Article with Mo Girach and Michael Sobanja

1. Building new mutuals from the foundation trusts?
Mo Girach, Geraint Day and Michael Sobanja
In June this year the NHS Alliance injected new life into the debate on
accountability within the NHS. Working with several other organisations it
published Whose NHS Is it Anyway?1 The document encapsulated the fruits
of some work begun in 2008.
That report drew together a number of proposals to enhance accountability of
NHS organisations. The main themes were:
1. more shared decisions in the consulting room;
2. GP surgeries to be more responsive to their local populations;
3. more responsive and accountable commissioning of services;
4. a stronger push at national level to share power with patients and
citizens;
5. exploring co-production of services.
The principles behind its recommendations are generally applicable to the
NHS across the UK but we shall focus here on the current UK Government
policy agenda that relates to the NHS in England, given the UK's devolution of
healthcare responsibilities.
“We need a system that sees patients and communities as assets, trusts its
users and commits to cooperative working across communities. We want
structures that enhance the great potential of human association and
collective action”, stated Whose NHS Is It Anyway?2 It went on to recommend
that commissioner boards be elected, and that there be, for Practice Based
Commissioners (PBCs) “elected boards to work with the clinicians to run the
PBC group, along the lines of parent governors in schools”.3
A move towards involving local people and health professionals took place
when NHS foundation trusts were created in England, but not across the
health economy as a whole. Some of us were actually surprised that the
foundation trust moves started at secondary care rather than primary care
level.
When foundation trusts were first being mooted by the UK Labour
Government, one of the strands of thinking borrowed from the experience of
the co-operative and mutual sectors:
“We will shortly be bringing forward legislation to establish NHS
Foundation Trusts as independent public interest organisations,
modelled on co-operative societies and mutual organisations. Their
ownership will be lodged in the local communities they serve. This form
of social ownership will replace central state ownership with local
ownership ... with power in the hands of local people and frontline NHS
staff. 4
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2. Wind the clock forward seven years or so, and we had this Department of
Health (DH) pronouncement under a Liberal Democrat Conservative Coalition
Government:
“We are committed to devolving power to local communities – to the
people, patients, GPs and councils who are best placed to determine
the nature of their local NHS services.”5
The Coalition’s programme for government contains this commitment:
“We will support the creation and expansion of mutuals, co-operatives,
charities and social enterprises, and enable these groups to have much
greater involvement in the running of public services.”6
When the then Secretary of State for Health, Alan Milburn, and his DH
advisers were drawing up plans for what became NHS foundation trusts, the
analogy with co-operatives and mutuals referred mainly to their governance.
How could the Labour Government achieve its aim of decreasing direct
management by Whitehall at the same time as increasing more local say and
influence into NHS organisations?
Foundation trusts were chosen to take forward that governance model and
were very large public bodies. They were existing acute secondary care trusts
(later to include mental health). The governance structure chosen, while
involving local community members, was not one of one-member, one-vote to
elect the foundation trust directors. It was a hybrid system whereby a board of
governors could appoint and remove the non-executive directors (NEDs) of
the trust. The board of governors was partly elected by constituencies made
up of the public and of trust staff, and partly appointed by external stakeholder
bodies. The governance model is a ‘mutistakeholder’ system. A tier of
accountability exists between local people and the foundation trust board of
directors. In some very large co-operatives there is a two-tier system whereby
geographically arranged groups of members elect members to a committee.
Membership of such committees is a prerequisite for being elected to the
board of directors. In many other large co-operatives there is, on the other
hand, direct election to the board of directors. There is no one-size fits all
model of governance.
