4 Overseeing hospital services
24. The majority of hospital trusts in England are
now Foundation Trusts, with much more financial and operational
freedom than other NHS trusts. Foundation Trusts will face increased
pressure to improve their cost-effectiveness, through wider adoption
of the practice of reimbursing hospitals for treatment given to
patients according to the costs incurred by the most efficient
hospitals, rather than the average.
The Department told us that the existing regime to address any
failure of Foundation Trusts, which is triggered by the Secretary
of State, would be adapted in legislation so that it can be triggered
by Monitor. A more comprehensive insolvency and special administrator
regime would come into effect in 2013 or 2014.
The Department also told us that in cases where a trust "went
bust" a special administrator would be appointed to ensure
the continuity of services that had been designated.
25. If a Foundation Trust fails, the services it
provides which have been 'designated' would be preserved for the
public and patients by the regulator, Monitor, stepping in to
appoint a special administrator. The administration process would
include addressing any Private Finance Initiative debts which
the trust might be carrying.
The Department said the details of the special administration
regime had yet to be worked through, including the question of
whether the cost of future PFI projects might be driven up because
of the increased risk arising from the possibility of a trust
going into administration.
Ramsay HealthCare UK's view was that in the private sector everything
would be done to prevent closure, but if it could not be avoided,
this would present an opportunity for another provider to come
in and run the hospital. It may therefore be possible in the future
for private providers to take over the running of NHS hospitals.
26. Monitor's new role will cover the regulation
of providers of NHS services, including private and voluntary
providers as well as NHS Foundation Trusts. It will act to ensure
continuity of supply, setting prices to ensure a viable provider
market, rather than the viability of individual organisations.
This is distinct from its old role as the regulator of Foundation
Trusts, authorising hospitals to become Foundation Trusts, ensuring
compliance and intervening if necessary. The King's Fund noted
that Monitor had a range of responsibilities to interact with
bodies such as the Office of Fair Trading, the Competition Commission,
the Care Quality Commission and the NHS Commissioning Board. It
would need to employ staff with specialist skills in regulation,
finance and the law and this would mean significant transactions
costs in the system. It was unknown whether these costs would
be higher than those of the present system.
49 C&AG's report para 2.20 Back
Qq 34-37 Back
Qq 84-86 Back