Seizing theopportunityFTN lecture by Rt Hon Alan MilburnTen new perspectives from healthcare leaders

Acknowledgements 2

ForewordGill Morganchair, Foundation Trust Network 3

Ten years of foundation trusts: an overviewChris Hopsonchief executive, Foundation Trust Network 5

Seizing the opportunity: the next decade for NHS reformRt Hon Alan Milburnformer secretary of state for health 9

Stuart Bellchief executive, Oxford Health NHS Foundation Trust 17

Dr David Bennettchief executive, Monitor 19

Nigel Edwardschief executive, Nuffield Trust 21

Sir Leonard Fenwickchief executive, Newcastle Upon Tyne Hospitals NHS Foundation Trust 24

Alastair McLellaneditor, Health Service Journal 26

Sir Robert Naylorchief executive, University College London Hospitals NHS Foundation Trust 28

Angela Pedderchief executive, Royal Devon and Exeter NHS Foundation Trust 30

Tracy Taylorchief executive, Birmingham Community Healthcare NHS Trust 33

Tony Thornechair, South East Coast Ambulance Service NHS Foundation Trust 35

Contents

We would like to thank the following colleagues for their time andsupport in contributing to this publication:

Stuart Bell, chief executive, Oxford Health NHS Foundation Trust

Dr David Bennett, chief executive, Monitor

Nigel Edwards, chief executive, Nuffield Trust

Sir Leonard Fenwick, chief executive, Newcastle Upon Tyne HospitalsNHS Foundation Trust

Alastair McLellan, editor, Health Service Journal

Sir Robert Naylor, chief executive, University College London HospitalsNHS Foundation Trust

Angela Pedder, chief executive, Royal Devon and Exeter NHSFoundation Trust

Tracy Taylor, chief executive, Birmingham Community HealthcareNHS Trust

Tony Thorne, chair, South East Coast Ambulance Service

Thanks also to Andy Cowper, comment editor of the Health ServiceJournal, for carrying out the interviews with each of the above colleaguesand producing the text for this publication.

2

Acknowledgements

3

We were delighted to have AlanMilburn give the FTN’s inauguralannual lecture on 1 April this year.The day-to-day delivery of highquality care, improving servicesand balancing the books canconsume all our time. We do nottake sufficient time to step back,evaluate what we have achieved,learn lessons and apply these tofuture challenges. Alan Milburn’slecture did exactly that. Itreminded us of how muchtransformation has been achievedsince the first foundation trustswere created. The response ofproviders to changing patientneeds, improving the quality ofand access to care whilstenhancing their governance andaccountability has beensignificant. Acquiring andexercising foundation trust statushas been a key factor in makingthese changes.

Alan Milburn also identified thatthe work is not yet complete. For allthe achievement there remainssubstantial potential to fulfil. Hislecture kicked off that debate andthis publication now takes it further.

We have asked leaders from theNHS, media and health policy totalk about how the NHS providersector will change, what it canachieve and how it can furthertransform patient care andoutcomes? The interviews arestimulating, the views diverse andthe passion for patient-centredcare evident. We are grateful forthe time our contributors gave andthe thoughts they shared. We hopeyou are stimulated by them andplease join the debate@FTNtweets #10yearsofFT.

Foreword

Gill Morgan chair, Foundation TrustNetwork

4

Ten years of foundation trusts an overview

BackgroundOn 1 April 2014, the tenthanniversary of the creation of thefirst foundation trusts (FTs),Alan Milburn, progenitor of thefoundation trust concept, deliveredthe FTN’s inaugural annual lecture,in which he reflected on ten yearsof FTs. His lecture is reproducedhere in full.

The FTN has also commissionednine contributions (conducted viainterviews, reviewed by eachparticipant) from others involved inthe FT movement over the lastdecade. We hope that, together,this provides a wide-ranging andstimulating set of reflections onwhat the FT movement hasachieved, and where it shouldgo next. The contributors span arange of perspectives. There are anumber of voices from the FTmovement itself, spanning all foursectors – acute, ambulance,community and mental health – aswell as from Monitor, the healthsector regulator, and twoexperienced independent NHScommentators. Reviewing all thecontributions, nine key themesemerge, with considerablealignment across the contributorsdespite their widely differingperspectives.

Looking backProvider autonomy sits at the1.

heart of the FT concept

Alan Milburn was clear in hislecture that a key driver of the FTconcept was freedom from centralcontrol: in his words, “therecognition... that the NHS couldsimply not be run from the topdown... power had to be movedout of the hands of ministers”. Theconcept was “to put those incharge of delivering localhealthcare in charge of controllinglocal healthcare so that localservices could be improved for thebenefit of local communities”.

Many contributions recognise the importance of this driver:“allowing us to set our ownagenda... devolution andempowerment”1; “autonomy wasmusic to our ears”2; and “movingaway from a culture of seekingpermission for everything”3.

Many talk about the rightsconferred by this freedom.Crucially, both Tony Thorne andAlan Milburn focus too on theresponsibilities conferred. Movingout of state control requires FTs tofashion their own success; standon their own two feet; and moveaway from a relationship offinancial dependency. What TonyThorne describes as the “sense ofresponsibility for delivering theright performance, financially andclinically... and spending less timeexplaining to head office!”

5

Chris Hopson chief executive,Foundation TrustNetwork

Local accountability also sits at2.the heart of the FT model

Removing FTs from directministerial control required a newgovernance and accountabilitymodel. This new model, with itsstrong emphasis on localaccountability, is the second of thetwin pillars of the FT concept. TheFT board has a range ofaccountabilities – tocommissioners, to nationalregulators – but also a very strongaccountability to local stakeholdersthrough the FT governors’ counciland the wider local membershipwho elect it.

Many contributors from the NHSprovider sector, notably Sir LeonardFenwick, Angela Pedder and TracyTaylor, from an aspirant trustperspective, persuasively outlinethe benefits from this enhancedlocal accountability. For example,“Having a 16,000 membershipbase, and an elected council ofgovernors representing them,means we will have additionalformal avenues through which toconnect with and hear what ourpublic think and want from ourservices. This enhances our abilityto work on a macro and micro leveldependent on the issue”4.

The FT model has enabled a3.range of innovations benefittingpatients

How have FTs used this new foundautonomy, underpinned by asignificantly enhanced localaccountability? Contributorsdescribe a welcome andunderstandable variety ofinnovations and advances toonumerous to list in full here.

Innovation and advances because,in Tony Thorne’s words, “weappreciate being able to establishthe right approach with our

commissioners and invest, withouthaving this checked out by others “.A welcome and understandablevariety because, as Stuart Bellobserves: “healthcare is morecomplex and fundamentallyrooted in local geography thansome may expect, even for highlyspecialist tertiary care”.

Many stress the benefits that haveresulted for patients. For example,changed priorities moving from“finance and hitting governmenttargets [to] patient safety,outcomes and their experience asa customer”5; development of newclinical models – “a specialist cadreof paramedic professionals”6 and“the development of clinicalleadership”7.

Both Sir Robert Naylor and SirLeonard Fenwick also talkpowerfully of the way that FTstatus has allowed their trusts togrow in scope and size. Forexample, using FT freedoms tocreate a capital programme thathas built a set of new world classmedical, research and biomedicalfacilities8; and to expand intoprimary and integrated care “thatwas not possible as an NHS trust”9.

Success has been4.accompanied by a sense of, asyet, unfulfilled promise

Alongside these successes many ofthe contributions, including someof those from inside the FTmovement, do contain a sense ofan as yet unfulfilled promise.Alastair McLellan talks, for example,of how the local accountabilitymechanisms remain “unfulfilled inany meaningful way”. This isechoed, albeit less definitively, byStuart Bell’s “we need to make themost of the opportunities of ourmembership – perhaps an areawhere we have maybe not done asmuch as we could”. Dr David

Bennett argues that “We havemany examples of good andinnovative practices acrossfoundation trusts, but performanceis not uniform”. There is also astrong sense that excessiveregulation has restricted FTfreedoms and that the FT modelneeds to develop to take accountof the changing circumstances ofthe NHS.

Supporters of the FT model willargue that the model is only tenyears old and that once FT statuswent beyond the initial elite highperformers, a greater degree ofperformance variability wasinevitable. The fact that many FTsneed to do more to embed the FTmodel, that the model itself needsto develop over time and that thestrategic environment is gettingmore difficult, should not obscurethe significant advantages that FTstatus has brought.

So any sense of as yet unfulfilledpromise should be set against thefacts that “on the whole FTs havelived up to their promise in the firstdecade”10 and that “the FT modelhas stayed the course for ten years– and in a change-prone systemsuch as the NHS, that is anachievement in itself”11.

Excessive regulation has5.eroded the FT model

One concern that is reflected inalmost all the contributions is thesense that, as the FT model hasdeveloped, a growing degree ofregulatory intervention hasrestricted FT freedoms, with aparticular focus on what isperceived as a change inbehaviour by Monitor. AlastairMcLellan, for example, talks of how“an increased use of regulation hasdegraded [the] sense ofautonomy”. This is echoed byAngela Pedder, Nigel Edwards and

6

Sir Leonard Fenwick, for example,“Monitor was not originallyconceived as an eleventh SHA, butit has steadily become much moreinterested in the detailedoperation of FTs”12.

Key drivers of this higher degree ofregulatory intervention are seen tobe the more stretching financialenvironment; the fact that “FTstatus has become the norm”13; andrecent FT failures driving greaterrisk-aversion: “after Mid-Staffs,everything changed to a very risk-averse environment and a focus onavoiding getting a kicking.Disappointingly we are returningday by day towards anovercrowded bureaucracy, with anew initiative a day”14.

Looking forwardFTs need to become more6.

effective system leaders

So how might the FT modeldevelop in future? For some, the FTmodel encourages a strong,potentially excessive, singleinstitutional, focus on the FT itself,rather than the broaderenvironment in which it sits. It istherefore striking that nearly all thecontributions point to the conceptof FTs taking more of an explicitwider system leadership rolewithin their health and social careeconomies; a role whichtranscends the individual FT’sinstitutional boundaries. This isusually paired with moves towardsgreater integration of care.

Although each contributor hastheir own different way ofexpressing this – “a foundationcommunity, embracing health andsocial care with FTs as leadprovider”15; “accountable careorganisations”16; “strategicallythought-through health systems”17;

“health services integration acrossthe populations we serve”18 – theunderlying concepts are the same.Sir Leonard Fenwick, Sir RobertNaylor and Stuart Bell all, forexample, explicitly point to theneed to integrate primary carewith secondary care FTs whilstAngela Pedder talks of the need to“think through how we work withlocal authorities”.

Enabling greater provider7.collaboration and consolidation

There is also much talk in thecontributions of the need for theFT model to develop to enablegreater collaboration andconsolidation across the secondarycare provider sector itself. Anumber of people see this asessential in an environment whereprovider clinical and financialsustainability is increasingly underpressure. Sir Robert Naylor and SirLeonard Fenwick both argue thecase for scale and the need for theFT model to adapt to allow this: “ofcourse there are some verysuccessful small FTs, but they arecoming under growing pressure asfinancial constraints bite”19.

