Matthew Custance thinks we’re currently seeing a lot of merger activity in the NHS because the alternatives have run out.
I think we’re currently seeing a lot of merger activity in the NHS because the alternatives have run out. Trusts in financial difficulty have nothing left to cut in terms of costs, which leaves either transforming the way care is delivered or mergers as the only options.
Time, as the result of the layers of bureaucratic complexity, is the enemy with both of these models. Indeed, this is something that has been recognised in The Dalton Review, a government report looking at future options for the NHS, which calls for mergers to take place in less than 12 months. However, under the current system that is pretty much impossible.
The best option is to transform the model of care delivery to deliver more efficient care at better value. This would mean more treatment of patients in the community, making better use of technology and making sure everyone sees the most suitable medical or care professional.
None of this is achievable within the current regulatory framework without public consultation, judicial review and ministerial approvals. This means that it’s impossible to reconfigure services in less than 5 years and most of the time it takes ten, as has recently happened in Barnet, North London.
This time lag means proposals end up being implemented in a health service that has already moved on. In addition, passing all the approval procedures waters them down, so they’re rarely as bold, wide-ranging or beneficial as they were originally designed to be.
So transformation is, at best, a long-term option, which leaves us with mergers which are themselves an arduous process. Mergers ask a lot of people overseeing their implementation both in terms of the volume of work they pile on to already stretched staff, but also in terms of the emotional journey. People are required to give up or extend sovereignty of their organisation which in turn threatens people’s jobs, allegiances, loyalties and ways of working. This is made even more complex by the layers of bureaucracy surrounding NHS mergers.
There are three layers of approval process that are required for an NHS merger. Initially, a strategic outline case must be approved by both Trust boards, the local commissioners, NHS England and the regulators managing the Trusts, which will be one or both of the Trust Development Authority and the Monitor. The next stage is an acquirer business case, which again requires the approval of all those authorities plus the Competition and Markets Authority, the Department of Health and potentially the Treasury. Then there is a final business case which needs to be approved by all those authorities all over again. Given this level of complexity it seems almost miraculous that any organisations manage to merge at all. It’s also hardly surprising that managers experience deal fatigue at the point of completion.
Just as they feel they’ve finished, they’ve got to begin again in terms of implementing the changes, inspiring their staff and delivering approaches to collaboration with an organisation they were previously competing with. Frankly they’re often simply exhausted, and as a result many of the expected plans and benefits fail to materialise.
I think the whole process needs to be dramatically simplified. The first and most important thing I’d like to see, is to change the process around consultation, to allow for some transformational changes to healthcare. If this were to happen we might not need to have so many mergers at all.
I’d like to see a maximum six month period for going out to public consultation on changes to care, with the final decision on that process being binding on everybody. I’d also have that final decision being made by a reconfiguration panel rather than a minister.
In terms of mergers, I would look for a single round of approval upfront to create an in-principle agreement to explore the transaction which could be informed by a relatively simple business case. From that point the process could be managed by a steering committee, which includes the stakeholders.
The steering committee would need a progress report each month to explain how they were tracking against the original plan. Then at the end of the process they would produce a full business case which would trigger the transaction.
Private sector mergers happen all the time in under a year, and I think that with a simplified process, the NHS would stand a chance of matching this and falling into line with the Dalton Review recommendations.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.