Hospital franchises - quantum leap

Cally Palmer, chief executive of the Royal Marsden foundation trust, the most famous specialist cancer hospital in England, is frank about its decision to branch out. "Financially it makes sense," she says.

That is not the only factor driving the organisation's decision to pioneer a Royal Marsden chemotherapy unit on the site of Kingston Hospital in south west London, which will officially open its doors to patients next month. But Ms Palmer is candid about how the foundation trust will need to operate if it is to flourish in the new world of payment by results and increasing pressure on foundations to generate a surplus and innovate.

"The concept was part of our foundation trust application, the idea that we would roll out a series of networks operated locally under the Royal Marsden banner," Ms Palmer explains.

The foundation trust had been in discussions with Kingston Hospital trust about setting up a specialist chemotherapy cancer unit on the site since 2005. Both trusts saw the move as a good opportunity to offer a better service to patients. The new unit will deliver chemotherapy services to Kingston-based Royal Marsden cancer outpatients, saving them from having to travel into central London. Both organisations benefit by offering something new and different to patients - particularly prescient as patient choice becomes a major factor in how organisations generate income in future.

In June the Sir William Rous unit, named after a former Kingston Hospital chair who died of cancer in 1999, will open to Kingston cancer patients who in the past would have been forced to have chemotherapy further from home. The new unit will include an outpatient diagnostic clinic, an outpatient chemotherapy treatment suite, a patient information library service and access to support such as counselling and complementary therapies.

The development is a three-way partnership between Kingston hospital, the Royal Marsden and Macmillan Cancer Support. In order to open the unit, Kingston raised£2.8m through a local fundraising drive, trustees of the Royal Marsden donated£1.3m and Macmillan Cancer Support raised£630,000.

"Although our primary interest was in extending Royal Marsden services to patients, we have looked at the business aspects, in particular in securing referrals from Kingston and from GPs in the area to the Royal Marsden," Ms Palmer admits. "Getting referrals is good for business and for extending our brand."

The unit is the first step in the trust's plan to roll out its cancer service brand across the South East. Ms Palmer says the trust is aiming to "centralise where necessary and localise where possible". It is already in discussions with a second trust about setting up another cancer unit on site and is market researching the possibility of setting up further units in London and the South East. "In the long term we hope this will benefit us as a foundation trust and provide financial security," she says.

Patients first

Royal Marsden provisional clinical services director Fran Davies says she is optimistic about the Kingston project, as the two organisations have worked together for a number of years, operating joint cancer clinics.

"We will now be able to provide urology, gynaecology, lung, breast and upper and lower gastrointestinal cancer services to patients locally," Ms Davies explains.

She says that while the ground floor of the new unit will house a clinic jointly staffed by consultants from Kingston and the Royal Marsden, the rest of the unit will be staffed and run as a day unit of the Royal Marsden.

"It saves patients travelling, which is one of our key drivers, although if patients need radiotherapy services for the time being, they will still have to travel to the Royal Marsden's main London site."

Kingston Hospital gains the opportunity to work with specialist cancer staff, and Royal Marsden staff benefit from working in a local setting.

"One of the key things we did when the idea was first mooted was to involve staff in both organisations at an early stage and have a detailed discussion with them about joint working." Ms Davies thinks this is a major element of a successfully franchised unit.

The unit also intends to recruit nursing staff locally, offering the chance to work on rotation at Kingston for two to three months before working at the Royal Marsden. Both trusts have worked closely on an operational level, including bringing together their IT departments in order to ensure the electronic patient record system can work across the unit and both hospitals. The two trusts established a partnership to design the new unit, which sits in front of the main Kingston hospital site, and the trusts' finance departments also worked together to "bring together a complex venture into a positive one".

To date, the Royal Marsden is one of a handful of specialist foundation trusts to follow this type of network franchising model. Well ahead of the game is London's Moorfields Eye Hospital foundation trust, which set up its first independent unit at Ealing Hospital 11 years ago and now operates out of 11 hospitals across London and the South East as well as in Dubai. But this type of arrangement may well be used in the future for specialist district general hospital foundation trusts and even extended to include non-specialist organisations that have particularly renowned service areas.

Established brands with a long history and track record of providing specialist services, such as Guy's and St Thomas' foundation trust and Great Ormond Street Hospital for Children trust, may have a competitive advantage. Their brands are instantly recognised as badges of quality and excellence. But successful foundation trusts also often have brand recognition and reputation within a local area and could exploit this to develop local franchises before looking further afield.

Although the NHS has in the past tried to manage an entire trust via the private sector when private healthcare company Secta (now part of the Tribal Group) was invited to run Good Hope Hospital in 2002, the franchise model has yet to really flourish.

Perhaps a franchising model that allows foundation trusts to team up with less successful ones could provide a partial solution to some problems for struggling trusts and a potentially successful way for foundation trusts to expand.

In commercial "business format franchising", the franchiser grants a licence to the franchisee. This entitles the franchisee to use the franchiser's trademark or name and make use of an entire package of business support. That package typically includes access to the franchiser's business model, know-how and training and management services, so the franchised business can be operated to a set of predetermined quality standards within a standard format. The franchiser may also be prescriptive about the standard of equipment in the franchised unit and how it looks and feels to the customer.

The result is that the customer experience in each outlet is consistent - think McDonald's - because the franchiser rigorously enforces its quality and performance requirements, and the franchisee risks contractual and financial penalties or even loss of the franchise if it fails to operate to the standards.