Some of the comment topicallyfocuses on the concept ofmanagement chains. AlastairMcLellan, for example, argues that“management chains could workwith the grain of the FT model ifthe best provider organisationsearn the right to lead chains”.But Nigel Edwards sounds acautionary note here: “If FTs godown the standardisation route,then inevitably some of theirlocalism goes”.

Greater collaboration andconsolidation do not necessarily,though, mean managementchains. And the Dalton Review,referenced by several contributors,hopes to identify a range of ways

to develop the FT model to enableproviders to come closer togetherto ensure sustainability.

Reversing the tide of increasing8.regulatory involvement

The third way in whichcontributors want to see the FTmodel develop is for the tendencytowards greater regulatoryintervention to be reversed.

Dr David Bennett does explicitlyacknowledge that Monitor is“committed to supportingfoundation trusts in their efforts tochange and improve, andrecognise that this means allowingthem the freedom to get on anddo what they need to do –including taking measured risks”.Yet this is qualified by his view that“we also have to minimise theimpact of failure... monitoringeveryone carefully and stepping inquickly when foundation trusts arestruggling... to nip potential issuesin the bud and prevent them fromspiralling into serious problems”.

A substantial part of Nigel Edwards’contribution is devoted toexploring the FT-Monitorrelationship, and the vast majorityof contributors would probablyagree with his desire to explore“how far might we float away fromMonitor’s oversight/regulation roleover FTs?”

Clarity is needed on the future9.of the FT pipeline

The final theme identified by thecontributors is the need for greaterclarity on the future of the FTpipeline. Many of the referencesare in reaction to Alan Milburn’ssuggestion in his lecture that alltrusts should become FTs withinthree years.

No-one challenges Alan Milburn’sargument that “the pace of

7

conversion [from trust to FT] isglacial [and] this organisationalimpasse needs to be broken... notjust because the current parallel-provider system is overrun withcomplexity and bureaucracy butbecause it [also] leaves the NHSwith too much ambiguity and toolittle clarity”.

But there is less agreement thatmaking all trusts FTs to a deadlineis the right answer. Sir RobertNaylor disagrees, arguing that“having set a high barrier toexercise these freedoms, surely thelast thing you would want is tolower the bar to make it lessmeaningful”. His answer is to“rationalise non-FTs intoorganisational groups or chains”.Both Stuart Bell and Nigel Edwardsrecognise the validity of theMilburn solution “given the logic ofthe situation. It can be seen as asort of tipping point thatpragmatically recognises where wehave got to”20. But both recognisethe danger of lowering the barand, in Edwards’ words, the need todeal with “the not always happyconsequences” of doing so, as heargues they have discovered inPoland and the Czech Republic.

SummarySo where does this leave us,looking back and forward? Theprovider sector is the bedrock ofthe NHS as it has to provide themost complex patient care24 hours a day, 365 days a year to a consistently high quality and within an increasinglytight budget.

Whilst there may be some whoyearn to reimpose central control,there is little doubt that providerautonomy is essential in today’sNHS. It is impossible to delivereffective patient care and drivechange in such a large andcomplex system from the centre.Accepting this, local accountabilityshould lie at the heart of the newmodel of governance that has toaccompany provider autonomyfrom the state. It is notable thatnone of the contributions seek tochallenge the validity of these twinpillars of the FT concept – providerautonomy and local accountability.

“We need FTs tohelp lead theintegration of care,we need tofacilitate greatercollaboration andconsolidationbetween providersthemselves andwe need to reversethe increasing tideof regulatoryintervention.”

All in the FT movement wouldargue that there is much to do tofully embed the model, to reducevariability between FTs, and todevelop the model to meetchanging circumstances. We need

FTs to help lead the integration ofcare, we need to facilitate greatercollaboration and consolidationbetween providers themselves andwe need to reverse the increasingtide of regulatory intervention. Wealso, as Alan Milburn argued, needto develop the model to enableFTs to lead the fundamentalchange in the distribution ofpower in healthcare so that thepatient is in control. But these arenot convincing arguments toabandon the FT model, rather theyargue for building on itsundoubted successes.

Those who seem most worriedabout the future of the FT modelare those who regard it as a fixed,final, destination, unable todevelop to meet changingcircumstances. Yet if we regard it asa flexible model based on the twinpillars of provider autonomy andlocal accountability, NHSfoundation trusts are, in AlanMilburn’s words “more relevantnow than they were a decade ago”.

8

Sir Robert Naylor1Sir Leonard Fenwick2Angela Pedder3Tracy Taylor4Sir Robert Naylor5

Tony Thorne6Stuart Bell7Sir Robert Naylor8Sir Leonard Fenwick9Stuart Bell10

Tracy Taylor11Nigel Edwards12Stuart Bell13Sir Leonard Fenwick14Angela Pedder15

Alastair McLellan16Stuart Bell17Sir Leonard Fenwick18Sir Robert Naylor19Stuart Bell20

9

Seizing the opportunitythe next decade for NHS reform

I would like to try to assess wherewe have got to on the ten-yearjourney that started with thecreation of foundation trust statuson 1 April 2004, and where weshould be heading next. I willargue that what feels now like aninsurmountable challenge – howwe make the NHS sustainable – is,in fact, a really big opportunity. Iwill set out an agenda for changein which NHS foundation trustscan once again play a leading rolein turning those very realchallenges into big opportunitiesfor the future.

The genesis offoundation trustsIn assessing where we have got to,it is worth recalling where wecame from. In no small part, thefoundation idea came from theNHS; especially the then three-starrated trusts. I went to visit all 13zero-star trusts in our first year inoffice, and it was not a terriblycomfortable experience.Interestingly, however, everyonehad an excuse: their populationwas more diverse; their healthneed was far greater.

In truth, the data we were thenusing was pretty ropey, but theimportant thing was to publish thedata, because, once you publishedit, it became valid and significant.For me, the real lesson was that, ayear later, none of the 13 trustswere in the zero-star category; infact, some had gone from beingzero to three-star. The three-startrusts were the genesis of thefoundation idea.

As health secretary, by and largeyou get sent to visit the goodplaces, not the bad. I got sick todeath of hearing from the best-performing NHS organisations,how resources were beingdiverted to bail out the bad, ratherthan being used to incentivise thegood. So I decided to do a simplething: to ask high-performing NHStrusts what they really wanted.Their reply was simple: they didnot want more money, but morefreedom to get on with the job ofimproving services for patients.

That request matched my ownrecognition, borne fromexperience, that, however hard youtried, the NHS simply could not berun from the top down. Sitting inthe health secretary’s hot seat wasoften uncomfortable because thepublic, the press and parliamentwere all united in one belief: thatthe secretary of state had to beheld responsible for everythingthat happened in the NHS.

One of my key learning momentswas when I was dragged toparliament to explain why amortuary in Bedford had failed. Ofcourse, since I had the power tointervene, I had to promiseintervention. If you have power, it ispretty hard not to use it.

The consequence was to reinforcethe notion that, when it came tothe performance of local healthservices, the buck stopped inWhitehall rather than where itbelonged: in Bradford,Bournemouth, or Bedford. Theconclusion I came to was that, ifaccountability was ever to be

Alan Milburn former secretaryof state for health

lodged in the right place, powerhad to be moved out of the handsof ministers.

If bedpans that dropped inTredegar were ever to be heardthere, the ties that boundWhitehall to local health servicessimply had to be severed. Theinspiration for this thought, oddlyenough, was none other than thecreator of the NHS, Nye Bevan,who argued that the ultimatepurpose of Labour being in powerwas to give it away. He might nothave always practiced what hepreached, but the lesson that Ilearned was that an irreversibleshift in power in the NHS was bothnecessary and long overdue.

Empowering localhealthcareThe idea was simple: to put thosein charge of delivering localhealthcare in charge of controllinglocal healthcare, so that localservices could be improved for thebenefit of local communities. That

could be done only by addressingthe democratic deficit that lay atthe heart of the NHS: the fact that,while services were deliveredlocally, in practice they werecontrolled nationally.

Contrary to those who argued –many of them on my own sideand, indeed, some in my owncabinet – that foundations wouldmean the privatisation of the NHS, Ialways saw them as a means tostrengthen public ownership sincethey would be owned andcontrolled by the public locally.

A decade on, and notwithstandingthe appalling failures at Mid-Staffsand amongst some otherfoundation trusts, serviceinnovation and improvement havebecome watchwords for thefoundation movement. They haveused their freedoms to create newservices, commercial ventures andentities like Academic HealthScience Centres. Together,foundation trusts generate£30 billion annually throughemployment, partnerships and

procurement. In fact, their directeconomic contribution to ourcountry is now higher than that ofall of England’s universities puttogether or the whole of thepharmaceutical industry.

When it comes to scale, NHSfoundation trusts should rightly beproud of one other thing: havingmanaged to recruit a totalmembership of 1.5 million people –more than all main political partiesput together. That may say moreabout the political parties thanabout foundation trusts.

Although foundations have not yetproactively turned publicparticipation into improvements inpublic health – a theme I willreturn to in a moment – theirengagement with localcommunities provides a sureplatform for the future.

I say that because, in this nextperiod, there will have to be far-reaching changes to therelationship between the citizenand the service, if the NHS is to besustainable. A decade ago, themost pressing health problem wasto rescue the NHS and, inparticular, to cut what were thenappallingly long waits that patientshad for treatment.

A decade on and that old bugbearof the NHS – long waiting times –has, more or less, been beatenthrough a mix of many moreresources and top-down reforms. Itwas difficult but, in retrospect, itwas relatively easy.

The issues facing the NHS todayare different and altogether morecomplex. The NHS now not onlyneeds to cope with the pressuresof an ageing society andadvancing technology; it now hasto focus on how to improve health,with a growing number of patients

10

with chronic conditions – how tomanage their diabetes or theirarthritis, and how to beat obesityand tackle alcohol abuse. It nowhas to find ways not just ofproviding collective care, but ofshifting individual behaviour, and ithas to achieve that without thebenefit of generous resourcing.

The problem today is different, asthe solution must be. Itfundamentally lies in patientsbeing treated less as passiverecipients of care in a system thattends to deny them both powerand responsibility, and insteadbeing more in charge andbecoming more responsible fortheir own health.

That entails big changes in NHSculture. NHS foundation trusts areuniquely well-placed to lead it. Youlead on service innovation; youlead on community involvement.Your leadership is needed nowmore than it has ever been. NHSfoundation trusts are morerelevant now than they were evena decade ago.

A time of profounduncertaintyI say that because we have reacheda real inflection point. In the lastyear in particular, the NHS hastaken a real battering. First, therewas the car-crash of the coalition’shealth reforms – an extensive andexpensive upheaval that foolishlyfocused on changing structures,not improving services; next, theimpact of squeezing £20 billion ofsavings out of a system underescalating demand pressure. Then,the hammer-blow of the Mid-StaffsHospital scandal and the spotlightpoliticians and regulators havesubsequently shone on failings inquality elsewhere. Meanwhile, as

both The King’s Fund and NuffieldTrust have recently highlighted,cost pressures are building andwaiting lists are growing onceagain, A&Es are stumbling andsocial services are creaking.

“Together,foundation trusts generate£30 billionannually throughemployment ,partnerships andprocurement.”

