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Boards approve case for £2.1bn merger

The boards of three foundation trusts in London have agreed a strategic outline case for a merger that would create the largest trust in England.

King’s College Hospital, Guy’s and St Thomas’ and South London and Maudsley have agreed the case for forming an organisation with a turnover of more than £2bn.

The new organisation would be nearly twice the size of Barts Health Trust - which with a turnover of £1.1bn is the biggest in the NHS.

The merger of a mental health trust with two hospitals would be unique.

A full business case will be presented to the three trust boards and the board of King’s College London, their university partner in an academic health science centre, early in 2013.

The strategic outline case estimates the earliest a merger could take place would be late 2014.

No foundation trusts have yet merged and an application would have to be approved by Office of Fair Trading, which could refer it on to the Competition Commission.

The document said: “Estimates suggest three to five per cent savings in non-clinical support functions alone could be achieved in the new organisation” and that “a single organisation could make better use of our combined assets (£1.3bn across the three trusts) to release funds for investment in new models of healthcare”.

The trusts already work together with King’s College London as part of academic health science centre King’s Health Partners, as well as collaborating on research and providing services as part of “clinical academic groups”.

The new organisation cannot become a single legal entity with King’s College London but the intention is to further strengthen the ties between the trusts and the university.

The new organisation would operate as a single foundation trust and its chief executive would sit on the board of King’s Health Partners.

The trusts believe the combination of secondary, tertiary, mental health and community services would make it unique in the NHS.

But the document stressed: “We have been clear from the outset that this undertaking would be unacceptable – and would fail – if it resulted in a remote, centralised organisation which attempted to replicate conventional NHS trust governance, management and service arrangements at this scale. It would have to operate in a very different way to be effective.”

It also clarified that the two A&Es and maternity units would remain on their current sites.

The news comes one month after South London and Maudsley chief executive Stuart Bell announced he was leaving, after 14 years, to lead a trust in Oxfordshire.

 

Readers' comments (25)

  • The trusts believe the combination of secondary, tertiary, mental health and community services would make it unique in the NHS - I believe it sounds very much like a Health Authority of 20+ years ago

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  • The trusts believe the combination of secondary, tertiary, mental health and community services would make it unique in the NHS - I believe it sounds very much like a Health Authority of 20+ years ago

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  • Yes Nikki - We heard you!

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  • Big is not necessarily better in any sector...

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  • choice and competition?

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  • SHA on the way back we think

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  • With lots of hospitals failing across the country, maybe super-trusts on this kind of scale will be the new norm...

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  • Always entertaining to hear how mergers will save money. Remember what was said about merging St Mary’s and Hammersmith into Imperial College Healthcare? London Strategic Health Authority Strategy Board, 8 August 2007 (chief executive Ruth Carnall, director of organisational development Anne Rainsberry, programme manager, Lisa Anderton):

    “The Business Plan has been revised. NHS London, through the Provider Agency and the Director of Finance and Performance has been consulted
    on its development. The SHA is satisfied with the process and content. There is a planned forecast of £6.8m surplus for 2007/08. Some of these
    savings will come from having a single Board and supporting corporate services. Other savings will come from the merger process. Looking ahead over five years, the Trust will be projecting further surplus.”

    Really?

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  • You're missing the point - this is a merger of 3 SUCCESSFUL FTs, not merging to try and sort out a basket case. It could go either way in my view, but if successful, becomes a global market player/leader in terms of research & academia, and develops a 'brand' or 'profile' that attracts international funding (private or foreign gov's) which then props up the provision of local services.

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  • But Kings Health Partners can do that without a merger - that's the whole point of academic health science centres.

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  • What if they take over South Lonodn Healthcare?

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  • Anon 4.43 - It depends how you define successful. These trusts have great doctors and rightly attract patients. Financially they benefit from: high levels of SIFT and dental SIFT (generally accepted to be bunce); high MFFs; high margin off tariff treatments; and high levels of donations from captive charities.

    Financially they make surpluses, but these surpluses are more down to serendipity as described above than good management.

    The accountants always assume that merging will reduce non clinical costs, but often this leads to diseconomies of scale and large unresponsive support services.

    Does anyone in the NHS really have a clue how to manage a >£2bn organisation effectively.

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  • Does the paper articulate in what way it will run differently. We are talking about one organisation running 2% of the NHS budget across widely different sectors including all acute services, community and mental health. The traditional model of band 8 general managers supported by sub standard IT, finance and HR systems will fail its local population badly.

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  • Leading teaching hospitals offer consultant benefits including access to resources, opportunity to sub-specialise, interesting tertiary cases, calibre of peer workers etc. Great consultants will always want to work within KHP.

    Nonetheless, consultants within KHP are generally frustrated by weak leadership and management, poor data and IT, dysfunctional support services and an organisation which is slow and monolithic to respond.

    Consultants want this merger, but are concerned that the process will be a huge distraction for management, and will result in an organisation which is even less responsive.

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  • Sounds like South West London and St.George's Mental Health Trust could be taken over by this huge Trust if they don't acheive Foundation Status next year. However, we all know how CQC inspections by the compliance team have become more and more silly following criticisms against themselves!!!

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  • Geographically adjacent meregers inevitably reduce choice. Surely lessons from where competition has worked (retail?) would suggest that we need a Guys chain who run a arange of hospitals across the country, competing with UCLH, Newcastle, Manchester and Cambridge chains, each geographically dispersed, and competing under choice, but each benefitting from economies of scale in support services and from standardised care pathways.

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  • I tend to agree with 9.23 and some of the other points - great doctors and great care, in spite of poor processes, poor management and poor leadership. Not convinced that merger is the solution to .... has anyone thought about the problem which they are trying to solve?

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  • So in general, most comments seem to be against this new organisation (hardly surprising?), or at least against the idea of it unless there is more detailed explanation to what the perceived benefits will be and how they are achieved. I guess we'll have to await the FBC.

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  • Looking more like the Banks that got too big to fail.

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  • surely these trusts are all exemplars of management excellence within the NHS, and their merger should be encouraged to create a truly world class healthcare organisation?

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