Foundation trusts 7.5% short of savings target

13 Mar 12
NHS foundation trusts are set to miss their efficiency targets this financial year, regulator Monitor revealed today.
By Richard Johnstone | 13 March 2012

NHS foundation trusts are set to miss their efficiency targets this financial year, regulator Monitor revealed today.

A review of the 141 trusts’ performance for the first three quarters of 2011/12, published today, found that on average they were 7.5% behind the targets in their Cost Improvement Plans.

However, this was an improvement over the past two years, when they were 9% behind at the same point.

The target for this year is the same last year’s – a 4.4% reduction in operating costs. Trusts managed to achieve 3.9% savings in 2010/11.

Monitor’s report found that the ‘principal cause for slippage’ from the target was an increase in activity in the acute hospital sector.

But it acknowledged the role of Cost Improvement Plans, which set out each trust’s contribution to the overall NHS savings target of £20bn by 2015. The report noted that the plans were ‘an essential part of meeting the financial challenge faced by the NHS, to keep pace with the rising costs of higher demand on NHS services and an ageing population’.

Stephen Hay, Monitor’s chief operating officer, said that the fact that trusts were closer to their plans this year showed ‘the benefit of robust financial planning and better delivery of cost savings across the sector’.

He also stated that it was ‘encouraging’ that the sector’s operating margin, measured as a percentage of foundation trusts’ income, was slightly ahead of plan, at 6.1% compared to 6.0%.

But he added: ‘This should be seen in the context of a significant downward trend over the past four years and foundation trusts will need to continue to deliver sustainable cost savings in a challenging financial climate. We’re very clear with them that they need to do this while maintaining their focus on providing quality services for their patients.’

Monitor found that, overall, 15 foundation trusts are currently in significant breach of their terms of authorisation, an increase from 13 in the first half of the year. In 11 cases, financial problems are a factor.

Three trusts are experiencing ‘significant financial problems’, the regulator revealed. These are: Mid Staffordshire; Heatherwood and Wexham Park Hospitals; and Peterborough and Stamford Hospitals

Hay added: ‘We are working closely with them to ensure they address the root causes.’

Monitor also revealed that the number of trusts given the ‘green’ rating for low governance risk had risen – from 56 in the quarter two report to 63. However, the number rated ‘red’ or ‘amber-red’ had also increased in the same period, from 48 to 59.

The traffic light risk-rating measures whether foundation trusts are meeting national health targets, as well as assessing clinical standards and co-operation with other NHS bodies.

The proportion of trusts in ‘red’ or ‘amber-red’ status is more than double that of the same report a year ago, at 42%.

Hay said this was due to the Care Quality Commission carrying out more inspections. ‘Patients should be reassured by the increase in the number of CQC inspections as it means regulation is working and problems are being identified and addressed,’ he said.

The report is published as both MPs and peers prepare to debate the government’s NHS reforms today. Peers will debate the Health and Social Care Bill at report stage, while Labour will stage an Opposition Day Debate in the Commons calling for the government to drop the changes. The legislation proposes that all hospitals in England become foundation trusts by April 2014.


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