Primary care trust boards risk failures in governance because arrangements for appointing the boards of their arm’s-length provider organisations are unclear.

The NHS Confederation is calling for provider arms to be treated like wholly owned subsidiaries of private companies.

The Department of Health’s rules say PCTs should set up separate governance arrangements “so the provider service is treated like any other provider”, but the commissioning PCT board remains ultimately accountable for the provider’s activity.

This means provider arms cannot make public appointments to boards. As a result it becomes difficult for them to prove that board members have the skills and capacity to make robust decisions.

PCT Network director David Stout said: “The worry is, particularly in light of Mid Staffs, if things go wrong and people ask questions about governance, it’s going to come back to ‘we didn’t have a proper system in place’.”

He said: “We’re arguing you should be able to have the same quality of process for appointing the provider arm [board] as anyone else is allowed. Patently it’s problematic not to be able to do that.”

Lawyers say PCTs still struggle to make sure arm’s-length provider boards and PCT boards have the right systems in place to protect themselves.

Intervention orders

Capsticks senior partner Peter Edwards said: “If these problems are identified and haven’t been addressed and identified by the accountable board, there is scope for intervention orders from the secretary of state and everything that flows from that.”

He said managers must make sure enough information gets to the PCT board and the provider board and that the PCT board gets to exercise “the right degree of challenge”.

“From what I’ve picked up in discussions people are finding that very difficult to reconcile at the moment,” he said.

Some PCTs were appointing PCT non-executive directors to provider boards to ensure the legitimacy of board members could not be challenged, he said.

Cambridgeshire Community Services chief operating officer Matthew Winn said it was essential there was a “specific and robust” scheme of delegation from one board to another.

A DH spokesperson said it was working with the Appointments Commission on guidance to be published shortly.

HSJ’s NHS Governance 2009 conference is on 25 June. For details visit www.hsj-governance.com

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