Ownership Matters in Foundation Trusts

Creating “the largest and most vibrant social enterprise sector in the world” particularly by giving more freedom to Foundation Trusts is a key objective of the policy blitz known as Liberating the NHS (in England).   Mr Lansley has also said FTs would have ‘characteristics’ of social enterprise, implying for some that they might not be the genuine article after all.

The Social Enterprise Coalition is concerned by this. Peter Holbrook SEC’s CEO said “There needs to be greater understanding of the differences between these two organisational forms and the different roles they can play as part of the landscape for healthcare in England.”

How right he is.

A worrying shift of emphasis

Mr Lansley’s vision seems to be moving more towards an employee-ownership model. The White Paper says as much.

“As all NHS trusts become foundation trusts, staff will have an opportunity to transform their organisations into employee-led social enterprises that they themselves control, freeing them to use their frontline experience to structure services around what works best for patients.”  . . .   “We will consult on future requirements: we envisage that some foundation trusts will be led only by employees; others will have wider memberships. The benefits of this approach will be seen in high productivity, greater  innovation, better care and greater job satisfaction. Foundation trusts will not be privatised.”  (Liberating the NHS, para 4.21)

There’s the rub.  It comes down to an ownership question: who are the owners of a Foundation Trust?  We always thought it was the citizens, patients and staff members who sign up (register) as Members and acquire voting rights to elect Governors who represent their interests to the Board and management.  Guidance setting up FTs was very clear: “The members of an NHS Foundation Trust will, collectively, be its legal owners. This is a real and not a paper exercise in social ownership. As such the rights of membership will therefore confer some limited but real legal responsibilities.”

Mutuality models vary on the ownership question.  A GP co-op as a employee-owned mutual is one thing; a Foundation Trust controlled solely by the people whose livelihoods depend on it is several magnitudes different and not in the public interest.  Mr Lansley is failing to distinguish between types of mutal ownership and that has big implications.

Building new Mutuals

Currently FTs are “public benefit corporations”  – an elusive and self-defining status that suits the fluid reform environment into which they were launched.   In theory there is nothing to stop them becoming CICs (community interest companies) – though that would give them two regulators  in the shape of Monitor and the CIC Regulator which is probably not desirable.  They could of course turn themselves into big mutuals (they are halfway there now but with an indirect election model).

Exploring this is the subject of the NHS Alliance’s latest policy paper Building New Mutuals from Foundation Trusts. The Alliance rings an alarm bell: “A potential move to employee-led organisations was never the intention of the Health and Social Care (Community Health and Standards Act) 2003 that created foundation trusts.” Other well-placed commentators such as Paul Corrigan have also spotted that doing this would be a significant shift in the FT  governance model.

Much could be improved in FT governance

There are a number of things that could be improved in Foundation Trust governance without handing the whole enterprise over to the staff and cutting off control by the community who use the service.   These include:

1. The idea that the same person chairs the Board and the Governors should go for starters as Governors must be able to elect their own leader from amongst their number.

2. There should be much more direct contact between Members and Governors.  The Alliance would go further still in democratic control: “why not have public elections for NEDs on foundation trust boards, not just for the governors? Many large co-operatives – comparable in employment numbers and financial turnover with foundation trusts – do just that.” That sounds sensible since we are not now to have direct elections to soon to be phased out PCT Boards and so far there is little enthusiasm for putting lay people on new commissioning consortia which may not even have “boards”  in any formal sense.  We will return to that subject in a later post.

3. Governance can reflect constituencies for voting, eg staff members should be able to vote directly for their own NED on the Board

4. NEDs should elect their own Board chair

5. Board accountability should be to Governors on behalf of Members for continuing involvement and engagement with strategic planning and other internal governance requirements and also to Monitor for efficient running of the business.

Members in the lurch

We share the fear that the White Paper’s vision for FTs would leave community and patient members as owners in the lurch as well as introducing governance muddle.  Our concern is that the logical conclusion of employee-ownership and control of Foundation Trusts –  despite Mr Lansley’s assertion that they will not be privatised – could actually lead to FTs leaving behind any public control at all – in essence privatisation with a social enterprise face on it.   This is the contradiction at the heart of the “John Lewisisation” of public services – who owns them? It has nothing to do with getting better outcomes, increasing staff engagement and incentivisation or customer friendliness -  all very desirable.  It is about keeping public control and accountability of publicly-owned assets.

