News / Monitor urges foundations to invest in service upgrades

By Seamus Ward

Monitor has urged foundation trusts to use their surpluses to ease the pressures in the system and continue improvements to patient services.

The call came after the regulator’s year-end review of foundations’ performance showed that the trusts had built up cash balances of £4.5bn – a sharp rise on the planned figure (£3.2bn) and the equivalent figure 12 months earlier (almost £4bn). The rise against plan was largely due to slippage in capital expenditure and working capital movements, Monitor said.

The regulator’s concern follows a rise in the number of foundations failing to meet the national four-hour A&E waiting times target in the last quarter. These increased from 32 trusts in the previous quarter to 47 – meaning more than half (58%) of all FTs with A&E units breached their target.

The number of foundation trusts failing cancer referral treatment waiting times targets also increased. A&E performance improved in the first half of May.

Foundations continued to report strong financial performance overall in 2012/13. The sector made a surplus before exceptional items of £540m – £159m above plan and £31m greater than the aggregate surplus for 2011/12.

Monitor managing director of provider regulation Stephen Hay said foundations were doing reasonably well financially, but they needed to improve their planning, particularly for capital expenditure.

‘Foundation trusts have the freedom to make a surplus every year, as long as they plan to ensure that it is invested on behalf of patients,’ he said.

‘The amount they have stored up this year is well above what was expected. We will encourage the sector to use its strong financial position to help ease capacity issues and continue to improve services for patients.’

Despite the strong position, several trusts were in financial difficulty. The number of FTs in deficit rose from 15 last year to 16 this. Gross deficits have risen from £105m last year to £143m at 31 March 2013. Small acutes (revenue of less than £200m) were the most financially challenged, with an average financial risk rating of 2.8.

Monitor said five FTs have been given public dividend capital funding in 2012/13 while long-term solutions to their financial challenges are developed. They are: Peterborough; Mid Staffordshire; Bolton; Heatherwood and Wexham Park; and Milton Keynes.

Cost improvement plans remained behind plan – £1.3bn of savings were delivered (£225m behind plan). Monitor said this was probably a reflection of schemes being harder to deliver, together with ongoing activity pressures.