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Mutuals in Health Pathfinder: Feasibility Study
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CONTENTS
1 Introduction ............................................................................................. 4
1.1 Executive Summary ..................................................................................................... 5
1.2 The form of this report ................................................................................................ 5
1.3 SaSH Team ................................................................................................................... 6
1.4 Support Team .............................................................................................................. 7
2 Strategic Context of mutualisation ........................................................... 8
2.1.1 National context – the Mutuals in Health Pathfinder Programme .............................................. 8
2.1.2 SaSH local context as a Pathfinder trust ....................................................................................... 9
2.2 Objectives and Principles of Mutualisation .............................................................. 10
2.2.1 What is a mutual?....................................................................................................................... 10
2.2.2 What would a mutual seek to achieve? ..................................................................................... 10
2.2.3 Putting mutuals in a historical context ....................................................................................... 11
2.2.4 Comparison to the NHS Foundation Trust Model ...................................................................... 11
2.3 SaSH values and Strategic Fit with Mutual Principles ............................................... 12
2.4 Scope of Mutual Model ............................................................................................. 14
2.4.1 Ownership constituencies .......................................................................................................... 14
2.4.2 Red Lines & Requirements ......................................................................................................... 15
2.4.3 Types of Mutual .......................................................................................................................... 19
2.5 Benefits and Risks ...................................................................................................... 22
2.6 Constraints ................................................................................................................ 22
2.7 Dependencies ............................................................................................................ 24
3 Options Appraisal .................................................................................. 26
3.1 Developing Critical Success Factors .......................................................................... 28
3.1.1 What should relations with stakeholders be like? ..................................................................... 28
3.1.2 What should the Trust retain, begin and end from different perspectives? .............................. 28
3.1.3 What Critical Success Factors would a mutual have and how could they be measured? .......... 29
3.2 Mutual Models Considered: Long List ....................................................................... 30
3.3 Short-listing Options ................................................................................................. 36
3.3.1 Methodology for evaluating qualitative benefits ....................................................................... 36
3.3.2 Methodology for Risk Appraisal ................................................................................................. 40
4 Current Preferred Model ........................................................................ 43
4.1 Template Model Specification .................................................................................. 43
4.2 Commercial Considerations ...................................................................................... 44
4.2.1 VAT ............................................................................................................................................. 44
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4.2.2 Procurement requirements ........................................................................................................ 46
4.2.3 NHS Pension ............................................................................................................................... 46
4.2.4 Financial failure regime .............................................................................................................. 47
4.2.5 NHS Branding & Logo ................................................................................................................. 48
4.2.6 Assets and Liabilities ................................................................................................................... 48
4.2.7 TUPE ........................................................................................................................................... 48
5 Next Steps ............................................................................................. 49
5.1 Project Plan ............................................................................................................... 49
5.1.1 Overview .................................................................................................................................... 50
5.2 Roles and responsibilities .......................................................................................... 50
5.3 Details of phases ....................................................................................................... 53
5.3.1 Exploration and development .................................................................................................... 53
5.3.2 Preparation ................................................................................................................................. 56
5.3.3 Transition .................................................................................................................................... 57
5.3.4 Consolidation .............................................................................................................................. 60
5.4 Finances ..................................................................................................................... 61
5.5 Stakeholder Engagement Plan .................................................................................. 61
5.5.1 Exploration and development .................................................................................................... 62
5.5.2 Preparation phase ...................................................................................................................... 62
5.5.3 Transition .................................................................................................................................... 62
5.5.4 Consolidation .............................................................................................................................. 62
6 Appendices ............................................................................................ 63
6.1 Summary of Project Activities ................................................................................... 63
6.2 Summary of SaSH Mutuals Communications ............................................................ 64
6.3 Details of Rewards & Incentives sessions ................................................................. 65
6.3.1 Influence on SaSH ....................................................................................................................... 65
6.3.2 Incentives and demotivation ...................................................................................................... 66
6.4 Beneficiary Trusts in Pathfinder Programme ............................................................ 67
6.5 Governance Rationale for Foundation Trust ............................................................ 68
6.6 SaSH Pathfinder Application ..................................................................................... 68
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1 INTRODUCTION
This Feasibility Study was produced for the Mutuals in Health Pathfinder Programme1 designed to
inform policy development for the Department of Health and Cabinet Office and to assist beneficiary
Trusts including Surrey and Sussex Healthcare NHS Trust (SaSH) to investigate whether a mutual model
would be suitable for the Trust.
This paper provides an exploration of the suitability of a mutual model for SaSH and guidance for a
future more in-depth exploration of a mutual model by a future SaSH team once the policy and
legislative environment has developed. It sits alongside a knowledge capture document being
produced for the Cabinet Office and Department of Health that looks to inform policy development
based on the experiences of the Pathfinder trusts.
The project took place between January and March 2015 and consisted of a series of workshops and
focus groups to engage with stakeholders as to the suitability of a mutual structure for the Trust within
SaSH. The outputs of those workshops form the basis of this report along with more technical advice
and planning on the potential to develop into a mutual in the future.
