01 September 2006
Some foundation trusts are reluctant to show surpluses because they fear a backlash over their relative wealth, regulator Monitor said this week.
In a letter to recently authorised foundations and applicants for the next wave of licences, Monitor chief operating officer Stephen Hay said there were many lessons to be learned from foundations that had been established earlier. The trusts must assert their independence, particularly in finance.
The ability to generate and retain surpluses was one of foundations' key freedoms and some had generated reasonable sums. But this was not always the case when the local health economy faced financial difficulties.
'We have found in certain foundation trusts a reluctance to show surpluses in a challenged health economy, as they fear the money might be “clawed back” by strategic health authorities or primary care trusts, which undermines the incentives this system is designed to generate,' a Monitor spokesman said.
Some foundations hid their surpluses as contingency funds. The regulator said that while it was prudent to build some contingencies into their plans, significant sums distorted the true picture of their finances and should be resubmitted with more realistic figures.
Monitor also expressed concern over loans to other NHS bodies that were struggling to balance their books. It did not object to the loans in principle but said they should include legally binding terms for repayment.
PFsep2006