The model is attractive to patients - vital in the era of choose and book and payment by results - and offers the opportunity to drive cultural change and increase efficiencies.

And it could provide real opportunities for small district general hospitals that are struggling to perform under payment by results.

Kingston Hospital trust chief executive Carole Heatly is excited about the Royal Marsden partnership: "I think it is a fantastic thing for patients who use Kingston hospital and for staff to be able to work with a trust which has such an international reputation." She says the trust initially started to think about how to improve cancer services provided to local patients as far back as 2003, but that it has taken five years to raise the money to fund the unit.

She adds that Kingston has a contractual agreement with the Royal Marsden about patient flows and referrals, which she says should be "mutually beneficial financially". She says an important part of the development was engaging both staff and patients.

"We had to reassure patients that if they were already in a clinical pathway as part of the West London cancer network, the choice was theirs as to whether they wanted to continue to go to the Royal Marsden's main site for treatment or transfer to the unit. We have found that most patients have gained a great deal of confidence in being able to access their chemotherapy treatment locally and with the link we have created with the Royal Marsden," she says.

Partnership models

Indeed, Ms Heatly is so pleased with the franchise model that the trust is now in detailed discussions with Great Ormond Street about the possibility of creating a branded specialist children's unit at Kingston.

"I would recommend other district general hospitals consider this model - it's about local care for local people." She says the trust is as keen to have as much expertise on the site as it can and she is enthusiastic about the Great Ormond Street partnership: "I say bring it on." However, the trust will not confirm further details of the Great Ormond Street deal as talks are still at an early stage.

Kingston clinical services divisional manager Tracey Moore is equally enthusiastic, particularly about how the unit has not only partnered with the Royal Marsden but with Macmillan Cancer Support, which helped to raise a significant proportion of the cash needed to build the unit and manage and run its library and counselling services. "It's definitely an innovative and exciting project, especially because of the three-way working, and we hope it will attract extra patients to the trust in future," she says.

The partnership is also a first for Macmillan Cancer Support, which it hopes to build on, says Steve Richards, support services director for London, Anglia and the South East.

"The three-way partnership [is] relatively unique [and] we have been very keen to bring in our expertise," says Mr Richards.

He says Macmillan has a lot of experience in developing cancer environments and was able to help with the design of the unit. Macmillan Cancer Support is now working with the Royal Marsden to look at building a network across the country to replicate the Kingston model.

As yet only a handful of trusts have decided to stretch their brand and establish specialist clinics on other sites, but it looks as though the franchise model will spread - and it could become an important way to rescue smaller struggling organisations and to help foundation trusts expand their income.

Networking the Moorfields way

"'Moorfields comes to the community' is how we market the brand," explains Valerie Giddings, general manager of the Moorfields Eye Hospital foundation trust specialist eye unit based at Ealing Hospital trust.

It is one of Moorfields' 11 satellite sites: last year the trust opened a unit in Dubai. Now 12 years old, the Ealing unit is well established.

"Once we sold the original idea, we have built up a great rapport with the host trust," Ms Giddings adds. The unit is operated by Moorfields staff and runs a different specialist service each day, including glaucoma, cataract, children's and diabetic clinics and sees 700 patients a week.

Contracts are negotiated with the local primary care trust and land and theatre use is rented from Ealing. Most patients are referred either by their local GP or through Ealing's accident and emergency department.

Open dialogue

The unit's lead consultants are active in the community, communicating with GPs and optometrists about the services on offer.

"We offer a wide sub-specialty range of services tailored to the local community, which has a large Asian population with conditions such as medical retina problems, cataracts and glaucoma," explains lead consultant Ian Murdoch. "We not only work closely with GPs but also with Ealing PCT as our commissioner to help them meet their targets," he adds.

Ann Arnold, one of three Moorfields general managers in charge of managing the satellite services, explains the network is run on a matrix system, with each unit headed by a lead nurse and an outreach manager as a well as a lead clinician. She admits the units can become difficult to manage when sub-specialty services are run only out of a particular unit and not the main hospital site.

Each Moorfields satellite is run differently. At Bedford the foundation trust has taken over the ophthalmology service offered by the local trust, whereas at the Ealing and Northwick Park sites the organisation has been contracted by the local PCT. At Homerton foundation trust, Moorfields has a contract to offer specialist services.

Ms Arnold says it is important to try to ensure staff at the sites feel they work for and are part of Moorfields. "This is not such a problem for the consultants and junior doctors, who are on rotation, but with nursing and clerical staff. We make sure they are getting Moorfields training, for example.

"More established units tend to feel they work at Moorfields more than the others, I think."

Local service

Moorfields develops its services to suit local needs and looks to broaden its approach. The trust is in talks with Harrow PCT about operating services in the community, managed by a local GP with a special interest.

Naturally, there is a financial incentive for the foundation trust to offer these local services. "Local trusts act as feeders to us for specialist services - we are picking up referrals from a much wider population and in order to stay financially sound under payment by results, we need that economy of scale," Ms Arnold says.

So is it something she would recommend? "To other specialist trusts, definitely; it is quite complicated to manage relationships with local host hospitals in terms of setting up and agreeing licences and contracts but yes, both for the patients and financially, it works well."

HSJ's NHS Business Management conference is on 3 July