At the time of writing, SaSH is anticipated to go through an important transition to Foundation Trust
(FT) status over the next few months – a key achievement in the transformation of the Trust over the
past several years, recognising the high quality safe care provision provided by the Trust. The
pathfinder project has sought to integrate with the transition to FT. FT status is itself designed as a
form of mutual ownership, based as it is on traditional mutual and co-operative ideas. However given
the constraints within which FTs have had to operate, it has been difficult for them to optimise their
mutuality. This Feasibility Study therefore envisages a potential evolution of the new FT structure
towards a substantially more mutualised structure if policy and legislative conditions become
supportive.
The FT model that SaSH is currently moving to will unlock a number of the benefits that a mutual
model could also produce. The governance of the model is however inherently prescribed by
legislation and has a number of limitations that other Trusts have experienced. This project has helped
to highlight the limitations that other Trusts2 have experienced with FT status and to address some of
these, e.g. assisting with the membership engagement strategy.
Mutual models present a potential next step in the development of the FT model to suit the needs of
SaSH. This report provides a framework for developing the specific model and assessing the benefits
of evolving to a more mutual approach.
1 See https://www.gov.uk/government/publications/mutuals-in-health-pathfinder-programme for more information 2 A specific session to discuss this was held on 17th Feb 2015, and included Oxleas, SaSH, Moorfields, University Hospitals Leicester and Liverpool Heart & Chest
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1.1 EXECUTIVE SUMMARY
The study’s overall conclusion is that a move towards greater mutualisation would be an excellent
cultural fit for the Trust. As a governance structure, it has the ability to embed at a constitutional level
the values and behaviours that the Trust is seeking to encourage. This would provide a resilient basis
for staff engagement with less dependence upon the priorities of the current board, and look to start
to build similar engagement with the community. Whilst it is not possible for the Trust to develop into
this model at the present time due to the current policy guidance and legislative frameworks, in the
longer term if these constraints are removed it is recommended that SaSH continue with its
exploration of a mutual approach as this has been well-received by staff in early engagement sessions.
The model has some important flexibilities and advantages over the standard FT model that may be
of benefit to SaSH – although SaSH need to wait for its FT decision and the consequences of this.
We have summarised the key messages from each section at the start of that section, and would
recommend this as summary of the different areas of the report.
1.2 THE FORM OF THIS REPORT This Feasibility Study report is laid out to assist with the development of an Outline Business Case
(OBC) in line with the Treasury Five Case Model at a future date. It does not directly follow the form
of an OBC because some of the sections are not feasible or relevant at this stage of SaSH’s thinking.
The table below provides a reconciliation between the sections of this report and a future OBC.
Section of Feasibility Study OBC Sections and Sub-sections
Strategic Case
2 Strategic Context
2.4 Scope of Mutual Model
2.5 Benefits and Risks
2.6 Constraints
2.7 Dependencies
Investment objectives/Business needs
Scope and key service requirements
Main benefits criteria/Main risks
Constraints
Dependencies
Economic Case
3.1 Developing Critical Success Factors
3.2 Mutual Models Considered: Long List
3.3 Short-listing Options
3.3.1 Methodology for evaluating qualitative
benefits
3.3.2 Methodology for Risk Appraisal
Critical Success Factors
Long Listed Options
Short Listed Options
Qualitative Benefits appraisal
Risk appraisal & scoring
Commercial Case
4.1 Template Model Specification
4.2 Commercial Considerations
Required Services
Key Contractual clauses/Risk Transfer/TUPE
Financial Case
5.1.1 Overview Affordability
Management Case
5.1 Project Plan
5.2 Roles and responsibilities
5.3 Details of phases
5.2 Roles and responsibilities
Programme management arrangements
Roles and responsibilities
Project plan
Special advisers required
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Sections of the OBC to be developed at a later stage in the transition programme are:
Strategic Case: Organisational overview, Business strategies, Other organisation’s strategies, Existing
arrangements – elements dependent on outcome of FT application and changing over time
Economic Case: Methodology for estimating benefits, Methodology for estimating costs, Net Present Cost,
Sensitivity Analysis – elements dependent on outcome of FT application and determination of “Do Nothing” case
Commercial Case: Charging mechanism, Contract length, Procurement strategy & timelines, Accountancy
Treatment – elements dependent upon legislation and policy development
Financial Case: Impact on income and expenditure, Balance sheet impact – elements dependent on outcome of FT
application and determination of “Do Nothing” case
Management Case: Change and Contract Management, Benefits realisation, Risk Management, Post Project
evaluation arrangements, Gateway reviews, Contingency plans – elements to be fully developed in FBC once
chosen option details finalised (FT transition arrangements provide draft template for procedures to follow)
Throughout this report we have included areas to help SaSH continue exploring the feasibility of
mutuality and start developing a full business case, if desired. Specific areas for further development
are indicated by this “Future questions” or “Further discussion” notation.
1.3 SASH TEAM SaSH invited a range of members of staff from throughout the trust to participate in the workshops,
provide their experience and opinions, and help shape the approach taken in this paper. The support
team are grateful for their enthusiasm and commitment to the programme.