A number of FTs have healthy financial surpluses. Removing the private patient income cap will see these rise.  These could be used to buy out their assets.  If FTs had become employee-owned and controlled by that stage to the exclusion of community and user owners,  it would amount to an exit from public accountability.  We do not want to see that happen.

A mutual future

The NHS Alliance points a timely signpost towards the future of Foundation Trusts.  We support making Foundation Trusts into big mutuals so long as membership and majority ownership are strongly rooted in the community and the users they serve.  That is the best partnership arrangement staff members who also have a stake in ownership can have in ensuring that they too are fully engaged with the enterprise for the community’s as well as their own benefit.   The concept of mutuality is sufficiently dynamic to achieve both objectives.

The Wrappings on Local Health Watch

Thanks to Jeremy Taylor for raising in a comment on the LINks and Healthwatch post the thorny issue of Local Health Watch (LHW) and the proposed relationship to local authority funders.  He said: HealthWatch should be funded through local authorities but not accountable to them. How can you be accountable to the body that – in part – you are holding to account yourself? Why not make them accountable to local communities as community interest companies?

Look beneath the wrapping

This is a very pertinent question and about much more than just what wrapping eventually gets put around LHW. It’s what in the box underneath the pretty paper that matters. Community Interest Companies (CICs) and other forms of social enterprise might be a viable form for LHW to take if other things were also true about their status.

Jeremy is right that the conflict with the LA as funder and the LA as a key body to be held to account by LHW could pose big issues. The phrase “lap dog not watch dog” (a twist on the old ACHCEW slogan) comes to mind. To make it more tricky, the LHW would be on the Health and Wellbeing Board run by the LA as well.  So if that’s the problem, maybe a social enterprise form – and CICs are attractive if they have a wide community membership base – is a way for LHW to get out of a potential governance tangle with their funders.

Having mulled this over, here’s what we think about a way forward.

Best of both worlds

Re the governance status and accountability relationship of LHW, we don’t  see a conflict with being a CIC social enterprise, with all the community ownership/accountability that should go with that, and having a statutory foundation, legal powers and public funding stream.  We certainly would not support anything that said LHWs were not to be statutory bodies.  They should be no less established in law than LINks are now and with powers of enter and view  at least as strong as those that currently exist.

If LHW were simply voluntary bodies, whether not they were SEs doesn’t matter so much, their potential would be lost and there would be a status issue with CQC and everyone else they need to influence. No one would have to listen to them.

LINks accountability unclear now

On the point of accountability, it is a moot point to whom LINks are accountable at the moment.  Certainly not to DH or the SOS in any formal way.  The previous government, when they said anything at all about LINks governance, just repeated the mantra that they are accountable to their members/communities, but gave no idea of how that process was meant to operate. Locally our LINk sees itself as accountable to its 350+ members in some way, but this is never put to the test and it is unclear how it would be.

CIC would clarify accountability to community

If LHW were CICs for governance purposes, however, that would at least clarify a big part of the accountability point.  As there is a CIC Regulator, she would hold them to account for fulfilling their governance and engagement obligations to the community through their membership.

Their funding local authorities, through a model contract, would then be able to hold them to account for doing their job and keeping within budget.  Messy though it might be, part of that job would be scrutinising/entering and viewing/possibly blowing the whistle on local authority social care services that were not up to scratch.  That’s part of the LHW job and it can’t be ducked.

We think that dual arrangement would meet the point that Jeremy as raising in his comment that accountability only to the funding LA would be asking for trouble when scrutinising their services/talking to their users.

Analogy with Foundation Trusts

LHW as CICs could have the best of both the statutory body and social enterprise worlds. The analogy with Foundation Trusts as “community benefit corporations” comes to mind. FTs are technically owned by and accountable to their members through their elected governors. This theory has never been elaborated very much, but we think there are signs of more progress towards a clearer SE model for FTs after the Health Bill. After all the coalition say they want to create the biggest social enterprise sector in the world.  Pushing FTs and LHW down that road would certain achieve it.

What of Health Watch England?

And if we get LHW sorted out,  then there is HealthWatch England (HWE) to consider.  Is that to be a new Arms Length Body?  - probably not when some have just been given their death warrants.

And what does HWE nesting in CQC actually mean? Just facilities, pay and rations for staff? Or maybe something stronger.  Who is HWE going to be accountable to?

