Hospitals breaking financial rules

Monitor has warned hospital trusts that a breach of one of 10 tough new financial rules could provoke intervention. Under the independent regulator's compliance framework foundation trusts will receive three scores: 'traffic light' ratings on governance and the provision of mandatory services; and a score from one to five on financial strength.
A red traffic light score will provoke intervention under the powers given by the Health and Social Care Act 2003, as will a rating of one for financial strength.
The compliance framework sets out the 10 rules Monitor will use to inform the financial score. The rules cover areas including completing correct annual financial plans on time, full repayment of the government's public dividend capital, and Monitor's prudential borrowing code for the trust. Breaking some of the rules incur greater penalties than others.
Monitor will also intervene in the running of the trust if it fails to meet any of the government's national performance targets, including the four-hour maximum wait for patients in accident and emergency.
The Healthcare Commission has agreed to use Monitor's financial assessment of foundations rather than carry out a separate evaluation.
Foundation Trust Network director Sue Slipman welcomed the framework. 'We are pleased Monitor has made clear its commitment to ensuring that any regulatory intervention is proportionate to the risks involved, with the most successful trusts having less regulatory oversight.'
Acutes' foundation plans founder on finances- acute trusts are finding the assessment process for foundation status demanding and struggling with the financial disciplines needed, Monitor said as it rejected two more applicants.
A Monitor spokesman said assessing applicants' financial viability and sustainability 'has proved challenging for a number of applicants'.
Six trusts were given foundation status last week: Frimley Park Hospitals; Birmingham Heartlands and Solihull; Lancashire Teaching Hospitals; Liverpool Women's Hospital; Royal Bournemouth and Christchurch Hospitals; and the Royal National Hospital for Rheumatic Diseases.
But Monitor refused the applications for West Suffolk Hospitals and Wrightington, Wigan and Leigh. Three decisions were deferred: Aintree Hospitals; East Somerset; and Newcastle upon Tyne Hospitals. Altogether, 13 of the 43 aspirant foundation trusts have now had their applications refused, deferred or have chosen to voluntary withdraw.
Monitor said underlying trust deficits had been a problem. The Department of Health wants all trusts to be foundations by 2008.

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