Becoming a Foundation Trust – What are the issues

Transcript Becoming a Foundation Trust – What are the issues

Becoming a Foundation Trust – what are the Issues for Clinical Commissioning Groups?

A Toolkit to help guide Clinical Commissioning Groups

• • • • • • • • • • • • • Foreword Introduction Purpose of this guide Role of Clinical Commissioning Groups in Provider Development Provider and Commissioner relationships Options for aspirant FTs Criteria NHS Trusts must meet Traditional route to becoming a Foundation Trust Tripartite Formal Agreements NHS Foundation Trusts - The Benefits to commissioners of becoming a Foundation Trust Health economy issues System connectivity An aspirant Trust’s FT application is a health economy issue

Contents (Continued)

• • • • • • • • • • • • • Foundation Trust application - building consensus on a target operating model 1. Alignment - the importance to the programme path 2. Organisation baseline - market assessment 2. Organisation baseline - patient flow & market assessment 2. Organisation baseline - business unit performance 2. Organisation baseline - financial position 3. SWOT Analysis 4. Target operating model - option evaluation Target operating model - option evaluation & criteria System Designs – organisational models for FTs 4. Target operating model – option evaluation, some system designs for integrating care 5. Stakeholder engagement – importance of involvement 5. Stakeholder engagement -

Foreword

The Government’s ambition is to create the NHS as the best healthcare system in the world and this is rooted in the three principles of giving patients more power, focusing on healthcare outcomes and quality standards and giving frontline professionals much greater freedoms and a strong leadership role.

Clinical Commissioning Groups (CCGs) are charged with: • Creating a strong clinical and professional focus • Building on and establishing meaningful engagement with patients, carers and their communities • Establishing clear credible plans to continue to deliver QIPP within financial resources and set quality standards • Developing constitutional and governance arrangements that deliver all their duties and responsibilities • Build collaborative arrangements for system wide and specialist commissioning with other commissioners e.g. local authorities, NHS Commissioning Board • Lead the system – leading health commissioning for their population and drive transformational change.

This indicates the important role that CCGs will have in developing and determining the future shape of the health and social care system. This guide is intended to help CCGs begin to engage in the wider issues of system management and in particular, issues with their local acute providers

Introduction

CCGs have a clear role in ensuring that the wider healthcare system delivers services that meet the needs of the local population. In this respect, they will have an increasingly important responsibility to consider the impact of their commissioning decisions on local healthcare providers and whether these decisions may have unintended consequences. Government policy is that NHS hospitals should run their own affairs and be accountable to local people and patients. This means an expectation that the vast majority of NHS Trusts will become Foundation Trusts by April 2014, primarily through a locally managed process, with national support as needed. Becoming a Foundation Trust requires strengthened board governance, financial disciplines that promote long-term financial viability and a framework to secure delivery of quality services.

It must be recognised that many of the remaining NHS Trusts have more challenges to resolve to achieve Foundation status than the early applicants did. These include financial, quality and governance issues within the organisation themselves, and also, for some Trusts, more deep seated and long standing issues about, for example, size and location, which limits their capacity to deliver health services efficiently and effectively. Therefore, this guide will examine the processes that may be followed, to allow Trusts and their lead commissioners to determine the appropriate route to financially and clinically secure providers of care.

CCGs have an important role in understanding the internal issues and influencing the external constraints that such organisations face. The commissioning intentions of CCGs are fundamental to the business plan of any aspirant Foundation Trust.

Feedback from Department of Health briefing events for CCGs – sessions on support for FTs/aspirant FTs December 2011/January 2012

• Varying relationships with FTs and aspirant FTs • Some CCGs recognised as playing important role within meetings, decision making • Others felt relationship tokenistic or not invited to relevant meetings • Some CCGs supported by PCTs re FT engagement – unaware of current help at SHA level • CCGs with aspirant FTs not clear on support role to FT application • Where Trusts will not make FT in their own right, CCGs didn’t understand role in shaping future form of Trusts and required support for proposals • Recognised need to align Trusts and CCGs going forward • Would welcome an independent discussion/view of what’s required

Purpose of this guide

This is a practical guide intended to support Clinical Commissioning Groups (CCG) in considering what they will need to do when anticipating and considering sustainable service provision, service transformation and at the same time improving quality, innovation, productivity and prevention (QIPP). As part of these challenges, CCGs will be asked to input to, and influence, the journey of local NHS Trusts to becoming Foundation Trusts.

