Monitor: ‘failure of corporate governance arrangements and financial management standards’ at NSFT

ENFORCEMENT UNDERTAKINGS

LICENSEE:

Norfolk and Suffolk NHS Foundation Trust (the Licensee)

Trust Headquarters

Hellesdon Hospital

Drayton High Road

Norwich

Norfolk

NR6 5BE

 

DECISION

On the basis of the grounds set out below, and having regard to its Enforcement Guidance, Monitor has decided to accept from the Licensee the enforcement undertakings specified below pursuant to its powers under section 106 of the Health and Social Care Act 2012 (“the Act”).

GROUNDS

1. Licence

The Licensee is the holder of a licence granted under section 87 of the Act.

BREACHES

2. Financial Breaches

2.1. Monitor has reasonable grounds to suspect that the Licensee has provided and is providing healthcare services for the purposes of the NHS in breach of the following conditions of its licence: FT4(5)(a); FT4(5)d); FT4(5)f); CoS3(1)(a) and CoS3(1)(b).

2.2. In particular:

2.2.1. The Licensees 2014/2015 financial position has deteriorated from a planned £1.9m surplus to a £3.7m deficit outturn position.

2.2.2. The Licensee has forecast to close 2015/2016 with a deficit of £9.4 million;

2.2.3. The Licensee has forecast to close 2015/2016 with a Continuity of Service Risk Rating (“CoSRR”) of 1 and that it is unlikely to return to a sustainable CoSRR of 3 until 2017/2018.

2.3. These breaches by the Licensee demonstrate a failure of corporate governance arrangements and financial management standards, including a failure by the Licensee to establish and effectively implement systems and/or processes to ensure compliance with the Licensees duty to operate efficiently, economically, and effectively.

2.4. Need for action

Monitor believes that the action, which the Licensee has undertaken to take pursuant to these undertakings, is action to secure that the breaches in question do not continue or recur.

3. Appropriateness of Undertaking

In considering the appropriateness of accepting in this case the undertakings set out below, Monitor has taken into account the matters set out in its Enforcement Guidance.

UNDERTAKINGS

Monitor has agreed to accept and the Licensee has agreed to give the following undertakings, pursuant to section 106 of the Act:

1. Financial Recovery Plan

1.1. The Licensee will take all reasonable steps to demonstrate that it can achieve financial sustainability within 3 years of the date of this undertaking.

1.2. The Licensee will develop and deliver an ambitious and realistic four year financial recovery plan (the “Financial Recovery Plan”), beginning with the year 2015/2016, to enable it to comply with paragraph 1.1. The Licensee will agree the Financial Recovery Plan with Monitor by 27 July 2015, or such later date as agreed with Monitor.

1.3. The Financial Recovery Plan will include key milestones and metrics as agreed with Monitor to detail how the Licensee will comply with paragraph 1.1.

1.4. The Licensee will keep the Financial Recovery Plan and its delivery under review. Where matters are identified which materially affect or may materially affect the Licensees ability to meet the requirements of paragraph 1.1, whether identified by the Licensee or another party, the Licensee will notify Monitor as soon as practicable and update and resubmit the Financial Recovery Plan within a timeframe to be agreed with Monitor.

1.5. Following submission of the Financial Recovery Plan, and if requested by Monitor, the Licensee will commission an external assurance review of the Financial Recovery Plan from a source and according to a scope and timing to be agreed with Monitor. If an external assurance review is commissioned the Licensee will provide copies of the draft and final reports to Monitor.

2. Cash Flow Forecast

2.1. The Licensee will develop a rolling cash flow forecast (the “Cash Flow Forecast”) in a form to be agreed with Monitor to demonstrate how it is complying with paragraph 1.1 and it will maintain the Cash Flow Forecast for so long as Monitor requests. The Licensee will submit the Cash Flow Forecast to Monitor on dates to be agreed with Monitor.

2.2. The Cash Flow Forecast will detail the Licensees cash flow expectations on a weekly basis for at least 13 weeks following the date of this undertaking.

