Published: 14/10/2004, Volume II4, No. 5927 Page 21
Little attention has been given to the publication of the revised 'combined code' in 2003. Issued by the Financial Reporting Council, it is derived from Derek Higgs' review of the role and effectiveness of non-executive directors (NEDs) and has implications for all NHS trusts, especially foundation ones.
In essence, the code seeks to ensure that the board's role is to 'provide entrepreneurial leadership within a framework of prudent and effective controls' that enables risk to be assessed and managed.
Foundation board directors now have individual and collective responsibilities and liabilities and this has given added impetus to corporate governance development.
Equally, board assessment of corporate risk has been patchy but great strides now need to be taken with non-executive directors to ensure that all boards have sufficient expertise, time, support and information to discharge their corporate responsibilities. Our board has initiated a full development programme, including the appointment of two new NEDs with legal and financial expertise to strengthen corporate risk assessment and governance management.
All NHS trusts need to ask whether their boards satisfy best evidence-based practice as described by the combined code. For example:
Do all boards have systematic process control over risk management and is the current process for NED appointments fit for the future?
Do boards have assessment systems in place for NED performance and do the performance reporting arrangements from trusts up to SHAs make it more difficult to hold NHS boards and NEDs to account?
Do chairmen and NEDs meet independently of executive colleagues to consider performance?
Do NEDs meet independently of chairmen at least annually to appraise the performance of the chairman?
Have foundation boards organised appropriate insurance cover in respect of legal action against its directors?
Do existing NHS boards have sufficient autonomy to appoint NEDs, paying due regard to skills deficits and robust corporate risk assessment?
Should boards create nominations committees to evaluate the skills, knowledge and experience of the board and, consequently, prepare a description of the role of a particular appointment?
Do existing boards have robust performance appraisal systems in place for NEDs?
Given the intention to create as many foundation trusts as possible over the coming years, it is highly likely that the NED appointment system will need to change and that the roles and responsibilities of chairmen and chief executives will alter. Equally, new systems of board assessment and corporate risk management are needed to create autonomous boards who have true responsibility for setting strategy - with all the risks and rewards this brings.
Mark Britnell is chief executive of University Hospital Birmingham foundation trust