Select Committee on Health Minutes of Evidence

Examination of Witnesses (Question Numbers 20-39)


3 JULY 2008

  Q20  Dr Naysmith: Do you think there is still hope?

  Dr Exworthy: I think so. I think it represents the form of membership and the form of organisation that Foundation Trusts have become, to represent an innovative dimension in this regard. Traditionally the NHS has had rhetoric in this but has not always delivered.

  Q21  Dr Naysmith: When it went through Parliament it was described by one or two members as a fig leaf of democratic accountability; do you think it is more than that.

  Dr Exworthy: Yes, and also I think it sets up an interesting tension particularly on behalf of the PCT as another constituent because they could claim equally that they have the needs of their resident population in mind. I note that the Darzi report earlier this week allowed PCTs to change their name to become NHS such-and-such a county or town to identify much more with the population on whose behalf they are commissioning. I think there is a tension that patients might well have a very strong affiliation to particular institutions and particular trusts but the PCT loyalty, on the other hand, could set up a tension and clearly there are not enough evenings in the week for people to attend all of these public meetings.

  Q22  Dr Naysmith: Do you both have experience of the area we are talking about?

  Mr Carrier: There is a tension but I think it is a tension between strategic and operational issues on the board in that the true members are lay people, intelligent and inquisitive and want questions which often are the questions that non-executive directors should be asking. There is this quite interesting way of handling those sorts of things because some of them are not for public discussion and that sets up concerns; others are. One way I have seen it work is by the board of directors through the chairman inviting members' councils to join committees, to form sub-committees and to reach into the organisation in a much greater way so our patients see what reception is like, what discharge policies are like and so on and so forth. There is a way of involving people in working which does not quite cross the operational line but gives people some identity. I am pretty sure there are hard to reach groups of people who have never made their voice known or engaged with a hospital; they take it for granted, it is there, they expect high quality services. I also know that the oversight and scrutiny committees are doing their job. We have just seen a very good example in London in Healthcare for London where all 31 of them got together as well as the 31 PCTs to comment on Darzi's Healthcare for London. They are also good at calling in both Foundation Trusts and non-Foundation Trusts for scrutiny and the public do turn up and the newspapers are interested.

  Q23  Dr Naysmith: That is by-passing the governors in the membership of the Foundation Trusts. I am not saying that is a bad thing.

  Mr Carrier: It is another dimension; it covers columns of local newspapers which means that people are informed. The other thing I have noticed is that the staff members do speak out in these governing bodies. As you know, the big issue is the appointment of chairman, the appointment of the chief executive and the NEDs and that in the end a very big piece of knowledge that all members' councils have; it is not used in a threatening way but it is there. My observation is that they have attempted to involve them but there is this very strange operational strategic issue.

  Q24  Dr Naysmith: Do you have anything to add?

  Mr Palmer: I would just say that for me it is much better than what was there before. When I think about what was there before there were no local accountabilities at all and everything was directed by the Department of Health. I have always believe that it is not a perfect system and it works less or more well in different settings depending upon the communities you are dealing with, but I think it is the right thing to do to try to create some local accountability and some more effective channels to the local communities so that there is an outlet or an opportunity for them to express views and of course ultimately to get involved in governance. One hopes that that is never necessary because something has gone badly wrong, but the very fact that there is now a local solution mechanism if there are major disputes I think is a very helpful thing. The only other thing I would add is that although Barts and London is not yet a Foundation Trust we have decided to try to create some of these mechanisms anyway. We have created a membership, we have invited people to join and we are absolutely thrilled with the engagement we are getting. We have Medicine for Members events which are mostly about public health issues in East London and we get a tremendous turnout of people you would never imagine would ever go to a committee. I would say that it is not perfect but it is a good start and I think it is an approach which should be rapidly generalised across all trusts whether Foundation Trusts or non-Foundation Trusts.

  Q25  Dr Naysmith: I find it fascinating what Mr Carrier said about the Overview and Scrutiny Committee. Did you experience that as well when you were involved?

  Mr Palmer: The Overview and Scrutiny Committee is of course a statutory component of oversight. We have not found, at least in Guys and St Thomas's, that there is undue overlap between its role and the role of the board of governors of the Foundation Trust.

  Chairman: We have a series of questions now on the impact of Foundation Trusts on the wider health economy.

  Q26  Dr Stoate: John, I would like to start with you. We heard how Foundation Trusts might be able to improve efficiency and might be able to improve outcomes, but they do have a very, very significant impact on the wider health economy. We know, for example, that Foundation Trusts collectively have a surplus of £1.7 billion and Keith has told us he likes to have a surplus in the bank to make sure they can hedge against the future. However, this is tax payers' money. If it is being locked up in trust accounts does that have a big impact on PCT spending and thinking?

