Monitor is set to intervene in more foundation trusts that are in danger of breaching their authorisation.
The regulator will now consider stepping in if a foundation trust has a financial risk rating of 1 or 2. Previously only a rating of 1 would trigger intervention.
New powers in the 2011-12 foundation compliance framework also include ordering trusts to submit information on monthly income, broken down into each service line and including the previous year’s data for comparison.
All foundation trusts have a financial risk rating of between 1 and 5, with 1 signifying the highest risk. A trust’s score will usually be 3 or 4 when it is authorised.
The regulator currently lists three trusts as having a rating of 1: Heatherwood and Wexham Park, Mid Staffordshire and Milton Keynes Hospital foundation trusts.
Seven trusts have a financial risk rating of 2: Rotherham, Tameside, Poole, Blackpool, Dorset County, Medway and the Royal National Hospital for Rheumatic Diseases foundation trusts.
The rating is calculated using four criteria: achievement of plan, underlying performance, financial efficiency and liquidity.
One foundation trust finance director told HSJ the liquidity measure could restrict a trust’s strategic flexibility.
He said: “From a trust’s point of view the liquidity issue is a little bit galling. When you’ve done well in the past and built up reserves you might decide to go into them to break even for a year, to protect the front line and make your cost improvement plans.
“Finance directors are going to have a tough time over the next few years, no money and constant personal criticism if you don’t put forward a plan showing [a financial risk rating of] a 3.”
Of the 59 foundation trusts that responded to the consultation, 14 disagreed with the new financial risk rating policy, 28 agreed and eight agreed but with a caveat.
The Foundation Trust Network’s response said: “It is possible that organisations may drop to a 2 due to necessary investments (i.e., redundancy, cost of change) in that quarter and then move back to a 3.
“Any decision to review the financial governance at the trust should be based upon the risk of non-compliance going forward.”
The compliance framework said Monitor would consider potential breaches case by case.
Network director Sue Slipman said: “That approach could allay our concerns; but we will be watchful about the way that…is handled in practice.”
- BLACKPOOL TEACHING HOSPITALS NHS FOUNDATION TRUST
- DORSET COUNTY HOSPITAL NHS FOUNDATION TRUST
- Foundation Trust Network (NHS Providers)
- Foundation trusts
- HEATHERWOOD AND WEXHAM PARK HOSPITALS NHS FOUNDATION TRUST
- MEDWAY NHS FOUNDATION TRUST
- MID STAFFORDSHIRE NHS FOUNDATION TRUST
- MILTON KEYNES HOSPITAL NHS FOUNDATION TRUST
- POOLE HOSPITAL NHS FOUNDATION TRUST
- ROYAL NATIONAL HOSPITAL FOR RHEUMATIC DISEASES NHS FOUNDATION TRUST
- Sue Slipman
- TAMESIDE HOSPITAL NHS FOUNDATION TRUST
- THE ROTHERHAM NHS FOUNDATION TRUST