Michael Wilson – CEO
Sue Jenkins – Director of Strategy
Yvonne Parker – Director of Workforce and OD
Gillian Francis-Musanu – Director of Corporate Governance
Jane Thomson – Mutuals Project Manager
Laura Warren – Head of Communications
Ben Mearns – Acute Physician and Care of the Elderly Consultant
Linda Judge – Head of Outpatients
Mary Calvey – Senior Occupational Therapist
Caroline Hoyle – Medical Secretary
Nicola Shopland – Divisional Chief Nurse
Michelle Cudjoe – Head of Midwifery
Steve Buck – Assistant Catering Manager
Alan McCarthy – Chair
Barbara Bray – Chief of Surgery
Lorraine Clegg – Deputy Chief Finance Officer
Angela Stevenson – Deputy Chief Operating Officer
Lisa Reindel – Senior Dietician and staff side representative
Paul Millam – Staff side representative
We would also like to thank all the staff who attended other working sessions, in particular the
Rewards and Incentives working groups on 11th March.
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1.4 SUPPORT TEAM The support team consortium, led by Bolt Partners, has brought together a range of experts from
different organisations to support SaSH in different elements of assessing mutual models.
Representing a national collective of co-operative development agencies, Adrian Ashton has a national reputation for governance, impact reporting, and business planning in public sector bodies. He has also developed acclaimed tools to explore the governance of any organisation
A think-tank facilitating the public debate on citizen collaboration in services, Collaborate develop innovative public service policy and practice.
Anthony Collins are specialist solicitors advising on relationships between the public, private and “Third” sectors. Highly experienced in advising on mutualisation in healthcare and other sectors, they are governance experts in acute trust environments.
Dr Ruth Yeoman of the Centre for Mutual & Employee-owned Business at Kellogg College, University of Oxford is a leading expert in developing an international research agenda on mutuality and brings strategic overview.
As a specialist healthcare management and advisory company, Bolt particularly focus on workforce productivity in acute settings. Bolt previously worked with SaSH from 2006-2008 providing a turnaround and finance director and reviewing the commercial activities of SaSH.
Jonathan Knight
Anna Partington
Sarah Billiald
Henry Kippin
Tracy Giles
Cliff Mills
Ruth Yeoman
Adrian Ashton
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2 STRATEGIC CONTEXT OF MUTUALISATION
Key messages:
Mutualisation presents a significant opportunity for SaSH to embed its values with staff and develop
as a listening and caring organisation. Culturally, the ownership conveyed by mutualisation is already
felt by some staff constituencies and the plan is to embed this feeling further by linking values to
behaviour through the SaSH+ programme and board development activities planned as part of the
transition to a Foundation Trust. Whilst this opportunity is acknowledged and recognised and the
majority of risks identified can be mitigated through the mutuals structure selected, the constraint of
the legislative and policy environment cannot be overcome at this time.
The process of transitioning to a mutual is known to take several years and the pathfinder work has
laid some of the early groundwork from which to design a future model and to identify the benefits
that mutualisation would bring to SaSH. The FT transition represents an important achievement for
the Trust and a key opportunity to re-define the decision-making structures. Mutuals are a potential
evolution of this organisational form. This report is therefore designed to complement the FT
transition process, providing the ability to compare and contrast mutual structures to the FT, so that
at key points in the transition to FT, the benefits of mutualisation can be assessed.
Ultimately if a supportive policy framework were developed, SaSH could be an excellent candidate to
be a vanguard in a new NHS mutual transformation programme based on the journey undertaken by
the Trust so far and the culture and values developed at the Trust.
2.1.1 National context – the Mutuals in Health Pathfinder Programme
The concept of developing models where public service employees, particularly those in healthcare,
could have a greater say and involvement in their organisations has grown in the last five years.
Support for the idea has been expressed by politicians in the previous Labour government3 and the
current coalition government4. It has also been included NHS strategic direction papers, including the
“Equity and Excellence: Liberating the NHS” document5. In November 2013 Norman Lamb, the
Minister of State for Care and Support in the current coalition government, announced6 that he had
appointed Chris Ham, CEO of the Kings Fund to look specifically at the mutual model in healthcare.
Chris Ham’s report “Improving NHS Care by Engaging Staff and Devolving Decision-Making”7 was
published in July 2014. The review recommended that government support a pathfinder programme
to help NHS trusts and foundation trusts explore the benefits of the mutual model.
In response to the review’s recommendation, the Department of Health and Cabinet Office launched
a joint initiative in July 2014 to support health and care organisations explore the potential advantages
of mutualising their services. The Pathfinder Programme was designed to support a small number of
pioneering trusts, either individually or in partnership. It was open to all foundation trusts and NHS
trusts, and included a support package of technical, legal and consultancy support to help them (a)
3 For example: http://archive.labour.org.uk/tessa-jowells-speech-to-labour-party-conference 4 For example: https://www.gov.uk/government/speeches/francis-maude-speech-unveiling-new-support-for-mutuals 5 See https://www.gov.uk/government/publications/liberating-the-nhs-white-paper and specifically page 36 / section 4.21 of https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/213823/dh_117794.pdf, 6 http://tomorrowscompany.com/norman-lamb-mp-speech 7 http://www.kingsfund.org.uk/publications/articles/improving-nhs-care-engaging-staff-and-devolving-decision-making for more information
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understand what mutualisation means for them and (b) find solutions to practical barriers to
becoming mutual organisations.
The Mutuals in Health Pathfinder Programme ran from January to March 2015 inclusive, and involved
nine beneficiary trusts8 from across England with different challenges and situations, including SaSH.
