30 September 2005
NHS foundation trusts have made good progress but their future success relies heavily on assumptions that will be difficult to realise, regulator Monitor said this week.
Monitor has reviewed foundations' first set of annual plans and praised their efforts in establishing 'well-run, autonomous organisations delivering high standards of patient care'.
The non-financial performance of most of the 31 trusts Monitor examined (there are now 32) was excellent. However, some trust boards told the regulator that targets for areas such as cancer treatment waiting times and dealing with the MRSA superbug would be particularly challenging.
Monitor added that foundations' financial management was improving – the trusts forecast an aggregate surplus of £6m this year, compared with a deficit of £37m in 2004/05. However, this forecast relied on attracting more patients and cutting costs by £98m.
Monitor said the increase in patient activity was higher than that forecast by primary care trusts and it was concerned that PCTs might not be able to pay for it. The cost-cutting target was about 35% higher than when the trusts applied to become foundations, and some savings remained unidentified.
Foundations also assumed that payment by results tariffs would rise by 4% over three years to 2007/08. Monitor described this as 'challenging', as it assumed a 2.4% rise over this period – a difference of £60m a year for the 31 foundation trusts.
Sue Slipman, director of the Foundation Trust Network , said Monitor's assessment demonstrated that foundation status improved services for patients.
'Monitor's largely positive assessment is further independent evidence that the dire warnings issued by critics of the foundation trust movement have proved to be unfounded,' she said.
But she acknowledged that the trusts faced challenges. These were highlighted by Monitor's forecast that they will borrow only £84m this year, when the ceiling for their total borrowing has been set at £1.446bn.
'While there are many ambitious investment plans in the pipeline, realising those plans is being hampered by instabilities in the financial regime, as well as a lack of clarity about whether foundation trusts will have a genuine level playing field with the independent sector, particularly in bidding for the next round of independent sector treatment centres,' she added.
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