Trouble is, everything is connected to everything else. We should always keep an eye out for unintended consequences of  what might otherwise appear to be tidy solutions.

That’s the way to do it?

A debate is ramping up in the GP press – Pulse online is required viewing – about how (or even if) GP commissioners can make savings by doing things better vis a vis secondary care (aka hospitals) than PCTs generally manage to achieve.  Everyone knows that acute trusts are past masters at maximising income.  And the games some play would put a chess grand master to shame.

That’s how they’ll do it

I was taken by this contribution on the subject from Dr Michelle Drage, joint CEO of Londonwide LMCs .  As GP professional bodies, they know a thing or three about the system and its perversities.  This is how she said GPs would do it, meaning reduce expenditure on secondary care and improve primary care:

The first thing GPs will do is put a stop the tricks that NHS trusts play to generate more income from the same episode. And the coding games.

Then they’ll stop unnecessary admissions through A&E and other revolving doors.

Then they’ll work with clinicians to help them get the admin support they need to prevent patients coming back to GPs with no information so they get referred back unnecessarily.

And they’ll help consultants who use 85% of the budget manage their systems and workload in context with that of GPs who see 90% of patients with only 15% of the funding.

And services will be commissioned based on primary care need, not hospital income generation or colleagues’ favourite types of procedures.

And then they’ll make better use of the funds released so that patients in general practice get the best holistic general practice possible, not a service which only allows 10 minutes per patient, and that in turn will mean more appropriate referrals to hospital, greater patient satisfaction, and less unnecessary work for hospitals.

That’s how they’ll do it.

Hospital charivari

At this point an observing Mr Punch would squawk “That’s the way to do it!”  And it sounds good I admit.  But hang on.  The more switched on GPs in practice based commissioning clusters have been trying these things already with strong PCT encouragement.  Have referrals to A&E and demand for secondary care generally gone down?  It doesn ‘t look like it from national data and our own local experience in London.

The Nuffield Trust’s recent analysis of the rising trend in emergency admissions highlights how costly and largely preventable many admissions are especially for older people.  Big variations exist between areas and there is no clear link with deprivation.  That suggests the phenomenon has something to do with variations in the clinical knowledge, skills, attitudes and behaviour of the referrers -  in other words this trend is linked to what GPs do (or more accurately what many don’t do to prevent these admissions).

The perils of success

Dr Drage and her progressive colleagues have their work cut out turning that around.    And here’s the sting that may scupper success.  If all of this prescription worked (and we sincerely hope it does because we have waited far too long for it), then the inevitable, inescapable, inevitable and incontrovertible consequence will be a drop in hospital income. Possibly a significant and sustained one.

When demand drops and stays down, secondary care providers will have to respond with reduced capacity and prices (fewer wards, people, procedures and lower costs).   That could put the rising stars of GP commissioning on a collision course with local defenders of well-loved but threatened institutions.  They both can’t succeed.  We back the GPs.

Is that the way to do it?  Our  crystal ball is a bit blurry about that.  But whatever happens, a ringside seat is advised.

Liberation root and branch style

Liberating the NHS the new Health White Paper on “equity and excellence” could turn out to be, in Chris Ham’s prophetic words today, the “biggest organisational upheaval in the health service, probably, since its inception”.  This is about England only of course: the contrast with the other three countries in these islands will now be even starker.

Shaping the new order

Speaking in the Commons this afternoon as the document was published, Secretary of State for Health Andrew Lansley said his objectives were putting patients right at the heart of their care, putting clinicians at the heart of decisions about services and achieving health outcomes comparable of our neighbours.

We are to have an outcomes framework identifying what the health service should achieve and it will be up to the professionals (in collaboration with the public and patients if Lansley is serious about “no decision about me without me”) to say how it should be achieved in each part of the country.

