In the last of our series on organisational turnaround, we peer through the breaks in the clouds around two once-troubled trusts

Barnet and Chase Farm Hospitals trust

Barnet and Chase Farm Hospitals trust has endured some of the most painful experiences of an NHS organisation's life: franchising, a waiting-list scandal, 11 chief executives in as many years and a hefty deficit. This has meant an often prickly relationship with the press, but when HSJ meets chief executive Averil Dongworth and finance director David Carter, they are optimistic.

The trust is currently£11m in the red. The plan for 2007-08 is to end with a£2m surplus, with financial support, although there is still a historic debt of£20m to recover. 'We have an agreement with NHS London that we need a£10m surplus in both 2008-09 and 2009-10. After that we are free,' says Mr Carter. 'The challenge is to [do this] while adjusting to payment by results.'

Some argue that the north London trust should never have been created. Its hospitals are only five miles apart but difficult to travel between by public transport. Both are expensive to run as Chase Farm includes decaying Victorian buildings while Barnet is a new-build under the private finance initiative. The trust has a catchment area that straddles the M25, taking patients from inside and outside London. It answers to NHS London and NHS East of England. It also has numerous local authority, police and education partners. Creating the trust meant merging two IT systems, financial regimes and switchboards.

Mr Carter says: 'The inflexible asset base and their fixed costs is the biggest issue. Under payment by results we will struggle with fixed costs.' Coming from Barnet primary care trust at the end of 2006, he is well aware of Barnet and Chase Farm's history. 'There is light at the end of the tunnel,' he says.

Part of that light is changing the trust's clinical services, proposals for which are outlined in a consultation document. 'We have to do what is best for the long-term viability of the hospital. The status quo is not an option,' says Mr Carter.

Option 1 in the consultation includes concentrating planned care at the Chase Farm site, with major emergency services and urgent care at Barnet Hospital and the neighbouring North Middlesex University Hospital trust. Chase Farm would have an accident and emergency centre and consultant-led paediatric and older people's assessment units. Inpatient services for women and children and obstetrician-led maternity services would be at Barnet and North Middlesex.

Option 2 turns Chase Farm into a community hospital, with day surgery and intermediate care beds as well as the units outlined above. Intermediate care beds would also be at Chase Farm, with all inpatient and major services at Barnet and North Middlesex.

A report commissioned by NHS London from national emergency access director Professor Sir George Alberti advocates having major emergency care on two sites (Barnet and North Middlesex) rather than three.

'The PCTs and ourselves are at one on the direction of travel,' says Ms Dongworth. She stresses that the decision will be geographic, not about population density. 'There are too many hospitals and what we have now is not a platform on which to provide a modern NHS service.'

Speaking before the Healthcare Commission served the trust with an improvement notice on its hygiene levels, she adds that Chase Farm as an elective centre could mean 'no MRSA, no cancellations'. She also believes the consultation will aid continuing work on Modernising Medical Careers and help attract top-flight clinicians through specialisation.

Meanwhile, after years of see-sawing between one and zero-star status, the trust is confident that it has performed 'exceptionally well' on a number of healthcheck targets and is looking forward to the October ratings. 'We are feeling self confident; a corner has been turned,' says Ms Dongworth.

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Northern Devon Healthcare trust

An organisation-wide understanding of the enormity of the problems has underpinned a change in fortunes for Northern Devon Healthcare trust. Financial deficit meant an automatic rating of weak from the Healthcare Commission for use of resources in 2005-06, made worse by another one for quality of services. This was a setback as the trust achieved three stars the previous year and had been working towards foundation status.

However, a tough year has delivered results. The 2006-07 programme of turnaround projects has brought service improvements and savings of£1.15m through measures such as skill-mix reviews and the closure of 53 beds.

Director of operations Jo Gibbs has witnessed the turbulence of the past few years. She says that as well as finance there were issues over access targets and relations between clinicians and the executive team. 'For a relatively small organisation... our deficit was very large,' she says. The team rose to the challenge and Ms Gibbs says that while nothing done to tackle the debt was particularly innovative or complex, what counts is how it has come together.

A fundamental part of the trust's turnaround has been effective clinical engagement, assisted by interim medical director Dr Sean O'Kelly. He joined last summer with a brief to help find ways in which the relationship between clinical staff and the executive could become more functional. 'Before the seriousness of the problems had been recognised by the organisation there was a stage where the clinicians were not desperately engaged in efforts to remedy the situation,' he says. When the trust executive stated the gravity of the situation in a frank and honest way it was, says Dr O'Kelly, an attempt at making a fresh start in dealing with the problems.

'I think the trust focused on its methods of communication more thoroughly,' he says. 'The role I played was moving the clinicians along from an awareness of the problems and some of the strategies designed to cope with them to supporting and ultimately being committed to them, so there was a hierarchy of engagement.

'The trust didn't stop at making them aware but worked with them and clarified all the different ways they needed to be involved.'

By the end of the financial year in March 2007 the trust was showing measurable signs of recovering its position. Having forecast a deficit of around£7.3m the actual amount was around£7m. The trust aims to be back into financial balance by the end of 2007-08.

In the drive to achieve an increase in financial understanding, knowledge-sharing events were led by the director of finance. To help clinicians develop awareness of financial flows, Dr O'Kelly developed his own 'clinical' model. 'Financial management is very similar in function to the cardiovascular system. It's about getting financial resource to the right bit of the organisation at the right time, in the right amount, and that's exactly what the heart and blood vessels do.'

Throughout, the emphasis has been on both improving service efficiency and quality, says Ms Gibbs. 'Vertical integration' with the provider arm of the outgoing North Devon primary care trust presented opportunities for development of care pathways across the traditional acute and community care boundaries. 'Paediatrics has been a great success for us and demonstrates how vertical integration has worked,' she says.

The paediatrics review work has included development of a children's community nursing team, resulting in better patient management and fewer admissions, enabling a permanent reduction in beds on the paediatric ward. Protocols for self-administration of medicines have been implemented, and high dependency beds and a dedicated paediatric floor in the acute hospital are being developed.

In the background of all this change has been the decision to go ahead with a£23.5m refurbishment programme to renew the main hospital. 'The advantage for us was... that we could start to address some of the functionality problems and deliver continuous improvement very quickly. A PFI or external build would have taken some years to deliver,' says Ms Gibbs.

The commitment to the turnaround project is palpable, says Dr O'Kelly. 'There is a vibrancy to the organisation now,' he says. 'People who come here to see me say they feel there is an exciting air about the way that there is so much development and change and they want to be part of that. People don't want to join an organisation that is static - and that is one thing we are not.'