Monitor is considering changes to its regulatory strategy as it believes some foundation trusts may face financial problems so profound they cannot be fixed by the providers alone.

The regulator could advise the commissioners of well-run foundation trusts, which nevertheless face financial challenges, that they need to think about reorganising local services.

It is also considering whether it will in future need to use its powers of intervention to ensure foundations cooperate with those reconfiguring local services.

The proposals are a response to the tough circumstances now faced by some foundation trusts. Monitor believes it may, for the first time, have to deal with FTs that are no longer financially viable as standalone organisations, HSJ understands.

The proposals are due to be considered by the regulator’s board today.

Monitor compliance director Merav Dover said: “In a small number of cases, there may be foundation trusts that are efficiently run, but this is not enough to ensure quality and financial stability can be maintained.

“In these cases, Monitor would flag with commissioners that they might want to look at options for reorganising local health services to achieve the best quality and affordability.”

She added: “If commissioners believe reconfiguration of services is required, Monitor’s role would be to ensure that the foundation trust develops an appropriate plan and delivers it.

“If we felt there was evidence to support extra regulatory control to achieve this, we could use our statutory powers to intervene.”

Monitor’s proposals are in part a response to the financial and clinical problems faced by Mid Staffordshire Foundation Trust.

Recently published minutes from the regulator’s 16 November compliance board committee meeting say “the steps required to address” concerns about Mid Staffordshire “were expected to be such that Monitor would need to reconsider the tools that it used in its regulatory action”.

They add: “In light of this, the board would be considering the wider issue of how best to implement Monitor’s statutory powers of intervention across the NHS FT sector.”

Foundation Trust Network director Sue Slipman told HSJ it was “really positive that Monitor is recognising the depth of the issue”, but the regulator’s current powers gave it “a very limited sphere of intervention”.

She continued: “It’s helpful for Monitor to have conversations with commissioners, but it doesn’t have power over commissioners – it only has powers of intervention over FTs.”

Ms Slipman argued the financial penalties that acute providers now faced for increases in emergency care meant many FTs had an incentive to be open to service reconfiguration.

“The motive for providers is that they are facing a financial leak that they can’t fill,” she said. “If the commissioner isn’t investing in services to take demand out of hospitals, then hospitals’ activity continues to increase and they only get paid the marginal costs.”