Are hospital chains a sustainable NHS delivery model?

The hospital chain model has been receiving growing attention in the NHS, with three foundation chains currently being explored through the NHS England Vanguard programme.

In other sectors, from retail to hospitality, the chain model has driven efficiencies and improvements through providing strategic leadership, achieving greater economies of scale, centralising appropriate functions, and introducing standards and protocols. Can these same principles apply to hospitals?

A team from PwC travelled to Berlin to study several sites of a hospital chain. We came away with three insights for the NHS as it considers how hospital chains may help drive transformation and sustainability:

1. Strategic leadership is paramount to delivering greater economies of scale and standardising practice effectively

Hospital chains enable economies of skill, as well as scale. It is the skillset of the leadership of a chain that distinguishes it as an organisational model.

It requires a separation of strategic management (at HQ level) from the operational management of each chain entity or site. The Dalton review beckons NHS leaders to develop innovative solutions to their challenges and to codify and spread their success. This is precisely what we saw in action at the German hospital chain.

The scale of the initial challenge to join together multiple staff bodies and ways of working and shift to a collective mindset of collaboration cannot be underestimated

2. Cultural autonomy can be retained by hospitals within a chain, but the challenge of achieving a cohesive culture cannot be underestimated

Some fear that as hospital chains are established, the flexibility to local needs and cultural significance of individual provider sites may lose out to a “one size fits all” franchise. A key component of a hospital chain is that it operates with an overall set of values and a single strategic framework.

However, we also found that nuanced cultural values of individual sites in the German chains were retained and celebrated. But the scale of the initial challenge to join together multiple staff bodies and ways of working and shift to a collective mindset of collaboration cannot be underestimated.

3. Joining a hospital chain is not a panacea for hospitals in enormous financial deficits – form must follow function

While the German hospital chain experience can shed light on executing a successful turnaround of a failing hospital, this isn’t always the case and due consideration must be given to selecting appropriate hospitals to form a chain. Ultimately, as emphasised by Dalton, form must follow function and organisational models should not become an end in themselves.

The German experience suggests that the hospital chain model can potentially spread clinical excellence and deliver efficiencies. However, there are a number of obstacles that need to be addressed if the model is to take off in the NHS, notably in terms of resource, regulation and commissioning.

If NHS England is serious about getting behind hospital chains, addressing these obstacles will be critical.

Read the full report at www.pwc.co.uk/hospitalchains

Ian Baxter is a partner at PwC