Essential insight into NHS matters in the North West of England, with a particular focus on the devolution project in Greater Manchester. By Lawrence Dunhill

Lessons from Cambridgeshire

Those leading the procurement of a single contract for out of hospital services in the city of Manchester will no doubt be mindful of the disastrous UnitingCare contract in Cambridgeshire.

One of the downfalls of the Cambridgeshire deal - which had similar aims to the Manchester contract - was an unexpected VAT bill due to the contract being held by a joint venture company rather than an NHS trust.

If the Manchester contract is held by a joint venture organisation, as appears to be a likely option, then VAT legislation could well be an issue.

Commissioners will therefore need to be absolutely clear on the VAT liabilities before the contract is awarded, and discussions are ongoing around this with HMRC, according to a “risk update” for the project.

Manchester undeterred

Making large recurrent savings usually depends on two things that are extremely difficult in the NHS – cutting staff numbers and treating fewer patients in hospital.

The frequent failure of trust mergers and service reconfiguration to release the expected savings (in the words of the King’s Fund: the evidence is “almost entirely lacking”) usually comes back to these difficulties.

But this hasn’t deterred those planning the merger of Central Manchester University Hospitals Foundation Trust, University Hospital of South Manchester FT and North Manchester General Hospital, who reckon they can deliver total savings of £105m by 2021, with £42m saved recurrently from that point.

The trusts will of course be helped by a sizable pot of transformation funding, and there is lots of duplication of clinical services, which should mean plenty of scope for securing efficiencies.

But tough decisions may need to be made on workforce numbers, while hoping that redesigned community and primary care services can somehow start reducing hospital demand.

Bonus pot

The North West was a major beneficiary of the Treasury led plans to improve NHS finances, with the region receiving significantly more than its allocated share of sustainability funding.

Had the £1.8bn sustainability element of the sustainability and transformation fund been fed into the tariff – as would normally be the case with additional revenue investment – then it would have been distributed in a relatively even fashion across all of England’s providers.

Instead it was offered as an incentive to trusts to meet their centrally dictated financial targets, with an additional bonus paid to those who could go even further.

According financial data collected by HSJ, all four STPs in the North West were net winners from this regime, with Greater Manchester receiving almost £60m of extra STF.

There is a debate to be had here over the merits and fairness of this system, especially because improved performance was in many cases due to additional commissioner income or technical accounting measures. But you can’t blame finance directors for playing this game in the best interests of their organisation and patients.

Given the severe shortage of capital funding nationally, which is proving a significant headache for local leaders, this extra cash could come in pretty handy.

For those trusts that missed out, including Southport and Ormskirk Hospitals Trust, the STF regime could simply hasten their demise and eventual takeover by a larger provider.

Resignation

A hospital director under scrutiny for his role in an “irregular” departure deal for a midwife at the centre of the Morecambe Bay care scandal has resigned.

Roger Wilson, director of human resources and organisational development at Warrington and Halton Hospitals Foundation Trust, resigned with immediate effect last month, as an internal hearing was still ongoing.

This was begun after it emerged Mr Wilson had signed terms of departure with midwife Jeannette Parkinson in 2012, when he held the same role at University Hospitals of Morecambe Bay Foundation Trust.

An investigation raised issues about the deal, including in relation to governance, significant sums paid to the midwife, and a clause that the trust would not investigate her alleged misconduct.

Police called in

Police are investigating a spate of baby deaths at The Countess of Chester Hospital Foundation Trust.

The investigation was launched after the trust contacted Cheshire police because of a higher number of baby deaths than would normally be expected in its neonatal services between June 2015 and June 2016.

The trust said it had clinically reviewed the deaths “as far as we can” and is now seeking assurances to “enable us to rule out unnatural causes of death.”

North by North West takes an in-depth fortnightly look at one of the NHS’s most challenged and innovative regions. There will be a particular focus on the devolution experiment in Greater Manchester, but my scope will also include Merseyside, Lancashire, Cheshire and Cumbria.

Please get in touch to let me know how I can improve it, and to tip me off about stories you think I should cover: lawrence.dunhill@emap.com. If someone forwarded this to you, sign up to get your own copy here