Sustainability and transformation plans for the NHS in England: radical or wishful thinking?BMJ 2017; 356 doi: https://doi.org/10.1136/bmj.j1043 (Published 01 March 2017) Cite this as: BMJ 2017;356:j1043
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Most Sustainability and Transformation Plans (STPs) will include geographically determined place based solutions and possibly the eventual development of accountable care organisations or systems. The idea is to improve the unsustainable financial challenge and hospitals which are a major area of NHS spending are naturally required to play a major part in any such transformation plan. Within this context hospitals are expected to collaborate in a way that has not been encouraged in the past.
A number of hospital mergers are envisaged in the 44 STPs for English regions. Mergers and acquisitions (M&A) may again become the buzzword in the NHS. Evidence of real value creation with mergers in the NHS has not been available in the past (1). The Kings Fund had specifically advised NHS Leadership against such mergers as a response to failure in merging organisations. Most of these NHS mergers involved acute Trusts. That is why; if these mergers are packaged as part of the STPs they need to be thoroughly examined.
One such merger, that is now almost a fait accompli in Cambridgeshire, is the acquisition of Hinchingbrooke Health care NHS Trust by Peterborough Health Care NHS Foundation Trust. The new merged organisation will be the North West Anglia NHS Foundation Trust. The reason quoted for such an NHS merger is the possibility of synergistic gains resulting in cost reduction. Such gains are achievable from greater economies of scale in the new organisation and getting rid of inefficient management systems bedevilling the older organisations. Another reason may be better utilisation of complementary resources if possible. In actual practice these gains are often rarely achieved even in the private sector, where organisational cultures between merging organisations may be better aligned. In the private sector, mergers between equivalent organisations are only conducted if the process results in some net gain, usually estimated by a positive net present value (NPV). Mergers therefore should only be undertaken for the right reasons.
Mergers tend to happen in waves in an industry whether public or private. Often M&A activity reflects the external business environment. Mergers in such circumstances do not always yield the benefits because the reasons may be only to balance the bottom line and not essentially to add value. NHS mergers may also be very similar and Ben Collins in the King Fund Report lists such external factors like funding, along with poor leadership incapable of improving productivity and historic factors from past investments of the organisations. In the private sector, such mergers only generate benefits if there is substantial reduction in overheads with corporate redundancies. Another lesson to remember is that horizontal mergers of indebted and loss making organisations also does not work unless savings are made by offloading inefficient capital and human assets. This may be very difficult in the NHS because closure of hospitals is resisted by the public and decreasing the number of doctors may be linked with increased mortality (2). This is why it is important to look at the reasons for such hospital restructuring processes in the first place. In industries which have excess capacity consolidation and downsizing is a good idea. However does that apply to the current trend towards restructuring of hospitals? NHS Hospitals have been downsizing with reduction of bed numbers for some time now. The NHSE has now called for a pause in further bed reduction unless absolutely necessary (3).
One basic premise behind the STPs is based on the thinking that some smaller hospitals may have become obsolete for many current health care problems. Hospitals were developed as a solution for a problem of providing episodic care which has been overtaken by the need to care for long term conditions and an increasingly ageing population. Hospitals in the NHS are also deemed to be very costly to run. The obvious solution for managing long term conditions lies in dealing with them in the communities themselves. The King’s Fund-See Saw Report however never claimed that care closer to home necessarily made a good clinical or economic sense (4). Moving care out of hospitals may not always be cost effective (5 ) and some randomized controlled trials of care of the elderly moved out of acute hospital settings has suggested this already (6). However in a more patient-centred model it can be argued that hospitals were designed for the ease of the healthcare profession rather than the patients themselves. Hospitals may also be deemed to be repositories of multi drug resistant infectious agents like MRSA and Clostridium Difficile and therefore to be avoided. Lesser exposure of patients to the hospital environment is therefore preferable. In this vein, reduction in numbers of beds and the length of stay (LOS) in hospitals is to be encouraged. However, this still does not do away with the need for hospital based care for patients who need this. Hospital closure or downsizing is often strongly resisted by public opinion (7).
