Select Committee on Health Sixth Report

Conclusions and recommendations

1.  FTs have shown good financial performance; according to the Healthcare Commission and Audit Commission they are delivering more care and may be doing so more efficiently. FTs have generated cash surpluses to the order of £1.7 billion. It is not possible to conclude, however, whether this is largely attributable to the introduction of the FT system with its new flexibilities and rigorous financial monitoring, or whether it is simply the continuation of long-term trends amongst high-performing trusts in a Payment by Results system. (Paragraph 22)

2.  We were told that FTs are holding back both from investing their surpluses and from making full use of their borrowing powers because of a lack of direction from commissioners. (Paragraph 23)

3.  A further difficulty is that the private sector cap for mental health FTs currently set at zero. We have not examined the relationship between NHS FTs and the private sector in depth in this inquiry. However, it seems inequitable that mental health trusts should not have the same freedoms as other trusts, and we recommend that the Government reconsider this policy. (Paragraph 24)

4.  FTs are generally high performers in routine NHS process quality measures. However, despite the fact that they are widely believed to be a high performing elite, the performance of some FTs has fallen, and a small number are amongst the worst performers for some measures. A significant minority also fall within the 'amber' or 'red' categories on Monitor's governance ratings, with some showing no improvement across a whole financial year. This suggests that FTs can afford no complacency about the quality of services. (Paragraph 32)

5.  We commend the Department of Health for piloting a scheme to reward trusts financially for delivering a quality of service beyond the minimum contracted levels. We recommend that such schemes should be extended and conversely schemes to punish low quality care as evidenced by unacceptable complaints from patients or their relatives should be considered. (Paragraph 33)

6.  Freedom for the NHS to develop innovative models of care unencumbered by bureaucracy was widely seen to be one of the chief attractions of FT status; however while we have seen some examples of innovative practice, there seems to be little robust evidence to suggest FTs are using their new status to innovate in a significant way. Some witnesses thought it was too soon for FTs to be expected to be generating major innovations when they were still concentrating on achieving and maintaining financial stability; others considered that FTs' ability to innovate was being constrained by commissioners. (Paragraph 43)

7.  We were surprised and concerned that no organisation seems to have a clear remit to assess objectively whether or not FTs are becoming more innovative, which makes it difficult to evaluate whether or not there are sufficient incentives for FTs to innovate. Given that innovation is meant to be an important part of the 'value added' by FT status, and given the potential benefits to the rest of the NHS from sharing best practice, the Government should commission objective evaluation in this area. (Paragraph 44)

8.  While we saw some examples of good practice in FTs' new governance arrangements, in general they seem to be slow to deliver benefits and despite numerous small studies, there remains a lack of robust evidence of their effectiveness. The governance process currently costs circa £200,000 per trust, giving a total of around £20 million per annum. We recommend that the Department of Health make it a priority to evaluate rigorously the FT governance system and to give guidance on best practice so that public money as well as members' and governors' time can be used as effectively as possible to improve services. (Paragraph 60)

9.  We are also surprised and concerned that Monitor did not issue guidance to governors until shortly before our evidence session took place, despite several reports over the last five years having identified the need for this, starting with the Health Committee which recommended the establishment of a national training system for Governors as long ago as 2003. (Paragraph 61)

10.  In considering the impact of FT status on FTs themselves, a recurring theme has been a lack of firm evidence that FT status is yet conferring the benefits hoped for. While it is clear that the majority of FTs are high performers in terms of finance and quality as measured by Healthcare Commission ratings, these were high-performing organisations prior to becoming FTs, and so it is difficult to ascribe this high performance to FT status per se. Two other major aims were to give trusts the freedom to invest in innovation and to promote better local engagement with the public and other health providers through new governance systems. Evidence of benefit on both of these scores is also thin. Systematic and independent evaluation is needed. The Department of Health should make it a priority to commission research to measure FTs' progress objectively, and to disseminate their successes more widely. (Paragraph 62)

11.  Before their establishment a number of fears were voiced about the impact FTs might have on wider health communities. There is little evidence that FTs have poached staff from other trusts. Evidence from Dr Mark Exworthy and the Healthcare Commission suggests that in local health communities where collaborative working has historically been good this has continued to be the case; Dr Exworthy did suggest that in other areas the presence of FTs may be generating tensions and resentment. However, others felt that tensions exist between high-performing and less well performing trusts regardless of their status because of the system of Payment by Results. (Paragraph 69)

12.  The ability to retain surpluses was a key element of the FT reform, and FTs are now building up surpluses. FTs report that they are looking to PCT commissioners to collaborate on how these surpluses should be reinvested to improve patient care, but that PCTs are not in a position to give this guidance. We did not see any evidence that PCTs are thinking strategically about how FT surpluses might best be reinvested in their local health communities, a situation which we find extremely worrying. We recommend that the Department of Health takes steps to ensure that PCTs are able to play the strategic planning role urgently required of them; without this, public money risks sitting idle or being invested without proper strategic planning. (Paragraph 79)

