Rules due out soon on failing foundations

21 Jul 05
New rules on the treatment of failing and insolvent foundation hospital trusts will be published soon, the trusts' regulators said this week.

22 July 2005

New rules on the treatment of failing and insolvent foundation hospital trusts will be published soon, the trusts' regulators said this week.

As well as giving foundations financial freedoms, the Department of Health has made it clear they will be allowed to fail. But without the safety net of guarantees from the department, commercial lenders' rates are high, and to date no trust has borrowed from a commercial source.

Monitor said detailed work was needed to ensure creditors' interests were adequately protected. 'This would encourage commercial organisations to lend to foundation trusts on acceptable terms in the absence of financial guarantees,' it added.

The announcement came in Monitor's annual report and accounts for 2004/05, its first full year of operation. The regulator also said it was piloting a programme to analyse trusts' preparedness for foundation status. The government has promised that all trusts will become foundations by 2008, but the Healthcare Commission warned recently it was unlikely all would meet Monitor's strict authorisation criteria.

The analysis will highlight trusts' weaknesses. It is being piloted in the Birmingham and Black Country and Cheshire and Merseyside strategic health authority areas. The programme might be rolled out across the NHS in the autumn and be completed in the first six months of 2006.

Monitor executive chair Bill Moyes said: 'The challenge for next year is to manage the expansion of foundation trusts and to address some system policy areas that I believe are crucial to creating a genuinely decentralised health service – one that empowers patients and the staff closest to the patient.'

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