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Study reveals Monitor’s positive impact on efficiency and performance of NHS foundation trusts

Monitor has had a positive impact on efficiency and governance at NHS foundation trusts, according to a new study published today. Monitor produced the report, Measuring Monitor’s Impact, to evaluate the effect of its activities as the independent regulator for NHS foundation trusts. It was produced with support from Frontier Economics and the research methodology was independently validated by Professor Carol Propper (research methodology) and Professor Frank Windmeijer (econometric analysis) of Bristol University.

The study highlights improvements in performance at NHS foundation trusts as a consequence of both Monitor’s assessment process for applicant trusts, and its risk-based approach to regulation.

The effect of Monitor’s activities on financial performance and efficiency are most clearly visible when applicant NHS trusts enter Monitor’s assessment process and when Monitor has intervened at financially challenged foundation trusts. The study highlights some significant improvements:

  • Monitor’s decision to defer some NHS trusts from achieving foundation trust status resulted in these organisations re-visiting their forward looking business plans that led to cumulative savings of £279 to £373 million by 2012-13 across nine cases studies in the report;
  • Monitor’s assessment process has delivered improved efficiency in foundation trusts that resulted in an increase in surplus income margins of 0.8%, and a 7% increase in efficiency in day cases - these improvements in efficiency are worth approximately £130 million to date; and
  • the compliance regime results in financially challenged foundation trust turning around performance rapidly and delivers savings as a result.

Following successful authorisation the financial performance of NHS foundation trusts is not improving faster than NHS trusts. The report suggests several possible explanations for this trend such as the impact of NHS trusts improving quickly as they prepare to become NHS foundation trusts, and the fact that on average applicant trusts start from lower performance than foundation trusts and therefore may find it easier to make improvements.

Where Monitor has intervened directly at a foundation trust, the change in performance has been more apparent.

Monitor requires all NHS foundation trusts to be well governed. This refers to the ability of the trust’s Board to do their job properly and ensure their hospitals provide high quality care for their patients.
The emphasis Monitor places on having strong boards in place is evident in the report. Although the lack of sophisticated metrics for measuring governance meant the impact on performance proved harder to evaluate, case studies included in the report indicate Monitor has played an important role in developing stronger boards and this has had a positive effect on service performance:

  • foundation trusts believe the quality of governance has improved under Monitor’s compliance regime;
  • foundation trust boards recognise their responsibility to resolve problems; they realise they cannot rely on third parties to provide financial support; and
  • Monitor’s assessment process led to reduced MRSA rates and faster access to elective services.

Commenting on the report, Monitor’s executive chairman, William Moyes, said:

“Since Monitor was created we have developed an approach of rigorous, independent assessment of foundation trust applicants, combined with proportionate risk-based regulation. It is important as a public body we understand the nature of our impact and how we add value to the healthcare system. Although it is relatively early in the life of the FT sector, it is very encouraging that this report demonstrates that our approach is delivering results.
 
“It’s never been more important that regulators play their role in improving the efficiency of the NHS in order that the NHS can continue to improve the quality of care in a tighter financial environment

“Boards of trusts must ensure they understand fully the quality implications of the financial decisions they make. Our approach in both our assessment and compliance activities has increasingly focused boards on taking a holistic view of quality and finance. As a result foundation trusts should be producing integrated business plans that reflect the links between objectives to improve the quality of services and sound financial management.”

Notes

  1. A copy of the report Measuring Monitor’s Impact including case studies is available from Monitor’s website: http://www.monitor-nhsft.gov.uk/home/our-publications/browse-category/about-monitor/what-we-do/measuring-monitors-impact-economic-ev
  2. For media enquiries please contact Michael Moruzzi on 020 7340 2438 michael.moruzzi@monitor-nhsft.gov.uk
  3. Monitor authorises and regulates NHS foundation trusts ensuring they are well-managed and financially viable in order to deliver high quality healthcare for patients.
  4. Monitor was established in January 2004. It is independent of government and accountable to Parliament. Monitor’s functions and powers are set out in the National Health Service Act 2006.

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