Some of the other highlights of the new order include:

• A payments system that acts as a driver for quality, safety and integrated care not just a reward for activity (very welcome)
• Decision making as close to patients a possible, including patients with long term conditions having budgets (we hope for health AND social care combined) to make real choices about their care.
• Real, local accountability: Local Authorities will agree local strategies to integrate NHS, public health and social care together.  (fine, assuming councillors rise to the challenge and there isn’t likely to be extra money for cash-strapped authorities)
• Consortia will commission NHS services in line with the local health plan agreed with the local Council; this is how GPs will lead bottom up redesign of services:“GPs are senior professionals in public service and paid well for that.” No opting out.
• Patient choice over treatment options, including the consultant-led team that treats them, based on a torrent of information to guide informed choices
• Choice of GP practice and  power to control our own patient records. (no practice boundaries)
• Patient voices will be heard and acted upon by Healthwatch as a national body working through local healthwatch incorporating the current LINks (across health and social care which is essential)
• An English NHS “liberated from command and control”, including all NHS Trusts to be Foundation Trusts with power in the hands of their employees and users: “Our ambition is to create the largest and most vibrant social enterprise sector in the world.” (could help with getting assets off the government’s balance sheet and sort the pensions issue too)
• Any willing provider in the health care marketplace, provided they deliver to NHS standards and prices
• A more powerful Monitor as economic regulator and CQC as the guardian of safety and quality standards
• The NHS Commissioning Board holding the national GP contract, managing performance, allocating resources to commissioning consortia and leading specialised commissioning (big job all of that, any applicants on the horizon?)

Liberation is a double edged sword

MAC’s initial reaction to all of this – our deeper thoughts are for later –  is that what Mr Lansley is proposing  - and the devil will be in the detail of the coming consultations and the autumn Health Bill – could certainly be “liberating” both in an innovative but also in a chaotic sense (think Pandora’s box)  - and probably at the same time.  The phrase “constructive discomfort” comes to mind.

But there’s a catch. The NHS in England must save recurrently some £20bn by 2014 - “every penny saved will be a penny reinvested for the benefit of patient care” Mr Lansley said. That takes many steady eyes and hands on the job and some well placed voices are wondering if now is the right time to pursue wholesale root and branch change which will be very distracting in our largest and most expensive public service? Managers fashioning lifeboats for themselves may have concerns other than achieving efficiency savings.

Cromwellian thoroughness and speed

The reforms to commissioning and accountability aim to be Cromwellian in thoroughness and speed.  Andrew Lansley seems to be taking Tony Blair’s approach further and faster than anyone thought possible, but the difference is there seems to be a map this time.  Our modern day “major generals” (aka Strategic Health Authorities)  are being marched off to the Tower awaiting termination  - or as Mr Lansley termed it “disempowerment of bureaucracies” – by 2012, to be followed by PCTs by April 2013.

As we move towards then, will the crowd be shouting “behold the heads of tyrants” as we breath the free and pure air of GP commissioning, or will we just be too distracted to care?  And will there be anyone left in PCT land by then to turn off the lights, cancel the milk and put the cat out?

Stronger and more accountable Foundation Trusts needed to avoid “Staffordshire 2”

At least 400 died needlessly

“These patients were not simply numbers: they were husbands, wives, sons, daughters, fathers, mothers, grandparents. They were people who entered Stafford Hospital and rightly expected to be well cared for and treated. Instead, many suffered horrific experiences that will haunt them and their loved ones for the rest of their lives.”

The enquiry was published this week on deaths at the Stafford Hospital part of the Mid Staffordshire NHS Foundation Trust between 2005 and 2009.   It should be required reading – all 455 pages of it -  for commissioners and Trust board members everywhere. What happened in Staffordshire could happen elsewhere unless governance and clinical behaviour are drastically improved.

Don’t just read the recommendations or you will miss the outrage you should feel at the recurring catalogue of systemic clinical, governance and above all individual failings (nurses but also doctors and managers) that resulted in the untimely deaths of some 400 people (maybe up to 1200 according to some accounts).  If a train crash killed 400 people, there would be an immediate public enquiry and Ministers would be front and centre.  But that’s not what happened here.

No openness: no challenge: no change

The Francis enquiry report  is not strong enough on improving Foundation Trust governance. It largely ignores the role of the Trust’s owners – the Members of the Foundation Trust and their elected Governors.   A Foundation Trust is after all defined in law as a “public benefit corporation” – a species of social enterprise -  but what that means in practice has been deliberately fudged by Ministers and Monitor since FTs were first created. Now we can see what that sort of “governance neglect” can lead to.  Francis could have made a big stride forward to rectify that, but instead it made a rather bland recommendation to empower members and governors.  Much, much more needs to be done about ensuring there are stronger public and service user Governors and – crucially – about empowering staff governors elected from the Trust’s own workforce.