Target audience

The guide can be used by CCG leaders, clinicians and mangers and PCT cluster leads

How this guide can be used

The guide provides you with a series of tools to help you: • Benchmark or self assess where you are now, highlight opportunities, gaps and risks • Facilitate key stakeholders by asking challenging questions and creating the time to consider the critical issues at a local level • Give considered responses to SHAs, NHS Trust Development Authority, Department of Health and Monitor regarding local providers’ pathway to becoming Foundation Trusts

Role of Clinical Commissioning Groups in Provider Development

NHS Foundation Trust

CCGs must:

Maintain an ongoing dialogue with aspirant FTs, supporting commitments set out in the Tripartite Formal Agreements (TFAs) Ensure support and sign-up to the activity levels agreed by both parties in the NHS Trust plans Ensure NHS Trusts engage with and endorse provider strategies that support sustainable local healthcare, reflecting patient needs Take actions to ensure appropriate providers and models of care are available to meet commissioning requirements Support the development of Trust FT applications specifically with activity plans and overall health system strategies Support Trusts in developing sustainable business models to achieve FT status Provide support to NHS Trusts to ensure they are aware of the Equality Delivery System NHS Trust

Provider and Commissioner Relationships

Commissioners are focused on commissioning cycle to prove a balanced foundation for strategic change A key challenge is designing and purchasing sustainable service specifications that provide quality and value for money Commissioner Provider Consumer The provision and security of local hospital services are vital for community confidence, user stability and assurance The provider will value and prioritise independence and autonomy acquired through FT status The format and content of an FT business plan is a crucial set of core requirements

Options for aspirant FTs

• The Bill sets the course for

all public sector health providers to be Foundation Trusts by April 2014

. The Government is making provisions to abolish the NHS Trust organisational form in April 2014, in order to ensure that this goal cannot slip • As a result of this and the abolition of Strategic Health Authorities,

(NTDA) all NHS Trusts that have not gained FT status by April 2012 will be put under the guidance of a newly constituted Special Health Authority, the NHS Trust Development Authority

• The NTDA will have two years from April 2012 to

drive Trusts to FT status, OR work on an agreed solution to their future form, for example merge with an existing FT

Trusts wishing to gain FT status will have to apply by the 31 March 2013. Clear signals are being sent to providers indicating that they are co-responsible for achieving this.

. • Monitor will continue to assess whether organisations meet the necessary financial and governance requirements (the “FT Bar”).

There will be no lowering of the assessment bar

in order to ensure that organisations will be fit for purpose.

Criteria NHS Trusts must meet

Monitor is responsible for assessing and authorising applicants for NHS Foundation Trust status and for their regulation afterwards. Before submitting an application to Monitor, trusts have to gain the approval of their Strategic Health Authority (upon abolition of the SHAs the NHS Trust Development Authority will take on this role ) and the Secretary of State. Part of this key initial approval is the support of their local commissioners – formerly the PCT, but increasingly of their CCG(s). Once these support areas are secured, the application goes forward to the Department of Health’s Applications Committee which reviews it and advises the Secretary of State on its merits. If approval is secured, the Trust then submits its application to Monitor.

SHA led Development Phase SHA works with Trusts to develop robust and credible SHA led Development Phase • • • • 2.

Pre-consultation Trust review Public consultation Bespoke support Post consultation SHA decides that the applicant is now ready to proceed to: 4.

Historic due diligence report • • • • • 5.

SHA and trust submit application to the Department Board-to-board practice All actions from 1) above, delivered

4. SHA confirms the Trust is ready to move into second phase

Secretary of State Support Phase

When SHA is satisfied that Trust is ready,

Secretary of State Support Phase 1. Applications committee review application and make the recommendation to the Secretary of State 2. Secretary of State support granted 3. Trust is invited to formally apply to Monitor Monitor Phase • • •

Monitor Phase

supported applicants

1. Application review by the

Assessment Team

Monitor will carry out its full assessment

Is the applicant legally constituted?