The proposed North West Anglia NHS FT in Cambridgeshire is already quite lean in number of beds and LOS and therefore proposed cost savings are unlikely to be achieved by further reductions in these areas. Hinchingbrooke Health Care NHS Trust as a small DGH is not a stranger to such radical transformations. It was the first acute NHS Hospital to be managed by the first private sector operated NHS franchise which ended on 9th January 2015 (8). Whatever the reasons which led to the failure of that experiment, one fact was crystal clear. The current zeitgeist of health care is generally unhelpful for the survival of small DGHs. The proposed NWA NHS FT may be a harbinger of a new wave of horizontal mergers of similar debt ridden hospital service providers in other parts of England. The overall state of most NHS Hospitals is also not very impressive (9).
Disruptive change is therefore certainly on the cards in the present financial environment. However this should be meaningful disruptive change and not repeating mistakes of the past.
Schumpeter described creative destruction as the natural mechanism of bringing about innovative change in industry. In the private sector such change is incentivized with bigger returns on investment for the entrepreneur to take up this risk. Traditional NHS leadership does not allow a true entrepreneurial environment. It is of course possible to achieve the necessary cost savings and increase productivity by a strong resolve on the part of NHS leadership. NHS Leadership will also have to be more inclusive and less self-preserving in order to genuinely implement innovative models of health care delivery as planned in the STPs.
Kieran Walshe (10) has rightly pointed out that STPs should be properly funded but he also believes that the NHS leadership has done its bit by mapping out a sustainability transformation plan. This is not enough. NHS leadership is also responsible for the appropriate disbursement of any strategic funds for the implementation of STPs. It is necessary that these strategic transformation funds are not gobbled up by initiatives which may not really promote the wider sustainable transformation. A true case for a merger is therefore necessary and must be closely scrutinised as suggested by the Kings Fund Report (1) to ensure that it is really adding value. Only clear and robust financial modelling can help achieve the gains from the 44 STPs.
1) Foundation trust and NHS trust mergers 2010-2015 Kings Fund Sept 2015 Ben Collins
2) NHS trusts record 15,000 excess deaths BBC Health 9th March 2017
3) Hospitals must prove beds aren’t needed before closing them, says NHS England BMJ 2017;356:j1152
4) SHIFTING THE BALANCE OF HEALTH CARE TO LOCAL SETTINGS - The See Saw Report Kings Fund 2008 Sarah Harvey and Laurie McMahon
5) Moving care out of hospital is unlikely to save money, new analysis finds BMJ 2017;356:j1046
6) A cost effectiveness analysis within a randomised controlled trial of post-acute care of older people in a community hospital BMJ, doi:10.1136/bmj.38887.558576.7C 27 July 2006
7) BBC News UK 4th March 2017 NHS protest: Tens of thousands march against 'hospital cuts
8) Circle ends NHS Hospital deal amid losses and criticism
9) THE STATE OF THE NHS PROVIDER SECTOR NOVEMBER 2016 NHS Providers
10) STPs for the NHS in England: radical or wishful thinking?BMJ2017;356:1043
Competing interests: Consultant Anaesthetist and LNC Chair at Hinchingbrooke Health Care NHS Trust Secondary Care Board Member WFCCG and NCCG
Dear Kieran, well said. But it is not just more transformation funding that is needed: we also need good leaders to deliver the plan. The sad reality is the NHS always had plans and the NHS is full of inquests, enquiries and action plans but implementation has been the problem.
We had Mid-Stafford, Francis I then Francis II and then Kirkup and now Kirkup II is about to start. All of them have worked hard and given excellent recommendations (most of them) but then comes the problem of implementing them and it is because the NHS lacks transformational leaders. The NHS does have some very good leaders and it is they who give me and the the NHS real hope.
In Wigan, we reduced harm to patients by 90% in just 8 years and we received 46 awards, and for staff happiness we have improved from being in the bottom 20% to the third best place to work in the country! We are not perfect and there is still lot more to do but transformation has been spectacular.
A leader's job is to create a fantastic team of people and support them to do a good job and make sure they do a good job by robust and excellent performance management system and if they fail support them to improve and if they still fail then you have to get rid of them and appoint someone else! This last part is missing in our NHS!
In the NHS anyone who fails is left to fester or we move on! If they are doctors, they harm many patients and if they are leaders they harm many patients and sadly many staff suffer as well.
Yes, 5 years plan, Vanguard, Devomanc are all the right things to do but just giving more money on its own will not sort out any problems. But appointing right leaders, good use of IT, stopping working in silos and compete transformation of health and social care together by robust staff and patient engagement.
If anyone thinks giving more money will transform our NHS or social care then they are mistaken. Accountability for leaders and managers and also good governance is what is missing from our wonderful NHS and social care.
Competing interests: No competing interests