Heart of England Foundation Trust is “struggling” because it has “never fully recovered” from its takeover of a failing organisation, the chief executive of Monitor has said.

David Bennett also told the Commons health committee yesterday he would commission work looking at what lessons can be learnt from providers taking over struggling neighbours, and exploring why this can drag down the performance of a merged organisation.

Mr Bennett said: “The example that’s closest to my heart is Heart of England. Heart of England is struggling, their chief executive just left.

“One of the reasons it’s struggling is that many years ago it took over Good Hope Hospital which was a neighbouring trust and had for years been in great difficulty and I don’t think they’ve ever fully recovered from doing that, so you’ve got to be very wary of this.”

He told the committee that despite Monitor now having in-depth conversations with providers to make sure they are aware of the challenges, it can still be a struggle.

He cited King’s College Hospital Foundation Trust as an example of a high performing trust which was aware of the issues when it took over the failing Princess Royal University Hospital, but has still seen its performance drop since the takeover.

Mr Bennett added: “We felt that they had understood the nature of the challenges and I remember saying to one of my non executives after we’d had a board to board meeting with them, ‘Frankly if these guys can’t pull it off I think we’re really going to struggle to solve these kinds of problems’.

“They’re finding it very challenging, I think even more challenging than they expected.”

Although takeovers are “difficult” they are necessary because “if we can’t get the better organisations to help fix the failing ones I’m not sure how we are going to fix some of them”, he said.

He also said the purpose of the marginal rate tariff for specialised services, proposed by Monitor and NHS England in their ongoing tariff consultation, was to reduce unnecessary activity.

He said: “Our purpose is to create an incentive for providers to think very carefully about whether or not those specialised services are really needed. It is the case that they do have some influence over this.”

Mr Bennett said specialised referrals could be driven by medical consultants, and provider leaders needed to be more willing to question them.

“Quite often these specialised services are as a result of internal referrals within particular providers so you get one consultant saying ‘I think a further specialised type of treatment is necessary’. We want to get the providers focused on is it really necessary?”

However he said it would “only… apply to a very small proportion” of their total activity.