In two decades in health policy, Ihave never known a time of suchprofound uncertainty. The NHSsupertanker is drifting, with littleclarity about its direction in thepresent and even less certaintywhere it could be heading in thefuture. It is being pulled this wayand that.

All the political parties argue formore nurses on hospital wards butnone are prepared to write thecheques to pay for them. They allwant to prevent lapses in care, butthe army of regulators beingunleashed on the NHS forces careproviders to look upwards to thosewho regulate them; rather thanoutwards to the citizens who usethem and, ultimately, the taxpayerswho fund them.

The balance has swung far too fartowards top-down regulation asthe primary instrument forimproving standards. It needs toswing back to reforms thatempower patients, engage staffand embrace competition. Thepolicy agenda fundamentallyneeds to change.

Something else needs to changetoo: the way we think and talkabout the NHS. Browse any healthpolicy document, listen to anypolitical speech, read any expertcommentary and you will find itsuffused with the language ofchallenge: the challenge the NHSfaces of coping with an ageingpopulation; the challenge of arising burden of chronic disease; ofsoaring public expectations; ofconstrained resources. The morethe debate about healthcare iscouched in terms ofinsurmountable challenge, themore unsustainable the NHS feelsand, critically, the moredisempowered NHS staff feel.

Opportunities forhealthcare todayThere is another way of looking at things and talking about them:less the language of challenge and more about opportunity. That may sound odd, given thecontext that you all face and thatthe NHS, as a whole, confronts, butI believe healthcare has a bigopportunity today.

Five big factors are producing asure platform for change: eachprovides a challenge, but alsocontains an opportunity. First, weall know we live in an ageingsociety and that there will be morevery old people living with morehealth problems – co-morbidities –than ever before. That will requiresignificant investment in elderlycare, and more seamless care froma system that currently is morefragmented than it is cohesive. Thechallenge is that the newgeneration of the old will nottolerate a system of care that tellsus what to do; we will want to tellit what to do. The opportunity is to

11

refashion care so that it is alignedwith the mindset of this centuryrather than the last.

Second, if the healthcare battle ofthe last century was to beatinfectious disease, the battle forthis century is all about chronicdisease. What differentiatesdiabetes or arthritis from otherforms of illness is that they becomea permanent fixture of people’slives: it is with them 24/7. Whatpatients do to manage their owncondition – their lifestyle, diet andexercise – becomes as importantas what clinicians do. Thechallenge is to find ways ofempowering patients to takegreater responsibility for their ownhealth. The opportunity is to bringpatients inside the decision-making tent, so that they share theday-to-day dilemmas that everyclinician and manager faces, ratherthan keeping them outside.

Third, changes brought bytechnology also make possible theadvent of more citizen-controlledservices. In the long term, if thebenefits of pharmacogenetics canbe harnessed, the next fewdecades could see our wholemodel of healthcare, which hasbeen about detecting and thentreating illness, instead becomingone that predicts and prevents ill-health. In the short term, morechronic disease will drive the focusaway from episodic treatment,largely in hospital, towards earlierpreventative action and treatment,first in the community and then, astelecare and telemedicinetechnology evolves, in people’shome. The challenge is to addressthe mismatch between theservices that are provided today,with an over-concentration onhospital-based care, and those thatare needed, for more care in the

community and at home. Theopportunity is to harnesstechnology, from big data topatient-controlled health recordsand mobile health applications, tohelp us make that transition.

Fourth, we live in a world wherepeople are more informed andinquiring. Figures fromPew Research show that 50% ofAmericans consult the internetbefore visiting their primary-carephysician, rising to 80% aftervisiting the surgery. Why is thishappening? We live in a worldwhere deference is down andexpectations are up. The challengeis to find new ways of treatingeach patient as an individual ratherthan as just another number. Theopportunity is to harness themodern citizen’s appetite forknowledge and control in order tofinally make a reality of the notionof self-care.

“The world is on theverge – not thatyou would know itfrom the publicdiscourse – of ahuge leap forwardin how healthcareis delivered.”

Fifth, and most potently of all, inthe last three decades across theOECD, health budgets have beengrowing more quickly than theeconomy. We have been spendingmore than we have been earning.The global financial crisis and asqueeze on public spending havebrought those good times to anend. The next decade will see, atbest, a far lower rate of spending

growth than we have seen in thelast decade. The problem is thatresources might slow down butpressures will not, so the accentwill be on finding new ways ofgetting more out of healthcare forwhat is put in. That is a challengebut also an opportunity.

Doing morewith lessFaced with a rising tide of demandfor care, doing more with less maylook like mission impossible, yetconsider this: healthcare is surelyunique among modern industries(and that is what we are, anindustry) in that improvements inquality have not been matched byreductions in cost. Think of theprice and quality of your car,mobile phone or computer. Doingmore with less and doing it better,more quickly and more cheaplyhas become the new normal.

This is the time for healthcare tocatch up.

None of these challenges areunique to any one country; theyaffect every healthcare system inevery country. Their combinedeffect is to break the oldassumption that improvements inperformance could only becreated by large, continualincreases in investment. Thatproposition is no longersustainable. A new holy grail inglobal health policy is emerging:how we get better outcomes, notfor higher costs but for lower ones.

Some are already stepping up tothe plate. Across the country, theabsence of a national lead isproducing a flowering of localinnovation, but that will get theNHS only so far. What is needed isa plan to harness the benefits we

12

are going to see in the nextdecade from new science andnew approaches.

The world is on the verge – notthat you would know it from thepublic discourse – of a huge leap forward in how healthcare is delivered. Whether it isnanotechnology or cloudcomputing, technology is going to change what healthcare is ableto do and how it does it: mobilephones will routinely be used tomonitor the health of patients with chronic disease; people willhave virtual consultations withtheir doctors and nurses. This is not some sort of fantasy future. It is happening now in some partsof our NHS but it needs to become universal.

Many of these changes have thepotential to improve outcomeswhile containing costs. In 2001, itcost hundreds of millions ofdollars to read an entire humangenome. This year, it is beingdone for approaching $1,000.

Before long, inexpensive genesequencing will let doctorsroutinely diagnose and treatpatients based on informationabout their individual genomes.

Vaccines for a wide range ofchronic illnesses are already inclinical development. The bigquestion those in charge of theNHS should be focused on is howto capture and realise thosebenefits, which will require somefar-reaching reforms.

OrganisationalreformLet us start where former healthsecretary Andrew Lansley left off,with organisational reform. Thereis a job of clearing up the mess.The controversy that surroundedthe creation of foundation trustshas given way to the idea that theNHS has to be accountable locally,where services are delivered, notjust nationally, from where theyare funded.

Government should continue tobe a key player in health, settingstrategic direction, creatingcapacity for improvement andraising and distributing resources;but the thrust of reforms across atleast three decades and acrossgovernments of all politicalpersuasions has been for Whitehallto run less, not more.

In truth, however, today the NHSsits in an uncomfortable no-man’sland. Jeremy Hunt, the currenthealth secretary, feels the need tointervene with local services, eventhough his government’slegislation, just like the 2003 Act,aimed to prevent him from doingso. I understand the day-to-daytemptations, but Jeremy shouldrecognise the self-defeatingconsequences that, with everyintervention, accountability andresponsibility in the NHS nevermoves to those running localservices but remains with thoseoverseeing national politics.

In part, the current ambiguityabout where organisational powerreally lies in the NHS is the productof a bifurcated system. Today, whilethere are 147 NHS foundationtrusts, there are a further 99providers operating under thenational control of the NHS TrustDevelopment Authority (TDA).

The long-term objective remainsfor all trusts to becomefoundations, but the pace ofconversion is glacial at best. Onlythree have made it through therigours of the Monitor foundationtrust authorisation regime in thelast year. If we are not careful, wewill be in the 22nd century beforewe have a 21st century system of healthcare.

13

This organisational impasse needsto be broken once and for all, notjust because the current parallel-provider system is overrun withcomplexity and bureaucracy, butbecause it leaves the NHS with too much ambiguity and too little clarity.

I would like to see the currentapproval foundation process beingscrapped and, within the nextthree years, every NHS trust beingmade a foundation. The TDA, as ithas always wished, should beabolished and its resources madeavailable to Monitor to help turnaround those organisations thatare in trouble. Some would needto be placed in a special-measurescategory, but, as a general rule(and as I and my special adviser atthe time Paul Corrigan alwaysintended), all other foundationtrusts should be given greaterindependence and more financialfreedom to run their own affairs.Ten years on, it is time for thedecades-long journey to becompleted towards an NHS whereprovider organisations areautonomous but operate tocommon standards and incentives.

Paying providersThat brings me to reforms to howproviders are paid. Having over thelast decade changed from payingproviders for who they are to whatthey do, we now need to move topaying them for what they achieve.

In future, providers should be paidless on the basis of the quantity ofwhat they do and more on thebasis of the quality of what theyachieve. The focus should not beon inputs or outputs but onoutcomes. Critically, the keyfinancial incentive across thewhole care system needs to betargeted on keeping patientshealthy and out of hospital.

Having obsessed in this last yearon toughening regulation,ministers need to focus as muchenergy in the next year on refininghow money flows around thesystem, so that local services arebetter incentivised to see patientsin the right part of it.

That means taking a population-based approach, so, next, there willneed to be new reforms to makeprimary and community care the

bedrock of any new system. Inrecent years, absurdly, spendinghas been rising on hospital-basedcare just as it has been falling inprimary-based care. That nonsensemust change.

The policy objective for the NHSshould be to reduce the number ofpatients being admitted tohospital, and to secure a switch inspending from within healthcarebudgets so that less goes onhospitals and more goes on newforms of care in community.

The new investment priority forhealth and social services shouldbe to build a new careinfrastructure – polyclinics,intermediate care, telecare andtelemedicine – aimed atpromoting health, preventingillness and empowering patients.Critically, NHS foundation trustsshould be working to verticallyintegrate their hospital serviceswith those provided in primaryand community care; in otherwords, they should be reinventing what hospitals do and where they work.

New structuralmodelsNext we need reforms that createnew structural models capable ofbetter integrating care around theneeds of individual patients. Thecurrent system is riddled withwasteful and expensive silos.Ultimately, the price is paid bypatients: those who have mental-health problems as much as thosewith chronic physical illnesses. Alltoo often, their experience is oneof duplication and fragmentation.

Thankfully, it is now widelyrecognised that, in future,sustained management of patientswith multiple chronic conditions

14

will require a more integratedapproach. Much of the currentdebate on integration focuses onhow to unite health and socialservices into a single care system.That is a noble objective, but onefraught with complexity and(potentially) at very large cost.

Elsewhere in the world, integrationhas taken a rather different form.People often speak of Kaiser in theUSA as an example of what avertical integration of services canachieve, but the model I want tofocus on tonight is not fromAmerica, but from Europe. Themodel I find most interesting is theAlzira model from Spain, where awhole community of patients islooked after under a singlecapitation-based contract.Providers are paid according to theoutcomes they achieve, withstrong incentives to keep peoplehealthy and out of hospital. Profitsfor the private providers arecapped. Importantly, if patientschoose to seek treatmentelsewhere – as they can do, if, forexample, the quality or timelinessof local services is poor – providersface stiff financial penalties. Bymaking friends of competition andcollaboration, rather thanassuming them (as we so often doin public discourse) to be enemies,outcomes have improved andcosts have been capped.

