Monitor and NHS Foundation Trusts London Scrutiny Network 14 November 2008 William Moyes Executive Chairman Monitor

Agenda 1. NHS foundation trusts - context - accountabilities - performance 2. Monitor’s role - assessment - compliance 3. The foundation trust governance model - members - governors 5. How we work together…

NHS foundation trusts Monitor’s role The foundation trust governance model How we work together…

A devolved healthcare system Purchasers –NHS commissioners (distinct from PCTs) –Patient choice Consumer protection Policy, national standards and budget setting Stewardship Providers –Primary care providers –NHS foundation trusts** –Independent sector CQC Operational space Transactions –PbR –Contracts DH CQC Performance Management SHA PurchasingPaymentsProvision Monitor

PCT FT Parliament Ministers SHA Commissioning Governors Local Views Members DH Parliament Probity/ Value / Performance Monitor Compliance with ToA NHS foundation trusts: accountability structure Contracts Monitor has powers to - Replace Boards - Require Action if they breach ToA FTs are accountable locally, to the regulator, and to Parliament. SoS has no power to direct FTs

Freedoms Retain surpluses Borrow commercially Decide own strategy and services Negotiate staff contracts Nature Public benefit corporations – not for profit Primary business is health care (for NHS) Public money – majority investor, majority income NHS foundation trusts are independent public bodies

Main obligations of an NHS foundation trust Exercise its functions effectively, efficiently and economically Comply with its constitution Comply with the terms of its contracts with commissioners Compliance with any guidance issued by Monitor. This includes Monitor’s Compliance Framework, which identifies the key national targets and standards set out in the Operating Framework with which trusts must comply. Provide identified mandatory goods and services Provide identified mandatory education and training Remain a going concern Comply with its private patient income cap AND Co-operate with other NHS bodies and local authorities

NHS foundation trusts: current position “ It is our clear ambition that in future hospital care will be provided by NHS foundation trusts.” - Lord Darzi, NHS Next Stage Review 107 NHS foundation trusts authorised as at 1 October 2008 deliver c. £20 billion of services have over 1.2 million members employ over 300,000 staff 44% of acute trusts and 54% of mental health trusts are now NHS foundation trusts

NHSFTs are increasing their profitability…

…have reduced MRSA rates overall year-on-year… 89 Foundation trusts Actual 2006/2007 Total number of MRSA cases 29% reduction 89 Foundation trusts 2007/8 89 Foundation trusts 2008/9 89 Foundation trusts 2006/7 Actual 2007/ % reduction

…and perform well against Healthcare Commission standards Annual Health Check Maternity review Acute inpatient survey Healthcare Commission self declaration on core standards Of 42 trusts rated ‘excellent’ for both quality of services and use of resources, 38 were FTs 52% of FTs were rated ‘excellent’ for quality of services 72% of FTs declared full compliance against all standards Higher percentage of FTs declaring full compliance with all core standards than last year 21 out of top 30 trusts are FTs All top 5 trusts are FTs 75% of FTs were in best & better performing categories

NHS foundation trusts Monitor’s role The foundation trust governance model How we work together…

Five key functions of Monitor Compliance Assess annual plans Award risk ratings In-year monitoring Prevent withdrawal of services and disposal of essential assets Assessment Assess applications for FT status and issue authorisations Approve mergers between FTs Intervene if FT has significantly breached Authorisation Act on Healthcare Commission ‘special measures’ Intervention FT development Provide support on FT development eg governance code and service line management Contribute to operating framework, model contract and implementation of Payment by results Information & assurance Set financial reporting framework and audit code Present consolidated accounts to Parliament Publish performance data quarterly

Monitor’s authorisation process Business plan review Robust challenge process Governanc e review Two year working capital review Review of long term (5 years) strategy and finances Assessors pressure-test assumptions and forecasts Independent advisors involved Board-to-Board meetings Review of governance aspects: - Legally constituted –Effectively governed Possible outcomes - Authorisation - Rejection - Deferral

