The renewed interest in collaboration and integration among NHS providers is good news but we need to ensure the right transactions take place. By Richard Guest and Michael Barber

Richard guest

Richard Guest

Richard Guest

The need to promote consistent leadership and to secure financially and clinically sustainable services has led to renewed interest for collaboration and integration among NHS providers in England. In the last 12 months alone, more than 20 integrations covering acute, mental health and community services have been proposed.

It is very difficult to predict what the state of the combining trusts would have been, had the transaction not taken place

We have recently seen four foundation trusts (Guy’s & St Thomas’, Northumbria Healthcare, Royal Free London, and Salford Royal) accredited to lead foundation groups as part of the vanguard programme and acute trust combinations continue to be used to solve challenging situations – including for example the proposed Nottingham-Sherwood Forest and Peterborough-Hinchingbrooke transactions.

Despite this surge in activity, historically the track record of the NHS in delivering successful transactions has been mixed. Although early days, it is difficult to establish the extent to which the recent wave of NHS transactions will deliver sustainable results.

NHS transactions should take place between the right organisations and for the right reasons

It is also very difficult to predict what the state of the combining trusts would have been, had the transaction not taken place – and hence whether the local health economy is now better off. Every transaction has different drivers, objectives and potential benefits.

Lessons to be learnt

Michael barber

Michael Barber

Michael Barber

But are there lessons the NHS can learn from past experience to ensure it reaps the benefits of future transactions?

Firstly, NHS transactions should take place between the right organisations and for the right reasons. In recent years, the majority of transactions have comprised an acquisition of a challenged provider by a stronger neighbour.

The need to provide safe and high quality services to patients, as well as consistent leadership in the short term, surely provides a compelling motive for a transaction. However, the benefits of integration will only be realised if this immediate need is accompanied by a coherent strategic rationale and programme for change.

Sustainability and transformation plans provide a clear opportunity for local health and care economies to do this. These can articulate the structural changes required to accelerate the implementation of new care models and how the on-occasion “shotgun” partnerships of the past can be replaced with collaborative arrangements that can naturally progress the pace of integration.

Detrimental impact

Secondly, the support of local and national stakeholders is key to rapid execution and successful implementation. Early engagement with these stakeholders is essential of course, as is the need for transparency around the potential impact on other organisations in the local health economy.

As with other complex transformational programmes, while being beneficial to the local health and care economy overall, an integration may have a detrimental financial impact on an individual organisation, especially when it involves the reconfiguration of services. Again, where this is the case, STPs provide a valuable opportunity to align the objectives and priorities of individual organisations.

In addition, meticulous planning followed by relentless execution is essential. Integration planning must prioritise the safe transfer of services, followed by the operational, financial and clinical benefits.

A balance must be struck between driving rapid implementation and reality of how quickly benefits can be realised

Due diligence can identify risks to be mitigated, as well as potential benefits. However, a balance must be struck between driving rapid implementation and reality of how quickly benefits can be realised.

The date a transaction takes place and two organisations come together is not the end of the process, but merely the beginning of a longer period of integration. The leadership team in particular will need to recognise and plan for this as integration is likely to distract from “business as usual”.

Finally, in order to maximise the chances of a successful integration, the process must be sufficiently resourced both in terms of people and funding. Realistic estimates of costs are required and funding allocated – either from the trust’s internal resources, from national bodies and/or local commissioners.

Current funding constraints mean that the large funding settlements seen in the past are unlikely to be repeated. But even if the cost of a transaction appears to be high, the funding that would have been required had the transaction not taken place could have been much higher in the long term.

Given the continued financial and operational pressure on health providers, the current trend towards consolidation of trusts is likely to continue. Whether STPs provide the catalyst for further consolidation through integration remains to be seen.

The extent to which benefits for patients, local health economies and the NHS are realised will not only depend on whether the “right” transactions are undertaken with clear strategic logic, but also the extent to which the months of integration work that follow are successfully undertaken.

Richard Guest is partner in EY’s health advisory team and Michael Barber director in EY’s health advisory team