The ‘failure regime’ for Mid Staffordshire Foundation Trust overran its budget because the trust’s ‘special administrators’ had a weak negotiating position relative to neighbouring NHS organisations, a Monitor review has found.

  • First ever “special administration” for a failing FT ran nearly £5m over budget because administrators had no legal powers over neighbouring NHS organisations, Monitor review concludes
  • Review of the Mid Staffs “failure regime” was conducted to learn lessons from first use of FT “special administration” powers introduced under the Health Act 2012
  • Monitor concludes that “challenges and additional costs” involved in the special administration process mean there will be a “bias towards avoiding” its use in future “unless necessary”

The review, shared exclusively with HSJ, concludes that there would be a “bias towards avoiding” the trust special administration (TSA) process in future “unless necessary”.

Mid Staffordshire was the first FT to go through the failure regime, after the Health Act 2012 granted Monitor the power to put failing FTs into administration.

The regulator appointed consultancy firm EY to act as special administrators to the FT in April 2013.

Stafford Hospital

Mid Staffordshire was the first FT to go through the failure regime

The troubled FT was eventually dissolved in November last year, with its hospital services split between two neighbouring trusts: the newly formed University Hospitals of North Midlands Trust (previously University Hospitals of North Staffordshire Trust), and the Royal Wolverhampton Trust.

While Monitor originally budgeted £15m for the TSA process, it eventually came in at almost £19.5m.

The timeline for the work had to be extended twice to get agreement from local trusts and commissioners to the TSAs’ proposed solution, and to agree the funding needed to implement it.

The Monitor review, carried out to learn lessons from the Mid Staffordshire administration, found that because the TSAs had no legal power to compel neighbouring NHS organisations to accept their recommendations, their solution “depended on negotiating the commitment of all the local parties involved”.

“The TSAs had limited options, so the local parties each negotiated from positions of strength, and negotiations took more time and resources that anticipated,” the report noted.

According to the review, the “single most important lesson” from the FT’s special administration was “an appreciation of the extent to which [the trust’s] difficulties reflected broader and deeper problems in the local health economy”.

In light of this, Monitor said it would seek a health economy-wide approach from the outset when dealing with distressed providers to secure local commitment to preferred solutions as early as possible.

The report says that because of the “challenges and additional costs” involved in the TSA process, there would be a “bias towards avoiding it unless necessary”.

With the “pool of expertise” capable of undertaking a TSA “still very limited and expensive to use”, Monitor said it would try to deliver more in-house support for distressed organisations through its new Provider Sustainability Directorate.