The health service could see the development of ‘hospital chains’ within five years, the man heading a government review of new organisational forms for the NHS has said.

Speaking exclusively to HSJ, Sir David Dalton said the establishment of chains – or “foundation groups” – could also create new kinds of positions for NHS managers who were talented but “ill suited” for chief executive roles.

The Dalton review – now more than half way through – is examining the scope for extending the use of novel organisational forms in the provider sector.

Models under consideration include non-geographically contiguous chains of providers or services, management franchises, federations, joint ventures and social enterprises.

While Sir David said he did not think chains would be developed on a “significant scale” in five years, he expected some would already exist by then from which others could learn.

“If organisations feel this is right for them and they look at the evidence and decide what it is they’re going to do and how they’re going to do it differently, having a ‘foundation group’ approach… may provide solutions in some areas.

“Hopefully in five years’ time - if that is what people have felt to be appropriate - we’ll be able to go and look at those and learn from [organisations which already have chains].

“If people see the benefits in it, and those benefits outweigh the risk, I can see there will be a number of organisations that will be attracted to grow and develop their successful model and to have that spread, and develop relationships with other organisations to form a group.

“I can see that’s entirely plausible.”

The Salford Royal Foundation Trust chief executive said it was also important for the NHS to consider “how you get the best out of our current leaders in the system”, indicating that organisation models involving hospital groups could provide new kinds of roles for ambitious senior staff.

“I think we’ve got some excellent directors of operations, but I think that often these people, because of [their understandable] desire to progress to a chief executive role, may find themselves in that role and ill suited to it.

“I think that a group may make better use of talented people if they were the managing directors and having operational responsibility for organisations within a group.”

Sir David emphasised that the review had not yet completed its work to examine the potential benefits of “standardisation” that may be possible within hospital chains, and those benefits were not fully understood yet.

Having examined four hospital groups in detail - including Générale de Santé in France, Humanitas in Italy, and two groups operating predominantly in Asia - the review team is due to visit more European chains this week.

Sir David said there was a persuasive argument that “there appear to be benefits from those groups of hospitals that we’ve visited or had conversations with”.

He added: “We’re getting a much deeper understanding that there are other healthcare systems in Europe and… Asia that are able to demonstrate there are substantial benefits accruing to them as a consequence of standardisation.

“These would appear to be very simple things that they will do around all of the back office functions including procurement, and we can see from the information they’ve provided to us that they’ve made substantial savings in those areas.

“We can also see they have a view on the standards that should be found in all of their hospitals or operating areas, and they will standardise their care pathways to achieve those standards.

“They appear to be much more rigorous in reporting internally than they are at reporting externally about the achievement of those standards, and taking out the variation that would otherwise exist within their hospital group.”

Asked if he thought these potential benefits were theoretically achievable in an English context, he said: “I cannot see what would be so different about England compared with the approach in Italy, for example.”

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