Select Committee on Health Minutes of Evidence

Examination of Witnesses (Question Numbers 1-19)


3 JULY 2008

  Q1 Chairman: Good morning gentlemen. Can I welcome you to this one-off session that we are having looking at the issue of Foundation Trusts and Monitor. I wonder if I could ask you, for the sake of the record, if you could introduce yourselves and the current position that you hold.

  Dr Exworthy: I am Mark Exworthy. I am a Reader in Public Management and Policy in the School of Management at Royal Holloway, University of London.

  Mr Palmer: I am Keith Palmer. My current position in the NHS is that I am Chairman of Barts and the London NHS Trust. Up to a year ago for six years I was a non-executive at Guys and St Thomas's, three years of them as an NHS Trust and three years as a Foundation Trust.

  Mr Carrier: I am John Carrier. I am the Chairman of Camden Primary Care Trust. Formerly I was Vice-Chairman and then Chairman of the Royal Free Trust.

  Q2  Chairman: As you can imagine with three witnesses we may have a tendency to all say the same thing, so what we would like to do is try to put our questions to individuals concerned. Obviously others may be asked an opinion about them but we will try to keep the session reasonably tight if that is at all possible. My first question is to you, Mark. You argue that the evidence suggests an unwillingness on the part of Foundation Trusts to exercise their autonomy fully and you also state that the Department of Health and the SHAs require a change in attitude and behaviour to reflect the changed landscapes of Foundation Trusts and their activities. In what ways is the Department of Health and SHA's behaviour compromising Foundation Trusts' autonomy?

  Dr Exworthy: We have been looking at the issue in terms of local health economies and the ways in which the Department of Health's policy is being implemented at the local level. We have been observing changes from the centre right down to the locality and as part of our research—which we are part way through—we have been identifying issues at all levels. Part of that is the changed landscape both for Foundation Trusts at the local level but it also requires a change in mindset, in attitudes and approach from the centre as well. There are signs that that is changing but clearly there are examples where there might be a tendency to revert back to traditional patterns and there has been some discussion recently between David Nicholson and Bill Moyes about the degree to which the Department of Health is able to influence Foundation Trusts and I think generally Monitor and the Foundation Trusts have been resistant of that change. I think that gives you an illustration of the sort of change of mindset that is taking place but there is probably further work to go if autonomy is going to be fully realised at the local level.

  Q3  Chairman: Is it the case that Foundation Trusts could exercise more autonomy but culturally they do not? Or is it the case that they are being effectively advised not to? Which is it? Are people in Foundation Trusts still looking to the Department or beyond for the answer?

  Dr Exworthy: I think the balance between willingness and ability is quite crucial because certainly many of them are able. They were high performing trusts in the first place and many of them have very skilled managers and clinicians involved in the governance of these organisations. They are clearly able and Foundation Trusts require them to take another step forward to become more robust and much more independent. I think there is that ability and there are signs there. Their willingness in a way is being compromised not so much in the sense that they are being told what to do but there is a cultural change that is involved. In some ways many of these Foundation Trust organisations have grown up in an NHS that has traditionally been centralised so to some extent they have always been looking up, hence David Nicholson's advice to look outwards and not upwards, but clearly those traditional patterns still persist. Also I think the rules of the game are still a little unclear for Foundation Trusts in the sense that this is such a new departure and represents such a significant change in health policy that their willingness to extend into new areas—innovations, service developments, capital spending et cetera—exposes them in a much more visible way financially and publicly which you could say is a good thing but clearly, as you are exposed a little more, your willingness to do so leads to a certain caution or a certain carefulness which again might be a good thing but perhaps it starts to explain why, although they are very able and capable, they have not always been willing to exert that. Going back to my previous answer, I think there are still some elements of centralisation of being "told what to do".

  Q4  Chairman: We may pick up on one or two of those things. Keith and John, does that tally with your experience?

  Mr Palmer: My experience was three years getting into a position where Guys and St Thomas's became a Foundation Trust and then three years before I left the board when it was a Foundation Trust. I would say that Guys and St Thomas's was a first wave Foundation Trust so it is one of the very early up-takes. What it felt like on the board was that during the first 12 months all the Foundation Trusts were made Foundation Trusts as standalone entities, they need to remain financially viable but with no reserves in the balance sheet. The first thing that happened, during the first year or two, was a drive in performance to generate surpluses in part to provide a risk cushion in case things went haywire in the future and also to drive performance because before Guys and St Thomas's at least started to think about rather grander initiatives we felt we needed to get our act together and push for the very best quality of services in what we already provided. By the time I left the board in the third year of a Foundation Trust there were active programmes which I know are on-going to engage with the rest of Southeast London health economy to see if they can extend the excellence which Guys and St Thomas's now provides to its patients to a wider community. I would say that there have been uncertainties about how much authority there is to do new things; there is an emerging confidence that they are allowed and some of the trusts like Guys and St Thomas's are beginning to put their best foot forward.