A number of panel discussions were also undertaken with the other pathfinder trusts throughout the
project9.
2.1.2 SaSH local context as a Pathfinder trust
SaSH applied for the Mutuals in Health Pathfinder programme and set out in its application10 the key
strategic challenges for the Trust and the aims of participating in the programme:
8 See Appendix section 6.4 9 These pathfinder sessions were hosted by The Kings Fund and the Department of Health on 20th Jan, 17th Feb and 19th Mar 2015 10 See section 6.6 for the original SaSH expression of interest
The Trust has a firm foundation and has been transformed in recent years. It has proven its ability
to sustain and consistently deliver high quality care and some of the best national clinical
standards and outcomes […]
The benefits the Trust is aiming to demonstrate are:-
• alternative organisational structures can improve clinical outcomes, experience and staff
satisfaction
• good staff engagement can be harnessed and improved further in a mutual model
• a culture of innovation can be explored to challenge traditional boundaries and ways of
working
• staff can consider and develop incentives and rewards that encourage world class
standards
During 2013/14 the Trust achieved the embedding of values through involving staff more in the
delivery of outputs. It also introduced a “deep dive” process which encouraged specialty teams to
come together and demonstrate in a tangible way how their services were safe, effective,
responsive, caring and well led. This process supported a shift in focus from both teams and
individuals to both understanding and demonstrating how what they did on a day to day basis
directly impacted on clinical outcomes, quality of care and experience for patients. This process
was undertaken without the benefit of a formal mutual structure but demonstrates the readiness
of the organisation and its staff to explore what the next level of engagement and involvement
may look like. The Trust recognise the challenge there is for all of the organisation to be able to
demonstrate compassion and focus on the delivery of best care, and consider what different
rewards and incentives would support and encourage a greater sense of ownership by staff.
The Trust’s current thinking is that undertaking the mutual pathfinder programme will provide an
opportunity to explore what a staff owned model may look like where the Board is accountable to
the owners. They see this as an opportunity to shape what “type” of Foundation Trust they will
be in the future where decisions are led and influenced by those that deliver services moving
both the staff engagement and involvement to another level.
Mutuals in Health Expression of Interest, SaSH, 2014
(emphasis added)
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In line with the original objectives of the Trust, the project and feasibility study has focused on
establishing the organisational and cultural fit of mutual values with SaSH values to capitalise on good
staff and community engagement and the extent and “types” of Foundation Trust that are possible
with and without legislation change. Flexibility around incentives and rewards for staff and
mechanisms for staff/member engagement that encourage a culture of innovation and a focus on
clinical outcomes, experience and staff satisfaction have all been explored.
2.2 OBJECTIVES AND PRINCIPLES OF MUTUALISATION
2.2.1 What is a mutual?
Mutual organisations have many varied forms and ownership constituencies. This programme focuses
on The Cabinet Office Mutuals Support Programme definition11:
Note that because the term “mutual” is used as an umbrella term for different ownership and
governance models, there will be different definitions of which the Cabinet Office’s is just one (it is
used here because of its relevance to the Pathfinder programme).
Further discussion: SaSH may wish to consider which definition of “mutual” best fits SaSH’s situation
and aspirations.
Whilst the emphasis of this definition is on staff control and its link to engagement, it is important to
note that the involvement of other constituencies, such as patients and the community is not
precluded and in the context of an acute sector organisation may bring considerable benefits to the
organisation.
In formal terms, a mutual with only one type of owner (e.g. staff) is a single constituency model and a
mutual with different types of owners (e.g. staff, community, other providers) is a multi-constituency
model. Although governance costs may be higher in multi-constituency mutuals, there are many
benefits, including the aligning of key interests against an agreed shared purpose. Multi-constituency
mutuals are particularly suitable to public services which must increasingly move to creating
collaborative community and relational expertise if they are to produce integrated, efficient services
which meet peoples’ needs.
2.2.2 What would a mutual seek to achieve?
A mutual structure would seek to reflect and embed the high level of pride and ownership already
present in SaSH’s workforce, build upon the current excellent levels staff engagement and to create a
resilient governance system which ensures the voice of staff, patients and/or the community is
effective in decision-making processes. In workshops staff discussed how SaSH had a participative
11 https://www.gov.uk/start-a-public-service-mutual-the-process
Public service mutuals are organisations with the following three characteristics:
They have left the public sector (also known as ‘spinning out’);
But continue to deliver public services; and,
Importantly, staff control is embedded within the running of the organisation Cabinet Office “Start a public service mutual” July 2014
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nature that was beyond that of most NHS trusts they were familiar with, but concern that this would
not necessarily survive any change of management and leadership. There are also likely to be major
advantages to a mutual increasing the role of community and their engagement with the hospital.
2.2.3 Putting mutuals in a historical context
In the UK, mutual organisational models have traditionally been community-based, founded on a
principle of community self-help and accountability with democratic ownership process where every
member has a vote. Mutuals historically had a community or social purpose and in a number of areas
generated public services (including health services) before state provision was introduced.
Since 2000, mutual structures have enjoyed a renaissance in providing public services with the
benefits of service users and/or the local community and staff having ownership status in social
housing schemes, NHS Foundation Trusts, Leisure Services, Schools and Community Health Services.
