WIREDGOV

The rapidly expanding NHS foundation trust sector performed above expectations last year and is in excellent financial health according to figures published today by Monitor, the Independent Regulator of NHS Foundation Trusts.

Results for the financial year 2006-07 show it was one of continuous improvement with foundation trusts reporting an aggregate surplus of £130million before exceptional items,which was £104m greater than planned.

The improved financial performance was driven by greater efficiency. The sector continued the trend of improving its operating margin (on an EBITDA basis) , achieving  a margin of 6.7% in 2006-07 , significantly higher than the margin of 5.6%  recorded in 2005-06, and the 2004-05 margin of 5.3% .
During the year NHS foundation trusts achieved efficiency improvements of 3% of operating costs, equivalent to in excess of £270million. This compares with 2.5% efficiencies assumed within the 2006/07 tariff.

The financial data released by Monitor (1) covers 59 NHS foundation trusts during the period 1 April 2006 to 31 March 2007. The end of year results reveal that:

• the 59 NHS foundation trusts reported a £130million surplus (before exceptional items);
• the EBITDA operating margin across the sector was 6.7%, against 5.6% last year;
• 56 of the 59 of NHS foundation trusts delivered a surplus for the year;
• 44 of the 59 NHS foundation trusts experienced higher levels of activity than they initially planned for;
• provisions for bad and doubtful debts rose to £67m for the year, although this figure grew more slowly in the final quarter; and
• year-end cash balances across the 59 NHS foundation trusts amounted to £995million in total.

Executive Chairman William Moyes said:

“The financial performance of NHS foundation trusts last year was undoubtedly strong. Greater efficiency resulted in significantly improved operating margins and a healthy surplus across the sector. 

“It is very significant that 56 out of 59 trusts ended the year in surplus. An operating surplus and healthy cash balance is as important for a foundation trust as it is for any successful enterprise, because it allows the trust to invest in improving facilities and services for patients.”

The strong performance across the sector is also reflected in the improvement in the aggregate financial risk rating. Monitor assigns a risk rating from 1 to 5 for each NHS foundation trust, where ‘1’ indicates the highest level of risk and ‘5’ indicates the lowest; today’s report reveals the average rating has improved from 3.9 at the end of Quarter 3, to 4.0 at the end of the year.

The consolidated cash balances of £995m at 31 March were £621m ahead of planned levels of £373m. This reflected the impact of improved working capital management, capital expenditure timing, proceeds from the sale of assets and retained operating surpluses

The results are further evidence that the clear and transparent financial regime operated by NHS foundation trusts combined with effective forward planning is assisting the creation of financial stability across foundation trusts.

A summary of the year-end financial results is available here.

Notes:

1. The report (link above) contains financial information on the NHS foundation trust sector for the year ended 31 March 2007. A more detailed end of year report including individual governance ratings for each NHS foundation trust will be available on 12 June 2007.
2. Monitor quotes headline figures for NHS foundation trusts before deductions for “exceptional items”. Exceptional items, which amounted to £119m in the year, mainly related to impairment charges against property values.
3. For media enquiries contact: Imogen Shillito, External Relations Manager 020 7340 2442 or Nick Gammage, Interim Director of Communications 020 7340 2440.
4. Monitor authorises and regulates NHS foundation trusts ensuring they are well-managed and financially strong in order to deliver high quality healthcare for patients.
5. 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.