Governing the New NHS

Issues and Tensions in Health Service Management

John Storey, John Bullivant, Andrew Corbett-Nolan

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136905865
• Edition: 1
• Topic: Medicina
• Subtopic: Atención sanitaria

The new NHS is a very different organisation to the one set up 60 years ago. Two decades of reforms have introduced a market element, unprecedented transparency, patient choice, new incentives, devolved accountabilities and a host of new regulatory bodies. All these changes have made governance a crucial and contested issue in health care.

Governing the New NHS makes sense of the new systems and will enable anyone interested in healthcare governance to navigate their way confidently through the maze. It describes, assesses and critiques the new governance arrangements. It examines how they are working in practice and how practitioners are responding. The book:

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• explains current governance arrangements and explores related issues and tensions

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• discusses the roles and interrelationships of boards and effective board practice

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• offers a range of practical tools and frameworks.

Each chapter is supplemented with expert witness statement written by leading practitioners in the health system. This practical book will be invaluable to all those interested in health governance, policy and management - whether academic, student or practitioner.

1 The architecture of NHS governance

Issues and tensions

Introduction

Two decades of government reforms to the health service in the UK have wrought huge changes to the way these services are organised and governed. At the top-tier level, health governance has been devolved from London to Wales, Scotland and Northern Ireland. Within England, accountabilities for primary, secondary and tertiary care, and mental health services have been redistributed and in a broad sense devolved extensively away from Whitehall outwards and downwards into individual, independent organisations each governed by a board comprising non-executive directors as well as executive directors. There are approximately 5,000 individuals occupying seats on these boards. Achieving ‘foundation trust’ (FT) status frees organisations from control and monitoring by the centre, and from their regional agents, the strategic health authorities (SHAs). In their stead, the trust directors are accountable to ‘boards of governors’ elected by local ‘members’ – patients and citizens of the local communities served by these hospital trusts. The roles and interrelationships between the boards of directors and the governors remain uncertain and unresolved. With the new coalition government in 2010, this process of reform has if anything accelerated with stronger roles for GPs and local authorities. Directors sitting on these trust boards have to negotiate their roles not only with regard to each other but also in relation to the shifting and multiple principles and institutions which form the macrosystem of governance. With the reforms announced in the 2010 White Paper this challenge has reached new heights of complexity. Despite a pre-election pledge to avoid structural change the new Secretary of State went on to trigger one of the most radical upheavals since 1948. One immediate consequence of centre-led intervention was the resignation of the Chair of NHS London along with a number of the other Non-Executive Directors leading to concerns about whether the Board was viable. Examination and clarification of roles in the crossfire of these multiple forces is one of the central rationales of this book.

‘Governance’ has become a defining narrative in analyses not only of health services but of public policy more generally (see for example Rhodes 1997; Newman 2001; Kooiman 2003). Although widely used, the concept has been hard to define. Rhodes lists a number of different and indeed diverse usages – for example from the political studies and public administration domain, the idea of a shift from a central and providing state to an enabling state, which devolves accountability to distributed governing agencies; from the corporate governance domain, the idea of good governance based on procedures and defined roles; and from the policy domain, the idea of self-organising networks. He also lists other usages but his own interest in the concept seems to rest mainly with the self-organising networks idea.

More widely still, in his theory of transaction costs Williamson (1975) posited markets and hierarchies as alternative ways of governing economic exchanges and thus of economic life. These types of ‘transactions’ and their associated costs are also fundamental, alternative, governance mechanisms. Markets rely on prices, competition and contracts to help allocate resources. Economic exchange is guided by an invisible hand. Hierarchies, on the other hand, bring actors involved in an economic exchange under the control of a clear governing authority. This authority establishes rules and roles and reserves the right to resolve conflict by declaration. Subsequently, to these two ‘pure types’ of governance of economic exchanges have been added hybrid forms which are neither markets nor hierarchies – most notably alliances, interorganisational networks, joint ventures and other forms of interorganisational arrangements. Together, these forms represent the wider perspective on governance when viewed from a macroeconomic and political economy perspective.

When viewed from the narrower and more focused perspective of board governance, the NHS has been able to offer an increasing amount of practical guidance as it learns from the experiences of boards from within and from outside the NHS. Key documents of this kind include The Healthy NHS Board (National Leadership Council 2010) The Intelligent Board (Appointments Commission 2006) and Governing the NHS (Department of Health 2003). The documents offer useful practical descriptions and advice about the various roles of the board as a collective entity, and the individual roles for members of these boards. Much of this advice stems from similar guidance found in commercial settings – as found for example in the Walker review of corporate governance in banking and finance (Walker 2009) and the Combined Code on Corporate Governance (Combined Code 2008, now the UK Corporate Governance Code 2010). Hence, purposes of NHS boards are clarified – to formulate strategy, to ensure accountability and to shape culture. Likewise, the factors which need to be taken into account when pursuing these purposes are also helpfully clarified (such as understanding of context, seeking out appropriate information and engaging with key stakeholders).

