Select Committee on Health Minutes of Evidence

Examination of Witnesses (Question Numbers 80-99)


3 JULY 2008

  Q80  Chairman: Would it be fair to say in the past that they would have built the unit and then looked for the patients to go into it?

  Dr Moyes: I would not want to generalise.

  Q81  Chairman: No, I do not want to either, but I am too tempted not to ask you the question.

  Dr Moyes: When we had our financial problems with Bradford in 2004 that was part of the reason. They built a modular theatre and, if I remember rightly, they took on something like 300 staff, but there was no commitment from the commissioners to transfer patients to the hospital to use those facilities. That was part of the underlying reason why Bradford got itself into real financial difficulty and in getting itself out of that difficulty it had, if I remember correctly, to rationalise services, move in-patient facilities from St Luke onto the main Bradford Royal Infirmary to use those facilities they had created. Personally, having been there, I think it is a better service to patients so I am relatively relaxed about the outcome of that, but you are absolutely right, that was a good example of creating a facility and expecting the commissioners to send the patients.

  Q82  Chairman: I meant that in general terms about what has happened in the National Health Service for the last 60 years.

  Dr Moyes: You will forgive me if I confine my response to the last four years.

  Q83  Chairman: The other thing of course is that there are very low levels of borrowing at the moment but if things were different and if income going into the health service budget was less than now, it might not be the case at all and those barriers that you want for borrowing might be a bit nearer. Would you have access to capital markets under those circumstances? If you needed major investment or a new hospital in Chesterfield or whatever, would you have access to capital markets and what would be any restrictions that you may or may not have in accessing capital markets?

  Dr Moyes: I think from our contacts with the commercial banks there is undoubtedly appetite in the commercial banks to lend to the sector, but of course at the moment the Department still provides loan funding and other dividend capital at well below the prices the commercial markets would set. I think there is a question of working out what is the capital regime for the future. I think the banks are very keen and I do not think from our contacts with them that the banks would be looking for any particularly onerous conditions or anything novel. But why would a Foundation Trust go to the commercial markets when they can get cheaper money from Richmond House?

  Q84  Chairman: Of course there would be the issue as you have described with Bradford, the actually commissioners decide on what the income is likely to be over time. Would that in any way, do you think—talking about the future here—restrict people in terms of loaning money into the building new hospital sector? Could it do?

  Dr Moyes: I think the banks will have to work out how they assess the credit of different types of Foundation Trusts and depending on the state of the world economy at the time that this happens they might be more or less adventurous. I would expect them to start by exploring very carefully the long term future of the hospitals they are lending to. Our contacts with them suggest that they would want to understand in some detail how Monitor would behave if a Foundation Trust that was a borrower got itself into financial trouble. Yes, I think they would take a very, very detailed view of the hospital's prospects but I think that is to be welcomed.

  Q85  Dr Naysmith: Good morning, Bill. I want to ask you about the private income cap for Trusts which, as you know, varies quite considerably. I want to know if that is a problem and if there is any rationale behind it and, if it is a problem, what should be done about it?

  Dr Moyes: It does vary considerably and it does because that is the way the legislation is structured. The 2003 legislation defined the cap and in essence what it does is that it fixes the proportion of private income to the level that it was in 2002/03. Therefore those trusts in 2002/03 who had a high proportion of private income can retain that and those that did not cannot. I feel slightly inhibited in talking about whether that is a problem or not because, as you may know, Monitor has started consulting on the private patient cap. The way the legislation is framed, Parliament has expressed a principle that private income should not grow unless NHS funding income grows, but it has largely left it to Monitor to sort out what the rules are. We thought we had done that but Unison has challenged us and is now pursuing judicial review of our process which, of course, they are entitled to do. That led us to think that we ought to set out the complexity of this issue in a consultation document and seek views from a wide range of not just Foundation Trusts but all sorts of people. We published that two or three weeks ago and the consultation closes in early September. If you do not mind, I would rather not speculate on the outcome of that consultation.

  Q86  Dr Naysmith: Could I just ask you a specific question, do you think there is a demand from some of the Foundation Trusts which have a historical low base to increase it, or is that too difficult to answer in the circumstances?

  Dr Moyes: What I can say is that I do not believe that Foundation Trusts find the rules that we have written out of the private patient cap to be restrictions, but they might find restrictive some other interpretations of the rules. That is what I think I can say.

  Mr Firn: It is a specific problem for Mental Health Trusts because, I think I am right in saying, everyone who has been authorised so far has had the private patient cap set at zero because that was the position in 2002. It is something of an absurdity because if we were not a Foundation Trust we could set up services that have private patient income, but because we are a Foundation Trust we cannot. I have worked in the NHS for 27 years and I agree with all the principles about care being free at the point of delivery, but I know from all the work we have recently been doing with employers, that the support we could provide to employers about getting people back into work and retaining people in work and getting income from them would meet some of the Government's policies around keeping people in work and recovery, we cannot take forward because it would count as private income at the moment. There are other things around psychological therapies where we could set up units with free access for people on the NHS but we could part fund it by having private patients; we are not in a position to do that. I think it is actually inhibiting us from taking forward some key policies but also getting income to improve other NHS care.

