18 August 2006
Strict new financial rules might scupper mergers involving foundation trusts, the Foundation Trust Network said this week.
Monitor, the regulator, has issued details of how it will assess foundation trusts' plans to merge with each other or with non-foundation trusts.
Some analysts believe that several trusts will never gain the financial stability needed to become foundations and should be merged with those that have achieved foundation status.
The regulator promised a rigorous assessment of both the quality of the merger plan and the likelihood of its successful execution.
Monitor chief operating officer Stephen Hay said a merged trust must be financially viable. Generally, the regulator would insist on a financial risk rating of three or more in its first year before granting an operating licence.
A rating of three or more means the trust is unlikely to significantly breach its terms of authorisation.
'Mergers can be complex transactions to successfully execute, with the benefits hard to realise unless there is a detailed integration plan in place. However, a well-executed merger will have the potential to create real value for patients, staff and the taxpayer,' he added.
But Sue Slipman, director of the Foundation Trust Network, said few newly merged foundations would be able to meet Monitor's tough financial targets in the short term.
'We remain concerned that it will still mean that mergers involving foundation trusts are extremely unlikely to happen in practice.
'We need to ensure merger is an option where integration carries higher risks in the first few years of operation but is still capable of delivering financial sustainability over the longer term.'
PFaug2006
