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Report to the Meeting of the Oxford Health NHS Foundation Trust

Board of Directors

25 October 2013

Monitor Risk Assessment Framework

For Information

Executive SummaryOn 27 August 2013, Monitor published the Risk Assessment Framework which, from 1 October 2013, replaced the Compliance Framework. The Risk Assessment Framework is a component of the new regulatory regime following the changes brought about by the Health and Social Care Act 2012. Since 1 April 2013, all NHS foundation trusts need a licence from Monitor which sets out conditions that met be met; these conditions include governance requirements and financial stability and the Risk Assessment Framework explains how Monitor will assess NHS foundation trusts’ compliance with these two conditions.

Currently, the Risk Assessment Framework only applies to NHS foundation trusts; however, when the licence regime expands to cover all providers of NHS services in April 2014, the Framework will be updated.

This report provides Board members with an overview of the Risk Assessment Framework, with a focus on the two new risk ratings that will apply to NHS foundation trusts. The overview draws on internal analysis undertaken, as well as published reports and comments from Monitor, the FTN and the Trust’s auditors – Deloitte. A copy of the full Framework is attached to the report.

RecommendationThe Board is asked to note the report.

BOD 118/2013(Agenda Item: 13)

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Author and Title: Justinian Habner, Trust Secretary Paul Dodd, Deputy Director of FinanceMike McEnaney, Director of FinanceRos Alstead, Director of Nursing and Clinical Standards

Lead Executive Director: Stuart Bell, Chief Executive

1. A risk assessment has been undertaken around the legal issues that this paper presents and there are no issues that need to be referred to the Trust Solicitors.

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RISK ASSESSMENT FRAMEOWRK

The Risk Assessment Framework sets of the process by which Monitor will seek to establish where there is:-

1. significant risk to the financial stability of an NHS foundation trust which would put at risk continuity of services; and

2. poor governance within an NHS foundation trust.

Accordingly, NHS foundation trusts will be assigned two new ratings:-1. Continuity of Services Risk Rating; and2. Governance Rating

These replace the ratings set out in the former Compliance Framework.

1. CONTINUTY OF SERVICES RISK RATING

The new Continuity of Service Risk Rating (COSRR) replaces the Financial Risk Rating (FRR). The previous FRR assessed the financial position of NHS foundation trusts using a calculation based on a basket of five financial metrics. The new COSRR assess providers for risk of financial failure using a calculation focused on two metrics. The diagram below sets out the changed approach:-

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Calculation of new Risk Rating

The new COSRR will be calculated using the following two metrics:

The previous FRR had a range of ‘1’to ‘5’, with ‘5’ representing the lowest level of risk and a score of less than ‘3’ attracting Monitor’s attention. The revised COSRR has a range of ‘1’ to ‘4’ as follows.

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Within the ‘1’ – ‘4’ ratings, there is a= rating of ‘2*’ where “new risk rating… make[s] a trust appear high risk but in [Monitor’s] view the trust does not represent a cause for financial concern” – a 2* rating means “the level of risk is material but stable” and regulatory action is not therefore anticipated.

In terms of the ‘3’ rating, NHS foundation trusts will still potentially be subject to monthly monitoring; it will be decided on a trust-by-trust. Monitor has advised that should monthly monitoring be deemed appropriate under a rating of ‘3’, the information required would be a “small subset” of quarterly reporting and will be information “that trust boards will already receive monthly”.

Transition to new risk rating

The previous FRR was effective up to and including Q2 with the new COSRR being introduced from the beginning of Q3 (1 October 2013). Following the conclusion of Monitor’s analysis of Q2, Monitor will publish both the previous FRR and the new COSRR, which will be identified as a ‘shadow’ rating. This dual publication reflects that the Q2 performance data on which these ratings are based relates to a period when the Compliance Framework was in force, while the COSRR will be in force at the time of publication. The COSRR will be the only financial rating published following Monitor’s analysis of Q3.

Impact of new risk rating

The introduction of the new risk rating on the Oxford Health NHS FT financial plan for FY14-FY16 is as follows:

Q3FY14

Q4FY14 FY15 FY16

Continuity of Service Risk Rating(New)

3 3 3 3

Financial Risk Rating (Old) 3 3 3 3

The planned risk rating remains a ‘3’ but under the new regime this is on a scale of ‘1-4’ rather than the previous scale of ‘1-5’, which could result in the requirement for monthly monitoring.

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In addition, the liquidity element of the FRR included the value of any Working Capital Facility (WCF) arrangement in place at the Trust; this effectively made allowance for the ‘cash headroom’ provided by such facilities. However, in reality NHS foundation trusts were unable to access these facilities due to covenants imposed by the banks.

The new COSRR recognises that NHS foundation trusts were not able to make use of WCFs and that they acted in a perverse way by artificially ‘shoring’ up FRR scores; the revised COSRR therefore excludes any WCF from its calculation. This means that there is no value in NHS foundation trusts continuing to have WCFs in place from October 2013.

2. GOVERNANCE RATING

The new Governance Rating has three categories:- Green rating – where there are no concerns. Written description of concerns held – concerns have been identified but

no enforcement action has commenced. Red rating – when enforcement action has commenced.

The diagram below from the Risk Assessment Framework provides further clarity:-

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The new Governance Rating replaces the ‘Green’, ‘Amber’ and ‘Red’ ratings under the Compliance Framework.

Calculation of new Governance Rating

Monitor will calculate the Governance Rating for NHS foundation trusts through consideration of information in the following five areas:-

1. CQC Judgments - Monitor will take account of CQC notices or action; where the CQC issues a warning notice or takes stronger action Monitor is likely to investigation further.

