17 March 2006
NHS foundation trusts lead the way in recovering from deficits but their immediate future looks less promising, according to foundation trust regulator Monitor.
In the week that a BBC survey predicted aggregate deficits in NHS England would reach £750m by the end of the financial year, Monitor said foundations had delivered a 'generally strong' financial performance.
By the end of December 2005, the 32 foundations had a combined deficit of £9m on a total income of £5bn.
If the financial predicament of University College London Hospitals Foundation Trust were excluded, the remaining trusts had an aggregate surplus of £20m.
Despite the improved performance, there was still cause for concern. The board of UCLH avoided intervention by Monitor only by appointing KPMG to help recover its financial balance. The trust's deficit continued to grow – from £17.4m in quarter two to £29.4m in quarter three.
While 13 foundations improved their financial risk rating in the third quarter, Monitor said the outlook was less rosy for seven trusts. The finances of UCLH and six other trusts were being monitored each month, rather than on the usual quarterly basis.
Monitor chair Bill Moyes warned that the final quarter of the financial year would be difficult for foundations, as some primary care trusts were unable or unwilling to pay for contracted work.
The Foundation Trust Network agreed that PCTs were increasingly failing to honour contracts. 'The challenge now is to ensure this FT success story is not stopped in its tracks. We need government to stand firm in support of a transparent, rules-based system that requires all organisations to operate on a business-like basis,' it added.
Turnaround plans at the three foundations with deficits in 2004/05 (Bradford, Peterborough and Royal Devon & Exeter) appeared to be working. Their combined deficit of £23m had been reduced to £400,000 by December.
Moyes said: 'The performance of the foundation trusts offers clear pointers for the whole of the NHS. The current reform programme, particularly Patient Choice and payment by results, requires providers to be financially strong, well managed and responsive to patients and commissioners.'
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