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Medway NHS Foundation Trust must take urgent action to deliver improvements for its patients or risk changes being imposed on its leadership.
Monitor is escalating its regulatory action after discovering that the problems at the trust are broader than those uncovered by Sir Bruce Keogh in August, which caused it to be put into special measures.
The regulator believes that, given the range of significant issues it faces, the trust must now set out, then stick to, a credible plan to transform the services it provides.
As part of the special measures regime Jonathan Guppy was appointed Improvement Director to support the trust in tackling its problems. He has found that while the trust is focused on tackling specific quality of care issues identified by the Keogh Review it needs a credible clinical strategy for the organisation as a whole.
Separately, Monitor is concerned that the trust's failure to properly address poor A&E performance, and problems identified by the Care Quality Commission in midwifery and maternity services last month mean that it continues to operate in breach of its licence.
The regulator requires the trust to take further action, including preparing and implementing the necessary clinical strategy, and has imposed a new condition on the trust's licence to provide NHS services. This new condition means that Monitor can ensure the trust has the appropriate leadership to deliver the necessary improvements.
Paul Streat, Regional Director at Monitor, said: "We know that staff are working hard to improve the quality of services, but we need the organisation's leadership to do more to make sure that urgent improvement happens quickly. The new licence condition gives us the power to make changes at the top if the current leadership fails to deliver."