For foundation trusts it is still early days. The first ten NHS foundation trusts
were authorised by Monitor (currently the NHS foundation trust regulator and
now intended to be the economic regulator for all providers of health and adult
social care services in England7) in April 2004, with a further ten following that
calendar year. There are currently 130 foundation trusts. 8 The Coalition
Government pledged in the Health White Paper issued in July 2010 to
accelerate the movement of all hospitals to foundation trust status9:
“Our ambition is to create the largest and most vibrant social enterprise
sector in the world. The Government’s intention is to free foundation
trusts from constraints they are under, in line with their original
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3. conception, so they can innovate to improve care for patients. In
future, they will be regulated in the same way as any other providers,
whether from the private or voluntary sector. Patients will be able to
choose care from the provider they think to be the best.”
That same paragraph in the White Paper refers to changes in the governance
and accountabilities of foundation trusts:
“As all NHS trusts become foundation trusts, staff will have an
opportunity to transform their organisations into employee-led social
enterprises that they themselves control, freeing them to use their front-
line experience to structure services around what works best for
patients. For many foundation trusts, a governance model involving
staff, the public and patients works well but we recognise that this may
not be the best model for all types of foundation trust, particularly
smaller organisations such as those providing community services. We
will consult on future requirements: we envisage that some foundation
trusts will be led only by employees; others will have wider
memberships. The benefits of this approach will be seen in high
productivity, greater innovation, better care and greater job satisfaction.
Foundation trusts will not be privatised.”9
A potential move to employee-led organisations was never the intention of the
Health and Social Care (Community Health and Standards Act) 2003 that
created foundation trusts. As mentioned earlier the governance model chosen
was one that involved several stakeholders, not only the employees. The
2010 White Paper commitment is, however, is in line with the idea set out
several weeks earlier by the UK Coalition Government to:
“...give public sector workers a new right to form employee-owned co-
operatives and bid to take over the services they deliver. This will
empower millions of public sector workers to become their own
boss and help them to deliver better services.”10
The DH has already released its consultation paper that contains proposals
for the future of NHS foundation trusts.11 That paper makes it clear that the
UK Government would like to see some foundation trusts having a
membership drawn entirely from their employees, perhaps particularly smaller
foundation trusts providing community services. 12 The DH also wants to
explore whether there could be increased employee influence within existing
foundation trusts, although it does also state that, “The Government has no
intention of requiring or encouraging any existing foundation trust to change
its governance model”. 13 The consultation paper also repeats the intention
that all NHS trusts would become foundation trusts within three years – and
that the ordinary, non-foundation, trust model would be abolished. So the only
game in town for NHS trust governance in England would be the foundation
trust model, however that be ultimately constituted in individual cases. Other
parts of the consultation document refer to financial freedoms from central
government, and to the aim of making Monitor both encourage competition in
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4. health and adult social service provision and apply the requirements of
competition law to all such services. The closing date for comments on the
governance and the other proposals is 11 October 2010.
The modern co-operative sector is the direct descendant of the Rochdale
Society of Equitable Pioneers, which began operating in Lancashire in 1844
(there were co-operatives before that, such as the Fenwick Weavers in
Scotland, dating from 1765). When one considers that the worldwide co-
operative movement did not come into existence fully fledged and with perfect
systems of member involvement in place, it is impressive that many
foundation trusts have taken significant steps in trying to involve people in
decision-making. That takes a lot of doing in a NHS culture where top-down
decision-making has been the norm since 1948.
As neither Rome nor the Rochdale inspired co-operative movement was built
in a day, there are still things that the NHS foundation trust sector can yet
learn. For example, and despite pretty high turnouts in elections for governors,
some trusts have a long way to go in engaging members meaningfully in truly
open governance. It was observed earlier this year that impediments can be
put in the way of foundation trust members engaging with governors, with 'no
way to contact individual governors outside of carefully-managed meetings
than to go through the “Governor-Coordinator”.'14
The two foundation trusts that one of the authors is a member of have had fits
and starts in communicating with their members. Although matters seem to
have improved, neither NHS foundation trust seems to want to share
proactively with its own membership some of the difficult issues that have
arisen (the sudden departure of the chief executive in one case, and a high-
profile health and safety prosecution in the other). Instead, there is a tendency
to only communicate ‘good news’ stories through communications aimed at
members. There is nothing wrong with having good news, of course
(especially in the NHS) but there are lessons to be learned about openness.