There is growing interest in howsuch a model might work in the UKor, more particularly, in England.NHS foundation trusts, not justcommissioners, should be actingas a catalyst for such change inlocal health economies, andgovernment should help localpioneers remove the barriers –whether regulatory, financial ororganisational – that stand in theway of making it happen.

Supplier reformThat brings me to supplier reform.Our system of healthcare is uniquein at least one respect: thedominance enjoyed by one public-sector provider – the NHS.Monopolies in any walk of life,whether public or private, rarelydeliver either operational efficiencyor customer responsiveness. That iswhy, as health secretary, I createdwhat I called a managed market inthe NHS with the introduction ofprivate and voluntary providers.

“We need reformsthat create newstructural modelscapable of betterintegrating carearound the needof individualpatients.”

There should be no preferredproviders, whether public, privateor voluntary. The only yardsticksfor deciding who provides healthservices should be quality, whichis what counts for patients, andefficiency, which is what countsfor taxpayers.

The next wave of reform shouldcreate a legal level playing field,where public, private andvoluntary sectors are able tocompete to be providers and aresubject to the same exactingstandards and incentives:

Regulation should be simplified•to make it easier for the best NHSfoundation trusts to form chainsof local services they run acrossthe country.

New entrants should be•systematically encouraged onto the provider pitch to bring much needed know-how and innovation.

Pharmaceutical companies, for•example, should be encouragedto forge new partnerships withlocal commissioners, surgeriesand pharmacies to delivercompliance and supportservices for patients with achronic condition.

Retailers should be encouraged•to provide in-store, instant-access services for localcommunities.

Telcos should be encouraged to•develop new homecare servicesfor elderly and infirm patients.

For the NHS to meet thechallenges of the next decade, it isnot less competition that will beneeded; it is more.

Shifting the powerparadigmThere is one final area of reformthat, above all others, holds the keyto making the NHS sustainable:how we move patients from beingpassive bystanders to activeparticipants in healthcare. If we canachieve it, this shift in the powerparadigm will be the mostsignificant long-term change of all,because the explosion in chronicconditions we are now witnessingacross the developed world callsinto question how we havetraditionally delivered healthcare.Clinicians have diagnosed andprescribed, and patients havereceived. If you have diabetes,however, the choices you make inyour life (lifestyle, diet and exerciseregime) have a huge bearing on

15

your health. That is why we have tofind new ways of making patientsco-producers of their healthcare.

We can glimpse what that newfuture could look like. During mytime as health secretary, Ichampioned Liam Donaldson’sExpert Patients’ Programme togive people – mostly those with achronic condition – the tools tobetter manage their own care. Byputting the individual patient incharge of managing theirconditions, the programmesucceeded in reducingphysiotherapy visits by 9%;hospital-outpatient visits by 10%;and accident-and-emergencyvisits by 16%.

Much lip service is paid a decadeon to the notion of empoweringpatients, but, in truth, patientpower is marginal in today’s NHS. Itis time to make it mainstream, andNHS foundation trusts should takethe lead in doing so:

You should work together to makepatient-reported outcome andexperience measures central tohow local services are assessedand rewarded.

You should spearhead atransparency revolution across thewhole care system so that patients,carers and clinicians alike are ableto see which services work bestand which do not, from carehomes to hospitals.

You should lead a national drive togive people, through pharmacies,GP services and community care,the practical help they need –

blood-pressure monitors, testingkits and mobile health – toimprove their own health.

Hundreds of thousands of patients– and especially those with achronic condition – should gettheir own individual healthcarebudgets so they have directcontrol over resources to buy thehealthcare that is right for themand personalised for their needs.

NHS foundation trusts, owned asthey are by local communities andrun as they are by thoseaccountable to local people, canplay a leading role in making thesechanges. In the last decade, a newNHS architecture has been built:national standards, localcommissioning, diverse provision,community ownership.

These reforms, which were oncehighly controversial, are now amatter of broad consensus. Theissue now is whether, on thisplatform, we can build an evenmore fundamental purpose: tofundamentally change thedistribution of power in healthcareso that the patient is in control.

Change will have to happen notjust because the cash is runningout, but because time is runningout for a system that was designedto deal with yesterday’s challenges,not tomorrow’s opportunities.Meeting these changes will bedaunting, but it opens up anenormous opportunity to reshapehow care is delivered, so that weimprove outcomes, optimiseresources and, above all else,empower patients.

ConclusionIt is long overdue to move thedebate on from how to deal withgrinding challenges, to aconversation about seizing newopportunities. Amid the gloom,there are reasons for optimism.

Today, there is a particular reasonwe should all feel a bit moreoptimistic. A new chief executivefor NHS England has taken upoffice. 14 years ago, Simon Stevensworked with me on The NHS Plan.Quite simply, he is the best personI have ever worked with inhealthcare. Due credit to PrimeMinister Cameron and to Secretaryof State Hunt for recognisingSimon as the right man for the job,but, having appointed him, theynow need to empower him.

If they do so, he will bring instrategy to replace tactic as thegoverning motif of how the NHS isrun, he will give the NHS clarityinstead of uncertainty, and he willbring something even moresignificant: hope.

Hope is what the NHS needs. Ifthere is one thing above all elsethat Simon can do, it is to give theNHS that precious gift.

16

Text of the questions and answers session that followed the speechis available on the FTN websitewww.foundationtrustnetwork.org/blogs/alan-milburn

17

Being an FT gives us theopportunity and the responsibilityto fundamentally reshape the wayin which we respond to thecommunity’s needs for healthcarein the 21st century. As a provider of community and mental healthservices, it is really important to usthat we view healthcare as a jointendeavour, co-produced withpatients and carers. That is goingto be one of the key changes inthe constructs and paradigms of health systems over the coming century.

Only a few years ago, when theconcept of FTs was invented,hospitals were still very much seenas the centre of the healthcaresystems. Today, we see much moreclearly that the patient and theirfamily are the centre, and theadvantages to be gained throughco-production of health basedwherever possible around people’shomes and in their communities.Aspects of the FT model still gowell with the grain of this, so weneed to make the most of theopportunities of ourmembership – perhaps an areawhere we have maybe not done asmuch as we could.

However, many aspects of thecurrent funding regimedisproportionately incentivise theconsumption of healthcareinterventions once people are sickover keeping people well. And westill see unhelpful tweaks, like thedifferential tariff deflator forcommunity and mental healthservices, which are manifestly atodds with the overall strategic

direction that almost everyonenow professes. That needs tochange if we are to achieve thestrategic change in healthcare thatwe know to be essential.

On the whole, FTs have lived up totheir promise in their first decade,because in general the providersector has significantly raised itsgame in the delivery of healthcare.Similarly, some of the fears thatpeople had when FTs came inhave not been realised. Ironically,the idea that FTs would developchains across the country has notproceeded at pace, if at all so far.This is probably becausehealthcare is more complex andfundamentally rooted in localnetworks and geography than wasanticipated, even for highlyspecialist tertiary care.

An important positive contributionis the way the FT movement hashelped support the developmentof clinical leadership – that hasimproved over the last decade.

As FT status has become the normand we have more FTs than non-FTs, it has altered the way thatMonitor has to act. In many ways, itwas easier to be the regulator of asmall, tightly-contained elite drawnfrom the best performers, ratherthan of the majority and in timethe totality.

Now, Alan Milburn suggests weshould quickly make all providersFTs and have done with it. You cansee his point, given the logic of thesituation. It can be seen as a sort oftipping point, which pragmaticallyrecognises where we have got to.

Stuart Bellchief executive, Oxford Health NHS Foundation Trust

“An importantpositivecontribution isthe way the FTmovement hashelped supportthe developmentof clinicalleadership – that hasimproved overthe last decade.”

18

But the down-side of the idea isthat it removes some of the edgeand the raising of the bar andsharpening-up of the actassociated with becoming an FT.That said, times are harder thanthey were ten, or even five yearsago, and so even if the FTauthorisation bar had not beenraised (which it has), reaching thebar is a tougher ask now for manyorganisations than it would havebeen ten years ago.

The system still needs furtherchange to provide truly 21stcentury care – most importantly,the integration of provision ofgeneral practice and primary care.If the NHS compares itself with themost effective, best developedhealthcare systems internationally,we still see primary care provisionas being in a separate box basedon the 1948 compromise, on theperiphery or somehow separate,rather than as central to the whole.There have been a few tentativeexamples of FTs entering the worldof primary care, but we need moreto develop strategically thought-through health systems. System isthe paradigm which should driveour attitude to competition, whichas it currently stands is conceivedin a way which is fundamentallyout of kilter with the true nature ofmost healthcare, and is more oftenthan not manifesting itself as areally powerful dysfunctionaldisincentive to progress.

We still struggle to tackle what areoften deep and unresolvedstrategic problems of organisationscurrently configured in outdated

patterns of provision. Competitionpolicy makes dealing with thisharder than it used to be. The mostchallenged providers findthemselves going round in circles;not necessarily because they arepoorly-run, but you just ‘wouldn’tstart from there’ if you were tryingto achieve FT status. It is a crueland wasteful form ofprocrastination, and it does notserve the public well.

“We often pay toolittle attention tothe pace at whichscience andtechnology moves,and that shouldguide us morethan inheritedinstitutionalstructures.”

It will take a vision of a profoundlydifferent model of healthcare tochange this, but our ability toarticulate and to achieve this hasnot really been resolved. Do wehave a small number of specialisthubs, supported by networkedcare systems covering a broaderrange of specialties, sustained on alocality-based, community-focusedmodel with the superordinate aimof keeping people well, or as wellas possible, at home? That is theAlzira or Kaiser Permanenteintegrated network provision

model, providing systemic care toa population within some degreeof geographical footprint. It isprobably sensible to start there,rather than to try and force thecurrent hotchpotch of institutionsto randomly reshape and to deliverthat model of care.

Providers, as currently configured,owe most of their configuration toaccidents of history. 21st centuryhealthcare needs something moresophisticated and networked.Many established FTs have beenthinking radically about their futurecomposition, so they can do betterfor less and keep up with thepractice of 21st century medicine.We often pay too little attention tothe pace at which science andtechnology moves, and thatshould guide us more thaninherited institutional structures.FTs, especially those which aregood at understanding how tocapitalise on progress inbiomedical sciences, have aresponsibility to take the lead inreshaping our healthcare over thenext ten years.

19

We all agree that the NHS inEngland has got to change a lot.This should not be seen as a threatto the foundation trust sector but areal opportunity. The changingnature of our population, withincreasing numbers of elderlypeople requiring care, and higherexpectations all round, meansthere is a great opportunity toprovide a service that meets theirneeds better and helps NHSmoney go further. Foundationtrusts can, indeed must, play amajor role in this.

There is a lot of agreement aboutthe broad direction of change, forexample the need to treat morepatients outside hospital, closer tohome. Inevitably this will meansome restructuring of the wayprovider organisations deliver care.Making these changes will be verychallenging, not least because ithas to be done at a time whenfunding is tight and there isrenewed pressure to improvequality. Because of this, change hasto happen much more quicklythan it has in the recent past – wehave to ‘turbo-charge’ change.

