PERFORMANCE: Monitor has found Medway Foundation Trust to be in significant breach of the terms of its authorisation.

The breach is due to the trust’s failure to comply with its general duty to exercise its functions effectively, efficiently and economically, as well as governance failures.

Monitor has raised particular concerns relating to board level scrutiny and assurance processes concerning financial planning and performance at the trust. The regulator said this was particularly worrying “given the historical lack of effectiveness in these areas”.

No formal intervention powers have been invoked but Monitor will continue to review progress against specific milestones and actions to be agreed with the trust’s board.

Should the trust fail to deliver timely and sustainable progress towards full compliance with its terms of authorisation, Monitor is likely to consider formal intervention.

Monitor chair David Bennett said: “We’ve taken this decision due to concerns about the level of board challenge on financial issues and about the trust’s plans to return to a stable financial footing.

“As the regulator of foundation trusts, it’s our role to make sure that they are well-led, that their boards are focused on the quality of care patients get and that they are financially strong - but we don’t performance manage them.

The trust’s board is accountable to the local community for the effective delivery of services, and responsible for identifying problems and addressing them. We only take action if a trust doesn’t deal with issues quickly and effectively.

“Monitor will continue to work closely with the board at Medway Foundation Trust to ensure that it takes the action necessary to make a sustainable return to full compliance and that it does so at an appropriate pace.

We will also continue to work closely with the Care Quality Commission to ensure the continued provision of high quality services to the patients the trust serves. If evidence suggests the trust is not addressing issues effectively, we will consider whether further regulatory action is appropriate.”

A trust spokeswoman said: “The trust board is naturally disappointed with this announcement but understands why Monitor is taking this precautionary measure.

“The trust’s financial plans for 2010-2011 were ambitious with a savings target of £15m, of which more than 90 per cent of planned savings were achieved. The shortfall, coupled with other significant one off losses in the year, led to the trust failing to meet its financial plans in 2010-11. The trust board has ensured that financial plans for the current financial year are more robust.

“In all other respects the hospital performed well last year, meeting all patient access targets and achieving the best infection control performance in the south east coast region.

“The board will be working closely with Monitor to return to compliance as soon as possible.”