Monitor investigation - March 2015
Monitor, the financial regulator of foundation trusts, announced today that it is opening a formal investigation into compliance with our licence in relation to financial sustainability.
To March 2014 we have successfully delivered savings of more than £60m, which is an average of 4% of our turnover every year - a considerable achievement. However, this level of saving is extremely difficult to sustain on an ongoing basis, and during 2014/15 we have made a further £10m in savings which is over 2%.
Our five year strategic plan committed to delivering savings of 2% initially, rising to 3% in later years, as service transformation begins to have an effect. This is a challenging but realistic target, and is around the level of savings NHS England’s recently published Five Year Forward View predicts hospitals will be able to achieve.
However, to remain financially viable, we are actually required to continue to deliver annual savings of significantly more than 4%. We do not believe it is possible to achieve this level of saving whilst maintaining services and care quality. On that basis we have contacted Monitor to request financial support, and this has prompted the regulator to open its investigation.
Monitor’s investigation will consider our short and long term financial viability, and expects that a financial recovery plan will be developed alongside our local partners, because much of our financial performance is dependent upon how the wider health and social care system is working.
Karen Partington, Chief Executive of Lancashire Teaching Hospitals NHS Foundation Trust said, “We are committed to providing the very highest standards of care for our patients, and it is important to note that this investigation relates to financial sustainability – it is not about care quality.
“Analysis published by the King’s Fund last month shows six in ten trusts are now relying on the Department of Health for financial support, or drawing down reserves. The combined deficit of England’s NHS foundation trusts has now reached £321m, which is five times higher than planned, according to figures released by Monitor this month. It is evident and well documented that the NHS as a whole is facing significant financial pressure.
“Over the past four years our staff have demonstrated great commitment to working more efficiently and effectively, and together we have managed to deliver considerable costs savings whilst maintaining services and standards.
“However, the board is not willing to compromise on the quality of care we are able to provide and we do not believe it is possible to continue to deliver the significant level of savings required going forwards without affecting patient services, and so we have taken the decision to request financial assistance from Monitor.
“We will fully co-operate with the investigation, and will be working with local health and social care organisations to develop a financial recovery plan that secures the highest standards of care for our communities.”