Delays and failure revealed in warning letters sent after trusts fall behind in attempts to achieve foundation trust status.

HSJ can reveal the 19 Department of Health warning letters sent to trusts that have fallen behind schedule in the foundation trust pipeline - one of which includes proposals to use the failure regime for a second time.

The DH’s director of provider delivery Matthew Kershaw told Mid Yorkshire Hospitals Trust in May that it could enter the same failure regime that was last week imposed on South London Healthcare Trust.

In his letter sent on 18 May, Mr Kershaw told Mid Yorkshire chief executive Stephen Eames: “The [unsustainable providers regime] could help to identify a sustainable service strategy.”

In one of a series of examples of the letters presaging the departure of senior figures, Mid Yorkshire announced the mass resignation of all four of its non-executive directors on Tuesday.

The letters warn of “personal consequences” for management teams found wanting. Of the 16 “escalated” trusts - those who have missed key pipeline targets - five have subsequently seen their chief executives depart and another three have seen new chairs and non-executive directors appointed.

The letters also show chief executives admitting to the shortcomings in quality and finance, which meant application targets were missed (see right).

One letter also shows Mid Essex Hospital Services Trust to be considering a merger “preferably” with Basildon and Thurrock University Hospitals Foundation Trust.

In September, all non-foundation trusts had to sign “tripartite formal agreements” with their commissioners, strategic health authorities and the DH setting out the milestones they would hit on their way to gaining FT status.

Trusts are “escalated” if missed targets mean they gain a “red” rating on the DH’s traffic light progress tracker for three consecutive months, or if they miss their agreed date for formally applying to the DH. This is the stage before Monitor makes a final decision on the application.

The letters obtained by HSJ were sent to escalated trusts between January and June this year. Most were written by Mr Kershaw. They reveal that within a month of the tripartite formal agreements being signed three hospital trusts had missed their October application target and been escalated.

A DH document released to HSJ under the Freedom of Information Act in March said the strategic health authorities overseeing the then-escalated North Staffordshire Combined Healthcare Trust and Cambridgeshire community services Trust had “already affected [sic] a change of leadership” and proposed changing the trusts’ FT application dates (news, page 5, 1 March).

The trusts that have been escalated constitute one sixth of the organisations in the foundation pipeline and have a combined turnover of £6.4bn.

Health secretary Andrew Lansley declared all trusts would achieve foundation trusts status by April 2014, but the DH subsequently had to admit that some would not achieve this.

A spokesman for the DH said: ““We still expect the vast majority of NHS Trusts to reach foundation status by April 2014. There are currently 21 NHS trusts with applications to become foundations, either at DH or with Monitor, so already real progress is being made.

“An important stage in helping all trusts become foundations on their own, as part of an existing foundation or in another organisational form was the signing of the TFAs) Each TFA details the issues Trusts face in becoming FTs, and how they should deal with these issues. Although some trusts have not been able to fulfil the plans in their TFA so far, we are taking decisive actions to support these Trusts. Overall there is an unprecedented grip on the FT pipeline.”

Mid Yorkshire and Imperial College Healthcare Trust are now making plans that would see them authorised after this date.

Later this month, the NHS Trust Development Authority will take responsibility for shepherding the remaining trusts through the pipeline. HSJ understands key appointments to the body will soon be announced.

The Kershaw Letters

Extracts from letters sent by Department of Health director of provider delivery Matthew Kershaw to trusts summarising their meetings.

Mid Essex Hospital Services Trust revealed its board had discussed a merger or acquisition “preferably with Basildon but possibly with Southend”. Trust chief executive Malcolm Stamp told the DH “the FT trajectory was on-track, save for the finances”.

Ipswich Hospital Trust’s application was at the Monitor stage when it was withdrawn. It revealed it had consultant workforce problems and needed support from its primary care trust to break even. Mr Kershaw said: “The trust had been risk averse in relation to the delivery of service performance requirements, with financial performance put at risk.”

Mid Yorkshire Hospitals Trust could face the same unsustainable providers regime that was last week applied to South London Healthcare Trust. Mr Kershaw told its chief executive Stephen Eames: “The UPR could help to identify a sustainable service strategy.” The trust said “the only real prospect for the future is to consider further service reconfiguration” and it “did not believe [the] status quo can continue”. Mr Kershaw added the trust’s private finance initiative rebuild had been based on a plan to reduce workforce by 20 per cent, which had not been achieved.

Leeds Teaching Hospitals Trust was forced to submit a more radical savings plan by NHS North. Monitor told the trust in April to plan to add another £10m to its cost improvement plan. Mr Kershaw told chief executive Maggie Boyle in June: “The issue of MRSA on top of performance and financial concerns could create the impression the trust is losing grip.”

Worcestershire Acute Hospitals Trust told Mr Kershaw the lessons it learned from its abandoned foundation trust application included “not assuming they are a special case and require different treatment to other [similar] providers”.

University Hospitals of Leicester Trust was found to be “complacent on savings, a significant proportion of which were cost-cutting and not service redesign which is what is needed”. Finance and performance issues meant its October 2011 application date was not feasible.

Hull and East Yorkshire Hospitals Trust was told it must reduce its high mortality rate. It has respectively brought in McKinsey, Deloitte and then KPMG to work on the FT application and its liquidity.

University Hospitals Coventry and Warwickshire Trust had originally agreed to submit its application in October 2011. After being escalated this was pushed back to December 2012. Mr Kershaw warned: “There are consequences to any future failures.”

Surrey and Sussex Healthcare Trust had “dramatically improved” its service performance between escalation meetings in February and May this year, NHS deputy chief executive David Flory said in a letter. Chief executive Michael Wilson said he had replaced consultants.

Cambridgeshire Community Services Trust’s chief executive Matthew Winn told the DH his “previous chair and medical director had no appetite for and had discouraged the service change debate”.