Is the applicant financially viable?

Is the applicant well governed?

2. Interviews with the Care Quality Commission, SHA, and PCTs/CCGs 3. Board to Board meetings Commissioner support – vital in planning, monitoring, and FT application See next page Authorisation granted Deferral Rejection

Traditional route to becoming a Foundation Trust

Intervention Points for CCGs

SHA Led Development Phase • Commissioner signatory to TFA • Negotiation and Agreement over contract income • Negotiation and Agreement over changes to clinical pathways • • • Commissioner input to the Trust’s business plan and financial model • • SHA/NTDA check commissioner support for FT application Secretary of State Support Phase Monitor Phase When SHA is satisfied that Trust is ready, Trust formally applies to Secretary of State, with SHA full support Commissioners provide a letter of support Applications Committee considers applications and provides advice to Secretary of State which Trusts be supported to proceed to Monitor for assessment and, if successful, authorisation.

• • DH advises Monitor of the applicant’s support from commissioners Monitor carries out full assessment process, including direct discussions with commissioners with focus on commitment to financial model for Trust, satisfaction with quality standards of Trust and commitment to Trust’s clinical strategy • Commitment to commissioning plans to ensure robustness of aspirant Trust financial projections • Final decision by Secretary of State

Tripartite Formal Agreements

The Department of Health has developed new processes to help progress aspirant FTs towards FT status. A key element of this process is the Tripartite Formal Agreement (TFA). The TFA summarises the main challenges facing each organisation, the resulting actions to be taken by the Trust, the SHA and the DH. There is an explicit timescale in this document for the Trust to become an FT. Because of the influence that commissioning intentions and overall commissioner support to applications have on whether Trust’s financial plans are viable, the lead PCT for each Trust has also endorsed the TFA. This responsibility will pass onto the lead Clinical Commissioning Group (CCG) once they are authorised.

The actions outlined in the TFA to become an FT primarily rest with the NHS Trust board and management, supported regionally by their SHA and nationally by the DH. When SHAs are abolished in April 2013, the NHS Trust Development Authority will become responsible for progressing the remaining Trusts.

The TFA forms the main public document giving the Trust’s commitment to becoming an FT and is the commitment against which the health economy, and particularly the Trust, will be measured. All aspirant Foundation Trusts have a signed TFA which is available on the Trust’s website.

NHS Foundation Trusts The Benefits to commissioners of becoming a Foundation Trust

NHS Foundation Trusts:

• • • • Are free from central government control – the board has the authority to run its Foundation Trust as it judges best, but is accountable for the success or failure of the organisation. This is a cultural shift which fosters improved leadership and innovation; Have greater financial freedoms – they can borrow commercially and generate surpluses to expand, improve quality or develop new services; and Are accountable to: Their local communities, through their members and governors • • • Commissioners, for delivery of services specified in their contracts with PCTs, CCGs and other specialist commissioners; Monitor as their regulator and Parliament, by laying their annual reports and accounts before the House of Commons and House of Lords.

Monitor as the regulator of FTs has said it is keen to develop closer and more effective relationships with commissioners.

Health economy issues

Potential acute sector re-design

Public services are facing unprecedented financial and other challenges. The NHS is increasingly under pressure to improve quality, productivity, respond to public demand and make significant efficiency savings. The NHS works as a series of organisations that are inextricably linked and works as a whole system. Clinical Commissioning Groups may wish to change clinical pathways to improve services to local patients. Changing patterns of care can, in some circumstances, impact on the viability of other related services. Therefore the whole system needs to work together to determine priorities and solutions, ensuring that clinicians, managers and local communities are engaged effectively in the process of change.

System reform presents a number of challenges to local health systems and creates/exposes system management risks between the Strategic Health Authorities, Primary Care Trusts and newly formed CCGs.

Many health organisations on the Foundation Trust pipeline are struggling to attain legitimacy in their current organisational form having been challenged organisations for many years. In many cases, reconfiguration and efficiency saving will be required to deliver on the demographic and economic changes for the NHS over the medium term.

