Foundation trusts wanting to spend more than £50,000 on a management consultancy contract will have the deal reviewed by Monitor, as part of new measures announced today.
- Monitor will review management consultancy contracts at FTs above £50,000
- Limits will be put on agency spending from July
- David Bennett explained the need for clampdown on spending in HSJ interview last week
Monitor has outlined plans to strengthen its regulatory regime for FTs, to help them “live within their means”.
This includes set limits to be imposed on agency spending from July, while consultancy contracts worth more than £50,000 will need to be approved. The new approach will automatically apply to all FTs found in breach of their licence on financial grounds, while others will be asked to comply voluntarily.
The regulator will also consult the sector on changes to its risk assessment framework, which set out the principles by which the regulator decides whether to investigate FTs, and what action to take to ensure they comply with the conditions of their licence.
Monitor chief executive David Bennett explained the need for change in an interview with HSJ last week, 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.
In a letter to providers this afternoon, Mr Bennett said the approval processes for agency costs will include a trust-specific ceiling on the percentage of staff that can be employed on an agency basis; a cap on the maximum rates of agency pay for different types of staff; and a list of approved frameworks.
However, there will also be a mechanism for local managers to override these limits in the interests of patient safety, with a retrospective review.
The new rules around consultancy contracts exclude internal and external audits, and local counter fraud services.
The national body said a revised risk assessment framework would introduce “more specific criteria for testing whether an FT board is applying the standards of good corporate governance to ensure the trust is making best possible use of its resources”.
A series of financial triggers would enable Monitor to take regulatory action earlier if an FT is in deficit, failing to deliver its financial plan, or not providing value for money.
The proposal effectively reintroduces triggers that were in the framework some years ago, Monitor said. The aim is to allow intervention where there is “uneconomical or inefficient use of resources”, rather than just a short term risk to solvency.
The regulator has started a programme of two-day site visits to the 43 FTs which account for 85 per cent of the forecast deficit in the FT sector. It said there have already been encouraging results, such as South Tees Hospitals FT, which reduced a forecast deficit of £29.4m to an outturn of £12.7m in 2014-15.
Mr Bennett said today: “The scale of the operational and financial challenge facing the NHS means we cannot proceed with business as usual.
“Our revised regulatory approach will send a strong signal to all foundation trusts about what they should focus on, including reducing the costs of agency staff and management consultancy. It will also enable us to step in earlier where an FT is in danger of getting into difficulty, or is failing to make maximum use of its resources.
“This approach will complement the practical help and support we will continue to offer FTs.”
The enhanced challenge to the track record of FTs will be supplemented by a significant upgrade in the practical support Monitor offers to improve operational performance, through turnaround advice, leadership training and ‘buddying’ arrangements, Monitor added.
This story was updated after Monitor released a letter sent to FTs today, which expanded on the plans.
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