News / Monitor voices FT finance fears despite strong Q1 performance

Foundation trust finances remain strong, but Monitor is worried that unmet cost improvement plans (CIPs), contract disputes and the marginal rate for emergency activity could affect FTs’ financial position.

In an overview of the first quarter of 2010/11, the regulator said income was £72m (1%) above plan, mainly driven by over-performance on non-elective care, accident and emergency activity, outpatients and non-tariff work. However, greater activity also raised costs, which were £54m (0.8%) above plan.

Monitor said 62% of FTs were behind plan on cost improvements at the end of the first quarter. They had delivered £203m in CIPs – £41m less than planned, mainly due to a failure to reduce staff costs.

Sixteen foundations told Monitor they were likely to have a dispute with commissioners over their 2010/11 contracts. Monitor expected the 27 trusts that had not signed 2010/11 contracts to do so shortly. The nine outstanding disputes over last year’s contracts should also be resolved soon.

The report said the 30% marginal rate on emergency activity above 2008/09 levels could lead to financial pressures later in the year, if overperformance on A&E and non-elective activity continued. Eleven foundation trusts reported non-elective and accident and emergency income 5% or more above plan.

Monitor chief executive David Bennett said foundations should not rely on short-term measures to deliver CIPs and, while working with commissioners to manage demand, they should not take on unnecessary risk.

‘The issues we’re flagging in this report have to be dealt with now to prevent pressures building. These are fixable problems. The key is boards identifying the causes and taking action,’ he said.