Nevertheless, if we get this right,we will have an NHS that is truly fitfor the 21st century, deliveringbetter care, providing more of itand providing a better experiencefor patients. And what is true forthe NHS as a whole is particularlytrue for foundation trusts, whichnow comprise about two-thirds ofthe provider sector. We have manyexamples of good and innovativepractices across foundation trusts,but performance is not uniform.Not all foundation trusts are at the

leading edge of reshaping howthey provide healthcare, and eventhe best will need to do more.

So now is the time for the leadersof all foundation trusts to lift theirheads from the daily grind –difficult as that might be – and usethe freedoms that come withbeing a foundation trust toreinvent themselves, to break withthe past. Now is the time forfoundation trusts to show,individually and collectively, thatthe foundation trust policy is theright way to support change andimprovement in the NHS.

And we at Monitor have to changetoo. We have a new duty to focuson the interests of patients, andthis now drives everything we do.We are committed to supportingfoundation trusts in their efforts tochange and improve, andrecognise that this means allowingthem the freedom to get on anddo what they need to do –including taking measured risks.We are not setting out a centralplan that everyone has toimplement, although we will pushpeople to get on and work outwhat is right for them locally, fortheir commissioners and, above all,for their patients. And, if peoplealready know what they want todo, we want them to get on with it.

As the regulator, we know that weare not going to get changehappening if we are rigid in theway we look at a provider’sbusiness model. We do not wantto get ourselves into a situationwhere trusts have the impressionthat only one model is acceptable

Dr David Bennettchief executive, Monitor

“Now is the timefor foundationtrusts to show,individually andcollectively, thatthe foundationtrust policy is theright way tosupport changeand improvementin the NHS.”

20

in order for them to achievefoundation status. An NHS trustchief executive recently said thathe wanted to change his hospitalinto an integrated careorganisation but could notbecause the organisation’s prioritywas becoming a foundation trust.That is the wrong way to think. AtMonitor, we should always beflexible about business models,and never more so than in thesechallenging times wheninnovation is at a premium.

Similarly, we have got to be able toassess the readiness of NHS truststo be given independence withoutasking for a long track record intheir current form, or a detailedfinancial projection out into thedistant future. The environment ofan applicant NHS trust is changingso quickly it is at least as importantfor us to understand how anorganisation is set up to deal withchange as it is to predict what theircash flow might be in four years’time. The real test of both applicantand existing foundation trusts istheir capability to deal with themajor change that is necessary; tomake their own versions of changehappen in their own organisations.And although leadership is crucial,this is not just about thecapabilities of the leadership teambut the institution’s capability as awhole to learn and change.

The question we face is how tomeasure an organisation’s capacityto change. We are already lookingat quality governance and will startnow to look at the governance ofplanning, performance

improvement and organisationaldevelopment. This means asking iftrusts have good processes,including whether they are askingthemselves the right questions. Forexample, is a board asking hardquestions about their ability tohandle uncertainty? What analysishave they done about how theirworld is likely to change? Do theyknow what their commissionersare doing to address thechallenges they face? And whatother providers are doing locally? Istheirs an organisation that isthinking systematically andthoughtfully about dealing with itschallenges? How are they drivingoperational performanceimprovement? Do they benchmarkagainst peer groups? How do theyset targets for improvement? Whattools and techniques do they usefor driving improvement?

We are talking to the NHS TrustDevelopment Authority (TDA) andwill engage with the sector in duecourse about the details of whatexactly we will aim to do. As wemade clear in our corporatestrategy for 2014-17, we will seek tobring about any necessarychanges in a measured way so wedo not raise the bar for achievingfoundation trust status.

With money tight and anincreasing focus on safety andquality, we also have to minimisethe impact of failure. So we havesimultaneously to allow goodperformers to innovate andimprove while monitoringeveryone carefully, and stepping inquickly when and where

foundation trusts are struggling.Our objective in doing so is not topunish but to support, to nippotential issues in the bud andprevent them from spiralling intoserious problems.

However, if problems do becomeserious our aim in fixing them isto take a whole health economyapproach, even when we need toput a trust into specialadministration – although thisshould only be a last resort. Takingthis approach is in recognition ofthe fact that changes at oneprovider may well impactneighbouring providers, and mayeven need their support. And, ofcourse, it is not possible todevelop a plan for the future of astruggling trust without having aclear understanding of theircommissioners’ intentions. Aslong as there is effective co-operation between us, the NHSTDA and NHS England, we shouldhave the powers we need to dothis effectively.

Finally, in accordance with our newresponsibilities, we will be workingto make sure all the rules of thesystem work to support thedelivery of more and better care forpatients, in particular on payment,and on procurement, patientchoice and competition.Everything we do is intended toenable others to provide bettercare, and more of it. Where wehave regulatory decisions to make,with all the different levers at ourdisposal, we always ask ourselves:what will produce the bestoutcomes for patients?

21

After the first decade, have FTsfulfilled their potential as systemleaders? I do not think so, really, butthere are good reasons why this isthe case. We have seen examplesof FT leadership such as UCLPartners and the Academic HealthScience Centres; trusts workingacross Manchester to change thesystem; Southend stepping awayfrom Agenda For Change; anddecisions on the consolidation ofcancer services.

But should FTs have beenresponsible for system leadership?Admittedly, in retrospect providersdo look like the stable bit of theNHS system over the last decade.

The policy context matters.‘Commissioning A Patient-Led NHS’said that commissioners weremeant to be leading the system forsome of this period, during whichthere were three majorcommissioner reorganisations: firstin 2006 from 302 PCTs to-150; thenin 2010 the clustering of the PCTsto 50; then the move to 211 CCGs in2013. Later, SHAs believed that theyled bits of the system: they toowere much-reorganised.

Those very mixed messagesreflected the system’s lack of clarityabout system leadership. It is hardto make this a criticism of FTs, sincethey were not really expected tolead the system.

But we have not seen greatstrategic steps from providers. Ingeneral, we have not seen themrealigning their portfolios of workor fundamentally rethinking theirstrategies. There has certainly not

been a huge amount of big-scalestrategic change in the providersector, in the way that policy mayhave expected. Again, we mightwonder if that was a reasonableexpectation given the continuedgrip from above and theenthusiasm for transformation atthe centre often being moretheoretical than real.

So one reading is that there was asystem leadership vacuum, whichFTs could have filled. But therewere mixed messages, and itwould have needed FTs to bringtheir always-being-disruptedcommissioners with them, whichwould have been hard.

The current theory about thecreation of FT status, that it couldenable devolved strategy-setting,is a retrospective justification.Some providers may think that asan FT, they can just get on anddo things; but for the system’schecks and balances to work,they need commissioners whoknow what they are doing.Bankruptcy courts are full ofthose for whose inventions themarket was not yet ready.

The under-developed nature ofcommissioning is the other half ofthis. For FT providers to have beenmore strategic, they would haveneeded someone to listen to andsupport (or oppose) theirproposed strategy. Paradoxically,the weakness of commissioningmay have held back FTs fromdeveloping this.

Nigel Edwards chief executive, Nuffield Trust

“The currenttheory about thecreation of FTstatus, that itcould enabledevolvedstrategy-setting,is a retrospectivejustification.”

22

Internationally, independent,standalone hospitals tend not tobe great at strategy. They are verytactical and operationally-focused, which is appropriate,given the safety-critical nature ofwhat they do! But they tend notto be strategic. It is almost as if theculture of acute medicine tosome extent infects the wayhospitals operate. In healthcare,all too often ‘next week’ isstrategic and ‘the week after’ is theunimaginable future.

By contrast, mental health trustshave tended to be a bit morestrategic: they have a differentculture and tend to think longer-term and treat people with what soften a long-term condition. So theculture of the services you areproviding probably has an impacton how you think about strategy.

Add to this the fact that for a longtime, strategy was handed downfrom on high in the DH, whereasnow it is more DIY. Providers arelooking to satisfy commissioners,health and wellbeing boards, NHSEngland’s specialist commissioning– and of course to meet all thewaiting and quality targets.

The obvious feature distinguishingself-managing and self-governinghospital in England from othercountries is the presence ofMonitor. So in Netherlands, theirindependent providers have aboard of governors “who basicallyare accountable to history,posterity and God” as one told me,describing the arrangement as “aburden and a rather attenuated

form of accountability”. This personis a professor of political scienceand the chair of big teachinghospital, and he liked the idea of abody like Monitor.

“The originalconcept was thatFTs should beembedded in theircommunity: it wasabout localismand meeting localhealth needs.”

When FTs were first set up, thepolicy insider’s view was that onceall providers became authorised,Monitor might still be required inits non-authorising oversightfunctions. Monitor would be muchless like a regulator, and more like aprivate equity fund owning a largeblock of shares in an enterprise. Butthat was not the model publiclydescribed to sell the idea of FTs,which was a model of localownership by staff, patients andthe community; not oversight byex-KPMG and ex-McKinsey staff inLondon SE1.

Then we had the 2010 reforms’ takeon this. Monitor’s oversight rolewas due to move from oversight indetail to one of FTs becoming self-managing and self-governing, withMonitor providing a backstop.Andrew Lansley was keen to stopdetailed oversight by Monitor, and

the governors were to take on thatresponsibility (although they werenot really trained for it nor werethey recruited on this basis).

How far might we float away fromMonitor’s oversight/regulationrole over FTs? Policy makers seemto have little appetite for itcurrently. Could a time comewhen the model of a board ofgovernors made up of membersand supported by non-executivessupported by regulation could beenough to guarantee to thepublic that a local provider isdelivering care well, safely andcost-effectively? There is interestin mutual models in policy circlesand this was one of the originalinspirations for the FT model,however there are concernsabout the application to largehealthcare providers.

Monitor was not originallyconceived as an eleventh SHA, butit has steadily become much moreinterested in the detailedoperation of FTs. One possibleevolution could be that some ofMonitor’s activist oversight /intervention role falls away. But thequestion is why do this, and if thatrole is necessary, who would do itinstead? Is the evolution of FTsheld back by Monitor oversight? Ido not have the feeling that it is,particularly.

Another current option underreview by Sir David Dalton is theidea of chains of providers. Theoriginal concept was that FTsshould be embedded in theircommunity: it was about localism

23

and meeting local health needs.That met another idea that publicproviders can improve theirgovernance when they are freedfrom central control to developdevolved decision-making. Thoseare two distinct ideas. Now theyhave been joined by a third ideaabout chains: that standardisationof processes and quality may giveeconomies of scope and scale. Butif FTs go down the standardisationroute, then inevitably some of theirlocalism goes.

The chains model might work invarious ways. Some chain modelsin the US are networks, so somehospitals have their own boarddrawn from their local community,with some delegated decision-making. In Germany, somenetworks mainly share resources,such as back office and IT. In othersystems, hospitals are run to astrict formula; strategy is setnationally at head office and localmanagers are there to keep thedoctors happy and exploit localcommercial opportunities.

Looking at that range of options, itis about what we are trying toachieve in what context. Inevitably,if providers go into a chain, somedecision rights will be sacrificed –that is the whole point. That mightbe how many orthopaedicimplants they offer, or what servicelines they operate. Potentially, thismakes the membership model abit problematic: if a chain decidesthat vascular surgery goes from alocal hospital to their main hub,and the local hospital’s members

disapprove, then who trumpswhom? A membership model isnot obviously as good for a chainas for a standalone institution.

