News / Monitor worry over slippage of savings

Monitor has voiced its concern that only one in four foundation trusts delivered their planned cost improvement savings in the third quarter of 2012/13.

For the third quarter in a row, delivery of cost savings was substantially behind plan. The aggregate shortfall was 16% (£173m) of the total savings planned (£1.07bn) to that point in the financial year. When it published the earlier Q2 figures, Monitor urged foundations to make cost savings earlier in the year.

In the past some trusts were regularly behind target on cost improvement programmes (CIPs) in the first six months, before accelerating progress over the second half of the year. However, this does not appear to have happened this year. The regulator said this may in part be because revenue generation schemes can no longer be recorded as CIPs and possibly reflects the fact that CIPs become harder to deliver over time.

Monitor managing director of provider regulation Stephen Hay (left) reminded trusts of the importance of delivering CIPs in today’s financial environment, while maintaining and improving the quality of care for patients. ‘Monitor has regularly reminded trusts of the importance of making savings early in the year to prevent problems being stored up for later,’ he said.

Despite the overall shortfall on planned cost savings, financial performance remained ahead of plan at quarter three with an overall surplus of £365m. Revenue was 2% more than expected, driven by increased demand for hospital services.

The number of trusts in deficit fell from 26 in Q2 to 19, but their total deficit rose from £90m to £112m. The regulator said this was largely due to the five most financially challenged foundation trusts (Peterborough, Morecambe Bay, Sherwood Forest, Mid Staffordshire and Bolton), together accounting for £90m of the £112m.