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An article in the Financial Times on Friday 8th July covered research from the University of York which has found becoming a Foundation Trust makes no difference to a trust’s performance. Which makes you wonder why trusts have bothered to drive towards FT status and why attaining FT authorisation is one of the key directives of the health and social care bill. Every aspirant FT has the same page on their website, selling the benefits of FT status and trying to garner local support for their application, but if I was a member of an aspirant FT I’d be inclined to ask the board what empirical evidence they could show me that demonstrates FTs deliver better patient care.
FTs may generally achieve better performance levels but as Maria Goddard, Director at the University’s Health Centre for Economics states, this is “the result of long standing differences between non-foundation trusts and foundation trusts, rather than being attributable to foundation trust status per se”. i.e. strongly performing FTs are good trusts because they are probably structurally sound, with good governance and strong commissioner relationships, so becoming an FT hasn’t made them a good performer, they were good anyway. You might argue the application process itself will raise the performance of a trust, and once above the line and through the gate, that performance level can be maintained? Not necessarily says Goddard, “some hospitals were better than others to begin with, and over time they have all converged and there is no longer any differential performance apparent.”
I’d be interested to hear from interims in our network that have a front line perspective on this. Have you worked for a trust which has really benefitted from achieving FT status? What about those who have been authorized only to see their performance drop? Is the autonomy granted by FT authorization often a recipe for disaster (Mid Staffs?) Given FTs can acquire neighbors and grow private patient income under the bill, will they now be able to truly benefit and prosper as FTs in a way they couldn’t before?
Steve Melber is Senior Consultant, Health at Interim Partners.
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July 14th, 2011 at 10:02 am
Becoming an FT has become in some instances something of a poisoned chalice. As most Trusts have up until now had the sword of Damocles hanging over them to either attain FT status or face the consequences of an M&A with its implications of loss of identify, asset (and service) stripping and general loss of presence, there has been a pressure applied to all non-FTs to ‘go for FT status.’
In many instances the reason why the later waves of Trusts haven’t yet become FTs is often due to glaringly evident hospitals offering poor service delivery, managing but not resolving inherent and often long neglected (and now hugely costly) problems to fix be they operational, or infrastructural.
The days of the journeyman NHS leader should be a relic of the past but in many cases, Trusts aspiring to FT status have a board that is either mired in old discredited practice, bereft of leadership, and has no frame of reference for genuine accountability to providing the non-negotiable “dual-dividend” – that of excellent patient outcomes (with all its implications of patient experience and centred-care) and financial viability. Most Trusts are only now recognising the intrinsic incestuousness of the two, and these are in turn the basic building blocks of a genuinely viable or aspirant FT.
All too often however, a Trust working towards FT status has sacrificed truly distinctive quality care by introducing a regime that emphasises parsimoniousness rather than effective spend and whilst this makes the (unsustainable) balance sheet look reasonably fit for purpose in the FT application, is in effect hiding a multitude of sins that when FT is awarded, opens the floodgates of delayed critical spending needs – invariably aligned to issues where safely may well have been compromised – and the net effect is that within a year of two of its new “independence” is a candidate for Turnaround. This is no exaggeration.
The need to save £20b – and probably more – has spawned a welter of Cost Improvement programmes (CIPs) but these in the short term merely cloud the issue as they appear to signify a Trust’s commitment to a genuine saving plan but all too often are the result of superficial schemes, poor (and no) analysis, limited internal capability to drive these and no momentum to embed them if achieved. Whilst many Trusts have these CIPs running as a matter of course, any Trust that wishes to achieve FT status has to undertake a multi-year programme that will trim the overhead to make it run like a business. However, because of this, unless a costly external resource is recruited to scope, plan and deliver these, the performance is often inconsistent and not bought into by staff.
It is this fundamental misconception of running like a business – which almost no Trust has the ability or latitude to do, that makes the notion of FT status less then worthy. Trusts have no real asset base to leverage cheap capital, they have no profile of shareholder performance beyond good patient care (which banks aren’t interested in lending against unless it acts as an incentive to bring hordes of paying patients through the door and which can be proven as a projection – which despite choice cannot happen in a free NHS and where activity is reimbursed based on a pre-agreed volume contract with Commissioners (whoever they may be) who have a static pot of cash to pay for more services. As such apart from being able to bypass various centralised dictats that non FT s must obey, an FT has precious little value proposition other than being asked to meet a number of criteria that a small and often parochial district hospital has neither the culture nor capability and certainly mostly not the right sort of leadership to realise.
Given the need then for these hospitals to try and acquire FT status forces them into new and unfamiliar territory where the wrong capabilities and foreign mind-set are unable to deliver the goods beyond manufactured spread-sheets, and what suffers is the hospital’s core business…looking after patients. In many cases the application process takes managements eye OFF the “business as usual” ball so in the short term may not necessarily improve the quality.