  Mr Carrier: No. We think PbR is wrongly named; we do not think it is payment by results we think it is payment by activity. In a sense that surplus is a hidden iceberg and what we are constantly debating with them are issues like coding of procedures and whether the returns we get quarterly are accurate and validated and so on. So there is that very administrative financial detail and we tend not to look at that big issue of the surplus and tax payers' money. We are obviously very keen on effectiveness and efficiency and value for money and I think it is right that the big Foundation Trusts, University College in our particular PCT is £52 million and the Royal Free is £58 million; Tavistock is very much less. We tend as a PCT not to think about the surpluses; we tend to argue about our bottom line and us coming in on budget. We look at it that way. We also view it as a health community rather than a health economy as well because obviously we are very keen to delay wherever possible entry into any hospital if primary care can do the job. Recently, because of the debate about polyclinics, we have certainly had discussions with the UC as a Foundation Trust and the Royal Free as a non-Foundation Trust about polyclinic issues and primary care. We are conscious of that but not the surplus that Keith has referred to.

  Q27  Dr Stoate: I am worried about this now because that is evidence of real silo thinking; you are saying that you do not really care about those surpluses.

  Mr Carrier: I am not saying that we do not care; I say that our main concern is to make sure that the 18 week target is met, that our chief executive meets the three financial targets he has to meet each year, that services are of a high quality. If you want me to put them in order of priority then high quality comes top. We are obviously interested in cost efficiency and clinical effectiveness—we would distinguish between those two—but all hospitals in our area have quite a good reputation.

  Q28  Dr Stoate: Yes but that is not the point I am making. The point I am making is that we have a lot of tax payers' money; £1.7 billion collectively is locked up in trust coffers and surely as a PCT you must be very concerned to ensure that that money is all spent on patient care, or do PCTs not care whether that money is spent on patient care?

  Mr Carrier: Again I think it is wrong to say that we do not care but I think you are also right to say that our interest is not directed to that; our interest is directed to the day to day making sure that patients get in when they need to get in as fast as possible and are given the highest quality treatment and there are no delayed discharges and the community will support them once they are out. That is our main concern. I am sure if we changed our direction and started to ask questions about the surplus and how it is being spent we would have a different debate. I do meet the chair of the Foundation Trust at regular intervals; our chief executive meets their chief executive, there is an interchange and the relationship is good. Every now and then it gets tense because we are asking for details and they are asking for money but you are correct in one sense that we do not concentrate on the surplus.

  Q29  Dr Stoate: PCTs are always finding difficulties with their finances and under payment by results they do the work and you have to pay them; there are no ifs or buts or maybes. The more operations they can hoover up the more operations you have to pay for whether you like it or not.

  Mr Carrier: No, it does not quite work like that. We have a demand management system in place.

  Q30  Dr Stoate: How does that work?

  Mr Carrier: It is known as CCAS which is the Camden Clinical Assessment Service where GPs, if they want to refer to a hospital, will refer to this group which is composed of GPs, unless it is an emergency.

  Q31  Dr Stoate: They have to apply to you for every single referral they make to everybody; even under choose and book they have to apply to you first.

  Mr Carrier: The CCAS does the choose and book unless it is an emergency. That is how that system works. It is based on what is known as the Kingston model which was introduced a few years ago and it is really asking whether the referral appropriate and obviously it is a cost effectiveness mechanism so we have been working that for about two years now and looking at the results.

  Q32  Dr Stoate: So the GPs do use choose and book.

  Mr Carrier: They do use choose and book, yes. We have about 42 practices in the PCT, about seven of them are still not using choose and book and discussions are on-going with them. It is about technology and cultural resistance.

  Q33  Dr Stoate: The point is, when a patient comes to a doctor and the doctor says you need your hip replaced, the doctor has to say, "You can use choose and book but I have to check with the PCT first whether I am allowed to refer you".

  Mr Carrier: The point is that our GPs do support this system; they use it and how it is developed is based upon their own thinking and ideas. They are paid and it works. It works for all referrals in our particular Primary Care Trust. The activities are monitored; there have been hiccups. I think if activity is out of line, in other words it is not meeting expectations—what we would have expected in terms of the patient flow—questions are asked, but it seems to be working.

  Q34  Dr Stoate: That is slightly off the subject of Foundation Trusts but it is a question of how your PCT works. My main concern really is to ensure that PCTs take a close look at how the surplus is used. Do you think this is something Monitor should look at in terms of ensuring that surpluses are directed towards patient care or is it something that PCTs should keep out of altogether?

  Mr Carrier: No, they both have a role in doing that, of course. We obviously expect Monitor to do that but we are very challenging in terms of the volumes of work that come to us and whether they have been properly coded, whether the statistics are validated and so on. We have a whole group of people who deal with the contracts. We are still on the first wave contract although we have given notice—we gave notice two years ago—and we will go onto the model contract that is being introduced. Even then I think our Foundation Trust—the big one, UC—takes patients from around 200 PCTs and whether they will want to have one contract for all of them or negotiate separately is another issue. We are the lead commissioner, that is the point, and that is a way of ensuring economies of scale, keeping an eye on the total picture.

  Mr Palmer: Could I just add to that the reason that John is not all that concerned about the surplus is because it is not extra revenue that is being paid to the providers; it is the benefit of providing the same volume of care more efficiently. I think the right way to think about the surplus is as extra resources available.

