Post on 07-Oct-2020
Do hospitals respond to
greater autonomy?
Evidence on Foundation Trusts
Rossella Verzulli, Rowena Jacobs and Maria Goddard
Centre for Health Economics, University of York
rowena.jacobs@york.ac.uk
Health Policy Seminar Series, Nuffield College, Oxford
17 November 2011
Foundation Trusts
• Not-For-Profit independent public benefit corporations
• Required to meet national targets, but more freedoms how to achieve standards
• Incentives to develop business - greater autonomy expected to bring benefits
• Subject to less central monitoring and control, free from StHA performance management; regulator – Monitor
• Applying for FT status is voluntary but dependent on performance
• Government expects all NHS providers to become FTs by April 2014
Accountability of FTs
FT membership
• NHS staff, local citizens share governance through
membership rights
• Total membership approx
2.03 mill (2011/12)
• Average number members
per Trust 13,962 (Mar 2011)
• Governor election turnout rates: 48% (2004) 25% (2010)
• Average number candidates per governor seat: 3.63
(2004) 2.76 (2010), most difficult to secure staff seats
• Average uncontested seats: 23% (2004) 47% (2010)
• 10% staff, 14% public, 16% patients “active” members
Southern Health NHS FT
Governors’ statutory roles
• Appointing, removing and deciding terms of office of
chair and other non-executive directors
• Approving appointment of chief executive
• Reviewing annual report and accounts and auditor’s
report at general meeting
• Appointing and removing the auditor
• Expressing view on Board’s forward plans in advance of
plan’s submission to Monitor
Foundation Trust freedoms
• Don’t have to break-even every year, retain financial
surpluses
• Manage assets, invest in buildings and services (quicker
access to capital investment), borrow public and private
sector
• Recruit and reward staff with more competitive salaries,
control over appointing directors, set local pay
agreements
• Form partnerships with the private sector and other
hospitals, or specialise in selected services
FT investments
• FTs invested to expand capacity and develop new services
– New paediatric facility at Moorfields Eye Hospital - Richard Desmond Children's
Eye Centre (RDCEC)
– Cambridge University Hospital major refurbishment and IT equipment
– University Hospital Birmingham – new leukaemia centre
FT investments
– New cardiology and surgical unit at Stockport
– Papworth Hospital – cardiothoracic biotech incubator
– Guy’s and St Thomas’ Hospital – new respiratory unit, new fracture clinic
• In practice FTs have tended to deliver less capital expenditure than planned (71% of plan 2009/10)
Introduction of FTs Acute Specialist MH Ambulance Total
2004/05 21 4 - - 25 (18%)
2005/06 5 2 - - 7 (5%)
2006/07 18 4 5 - 27 (19%)
2007/08 12 2 16 - 30 (22%)
2008/09 14 1 11 - 26 (19%)
2009/10 3 3 8 - 14 (10%)
2010/11 4 - 1 2 7 (5%)
2011/12 2 1 - - 3 (2%)
Total 79 / 146
54%
17 / 20
85%
41 / 60
68%
2 / 11
18%
139 / 237
59%
Risk ratings 2010/11 Acute Specialist MH Total
Governance
Green (low) 47 12 36 95 (74%)
Amber-green 17 4 4 25 (19%)
Amber-red 6 - - 6 (5%)
Red (high) 3 - - 3 (2%)
Finance
5 (low) 1 1 - 2 (2%)
4 21 9 23 53 (41%)
3 48 5 17 70 (54%)
2 1 1 - 2 (2%)
1 (high) 2 - - 2 (2%)
Deriving the financial risk rating
Deriving governance risk rating
Escalation, breach, intervention
Potential significant breaches
Aim of this study
• Examine whether new freedoms enjoyed by FTs have
produced difference in performance of FTs compared
with non-FTs since introduction of FT policy in 2004/5
• Previous analysis suggested no significant change in
financial performance of FTs (Marini et al, 2007)
• We add to evidence by:
updating previous estimates of impact of policy on financial
performance with inclusion of larger number of FTs operating
over longer period of time
examining differences between FTs and non-FTs on quality
and staff satisfaction
Methodology • Difference in performance between FTs and NFTs pre-
and post- introduction of FT policy
FT policy
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
FTs Treatment
NFTs Control
Pre-treatment Treatment
DID methodology
