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Editorial 6 June 2008: Franchising management (again) for failing trusts…

except it’s not franchising and we don’t know what they mean by ‘failing’. Unsuccessful 2001 policy re-announced in motivational boost for NHS managers.

by Andy Cowper, editor, Health Policy Insight

The Department of Health has launched a new outline document ‘Developing The NHS Performance Regime’, to address consistently poor-performing NHS trusts.

After a failing NHS trusts has failed a series of further tests, they will be declared ‘under directions’ of NHS chief executive David Nicholson. This seems at odds with the document’s statement (p.7, para. 7) that “this increasingly devolved and plural system cannot and should not be controlled from Whitehall”, and hardly looks like a triumph of decentralisation.

The failing trust’s board will be removed or suspended and the chief executive will lose ‘accountable officer’ status to a replacement, possibly from the private sector.

Foundation trusts will be encouraged to consider taking over failing organisations. This happened to Good Hope NHS Trust in Birmingham, which was privately managed by Tribal Consulting prior to being taken over by Heart of Birmingham NHS FT.

Health Minister Ben Bradshaw described Tribal’s achievement at Good Hope of a one-star Healthcare Commission rating (up from zero) and subsequent takeover as “a success”.

Meanwhile, PCTs deemed to be failing might be taken over by other PCTs or have some or all functions outsourced. The potential implications of this for commissioning and indeed provision are huge, and the framework for procuring external support (FESC)-approved companies are likely to look at this with keen interest.

NHS Alliance chief executive Michael Sobanja said, “it’s right and proper to have a robust performance management regime to see that we spend public money wisely. There is an issue about failing organisations having alternative management arrangements if it obstructs public accountability. An outsourced, PCT board has to keep its public accountability sacrosanct. Replacing a failing board doesn’t mean outsourcing the PCT board – it’s vital to preserve the board’s accountability to local people and local clinicians for tax-raised funds”.

Waiting for metrics
However, the metrics and parameters to be used are “being developed”, according to DH director of finance David Flory, and will not be published until later this year.

In the intervening time, strategic health authorities will be left wondering what they exist to do. Their proclaimed responsibility is to “making sure local health services are of a high quality and are performing well”.

Launching the document, Health Minister Ben Bradshaw said that “until now there has been no coherent, clear performance regime for failure.” This appears to be a damning indictment of SHAs’ performance in performance-managing the worst trusts.

Nor is information yet available about the failure regime. Mr Bradshaw was keen to point out that it should not be automatically assumed that those trusts rated ‘double-weak’ by the Healthcare Commission’s annual Health Check would be in the failure frame.

Nor will proposals for private sector involvement amount to genuine ‘franchising’ – they will be simple management contracts. Staff contracts and terms and conditions and all capital assets will remain in the NHS.

Amnesia about FTs’ independence
The document’s strong implication is that NHS foundation trusts will be keen to take over historically failing trusts with intractable and wide-ranging problems. The logic of this is opaque, and two problematic outcomes may follow.

Firstly, the policy goals of patient choice and plurality of provision could be compromised in circumstances whereby an FT might become dominant in a locality through any takeover, as the minister acknowledged.

Secondly, pressure from the NHS chief executive and SHA to pursue a takeover with FTs’ independence and with monitor’s ongoing regulatory role for their financial performance.

The DH has previous form in forgetting about the independence of FTs. The announcements of the hospital deep cleaning programme in 2007 and the introduction of new infection control staff were followed by reluctant admissions that the DH cannot mandate FTs to do these things.

There were also significant behind-the-scenes discussions whether FTs’ surpluses for the 2007-8 financial year could be re-nationalised.

Affiming the asset lock
However, finance officials in the DH confirmed that any FTs who take over failing trusts will not have the right to dispose of assets. A recent Treasury letter to the DH confirms this policy.

Asked about the closure of specific services of a failing trust by a new management, David Flory replied, “there is a well-established statutory regulation process for what happens next, including consultation, and evaluation by oversight and scrutiny committees (OSCs), to consider the merits of service change

Official reactions
Nigel Edwards, policy director of the NHS Confederation, said, “failure is often systemic rather than managerial and will only be solved by re-configuration and other strategies. We should not lose track of the fact the vast majority of NHS organisations are performing well – we need a balanced discussion.

“For providers, we believe the diagnostic process to become a Foundation Trust should be at the centre of the approach. This will give a clear indication of the reason for failure but further diagnosis will be needed. In some cases poor management is the problem and new management is needed; in other cases, there are intractable system issues like too many sites, the wrong buildings or over-provision. The situation is unmanageable and a different solution is needed.

“We need a tailored response which includes acquisition by a foundation trust, franchising by the independent sector or foundation trusts, or reconfiguration. Where poor management is the issue it must be addressed. Any player that is willing and able – including foundation trusts, talent in the NHS and the independent sector – could have a role to play in its solution. The fact that a trust has reached this point means that the challenges will be considerable for anyone. Foundation trusts and independent sector providers will be cautious about taking them on and in some cases may not feel able to, without adequate incentives to run the service. The independent sector has shown that it can come up with different management and delivery models, so having them as an option is important.

“For managers, any issue of poor performance needs to be fairly and consistently managed and investigated with correct procedures. There is a new legal power due which will be for the secretary of state through the appointments commission to suspend and remove non executive directors and chairs. We support this new process.”

Anna Walker, chief executive of the Healthcare Commission, said: “We strongly welcome the government’s commitment to driving up standards of care on behalf of patients, and tackling poor performance before it becomes a crisis.

“As the regulator, the Healthcare Commission already identifies both good and bad performance. We see significant variations in standards of care, much of which relates to the quality of leadership and management.

“We will continue to play our part, working with the strategic health authority and Monitor, to tackle any under-performance we identify.

“We expect that the management of ‘challenged’ trusts will dovetail into the regulatory activity of the Healthcare Commission and the work of the Care Quality Commission in the future.”