There is no current policy to support the formation of mutual organisations in the acute sector other
than NHS Foundation Trusts. The Mutuals in Health programme seeks to develop policy in this area.
2.2.4 Comparison to the NHS Foundation Trust Model
NHS Foundation Trusts were originally conceived as a form of mutual. In the legislation, a new
category of legal organisation – the Public Benefit Corporation – was created, with very specific
requirements as to membership, elected members’ representatives (Governors), and the Board of
Directors. Detailed ownership and governance requirements are set out in primary legislation.
Whilst significant elements of community / employee ownership are present in the Foundation Trust
structure, the statutory constraints on mutuality are considerable, the implementation has tended to
focus on the structural change at the expense of the crucial cultural change, and as a result it has been
criticised for not using the best aspects of mutuality. A 2005 Report by Nuffield Trust highlights
particular concerns12.
The regulator’s role especially for early FTs focused on financial affairs and management
capacity with little interest in governance (p27)
Members have minimal formal roles and are most likely to be passive (p16)
Governors’ powers were quite limited reducing accountability (p28), although these powers
have now been significantly strengthened in the Health and Social Care Act 2012, which
amended the National Health Service Act 2006 (the “Act”)
The structure and constituencies were set out prescriptively in the Act (Schedule 7) rather
than developed to reflect the local circumstances; this led to representation problems e.g.
very small constituencies (p19)
The Foundation Trust structure provides a useful starting point for the development of an acute sector
mutual model and the potential to develop the FT model is considered further in section 3.2.
12 http://www.nuffieldtrust.org.uk/sites/files/nuffield/publication/governance-of-foundation-trusts-jun05.pdf
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2.3 SASH VALUES AND STRATEGIC FIT WITH MUTUAL PRINCIPLES
The values of co-operatives have been drawn upon here as a reference within the context of public
sector mutuals because there is a current and internationally recognised International Co-operative
Alliance’s Statement of Co-operative Identity, setting out these Values as well the Co-operative
Principles13. As is clear from the ICA Statement, co-operatives are accountable to, and based upon a
clear membership, with a wider concern for non-members as well. This would seem to be a closely
aligned fit against the model being explored by SaSH. As illustrated above, the values of SaSH and the
values of modern co-operation are well aligned.
Workshops with SaSH teams also identified how developing a mutual model could assist with
interpreting and evolving the existing values. In particular:
SaSH vision and values have been thought of in terms of staff participation, but with a mutual
there is also the potential to develop in the patient / community context e.g. One Team
includes other public services and consideration of the wider integration agenda across the
local health and social care economy.
There is the potential to add a focus on clinical and financial sustainability of care provision as
a necessary supporting objective to the values.
There is the potential to add a focus on democratic voice of staff and “the vibe” – values
deeply embedded in culture & behaviours of organisation. Participants recognised “the vibe”
as the feeling of an organisation that was well run and staff were professional, focussed on
customers and engaged with their roles – often found in very well, high quality hotels for
example.
13 see http://ica.coop/en/whats-co-op/co-operative-identity-values-principles
SASH: OUR VALUES
As an employee of Surrey and Sussex Healthcare NHS Trust, you have an individual responsibility to treat
everyone with:
o Dignity & Respect: we value each person as an individual and will challenge disrespectful and
inappropriate behaviour
o One Team: we work together and have a ‘can do’ approach to all that we do recognising that we
all add value with equal worth
o Compassion: we respond with humanity and kindness and search for things we can do, however
small; we do not wait to be asked, because we care
o Safety & Quality: we take responsibility for our actions, decisions and behaviours in delivering
safe, high quality care
Vision & Values, Surrey & Sussex Healthcare Trust, February 2015
VALUES OF CO-OPERATIVES
Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and
solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty,
openness, social responsibility and caring for others. Recommendation 193, International Labour Organisation, 2002
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The existing values are more focussed on the role of staff with respect to patients and the
community; an evolution of these values could focus more directly on the community
involvement
One of the key hopes identified in a workshop with SaSH staff is potential for a mutual structure to
embed SaSH’s existing values in decision-making processes and create resilience in the current
communications processes which have produced excellent levels of staff engagement and to extend
this level of engagement to currently less engaged groups.
A mutual structure will not deliver this ambition on its own, nor will a communications processes. Both
are needed, but the real change comes when all the relevant stakeholders engage in deep and
sustained discussion about the values, what they mean and how they are to be enacted in the work
they do together. Being a co-owner establishes an entitlement to speak, placing upon managers an
obligation to facilitate their speaking. Through identity shifts people come to see themselves as co-
owners and therefore their sense of confidence, trust and self-efficacy increases, encouraging them
to give voice to concerns/ideas. For the co-ownership to operate in this way, values-talk must be
deeply embedded in daily conversation,
Underlying this alignment of values is a broader issue of accountability. As an NHS Trust, SaSH
currently feels mainly accountable to patients and the public by ensuring that care is safe, high quality
and focused on patient experience and clinical outcomes. The Trust also feels a sense of accountability
to the TDA and values the opinion and guidance provided by the CQC inspection process and reports.