Then there is the role of the Local Involvement Network (LINk).  Why was there not a functioning LINk locally?  Why were there no unannounced visits to these wards under enter and view powers and reports made to the local authority and the PCT about obvious care shortcomings?  I cannot image a Community Health Council (CHC) pre their abolition in 2003 failing to respond vocally to the first reports of failing standards.  This is a measure of what we have lost in local accountability.

Closed enquiry

In Staffordshire theenquiry led by Robert Francis QC was closed and so most members of the public and the media outside the region were not even aware of until it reported this week.   To its credit the Francis team produced a good report, concluding that patients were routinely neglected by a Trust that was preoccupied with cost cutting, targets and processes and which lost sight of its fundamental responsibility to provide safe care in a headlong pursuit for Foundation Trust status which it achieved in January 2008.

But however good its recommendations, this process isn’t the same as a robust enquiry held in the public and media eye and it falls far short of assigning responsibility for these failings to individuals.  Only individuals can be held to account for this magnitude of institutional failure.  Think casino investment banks.   The Trust as a corporate body and its culture are only the reflection of the sum of the behaviours and attitudes of the people who comprise it -  the clinical staff, managers and board members in particular.  Some of them did try to raise the alarm, but most did not.  Some were cowed into silence, but it seems that most chose to look the other way. Or maybe they just could not believe it was happening to them.

Where were the nurses?

Most worrying of all is the question “where was the voice of professional nursing as the patients’ champion?”  The Trust’s diverse nursing team are the most numerous group of employees and always will be. They are  everywhere and they see everything.  Had nurses taken a united stand and made their collective voice heard, the care failings of the Trust would have come to light much earlier. Where were the letters to MPs that the hundreds of nurses working in this hospital should have written?  Where were the local nursing clinical leaders? Where were the nursing trade unions and professional bodies?

Does the buck stop nowhere?

If people knew and did nothing, that must be culpable if not criminal.   If some senior people at the Trust are not personally held to account for this, then the message is “the buck stops nowhere” and accountability is reduced to a cipher.   Relatives are demanding responsibility at this level and so too should the public because this outrage took place at a time when the NHS has never been more regulated and this Foundation Trust was – on paper – rated a good, and safe, provider of services.   But no one challenged the failures.

Governance matters

The enquiry recommendations could have clarified that the governance of the Foundation Trust must be rooted in the membership community and its elected representatives whose role is to hold the Board to account and who must be supported to carry out that role.   This seems to be what the Secretary of State Andy Burnham is now talking about in his reported views about strengthening the Governors of FTs .  Will he translate these words into action?

This Foundation Trust’s board meetings were held in private.  That was wrong and Mr Burnham has now declared in a parliamentary answer that FT Boards must meet in public and Governors must have access to all Board papers. There is still some wiggle room in that which needs clarifying.  It is welcome, but in itself it will not solve the problem of a culture opposed to openness and challenge.

It is an indictment that without the persistence of “Cure the NHS” -  a local group of patients and relatives who knew that things were going wrong within the hospital, who raised complaints and whose members kept shouting despite efforts to silence them –  the magnitude of this scandal would never have come to light.  Their contribution is praiseworthy, but they should not have had to make it alone.  The Foundation Trust is after all “owned” by its Members who elect a Council of Governors to hold the directors of the business (the Board) to account for delivering safe, effective services and fulfilling their strategic plan.

Stronger Governors needed now

Should FT Governors therefore have a role in the complaints process?  That is one option raised by Francis, along with the possibility of the Governors electing their own chair instead of sharing a Chair with the Board as currently.  Both suggestions have merit and need serious consideration. Governors could be effective scrutineers of the complaints process (which could do with improving its performance in many Trusts), but should not as individuals get directly involved in complaints handling.  And Governors deserve their own, independent chair.  Having the same person chair the Board and the Governors invites conflicts of interest as was obviously the case in Staffordshire.

FTs at a crossroads

The Mid Staffordshire scandal shows Foundation Trusts at a crossroads. We must learn from this and quickly because all other NHS Trusts are headed for Foundation status or else franchising from an existing FT.   These “community benefit corporations” must be made to behave for the benefit of the community and be accountable to its representatives.  They  must be directed by Government down the road of greater local accountable to their Membership communities through stronger, more effective Governors – public and staff.  If this does not happen, then it is just a question of waiting for “Staffordshire 2” to happen.