News / Single failure regime for trusts and FTs

The Departmemnt of Health has published proposals for an NHS-wide failure regime instead of adopting commercial-style insolvency procedures.

Under plans put forward by the Department last month, unsustainable foundation trusts would be dealt with in the same way as NHS trusts and would know their fate within four months of being placed ‘in administration’.

The plan means the Department has moved away from earlier suggestions that an insolvency regime would be introduced for FTs. The Department said it had not been able to find a satisfactory way of winding up a foundation trust. The insolvency regime was inappropriate as it put financial considerations before those of patients and risked court-based liquidation of assets.

NHS chief executive David Nicholson (pictured above) said the regime would be rarely used.  ‘It is important that there are clear processes set out to ensure that services for patients continue to be provided,’ he said.

The consultation on a regime for unsustainable NHS providers follows on from the NHS performance regime set out by the Department in June. Under the latter, challenged (non-foundation) trusts will be given 12 months to turn around their performance – if at this point their strategic health authority judged them to be unsustainable they would be passed on to the new regime.

Where Monitor did not believe its regulatory intervention could turn around a foundation, it would deauthorise the FT, which would revert to NHS trust status. A ‘legal savings provision’ would be put in place to preserve any arrangements with third parties that could only be entered into by an FT. The Department said the rules would not reduce FTs’ freedoms.

A trust special administrator would take over both deauthorised FTs and unsustainable NHS trusts, with a statutory duty to ensure continuity of services. Proposals on the trust’s future, which could include re-commissioning from other providers, consultation, final recommendations and a decision by the secretary of state for health would be made within 100 days.

A Monitor spokesperson described the consultation document as ‘helpful’. They added: ‘There are a number of detailed issues, including how commercial lenders should be dealt with, that require further consideration. It’s very positive to have these issues exposed for further debate.’