While many countries havechanged to having moreautonomous hospitals, in Norwayand Hungary, they are currentlypulling some strategic decision-making back nationally: whilethey can still run organisationsoperationally semi-autonomously(though having to deliver variousmust-dos), the strategy has beenpulled back centrally. The ‘newpublic management’ concept ofdevolving decision rights toquasi-commercial autonomousorganisations is not a one-waygate. It is not impossible for thisto be pulled back. In Norway,they have done that across thewhole country.

Then there are those aspirant FTswho for various reasons do notlook set to make it to FT status. InPoland and the Czech Republic,they basically said ‘there you go:you’re all autonomous’ and dealtwith the (not always happy)consequences.

The Alzira model, in Valencia inSpain is interesting. That was a PFIhospital run by the private sector,which ran into difficulties. Ratherthan make the provider bankruptthe Valencia regional governmentincreased the size of the contractand added in more risk, to create awhole-population healthmanagement system.

The Polish ‘instant liberation for all’system exposed a number offinancially utterly unsustainablehospitals. Poland’s approach toimproving providers’ governanceand financial management in thatway does rather assume that thepeople in charge will know whatto do, and that it is do-able. It isnot clear that this is necessarilythe case.

In Germany, we have seen somestraightforward takeovers, withstruggling hospitals sold to anumber of the chain operators.That is one approach; Poland’s‘make them all independent andhope for the best’ is another; as isthe Alzira concept of the hospitalas head of the local health system.

24

The FT provider sector has in goodpart been a success. However, asAlan Milburn, Bill Moyes and othersrecognised, I have always thoughtthere could be up to a 10% failurerate of public benefit corporations(which is what FTs are). That issomething which could beaccepted, or at least tolerated,through acquisitions mergers andsupport.

In assessing FTs’ success, we mustremember that the idea wasreceived with as much hostility asNHS trusts in the 1990s, brought inby another very dynamic healthsecretary Kenneth Clarke. SomeNHS trusts failed in their first fewyears, and that createdopportunities for acquisitions andre-evaluations. But yes, the FTsector from 1 April 2004 to nowhas seen some tremendoussuccess stories.

One change is from the formerview that perhaps felt small couldbe beautiful. For providers today,small does not tolerate the ebbsand flows of change, investmentand risk. There is a required size,and for DGHs, narrow serviceportfolios will be an issue. Our trusthas what we believe is the widestscope of service portfolios inEngland: supra-regional, regional,local and primary care. And I thinkyou need that kind of breadth andscope to cope with change.

In retrospect, I am a little surprisedby how few failures we have seen: Ithought there would be more, andsome providers who lookedunlikely to succeed have come

through with flying colours andshould be commended. For some,FT status has been an opportunityto excel and develop.

“For providerstoday, small does not toleratethe ebbs andflows of change,investment and risk.”

Another key factor for us was thesupport of the strategic healthauthority. Ours was pragmatic, andjust got on with their tasks withouttoo much ceremony. The moodmusic for autonomy was right atthe time: the FT policy was madeand our SHA acknowledged it andhad the confidence to let us goand to focus on actually beingstrategic – not interfering with usin a line management way (whichthey could not really do any more),but focusing on the health of ourpopulation, changing servicemodels, public health dynamicsand investing in unmet need.Steve Singleton, the SHA regionalmedical officer, was very switched-on to health improvement.

For a progressive FT like us,autonomy was music to our ears.We did not have to deal withanxiety about waiting list checkingor cross-boundary flows: our focuswas on quality improvement andhow we could better meet public

Sir Leonard Fenwickchief executive, Newcastle Upon Tyne Hospitals NHS Foundation Trust

“Some providerswho lookedunlikely tosucceed havecome throughwith flyingcolours andshould becommended.”

25

expectations, investing in servicebenefits, translational medicineand innovation.

FTs rose to the challenges, but afterMid-Staffs, everything changed toa very risk-averse environment anda focus on avoiding getting akicking. Disappointingly we arereturning day by day towards anovercrowded bureaucracy, with anew initiative.

“We have madethe most of ourmembership andcouncil ofgovernors. Thecouncil ofgovernorspublished ourmanifesto‘Better Together’ in 2010. That hasbeen the bedrockfor our strategy inthe last five yearsand our currentagenda of doingmore outside theacute setting.”

Being an FT made a measurabledifference to our local population. Ibelieve we were much moreresponsive. This is shown in thebreadth of our service portfolioand many new services; improvedquality outcomes; minimisedwaiting times. And we movedbeyond tertiary and secondarycare into community and primarycare settings: something notpossible under the old model. Wehave Freeman Clinics Ltd, a primarycare spin-off.

We also have a greatly enhancedrelationship with the localauthority and their proactivehealth and wellbeing board, whoare embracing the opportunities ofthe Better Care Fund, with itsupsides and downsides.

We have also made the most ofour membership and council ofgovernors. The council ofgovernors published our manifesto‘Better Together’ in 2010. That hasbeen the bedrock for our strategyin the last five years and ourcurrent agenda of doing moreoutside acute settings. Peopleliving an extra decade changes thedynamics of care and we have towork with other agencies. The localauthority is a real catalyst and thedriving force emerged from ourdirectly-elected governors in thecommunity.

They challenged us to do more inour city, and in a way FT statusbrought us back down to earth. Itreminded me of the 1960s whenthe DGH was very much outworking in the terraced streets

with loan equipment and rapidaccess – so FT status has broughtabout a regeneration of thatfreedom to think outside thehospital box and to change andchallenge without the fear ofsomeone coming along to clipyour ear. Freedom does breedenhanced accountability, even ifsome providers seem to fear theirown shadow. Or Monitor’s.

Being an FT allowed us to pursuehealth services integration acrossthe populations we serveespecially our local city population.That was not possible as an NHStrust. FT status offers a distinct self-determination in the context of theNHS system constraints, whilebeing held to account by therespective regulators.

26

How do you think FTs haveperformed over the past decade,relative to their original promise?

AM: Assessing FTs’ performancerelative to their original promisebegs the question of what thatpromise was. The original idea forFTs was effectively sold in twoways: the first promise was to thepublic, of democratisation of theprovider sector, and that localpeople would have greaterinfluence over their providerorganisations. There is limitedevidence at best that governorsand members have had anysignificant impact on majorchoices made by FTs (there will ofcourse always be exceptions).

I am always guided by what healthsector leaders and chiefs talk to meabout: and none talk to me aboutwhat their governors think, or aredoing, or about getting moregovernors. While the FT governorsmodel was established and exists(and broadly has not blown upwith governors declaring war onchairs, or vice versa), bluntly, it feelsa bit ‘so what?’ It is neither bad norgood. That first promise remainedunfulfilled in any meaningful way.

The second promise made was tothe people running providerorganisations: that they couldhave greater freedom fromcentral control and earnedautonomy. Here, we have seensignificant changes, and very fewFTs would give up the freedomsthey have won.

It depends to what use thesefreedoms were put: already-strongorganisations who became FTshave used them more fully thanless-strong organisations. Thosewith sustainable financial andclinical performance have provedmuch better able to use FTfreedoms. You could say they havemade the strong stronger withoutmaking the weak stronger(though nor have they made theweak weaker), so it probablyincreased in-sector inequalitiesamong providers. It is interestingthat the Shelford Group hasemerged so strongly as the FTsector has matured.

The freedoms themselves are agood thing and we have seendefinite improvements in the useto which the freedoms have beenput. Some organisations – thosewith their heads above water –have used them robustly to keepregulators and government atarms’ length for a long time(though less so recently), andhave been more the masters oftheir own future than in the past.As an aside, we have seen that anincreased use of regulation hasdegraded that sense ofautonomy. Though in many casesFTs were effectively involved in aFaustian pact of surrenderingsome autonomy via Monitor forextra cash.

Alastair McLellan editor, Health Service Journal

“Meeting theneeds of thepublic anddeliveringefficiency ofservice means a move toaccountablecareorganisations,judged onpopulation-based outcomesand paid onthat basis.”

27

What evolution of the format ofFTs would create the most sensiblefuture for the provider sector?

AM: There are many ways it couldgo, but to me, logically, meetingthe needs of the public anddelivering efficiency of servicemeans a move to accountablecare organisations (ACOs), judgedon population-based outcomesand paid on that basis. To buildthese organisational models, lessdefined by bricks and mortar andmore by service pathways, wecan turn to the FT model aspectsabout freedom and democracy. Iftaking a more population-basedapproach, involving thatpopulation would seem to be agood thing if we want tomeasure new systems onoutcomes as opposed to inputs.So we would focus less onstandards (also known as targets)and delivery process measuresand more on outcomes.

That intellectual and philosophicalapproach behind FTs is right andaligned with the direction of travel.For all the talk of moving to ACOs,the system is still trying to managethrough standards (the new namefor targets). The FT model needssignificant re-engineering to makeit right for an ACO-type system, butso does the healthcare sector as awhole. Re-engineering the FTmodel does not feel like an urgentneed: that is about restructuringthe provider sector so it is alignedwith the way we want the NHS to

operate. If we start reviewing that,then questions of local autonomyand accountability are animportant part of package ratherthan the main driver.

Do management chains ofhospitals, as being investigated inthe Dalton review, conflict withthe notion of FT freedoms forautonomous organisations?

AM: Management chains couldwork with the grain of the FTmodel if the best providerorganisations earn the right tolead chains.

It could certainly help with theleadership challenge. It is currentlyreally hard to find acute trust chiefexecutives – partly becausenobody wants to do the job. Thereare 243 NHS provider organisations,but it seems unlikely that there are243 people able to have that entireskill mix for successful leadership,including experience, knowledgeand robustness. There are probablyabout 50 people with that skill-setand the experience – so they canlead chains and grow new talentunder their protection andtutelage. So that works beautifullywith the earned autonomyelements of the FT model.

How many provider organisations– FT and non-FT – do you thinkthere will be by 2020?

AM: The provider landscape willnot look exactly same. We wouldprobably see more largerorganisations, more smallerorganisations and less medium-size ones.

How many might be joint ventures– public and private? Priory Groupis in aggregate the biggest mentalhealth supplier in the country: farbigger than any mental healthtrust. By 2020, we could see BMI orRamsay running big elective carefactories, as NHS organisationsconsolidate around specialist care.

There will probably be moreproviders than there are now, butsome will be organisations innetworks or chains, of whichthere will be a small number. Wecould see 50 chains, somegeographical and some by serviceline, within whichorganisations/chains/networksthe leaders would be the larger-profile organisational providers.These smaller new organisationsthat would be part of thosechains would also include spin-offs from acute care or extendedGP and community services tomake standalone services.

That version of the future worksboth with the broadly right-of-centre view (let as many providersas appropriate become availableto deliver the right-qualityservice) and with Labour’spreferred provider schema toidentify a lead contractor, whodecides what it should do andwhat others would do. I thinkeconomics of deliveringhealthcare to meet proper qualityand safety and experiencestandards make doing it all, as inthe past NHS monopolysituations, impossible.

28

The most valuable freedom of FTstatus is to allow us to set our ownagenda. It is an opportunity tofocus on what matters to ourpatients, and at UCLH our prioritiesare all about the quality of patientcentred care that we provide.