  Q5  Chairman: John, is that your experience?

  Mr Carrier: Yes, I think I would agree with Keith rather than with Mark. I was in at the ground floor with University College Hospital who asked obviously under the Act for a Primary Care Trust representative to be on the Members' Council. My feeling was for the first few months there was some sorting out to do because we had a huge constituency of people coming along who had no experience of Foundation Trusts let alone a health service organisation. There was a lot of discussion about what their role was. The hospital was also moving from an old building to this brand new palace on the Euston Road—you may have seen it, this great giant green thing—but the concern that the executive had and the rather experienced chairman and NEDs was with financial stability, the commissioning position that the PCT would take as well as other targets the PCT were concerned about (delayed discharges, MRSA). There were always debates about the tariff and whether it should be unbundled and whether PbR was the right way of going forward. So all those things were being sorted out in the first year. I then left because the chief executive of the other local Primary Care Trust, Islington, came on board and I thought that my chief executive ought to be on instead of me to match her. One of the issues that was always raised was the accounts, the finance. Innovation, I think, would have been pushing it for the first couple of years. They were the first wave. I was then asked to go onto the Tavistock and Portman, a much smaller Foundation Trust with a budget of about £20 million a year in contrast with a budget of about £400 million or so. What I thought was interesting was the efforts both Trusts made before they were set up to involve the public by meetings et cetera.

  Chairman: We may pick up on these matters later. Could we move on to Sandra?

  Q6  Sandra Gidley: Innovation has been mentioned. Dr Exworthy, reports by the Foundation Trust Network and Monitor proved some examples of what they term innovative practice being employed by Foundation Trusts, but a recent HCC/Audit Commission report concluded that "On a national level ... FT status does not yet seem to be empowering organisations to deliver innovative models of patient care". Are there any practical examples or independent evidence that Foundation Trusts are actually delivering care more innovatively or efficiently?

  Dr Exworthy: I think you are right to point out that there is relatively little evidence of this so a lot of it does rely on the sort of reports that you have mentioned which clearly have a "vested interest" in some of these issues so independent research or independent evaluations tend to be rather scarce. Having said that, innovation covers a wide range of activities so it would be difficult to categorise all the sorts of things that are going on. Probably there are two points to make, one is that these were high performing, largely innovative, dynamic organisations so, as it were, much of that has continued in the direction that you would expect it to, so what difference would Foundation Trust status over and above that bring? Some of the evidence seems to be a little bit weak in that regard. Whether they are actually offering over and above improvements, I am not too sure whether that exists so far, I am slightly dubious. I think a lot of the work that has gone on is making sure that they are a robust organisation in the sense of greater attention to costs and greater focus on improving the managerial skills, clinical involvement et cetera. I think there is a lot of work that is going on that might not yet have translated into, as you call it, innovative practice or service developments.

  Q7  Sandra Gidley: Some of these trusts have been in existence for a number of years now so surely there should be some sign of changes in practice.

  Dr Exworthy: We have to remember that all of these operate within a local health system which, to some extent, liberates them and to some extent constrains them. We are seeing some much more innovative practice in terms of developing clinical networks outside the organisation which I think is quite important—cancer surgery, for example, being quite significant there—but that is not necessarily to do with their Foundation Trust status.

  Q8  Sandra Gidley: It might be helpful to ask somebody who is representative of a trust. Mr Palmer, you have been in since the beginning, are there any benefits conferred by Foundation Trust status? What have you been able to do that you would not otherwise have been able to do with regard to innovation? It seems that the best high performing trusts were the first off the blocks, as it were, and could have done this anyway. What difference has it made in practice?

  Mr Palmer: I asked myself that question right the way through actually because I held great hopes for Foundation Trust status. I would identify two in particular. The first is the fact that that Foundation Trusts are allowed to keep the surplus that they generate through efficiency improvements is a really important driver of behaviour within the hospital trust.

  Q9  Sandra Gidley: What do they do with it when they have got that money?

