Foundation trust regulation...Governance Total Regulatory action 36 FTs have been found in significant breach since 2004 11 FTs in the past year 14/11/2012 ...

Foundation Trust Regulation

Stephen Hay

Managing Director of Provider Regulation

Presentation to FT Chairs and NEDs

15 November 2012

• Challenging times for the sector

• Current and expected

performance

• Key elements of provider

regulation

• Role of NEDs

14/11/2012 2

Challenging times for the sector

14/11/2012 3

Projected NHS spending

Annual percentage change in real terms NHS expenditure & planned expenditure in England:

1974/75 to 2014/15

14/11/2012 4

Challenges for FTs – But you cannot

compromise on safety or quality

New drugs and

technologies Maintain and

improve quality

LHEs and demand

management

Commissioners and

Choice

Care closer to home

Demographics

Patients

14/11/2012 5

Current and expected performance

14/11/2012 6

% of FT sector in significant breach

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Q12012/13

Q4Q3Q2Q12011/12

Q4Q3Q2Q12010/11

Q4Q3Q2Q12009/10

Q4Q3Q2Q12008/09

Finance

Governance

Total

Regulatory action

36 FTs have been found in significant breach since 2004

11 FTs in the past year

14/11/2012 7

Historical and projected performance (2006 to 2013)

0

1

2

3

4

5

6

7

8

9

0

5

10

15

20

25

30

35

40

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

Total income (£ billions)

operating costs (£ billions)

EBITDA (%)

Net surplus (% income)

Projected income

Projected operating costs

14/11/2012 8

£billions %

FT Profit / Loss: Q1 2012 / 2013 –

Differential performance

14/11/2012 9

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Profit / loss (£m)

Profit / loss (£m)

FT authorisations

Monitor’s work assessing and authorising trusts to continue

Majority of trusts expected to gain FT status by 2014

Monitor will maintain the ‘bar’ for entry standards

14/11/2012 10

Key elements of provider

regulation

14/11/2012 11

Licence replaces ToA

Licence replaces ToA

from April 2013

focus of Monitor’s

oversight

providers of NHS health

care services

Monitor has powers to

address breaches by

licensees

Licence conditions

Pricing, competition and

integrated care - all

licensees

Continuity of Service (CoS)

- providers of

Commissioner Requested

services (CRS)

FT register and governance

conditions – all FTs

14/11/2012 12

Risk assessment framework (CoS and FT governance conditions)

Ensure continuity of provision of vital services

Oversight of FT governance

Assess financial strength of CRS providers – initially FTs

• Monitor financial strength of CRS providers

• Ensure continuity of services

Assess FT governance

• Compliance with governance licence condition

• Risk that governance causes failure to comply with any condition

14/11/2012 13

Approach to potential failure

Causes of failure

• Management / clinical failure

• Underlying viability of

individual provider

• Configuration of services

across health economy

• Change in demand

Monitor actions

14/11/2012 14

• Contingency planning team works

with local commissioners .

• While drawing up plans, solution

may be found that would result in

provider avoiding financial failure

• Provider placed into special

administration if solvent

restructuring is not possible

• Risk Pool will provide funding to

ensure continuity of service whilst a

permanent, sustainable solution is

found.

The NED role

14/11/2012 15

Governance requirements for FTs:

what Monitor expects

Board

leadership

Organisational

oversight

Quality

governance

Capability and

Capacity

• effective board structures;

• clear lines of responsibility & accountability;

• appropriate levels of challenge

• rigorous & robust business plans & other strategic decision-making processes.

• accurate & timely information to the board;

• effective performance management, risk assurance and escalation

• compliance with the licence, national healthcare standards and legal requirements.

• sufficient quality expertise at board level,

• quality considerations are reflected in plans;

• systems to monitor quality of care. Timely & appropriate action to address issues;

• procedures to take account of stakeholders’ views

The FT has systems in place to ensure there is sufficient capacity and capability at all levels

in the organisation

14/11/2012 16

What we find when things go wrong

14/11/2012 17

• Poor information flows

• Failure to plan appropriately

• Failure to implement action plans

• Poor scrutiny of financial plans

Planning

• Poor CIPs planning and / or delivery

• Lack of challenge

• Lack of board understanding

Risk management

Financial management

• Insufficient capacity and skills

• Lack of clarity around roles

• Lack of challenge Governance

• Poor assessment of risk

• Poor risk management systems

• Failure to identify key areas of concern

• Failure to address arising issues

Key challenges for FT NEDs

14/11/2012 18

Maintain a strategic focus

Looking for innovative approaches: new care

pathways, working with partners

Never forget quality and patient safety

Don’t be afraid to challenge - use your previous

experience beneficially

Question information flows

Question assurance processes

……These challenging times requires strong leadership

which needs to come from the Board.

Foundation Trust Regulation

Stephen Hay

Managing Director of Provider Regulation

Presentation to FT Chairs and NEDs

15 November 2012