Foundation Trust Pipeline Assessment

Background

Foundation Trusts, which now account for more than half of hospital trusts, are independent of the Department of Health’s control and all trusts are intended to become Foundation Trusts by 2014.

In June 2011, the Department of Health commissioned McKinsey & Company UK to undertake an assessment of the trajectory of 23 NHS Trusts to Foundation Trust status.

The assignment

AFC was engaged as a subcontractor to McKinsey & Company UK to investigate and report on how – if at all – the ability of each of the 23 Trusts to meet the financial criteria set by Monitor and the DoH for transition to Foundation status is being or is likely to be affected by the fact that the Trust is, or is in the process of becoming an obligor under a PFI contract. Of the 23 Trusts assessed, 17 have operational PFI contracts, 4 have contracts at the construction stage and 2 have yet to start the contract procurement process.

AF Consulting’s approach

AFC submitted a detailed questionnaire of its own design to each Trust with a request for specified information including key contract documents in electronic form. Review of the completed questionnaires and desktop review of the electronic documents was followed by a 2 hour interview with Trust managers responsible for management of the Foundation Trust transition process and PFI management respectively. The conduct of each interview was guided by a further series of questions extrapolated from the information elicited by the original Q&A forms and designed to achieve a balanced view under test conditions of each Trust’s calculation of the impact of its PFI contract (where applicable) on a number of key factors including increased efficiency, cost inflation, adoption of new financial reporting standards, cost improvement plans, public dividends, liquidity and other financial ratios relevant to the Foundation Trust threshold criteria. The information so adduced was submitted, following review by each Trust, to the DoH in the form of a high-level summary and detailed report of findings.

Benefits to the Department of Health

In relation to the 17 Trusts with operational PFI projects, the DoH has benefitted from now having clear insight into the relative direct and indirect impact of the Trust’s PFI contractual obligations on their ability to meet the threshold requirements for becoming foundation trusts. The benefits to the DoH extend to an objective understanding in respect to all 23 Trusts included in the assessment of the effectiveness of contract management and the scope for savings and efficiency gains.

Summary

AFC was engaged to work with McKinsey and Company UK to make an objective assessment of 23 NHS Hospital Trusts to assist the DoH in planning the transition of all Trusts to foundation trust status. AFC was selected for its experience in helping NHS Trusts to become more effective at managing and achieve savings from operational PFI projects. AFC’s delivery process and tools were self-developed.