Speaking recently at a conference, Isaid that since becoming an FT, ourpriorities changed to being muchmore focused on patient quality.We were challenged on theevidence, I replied that a decadeago our top ten priorities related tofinance and hitting governmenttargets – today they are all aboutpatient safety, outcomes and theirexperience as a customer.

So that shows how our wholephilosophy changed away fromlooking up for instructions to howwe can achieve the best patientexperience in those threedimensions of patient safety,outcomes and experience.

Of course finance is important, andgood control allows you to focuson those aspects that are moreimportant to patients. Here atUCLH we have managed a£1 billion capital programmelargely from our own resources, atfirst with PFI, but in the last fiveyears we have been resourcing ourcapital from our internal revenues,and making better use of ourassets. We inherited the Middlesexhospital, which was valued at £32million, and through acting as aproperty developer sold it for £175million at the top of the market. Were-invested this into expanding theuniversity/hospital campus andproviding the kind of care we

wanted to deliver. We and UCL arenow one of the most impressive inthe world, delivering the greatestbiomedical research output inthe UK.

And our strategy for the nextdecade is to do the same again –our forward capital programme isequally impressive. It is all focusedon developing world-classresearch, and top-quality care forour local population. Thecombination of these freedomsenables us to be regarded as oneof the flagship FTs. So now wecompare ourselves with the top-performing acute providers in theNHS and beyond.

As a specialist provider of regionaland national services, there is noquestion that bigger is better. Forexample, you simply cannotprovide complex cancer services ina fragmented way any more. Clearevidence shows that you needcritical mass in specialised servicesfor the best outcomes –exemplified by the stroke strategyfor London, and we are about todo the same with a complexcancer care rationalisation themost specialist services onto muchfewer sites across UCL Partners’ sixmillion population footprint.

The survival rates for complex careare substantially better with criticalmass coming from doing someprocedures day in day out ratherthan distributed across many sites.That is why our standardisedmortality ratio (SMR) is 30% belowaverage, and why smaller DGHs’tend to be above average. There isa profoundly obvious argument for

Sir Robert Naylor chief executive, University College London Hospitals NHS FoundationTrust

“A decade agoour top tenpriorities relatedto finance andhittinggovernmenttargets – todaythey are allabout patientsafety,outcomes andexperience.”

29

centralising specialised services –local care where possible andcentralised care where necessary,as Ara Darzi said.

Can smaller provider organisationsjustify the overhead costs of beingseparate organisations? Look atthose smaller providers, FTs andnon-FTs. Of course there are somevery successful small FTs, but theyare coming under growingpressure as financial constraintsbite. Of the 99 non-FTs, I thinkmany will fail to meet the standardsto achieve FT status and will needto seek partnerships with others.

And for that reason, I disagree withAlan Milburn’s suggestion that allnon-FTs should become FTs.Frankly, I was surprised. Having seta high barrier to exercise thesefreedoms, surely the last thing youwould want is to lower the bar tomake it less meaningful? Manypeople in my position will arguethat we need to rationalise non-FTseither into organisational groups orchains of hospitals, but wecertainly cannot allow ourselves tocontinue to subsidise failingorganisations – that is just creatinga dependency on the centre.

The major challenge is adapting tothe changed financial NHS reality.We have long argued that thefinancial cliff-edge in 2015–16 couldmake the NHS unsustainablewithout additional funding. Andwhen it comes to the debateabout the Better Care Fund, I thinkwe need more evidence that carein the community is likely to bemore cost-effective in the way thatis proposed. We can already see

more trusts going into specialmeasures because of deficits, andit will reach the tipping point ofpolitical unsustainability at aboutthe time of the next election.

So we need to solve the 2015–16issue, and part of that depends onhow realistic the main politicalparties’ debate will be aboutfuture funding.

Having said that, I accept theurgency to develop the integrationof services, but the difficulty is thatthe ‘i’ word can be interpreted inmany ways by many people. Byintegration, I mean closercollaboration between primary,community and secondary care inorganisations with a commonpurpose and integrated systems.

We can no longer sustain singlehanded contractors in generalpractice, particularly in urban areas.So we need reform in primary carealongside the acute sector. It mightbe in unified organisations, or ingroupings with clear contractualrelationships. Only that can offer uspotential integrated careorganisations for geographically-based communities.

FTs have to be part of theleadership process of making thesechanges happen, but it will becontroversial and take a long timeto implement. As currentlyconfigured, the NHS is notsustainable and we need to testout the development ofaccountable care healthorganisations. Politicians will needto grasp the nettle. Primary carehas been the ‘jewel in the crown’ of

the NHS, but its currentconfiguration is no longer fit forpurpose in the 21st century.

Alan Milburn was seen by many ofus as the most successful healthsecretary of our generation. Manyof us found his focus on devolutionand empowerment in the FTmodel inspirational. Devolution toorganisations allows us to devolvethe critical decisions about patientcare much closer to clinicians atthe front line.

His emphasis that this is not aproblem unique to the NHS, but achallenge to healthcare systemsinternationally facing exactly thesame problem, is correct. This isnot just an NHS problem: it is oneof how we can meet legitimatepublic aspiration for better careand choice. We would allemphasise the use of newtechnology, both medical and IT, asmajor levers towards changing theway we provide healthcaresystems in future. Alan’s emphasison the balance travelling too fartowards top-down regulation andthe need to swing back toempowering patients is one withwhich those of us in the FT worldabsolutely agree.

Becoming an FT was absolutelyliberating. Providers moved awayfrom a culture of being constrainedand seeking permission foreverything they did, going from an attitude of saying (in our formerchair’s phrase) “if only they woulddo x, we can do y” to just “we can do y”.

And in place of external double-,triple- and quadruple-checking,suddenly an FT board becameaccountable for the decisionsthey made. We recognised thefreedom also bought with it thefreedom to make errors andwrong decisions, and this madeour approach to decision-makingmore rigorous and robust. Andhaving much more freedom wasnot just about how we worked,but how we were embedded intoour wider community.

I was involved in thedevelopment group that workedon the FT policy, but although we intellectually understood thescope of the freedoms we werebeing given, they only becamemeaningfully real when we were licenced.

In our early days, we were scepticalabout the need for a membershipbase and governors and wereconcerned about how this wouldwork and whether it wouldencroach on the role of the board.As things progressed, andengagement with shadowmembers and prospectivegovernors developed, werecognised this was a valuablemechanism to work more directly

with the populations we servedand was a necessary part of localaccountability.

So when the 2003 Act creating FTswas on a knife-edge, we decidedthat even if the Bill failed wewould try to create somethingakin to a membership base,seeking direct feedback frompatients on how to set prioritiesfor the way we deliver care.

As an FT, our first strategy wasdeveloped with staff and publicmembers, asking them to ‘tell ustheir top five priorities’, and whatstaff and patients told us correlatedstrongly. Public perception at thattime was that if you walkedthrough the front door of an acutetrust, you would probably pick up anasty infection, so eliminatingavoidable hospital-acquiredinfections was priority for us. It wasa real chance to get close to thepeople we serve, and we havelargely achieved this objective.

It was very noticeable in the early days, when there were 10-20 FTs, that the philosophy in Alan Milburn’s lecture to remove the secretary of state from the operational running of FT organisations was absolutely achieved.

However, as the number of FTsgrew, the centre regrouped anddemanded standardisation and asingle interface with the sector.And over time, Monitor hasbecome something much moreakin to an eleventh strategic healthauthority. The indicators of FToperational freedom’s death-knell

Angela Pedder chief executive, Royal Devon and Exeter NHS Foundation Trust

30

“Despite thechallenges wecurrently face,the FT model isthe best providermodel I haveworked induring the 38years I havebeen in the NHS.”

started to clang for me whenMonitor was required to put inconsolidated accounts for thewhole of the FT sector, and year onyear NHS England imposednational contact terms andreinstated control mechanismsthat had been removed in the 2003Act. In the guise of makingreporting and accounting easierfor NHS England and DH, thedirection of policy wasincrementally rolled back and thedirection of travel changed.

Those of us in early waves who hadhad the privilege of shaping thepolicy were steeped in theliberation ethos. For later phases, asthe number of FTs grew, some ofthe ‘hearts and minds’understanding of the intentionunderpinning policy was lost andachieving FT status became moreexactingly procedural, and perhapsless cerebral.

The original approach waspermissive and developmental.From the outside, it seemed thelater cohorts to come throughwere more likely to ask forpermission rather than to decidefor themselves. The developmentof the authorisation process andSHA involvement almost requiredthat, and I recognise gettingauthorised today is clearly muchharder now than ten years ago.

Things began to shift, and to feelmore like the centrally-directedsystem (away from which we weresupposed to be moving). We havenot lost all the gains, and there arestill opportunities, and as FTs we

need to have the courage to usethem for the benefit of thepopulations we serve.

“We recognised the freedom alsobought with it thefreedom to makeerrors and wrongdecisions, and this made ourapproach todecision-makingmore rigorous and robust.”

The FT form probably does needmore flexibility and freedom now:the difficulty is that ineconomically-constrained times, itbecomes a very courageous stepto say ‘here, take more freedom’.

The healthcare delivery systemswe need today may not besomething traditional FTs can doalone. The concept of afoundation community,embracing health and social carewith FTs as lead provider for asystem perhaps with a capitationfunding arrangement in place,would be an attractive option.

We have to think through how wework with local authorities in thatscenario: we can learn a lot abouthow they engage with their

population and align services withtheir demographic and democraticresponsibilities.

To make such changes work wouldneed permissive mechanisms,which recognise and accept pluralsolutions to meet the differingneeds in different locations.

Vast resource is currently tied up innon-value-adding transactionswithin the health system, whichcan and should be released forvalue-adding activities.

Should we become mutuals? I donot know, but there could bemuch to learn. Equally, the Co-operative Bank’s current troublesshow that mutualisation is not aperfect model. Perhaps the truth isthat there is no perfect model; butwe need a model that is capable ofbeing developed over time.Permissive flexibility is the key.

Changing to a more localfoundation health systemapproach would require changesto the funding/commissioningsystem. Similarly, to the approachto tariff setting; the 4% annualefficiency savings and 30%emergency tariff would also needto be changed. There is a riskcurrently (particularly among acuteFTs) of having to focus so much onmoney in the narrow silo of acutecare that it constrains creativesolutions and limits the changeswe need to make.

Despite the challenges wecurrently face, the FT model is thebest provider model I have workedin during the 38 years I have been

31

in the NHS. It can be developedfurther, and there are many aspectswe should celebrate.

We have found engaging with ourgovernors and members reallyuseful for testing and sounding outthe board’s approach, particularlywhen difficult decisions need to bemade which might bump upagainst the system’s regulatoryregime. Traditional regulatoryperformance management is veryblack and white: you are compliantor you are not.

The board has statutory safety andfiduciary responsibilities for theservices we provide, and has to dothe right thing in the interests forpatients. On occasion, this canmean that some mandatorytargets might not be achieved.Consequently, making the rightdecision for patients may put theorganisation at risk of regulatoryintervention.

