The hospital sector is at an intriguing fork in the road, with policymakers from across the board offering their visions for the future. But first they need to get the incentives right

Failure has been much on the mind of health service policymakers lately. The Keogh review and the new Care Quality Commission inspection regime have given the government a narrative around those hospitals with significant care concerns. They have yet to determine a similar coherent system-wide response to financial pressure. The national media, and others, have begun to notice.

‘Spreading NHS expertise through hospital chains or franchises is an idea policymakers find very attractive’

Of course, the dichotomy is a false one. Financial and care quality challenges are often wrapped up in one another. A trust with an overloaded emergency department may feel the sting of the emergency marginal tariff, while hospitals providing specialists services that do not meet new NHS England standards could soon see that lucrative workload disappearing.

Hence a combined answer is needed to the question of how the acute sector can be given a clinically and financially sustainable future.

This week HSJ reveals work to discover that answer is under way. Monitor and the NHS Trust Development Authority are leading, but the Department of Health and other senior figures in government are closely involved.

Indeed, one of the important issues being addressed is how a reconfiguration of the hospital sector could be achieved without falling foul of the competition authorities. At a recent meeting in Richmond House the health secretary sought assurances from those authorities that they would not stand in the way of attempts to improve quality in the NHS by linking up the best performers with those who are in difficulties − and received, apparently, a reassuring answer.

Wrong incentives

Spreading NHS expertise through hospital chains or franchises is an idea policymakers find very attractive. Giving patients access to the best care and exploiting the brand strength of leading trusts or other trusted organisations without the need for messy, time consuming, controversial mergers is appealing.

‘There are not enough NHS − or private sector − organisations prepared to throw their hats in the ring and create the capacity needed’

However, despite a number of efforts over the years, the idea has gained very little traction. The trusts that have pursued it − such as eye specialists Moorfields − have found most success overseas. In the UK the idea has been associated with controversies such as those surrounding Great Ormond Street’s involvement in delivering children’s services in Haringey or Circle’s management franchise for Hinchingbrooke.

Though it is also fair to point out there are − lower profile − examples of success, such as the work done by South Essex Partnership Foundation Trust in Bedfordshire, Luton and Suffolk.

Policymakers know they have not got the incentives right. There are not enough NHS − or private sector − organisations prepared to throw their hats in the ring and create the capacity needed to have a significant impact on service redesign plans across the country. The rewards are too ill defined and the risk, particularly to reputation, is too high.

Fork in the road

One concern is involvement in services outside a trust’s patch − where they are unable to rely on local knowledge or exploit their own resources. Local partnerships are the most attractive to leading organisations − but face greatest resistance from other providers, commissioners and regulators - concerned about regional dominance.

Expect to see efforts to show such tie-ups can be in the best patient interest and are to be encouraged.

But it will be creating incentives to form links between different geographies that will receive the most attention: with work going into ideas such as NHS joint ventures, which would facilitate top trusts creating off-balance sheet vehicles to supply services in a way that mitigates financial and reputational risk.

One final thought: the hospital sector faces an intriguing fork in the road. Under Labour the local NHS trust would become the “preferred provider”, under the Conservatives one of a group of high profile organisations may occupy that role for a range of specific services.