Technical / Monitor rating likely to identify more FTs at risk

The regulator said a ‘series of new financial triggers would enable Monitor to take regulatory action earlier if a foundation trust is in deficit, failing to deliver its financial plan or not providing value for money’. It was effectively ‘reintroducing triggers that were in the RAF some years ago’.

Three metrics will be added to the continuity of service rating to create a broader sustainability and financial performance risk rating:

• Income and expenditure (I&E) margin
• Variance from planned I&E margin
• Variance from planned capital expenditure.

The same 1 (high risk) to 4 (low risk) rating scale will be used with I&E deficits, resulting in ratings of 1 and 2. An I&E margin that falls short of plan by more than 1% or capital spending that varied from plan by 20% or more will trigger individual metric ratings of 1 or 2.

The individual metric scores will be combined in the usual way, using weightings as indicated in the table to give a rating of 1 to 4. But scoring a 1 on any metric (other than variance in capital expenditure) will cap the weighted rating to a 2.

Monitor has made it clear that trusts rated 1 can expect investigation, while investigation is ‘likely’ for trusts rated 2. The regulator has also promised increased improvement support to ‘help trusts adopt best practice and improve their financial efficiency, reducing their risk of breaching their licence’. This is likely to be targeted at and available to all FTs rated 1-3.

Monitor is also planning an extra measure in FTs’ governance rating, looking at how a trust performs against published benchmarks. In particular, it could investigate on the back of poor control of agency and management consultancy costs.

Responding to the consultation, the HFMA said the proposals were likely to mean more organisations falling into Monitor’s investigation routine. The changes would simply ‘identify more foundation trusts for extra scrutiny’ but it is unclear what this will mean in terms of additional intervention and support for those bodies.

Given that 77 out of 152 FTs ended 2014/15 in deficit, the HFMA said there was a danger the proposals would merely ‘flag up the financial stress affecting the whole of the sector’ but add little new information.

With potentially increasing numbers of FTs rated 1 or 2, the HFMA suggested there might need to be further amendments to the metrics to enable Monitor to focus investigations and support on those most in need.

Debbie Paterson is a technical editor for the HFMA

New sustainability and financial performance risk rating

In brief

The Department of Health has issued guidance on the bulk transfer of staff to the NHS Pension Scheme under the ‘New fair deal’. The deal allows staff compulsorily transferred out of the NHS to have continued access to the pension scheme. The guidance outlines the process for bulk transfer when an NHS organisation is re-tendering for the provision of services.

Foundation trusts no longer need explicit authorisation from the Treasury to run a mutually agreed resignation (MAR) or voluntary severance (VS) scheme, Monitor said. Foundations have delegated authority to run either scheme in 2015/16 under set conditions, including an £80,000 limit on each payment.

Clinical commissioning groups and their partners are being offered help on personal health budgets. NHS England said a renewed support programme would help develop local personal health budget offers in line with CCG circumstances.

The Department of Health has published an ordinary residence tool for overseas visitor managers, as part of its guidance on the overseas visitor charging regulations.