  Q35  Dr Stoate: Yes, but it is still tax payers' money being locked up in coffers and not being used for tax payers' benefit. If you are going making efficiencies surely that money must be recycled back into patient care.

  Mr Palmer: That was going to be my next sentence. I think it is not a question for me about the commissioners being concerned; I think that what we lack at the moment is precisely what you have just described. At the moment Guys and St Thomas's, for very good reasons, is still planning on how it wants to spend that money. Whilst it is locked up it should be available to the NHS, recycled, and until it is needed it is available to be used.

  Q36  Dr Stoate: There are things the PCT would like to do but cannot do, there is money in your bank that is not doing anything and those two things are not being put together. What I am saying is that this is silo thinking; it is not joined up thinking.

  Mr Palmer: It is a question of policy. At the moment there is not the mechanism to recycle surpluses so they can be used elsewhere in the NHS.

  Q37  Dr Stoate: That is exactly my point.

  Mr Palmer: But on the basis that those who generated the surpluses can get access to them when they have plans to spend them. It is actually relatively straightforward to devise an internal banking system where you re-use those surpluses but you do not take them away from the providers so that when they have good plans for them then they can use them.

  Dr Exworthy: Could I just make two quick points, one is that in a way this is the price of autonomy. We are giving Foundation Trusts the autonomy and they keep the surpluses; that is part of the rules. That is the name of the game, as it were. I think also there is a difference between long term and short term here. As Mr Palmer has just said, some of them have been a little unsure as to what to spend it on, but there is a difference between, as it were, short term improvements you might be able to make and say, capital expenditure which might take several years of surpluses to accrue. Building a new wing of a hospital or even a new hospital would clearly be on a different scale than, for example, I know from the Darzi report one of the Foundation Trusts in Gloucestershire paid £100 to each member of staff as a bonus. There is a short term/long term issue.

  Mr Bone: I was going to come in but I disagreed with Dr Stoate and I thought that was dinosaur thinking of the NHS. The effect is that efficiency savings have been made which would not have come about if you did not have Foundation Trusts. That was the problem with the existing system, there was no incentive to make the savings then no savings go to the hospital which they could spend on long term projects. The Government is absolutely right on this, it is the dinosaur thinking that they are trying to get away from which I think actually Mr Palmer did explain.

  Q38  Chairman: Let me pick up on one with John who is a commissioner effectively. Your health budgets have been growing, effectively 4% above inflation or something like that. Would your attitude to surpluses being held by your local hospital be different if your budgets were not growing in the way that they are now or indeed have done in the past, a lot less than they are currently? Would it change your attitude?

  Mr Carrier: It might well do. We do see the surplus as a much broader issue. I will give you the point, but it is a broader issue and again we see our task as to make sure we commission services that are needed and the tariff and then to check what it is going on. It may sound like silo thinking but that is the accountability thing that we take very, very seriously and that is why we call for the data and statistics, and that is why we have these debates. I think that is a fair point.

  Q39  Mr Scott: Maybe I am a dinosaur as well but I would quite like to see that if a PCT needs some money and that one has it that it could be used for the benefits of the patients, which is what I thought it was all about. Mark, you say that provisional evidence suggests that Foundation Trusts are picking and choosing the issues on which they are cooperating with other parts of the National Health Service, especially if it is in their own interest. Could you give us a little more detail, please?

  Dr Exworthy: I think it is perhaps implicit in some of the things that we have been discussing already this morning. Clearly Foundation Trusts have been given a set of incentives in which they are much more responsible for their own activities and affairs and, as we have just heard, surpluses as well. So clearly there is a much greater focus on their internal processes and decision pathways if you like and that clearly sets up a self interest type model that they are responsible for the boundaries of their trust and outside that is an externality; it is beyond their responsibility. Clearly in terms of some of the activities that might be going on in the local health community they are deciding the degree to which they might cooperate. Clearly there are areas in the country where there has been a history of collaboration and Foundation Trust status does not immediately change that; there has been an on-going network, many people will have worked in similar organisations, their friends and colleagues work similarly. There is a level of trust often between Foundation Trusts and non-Foundation Trusts in the local health community in the development of HR policies or clinical networks et cetera. There might be some places where the Foundation Trust status sets up a difference of position, responsibility and interest such that there is—to use the term used earlier—more of a silo mentality. That has created not just the acquisition of their Foundation Trust status but some of the central rules and implementation of those rules that set up a degree of resentment between Foundation Trusts and non-Foundation Trusts. That might hinder future collaboration. Some of the specific examples where they might wish to collaborate, for example in some of the big service reconfigurations that have been going on and are likely to continue, in the sense that it is very much in their long term interests for Foundation Trusts to get involved in these decisions. Helping shape that debate locally within the county, city or whatever is part of their interest. As we have heard surpluses might be retained which might set up a kind of tension, the degree to which they are seen to be retaining the surpluses and/or hindering or hampering local service developments. I think it will be very different in different places depending on the history and culture of collaboration.

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