Compliance regime: light touch, risk based, proportionate and low cost Philosophy Components of Compliance Framework 1. Annual assessment & risk rating 2. Robust in year monitoring 3. Intervention Annual plan Risk evaluation and ratings –Finance –Governance –Mandatory services Regular reports Exception reports Intelligence network Authorisation is not a licence Monitor can use statutory powers to require specific actions if: –FT in danger of breaching / has breached its Authorisation –failure is ‘significant’ Self-regulation Proportionality Transparency Trust-based approach Confidentiality Minimal duplication of regulation Minimal information requirements

FT Boards are the frontline of regulation… They need to: –understand all aspects of trust performance (financial, operational, clinical) –identify and address problems swiftly, decisively and knowledgably –create a culture where quality and safety are taken seriously The board’s duties do not end with financial stewardship. Boards must oversee: Overall Mission – Vision, Values, Aims & Priorities Strategy Leadership Quality Safety Patient Satisfaction The board’s responsibility for ensuring and improving care cannot be delegated to the medical staff and executive leadership.

…but if Boards don’t deliver, we take action Monitor’s intervention process 1.Discussion 2.Diagnosis 3.“Informal” intervention 4.Formal intervention stop services etc require appointment of advisors change management or leadership

Intervention – formal and informal Informal: FinancialInformal: Service Delivery Informal: Board functionality RNHRD (2008) Bradford (2004) UCLH City Hospitals Sunderland Homerton RNHD Moorfields Countess of Chester Gateshead Sherwood Forest Tavistock and Portman Royal Devon & Exeter Peterborough & Stamford Derby Moorfields Lancashire Teaching Clatterbridge Calderdale and Huddersfield Doncaster & Bassetlaw Gloucestershire Hospitals Royal Marsden Peterborough & Stamford P’borough & Stamford Poole Hospital Moorfields Mid Staffordshire In the last four years we have intervened on nearly 30 occasions*, both formally and non-formally, on both financial and non-financial issues Formal interventions * On some occasions more than once at the same trust

NHS foundation trusts Monitor’s role The foundation trust governance model How we work together…

The NHS foundation trust governance model The board of directors: the chair of the board of directors also acts as the chair of the board of governors. Board of governors: elected by members to represent patients, public, staff. Also includes appointed representatives from organisations in the local community. Members: patients, service users, staff, and the general public from the local community.

NHS foundation Trust members FTs are accountable locally to patients, staff and communities through their membership and boards of governors. This local accountability is key to the FT policy. Between them, FTs have over 1.2 million members and The PM has said he wants to see 3 million FT members by 2012 Monitor’s Compliance Framework requires FT to demonstrate they are developing a representative membership by providing information on membership size and movements, and analysis of current membership

NHS foundation trust governors FTs’ accountability to their local community comes via their board of governors as well as through membership. The majority of an FT’s board of governors must be elected by public members. Foundation trusts have approximately 3,400 governors Board of governors on average comprises between 25 and 40 representatives and is likely to be made up of: –Public governors (51-55%) must form the majority. Can include patients, carers & service users –Staff governors (15-20%) must have at least three –PCT (5%) must appoint a governor from a PCT it provides services for –Local authority (5%) at least one governor must be appointed from one or more local authority –Appointed governors (15-20%) e.g. universities; local constabulary; voluntary services groups; Job Centre

Foundation trust governors have significant statutory powers: appoint or remove the chair and non-executive directors; approve the appointment of the chief executive; decide the remuneration and allowances, and other terms and conditions of office, of the chair and other non-executive directors appoint or remove the trust’s auditor; receive the trust’s audit report; and scrutinise the trust’s annual plan.

NHS foundation trusts Monitor’s role The foundation trust governance model How we work together…

Report The big picture: how we work together Monitor FT must consult with OSC if it wishes to vary its ToA to result in a substantial change to the pprovision of goods or services Must respond to any report or recommendation pmade by OSC within 28 days OSCs review and scrutinise any matter relating to the planning, provision and operation of health services in the area of the committee’s local authority Monitors compliance with ToA (including co-operation with local authorities) Approves changes to ToA Can compel FT to consult further with OSC OSC can report to Monitor on any of these issues: inadequate consultation variation to ToA not in the interests of the local community FT not co-operating with local authorities Regulate Scrutinise Consult FT OSC