National Health Service Landscape Review - Public Accounts Committee Contents

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.[49] 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.[50] 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.[51]

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.[52] 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.[53] 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.[54]

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.[55]

49   C&AG's report para 2.20 Back

50   Q33 Back

51   Q35 Back

52   Qq 34-37 Back

53   Qq 84-86 Back

54   Q257 Back

55   Q284 Back

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© Parliamentary copyright 2011
Prepared 27 April 2011