News / CIPs delivery improves but FTs still fall short

FOUNDATION TRUSTS HAVE improved their delivery against cost improvement plans (CIPs) in 2010/11 but still fell short of the planned efficiencies.

In its review of 2010/11, Monitor said foundation trusts’ financial performance had generally followed plans. However, CIPs were 7% behind plan. Monitor said this was an improvement on 2009/10, when foundations were 11% behind plan.

CIPs delivered at quarter four represented 3.9% of operating costs. Again, this was behind the 4.4% plan, but an improvement on 2009/10, when CIPs represented 3% of operating costs.

The Department of Health also published its Q4 review for 2010/11, showing primary care trusts and strategic health authorities had a year-end surplus of £1.375bn (1.4% of revenue), in line with the revised operating framework. NHS trusts reported an aggregate year-end operating surplus of £121m. Two PCTs and seven NHS trusts reported a gross deficit of £18m and £103m respectively.

Foundation trusts reported an aggregate surplus of £406m, with cash balances of £3.3bn. This was £923m above plan, mainly as a result of favourable working capital movements (£592m) and a £404m underspend on capital plans.

Underperformance on CIPs and higher than planned costs contributed to FTs’ EBITDA (earnings before interest, tax, depreciation and amortisation) being behind plan. The aggregate EBITDA of £2.05bn was just behind plan (£20m), with a margin of 6.7% compared with a planned 6.9%.

Operating income was £588m (2%) over plan at almost £31bn. This was driven by a number of factors, including greater than planned non-elective and outpatient revenue.

However, operating costs were 2.2% (£608m) above plan, largely due to staffing costs, winter emergency activity and a shortfall in CIPs relating to pay costs.

Monitor chair David Bennett said foundations must maintain their focus. Cancer waiting times represented a significant challenge and continued underperformance could lead to breaches of trusts’ terms of authorisation, he added.

‘The results for the past 12 months are encouraging, but we know that the most significant challenges are yet to come. Trusts must continue to strive for improvements in efficiency, while improving the quality of care.

‘The results for the year suggest a marked improvement in planning from foundation trusts,’ he added. ‘This is a good example of a devolved system working.’