2.3. The Licensee will review the Cash Flow Forecast every six months with Monitor for so long as Monitor requests.

3. Monitoring Return and Cost Improvement Programme (CIP) Dashboard

3.1. The Licensee will complete a monthly monitoring return and CIP dashboard (the “Monitoring Return and CIP Dashboard”) in a form to be agreed with Monitor to demonstrate how it is complying with paragraph 1.1 for so long as Monitor requests. The Licensee will submit the Monitoring Return and CIP Dashboard to Monitor every month.

3.2. The Licensee will review the Monitoring Return and CIP Dashboard with Monitor every six months for so long as Monitor requests.

4. Financial Performance Information

4.1. The Licensee will record financial performance information (the “Financial Performance Information”) in a form to be agreed with Monitor to demonstrate how it is complying with paragraph 1.1 and it will maintain the Financial Performance Information for so long as Monitor requests. The Financial Performance Information should ensure that financial reporting at locality level and organisational level is standardised.

4.2. The Licensee will review the Financial Performance Information every six months with Monitor for so long as Monitor requests.

5. Department of Health Financing

5.1. Where interim support financing or planned term support financing is provided by the Secretary of State for Health to the Licensee pursuant to section 40 of the NHS Act 2006, the Licensee will comply with any terms and conditions which attach to the financing.

5.2. The Licensee will comply with any reporting requests made by Monitor in relation to any financing provided or to be provided to the Licensee by the Secretary of State for Health pursuant to section 40 of the NHS Act 2006.

5.3. The Licensee will comply with any spending approvals processes that are deemed necessary by Monitor.

6. Meetings

6.1. The Licensee will attend meetings or, if Monitor stipulates, conference calls, during the currency of the undertakings detailed in this notice to discuss its progress in meeting those undertakings. These meetings will take place once a month, unless Monitor stipulates otherwise, at a time and place to be specified by Monitor and with attendees specified by Monitor.

THE UNDERTAKINGS SET OUT ABOVE ARE WITHOUT PREJUDICE TO THE REQUIREMENT ON THE LICENSEE TO ENSURE THAT IT IS COMPLIANT WITH ALL THE CONDITIONS OF ITS LICENCE, INCLUDING ANY ADDITIONAL LICENCE CONDITION IMPOSED UNDER SECTION 111 OF THE ACT AND THOSE CONDITIONS RELATING TO:

• COMPLIANCE WITH THE HEALTH CARE STANDARDS BINDING ON THE LICENSEE; AND
• COMPLIANCE WITH ALL REQUIREMENTS CONCERNING QUALITY OF CARE.

ANY FAILURE TO COMPLY WITH THE ABOVE UNDERTAKINGS WILL RENDER THE LICENSEE LIABBLE TO FURTHER FORMAL ACTION BY MONITOR. THIS COULD INCLUDE THE IMPOSITION OF DISCRETIONARY REQUIREMENTS UNDER SECTION 105 OF THE ACT IN RESPECT OF THE BREACH IN RESPECT OF WHICH THE UNDERTAKINGS WERE GIVEN AND/OR REVOCATION OF THE LICENCE PURSUANT TO ACTION 89 OF THE ACT.

WHERE MONITOR IS SATISFIED THAT THE LICENSEE HAS GIVEN INACCURATE, MISLEADING OR INCOMPLETE INFORMATION IN RELATION TO THE UNDERTAKINGS: (i) MONITOR MAY TREAT THE LICENSEE AS HAVING FAILED TO COMPLY WITH THE UNDERTAKINGS; AND (ii) IF MONITOR DECIDES SO TO TREAT THE LICENSEE, MONITOR MUST BY NOTICE REVOKE ANY COMPLIANCE CERTIFICATE GIVEN TO THE LICENSEE IN RESPECT OF COMPLIANCE WITH THE RELEVANT UNDERTAKINGS.

 

LICENSEE

Signed (Chair of Licensee)

 

 

 

Dated: 18/06/15

MONITOR 

Signed (Chair of relevant decision-making committee)

Dated: