Woeful shortcomings in the boardroom was one of the reasons for the global recession - but there is no excuse for NHS boards to make the same mistakes

Many commentators on the current worldwide financial crisis have laid the blame firmly at the door of the boardroom - and in particular at a failure in corporate governance and inaction of boards, who failed to understand and manage risk and tolerated perverse incentives.

What we need is a crusade to embed world class governance in the NHS

Sounds familiar? It should do: this picture resonates across all parts of the NHS. In many primary care trusts, boards of 20 plus meet monthly to try to make sense of a challenging and changing agenda, supported by an unwieldy committee structure and accompanied by poor quality paperwork.

The inevitable result is an absence of focus on driving forward the strategic direction of the organisation. Risks are hardly being managed and frank, open discussion and debate is non-existent. No surprise, then, that the world class commissioning process shows that over half of PCTs are rated as amber or worse on governance. The picture is not much better in some NHS trusts aspiring to foundation status, who are struggling to make sense of what a well governed organisation needs to look like and how to make it happen.

Recent failings at Mid Staffordshire suggest that good governance is not well embedded in foundation trusts either. Indeed, the governance failings at Mid Staffordshire, while not as headline grabbing as the issues around the way in which emergency patients were admitted and treated, show very clearly that the board failed to understand the basic precepts of good corporate governance. If it had, then surely it would not have channelled the majority of board business through the private board, board reports would not have been written so badly that they masked the real issues, board actions would have been followed up, board minutes would have demonstrated discussion, debate or challenge and board directors would have been asking questions, and the right ones.

What we need is a crusade to embed world class governance in the NHS, and the place to start has to be the boardroom. Lord Myners, financial services secretary to the Treasury, memorably stated last year: “The typical bank board resembles a retirement home for the great and the good: there are retired titans of industry, ousted politicians and the occasional member of the voluntary sector. If such a selection… was ever good enough, it is not now”. Are NHS boards any different?

NHS boards now need to rise to the challenge of delivering good governance and ensure that they learn the lessons of recent corporate failings and put their house in order.

There is no shortage of governance guidance from the Department of Health, and Monitor’s code of governance for FTs knows no boundaries and could be more or less implemented in full by any PCT, strategic health authority or aspirant FT today. Any board that has not done so already should be requesting this to be a topic at their next board development session, accompanied by an action plan for implementation.

Beyond the NHS, guidance proliferates in the commercial sector and from elsewhere in the world. This should be scrutinised by NHS organisations and best practice effectively adopted. In my PCT, our board received a paper a year ago on board governance and that covered everything from what could be done to enhance the committee structure and other aspects of governance to highlighting key elements of Monitor’s code and how it could be taken forward.

To its credit, the board has taken this forward with a vigour that on occasions has surprised me. A year on, we have:

l employed a company secretary, a dedicated role to support the board on corporate governance, supported by a well resourced secretariat;

l established a new committee structure with clear board reporting lines;

l raised the profile and role of the audit committee to clearly act as “scrutineer of other committees”;

l reviewed and revised our board agendas by having in place an agreed board forward planner - focused more on strategy quality and performance of services and less on operational matters, which should be the purview of the executive directors;

l ensured risk registers are vigorously scrutinised and managed and have the ownership of the entire executive team.

Governance needs to be constantly reviewed and our procurement of a board development programme will soon further enhance these agendas. And that is the point. Governance needs to be taken seriously by NHS boards. Poor governance was central to the global financial crisis and Mid Staffordshire and should be a wake-up call for the NHS.