Discussions have begun between national NHS bodies on how the provider landscape can be radically reshaped, including on providers forming national chains of hospitals and services.

HSJ has discovered senior figures from Monitor, NHS England, the Department of Health and the NHS Trust Development Authority are discussing a major engagement programme to seek a “longer term vision for the provider sector”.

Firm plans for how the initiative will run have not been drawn up but senior sources indicated it was likely to begin in the coming months.

The work will consider how providers in the NHS secondary and specialist care sector should be reshaped to best meet requirements for increasing quality and demand, with limited funding growth.

Some of the senior national policymakers are keen to accelerate the consolidation of NHS providers, in the belief this will improve efficiency, standards and leadership, HSJ understands. In particular there is support for the development of “chain” provision where one organisation runs several hospitals or specific services, which are located in different geographical locations. The arrangement could be achieved by mergers or franchises.

This would be a different pattern to that seen in NHS provider consolidation so far - in which mergers between providers often occur when one is failing and they usually have geographically contiguous patches. The chain approach would usually not lead to a single provider becoming dominant in a geographical area and is therefore more likely to be permitted by competition authorities.

The work is also expected to consider the “barriers and enablers” to reform of the provider sector. Issues likely to be raised include competition rules and the current emphasis on trusts becoming foundation trusts, and generally aiming to do so as single, independent organisations providing services for their area.

It was announced on Thursday that the chief executive of Salford Royal Foundation Trust Sir David Dalton has been asked by Jeremy Hunt to lead a team looking at the barriers preventing trusts from forming “chains”.

NHS England has been running a project since April on developing a five year strategy for the health service. Its chief executive Sir David Nicholson launched this work in June in an HSJ interview in which he questioned “the straightforward commissioner-provider split”. He said the work would consider “the different ways of organising ourselves from, on the one hand, chains of hospitals, through to integration”. He condemned the idea of a “cookie cutter foundation trust pipeline”.

Since then there has been little material progress on enabling such dramatic changes. However, HSJ understands senior figures in NHS England are discussing the next steps of this work with other national organisations in a bid to make progress.

The process of considering the future of specialised services, being led by NHS England, may also lead to a significant expansion of franchise and network arrangements.

Some chain arrangements already exist. In addition to radiotherapy services in North Cumbria (see box, below), the national initiative is likely to highlight the example of Moorfields Eye Hospital Foundation Trust, which now has franchise arrangements at 19 trusts, mostly in London.

The Royal Marsden Foundation Trust runs the specialist cancer clinic at Kingston Hospital Foundation Trust. Royal Marsden medical director Martin Gore said the arrangement had been “very successful” because there was a “shared risk and reward relationship” between the two trusts.

He said the trust’s model was subtly different from the franchise model because there was a “shared financial relationship”. He added: “The reason why we like the model is if we hold the contracts then we hold the governance and there’s no argument about who’s responsible for quality.”

A spokesman for Monitor said it had been been, since last year “working with national and local partners to explore innovative solutions to delivering services in future”. He said: “No decisions have been taken about endorsing or recommending specific models of care, but we continue to be open to new ideas and will continue to engage with the sector over ways of meeting the challenge, through organisations such as the Foundation Trust Network representing the specific interests of all NHS providers.”

Newcastle takes over radiotherapy service

Newcastle upon Tyne Hospitals Foundation Trust has partly taken over the running of radiotherapy services in Cumbria after shortcomings emerged. The service is set to be franchised later this year.

Problems were identified at North Cumbria University Hospitals Trust by NHS England’s specialised services review, which tested provision against minimum quality standards.

The process led North Cumbria to agree with the NHS England area team for Cumbria, Northumberland, Tyne and Wear that it should no longer directly provide its radiation oncology service at the Cumberland Infirmary site.

They decided the trust was too small to have sufficient doctors or patients to provide the service and it could not afford equipment required.

As an interim measure, NHS England asked Newcastle late last year to support the service. Under the interim arrangements, Newcastle’s clinicians are seeing some radiotherapy patients in Cumbria and assuring quality. Some treatment in Cumbria will be planned in Newcastle.

The area team told HSJ Newcastle would be the joint provider with North Cumbria until March. A limited procurement process would be held to determine which body provides the services for the following two years before a longer term franchise is agreed.

Although Newcastle is well placed to run the services other providers are likely to be able to compete for contracts.