13.  A major concern at the inception of FTs was that they, together with Payment by Results, would strengthen the acute sector to the detriment of primary care services. This seems to be the case, although it is probably more because of introduction of Payment by Results than the introduction of FTs. By this stage we might have hoped for better collaboration within health economies, particularly with a view to providing more care in the community. Mental health provides an interesting contrast: mental health FTs, which are not subject to the Payment by Results regime, argue that they have a strong incentive to get more patients treated in the community in order to generate surpluses. This Committee is very concerned that PbR is to be extended to mental health and community care in the next two years. We recommend that the Government address this issue. (Paragraph 86)

14.  Weakness in PCTs' commissioning was cited by witnesses to this inquiry as the cause of many perceived problems relating to FT status, including FTs not investing their surpluses, FTs not being able to innovate, and the lack of shift to primary care. We note that the Government is now developing a specific support package to enable PCTs to become 'world class' commissioning organisations; however in our view focusing on provider side reforms, including payment by results and the introduction of FTs, before PCTs were ready to meet the challenges set before them was ill-judged. (Paragraph 94)

15.  As part of its 'World Class Commissioning' initiative, we recommend that the Government sharpens incentives for acute trusts to ensure they are fully engaged in keeping people who could be treated in the community out of hospitals. One option would be further adjustment of the two part tariff for emergency care, thereby increasing incentives to commissioners and providers to develop more rapidly alternatives to hospital care. (Paragraph 95)

16.  While FTs do not appear to have yet exploited the full potential of their autonomy, witnesses from FTs told us they were free to make decisions more quickly, and that there was a 'tangible' difference to the dynamic of their organisations, which we welcome. FTs' use of their autonomy should be included in the evaluation of FTs' progress which we have recommended that the Government commissions. (Paragraph 102)

17.  The recent disagreement between Monitor and the Department of Health suggests that boundaries are still being negotiated between the Department of Health and Monitor about what level of government intervention in FTs' affairs is legitimate. The Government should take steps to clarify this. (Paragraph 103)

18.  The FT application process and regulatory regime seems to be well regarded, but concerns have been expressed about the availability of information on FTs for the purposes of public scrutiny and research. There also seems to be potential duplication between Monitor and the Healthcare Commission in terms of regulating quality, and the regulatory landscape will soon be further complicated with the addition of a new body, the Competition and Collaboration Commission. (Paragraph 111)

19.  FTs have some proven strengths, but much is unknown. In general, robust evidence is lacking. It is not clear whether their high performance in terms of finance and quality is the result of their changed status, or simply a continuation of long term trends, since the best trusts have become FTs. Key aims of FTs were the promotion of innovation and greater public involvement, but, again, there is a lack of objective evidence about what improvements, if any, FTs have produced. (Paragraph 112)

20.  The lack of objective evidence about, and evaluation of, FTs' performance is surprising given the importance of this policy. With over half of NHS trusts now FTs, the time is right to begin systematic and independent evaluation. The Department of Health should, as a priority, commission research to assess FTs' performance objectively. This will require access to FT data. Researchers have found it difficult to access such data. This should be centrally collected by Monitor and published. (Paragraph 113)

21.  It seems that many fears about FTs' impact on local health economies have not been borne out; however, they have made little contribution towards the government's aim of delivering more NHS care outside hospitals with the interesting exception of mental health trusts. This is not solely attributable to FTs themselves; rather it is a consequence of payment by results and inadequate collaboration between PCTs and FTs, notably their failure to reduce emergency admissions to hospitals. (Paragraph 114)

22.  In this inquiry the deficiencies of PCTs were also seen as contributing to other failings. In particular, FTs' slowness to innovate and invest was seen as a failure on the part of PCTs to provide strategic guidance. The Government is clearly aware of these deficiencies and has announced plans to strengthen PCTs' commissioning skills through its World Class Commissioning programme; however, it is unfortunate that this has come after the establishment of FTs and not before. (Paragraph 115)

23.  A major advantage of FT status is the autonomy it gives trusts. While FTs do not appear to have yet exploited the full potential of their autonomy, witnesses from FTs argued that the ability to make decisions more quickly was important and made a 'tangible' difference to the dynamic of their organisations, which we welcome. Unfortunately, there are persisting concerns about what level of government intervention in FTs' affairs is legitimate. We recommend that the Government clarify what the appropriate levels of intervention are. (Paragraph 116)

24.  FTs' use of their autonomy and the relationship between FTs, their regulator, and Government should be included in the Department of Health's evaluation of FTs' progress which we have recommend above. (Paragraph 117)

25.  Monitor's application process and regulatory regime seems to be well regarded. However, a complex regulatory environment of other organisations also surrounds FTs, and in particular there is potential duplication between the Healthcare Commission and Monitor both of which evaluate the quality of FTs' services. (Paragraph 118)

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 17 October 2008