Exclusive: Monitor’s chief executive will today warn that foundation trusts could see their freedoms ‘completely eroded’ if they do not do better to reduce a sector-wide deficit projected to reach £1bn in 2015-16.

David Bennett is expected to reveal that the latest forecasts show the FT sector finishing this year an “unaffordable” £989m in the red – nearly three times worse than the £349m deficit it recorded in 2014-15.

FTs are supposed, and are generally held, to be the financially strongest part of the provider sector. Its 2014-15 deficit made up less than half of the overall deficit of £822m recorded by the whole provider sector that year.

In a speech to provider finance directors in Birmingham later this morning, Mr Bennett is expected to say that:

  • FTs in general have not used their freedoms to improve performance fast enough, and have been too slow to adopt best practice in efficiency. 
  • Monitor will clamp down further on poor financial and operational performance, including rating all FTs on a sliding scale for the first time.
  • Individual FTs will need to cooperate with their neighbours and commissioners to organise services in the most efficient way possible, even if that sometimes means giving up the provision of some medical specialities to others.

David Bennett

‘We have to do better’, David Bennett will say

In what will be interpreted as a strongly worded warning to FTs that might block reconfiguration out of organisational self-interest, he will tell the Healthcare Financial Management Association conference: “We have to do better, especially if freedoms are not to be completely eroded.”

The warning comes after a series of moves by Monitor to tighten controls on FTs in response to their declining finances.

Mr Bennett will add: “We want to work with you to redesign patient services across organisational boundaries, where there may be some winners and some losers.

“We are not advocating the closure of vital hospital services, but we recognise that in some places they can be run better on a shared basis by trusts within a geographical area - for example, through clinical networking arrangements.” 

However, the outgoing Monitor chief executive is also expected to signal that in future commissioners will have to take a greater part of the responsibility for finding NHS savings, and that there are limits to the practice of driving provider savings through the payment system.

He will also warn that the Department of Health driven initiatives to control FT spending on agency staff and management consultants must be applied “intelligently”.

“We must be careful not to throw the baby out with the bathwater,” he will say. “The idea that we have empowered local leaders to focus on what they need to do, not bombard them with requests for information, or worse still try to manage their trusts for them, remains critical to the FT model.”

Mr Bennett has announced he will step down as Monitor chief executive, and the DH has indicated it will recruit a replacement - who will also run the NHS Trust Development Authority - in the near future.