Department of Health – Foundation Trust Pipeline Assessment

Client:

McKinsey & Company

Location:

Across England

Sector:

Health

Client Details:

Foundation Trusts, which now account for more than half of hospital trusts, are independent of the Department of Health’s control and all trusts were 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 Challenge:

ACE 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 had operational PFI contracts, 4 had contracts at the construction stage and 2 had yet to start the contract procurement process.

Our Approach / Solution:

We submitted a detailed questionnaire of our 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 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.

The Results:

In relation to the 17 Trusts with operational PFI projects, the DoH has benefitted from having a 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 extended 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.

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