2. Performance against national access and outcomes standards - Monitor expects NHS foundation trusts to meet national standards, including requirements of the NHS Outcomes Framework. As under the Compliance Framework, Monitor will use a set of national targets & indicators to assess governance:-

AREA INDICATOR THRES-HOLD

WEIGHT-ING

MONITORING PERIOD

1 Maximum time of 18 weeks from point of referral to treatment in aggregate – admitted

90% 1.0 Quarterly

2 Maximum time of 18 weeks from point of referral to treatment in aggregate – non-admitted

95% 1.0 Quarterly

3 Maximum time of 18 weeks from point of referral to treatment in aggregate – patients on an incomplete pathway

92% 1.0 Quarterly

4 A&E: maximum waiting time of four hours from arrival to admission/ transfer/ discharge

95% 1.0 Quarterly

5 All cancers: 62-day wait for first treatment from: urgent GP referral for suspected cancer NHS Cancer Screening Service referral

85% 90%

1.0 Quarterly

6 All cancers: 31-day wait for second or subsequent treatment, comprising: surgery anti-cancer drug treatments radiotherapy

94% 98% 94%

1.0 Quarterly

7 All cancers: 31-day wait from diagnosis to first treatment

96% 1.0 Quarterly

8 Cancer: two week wait from referral to date first seen, comprising: all urgent referrals (cancer suspected) for symptomatic breast patients (cancer not initially suspected)

93% 93%

1.0 Quarterly

9 Care Programme Approach (CPA) patients, comprising: receiving follow-up contact within seven

1.0 Quarterly

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days of discharge having formal review within 12 months

95% 95%

10 Admissions to inpatients services had access to Crisis Resolution/Home Treatment teams

95% 1.0 Quarterly

11 Meeting commitment to serve new psychosis cases by early intervention teams

95% 1.0 Quarterly

12 Category A call – emergency response within 8 minutes, comprising: Red 1 calls Red 2 calls

75% 75%

1.0 1.0

Quarterly

13 Category A call – ambulance vehicle arrives within 19 minutes

95% 1.0 Quarterly

14 Clostridium (C.) difficile – meeting the C. difficile objective

DM* 1.0 Quarterly

16 Minimising mental health delayed transfers of care

≤7.5% 1.0 Quarterly

17 Mental health data completeness: identifiers

97% 1.0 Quarterly

18 Mental health data completeness: outcomes for patients on CPA

50% 1.0 Quarterly

19 Certification against compliance with requirements regarding access to health care for people with a learning disability

N/A 1.0 Quarterly

20 Data completeness: community services, comprising: referral to treatment information referral information treatment activity information

50% 50% 50%

1.0 Quarterly

* DM – a de minimis applies

The targets and indicators above are the same as those listed in the 2012/13 Compliance Framework with the exception that MRSA has been removed.

3. Third Party Information - Monitor will take account of information from third parties, either supplied by NHS foundation trusts or sent direct to Monitor.

4. Quality Governance Indicators - Monitor will examine trends in a small number of indicators to consider whether patient or workforce concerns exist.

5. Continuity of Services and Financial Governance- Monitor will assess NHS foundation trust’s forward plans, reforecast and transactions; where such indicate that the Licence is breached, further action is likely particularly in relation to planning and leadership.

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In addition to using the information from the categories above, Monitor will also draw on information from other sources (such as corporate governance statements, annual governance statement and governance reviews) to generate a Governance Rating. The diagram below outlines what is likely to give Monitor cause for Governance concern:-

Transition to new rating

Monitor wrote on 3 October 2013, advising that the Trust had been assigned a Governance Rating of: Green.

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3. OTHER MATTERS

In addition to setting out the two new ratings, the Risk Assessment Framework includes the following:-

CapexThere is a new requirement to support HM Treasury budgeting such that if NHS foundation trusts are “likely” to miss their Capex budget by 15% (in either direction), they should inform Monitor which “may” require a formal Capex reforecast.

Regular Governance ReviewsMonitor recommends that NHS foundation trusts should commission an independent review of governance arrangements every three years; further guidance on this recommendation will be published by Monitor later in the year.  The results of these reviews should be reported to Monitor, and the diagram below sets out the areas to be covered by such reviews:-

InvestigationsThe Risk Assessment Framework sets out Monitor’s approach to undertaking investigations once a breach or potential breach of the licence has been

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identified. Monitor will seek to determine the scale and scope of any breach, and indentify appropriate action (which may include formal enforcement action).

Commissioner Requested Services (CRS)CRS (and Location Specific Services) are integral to Monitor’s ‘continuity of service’ regime and the Risk Assessment Framework acknowledges this. Monitor has published separate guidance on the designation of CRS which replaced ‘mandatory services’ on 1 April 2013.

Submission of InformationAs under the Compliance Framework, the Risk Assessment Framework sets out the information that NHS foundation trusts (including those who provide CRS) will need to submit to Monitor.

1. Annual Submissions: Three-year forward plans. Availability of resources statement. Providers of CRS will be required to submit additional information to

support Monitor, HM Treasury and the Department of Health in planning and monitoring.

Corporate Governance Statement (replaces the previous ‘board statements’).

NHS foundation trust annual report and accounts. Governor and membership reporting.

2. In-year Submissions: Where no risks to compliance identified, licence holders will generally

submit in-year information on a quarterly basis. Providers of CRS will be required to submit financial information during the

year as requested by Monitor.

The Risk Assessment Framework also sets out what exception in-year submissions and exception reports both providers of CRS and / or NHS foundation trusts should submit.