Mergers are the strongest model for NHS collaboration

Mergers are the strongest model for NHS collaboration

Matthew Custance argues mergers between trusts are the way forward and also assesses the alternatives.



KPMG in the UK


Also on

Bridge of Ants

NHS organisations are grappling with the increasing needs and expectations of patients, advances in technology and new thinking around clinical practice. One response from trusts has been to collaborate with their peers but what is the best way of doing so? Here, Matthew Custance argues mergers between trusts are the way forward and also assesses the alternatives.

The beauty of the merger process is that by tying two organisations together you remove the possibility of either party walking away. This is why I think imposing a single management structure through a merger is the form of collaboration that stands the best chance of success in an NHS environment.

It is never going to be easy to get two NHS organisations to work together. Size matters, and NHS hospital trusts employ thousands of people, all of whom need to engage with a process that impacts their day to day lives.

Long-term change will only succeed if there is some mechanism to lock the parties into delivering that change. The first responsibility of any stressed NHS executive (that’s all of them) is to his or her own organisation. If a collaboration is not beneficial to them, it will quickly be abandoned.

The attempt by commissioners in the Midlands to jointly procure community pathology is one of many attempts to reconfigure the health economy that have fallen victim to this. It simply isn’t possible to sell a financial loss to stakeholders or board members, even if it’s only short-term.

Every NHS organisation faces the challenge of scarce resources, including their senior management time. Executives have to make major decisions and look at plans for collaboration in whatever time is left, after dealing with their regular heavy workload. So nothing happens quickly.

When you add the management time required to deal with any objections from staff, you can see how challenging it is for two organisations to pursue a project together over a sustained period.

If a merger is not possible, the next best option is to create a shared responsibility through a joint venture. This creates a formal arrangement between two parties, and it forces discussion on collaboration. It might sound strange, but getting time in senior people’s diaries is so difficult, that forcing them to meet really is a substantial benefit.

Joint ventures are a simple way of regulating collaboration. There are a number between NHS and private bodies to help with estates management or cost reduction. It was only with the creation of foundation trusts in the early 2000s that JVs became possible, but their effectiveness is already clear. A good example is the Fulham Road collaboration - where the Brompton, Marsden and Chelsea & Westminster trusts have agreed to share back-office functions such as HR and accounting.

If a JV or merger isn’t possible, or practical, the next option is a legally-binding contract. There are lots of examples of this type of collaboration both within the private sector and in the form of service level agreements in place throughout the NHS.

It may seem cynical, but if you have invested scarce time and money, you need to be protected by an agreement that ensures your partners contribute with you. The NHS environment is so fast-moving that the circumstances that led to the creation of the contract are unlikely to last. With only an informal agreement, there’s a strong risk of one partner being left holding the baby.

NHS managers are monitored and managed in such a way that it is more urgent for them to respond to failure than to take an opportunity to make a good service, great. This means they tend to go into collaborations to solve a specific problem.

The system is designed to make the manager’s original organisation their primary responsibility, not an intangible system-wide benefit. Thus the stronger the ties that bind collaborating organisations, the greater the chance of success.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

Connect with us


Request for proposal



KPMG’s new-look website

KPMG’s new-look website