  Mr Palmer: At Guys and St Thomas's the promise was that if we can generate the surpluses we can reinvest them in even better health care and that motivates clinicians—not just doctors but a whole community of people, the 8000 people who work over there—that the thought that you are slogging to get cost reductions because the Department tells you you have to is an entirely dynamic to: if you do this and do it well you can then do the things which have been on our planning horizon that we could not afford for a very long time. The question of what you do with it of course is a very important question. As I say, at Guys and St Thomas's the view initially was that we must generate surpluses to create some risk cushion because it is a very uncertain world out there; we do not know what the Darzi plan is going to be for our services; we need to be able to invest in the fabric of the building. The basic position was to get some surplus and then think about what to do with it. I have not been privy for the last 12 months, but there are some very interesting plans to change the models of care, to use language you use. However, as Mark said, you can only change models of care by interacting across the whole network. You have to deal with organisations which are not Foundation Trusts and who are subject to direction by the SHA. I think it has been slow but my observation would be that there is a degree of freedom now and the fact that Guys and St Thomas's plan to use those surpluses is really quite interesting. It would be a shame, I think, to stop the experiment now, but if you do not see some action over the next couple of years then you should be asking the question why. The other important difference is the membership and the engagement and the board of governors of a very wide range of stakeholders. We have a slightly absurd board of governors at Guys and St Thomas's in the sense that it has 40 people on it and you could say that no body of 40 people can do anything effective, but because it is so representative of all the interest groups—staff, patients, PCTs, local healthcare trusts—it really is a tremendously effective forum for sharing ideas and discussing things, not in a governance sense but simply sharing in a single forum the very different interests of everybody. I think that that has been very valuable.

  Q10  Sandra Gidley: I would like to be reassured that it is not just tokenistic; can you give me one practical example of something the board has done to make a difference, something you would not have been able to do if you were not a Foundation Trust?

  Mr Palmer: I think it is difficult to pick something out. The behaviour of the board of directors at Guys and St Thomas's has been different in the sense that they have felt free to take certain decisions which otherwise they would have been directed when they were an NHS Trust. Things like how to conclude negotiations with the commissioners, how to engage with the sector about the changing models of care, there is a sense of empowerment that there is a right to carry on those discussions which simply was not there before. I am absolutely sure in my mind, having been both an NHS Trust and a Foundation Trust, it feels very, very different on the board of an NHS Trust—which is where I am back again—because you really have to ask permission all the time. It is a different dynamic and it is quite difficult for me to give you a particular instance, but it is tangible and real.

  Q11  Dr Taylor: Quality occurs four times in the titles of Darzi's report; four out of eight chapters have the word "quality" in them. When we did our report on Foundation Trusts right at the beginning some years ago one of the recommendations was: " the key argument in favour of the policy of Foundation Trusts is that it presents a genuine incentive for trusts to improve their performance. However, we are not clear that once Foundation Trust status is achieved there are adequate incentives in place to ensure that trusts improve or even maintain high levels of performance." Turning to Mark first, I think you say that "initial evidence suggests no significant improvements as a result of Foundation Trust status.

  Dr Exworthy: Quality again can be defined in many different ways just like efficiency or any other concept by which you are wanting to measure. I think the evidence is thin or weak at the moment; we do not have too much on which to base other than perhaps anecdotal or experiential evidence. However, I think there are signs of a greater sense of ownership, a greater sense of pride, a greater sense of empowerment through which you might hypothetically suggest that quality would improve. Some of the evidence on decentralisation generally suggests that people who have greater ownership tend to address things more carefully, more assiduously and as a result quality might improve. There is a hypothetical argument to say that that would happen and there are a few signs that that has happened I think so far.

  Q12  Dr Taylor: As to one of the crudest measures, complaints, is there any evidence that complaints have either gone down or up since the Foundation Trust status?

  Dr Exworthy: I do not have any information on that.

  Q13  Dr Taylor: Moving to Keith and John, would there be any evidence on that side?

  Mr Palmer: If the complaints records are kept and constitute part of the insurance framework which the Healthcare Commission expects. As you know, the majority of Foundation Trusts are good or excellent but quite a few of them were good or excellent before they were Foundation Trusts. I think there is evidence that the standard of care and the quality of care of the cohort of Foundation Trusts is very good. There is some evidence it has been improving because the weighted average of the scores of them has improved, but like Mark has said several times, it is difficult to say that because of Foundation Trust status it has happened. Certainly in my trust—which is not a Foundation Trust yet—we are improving the quality of care irrespective of an organisational status.

  Q14  Dr Taylor: Do you have anything to add?