The legitimacy of our boarddecisions in these circumstances isreinforced by our dialogue withour governors and publicmembers. An example is thatalthough we have had tworeasonably good winters, threeyears ago winter was chaotic. As aresult we had a high waiting listbacklog, and missed the 18-weekRTT target. Once you are in thatposition, there are workaroundsthat could be put in place, but theymean that you get a pool ofbreached patients who maybecome very long waiters, whilstpre-18 week patients are treated tosmooth performance.

Our board made the rightdecisions to prioritise emergencies,and after that to admit on clinicalpriority and then on chronology.That meant we missed the 18-weekRTT target for three quarters. Ourdiscussions with governors andmembers ahead of any risk ofregulatory failure said that theboard has decided that we mustdo right thing for patients, butthere is a risk of regulatory failure:do you understand why this is ourplan and do you endorse thedecision we have made?

“The concept of afoundationcommunity,embracing healthand social carewith FTs as leadprovider for asystem perhapswith a capitationfundingarrangement inplace, would bean attractiveoption.”

This, to me, is an example of beinga responsible organisation. It is tooeasy to say ‘the public don’tunderstand and it’s too complex”we are in charge’; you have to getout there and engage them and

present your proposals coherently.We are doing the same thing nowwith the financial challenge andthe impact of the 4% efficiencytarget: we have a current opendialogue with staff and the public,so that they understand thechallenges we face in the £80million savings requirement overthe next five years. In the past, andcertainly pre-FT status, I doubtwhether any NHS board wouldvoluntarily have bought such achallenge into the spotlight.

32

33

A decade of FTs is a goodmilestone for those in the NHS tolook backwards as well as forwards.Looking back, we can see varioushighs and lows.

Perhaps the biggest of the highsis the fact that not only do wehave a number of FTs establishedbut that the FT model has stayedthe course for 10 years – and in achange-prone system such as the NHS, that is an achievementin itself.

However there have been lows –particularly some of the emerginggovernance and quality issues andfinancial challenges currentlybeing identified in FTs (as in non-FTs). It is a shame therefore that FTstatus – something that is reallyhard to achieve and previouslyheld in high esteem as markingout the really good organisations –has not always turned out thatway. Consequently, high-qualityand high-performance are notautomatically synonymous withFTs any more.

As a community service providerorganisation, one of the benefitsthat FT status has for us is focusedon the governance model. We seethe governance model as being avery real, tangible part of ouraccountability to and relationshipwith the public and the patientswe serve.

We have strived for many years inthe NHS to engage purposelywith our patients and serviceusers but in reality this has beenrelatively fragmented andpossibly tokenistic. What the FT

governance model does isformalise this as a priority for ourorganisations, as well asdemonstrating our accountabilityto the public.

“The money isimportant andever diminishingbut unless wefocus on serviceuser andclinically ledtransformationfirst and foremostwe have no hopeof managing thefinancialchallenge.”

As a community providerorganisation, we can be closer tothe public than many NHSproviders because much of thecare we provide is undertaken inthe public’s own home – we are ontheir ‘turf’ – and that geographicaldynamic often makes the peoplewe serve feel more empowered.The FT governance model,combined with empoweredpatient users, leads to betterengagement and real influence inhow we deliver our care.

Tracy Taylorchief executive, Birmingham Community Healthcare NHS Trust

“The FTgovernancemodel,combined withempoweredpatient users,leads to betterengagementand realinfluence in how we deliverour care.”

34

Organisations and forms do notstay fixed in stone and unchanged,of course and it may be that someevolutions to the FT model wouldhelp providers deliver better care.

One such evolution might be toput even greater emphasis on therole of members and governorsthan in the past. Locally, that iscertainly an intention of ours, but ifthe system developed a focusmore on governance and theoriginal rationale behind the FTmodel as community-based localorganisations, rather than thehistoric business-commercialfocus, it may enhance how FTsachieve change and provide bettercare in the NHS of today.

The money is important and everdiminishing but unless we focuson service user and clinically ledtransformation first and foremostwe have no hope of managing thefinancial challenge. We need to dothings radically differently utilisingall elements of the system workingbetter together and drivingthrough efficiencies, the peoplewho know how that can beachieved better than anybody elseare those on the frontline, serviceusers and staff.

Birmingham is a big, diverse citywith some significant pockets ofdeprivation and inequalities. A corepart of our strategy is to make themost of the fact that we work inlocal communities. Ourcommitment to being reallyrooted in our communities acrossthe city means that we areplanning and doing our work in a

more integrated and meaningfulway than perhaps communityproviders in the NHS havegenerally tended to historically.

“Having a 16,000membership baseand an electedcouncil ofgovernorsrepresenting themmeans we haveadditional formalavenues throughwhich to connectwith and hearwhat our publicthink and wantfrom our services.”

We describe our focus on localareas and smaller communities asbeing about ‘health synergies’. Inthe localities across the city, wehave to recognise difference anddiversity. Too often in the past,health and care providers havetended towards a one-size-fits-allblanket blueprint. Locally, we try towork with our communities tojointly agree and co-produce care.This is transforming how we deliverour care with greater effect forsmaller communities, breakingdown the city into localities andlooking at the local socio-economic factors influencing

health and wellness and outcomes.This kind of work has to be done ata smaller level than the city’s 1.1million population.

Through our FT applicationprocess we have developed a clearmembership strategy and haverecruited a large number ofmembers. Having a 16,000membership base and an electedcouncil of governors representingthem means we have additionalformal avenues through which toconnect with and hear what ourpublic think and want from ourservices. This enhances our abilityto work on a macro and micro leveldependent upon the issue.

35

Tony Thorne chair, South East Coast Ambulance Service NHS Foundation Trust

My time-frame of reference for theNHS and the FT sector is the pastthree years. My impression is thatthe performance of FTs is variable.However in assessing performanceand progress, it is difficult todisentangle good efforts andclever positioning by a localleadership team from theenvironment in which they areworking. You can have a good,well-led board and executivewhose good work is underminedby an unforgiving environment,and of course the reverse.

So it is quite difficult to generalise about FTs’ performance:local circumstances vary, although nationally, the picture’sgetting much tougher due totighter funding.

I do not have the information tojudge whether FTs are performingbetter than non-FTs in similarenvironments. Nevertheless acrossdifferent sectors I have seen well-led FTs with excellent, highlycommitted teams and I believethat these will arrive at better localdecisions than if these decisionswere driven centrally. I say that lessfrom my experience in the NHS,which is relatively short, but havinghad responsibility for some quitelarge companies with manyoperating units. I learned that acentral team contributed best if itwas setting the overall goals andstrategy, checking that local planswere being successfullyimplemented and ensuring thatthe local leadership was up to thetask. Attempts to manage issuesfrom the centre inevitably showed

that it is hard enough to correctlyidentify a local operation’s problemlet alone find the right answer.

Change in the FT format isneeded. I believe that the FT idealargely came out of governmentrealising that in a tougherenvironment where hard decisionswill have to be made, it is bestthese decisions are worked up anddetermined locally.

Many of these tough decisionsrevolve around service deliveryand the current approval system isnot ideal. Providers have to be ableto restructure, which will meanthat some will get bigger whileothers get smaller. Some mergersand acquisitions fail, however,growing, merging and evenswapping assets does often lead tobetter services at lower cost.

At the moment, the process bywhich FTs get permission forsignificant investment ormerging/acquisition is unclear. It isalso not clear whether those withresponsibility for approvingmergers, acquisitions and servicechanges have the experience tojudge the benefit-to-risk ratio.

There will be errors but withoutproviders being able to grow inareas where they haveadvantage, through investmentor consolidation, we will remainwith a cohort of providers tryingto improve but only with theassets they currently have; thislimits the opportunity forsignificant innovation.

“Across differentsectors I haveseen well-led FTswith excellent,highlycommittedteams and Ibelieve thatthese will arriveat better localdecisions than ifthese decisionswere drivencentrally.”

I feel that the FT concept has gotahead of the permission structure.

Much will rest with the CCGs. Theywill have to be prepared to backthose they consider as likely toprovide the winning solutions andaccept that there will be losers.Currently, the system shows atendency to try to keep all theshows on the road.

The FT format is well-suited to anambulance trust such as ours. Ourexecutive team is innovativeparticularly as regards thechanging role the ambulanceservice can play in unscheduledurgent care, rather than traumawhere our role is already welldefined. The SECAmb teamrecognised that for many patients,for example the frail elderly withmultiple conditions, being taken tohospital is often not the bestoption for them. Therefore the trustis developing a specialist cadre ofparamedic practitioners. Thesehave the education, skills,equipment and drugs, to enablethem to diagnose and treat manyof our patients in their homes orrefer them to specialist clinics. Thisapproach is safely reducing thenumbers conveyed to hospital andhas been cited as an example ofemerging good practice in the A&ECare Review (and we are not yetthe finished article).

This concept, with thepreparedness to invest in people,training and equipment, was verymuch done under the auspices ofour being a FT. We got goodsupport from our commissioners

who were prepared to recognisethe benefit to the overall healthsystem in our getting patientstreated in the right place, notnecessarily hospital. It is unlikelythat we would be as advanced ifwe had not been an FT and feltable to back our approach. As aboard, we appreciate being able toestablish the right approach withour commissioners and invest,without having this checked outby others.

“I feel that anFT’s localaccountabilitymakes it morelikely for it tosucceed; so longas the leadership is given the spaceto get on with thejob and the rulescovering futuredevelopmentare clear.”

In common with other sectors ithas been a tough time forambulance trusts lately; facing abig increase in demand but not acommensurate increase inresources. At SECAmb there hasbeen a great concentration ondelivering performance, clinicallyand financially but also to drive in

the innovation. Under the FTstructure the board has found iteffective and efficient to beaccountable though a locallybased council of governors, ratherthan explaining itself to a distanthead office!

I look to the future with optimism.FT status is not of itself the answer:decentralisation and localaccountability are hard – you haveto back your judgement, sell yourapproach to commissioners whohave many calls on the money andthen deliver. Nevertheless I feelthat an FTs local accountabilitymakes it more likely for it tosucceed; so long as the leadershipis given the space to get on withthe job and the rules coveringfuture development are clear. Thefirst may be difficult in anenvironment where politicianshave to demonstrate to the publicthat they have a grip on what isgoing on. I have sympathy forpoliticians, who, if they are notseen as solving the immediateissues, are not around for long.However they will not solve theNHS’s problems by centrallyrunning it; but they probablyknow that.

36

One Birdcage Walk, London SW1H 9JJTel 020 7304 6977enquiries@foundationtrustnetwork.org www.foundationtrustnetwork.org

© Foundation Trust Network 2014

The document may not be reproduced in whole or in part without permission.

The Foundation Trust Network (FTN) is the membership organisation andtrade association for the NHS acute hospitals and community, mental healthand ambulance services that treat patients and service users in the NHS. TheFTN helps those NHS trusts deliver high quality, patient focussed, care byenabling them to learn from each other, acting as their public voice andhelping shape the system in which they operate.

The FTN has over 225 members – more than 90% of all NHS foundation trustsand aspirant trusts – who collectively account for £65 billion of annualexpenditure and employ more than 630,000 staff.

Registered Charity 1140900The Foundation Trust Network Registered in England No 07525114Registered Office One Birdcage Walk, London SW1H 9JJ