System connectivity

The relationship between Commissioners, Providers and Consumers

The current pressure on public sector accounts, and the structural transition in the NHS present a number of significant challenges to local health systems. For many organisations, traditional methods of cost improvement are not enough to ensure sustainability and therefore achieving or maintaining Foundation Trust status is a significant challenge.

Provider configuration has many challenges: • Cost of transition • Achieving viable/safe clinical models • Public and patient expectations and reactions • Politics • Loyalties and alliances Structural transition exposes the risks that whilst SHAs and PCTs have mandated system management responsibilities and also have experience of strategic change over many years; newly formed CCGs have neither responsibilities or experience in many cases.

Nevertheless, systems configuration may be needed, alongside the QIPP challenge and the requirement for all Trusts to be FT by 2014

An aspirant Trust’s FT application is a health economy issue

Aspirant Foundation Trusts need to demonstrate clinical and business viability

Tactical Cost Improvement is not enough Clinical & Business Viability Increased competition and plurality CCGs have ambitions to minimise hospital based activity Providers have already made significant internal efficiency gains Sustainability and critical mass ensure quality and continuity Providers have fixed costs that need to be funded Many health organisations on the FT pipeline are struggling to attain legitimacy in their current organisational model and form. Critical mass and activity based income are influential factors in determining whether an organisation is sustainable and can achieve FT status. Conurbations of health organisations need a programme approach to re-configuration that is aligned and transparent, and that uses clinical and economic evidence and objectivity.

An innovative and whole systems based approach to a Trust’s FT applicaiton is required to develop and agree a mutually sustainable position

Foundation Trust application - building consensus on a target operating model

1. Alignment

Case for Change Stakeholder Map Key Risks Identified Governance & Project Membership

Stakeholder profile Communications Plan Virtual Network Established Risk Mitigation Portfolio Programme Established

2. Organisation Baseline

Patient and Activity Flow Analysis Current Operating Model: Access, Quality & Financial Baseline Workforce Data & Analysis Environment & Transport Mapping Identify Quick Wins

3. 4. Target Operating Model

Target Operating Model

Options Criteria & Long Listing

TOM Baseline Review

Short List Options

Transformation Objectives

Option Evaluation

Stakeholder Alignment

Target Operating Model Baseline

Programme Mandate & Outline Business Case

5. Stakeholder Engagement & Account Management Clinical Expertise & Objectivity Programme Management Office Established CCG Learning Development & Support

1. Alignment - the importance to the programme path

Stakeholders brought together on the programme path to achieve a route to FT status

2. Organisation baseline - market assessment

Provider landscape review • • What is capacity for different services and what is needed? What are the current and potential alternative suppliers and how do they relate?

• Provider analysis, using contracts data, commissioner interviews, geographical/service line capability and capacity mapping Market Configuration/ Provider Structure Analysis • • What are the current market structure characteristics that impact on current utilisation?

What are the incentives faced by providers?

• • Review available expenditure, activity, and utilisation data sources Contracts analysis and incentive implications

These work streams also inform an assessment of the sustainability of the current market configuration and development of the case for change

Care pathway patient flow analysis • • How joined up are patient care pathways?

Are there patient or information bottlenecks?

• Identify care pathway flows for key service lines, including points of referral, bottlenecks and ease of patient and information flow • Geographical patient flow analysis To what extent does willingness to travel influence service utilisation now and in the future?

Where are patients at specialist units being referred from?

• • Map service-specific patient movements across relevant geography Assess current patient flows against current capability and capacity Choice and contestability review • • Is choice available for services where attributes are appropriate?

Are patients effectively exercising choice where it is available to them?

• • Consider implications of underlying service attributes for choice and contestability.

Map these implications against areas where choice and contestability currently exists.

2. Organisation baseline - patient flow & market assessment

Example of patient and activity flows

Type

Volume Cost (£000)

Total Cases

1,003 3,324

STHK Cases

22 73

583 1,932

235 779

163 540

2. Organisation baseline - business unit performance

There are a number of tried and tested tools which have proved to be very powerful and engaging with clinicians. They help to understand that whilst cost will vary from patient to patient the ‘portfolio’ of cases must balance in order to maintain a viable service. The following examples have been utilised to engage effective change.

