How Monitor regulates NHS foundation trusts

Monitor licenses NHS foundation trusts and has created a risk-based system of regulation which informs the intensity of the monitoring we undertake. It is designed to identify actual and potential financial and non-financial problems in a manner that allows Monitor deal with them effectively.

Foundation Trusts and the licence

Once licensed, each NHS foundation trust is assigned a Monitor relationship manager (details can be found in the foundation trust directory). The relationship manager ensures that where an NHS foundation trust is in breach of its licence, the trust's board takes the appropriate remedial action.

The licence has a number of conditions, and Monitor will use a number of methods to assess licensees’ compliance with them. Monitor's current Compliance Framework describes in detail how we monitor each NHS foundation trust's compliance with:

  • the Continuity of Service risk condition (staying solvent and maintaining the continuity of services provided by the trust); and
  • the NHS foundation trust governance condition (being well governed from both a financial, operational and quality perspective).

Our current Compliance Framework describes in detail how we monitor each foundation trust's compliance with its licence, it also references our Quality Governance Framework which measures the structures and processes in place to ensure effective, trust-wide, oversight & management of quality performance. The current Compliance Framework will be replaced by the Risk Assessment Framework from October 2013.

Where the Compliance Framework indicates that the foundation trusts are breaching or potentially breaching, their Continuity of Service or governance conditions, we will consider whether formal investigation is required in order to assess the scale and scope of the breach and what, if any, regulatory action is appropriate. Details of this process and Monitor's enforcement powers are here.

Foundation trusts planning and reporting

Monitor requires each NHS foundation trust board to submit an annual plan and quarterly and ad hoc reports. These are used to assess risk on a forward-looking basis and to hold boards of foundation trusts to account.

Monitor publishes sector summaries based on these submissions, on a quarterly and annual basis, and assigns each NHS foundation trust with an annual and quarterly risk rating. These risk ratings are designed to indicate the risk of a failure to comply with the Continuity of Services and governance licence conditions. Monitor can adjust risk ratings to reflect the escalation process set out in the Compliance Framework.

We publish two risk ratings for each NHS foundation trust, on:

  • governance (rated red, amber-red, amber-green or green); and
  • Finance (rated 1-5, where 1 represents the highest risk and 5 the lowest).

Based on these risk ratings, the intensity of monitoring and the potential need for regulatory action is considered on a case-by-case basis. This also applies where a foundation trust is performing well, for example moving from the usual quarterly monitoring to six-monthly monitoring.

When Monitor identifies a risk of an NHS foundation trust breaching its licence we may seek further information and/or open a formal investigation. The issues we find are likely to drive our regulatory response – for instance we may seek an agreed recovery plan to return the trust to compliance. However, if the need for action is time-critical, Monitor’s Board will consider using its formal powers to intervene. More information can be found in Regulatory action.

Working with our partners

In addition, Monitor works closely with a number of organisations, including the Care Quality Commission (CQC), in order to carry out its role. CQC is responsible for safeguarding appropriate standards of quality and safety within adult health and social care in England. See how we are working together with our partners, for patients.

Related publications

  • The new NHS provider licence – this is the main tool with which we will regulate providers of NHS services
  • Compliance Framework - describes our approach to ensuring foundation trusts are well-led, in terms of both quality and finances. 
  • NHS foundation trusts: quarterly reports
    Reports on the performance of NHS foundation trusts and Monitor’s regulatory activity, based on quarterly submissions to Monitor by NHS foundation trusts.
  • Quality Governance Framework - this framework sets out the approach Monitor will take in assessing a trust's ability to ensure trust-wide quality performance