Even the best-run co-operatives and mutuals can have problems. Think of
Equitable Life, in the case of mutuals (not to mention Northern Rock and RBS
in the purely private sector). Attempting to shun away from or even hide big
problems does not always benefit users. We suggest that it does the opposite.
The NEDs of foundation trusts are still one tier removed from those with votes.
Coupled with lack of member engagement in some foundation trusts, that can
engender feelings of a democratic deficit. Of course, given that no other form
of NHS organisation (in the UK, not just in England) has direct elections, one
is comparing foundation trusts (with an average election turnout of 26% in the
period 1 April 2008 to 31 March 2009 15) with the rest of the NHS, where not
one person has a vote other than via a General Election.
Despite board, governor and staff’s best efforts, it can be argued that the
public is still largely excluded from the big decisions that NHS foundation
trusts take day in, day out. These account for large sums of public money. And
of course the public is still currently largely excluded from commissioning.
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5. Ideally more open governance and public involvement should apply across
the whole health economy, not just one part of it.
There was a feeling around at the inception of NHS foundation trusts, that
‘trust’ of the public was a long way from the deliberations of at least some of
the DH policy makers. The two-tier governance structure has already been
mentioned. But why not have public elections for NEDs on foundation trust
boards, not just for the governors? Many large co-operatives – comparable in
employment numbers and financial turnover with foundation trusts – do just
that.
An earlier intention of the Coalition Government to have direct elections to
Primary Care Trust (PCT) boards has been eclipsed by the announcement
that the Government wants to phase out PCTs by 2013.16 Yet we maintain that
the idea of having direct elections to the boards of NHS bodies is still a good
one.
We contend that opening up and involving local people through such elections
in foundation trusts should deliver better accountability. The whole ethos of
public accountability – and that of the Coalition theme of the ‘Big Society’17
ought to be about allowing the public to have a real say. It needs to be
realised that the NHS is usually dealing with responsible and sensible adults –
they should be directly involved in spending decisions, rationing decisions,and
the other essential aspects of delivery of effective and efficient health care by
NHS foundation trusts. Incorporating democratic structures into healthcare
providers and not on commissioning boards has the potential to confuse – or
at least heavily dilute – accountabilities. If foundation trusts are meant to
concentrate on one aspect of the “how” and commissioners on the “what”,
there is surely a strong case that community involvement in commissioning is
even more important than in the operation of providers. There does need to
be close scrutiny of the proposed accountabilities being proposed for
foundation trusts in future, however. That is the nub of Whose NHS Is It
Anyway?
The Government wants to transfer some of the functions of PCTs (for health
improvement) to local authorities. 18 If direct elections are alright for the
councillors overseeing the operations of local authorities, which may dispense
tens of millions of pounds of public money, why not for comparably sized
bodies which happen to be in the NHS? As we have already said, many co-
operatives practise one-member, one vote to elect their NEDs. The public’s
voice should be heard and more importantly, to be listened to at the
heart of the decision-making process. So why not through the ballot box?
To be sure, involving the public in this way would be a challenge. But in order
to make the board truly accountable to the public and to society it is a
necessary step:
“For the first time since 1948 the NHS will begin to move away from a
monolithic centralised system towards greater local accountability and
greater local control.”19
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6. The above are not the words of Andrew Lansley but the words of Alan Milburn
from 2002 in support of foundation trusts.
Tough decisions are undoubtedly ahead for local NHS systems (across the
UK as a whole, not only in England). This will make the need to address the
disconnection that many people feel about NHS decision-making even more
important to address. If done properly and with determination it could well
create a real sense of public ownership by local communities. Of course other
powers and freedoms for foundation trusts need also to be looked at seriously.