  Q87  Dr Naysmith: You have raised a very interesting point there which is not really a part of this inquiry but can I just ask you about it? There are known to be, all over the country, long waiting lists or longer lists than there should be for psychological therapy. If this problem you are describing could be solved would it help to make psychology more available?

  Mr Firn: I think it would be one part of the jigsaw, yes.

  Q88  Dr Naysmith: Bill, returning to joint ventures with the private sector is something that is suggested will increase NHS efficiency (and it probably will). Will Foundation Trusts' capacity to enter such arrangements be restricted by some of the things we have been talking about and would this not be a failure to ensure a level playing field for the National Health Service and for Foundation Trusts and for private providers?

  Dr Moyes: Depending on the consultation and depending on whether the judicial review proceeds to a hearing, and depending on whether or not the outcome of that is that our roles are supported or overturned in the court, we could find that there are circumstances in which joint ventures and other types of cooperation between the Foundation Trusts and the private sector are inhibited. It is very hard to answer the question at the moment, I am afraid, until we get to the point where either the judicial review has come to a conclusion or something else has happened. I am speculating really.

  Q89  Dr Naysmith: Richard, much has been made of the new autonomy that is granted to Foundation Trusts. What is different now you are a Foundation Trust? There are obviously quite a few difference, but what are the main ones?

  Mr Gregory: I think, as I said earlier, the ability to try to shape your own future, to prioritise and the speed of decision making.

  Q90  Dr Naysmith: Some people would argue that that could have happened before, prioritisation and speed of decision making.

  Mr Gregory: When I joined back in 2006 one of the first major items on the board agenda was the business plan for the new children's development that we are building in Chesterfield, bringing services that are currently delivered in rather dilapidated buildings in the town centre onto the site of the Royal (which is a large site) and having an integrated set of services and an improvement to those services. We had the board meeting and I noticed after we gave the business plan approval the chief executive and the financial director and a few others were smiling at each other. I asked what I was missing and they said, "You don't realise, Richard, but what we have just done in two months would have taken at least two years to achieve before".

  Q91  Dr Naysmith: What was it specifically about the Foundation Trust that enabled that to happen?

  Mr Gregory: We could make the decisions. We did not need to bid into a central pot. We had the resource, we put forward a proper analysis on clinical and financial criteria and we debated it rigorously and we decided to approve it. We did that within our own boardroom; it took as long as the process took which was probably less than two months actually. Apparently these things took an awful lot longer before.

  Q92  Dr Naysmith: Stephen, what have you done that you could not have done before?

  Mr Firn: I think there are a couple of examples, first around money and then around the work with governors. We are a Mental Health Trust, as I alluded to before and do not have a tariff, we just have block contracts. Prior to being a Foundation Trust there was no incentive to make or declare a surplus because we were essentially given a block of money on the first of April and you were expected to have spent it all by 31 March otherwise the risk—and often the reality—was that any left over was used to cover problems elsewhere in the health economy. Now that there is a recognition that if we work with commissioners and work with our commissioners to generate a surplus and we can carry that over and invest it in ways that are agreed with governors and commissioners that has made a huge difference. This year, as I have alluded to, we have put part of it into developing a personality disorder day hospital which is part funded by commissioners but part funded out of our surplus. That would not have happened; we would not have been able to do that. We have increased the level of psychological therapies through funding through our surplus because this is what governors said was the highest priority amongst local people. That has been a big difference and, as I said before, we have set up something called an opportunity fund where any of our clinicians can now say, "I can see a good service that we could develop; if you can give us non-recurrent funding we can demonstrate that it works to commissioners and then hopefully they will pick up the funding". We can get that approved within a month. The example last month were some commissioners from our child and adolescent mental health service who wanted to develop a service in a number of schools providing advice and education and counselling to young people. We were able to fund that. Already one of the schools has said that they will pick up the funding in the future. In that sense we are much more able to look at the money we have, work with clinicians and work with commissioners to re-invest it in a way that we were not able to before. The other big difference is the governors. As a Mental Health Trust we have often been used to involving users in care and having things like user councils that we have had for many years, but actually the Council of Governors which has 12 elected members of the public, 12 elected patients and six elected members of staff really are now holding us to account and making us focus much more on patient quality, sitting in on serious incident investigations and being part of those panels, and they are coming to our board strategy days to help us plan the future and approve our plans. That really has shifted our focus onto what are the local needs, to look outwards rather than look upwards. If I give one further example around the governors, we appointed onto the Council of Governors people from partner organisations who had not really been involved with us before, so representatives say from JobCentre Plus, from the Chamber of Commerce and through those new links we have been able to do things like set up employment schemes where we have been able to get our service users into jobs and supported, we have a lot of events with local employers showing how we can support them to employ our staff, and we have set up a partnership with Charlton Athletic where they have had us on the pitch giving messages about mental health. I could go on, but I think those are the two big things: the flexibility around the money and being able to invest it locally, and the work with the Council of Governors.

  Q93  Dr Naysmith: Playing the devil's advocate, an awful lot of what you have said about the governors helping you to make contacts in the local community could have been done before through things like Community Health Councils and the new Links organisation. Or is that just not feasible?

