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)
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