• Difference in difference (DID) methodology to test
difference in performance of FTs and NFTs as response to
FT policy:
where yit is the performance indicator for Trust i in period t,
FTi is a dummy for FT status, Dt is a year dummy with
baseline year 2003/4, and Xit is vector of covariates
𝑦𝑖𝑡 = 𝛽0 + 𝛽1𝐹𝑇𝑖 + 𝛽2𝑡𝐷𝑡 + 𝛽3
6
𝑡=1
𝑋𝑖𝑡 + 𝛿𝑡𝐹𝑇𝑖𝐷𝑡 + 휀𝑖𝑡
6
𝑡=1
DID methodology
• DID method relies on crucial assumption that assignment
of Trusts to treatment and control groups is random
• Assumption is violated as Trusts can volunteer for FT
status (subject to performance requirements)
• Mimic a designed experiment – assumes random
assignment to treatment
• Use propensity score matching method (logit model) to
match control group on pre-treatment observable
characteristics
Methods
• Use two control groups
– All non-FTs (86 Trusts)
– Matched non-FTs (79 Trusts)
• Estimate variety of panel data models
• Pooled OLS, fixed effects (FE), random effects (RE)
• RE model is preferred specification - Hausman test
supports RE against FE
• Results provided by simple pooled OLS specification
qualitatively similar to RE
Data • Acute and specialist Trusts in England: 2002/3 to 2008/9
• Measures of financial management: retained surplus
(deficit) as proportion of total expenditure, Reference Cost
Index (RCI)
• Measures of quality of care: MRSA infection rates, mean
waiting times, staff reports of “near misses” and errors
• Measures of working environment: staff job satisfaction,
intention of staff to leave
• Explanatory variables: measures of activity, efficiency in
use of resources, capital inputs, case-mix, key targets,
type of Trust
Results: propensity score matching
Inpatient days per spell -0.449 (-2.04)**
Financial management 1.022 (3.64)***
Hospital cleanliness 0.973 (2.65)***
Percent inpatients waiting less than 6 months 0.079 (1.68)*
Percent outpatients seen in 13 weeks 0.057 (2.27)**
Constant -13.970 (-3.14)***
Observations 173
R-squared 0.265
t statistics in parentheses
* Significant at 10%; ** Significant at 5%; *** Significant at 1%
Retained surplus hypothesis DID (+)
-0.10
-0.08
-0.06
-0.04
-0.02
0.00
0.02
0.04
0.06
0.08
0.10
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05
NFTs (all) FTs
Retained surplus (deficit)
Results: Retained surplus (deficit)
RCI hypothesis DID (-)
92
94
96
98
100
102
104
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05
NFTs (all) FTs
Reference Cost Index (RCI)
Results: RCI
Results for financial performance
• FTs expected to achieve higher financial performance by
enjoying greater control and flexibility over financial
matters
• Results suggest policy per se has made no difference to
the financial performance of FTs relative to NFTs, as
measured in terms of surplus and RCI
MRSA rates
Results: MRSA rates
Mean waiting time (days)
Results: Mean waiting time (days)
Witnessing potentially harmful errors
Results: Witnessing errors
Job satisfaction of staff
Results: Job satisfaction of staff
Intention of staff to leave
Results: Intention of staff to leave
Results for quality and staffing • With greater control and flexibility over financial,
organisation, and reward policies, FTs expected to be
more responsive to patients’ needs and meet national
quality targets
• Results suggest FT policy has made no impact on quality
of patient care as measured by MRSA rates, waiting
times, witnessing near “misses”, and staff job satisfaction
• Positive and significant impact on staff intention to leave
suggests that, to the extent such intentions reflect quality
of environment and care provided, FT policy may have
had positive effect, albeit very small
Conclusions
• Little evidence superior performance of FTs inferred from
simple comparison is true reflection of FT status
(exception of staff intention to leave)
• Not much evidence FT policy has made a difference –
there are longstanding differential trends
• Important policy implications about whether extra costs
involved in setting up and regulating FTs are justified –
annual running costs of governance arrangements £25m
• Evaluation of FT policy is of importance beyond UK
context and for all systems currently experiencing similar
transitions, or which plan to in future