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Better the devil you know

The admission by the joint chief executive of three Essex trusts today that running the three sovereign entities as a group has proved “cumbersome and inefficient” raises further questions about the group model.

Will group experiments prove to be, by and large, precursors to mergers rather than genuinely new, sustainable models of provider collaboration?

The closely watched unprecedented Essex group model involved the trusts which run Basildon, Chelmsford and Southend hospitals remaining statutory independent bodies but having a joint leadership team and “flexible workforce”.

When the plans were unveiled in 2016, local bosses said they hoped to get the benefits of collaboration but without the rigmarole of a conventional merger.

But trust leaders have also found themselves frustrated by bureaucratic burdens arising from the new group model, and establishing the scrutiny and accountability framework proved even harder. Two non-executive directors went as far as resigning such were their concerns around the governance of the new model.

Trust executives have now decided the best way out of this considerable pickle – not helped by deteriorating finances at Basildon and Mid Essex – is to go for a conventional merger, as revealed by HSJ last week.

Another key NHS “group model” – Salford Royal Foundation Trust’s de facto takeover of Pennine Acute Hospitals Trust – is also likely to result in a formal merger once they have bedded in a clinical reconfiguration.

While joint chief of the three Essex trusts, Clare Panniker told HSJ that it had not been the intention to merge all along, the outcome – intended or not – from these two prominent group experiments appears to suggest that the group model is a stepping stone to a full merger rather than a sustainable model in its own right.

The other original FTs given permission to experiment as “FT group leaders” by NHS Improvement were Guy’s and St Thomas’, Northumbria Healthcare, and the Royal Free London FT, progress on which is being watched by other sector leaders contemplating how best to further collaborate.

But other models are available – it is not a binary choice between a group or conventional merger.

University College London Hospitals FT’s chief said last year that he did not think the chain model would work – and outlined concerns about precisely the sort of governance issues experienced in Essex. His trust would instead look to form provider “alliances” and shared service agreements.

Impact of Carillion collapse

The sudden demise of Carillion has cast uncertainty over the services provided and contracted by the company to the NHS.

It is too early to say precisely what the implications are for each of the 14 trusts affected but HSJ has found some consensus of opinions after speaking to industry experts.

Given that Carillion was subcontracted by PFI providers to run or contract services to 13 of the 14 trusts, it is the PFI providers who face the most immediate problems.

They are now tasked with finding new contractors who will take over the construction, maintenance, cleaning, cooking and other facilities management services for the trusts.

This pressure is particularly high for the companies set up to deliver the two new PFI hospitals in Liverpool and Birmingham.

One issue those PFI providers will need to navigate is the question of who takes on liability for the construction work carried out by Carillion.

Persuading new contractors to take on the liability is challenging and may require some form of premium payment, which could strain the PFI providers’ finances.

Further costs could be incurred if the delay results in the trust missing out on income or efficiency savings because it is unable to move to the new site. Depending on the terms of the contract the trust may be entitled to reimbursement.

For the other trusts where Carillion has been engaged in facilities management through PFI providers, the issues should be easier to resolve.

Options include taking a service in house, setting up a company to employ Carillion staff to do the jobs as planned, or finding new providers.

The biggest losers currently are the many businesses owed money by Carillion, many of which will take a severe hit.