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For many years there has been a question mark hanging over the sustainability of Northern Devon Healthcare Trust.

The acute and community services provider runs what is often described as England’s most remote mainland hospital (North Devon District Hospital) and has long struggled with workforce shortages and an increasingly elderly population.

After hitting something of a low point in 2017-18, when concerns emerged about NDDH’s maternity department, hospital consultants intervened to prevent the medical director becoming CEO, and the trust suffered data problems. NDHT sought help from its closest neighbour: Royal Devon and Exeter Foundation Trust.

In May 2018, RD&E CEO Suzanne Tracey and chair James Brent took on the same roles at NDHT. Their job was to stabilise the trust and to persuade a sceptical consultant body that closer work with RD&E would not lead to clinical services being moved from North Devon.

Less than two years later the trusts’ boards agreed to explore “formal integration”, and another two years on the trusts are now set to merge in April if approval is granted by NHS England.

Unusually, they have not published their strategic outline case, outline business case or full business case (FBC) throughout the process.

However, a six-page “executive summary” of the FBC was published last month, which leaves readers with little doubt about the importance of the merger. 

Rural subsidy

Interestingly, the FBC confirms that a “rural subsidy” – to compensate for the “diseconomies of scale present in NDHT” due to North Devon District Hospital’s remote location – has been achieved.

In other words, the merged trust will receive more money to deliver 24/7 services such as accident and emergency, intensive care, maternity, trauma and acute medicine.

Although the trusts estimate annual efficiency savings of up to 3 per cent post-merger, this would not have been enough without the rural subsidy, according to the FBC.

It is unclear from the executive summary specifically how this rural subsidy will work in practice, and it raises the prospect of CEOs from other remote trusts knocking on commissioners’ and NHSE’s doors asking for similar settlements.

Investment in infrastructure

Along with the rural subsidy, the FBC summary also refers to two other “enablers” to making the merger a success – both of which require NHSE approval.

These enablers are the implementation of Epic’s electronic patient record at North Devon District Hospital and the large capital allocation to overhaul the hospital’s estate under the New Hospitals Programme.

RD&E installed Epic’s system last year and sees a common electronic patient record with NDHT as “fundamental” to achieving clinical integration.

With Epic not being cheap, trust chiefs wanted to use part of the funding allocated by the New Hospitals Programme for the EPR to be bought and rolled out. This would be the first of four phases of North Devon District Hospital’s transformation under the high-profile programme.

The FBC states this objective has also been achieved, which is an impressive feat given NDHT’s NHP allocation was not expected until after 2025. It is not known how much of the NHP allocation has been devoted to the digital aspect, but it will be a significant amount.

That leaves the final enabler for success, which is still awaited: approval of the business case for NDHT’s full allocation under the NHP. Precisely how NHSE can guarantee this, when the NHP itself needs to secure agreement from the Treasury to fund the projects planned for after 2025, is not clear to the Chronicle. Our questions went unanswered, with the trusts insisting “it wouldn’t be appropriate to provide further detail at this stage”.  

Other NHP trusts hoping to get their own business cases approved will doubtless be keeping a close eye.

The counterfactual

Finally, it is interesting to see how starkly the FBC appears to set these three enablers as effective conditions for the success of the merger.

Under a “counterfactual” scenario where the merger didn’t progress, set out in the document — which could of course be meant very hypothetically — the “positive momentum and impact [of the closer working between the trusts] would doubtless cease as there would be uncertainty around the strategic direction of NDHT and continued organisational barriers to clinical teams owning the shared clinical service sustainability challenges”.

It goes on: “The counterfactual scenario envisages that RD&E would not wish to continue in a sub-optimal relationship and would withdraw its leadership team from NDHT once a whole new Board and leadership team had been recruited to NDHT.”

To the Chronicle, this seems like a polite ultimatum.

All eyes are now on NHSE to decide the proposed merger’s outcome, but it is difficult to see how the regulator could refuse. The choice seems to be between more long-term unsustainability or hope for the future backed by huge investment in local infrastructure.