Case Study: Profitability Trees

Profitability trees which breakdown the income and cost components of an HRG. This clearly shows cost and volume drivers and illustrates how the deficit or surplus at HRG level is derived

Case Study: Breakeven analysis

Breakeven and margins analysis, which illustrates the required patient throughput per theatre session or outpatient clinic in order to breakeven

2. Organisation baseline - financial position

Typical Issues

• Organisation is in significant financial distress , including a need to generate substantial cost improvement • Lack of clarity around underlying financial and recurrent / non-recurrent positions • Strains on cash availability and potential for income generation • Existence of historic debt obligations requiring prompt payment • Competing financial challenges from sector partners / providers • Poor income and expenditure forecasting and results • • • Operational control issues , e.g

poor credit control; and inappropriate levels of pay and non-pay spend

Approach

• Detailed scrutiny of the organisation’s financial position • Rigorous and fast-paced review and assessment of financial forecasts and trends • Bottom up and top down review of organisational and operational processes, including risk review • Challenge to current and future financial assumptions based on sector experience • Application of sensitivity analysis to financial forecasting • Stress testing reasonableness of activity, income and expenditure assumptions • Review of cost improvement programme, governance and programme management methodology

Key benefits

• Independent and experienced perspective provided based on sector experience • Cross organisational approach to verifying/ cross check findings, and examining controls • • Clarity provided on underlying financial position and current and future plans Short, medium and long term view taken with recommendation on financial and operational requirements and improvements • Readily implementable recommendations made on cost improvement governance, and development of programme • Organisational knowledge gap bridged through comprehensive findings and graphical analysis

3. SWOT Analysis

A SWOT exercise can be undertaken across the health economy to help to shape the evaluation of options:

In developing a robust strategy it is important to scan both the internal and external environment to understand the organisation and the market within which it operates.

The process of determining these strategies is commonly referred to as a SWOT analysis. A detailed SWOT analysis by an organisation and its key stakeholders can provide useful information to help to shape future strategy and determine how resources might be best deployed in order to maximise organisational potential.

In a SWOT analysis, internal factors (e.g. clinical ratings of services, local reputation, strategic partnerships) are classified either as strengths (S) or weaknesses (W). External factors (e.g. local health needs, new technologies, regulation, or competitor activity) are classified either as opportunities (O) or threats (T). This can then be mapped on to a strategic framework (often referred to as a TOWS framework).

SWOT and TOWS frameworks: Strengths Weaknesses Opportunities Threats Strengths Weaknesses Opportunities Threats

SO Strategies for ADVANCEMENT ST Strategies to OVERCOME THREATS WO Strategies to OVERCOME WEAKNESSES WT Strategies to AVOID AND OVERCOME

4. Target operating model - option evaluation

Four key stages of work, as outlined below and detailed in the project plan

Stage 1:

Local Context and Long List of Options, will focus on understanding the local issues impacting on the Trust as well as the full range of options available for its future use. In this stage we will also develop generic selection criteria for the high level assessment of these options.

Stage 2:

Ranking of Options, will focus on applying selection criteria to rank – qualitatively - each option in order to identify the “preferred” or highest ranking options for more detailed review – the “short list.

Stage 3:

Detailed Appraisal, will focus on appraising each of these short listed options in terms of likely costs, outputs, risks and impacts - in quantitative terms - in order to identify the option most likely to generate the greatest net benefits for the local health economy.

Stage 4:

Business Case Finalisation. In this phase we will finalise the business evaluation and present to the Trust Board.

Understand Local Context

Generic Approaches (‘Long List’) Generic Selection Criteria

Stage One

Qualitative Ranking Selection of ‘Short Listed’ Options Selection Criteria

Stage Two

Key Features Detailed Costs Cost Benefit Appraisal Detailed Benefits Risk Appraisal Baseline Status Quo Additionality/ Displacement

Stage Three

Selection of Best Case ‘Preferred Option’

Finalisation of Business Evaluation

Stage Four

4. Target operating model - option evaluation & criteria

•

Process:

In order to identify the leading options for the future of a Trust, a six stage process based on Multi-Criteria Decision Analysis (MCDA) to narrow the current range of options can be used. • MCDA is a useful approach when considering a range of solutions against a set of criteria containing a mix of considerations.

