Sir David Dalton has predicted that “every single” NHS provider in England will be touched by the options for organisational change described in his government commissioned review, which has set out proposals that would bring sweeping reform of the provider sector.

The Salford Royal Foundation Trust chief executive, in an exclusive interview with HSJ, also:

  • estimated 20-30 non-foundation trusts need to be taken over or run under franchise;
  • called for strong NHS leaders willing to help run struggling trusts to be paid more; and
  • said no hospital in England was currently meeting national quality standards for emergency surgery.

The final report of the Dalton review, commissioned by health secretary Jeremy Hunt in February, set out a menu of novel organisational forms it suggests could help providers drive out variation in care standards and bring about the new care models proposed in the NHS Five Year Forward View. They include hospital chains, integrated care organisations, Hinchingbrooke style management franchises, Moorfields style single service chains, federations, and joint ventures to consolidate surgical services.

It also makes a string of recommendations aimed at accelerating the process of those trusts deemed unviable to be taken over, or put out to management franchise, and making it easier and more attractive for successful NHS organisations to extend into running weaker counterparts.

Among its recommendations are:

  • The health secretary should set a requirement that, except in exceptional circumstances, all takeovers, mergers and management franchises should be completed within a year.
  • Monitor and the Care Quality Commission should set up a “credentialing” system for successful organisations “capable of spreading their systems and processes to other organisations”, with the first wave to be accredited by October 2015. These organisations would be able to automatically pass the prequalification questionnaire stage of any tenders.
  • Successful organisations should have a “grace period” following acquisitions, in which their performance and finance metrics would not be dragged down by those of the challenged organisation they acquired.
  • The NHS Trust Development Authority, which oversees non-foundation trusts, should publish its assessment of each trust’s ability to attain FT status, and the dates by which they are expected to become FTs or adopt another “sustainable organisational form”. The DH should hold the TDA to account for this.
  • The TDA should consider running “batched procurements” for the acquisition or franchising of groups of trusts deemed unviable in their current form.

Asked if the TDA was happy to publish its assessment of trusts, Sir David said the organisation had been involved in the review from the start, and was “aware of the importance of taking the work they will do on categorisation and discussing that with all the people affected” that would “eventually mean publication”.

He told HSJ the question of how many trusts in the FT pipeline would need acquisition or franchising was one for the TDA, but he gave an estimate of 20-30.

But he added: “This is not just about that small number [of trusts that might need franchise or acquisition].

“This is much more about fundamentally changing the mindset that the job of a board is just to be the steward of what it currently manages.”

Consolidation

He said he was in “no doubt” that NHS England was “clear on their intent to see integrated services develop”, which would mean “existing management control arrangements of individual organisations have to change”. By a similar token, he suggested hospitals would have to consider “ceding some sovereignty” to work collaboratively if they were to meet care standards for elective and emergency surgery.

Sir David Dalton

Sir David suggested hospitals would have to consider ‘ceding some sovereignty’ to work together

“I don’t think there’s a single hospital now, in the country, that can meet the standards that the Royal College of Surgeons has set for emergency surgery,” he said. “They could if they employed more surgeons, to provide 24 hour consultant delivered emergency surgical services seven days a week, but even if those people were available there isn’t the funding to afford them…

“The way this can be done is through ceding some sovereignty and pooling workforce and finding new ways of working together to meet those standards.

“There is an inevitability that there will be some consolidation of services as a consequence of meeting, quite rightly, the high standards that people ought to be achieving.”

He suggested that “every organisation in the country is going to be affected somehow by these new possibilities, and they really, really ought to be pursuing them”.

Trust takeovers

Asked why he thought acquisitions and management franchises could drive improvements, despite evidence that past NHS mergers have often failed to improve financial or clinical performance, Sir David emphasised his recommendations about “credentialing” those organisations that would have the greatest likelihood of success.

“That’s different to how we have done things previously,” he explained, “where we have just assumed that a merger or acquisition would bring benefit without there being a prior review or assessment of the track record, of [the acquiring organisation’s ability] to take their methods, their systems [and] their culture and have those operate in another organisation.”

He conceded that there would “probably be only a small number” of successful trusts interested in taking over organisations outside their immediate locality and there was “probably only a small number that would be deemed appropriate through the credentialing process to do this”.

But he added: “It does offer a real opportunity for an organisation that’s in persistent difficulty – for the patients that it serves to benefit from tried and tested systems and a culture that appears to work. And I’m sure that a number of providers have the capability to do this if they wish to.”

Asked about incentives for successful trusts to extend their management reach, Sir David said the review had not made any proposals to change the pricing structure. However, he hoped there would be a number of “demonstrator sites” for the models proposed in his review, where “early adopters” would have “the costs of the transaction processes… supported”.

Remuneration

The review report also states: “Leaders of trust boards in successful organisations who are willing and credentialed to take over management control of a struggling organisation, either through management contract or acquisition, should have the benefit they are bringing to the wider NHS adequately recognised through their remuneration and reward, in line with their organisation’s remuneration policies.”

Asked if he thought that there would be more interest in successful trusts if expansion would be rewarded in pay, Sir David said: “Yes. I don’t think it’s a principal issue. But I think if we’re seeing these sorts of changes we need to make sure [that for] those people who are taking on significant additional responsibility their remuneration reasonably reflects the scale scope and complexity of their role.”

The report advises that organisational forms for providers “should develop to deliver the models of care which best suit local circumstances” and “must not be centrally dictated”.

Sir David said he thought that in 10 years’ time we would probably see trusts using a number of the models proposed in his review simultaneously. For “an average acute provider” this might mean being part of an integrated care organisation for long term conditions and urgent care, operating a joint venture with other hospital trusts for elective surgical services, allowing other providers to operate services as a franchise on your premises, and federating with a “range of organisations” to pool back office services.

Health secretary Jeremy Hunt said in a statement: “Sir David’s proposals go hand in hand with the NHS Five Year Forward View on how to meet the challenges of the future, and they will be food for thought for hospitals and commissioners looking to innovate, supported by the £200m transformation fund we announced last week.”

A DH spokesman said the government would not be responding formally to the review, but accepted the recommendations that were for the department directly.

Exclusive interview: Dalton sets out plan to restart FT pipeline