In this book, we conceive of health-care governance as an interlocking, multilevel phenomenon. Thus, while most certainly of focal concern is the behaviour of boards that are explicitly charged with governing their organisations, we also argue that these behaviours and the dilemmas with which they try to grapple can only be properly understood in the wider context of the market, hierarchy and network forms that they have to interpret, and within which they have to operate. This point can in part be illustrated by the fact that, following the publication of the report from the extensive corporate level inquiry into the Mid Staffordshire NHS Foundation Trust (Francis 2010), the head of the inquiry recommended a further inquiry into the wider system of regulation which allowed the massive failures of governance at trust level to persist and seemingly go unnoticed. The recommendation from that inquiry which touches most directly on this point is worth quoting in full:

The Department of Health should consider instigating an independent examination of the operation of commissioning, supervisory and regulatory bodies in relation to their monitoring role at Stafford hospital with the objective of learning lessons about how failing hospitals are identified.

(Francis 2010: 28)

Governance in health is about the oversight and balancing of financial, clinical and patient satisfaction objectives. This process takes place between interlocking tiers. This book is about the interplay between these tiers of governance and that is why we have chapters covering governance of and in the provider organisations, the commissioning organisations, networks and the regulators.

But, before we go any further, the question to be asked is: does governance matter and if so, in what ways and to what extent? Some senior managers – and senior clinicians – schooled in the arts of planning, leadership and strategy or schooled in the tenets of professional autonomy, are at times ambivalent about the contribution of governance. Perhaps not fully sure about, nor practised in, the arts of governance, too used to controlling directly or simply lacking in confidence to be transparent and to listen to additional voices, some chief executives are tempted to try to ‘manage’ the board itself. And some senior clinicians are tempted to stand aloof from board engagement. Where the management ploy succeeds it turns the tables: instead of management being steered by governance, governance is steered by management. In such instances governance is neutered and it is, on the surface at least, made not to matter. But where governance is made ineffectual, or is ineffectual to start with, the impact can be catastrophic. In financial or delivery of care terms, or both, trusts with poor governance have repeatedly run into very deep trouble. The Chief Executive of the Mid Staffordshire NHS trust, Martin Yeates, who resigned when the Healthcare Commission (HCC) first made its critical report, said he had been appointed to a failing organisation ‘lacking in any governance arrangements’ (Francis, 2010).

Chairs of trust boards, in particular, tend to be strong advocates of governance. Until recently, however, hard empirical evidence of the difference made by good governance has been lacking. Now, evidence from a very extensive three-year research project conducted across the NHS including acute trusts, primary care trusts and mental health trusts, reveals that governance does indeed matter a good deal (Storey et al. 2010). Survey data was collected from boards in 98.7 per cent of all trusts in England. By correlating measures of governance behaviour within trusts, and comparing these with extensive performance data on a trust by trust basis assembled independently, the research team was able to establish a statistically significant relationship. This finding applied most especially to better use of resources; there was also a relationship with clinical performance measures but this was weaker. This suggests a need for boards to turn their attention more directly to clinical and patient experience aspects of governance in future. Evidence from the 12 case studies also undertaken as part of the research, revealed that there are exemplars to be found of fully functioning and highly effective boards with appropriately balanced contributions from executive directors, independent non-executive directors and fully engaged senior clinicians.

Foundation trusts (FTs) have started to devolve certain aspects of governance to ‘clinical business units’ within their trusts. These units are led by clinical directors and unit managers and they are accountable for managing their income and expenditure accounts as well as for clinical governance and quality of care. There are now thousands of clinicians and managers with these new kinds of accountabilities and responsibilities. Each of them is, or ought to be, seeking to understand how best to govern the complex set of services that is the NHS.

These board directors and other players practise governance within a dynamic context which is replete with tensions and dilemmas. The idea – almost a sacred notion – of an overarching and unifying ‘National Health Service’ remains, but it does so alongside a number of challenging and disruptive forces. These include the introduction of a quasi-market within which the providers of health care are supposed to compete for business by offering better services in more efficient ways. New ‘independent’ providers have been encouraged into this market – including private sector firms as well as clinical business partnerships and social enterprises. So the directors sitting on NHS boards need to take account of these competitors and also of a range of regulators who set and monitor an extensive array of standards and service requirements. In addition, these directors are required to ensure public and patient engagement.