MCDA is based on the standard Treasury Green Book evaluation approach, but supplements this to take full account of qualitative factors which can be important for decision making.

• The approach has been recognised in government. For example, it was used by the Department of Work and Pensions (DWP) to evaluate the delivery model for personal accounts in the impact assessment for the December 2006 White Paper. It has been used recently in other strategic prioritisation processes across NHS North West.

• The process involves a number of key steps that will be undertaken in order to arrive at a short list of options that will be worked up in more detail. Indeed the purpose of the evaluation process is to rule out options – as opposed to identifying the precise way forwards. • The process is summarised in the diagram below. It includes the establishment of the Trust’s strategic priorities and evaluation criteria and builds on the evidence established in the baselining exercise and SWOT analysis. 1. Identify strategic priorities 2. Define evaluation criteria 3. Construct scoring system 4. Develop option set 5. Appraise options 6. Sensitivity testing

Target Operating Model – 4. system designs – organisational models for FTs

Acute Sector FT Community FT Specialist Tertiary FT NHS Trust FT combined entity NHS Trust Existing FT NHS Trust New FT This slide shows some of the organisational models being adopted to achieve FT status from the simple acute focussed FT to the sort of organisational franchising model now beginning to emerge in some areas. Outsourced management/franchising FT

4. Target operating model – option evaluation, some system designs for integrating care

Potential market configurations to consider may include care integration or networked care models. This slide sets out stylised examples of options for configuration of models of networked care. We would map the challenges and benefits inherent within each model, as well as the clinical, patient experience and economic attributes suited to each system, to the options being appraised – in which option is the most

appropriate system (given service attributes) being implemented?

Provider arm acquisition Total vertical integration Virtual ICO

Hospital Community Hospital Community Primary Hospital Community Primary Primary

Integrated health & social

Hospital Community Social Care

Primary care led

Hospital Community

Fully merged organisation

Hospital Community Primary Primary

5. Stakeholder engagement – importance of involvement

As groups of emerging commissioners, Clinical Commissioning Groups will have an opportunity to improve the health of patients and wider communities but they will face a challenging commissioning environment and there will invariably be difficult choices and decisions. The public, patients and local representatives including MPs and local councillors are inevitably interested in and feel closely involved with their local hospital and for aspirant foundation trusts, often wish to see it succeed in its current organisational form.

Good responsive commissioning can be achieved when patients, the public and key stakeholders including Members of Parliament and Local Councillors are at the heart of what the NHS does. Improving health and health services requires Clinical Commissioning Groups to understand and act on what really matters to people and ensure they are active partners in co-designing and co commissioning health services. This is especially important in the case of local politicians (MPs and local councillors). Everyone has a stake in the health of their community. Get the engagement right, and Clinical Commissioning Groups can improve services and bring people with them through change. This is especially so for local politicians. Clinical Commissioning Groups will need to balance engagement and any proactive relationship with the ability to understand the political environment in which MPs and local councillors operate.

Good engagement is based on in the quality of relationships that clinicians have with their stakeholders (patients and the public) and clinical commissioning groups create with local people, communities and their representatives. See time spent building relationships with local politicians as a worthwhile investment. They have insight and understanding about local intelligence and the local communities needs, wants and priorities of local people and will be keen to share it and work with the Clinical Commissioning Groups to fill in the gaps.

5. Stakeholder engagement

Increasingly approaches to involvement that rely heavily on ‘formal’ consultation alone will struggle to be good enough: now more than ever Clinical Commissioning Groups will need to work with local politicians as well as patients and public as partners if better health outcomes are to be secured. Ensuring that local politicians are actively involved in decisions about commissioning can be a means of delivering powerful messages of reassurance to local communities but this has to be balanced with their ability to do the opposite which can include delaying changes which the NHS need to deliver to improve quality and outcomes for patients.

Clinical Commissioning Groups face many challenges as they journey toward authorisation and what is at the heart of much of their success will be the ability to engage actively with their local communities. This is equally so of local politicians where Clinical Commissioning Groups will have to balance the role of local politicians as the democratically elected members of local communities.