These include rate relief, taxation of revenue, the costs of complying and
compulsory competitive tendency and how a new improved mutual can raise
cost and risks.
The time is right to think how foundation trusts could be freed of the vestiges
of state micromanagement, by devolving power to local people. Not only is
that central to any debate about the Big Society, but should be a golden
opportunity for co-operative and mutual values to be placed at the heart of our
public services in practice.
Yet beyond this, even, more is required than than extending the public's right
to join and vote. A wholesale culture change is required to bring about more
responsive, publicly accountable and indeed efficient health services. Some of
the longstanding co-operatives and building societies learned from experience
that having thousands of inert members was not enough. Several in recent
years set about deliberately recruiting new members, and giving them
opportunities to actually creating more challenges to boards and management.
That is not always a comfortable process for those who hold the reins of
power. Yet it has not only led to greater involvement in some cases, but also
better performance as an enterprise. Some foundation trusts have tried to
learn from those experiences but more meaningful progression across the
NHS as a whole will require even more sustained commitment. Changing
culture was mentioned earlier. It is not an easy process in any organisation,
and many parts of the NHS still have a long way to go. We fully concur with
this message from Whose NHS Is It Anyway?:
“Further progress is essential if we are to have a first class service.
Greater involvement is an important way of improving quality and
safety, trust and confidence and public health. It can also help reduce
costs, essential for the next few years.20
We are convinced that such an approach is needed to help ensure that the
equity and excellence aspirations of the 2010 Health White Paper are fulfilled.
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7. 1
NHS Alliance with the support of Arthritis Care, National Voices, National Association for
Patient Participation, Patient Information Forum, African HIV Policy Network, Diabetes UK
and the National Association of LINks Members (NALM), Whose NHS is it Anyway? Sharing
Power with Patients and the Public, June 2010. It may be found at
www.pals.nhs.uk/cmsContentView.aspx?ItemId=2091.
2
Ibid., p 5.
3
Ibid., p 9.
4
Department of Health (DH), A Guide to NHS Foundation Trusts, London, December 2002, p
3.
5
‘Health secretary outlines vision for locally led NHS service changes’, DH news release, 21
May 2010.
6
Cabinet Office, The Coalition: our programme for government, Section 27, p 29, London,
May 2010, . It may be found at: www.hmg.gov.uk/programmeforgovernment. Extracts quoted
here are Crown Copyright.
7
Equity and excellence: Liberating the NHS, DH, Cm 7881, TSO (The Stationery Office),
Norwich, July 2010 p 36, para. 4.23. See
www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/@ps/documents/digitala
sset/dh_117352.pdf. Extracts quoted are Crown Copyright.
8
Monitor website consulted on 17 June 2010: www.monitor-nhsft.gov.uk.
9
Equity and excellence: Liberating the NHS,p 36, para. 4.21.
10
The Coalition: our programme for government, Section 27, p 29.
11
Liberating the NHS: Regulating healthcare providers, DH, London, 26 July 2010:
www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/
dh_117842.pdf.
12
Ibid., p 3, para. 2.3.
13
Ibid.., p 7, para. 2.16.
14
Andrew Pope, 'Hype versus reality: foundation trusts and mutuals”, Progressonline, 3
March 2010. At www.progressives.org.uk/articles/article.asp?a=5480.
15
Monitor, ‘2009-10 review of NHS foundation trusts’ three-year plans’: www.monitor-
nhsft.gov.uk/home/our-publications/browse-category/reports-nhs-foundation-trusts/reviews-
nhs-foundation-trusts-an-4.
16
Equity and excellence: Liberating the NHS, p 34, para. 4.16.
17
Cabinet Office, ‘Building the Big Society’: www.cabinetoffice.gov.uk/media/407789/building-
big-society.pdf.
18
Equity and excellence: Liberating the NHS, p 34, para. 4.16.
19
DH, A Guide to NHS Foundation Trusts, London, December 2002, p 4
20
Whose NHS Is It Anyway?, p 2.
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