Shape up or we'll find someone else to do your job - that's the new, tough message from the Department of Health. But how attractive will the 'someone else' role prove to be, asks Charlotte Santry

The NHS failure regime announced last week will have sent a shiver down the spines of many health service managers.

The Department of Health document sets out a clear timetable for dealing with underperformance, including the dismissal of managers and takeovers by private firms.

While many of the proposals have been announced before, the no-nonsense tone removes any doubts among commissioners and trusts that boards will be heavily penalised for failure.

The new system, outlined in Developing the NHS Performance Regime, initially gives "underperforming" primary care trusts and NHS trusts three months to improve. The criteria for underperformance will be announced in the autumn but are likely to be drawn from the registration requirements trusts will have to meet to register with the new health and social care regulator, the Care Quality Commission, from 2010.

Health minister Ben Bradshaw would not be pinned down when questioned about this by HSJ.

"I think the CQC standards will help inform the criteria," he says. "I don't think we've made up our minds. It's important to listen to the views of the service and the Healthcare Commission."

Introducing an extra set of standards would be a controversial, if unlikely option: trusts would not relish taking on the added burden, and regulators would be concerned about any overlap.

Mr Bradshaw is at pains to rubbish suggestions made in the national press that the 20 trusts rated "weak" in both parts of last year's annual health check - for quality of services and use of resources - would be the first targets. He says: "There are trusts that aren't double weak but aren't improving. Trusts may be seriously underperforming in only one of the two parts."

Next steps

If underperforming trusts cannot demonstrate sufficient improvements after three months, they will be classed as "seriously underperforming". After six months, the strategic health authority will give NHS chief executive David Nicholson a progress report. Evidence of insufficient progress or a significant risk to patient safety may lead to the organisation being labelled "challenged".

The SHA then agrees a turnaround plan and can impose interim managers and remove board members. The DH is exploring options to grant Monitor powers to act on behalf of foundation trusts equivalent to those enjoyed by SHAs.

Managers in Partnership chief executive Jon Restell will be demanding more details on exactly how managers will be removed and whether the rules apply only to those at board level.

"This idea we can just scoop people awayƒ there's no evidence they've thought through how that would happen and how they do it fairly and meet the principles of employment law and good employment practice."

After a further year, the SHA reports again to Mr Nicholson, who can either remove the "challenged" status, extend the review period or place the organisation "under directions". Primary care trusts may have functions outsourced or be taken over by another PCT.

Options for trusts include closure or disposal of assets, franchising of individual services or management, or merging with a foundation trust. The franchising of management services to the independent sector does not apply to PCTs because they already have the framework for procuring external support for commissioners.

Unions have attacked the proposals as evidence of creeping privatisation, although private sector contracts would involve no shift of assets or staff from the NHS.

Whether the private sector will want to take over struggling trusts is a moot point. Bupa calls the proposals "not directly relevant to us". Other firms involved in FESC will be mindful of the need to avoid a conflict of interests.

Hinchingbrooke Hospital in Cambridgeshire, which has historic debts of£40m, is being considered for a takeover, but will many private companies running hospitals really want to save NHS competitors?

Acquisitions by other NHS organisations are the government's preferred option, but the likelihood of foundation trusts launching takeovers in the absence of a convincing business case is also widely felt to be fairly low.

However, Monitor executive chair Bill Moyes says there may be more interest than suspected. "Some FTs will be interested in acquiring failing hospitals. I certainly think there's mileage in that idea," he says.

He suggests there are between 10 and 21 potential candidates.

Good Hope Hospital, taken over by Heart of England foundation trust, is the only such example at present and no other mergers are expected imminently.

When director general of NHS finance, performance and operations David Flory was asked in the press briefing what happened if no-one came forward, he appeared stumped. "That isn't something we have dealt with," he said.

Make or break

Mergers are the most probable solution for failing PCTs, particularly those in London, none of which was restructured as part of Commissioning a Patient-Led NHS.

But what if a trust continues to fail under new management? "Then the poor performance regime kicks in again," Mr Bradshaw explains. "The hope would be that we'd get people of the necessary calibre and that would mean the risk of that happening was lowƒ but there's no guarantee against a repeated failure."

Managers can also be "parachuted into" failing trusts from a talent pool known as NHS interim management and support. But Mr Restell is unsure this would be in anyone's interests. "Some of our case work suggests this can be a make-or-break career move," he says. "People have certainly undertaken these roles and lived to regret it. I'd be concerned about a high-flying finance director doing a day job and then putting in 40 hours to sort another trust out. Breaking people doesn't mean we're spreading expertise."

The amount of time new managers will have to tackle problems is also felt to be a potential barrier to success.

"It would take a minimum of four to five years to turn around a hospital in these situations," Mr Restell says. "One way of undermining individuals and organisations is giving them unrealistic timescales."

The document states the DH wants to support managers. It also devotes an entire chapter to holding leaders to account. Added to new powers to suspend chairs and non-executive directors and revised guidance on severance pay, it is being seen by some as part of an anti-management drive.

NHS Confederation policy director Nigel Edwards calls the paper simplistic and criticises the lack of analysis on why trusts fail.

"The department has been doing work on performance for four yearsƒ I'm not entirely sure if this work has any connection with what has been produced. It seems rather rushed."

Many problems are down to issues such as over-capacity rather than bad management, he says.

Healthcare Commission chief executive Anna Walker says of the 32 trusts that received follow-up visits after weak performances in last year's annual health check, most had problems stemming from historic weak management and reorganisation.

"I wouldn't want to say that all challenged trusts are only about leadership and management because there are other issues," she says, citing regional health economies as an example.

However, she sees leadership as the major causal factor in the significant variations in performance across the country.

While NHS trusts and commissioners have been widely perceived as being on the receiving end of many of the changes set out in the new regime, SHAs have not been let off the hook.

The fact that such a regime is deemed necessary may be viewed by some as an indictment of NHS performance management as it stands. Mr Bradshaw admitted intervention is currently "ad hoc". The DH paper states more mildly that SHAs "have taken different approaches".

Drift along

The post-Maidstone undercurrent running through the document is a message to SHAs that poor organisations must be dealt with at the earliest opportunity. It states: "Successful delivery against the SHA-level plan can sometimes hide poor performance by a small minority of individual organisations in the region.

"And over time there is a risk that such organisations are allowed to 'drift along', while high-performing organisations in the region are delivering more than their 'fair share' of performance improvement at SHA-level."

Each SHA is being subjected to a capability review as part of an SHA assurance system that will feed into the appraisals of chairs and chief executives by 2009-10.

It is possible that the push will quicken the pace of decisions regarding service reconfigurations and closures, although these will still have to go through the usual consultation processes.

Many of the unanswered questions will be addressed by work being led by Mr Flory to establish the precise details of the criteria for underperformance, SHA assurance system and failure regime for state-owned providers.

Consultation on the proposals will take place over the summer, for implementation next April.

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