SaSH’s turnaround journey started with using accountability to patients as a tool for increasing quality
of care and creating accountability to clinicians e.g. making the feedback on patient experience and
the feedback from patients more prominent. This led to the importance of a clinical voice in the
organisation and the introduction of a clinically-led, managerially-enabled model, which has led to
clinical staff taking a greater responsibility for the delivery of care and services to patients.
A crucially important point which must be continually stressed is that it is not changing the corporate
form of an organisation that changes how it works on a day to day basis. Such a change is only brought
about by a cultural change. The difference (crudely) between FTs and the community health spin-outs
praised in Chris Ham’s report is that FTs have mainly been taken through structural change, with
limited cultural change. In the community health spin-outs highlighted, the cultural change was an
imperative because staff buy-in was crucial to the organisations surviving as businesses where staff
were going to need to make concessions in terms and conditions and accept less security than they
had enjoyed before. Giving them more power and voice was the basis of the new deal, and they went
for it.
In SaSH’s vision, the organisation wants to increase accountability especially to patients and the
community, but also to staff. Only “feeling” a sense of accountability is of limited value and runs the
risk of being misplaced.
A mutual organisation is horizontally rich in conversational practice but this held together by a vertical
spine of managerial control (in the case of a hospital this may be between the clinical leads and
managers who share control) where authority to control is subject to democratic authorisation
through the representative mechanisms. Essentially, there will be multiple sources of authority held
together in a balance of power (technically a “polyarchy”) but each one needs to be legitimated and
authorised.
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So any new structure can support significant cultural change and make it longer lasting and stable; but
on its own, it will not deliver it. Even cultural change may be insufficient and talking about culture in
the absence of values, processes and identity risks putting the mutuality in a ‘culture box’ where it
appears “safe” but not actually effective.
2.4 SCOPE OF MUTUAL MODEL The mutual model investigated by SaSH would incorporate the whole Trust into a new mutual
organisation. The preferred model would be an evolution of the FT structure to empower members
and embed a culture of staff and patient engagement. This is a natural fit given SaSH’s current FT
application, but also helps with the level and pace of change the organisation will need to take on
under each of these scenarios.
Further discussion: it needs to be borne in mind that acute care is a specialised part of healthcare.
With the increase of integration, delivering care outside hospitals and the evolution of different
approaches to healthcare, SaSH may need to look at the question of mutuality not just on its own, but
as part of the wider health community.
2.4.1 Ownership constituencies
The aim of mutualisation would be to increase accountability member (staff and patients) voice and
influence. The members of the mutual would therefore include both a staff and public/patient
constituency as with the current FT governor structure.
In the patient/public constituency, the key decisions on membership to be further developed 14are:
Is there a need to distinguish between patients, those closely involved with parents (relatives
and carers) and the wider public? Could a more relevant approach be who is more interested
in being involved and want to voluntarily contribute their time to improve the organisation?
If so, are how is patient defined? E.g. attended in last 12 months? This needs particular
attention given the changes in how healthcare is being delivered (e.g. care closer to home),
and a definition based on receiving care rather than attending hospital may be more relevant
For the wider public, is the membership limited by geography? Is there a need to treat out-of-
area patients as a separate constituency?
In the staff constituency, the key decisions on membership to be further developed are:
Would there be a minimum qualifying time before becoming a staff member? (Workshop
leant towards no)
Would temporary staff and locums be included? (Workshop leant towards no)
Would volunteers be included? (Workshop concluded yes)
Can staff be both staff and public members? This could present a conflict of interest and it is
likely that the constituency model would look to avoid this by prohibiting staff becoming user
/ patient members.
Would employees of other organisations working on site be eligible as members e.g. social
workers? (Workshop leant towards yes)
14 One useful approach on the architecture for strategic formation could be using the Mutuality Principle:
• Stakeholder inclusive (who is included/excluded from your mutuality) • Organisation to system wide (where does your mutuality lie) • Institutional capability building (how does your mutuality join to institutional design)
15
Due to the risk of conflicts of interest, other public sector bodies and health sector bodies would not
nominate governors as in an FT structure. The benefit of nominated governors is providing information
and insight into wider health initiatives, so it is proposed that representatives of these constituencies
would either have non-voting roles or attendee status at governor meetings. This would need to
balance with the wider strategic direction of closer integration (e.g. Integrated Healthcare
Organisations).
Further discussion: How would SaSH define its membership groups, and what would the implications
be for a mutual organisation?
2.4.2 Red Lines & Requirements
Within the methodology of this study, a number of key overarching concerns and priority themes were
clarified with SaSH (referred to as “red lines” on the grounds that they were areas that shouldn’t be
crossed) through the workshops and focus groups. These were in addition to the initial scope of the
study as agreed with Cabinet Office as commissioners of this Pathfinder programme, but were felt to
be critical in ensuring that this final report and conclusions could be best used by SaSH in the future.
This red lines and requirements were created through engaging staff concerning the values and
purpose of SaSH that will underpin the organisational form chosen.
Through this exploratory study and structuring of workshops and focus groups, these were addressed
and acknowledged in the following ways:
RETAIN NHS BRANDING
A key concern of SaSH is that whatever model they ultimately adopt, that the NHS brand identity will
be able to be retained. This is not only to reflect its history, but also its commitment to the wider
values and ethos of the NHS and wishing to retain this into its future. It is also important in retaining
the goodwill and support of its various stakeholders in ensuring its future success.