  Mr Firn: I do not think we would have been able to do all this within the last two years. I think the fact that if you ask somebody to be a governor you are asking them to give up a certain amount of time but you are also asking them to carry out a very important job (appointing non-executive directors, approving annual plans, holding me and the organisation accountable for our performance) and when people come onto that Council of Governors it gives them an investment that they want to see something coming out of and being involved. It does open up those new links and opportunities. For Charlton Athletic, for example, one of their footballers was the first member; he signed on the football pitch and that was the kick start to a lot of other things we have done. That would not have happened if we had just gone and knocked on the door and said, "We're your local Mental Health Trust; we would like to work with you". It gives you levers that you do not have otherwise.

  Q94  Dr Naysmith: You are obviously very enthusiastic about this?

  Mr Firn: Yes.

  Q95 Dr Naysmith: Finally, Bill, on this autonomy section you have had a rather well-publicised discussion about autonomy, particularly over MRSA. Is this an area that you think has now been solved and resolved or is it still lingering around?

  Dr Moyes: I am not going to say that it will never happen again in the sense that the issue will never come up again. We underestimate the scale of change moving to Foundation Trusts. The Department, for 60 years, has seen itself in essence as corporate headquarters of a corporate hospital system and with Foundation Trusts they are no longer in that position, whereas they are the headquarters of a commissioning system. The issue that David and I were debating—I think it is a debate amongst people who are trying to make this happen rather than a personal difficulty between us—was: how can the Government express absolutely legitimate points of view from ministers saying that they are worried about cleanliness in hospitals and what is being done about it? But how can ministers convey the desire to see something done through commissioning rather than through issuing operational instructions to hospitals? That is the issue I was really opening up with David, that we have to try to find a way to use commissioning, the power of commissioning and the language of commissioning to convey legitimate political aspirations rather than revert to saying that the secretary of state wishes this to be done. That is a huge change and I suspect we will still uncover examples in the future where we have to round that territory again and work out how we could have done it better. It is not in any sense a running dispute; it is something that he and the permanent secretary and I have talked about and I think we are pretty clear that this is an important issue that has to be tackled.

  Q96  Dr Naysmith: Have you managed to get the MRSA issue into commissioning to your satisfaction?

  Dr Moyes: No, I do not think I do see it as being in commissioning to my satisfaction. It still remains in the Foundation Trusts an issue that was largely being dealt with through regulation, through our compliance system rather than through discussions between commissioners and suppliers. My aspiration for the future for C.difficile, for example, would be that much of the discussion about whether C.difficile performance has been delivered or not will be between the commissioners and the Foundation Trusts and that we will only get involved in the most extreme cases of difficulty.

  Q97  Sandra Gidley: Going back to innovation, the recent HCC/Audit Commission report concluded that "On a national level ... Foundation Trust status does not yet seem to be empowering organisations to deliver innovative models of patient care". I have to say that in the submissions received there did not seem to be any specific examples of improvements in patient care, so I just wondered whether Richard or Stephen might be able to put some meat on the bones really.

  Mr Gregory: I think we are now at the point in time after the Darzi report and the discussions about how Foundation Trusts can engage with their commissioners not simply in terms of negotiating the traditional bones of the activity and payment structure, but in actual fact trying to reshape services to improve them for the benefit of the patients in the local community. Those challenges that were laid out a few days ago will enable Foundation Trusts and commissioners, hopefully, to engage in some innovation. At the moment our innovative capability and capacity from where I sit is constrained by the quality of the contract and by the quality of the dialogue between the commissioner and the provider. That needs to be opened up and one of my personal concerns and priorities is that we need to escape our organisational barriers here and engage intelligently over and above the contract negotiation in terms of delivering change to the benefit of the patient.

  Q98  Sandra Gidley: Surely you did not have to wait for Darzi.

  Mr Gregory: I have not seen much evidence of an enabling framework for us to be able to do that from my perspective.

  Q99  Sandra Gidley: So this sentence in your submission when it says that this is what you have achieved, "an altering vehicle model, goes everywhere, does everything, unrestricted by the usual boundaries" is not true because you have just mentioned boundaries that are in place.

  Mr Gregory: I think there is a boundary. Yes, it is an exaggeration if you take that literally. I think that we have got the ability to deliver that; I think we have got the ability to be very flexible and innovative in the future, but we do need the right conditions. It is not simply about the contract, it is about the key individuals, it is the relationships. For example, yesterday we had a Council of Governors meeting at Chesterfield and we had the chairman, the chief executive and the director of corporate strategy from our PCT—Derbyshire County PCT—to actually present the Derbyshire vision following the Darzi work streams. We asked and they agreed for the implementation issues and the questions in those implementation issues to be consulted upon by 12,000 public members. We are beginning now to see evidence of like minded individuals in both camps actually putting their heads together to try to achieve this. The real trick is to enable the clinicians and the patients through their public elected members, the governors, to exert some leverage on that process. I am not unhopeful that we can deliver innovation; I would like to deliver innovation and I think we are at an interesting moment in time now.

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