1 Monitor's regulation of NHS foundation
trusts
1. On the basis of a report by the Comptroller
and Auditor General, we took evidence from the Department of Health
(the Department) and Monitor about Monitor's performance in regulating
NHS foundation trusts, and how it is responding to the new challenges
it faces.[1]
2. Monitor was created in 2004 as the
independent regulator for NHS foundation trusts. It assesses NHS
trusts for foundation trust status, and authorises those that
meet the required standards to become foundation trusts. It regulates
the 147 trusts that have achieved foundation status, and intervenes
where they breach their regulatory conditions to help them improve.
Monitor is an executive non-departmental public body sponsored
by the Department. It is independent of government, in terms of
its regulatory decisions, but is accountable to Parliament and
the Department for its performance and value for money. In regulating
NHS foundation trusts, Monitor has to work with other bodies including
the Care Quality Commission (which regulates the quality and safety
of healthcare), the NHS Trust Development Authority (which oversees
the performance of the remaining NHS trusts), NHS England and
local clinical commissioning groups (which commission healthcare
from trusts).[2]
3. To earn the greater financial and
operational freedoms that foundation trust status brings, NHS
trusts have to demonstrate to Monitor that they are financially
sustainable, well-led and locally accountable. Despite this, at
31 December 2013, 25 NHS foundation trusts (one in six) were in
breach of their regulatory conditions, an all-time high. One trust
was in breach on financial grounds, nine on governance grounds,
and 15 on both financial and governance grounds. At the time of
our hearing Monitor estimated that 39 of 147 NHS foundation trusts
(some 26%) would be in deficit by the end of 2013-14.[3]
4. Monitor told us that there were four
main reasons why trusts were in difficulty after gaining foundation
trust status. Firstly, key members of the leadership teams of
some trusts had changed over time and the new leadership was not
as strong. Secondly, the financial environment in which trusts
were currently operating was much more challenging than when many
trusts were authorised. Thirdly, the standards Monitor expected
in relation to care quality had become more demanding, following
the failings in patient care at Mid Staffordshire NHS Foundation
Trust. And lastly, Monitor had on occasion made the wrong decision
in granting foundation trust status to trusts that were not strong
enough.[4]
5. When NHS foundation trusts are in
breach of their regulatory conditions, Monitor intervenes to help
them improve. For example, it may require them to change their
Chair or Chief Executive, employ turnaround directors, or commission
external consultancy support. Despite this, some trusts have been
in breach of their regulatory conditions for a long time—three
of the 25 trusts in breach at 31 December 2013 had been in this
position for over four years.[5]
6. Basildon and Thurrock NHS Foundation
Trust is one of the three trusts which have been in breach of
their regulatory conditions since 2009. By 31 December 2013, it
had been in breach for reasons of care quality for 49 months,
since 2009. Monitor failed to give appropriate challenge until
local MPs declared they has lost confidence in the Trust's leadership.
Local Members of Parliament declared that they had lost confidence
in the Trust's leadership. Monitor acknowledged that it should
have moved much more quickly to replace senior staff at the Trust.
It believed that the new leadership team were now turning things
around, but it accepted that reaching this point had taken far
too long. It agreed that it should have been prepared to intervene
more strongly when the Trust did not sort itself out within a
fixed time period. In addition, Monitor noted that, prior to the
Care Quality Commission's new inspection regime, neither Monitor
nor the Trust itself had had sufficient insight into the underlying
causes of the problems.[6]
7. Monitor admitted that it had been
slow to improve the leadership at Heatherwood and Wexham Park
NHS Foundation Trust. At 31 December 2013, the Trust had been
in breach for 53 months, despite Monitor's interventions. Monitor
told us that it had decided that replacing a few key people was
insufficient to turn the Trust around, and that it needed to strengthen
the whole leadership team. It had also become clear to Monitor
that the Trust would not be able to return to a position in which
it was clinically and financially sustainable in its own right.
With Monitor's support, the Trust was now pursuing a merger with
nearby Frimley Park NHS Foundation Trust.[7]
8. The Department acknowledged that
there was a shortage of good leaders across the NHS. In particular,
in contrast to some other countries, not enough clinicians were
involved in running trusts. The Department told us that it was
taking steps to attract and develop more high-calibre leaders.
It had approved the first 50 people, including 35 clinicians,
to attend an accelerated course at Harvard Business School, and
it had asked Sir Stuart Rose to work with it, to improve the calibre
of NHS leaders.[8]
9. For a growing number of NHS foundation
trusts in difficulty, the underlying causes are not necessarily
about leadership, or other matters internal to the trust, but
are rooted in the wider local health economy, such as local commissioners
being in financial difficulty. Monitor told us that the ability
of trusts to fix problems on their own had become increasingly
limited. In some cases, managing the trust well was not enough
and more fundamental structural change was required. In these
circumstances, Monitor needed to work with other bodies, including
the NHS Trust Development Authority and NHS England, to develop
a plan for the local health economy as a whole. While this was
now happening in relation to Milton Keynes NHS Foundation Trust
and Bedford NHS Trust, Monitor acknowledged that Milton Keynes
had been in trouble for some time before it realised this was
the right approach. Monitor told us that it was now seeking to
step in sooner in similar cases, such as at the Queen Elizabeth
Hospital NHS Foundation Trust in King's Lynn. Monitor noted that
it was now responsible for the failure regime. This responsibility
gave it the power to appoint a special administrator, if it became
clear that an NHS foundation trust was not sustainable in its
existing form, and helped Monitor take appropriate action sooner.[9]
10. The proportion of NHS foundation
trusts in breach of their regulatory conditions has increased
significantly in recent years. At 31 December 2013, 17% of trusts
were in breach, up from 11% two years previously. Monitor told
us that it expected the number of trusts in breach to continue
to rise. Coping with this increase would be challenging for Monitor,
as intervening in trusts in difficulty was resource intensive,
particularly in terms of the demands on its senior staff. Monitor
noted that it was working with the NHS Trust Development Authority
and NHS England and, as a result, they had identified 11 local
health economies which they considered would benefit from early
support.[10]
11. The Department confirmed that it
was still the Government's policy intention that all trusts should
become foundation trusts, but it had not set a target date for
this to be achieved. However, just two NHS trusts gained foundation
trust status in 2012-13 and, as at 31 December 2013, 98 NHS trusts
remained.[11]
1 C&AG's Report, Monitor: Regulating NHS foundation
trusts, Session 2013-14, HC 1071, 26 February 2014 Back
2
C&AG's Report, paras 1, 2, 4, 1.5 Back
3
Qq 1, 12, 131-132; C&AG's Report, paras 2.2,3.14 Back
4
Qq 2-3, 5-8, 12 Back
5
Qq 3, 4; C&AG's report, paras 3.26-3.27, Figure 11 Back
6
Qq 17-21, 23; C&AG's report, Figure 11 Back
7
Qq 13, 15, 53; C&AG's report, Figure 11 Back
8
Q 117 Back
9 9
Qq 24, 26, 52-54; C&AG's Report, paras 18, 3.28 Back
10
Qq 62, 70, 105; C&AG's Report, paras 3.30-3.31, Figure 16 Back
11
Qq 101-102, 138; C&AG's Report, para 12 Back
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