As part of these reforms, new commissioning bodies (the reconfigured primary care trusts), a new independent regulator (Monitor) for the FTs and, a new Care Quality Commission (CQC), were created. New mechanisms by which the public can have a stronger voice in shaping the services the NHS provides have been introduced and further changes are on the way with the new Local Health Watch institutions (DH 2010)¹. These reforms have changed the relationship between central government and the NHS and, in turn, new issues of accountability have arisen. For example there is some concern that there are too many regulating bodies, that there is lack of clarity about their boundaries, that the lines of accountability are too complex and that, as a consequence, governance has become problematical.

As a consequence of these developments, governance has emerged within the health service as a whole as a very significant requirement and expectation. A new governance architecture and apparatus has been constructed, built crucially on ‘unitary boards’ of the ‘Trust’ organisations which also variously (for PCTs) interlock with boards of SHAs and with the national level government department responsible for health. An important model has been the idea of ‘corporate governance’ as developed over many years in publicly quoted private sector companies. Boards of directors comprising both internal full-time executive directors and external part-time non-executive directors are charged with setting strategic direction; overseeing progress towards the achievement of strategic goals in accord with this direction setting; and monitoring performance while responding with corrective action.

Further policy changes have been far reaching in shaping the institutional arrangements of the health-care landscape in recent years. They include radical changes to financial flows through the ‘payment by results’ (in truth a payment by activity) system. They include the ‘choice’ agenda which is designed to alter the demand side of the marketplace. That ‘marketplace’ is enhanced further by the promotion of challenge and the increase in potential and actual providers of health services. The split between the provider functions and the commissioning function of the primary care trusts also reinforces this shift.

Supply-side policy shifts have included: an intent to create multiple providers; an attempt to create some kind of health market with a degree of challenge and competition; devolved autonomy and accountability through foundation trust status; and the attendant roles of non-executive directors, governors and members. Demand-side policy shifts have included: an attempt to create and allow a measure of user choice; GPs, GP Consortia and, meanwhile, PCTs as assertive commissioners and other changes to commissioning; the specification and enforcement of waiting targets for treatment - followed in 2010 by the removal of these targets; regulatory compliance; patient and public voice requirements.

The shift from central government control to ‘governance’ was often seen as a key component of New Labour’s modernisation project. It related to devolution and to strategic change. But it continues also – and at a new pace – with the Conservative-Liberal coalition. Modernisation and governance can be seen as part of a related discourse embracing such ideas as a shift from producer interests to client interests, from uniform standardised services to a demand-led approach activated by the intelligent consumer.

There are different forms of governance regulations cascading through the existing structure: directives, standards, assurance frameworks, regulations, incentives, codes of conduct and standing orders. There are also a large number of vehicles for ensuring compliance. There is, in addition, the requirement on FTs to develop three-year local delivery plans that address national targets, and on primary care trusts to develop five-year strategic commissioning plans to meet the public health needs of their population. Hence, although governance in the NHS is now a highly dispersed phenomenon, these all serve to indicate the ‘web of constraints’ within which acute and primary care trusts must function. The complexity presents board members and FT governors with an interesting set of challenges.

Levels and issues arising

This architecture of governance for health services has triggered a number of tensions, controversies and issues. These occur at three main levels: the macro or whole system level; the organisation–corporate level and the intraorganisational level. All three levels intermesh with each other.

Whole system level

The first is the whole system level. The quickest and easiest way to approach this level is to view a ‘map’ of the system. Such a view which reveals the pattern of accountability relationships within the governance structure of the NHS is shown in Figure 1.1. This is followed in Figure 1.2 by a map of the governance system as proposed in the White Paper of 2010 – notably titled ‘Liberating the NHS’.

These figures offer schematic representations of governance and accountability in the NHS. In the following paragraphs further points of clarification and qualification are added.

At, or near, the pinnacle of the governance pyramid there is ambiguity concerning the relative powers and responsibilities of the Department of Health (DH), the Cabinet Office, the Prime Minister’s Policy Unit and the Treasury. There is evidence of tensions between the DH and the NHS secretariat in that the latter does not like to see itself as merely following the politically driven priorities of the department. Hence, who ultimately ‘governs’ the NHS at the very top is itself a moot point and this explains the intensity of the debate about an independent board.

Likewise, the current purpose and role of the reformed ten strategic health authorities is a matter of contention. As noted above, under the plans of the coalition, the SHAs are to be scaled back and by 2012/13 to be abolished entirely. But even prior to the Lansley plans, their role...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of illustrations
• List of Abbreviations
• Acknowledgements
• A note on terminology
• Foreword
• Preface
• 1 The architecture of NHS governance: issues and tensions
• 2 The role of regulators in the governance process
• 3 The governance of networks
• 4 Governing the commissioning organisations
• 5 Governing the provider organisations
• 6 Governance between organisations
• 7 Board development for better governance
• 8 Conclusions and the way ahead
• Glossary
• Bibliography
• Index