformational change, to new sources of large-scale support for providers in major difficulties. The latter will include a framework agreement to create a list of strong trusts available to act as “super buddies”, providing wide ranging multiyear support to struggling counterparts.

Asked if Monitor was taking this approach because it genuinely believed there was still “low hanging fruit” available to trusts looking for savings, or because it wanted to show the government it was doing everything possible, Mr Bennett said: “In all honesty, both.”

“There are an awful lot of people out there who think they’ve reached the end of the road in terms of fruit that can be plucked. In the main, I don’t think that is true, but I completely accept they need help.

“This is not just about shouting more loudly at people, we’ve really got to help them understand what can be done and help them do it.”

He said joint work between Monitor, the Department of Health and the prime minister’s implementation unit had revealed “significant variations” in trusts’ management of agency spending. The regulator has now set up an “agency intensive support team” to help trusts improve their practice on agency spending. Once the team’s approach has been tested, trusts in breach of their licence will, if necessary, be required to use its support.

He added that it was possible Monitor would use its powers to require trusts in this position to reduce agency spending, provided this would not have any “negative safety consequences”. “If you say on a benchmark basis you’re spending significantly more, there’s no obvious excuse for that or unavoidable reason, there’s no safety explanation, then yes, we’ll say you’ve got to reduce it to the benchmark of other people.”

The Monitor chief said he did not accept that “it can never be useful” to employ management consultants, and it sometimes required trusts to use such support. However, he added that the NHS got “significantly short of full value for money” from its spending on consultants.

NHS Providers policy director Saffron Cordery said the regulator’s proposed approach opened up “the debate on Monitor’s role as a regulator and the role of regulation” because “provider boards must feel and be completely responsible for their own improvement”.

She added: “That’s why I think the super buddies are a good idea. More broadly, the kind of direct intervention [proposed by Monitor] could be undermining of boards own autonomy and improvement.”

Mr Bennett said that when the FT policy was set up, Monitor was there as a safety net and it only intervened if there were serious failings. However, he continued: “Under a system that’s under considerable pressure… we need to be prepared to intervene before the problems become too serious. But it’s not a qualitative change… it’s just saying we need to be stepping in at an earlier stage.

“That has been a journey over the last few years at least, and I’m just saying we need to take a further step along that road.”