Published on: 16th July 2009
The consolidated accounts for 115 NHS foundation trusts for 2008-09 published by Monitor today reveals a sector in good overall financial health, but with the first signs of likely financial challenges ahead.
In the year ended 31 March 2009 foundation trusts generated total revenues of £22.8 billion and earned a retained surplus of £269 million. Although the overall financial position of foundation trusts remains healthy, 2008-09 was the first year in which foundation trusts did not continue the recent trend of improving margins. EBITDA margin (earnings before interest, tax, depreciation and amortisation), a proxy for overall operating efficiency, decreased to 6.1% from 8.1% in the previous year.
Total revenues at foundation trusts grew by 41%, reflecting an increase in the number of NHS foundation trusts, from 89 to 115 in the year, and higher than forecast activity. The financial benefit of revenues ahead of plan was reversed by additional costs to deliver these services.
The ‘NHS Foundation Trusts: Consolidated Accounts 2008/09’ also disclose:
Foundation trusts’ annual plans for the next three years, which will be published next month, indicate that they are planning to spend over £1.9 billion on capital in 2009-10, significantly more than in 2008-09, as they invest in new and improved services ahead of a widely anticipated slow-down in funding growth.
Monitor has warned foundation trusts they will need to have robust plans in place to implement efficiency savings before the financial pressures impact in 2011 and thereafter.
Commenting on these results, William Moyes, Executive Chairman, said:
“These are good results. NHS foundation trusts continue to deliver against service expectations and to generate financial resources to fund future investment. This will be particularly important if high quality services are to continue to be maintained and developed as funding growth reduces. Given the expected economic pressures after 2011, the challenge will be to ensure that NHS foundation trusts plan and successfully implement efficiencies in advance of financial pressures.”
Chief Operating Officer, Stephen Hay, commented on the cash resources held by foundation trusts:
‘Foundation trusts have earned and retain significant cash balances at 31 March 2009, but we also know from their annual plans that they have substantial plans for investment in the current year; capital expenditure is forecast at £1.9 billion for 2009-10.
The regulator also warned that foundation trusts have in the past been over reliant on expected increases in activity levels to sustain their financial position. Stephen Hay said:
“In future years foundation trusts will not be able to rely on sustained increases in activity to boost their revenues. The drive to deliver more services outside acute hospital settings requires a different approach. In the coming years we expect to see greater use of cash to fund capital projects to respond to inevitable changes in the environment in which foundation trusts will operate in the future.”
Notes