Big Tent

Give failing NHS Trusts freedom to innovate

BY Emily Barley   /  12 September 2017

Unless you’ve been living under a rock you will know that the NHS is in crisis – a continual crisis. Some people say the solution to this crisis is clear: spend more money. But year after year the government does spend more money on the NHS, and it’s never enough. At the same time, we see wide variation in the quality of care available across the country which is not based on budgets, but rather on how budgets and services are managed.

I believe that in order for healthcare in this country to adapt to changing demands, it needs to innovate. But with so much controlled from Westminster – and the devolved governments – NHS Trusts have very little freedom to do anything new. All of their main variables, including the largest cost and greatest source of income, are decided for them.

My idea is to stimulate innovative solutions to the problems in NHS hospitals by liberating certain Trusts from some of that central control. Safety and quality standards must remain, but there are other restrictions that could be lifted.

A great many NHS hospitals are struggling in terms of quality of care and poor finances – the two usually go together, indicating an issue with poor leadership and management culture. At the end of 2016, 58% of NHS Trusts in England were failing; given CQC ratings of ‘requires improvement’ or ‘inadequate’.

But the NHS inspectorate also focuses in on the absolute worst NHS Trusts in the country – the ones with the worst care, worst staffing levels, and largest number of ‘excess deaths’ – and puts them into ‘special measures’. At present, there are 10 NHS hospital Trusts in England in special measures.

And it is these 10 Trusts that I would apply my new policy to.

Managing an NHS Trust is a very restrictive job, and some of the restrictions can be extremely counterproductive when it comes to helping the worst performing hospitals improve. So I propose hospitals in special measure are given more freedom to innovate by lifting some of the restrictions and sanctions – forming new ‘Free Hospitals’.

When the Labour government first implemented its Academies programme in schools it targeted schools with entrenched academic failure and used the scheme as a vehicle to raise standards in the worst performing areas. Often, they were formed from schools that were previously placed in ‘special measures’ by Ofsted.

In education, Academies have more freedom in terms of what they teach – they do not have to follow the National Curriculum – are not bound by national bargaining around teacher’s pay, and have more freedom around things like school days and terms. This allows Trustees and Head Teachers to innovate and fit the education they deliver more closely to the needs of the communities they serve.

So, if we follow this model, which restrictions would go for new Free Hospitals?

There are three key things that I believe restrict the ability of hospitals to innovate their way out of failure, but this is by no means a comprehensive list: I hope others will suggest more things that have become counter-productive and so should be scrapped.

1) Agenda for Change and national pay bargaining for Doctors

Agenda for Change is the scheme which governs the terms and conditions of all staff in the NHS except doctors and the most senior managers. It dictates how much they are paid, their holidays and sick pay, and how careers progress. Doctors negotiate these same things separately and hospitals are all confined by the national deal.

Scrapping these national deals is by no means a proposal for a race to the bottom. One of the things the very worst Trusts often suffer with is difficulty recruiting and retaining staff. One of the consequences is high reliance on agency and locum staff, which can end up costing a fortune: I have heard reports of agencies which charge £100 an hour for a staff nurse. And when you’re talking about maintaining safe staffing levels on wards, Trusts have to just pony up.

There are also Trusts where they are failing in specific areas: a common one is A&E. At the same time, there is a crisis in A&E doctor recruitment – there are Trusts where the consultant A&E doctor post has been vacant for years. Going into a Trust in a senior position in a service which is failing and has not had proper leadership for years is a serious challenge – why would you take that on when for the same pay and terms you could work somewhere much easier?

Lifting restrictions on pay and conditions would mean failing Trusts could identify areas where it is worth paying more than the national deal demands – and still end up saving money. 5% or 10% extra in pay could entice permanent staff, which in turn means improvements in service and financial savings by cutting out agency and locum staff.

Allowing Free Hospitals to work outside of national pay bargaining would also allow them to develop their own policies around sickness absence – an enormous problem in much of the NHS – as well as things like holiday entitlement, working hours (within safe limits), and travel costs and allowances.

2) The national tariff system

Most services delivered by NHS hospitals are governed by the national tariff system, which sets prices for various procedures, tests and surgeries. The prices are paid by Clinical Commissioning Groups (CCGs), which every GP surgery in England is part of. This system creates something of a market by making money follow patients and hospitals be paid for the services they actually deliver. In theory it also creates competition as patients can choose which hospital they go to based on quality and preference, and hospitals which have a poorer reputation may receive fewer patients and therefore less money.

In practice NHS Trusts usually cover several hospitals close together, so patients have to travel some distance to reach a hospital which is under a different authority. And as we all know, a key part of markets and competition is price – and because of the national tariff system hospitals are unable to set their own prices.

I propose freeing our new Free Hospitals from the national tariff system or, if that is too radical to stomach, allowing them to deviate from the tariff by 15% either way.

Hospital administrators could use this in two ways: reducing prices to entice CCGs and patients back to a service, or increasing prices where the service costs more to deliver than the tariff pays or where additional investment in equipment or staff is needed but there is no budget available to do it.

It would also free hospitals to innovate more with different pricing structures for new care models delivered in the community. Clinicians know community care or greater use of things like telephone consultations would be better for some of their patients, but the tariff system constrains them because the tariff is only paid for working in a certain way and Trusts cannot afford to do anything for free.

3) Temporarily ditch the fines for breaching targets

Using targets in the NHS is a bit of a blunt tool, but it can be a useful one. Hospitals currently operate with a range of targets including things like how long you should wait to be treated in A&E, how long you should wait to see a consultant if you are suspected of having cancer, and how long you should wait for various types of operations.

Though I do think some of these targets need to be reconsidered and changed to better suit the nuances of modern healthcare, as a whole they are valuable.

What is also useful is that when NHS Trusts breach their targets they feel very real consequences – financial consequences. For every patient that waits longer than the Department of Health says they should, the hospital is fined. Fines range from hundreds of pounds to over a thousand pounds for each patient, so hospitals work very hard to avoid them.

The problem is that for some Trusts at the very bottom these targets and fines can become a vicious cycle: the hospital continually breaches targets and pays fines, and then has less money to invest in services so it breaches targets and pays fines again – ad infinitum.

So my proposal is not to get rid of targets and not to get rid of fines, but to give Free Hospitals a short reprieve. For 6 or 12 months the Trust will not pay any fines, on the condition that they have identified why the services are failing to meet targets and have a recovery plan ready to fix the problems.

This is not an easy fix

The reasons some Trusts are doing so badly are many and varied, but what is clear is that in some cases the three issues I have outlined above do not just constrain hospitals – they actively harm them or act as a barrier to improvement.

And so it follows that removing these restrictions will not magically make everything better – but it will give Trusts currently in special measures a real chance to improve. And not just an improvement from a little bit below the ‘awful’ line to a little bit above it – but a real, solid, enduring improvement in the care people receive.

The value will go beyond the communities these failing hospitals serve, too. By lifting constraints the new Free Hospitals scheme will promote innovation, and those innovations in service design and delivery will inevitably yield lessons the rest of the NHS can learn from.

Emily Barley is Chairman of Conservatives for Liberty