NHS Foundation Trusts – Risks and Opportunities

September 2014

GOV.UK/monitor

Content

• FT performance– financial– non-financial

• Risks and opportunities• Conclusions and questions

3

FT performance: financial

April 12, 2023

FT performance has begun to reflect funding pressures

59 14714514313612911589No. of FTs at year-end

Total FT surplus, EBITDA margin, 2007-14

£bn

2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-140.0

100.0

200.0

300.0

400.0

500.0

600.0

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Surplus (pre-impairments) EBITDA margin

Note: 2006-07, 2007-08, 2008-09 prepared under UK GAAP

5

NHS foundation trusts: plans vs delivery 2010-2014

April 12, 2023

EBITDA margin for all FTs

6.00%

5.90%

5.20%

6

FT performance: non-financial

April 12, 2023

FT performance: Accident & Emergency waits

FT performance: elective waiting time targets

FT performance: infection control

Risks and opportunities

April 12, 2023

11

Operational and Strategic risks

• Widely accepted that 2015/16 is likely to be very challenging

• Across the five year planning period we estimated that the cumulative affordability

challenge was 24.5%

• This compares to the 16.5% estimated efficiency that might be achieved. This leaves a

gap of 8% by 2018/19

• Small and medium acute trusts face the highest risk

• Evidence of growing financial pressure in mental health

• FTs in the Midlands appears to be most financially challenged, London the least, North

and South about the same

• About 50% of the sector have reasonable evidence in the plans of transformational

initiatives

• Varying degrees of modelling and understanding of impact of BCF

 

12

Operational and Strategic risks

• Despite the widely accepted challenges in 2015/16, on aggregate, the FT sector

forecast for APR 2014/15 shows an optimistic position following the ‘hockey stick’ again

• It is vital that Monitor (and FT boards) have a realistic view of the scale of the financial

challenge on which to make decisions

• We know that there is concern that showing the true scale of the challenge may result

in regulatory action but our primary concern is that FT boards are basing decisions on

the best and most realistic view of the future

• Quality of planning has improved but weaknesses in three key areas where there has

historically been a problem are an under-modelling of the financial pressure and under-

delivery of cost improvement plans and capital expenditure against plan.

• Our review of strategic plans suggests that on current plans a significant proportion of

the sector is marginal. In the majority of cases we are already taking action at those

considered unsustainable.

13

Opportunities - Monitors support

The challenges faced by the sector means that a different approach is required:

• We will support trusts to innovate ensuring a smoother and faster path for merger and encouraging local modification in the tariff

• We will invest in enhancing institutional and individual capabilities eg working with the NHS Leadership Academy to improve leadership and how they drive transformational change

• We are helping to develop robust local service strategies eg: supporting providers/commissioners on integrated plans and support to the 14 national integrated pioneers

• We will promote change through analysis and debate, eg work on small acutes

• We will challenge our risk Assessment Framework and ensure that it is focussed in the right areas to Ensure we have a good balance between regulatory burden and our ability to identify emerging problems

• We will develop improvement tools and guides such as a strategic planning toolkit to support the sector to develop

• We will work with system partners and align our approaches where possible eg: with CQCs inspection regime

Conclusions and questions

April 12, 2023

Carla MoodySenior Regional ManagerMonitorcarla.moody@monitor.gov.uk0203 747 0479