Doing nothing is not an option

Last week, some people expressed surprise at the statement by Monitor chair David Bennett that 11 foundation trusts are in financial difficulties. This shouldn’t have come as a surprise to anyone because, as a the regulator’s press release pointed out: “Monitor has placed 11 foundation trusts in significant breach of their terms of authorisation on financial grounds. These decisions were taken and announced at various points over the last three years”.

The announcement on Friday that Monitor is to take formal action at Sherwood Forest Foundation Trust, one of the FTs in greatest financial difficulty, brought a sharper focus to what we all know is a significant problem affecting a small but growing number of NHS trusts.

One reaction to the statement was to proclaim this as yet another example of an NHS in financial crisis and to call for more money, again. But is it realistic to expect the government to reopen a public expenditure settlement in which health was treated more generously compared to most? And at a point when more savings across government are being sought (witness the public battle between the Department of Work and Pensions and the Treasury over a possible £10bn welfare spending freeze)? And in a week when the latest government borrowing figures show the 2012-13 deficit increasing by 22 per cent so far this year against a whole year target reduction of 5 per cent?

Diverting attention

There’s also a danger that focusing on the size of the financial challenge - how difficult it is, and why health needs more money - diverts energy and attention from the real issue, which is how does the NHS maximise value from the money it has got?

From the provider perspective this felt like a particularly relevant question last week, when the Audit Commission showed that the vast majority of the £1.6bn 2011-12 NHS underspend clawed back by the Treasury came from strategic health authority and primary care trust budgets.

Surely one of the basic requirements of an effective NHS is to guarantee that all the appropriate money gets from those who hold the purse strings and commission services to the acute, community, mental health and ambulance trusts who actually treat patients?

The Foundation Trust Network’s reaction to both David Bennett’s statement and the announcement on Sherwood Forest focused on “the need to help trust boards improve their financial viability. That requires Monitor, the rest of the NHS in the relevant local area, and politicians to support plans that will involve difficult and unpopular changes. The test for the NHS and our politicians is whether we can all work together to make those changes before more trusts effectively become bankrupt”. There are four key elements here.

First, the problems of trust financial viability are not going to be solved at national level by the Department of Health, Monitor or the NHS Commissioning Board (though in a small number of cases it’s difficult to see how some form of national help on very large private finance initiative  problems can be avoided). The problems have to be resolved by trust boards developing plans that ensure long term financial sustainability. These plans will inevitably involve difficult and unpopular changes.

Second, those boards will need help and support in this very challenging task. Particularly since, in the majority of cases, the plans will involve complex interactions with other parts of the relevant local health economy - for example in reconfiguring services across trusts or in reshaping relationships with local commissioners. Last week’s Kings Fund report rightly highlighted the issue of whether the clinical commissioning groups will have the required capability to perform this task. Active and real support will be needed from the whole of the local health economy.

Third, Monitor clearly has a key role to play. Its actions need to be proportionate, appropriately challenging to ensure the rigour of the regulatory regime but supportive to the board in question. They also need to clearly recognise the importance of trust board autonomy and accountability. Tempting pressures to grandstand before and after the forthcoming Francis report also need to be resisted.

Finally, this is an issue with a loudly ticking clock which isn’t helpful given that it’s always been hard to make difficult decisions on the NHS in the run-up to a general election. Given the scale of the financial challenge over the next three years, we can’t wait for May 2015 before politicians start actively supporting trust boards making difficult choices.

This morning, I found the perfect last word on this issue in the NHS London report released in February on the financial sustainability of acute hospitals in the capital. It said: “The analysis that has been undertaken paints a compelling picture of a serious problem. Doing nothing is not an option.”

Chris Hopson is chief executive of the Foundation Trust Network