News / FTs to revisit year-two finance projections

By Seamus Ward

Monitor has asked foundation trusts to revisit their financial projections for 2015/16 after its initial review of their two-year operational plans.

The planning system has been changed in a bid to improve decision-making. Plans are triangulated between Monitor, the NHS Trust Development Authority and NHS England to ensure they align operationally and financially.

A letter from Mark Turner, the regulator’s regional director for London and annual plan review, said that in previous years, trusts had been ‘accurate’ at forecasting the first year of their plans.

But expectations of ‘sustained recovery in outer years’ had not been delivered. He said new two-year operational plans appeared to ‘demonstrate this pattern’.

Foundations expected a continuing decline in earnings in 2014/15, but, overall, the plans forecast an increase in 2015/16.

‘This profile appears to be somewhat optimistic, given the expectation that financial pressures will increase in 2015/16 and with little concrete evidence to suggest that delivered cost savings are likely to be substantially ahead of recent years,’ Mr Turner said.

?He acknowledged the current financial environment was particularly difficult, with commissioning uncertainty and concerns over the impact of the better care fund and the capacity to deliver cost savings year after year.

While it was likely that projections were based on reasonable assumptions, only some of which were supported by fully worked-up plans, boards and regulators needed the best information to make decisions.

When the planning process was launched, Monitor said the two-year plans should not be changed once submitted, but the initial review findings had prompted a rethink.

‘To this end, we are inviting FTs to consider if their projections for 2015/16 need to be revisited and to encourage them to be realistic in their five-year plan submission due at the end of June 2014,’ said Mr Turner. ‘We will also be seeking further information as to how providers have engaged with the better care fund as part of our work to review plans.’

While trusts may be concerned that showing a deficit could trigger regulator action, he insisted Monitor’s primary concern was to ensure boards were basing decisions on the ‘best and most realistic view of the future’.

Monitor did not expect many changes, but added that it would place more emphasis on performance against multi-year plans in future governance assessments.