Published on: 17th April 2012
Monitor has published its financial assumptions for 2012/13 which are used in the assessment of applicant Trusts and provide guidance for Foundation Trusts when producing their annual plans.
Monitor's assumptions are revised each year to reflect a number of updates on both cost and income pressures and risks that will affect all healthcare providers. Cost pressures are composed of pay costs and non-pay costs whereas income pressures arise from reductions to income uplifts.
Financial assumptions are used by Monitor to:
Monitor's assumptions about cost pressures are based on careful consideration of the likely pay and non-pay pressures in the NHS, including the latest economic forecasts published by the OBR, historic trends in NHS pay and prices, and stated government policy on public sector pay. Our assumptions about income uplifts are consistent with guidance in the Operating Framework regarding the level of tariff uplift in 2012/13 and beyond.
The table below details the sector-wide recurrent efficiency requirement facing providers based on these updates.
In addition to sector-wide efficiency requirements, for acute trusts Monitor will consider the impact of tariff income levers as outlined in the Operating Framework 2012/13 and the policies adopted by a trust’s commissioners. We will assess and apply any additional pressures from these tariff levers non-recurrently on a case by case basis to reflect the circumstances of individual trusts.
Individual providers will face their own specific circumstances and will, to some extent, be able to mitigate the risks reflected in Monitor's assumptions. Where mitigating actions are backed up by careful and evidence-based planning, Monitor will consider offsetting them against our assumptions.
Miranda Carter, Monitor's Assessment Director, said, "Monitor's has updated its assessment assumptions to reflect the current challenges in the sector with growing demand for services, increasing cost pressures but only limited growth in funding".
"Monitor's financial assumptions are consistent with maintaining the "bar" for achieving foundation trust status, which ensures aspirant Foundation Trusts have realistic business plans that are financially sustainable.”
"We recognise the scale of the productivity challenge, which will require trusts to deliver very challenging cost improvement programmes going forward. It is important that these are delivered whilst maintaining or improving the quality of care to patients. To ensure quality is not compromised, it will be important for trusts to look at new ways of working and new ways of delivering services as they seek to address these challenges."
Notes to Editors