Yes I know the arguments that better financial management, distinctive clinician-led services obviates targets, drives financial efficiency and thus frees up money to reinvest in patients….however, I have yet to see this happen beyond a few large well-endowed AHSCs (and even then with some exceptions) who would have a large embedded and sustainable income diversification scheme in place anyway and where the label of FT or not would make a limited difference.
So unless the NHS takes the bold step of genuinely incentivising FT status with the ability to diversify the organisations ability to generate income, brand itself and in the process create a financially viable and meritocratic hospital that is led by clinicians, attracts the best talent so that patients clamour to be treated there, the notion of FT is less attractive that envisaged and the DH should not be ‘blackmailing’ non-FTs into an “adapt or die” corner when these smaller Trusts, facing a war of attrition as services are integrated into the community may have better operational solutions going forward, rather than averagely talented, still underfunded factory sites with limited prospects in a 21st Century environment of clinical care.
Finally I do believe in the FT process given its purest intent but then it must be matched by a central government commitment to enable Trust’s to flourish as businesses.
July 14th, 2011 at 3:50 pm
Like a lot of NHS ‘transformation or improvement’ initiatives the FT process is not about better performance but rather the core NHS management objective of compliance. The Secretary of State has initiated FT as a mandatory [semi-mandatory it appears now]objective to ensure failure can be punished and poor performers can be merged with good. This is a management control strategy; reflecting the reality of failure by DH to manage and NHS culture as non-performance friendly. There has never been an evidence basis to much of the transformation agenda other than the desire to control budgets and cash. As the research shows the endowed configuration of the pre-existing hospital is more signficant for peformance than FT status itself. I suspect that FT status is a step towards consolidation and management of structural change. Any initiative that is designed to improve operating or financial performance must create real operating models based on real perfomance data focused primarily on what is happening with the patient. At the source of much of the performance crisis in NHS is very poor data and a managemment culture that avoids managing performance. Primacy is given to management compliance as is consistent with classic bureacracy.
July 15th, 2011 at 7:32 am
Having observed the FT process and impact from a number of perspectives it has always seemed to me based on a false premise, that is, if a hospital is well managed, has good business plans and is financially robust then earned autonomy is a decent reward and off they go, having more control over their business and service delivery. Except that they don’t really, do they? Firstly, no Trust is an Island (apologies to John Donne), they all exist within complex health economies and are subject to GP gate keepers, local loyalties, central pressures and regulators, and to be frank financial control is marginal. Financial stability and funds are as often historic accidents as are PFI debts and financial poor performance. An excess of cash can often mask inefficiency (look at the private sector). I am also of the opinion that the early wave of FTs were a self fulfilling prophecy, not only in how and who promoted the intention but those hospitals who met the criteria were those who really didn’t need the additional autonomy as they were powerful and influential – have any of that first wave really changed fundamentally? After this there was leverage to get Trusts through the FT process, the transaction and consultant costs would have been vast – best use of monies? There are also a number that are now falling over because they breathed out after gaining FT status and the economy has changed. The Monitor bar remains high and fewer are getting through with a large proportion of those remaining not able to become FTs.
So now what? The focus is on removing money from providers, at least acute, so FTs will find it more difficult. There is major reform of the commissioning side of the NHS but what really is the market intention for providers? AQP won’t cut it, especially given the current revisions to the Health Bill, big powerful Acutes will remain features of the health landscape, so the issue I think is how GP Commissioning will impact. You could of course decide that economic regulation and the FT model in their current forms should be scrapped in favour of more real control (and less central grip) for GP commissioners. Let the Market rip, whilst ensuring proper and sufficient quality and safety regulation and inspection. Simple isn’t it??
July 20th, 2011 at 9:57 am
Having gone through the FT assessment process, the principles on which it is based are sound and should be the focus of any organisation purporting to be a high quality provider of services with solid finances. However, the environment in which trusts operate, is the cause of failure / lack of opportunity to maximise benefits of being an FT.
Examples include national manipulation of tariffs biased to commissioners, outside the control of providers; adjustments to market forces factors; persistence with one year contracts
Monitor’s major concern has been the inability of organisations to take a longer term view; hence the emphasis in the assessment process on Long term financial models over a five year period and the annual planning submission covering 3 years including current year, allied to improvements in the delivery of services and improved quality of care.
However, the examples of interference make medium term planning fraught with difficulties.
One only has to look at the Peterborough situation to question how an organisation that has been an FT for several years can develop a forecast £38m deficit in 11-12 on a £200m+ turnover. To what extent has the medium term planning that helped them in delivering their PFI, presumably with commissioner / SHA sign up, been compromised by year to year tariff meddling; changes in commissioning arrangements / intentions.
Seems to me that FTs or any NHS organisation will struggle to prosper due to ongoing “political” interference.