  Mr Carrier: I think the first thing to say is that we are very conscious of sections 18 to 25 of the 1999 Act about that which lays a duty of quality on us all. That is an overriding issue. Whether Foundation Trusts have made a difference or not I do not have the data on the complaints but we do have data on serious or untoward incidents. However, I think it is wider than that. I think you can measure quality in a number of ways and Foundation Trusts may have made a difference here. There is the speed of care, the speed at which people get into the system. There is the location of care and I think Mark is right about that; networks have helped in that, for example, if you get cooperation between Foundation Trusts and non-Foundation Trusts like the Royal Free in our particular area there is no doubt that there has been an interchange of services where the location is best, so plastics move to the Royal Free, cardiac goes down to UC. Networks are the important issue; you can say it is coincidental but it may have been given a push. Liz Wise who is the Director of Contracts and Performance has passed me a note to remind me that one of the big issues is that Foundation Trusts have to respond to commissioners; they have no option to respond to commissioners on any service change or innovation. However, on the other hand, commissioners need to support innovation and what commissioners are interested in is not just efficiency and effectiveness; clearly we are under some obligation to make sure targets and standards are reached and that means relationships with the Foundation Trusts. We do call for regular quarterly data, financial data but also quality data. They come back to us and say that the tariff is constraining them and they need some more money if they are to meet the 18 week target, that relationship has been set up since the Foundation Trust so there is that interchange. My own feeling is that there is a paradox here and the paradox is that the centre wants more and more care out of hospitals and while we are trying to support centres of excellence which are these hospitals in the middle of London there is a real demand management question here which is quite tense I think. I think quality has been improving and I think you have to use proxy figures to demonstrate it, but you need the evidence to be properly discussed.

  Q15  Dr Taylor: Keith, you are going through the phase of applying for Foundation Trust status at the moment.

  Mr Palmer: That is correct, yes.

  Q16  Dr Taylor: So you have to have quality at a pretty good level before you can get in. Once you have got in what are the incentives to go on improving?

  Mr Palmer: They are various. Firstly, as John has said, the commissioners have a responsibility to make sure that standards are maintained at a certain level and of course the Healthcare Commission inspects everybody, Foundation Trust or not, and reports on the systems and processes in place to assure quality. You get a score and all trusts, whether you are a Foundation Trust or not, care mightily whether you are excellent, good, fair or poor. So there are some dynamics in the system. This is nothing whatsoever to do with Foundation Trust status but the dynamics to improve quality of care have not been very strong and I welcome the very recent announcements by Darzi et al for a renewed focus on quality but if that is to be achieved we need instruments that will drive it better than we currently have. I think those instruments should apply to everybody, not just to Foundation Trusts

  Q17  Dr Taylor: Can you define what you mean by an instrument to drive it?

  Mr Palmer: It has been proposed for quite some time that you should link in part the payment you make to a provider to the quality as well as the quantity of care. Payment by results is a payment per unit. You can develop quality metrics I think in some services quite easily and so the people will recognise quality by paying a bit more but equally we will punish you, as it were, for poor quality by paying you a little bit less. I am a great believer that a properly graduated incentive of that sort would put a renewed dynamic into the system.

  Q18  Dr Naysmith: Can we move to the area of governance and democratic accountability? This is an area where, when the legislation was passing through Parliament to set up Foundation Trusts, there was a lot made of it by the Government. You may or may not be aware that there have been a couple of reports into how this has been working, one an Ipsos MORI poll for Monitor and a so far unpublished report by Mutuo for the Department of Health by Chris Ham and Peter Hunt. It is true to say that there is a bit of evidence in this area but both of these reports contain good things but they are also more than slightly ambivalent and suggest there is still a lot to be desired in this area. I wonder if I could start with you, Dr Exworthy. In your submission to the Committee you said that the new governance arrangements of Foundation Trusts are "seen as an important development but have yet to translate into meaningful change" and that "the relationships between the FT Governors and the Board still require further development." How do you see this development taking place and how can Foundation Trusts governance arrangements be improved? I would like specific suggestions if you can with evidence if possible.

  Dr Exworthy: I will try to be as specific as possible. Like my colleagues on the panel who have already mentioned the significant changes in governance and public membership that Foundation Trusts give, having said that I think that the focus—or priority if you like—has not been on that so far, it has been about getting financial stability, robustness and making sure that their operation as a Trust (usually it is a hospital) is efficient and effective. There are signs that they are moving into developing better relationships with their memberships but I think there is a danger that initially at least these efforts have been focussed on people who might have been engaging with those Trusts anyway and extending it out to a broader membership is traditionally very difficult so Foundation Trusts would encounter similar problems. However, I think there are signs of much more outward focus; I mentioned that, rather than looking upwards, looking outwards. There are signs that they are taking that on board, entering into dialogue with all the various stakeholders that have been mentioned—local authorities, other NHS trusts, the public in all its dimensions.

  Q19  Dr Naysmith: In both the studies that I mentioned there was evidence that there were members and even some governors who said they did not feel involved and they could not really make much of a communication with even their chairs on some occasions.

  Dr Exworthy: Yes, and I think there is some evidence that the governors have failed to identify their role in a sufficiently well-defined sense. In a way that was my implication about this further development in that area. I think also there are areas to test between the board of governors and the executive team in the sense of on what occasions has that role been exercised in audits, appointments et cetera. Maybe they have not entered into that territory yet.

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