28.01.16
Monitor tightens FT assessment process after St George’s mistakes
The health regulator will have to tighten its internal process for granting foundation trust status to NHS providers after a trust’s finances suddenly deteriorated shortly after receiving the FT label.
The trust, St George’s University Hospitals NHS FT, was authorised as a foundation trust on February 2015, after which its finances suddenly collapsed during the fourth quarter of 2014-15, leading to a major £16.8m deficit for the financial year.
When the provider appraisal executive (PAE), the decision-making body, was presented with the trust’s application in November 2014, it highlighted concerns with the provider’s four-hour A&E target, quality of governance and short to medium term financial viability.
It proposed that the provider appraisal team should undertake further work and consult with NHS England with regard to the A&E performance and explore the possibility of extra funding arrangements between the trust, the Department of Health and the NHS Trust Development Authority.
During a follow-up application in December, PAE again concluded that the trust’s financial position remained an area of risk, requesting further work into possible borrowing arrangements to improve St George’s short-term position. The trust’s application was deferred to allow for this further work, after which it was anticipated that the authorisation could go ahead.
At the end of January, PAE concluded that, because of extra loans, the trust demonstrated a reasonable financial position for at least the next two years, giving it the green light for foundation trust status.
Monitor then granted it that status on the basis that it would break even in 2014-15 and make a small surplus the following financial year. When the trust’s balance sheet crashed, the regulator quickly investigated the reasons behind the turnaround.
Today’s investigation, published by the Health Group Internal Audit, was launched after Monitor’s internal investigation in order to assess whether lessons could be learned from the regulator’s appraisal process.
Amongst the auditor’s concerns was the fact that Monitor’s provider appraisal team only undertook a limited assessment of the trust’s finances after the December follow-up, instead of a full re-assessment – despite the trust showing clear in-month performance deterioration.
The decision to grant it foundation status was also made months after the first consultation period, without the assurance of all parties involved – which has led Monitor to change this element of its appraisal process. From now on, it will have to obtain assurances from all groups involved in the process if applications are delayed by over one month.
It has also pledged to strengthen its approach to financial governance by examining the scope of trusts’ finance streams to ensure they are fit for purpose in the current financial climate.
Miranda Carter, the regulator’s executive director of provider appraisal, said: “We are committed to being a learning organisation in order to continuously improve what we do.
“These changes will ensure our processes mirror the increased financial risk the health sector faces in the current economic climate. It also enhances ability to identify risks in applicant trusts while also providing greater clarity to reporting accountants on our expectations of what their work should cover.
“We will continue to monitor the performance of our processes and will make further changes if necessary to ensure they continue to be robust and fit for purpose.”