Hospital trusts have asked for over £300m in loans by April 2012 to remain within the foundation trust pipeline, HSJ can reveal.
HSJ has secured details of three quarters of the 69 acute trusts seeking foundation status. These trusts have asked for at least £352m in “transitional support” and other help this financial year from the Department of Health, strategic health authorities and commissioners to help them meet regulator Monitor’s financial requirements for foundation trust authorisation.
The figure rises to £476m when the need to plug the predicted year-end deficits of aspirant foundation trusts is also taken into account. Further funding will also be needed in subsequent years.
The £352m total includes University Hospital Southampton Foundation Trust, which successfully asked for £20m, and was authorised earlier this month.
HSJ collected the 53 publicly available tripartite formal agreements the DH agreed with hospital trusts. These set out when organisations will submit foundation bids and possible impediments to their success. The other 16 aspirant trusts will publish their agreements in the coming months or are not required to put together such a document.
Of the known trusts, 18 have asked for, or have already received, financial support this year, or have asked for a large loan for a capital project. Another three are requesting as yet unspecified amounts.
The biggest demand, for £93.5m, came from a grouping of Barts and the London, Whipps Cross and Newham trusts. Imperial College Healthcare and Shrewsbury and Telford trusts both asked for £35m.
The figures in the agreements do not include sums needed to deal with some trusts’ legacy debts, largely from bailouts in 2006, which in April amounted to £269m.
DH director of provider delivery Matthew Kershaw told HSJ in July he would look at the applications from trusts with insufficient reserves, or with debt but otherwise sound finances, on a case by case basis.
One trust finance director told HSJ: “I’m not sure [making these payments] lowers the bar for making foundation status – it more bends it. There is no doubt some SHAs took the view that all their organisations should be shown as successful and therefore money is moved around within SHAs through ‘banking arrangements’ [to ensure pipeline success].”
Foundation Trust Network chief executive Sue Slipman said trusts receiving this support would still have to satisfy Monitor they were viable in the longer term.
“We have always known that there will be organisations with intractable financial problems. This can be due to overcapacity or historical issues in the local health economy,” she said.
“It is understandable that organisations, or those seeking to acquire them in order that they make foundation status, will need one-off financial support. This does not mean a two tier system – it is a pragmatic solution.”
One senior figure involved in the tripartite agreement process told HSJ the main problem now facing the DH was holding trusts to agreements that they will deliver the service and financial changes needed to achieve foundation status.
“It took three days to pull agreements together and eight months to get them signed off,” he said. “The degree of ownership of the agreements is hugely variable and the process for now managing them is unclear. There is a real risk around [trusts] not doing what they need to do.”
Steve Dunn, who led the East of England’s tripartite formal agreement process, said: “Our trust chief executives had to explain to the chief executive of the SHA if they missed an application milestone. These lessons need to be learned for monitoring the agreements.”
One SHA manager involved in the process said: “We are looking at accountability agreements to cover the more detailed steps.”