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Monitor has today published its review of NHS foundation trust performance for the third quarter of 2011/12.

Governance

The foundation trust sector demonstrated an improved performance against many targets this quarter, with more trusts meeting MRSA, Referral to Treatment (RTT) and cancer targets.

In particular, significantly fewer trusts breached cancer targets, with 16 breaching targets this quarter compared to 23 in Q2.

However, quarter three also saw a poorer performance against A&E targets, which may be due to increased demand and work to address RTT backlog issues; and more trusts were found to be at risk of breaching tougher C. Difficile targets, despite having improved their performance significantly since last year.

Commenting on the results, Monitor’s Chief Operating Officer Stephen Hay said:

"Foundation trusts have improved their performance on many key targets which is good news for patients. However, we take the poorer performance in A&E and the risk of breaching the C. Difficile target very seriously and expect trusts to put in place swift actions to address these issues. If they don’t, we’ll consider taking further action."

45% of foundation trusts received the highest rating (green) for governance from Monitor this quarter, compared to 41% at quarter two. However, more trusts were rated poorly, with the proportion of red and amber-red trusts increasing to 42% from 35% in quarter 2. One of the main reasons for this is an increase in the number of inspections being carried out by the CQC which has resulted in more problems being picked up and addressed.

Stephen Hay commented:

"It’s the CQC’s role to highlight and investigate quality concerns. By reflecting them in our governance risk ratings we’re flagging that we expect the trusts’ boards to address them. If they don’t, we’ll consider taking further action. Patients should be reassured by the increase in the number of CQC inspections as it means regulation is working and problems are being identified and addressed."

Financial overview

Overall, the review shows the foundation trust sector continues to cope well in the face of financial challenges, with trust finances running ahead of plan, partly due to improved delivery of cost savings.

The surplus for the 9 months ended 31 December 2011 was £326m.

However, the regulator warned that there are a small number of trusts with a significant deficit and they will need to take action to address the underlying causes of these problems.

The review also shows that there has been a downward trend across the sector over the last four years, with margins now at 6.1% compared with 7.5% in 2008/09. Conditions will continue to challenge trusts in the coming months.

Stephen Hay commented:

"It’s encouraging that the sector’s performance this quarter remains ahead of plan. This shows the benefit of robust financial planning and better delivery of cost savings across the sector. However, this should be seen in the context of a significant downward trend over the last four years and foundation trusts will need to continue to deliver sustainable cost savings in a challenging financial climate. We’re very clear with them that they need to do this while maintaining their focus on providing quality services for their patients.

There are a small number of trusts experiencing significant financial problems. We are working closely with them to ensure they address the root causes of these."

Key findings from the results in the third quarter included:

• The average sector Financial Risk Rating (FRR) in Q3 (3.4) is above plan (3.2) and better than Q2 (3.3) and the EBITDA margin is slightly ahead of plan (6.1% compared with 6.0%)
• However there is a significant downward trend in EBITDA over the last four years (margins slipping from 7.5% in Q3 2008/09).
• Cost Improvement Plans are 7.5% below plan but plans are more ambitious and trusts are performing better against them than in the last 2 years (when they were 9% behind plan at this stage). Cost Improvement Plans of 3.9% have been achieved in the period.
• The total number of Foundation Trusts in significant breach rose from 13 to 15 in this quarter, with 11 of the 15 having financial issues as one of the primary reasons for their breach.
• Capex is 31% below plan but still ahead of the depreciation level with YTD capex (£995m) exceeding YTD depreciation (£742m).
• At Q3, the proportion of red and amber-red trusts has increased to 42% from 35% at Q2 and 17% at Q3 last year.
• The number of trusts with outstanding CQC major or moderate concerns was 34 at 31st January, a decrease from 35 at the time of publishing quarter two results.
• Cancer: significantly fewer trusts are breaching cancer targets this quarter (16 compared to 23 in Q2).
• A&E: 14 Trusts breached A&E targets this quarter compared to 6 in the third quarter last year.
• MRSA: 6 Trusts breached MRSA targets compared to 7 in the third quarter last year.
• Referral to Treatment: 12 Trusts breached RTT targets in quarter three compared to 13 in Q2 and 19 in Q1 of 2011/12.

Notes

1. For media enquiries contact Isabella Sharp, Media and Stakeholder Relations Manager, Isabella.Sharp@monitor-nhsft.gov.uk or 0207 340 2442
2. Monitor authorises and regulates NHS foundation trusts ensuring they are well-managed and financially viable in order to deliver high quality healthcare for patients.
3. 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.
4. This report reviews the performance of the 141 foundation trusts that were authorised as at 30 September 2011. There are currently 143 NHS foundation trusts.
5. Monitor assigns risk ratings to indicate the risk of a foundation trust failing to comply with its terms of authorisation in 2 areas (1) Finance (1 to 5 scale; a rating of 5 indicates the lowest risk of breaching the authorisation and a rating of 1 indicates the highest risk, in which case formal statutory intervention by Monitor is likely)) and (2) governance (traffic light rating system).
6. The full report can be found here: http://www.monitor-nhsft.gov.uk/home/news-events-and-publications/our-pu...
7. The risk ratings for all foundation trusts can be found here: http://www.monitor-nhsft.gov.uk/home/about-nhs-foundation-trusts/nhs-fou...
8. Monitor is now on Twitter - follow us @MonitorUpdate