The ability of a future mutual to retain this branding would be subject to discussions with the NHS at
the time of an application to transfer into a mutual. However, to date, health mutuals externalising
from within the NHS have largely created a new principle brand identify, and so it is unclear as to how
far this aspiration would be able to be achieved without further future exploration and in light of a
future national policy context.
RETAIN FOCUS ON PROVIDING SAFE QUALITY PATIENT CARE
As a provider of clinical care services, SaSH needs to ensure that whatever model it adopts will allow
it to be able to always act in the interests of assuring appropriate standards in the quality and safety
of patient care. The challenge for healthcare providers with alternative governance structures is to
ensure that this objective has credibility, particularly when there may be cynicism as to whether a
primary motive is in fact profit. To achieve this, SaSH would need to be able to say that its commitment
to care is underpinned by its commitment to public, not private benefit and their answerability to their
members and community for their performance.
As either an acute Trust, or a Foundation Trust, the legislation and mechanisms through which SaSH
manages and assures this are well documented and understood. However, given the limited incidence
of whole Hospital Trusts moving into a mutual model, and lack of history of such care being provided
through these models, the ability for SaSH to assure this focus would need to be more clearly detailed
and explored with these current regulatory bodies. SaSH would still be subject to Regulatory
16
Requirements in the same way that other providers are now – this may not necessarily be Monitor,
although the CQC will still be important.
To date, this has begun to be explored through some aspects of supporting SaSH to reflect on its
current membership strategy, and the role of membership with regards to patient safety and care.
However, it is recognised that should SaSH wish to pursue a mutual model in the future, this is an area
that would require significant additional development.
ENCOURAGE INNOVATION
SaSH recognises the value of current staff engagement in encouraging this key stakeholder group to
act as a source of innovation generation in its services. Moving to a mutual model and giving staff a
much greater level of voice and influence is felt to offer the potential to open additional sources
through which further innovation might be generated and captured through these different and
additional membership groups. A similar argument can be made in relation to patients and
community, whose expert knowledge could equally well be harnessed better for the benefit of the
community.
To this end, a separate discussion and reflection was held to reflect on SaSH’s current membership
strategy and offer suggestions as to how this might be reviewed and further enhanced to stimulate
and encourage the realisation of such future innovation.
PROVIDE GREATER FLEXIBILITY FOR STAFF REWARD AND INCENTIVES
SaSH has developed high levels of staff engagement15 and is keen to build upon these to ensure that
its workforce are fully engaged in supporting the success of the Trust and in the realisation of its vision.
Within its current structure, or that of a Foundation Trust, there are limits on how far SaSH might be
able to enact a more flexible and wider range of incentives and rewards for staff that it might wish to
otherwise offer.
Some of the earlier health spin outs, as a result of the “Right to Request” and Transforming
Community Services initiatives, took advantage of being able to move away from some of the
traditional requirements of working within the NHS, including, but not limited to moving away from
Agenda for Change terms and conditions (subject to any overarching TUPE requirements), looking at
harmonisation of terms and conditions where possible considering alterative pension provision and
or a menu of employee benefits, which employees could select from
A mutual model, in being separate to the wider NHS’ employability structures, could offer considerably
more freedom on how staff might be further incentivised and rewarded.
As part of the methodology in undertaking this study, a series of consultative events were staged to
explore what a preferred rewards and incentives structure might look like if a mutual were created to
allow more flexibility in enacting these.
These highlighted that staff preferences with regards to rewards and incentives more related to
intrinsic values (recognition, flexibility over working structures, etc.) rather than a material or financial
gain. Given that the key difference a mutual would offer over other forms would be a greatly increased
level of voice and influence, then a mutual approach would very much meet the aspiration of staff in
this respect.
15 http://www.surreyandsussex.nhs.uk/nhs-staff-survey-ranks-surrey-sussex-healthcare-nhs-trust-among-best-country/
17
Further details of how these sessions were run and the findings are included in the appendix section
6.3.
PROVIDE GREATER FLEXIBILITY IN PROCUREMENT PROCESSES
SaSH recognises that in utilising a considerable supply chain to support its services and activities, it
has great potential to further impact upon its local community if it were able to have more flexibility
over its ability to procure from local suppliers and agencies, and also have more responsiveness within
in its supply chain management. However, many of these suppliers might otherwise struggle to comply
with regulations associated with supplying NHS bodies under national public procurement legislation,
and so it is keen to explore how becoming a mutual might offer it more flexibility in addressing this.
While public sector mutuals are separate legal organisations to the state, and so in theory, not bound
by the public procurement regulations that SaSH is currently required to abide by, it is unclear at this
time as to how far this aspiration would be able to be achieved through a mutual structure. This is
because NHS England have taken a position of reviewing such changes to procurement terms on a
‘case by case’ basis.
This point is explored in further detail in this report in section 4.2.2.
ENABLE OR (AT A MINIMUM) DO NOT INHIBIT FORMING PARTNERSHIPS WITH PUBLIC, PRIVATE AND THIRD
SECTOR BODIES
SaSH recognises that it is a key body within the wider local community, and through its size, economic
contribution, and services, has the potential to act as a catalyst to enable wider impacts to be created
through engaging with other bodies and agencies in a variety of ways.
