Monitor may need to place some NHS foundation trusts in administration as soon as 2013-14 – the first year its powers to do so take effect, the regulator’s chief operating officer has suggested.
Stephen Hay told a conference of private healthcare executives this week: “We’ve got to get away from this concept that the FTs are some kind of elite, and are going to be immune to failing to take out costs and falling revenue lines which will result in potential financial failure.
“But we now have a failure regime that’s designed to address those problems.”
Asked if – given FTs’ current financial position – he expected Monitor to have to place FTs in special administration in 2013-14, Mr Hay replied: “I think there has to be a chance the answer to that question is ‘yes’.”
Under the 2012 Health Act, Monitor will have the power to place “failed” FTs in “trust special administration”, a form of insolvency procedure intended to protect continuity of essential NHS services. This power will not come into force until the regulator has issued FTs with licences under the act, which it expects to be ready to do by April 2013.
The legislation will also give Monitor responsibility for setting the national “tariff” prices for NHS services.
Mr Hay told the Laing & Buisson Independent Healthcare Forum it was “not going to be straightforward” in future years for Monitor to manage the balance between reducing tariff prices and avoiding bankrupting FTs.
“There is no doubt that the sector is under significant financial strain,” he continued. “And of course what’s really going to matter in the price setting process over the coming years is the level of efficiency requirement that is inherent in the tariff, and the ability of the FT sector and the NHS trusts to cope with it.”
He added: “I don’t think it’s credible that we can have a portfolio of 145 foundation trusts and rising, and that there won’t be a tail that will get into difficulty and will need to be rescued by the failure regime.”
Earlier this year, South London Healthcare became the first NHS trust to be put into special administration, under current failure regime legislation.