Published on: 20th December 2012
Half way through the financial year the NHS foundation trust sector continued to perform well in the current challenging economic climate, according to Monitor’s latest quarterly report.
However, a few trusts were still not making sufficient cost savings early enough in the year, the regulator said.
There is an overall improvement in the number of foundation trusts meeting healthcare targets, maintaining the steady progress over the last 12 months. However, all trusts will be under increasing pressure to continue to meet targets and deliver savings in future.
Although some financially-challenged trusts have not met their savings targets, the foundation trust sector as a whole has so far delivered a surplus of £201m - £23m ahead of plan – which is available for trusts to reinvest in healthcare for patients.
Unlike NHS trusts, which are expected to break even every year, NHS foundation trusts have more freedom to run their own affairs. Monitor assesses the financial health of foundation trusts on their performance in the medium term and does not require them to break even each year. They are therefore allowed to run a short term deficit, and from a business perspective this can be an acceptable method of managing their finances.
The sector reported an improvement in the proportion of trusts in deficit from 25% at Q1 to 18% at Q2. This reduction from 36 trusts in deficit to 26 (out of 144) represents an increase of one trust compared with Q2 last year (when 25 out of 138 trusts were in deficit). The gross deficit at Q2 was £90m compared with £79m this time last year.
Stephen Hay, Managing Director of Provider Regulation said: “The good news for patients is that more foundation trusts are meeting healthcare targets. The sector overall has also improved its planned financial performance, although a few trusts are not making the necessary savings early enough in the year.
“However to meet the challenge of financial pressures in the medium term, all trusts will need to understand the forces at work within their local health economy and develop strategic plans to deal with them. Without exception, trusts will need to plan sooner and more effectively for the longer term to ensure they can continue to deliver quality services.”
The report bears out Monitor’s forecast in its annual review of foundation trusts’ plans that an increasing number of foundation trusts are at risk of breaching their terms of authorisation for financial reasons in the next few years.
The report also notes that a small number of trusts have relatively large deficits. Those at greatest financial risk include trusts based on the traditional district general hospital model and those having to adapt to changing local health economy pressures or struggling with unaffordable PFI schemes.
Notes to editors
1. For media enquiries contact Emma Shepherd, Media Relations Manager, on 020 7340 2438 (firstname.lastname@example.org)
2. Monitor is the sector regulator of NHS-funded healthcare services. Under the Health and Social Care Act 2012 its fundamental duty is to protect and promote the interests of people who use them. Information about Monitor’s new role can be found here
3. This second quarterly report for 2012/13 summarises the key trends drawn from individual reports of the 144 trusts authorised for foundation trust status up to 30 September 2012.
4. The foundation trust sector now comprises two-thirds of all NHS secondary care providers running about 1,000 hospitals.
5. Follow Monitor on Twitter @MonitorUpdate.