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NHS must work together to pull struggling trusts back from financial cliff edge
A new licensing system for most providers of NHS-funded services is expected to be established from April 2013. Under this system, Monitor will have a duty to protect the interest of patients by promoting services that are economic, efficient and effective. Part of its remit will be to oversee the process of a ‘failure regime’ when trusts are declared unsustainable and go into administration.
The NHS Confederation says it is essential that trusts are supported before they fall in to failure and has suggested that three key points are taken on board to ensure a robust ‘pre-failure’ strategy is in place for NHS organisations.
It says such a strategy needs to:
- Maximise every penny available to improve services for patients and offer value for money for taxpayers. This would include setting up a ‘strategic change fund’ to make use of money stored in financial risk pools and money left unspent from budgets;
- Encourage and support commissioners and providers in their attempts to transform local services. Where there is a credible plan to change services to improve the quality and sustainability of services, investment should be available to cover some of the upfront costs;
- Provide investment in a transparent, accountable way. Monitor will ultimately be best placed to approve plans and help make funds available to local health economies, either directly or through local modifications of the tariff.
Mike Farrar, NHS Confederation chief executive, said:
“Our members have told us the financial problems they face are very rarely confined to the management of their trust. Very often their problems are compounded by the way the wider local health economy works, or as a result of sustained efficiency targets, which have impacted on some trusts yet failed to produce the incentives for health system transformation.
“The Government is aiming to have as many trusts as possible reach foundation trust status by 2014. We cannot afford to set ourselves up for failure by creating a system that throws good money after bad. We need financial investment that acts as a long-term incentive to create sustainable services in the right place for patients, not a short-term bail out that is seen as the easy way out.
“The wider solution lies in planning change, and developing a system that rewards trusts for successfully helping to manage demand in primary and community services. But we need to find the resources to fund this and make them available on a shared gain basis within each system.
“We are concerned that the closer we get to the next general election, the more difficult it will be for NHS organisations to make vital changes to local services. David Nicholson has said he believes trusts have a narrow window to begin reconfiguration projects next year before ministers become reluctant to defend or explain clinically justified cases.
“NHS organisations need the freedom to act in the best interests of patients and taxpayers. It will be essential they can work openly and honestly with local politicians and the public to bring about change that is in everyone’s best interests.
“Monitor’s role will be crucial in allowing trusts to make the necessary changes to ensure they remain viable. We must make sure it is set up to be fleet of foot to support and guide trusts through significant financial challenges. It is absolutely right that it oversees a fully transparent and accountable process.”
The NHS Confederation is publishing a new briefing, All systems go, which draws a number of conclusions from a simulation event carried out to test the new regulatory system for providers that run in to financial difficulties. Separate scenarios were carried out for urban and rural settings.
Drawing on the outcomes of the event, the NHS Confederation report says the licensing system must be geared towards preventing failure rather than creating a system that only considers what action is necessary when trusts go into administration.
The NHS Confederation says that a number of lessons must be learned now to avoid unnecessary failure in the future.
- The failure regime should be seen as a last resort, and the focus must be on preventing failure rather that dealing with it when it happens;
- The failure of a provider should be seen as a failure of the wider system. The solution almost always lies with all parts of the health economy including commissioners, regulators, neighbouring providers and the Department of Health;
- It is essential that there is a fair playing field for all providers. It is important that the designation of commissioner requested services do not have an unfair impact on current providers, especially those in rural areas where they may have to continue to run services at a financial loss because neighbouring services are too far away.
- Competition should not be pursued for its own sake - where there are difficulties in providing both choice and quality in health services, the system should always favour quality.
The briefing is part of a wider piece of work that the NHS Confederation is carrying out to look at how best to support financially challenged trusts.
The findings complement those of recent interviews with chief executives of the ten most financially challenges trusts in England.
Notes to Editors
The NHS Confederation represents all organisations that commission and provide NHS services. It is the only membership body to bring together and speak on behalf of the whole of the NHS. We help the NHS to guarantee high standards of care for patients and best value for taxpayers by representing our members and working together with our health and social care partners.
We make sense of the whole health system, influence health policy and deliver industry-wide support functions for the NHS.
Follow the NHS Confederation press office on Twitter @NHSConfed_Press
A full list of NHS Confederation press releases and statements can be accessed on our media page
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