Monitor is set to instruct foundation trusts to provide more accurate information about the financial performance of each of their services.
The regulator is consulting on changes to its compliance framework that aim to ensure trusts improve their reporting of the earnings and profit margins of each service they provide.
The move follows concern at Monitor that there is a 'key gap' in most foundations' measurement of 'service-line' performance ('The new economics', pages 22-24, 16 November).
Chair Bill Moyes said: 'It is vital for clinical staff and boards at foundation trust hospitals to accurately assess their financial risks and make further improvements in financial efficiency and use of resources for re-investment in services.' By examining data at service level, trusts would find out 'where best to focus on maintaining performance, growing activity, increasing productivity, or proactively deciding to subsidise a service', he said.
Monitor wants to make foundations self-certify that they have the right financial governance in place to fulfil their duty to act 'economically and efficiently'. Those foundations facing high financial risk, as measured by Monitor's risk ratings, will have to submit historic and forecast income and profitability information by service line.
The regulator also wants to revise the indicators that determine risk ratings. Monitor says this would reduce the current incentive for trusts to prepare overly conservative forecasts or request approval for more working capital facilities with the goal of improving their financial risk rating.
Meanwhile, health secretary Patricia Hewitt wants the framework to be clearer about the need for co-operation between foundations and PCTs. She told the NHS Alliance conference last month: 'A number of PCTs have raised with me the problem of the guidance that Monitor is giving to foundation trustscreating real barriers to the kind of co-operation we need.
'We need dialogue between PCTs, Monitor and foundation trusts to try to resolve that. We need a framework that is a bit clearer about the need for co-operation as well as some healthy competition.'
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Patricia Hewitt's letter regarding Monitor Compliance Framework