As an acute Trust or Foundation Trust, it has considerable flexibility over how it can explore and
achieve this through delivery partnerships, and service level agreements. However, legislation within
these forms limit the extent to which these options might be able to be more fully realised at higher
levels of Governance, including such partner bodies serving as Directors. There are additional
constraints around non-NHS income, significant transactions and financial investment and stability.
A mutual form outside FT would offer considerable flexibility with regards to governance and Board
configurations, and so would potentially offer SaSH more options with regards to how it might
approach the development of collaborative partnerships with other bodies in the future.
CONTINUE TO HOST STUDENT TRAINING AND TRAINEES
SaSH takes pride in its ability to support future generations of medical staff through its involvement
in student training programmes, and hosting trainees throughout its operations and services, and is
keen to continue this.
Any move to adopt mutual status should not preclude this aspiration from being able to be realised.
Given the additional flexibility that a mutual form would offer at all levels, becoming a mutual would
also offer SaSH more flexibility over the ways in which it supports such students and trainees through
not only ‘opting in’ to the wider NHS programmes relating to them, but also engaging with other
training providers and bodies as well.
LIMITS ON NON-NHS WORK
SaSH is keen to ensure that if it moves to become a mutual, the flexibility over its ability to take on
non-NHS paying work will not grow to an extent where it compromises its primary role as a provider
of public services.
18
Many public sector mutuals have taken the opportunity of the flexibilities and freedoms offered within
their new form to begin to seek and secure private work as a means to grow the service and also
generate additional revenues to reinvest in their core operations and activities. However, there is a
balance to be found in doing so in ensuring that the mutuals original purpose does not become
‘diluted’ or compromised.
Within the context of this study and report it would seem that there are two principle ways in which
this concern can be managed: one is that SaSH would continue to be subject to regulatory oversight
from bodies such as Monitor who may deem that the quality of care to public patients is being
adversely affected by the taking on of too much private work and so instruct SaSH to take steps to
scale it back. The other is that through its stated purposes in its adopted governing document it could
set such a limit itself. It would be up to its own membership, elected representatives and Board then
to enforce such constitutional commitments.
RETAINING THE ROLE OF TRADES UNIONS
SaSH has built strong relationships with the Trades Unions that staff are members of, and is keen that
any move into a mutual form would not put these at risk.
Trades Unions have taken an active interest16 in the emergence of the political agenda relating to
mutualisation from the outset and despite stated concerns, have worked positively with services
whose staff are keen to pursue this option. This is largely a reflection of their recognition that if
planned and structured well, mutuals can place more control and influence in the hands of staff and
their members, than current employment arrangements can otherwise allow for. They also recognise
the potential for mutuals to enhance the quality and impact of public services delivered through this
form.
Within the context of SaSH, it would therefore seem that there should be no obvious grounds as to
why its existing relationships with Trades Unions could not be further strengthened by a move to a
mutual form in the future.
PROTECTING STAFF EMPLOYMENT TERMS AND PENSIONS
A concern expressed through the methodologies utilised within this study was in relation to the risks
to the staff’s current employment terms and pensions that a move to a mutual form might incur in
seeing them being transferred out of the employment of the NHS into a new legal entity (the mutual).
In keeping with the Transfer of Undertakings (and Protection of Employment) (TUPE) regulations, any
staff that were to be transferred into a new mutual would be entitled to have their current
employment terms protected and preserved at the point of transfer (including pension provision). This
would also be a key area that formed part of the consultations with key stakeholders in advance of
the decision to become a mutual with relevant stakeholders (primarily staff and Trades Unions).
While of assurance to staff, the potential liability of this would need to be calculated within the
financial model for the new mutual to ensure that it could sustain and meet these obligations. This
would usually be expected to be undertaken as part of the ‘preparation stage’ of any future process
SaSH adopts in transitioning to a mutual form. This is detailed further in this report in section 5.3, and
TUPE and Pension issues and considerations are detailed further in section 4.2.7 and 4.2.3
respectively.
16 For examples of union views on mutuals, see https://www.unison.org.uk/upload/sharepoint/On%20line%20Catalogue/19946.pdf and http://www.acas.org.uk/media/pdf/p/t/Mutual_Advantage_The_future-implications_of_mutualism_for_employment_relations.pdf
19
NO MAJOR REORGANISATION OF THE DECISION-MAKING PROCESSES E.G. COMMITTEE STRUCTURES
Given SaSH’s recent history in strengthening staff engagement and patient and community
representation through the development and introduction of a range of forums and structures, it is
understandably keen that these need not be ‘dismantled’ before they have been able to generate
their potential returns and impacts.
As SaSH is also pursuing an application for Foundation Trust status, it has begun to consider through
its membership strategy and governance rationale how these structures will be extended and built
upon in this new arrangement. A subsequent further transition into a mutual model would mean
further changes to these decision-making processes, but at this stage it is hard to clarify how far these
would impact upon current processes. This is because it is not clear as to the exact governance
configuration such a future mutual might adopt, and neither has SaSH had opportunity to reflect on
how well the processes that will be enacted through it gaining Foundation Trust status will be effective
or need to be subsequently reviewed and assessed.
Further discussion: These redlines and requirements came out of discussions with a diverse group of
staff involved in the pathfinder programme, but this is a key area to involve the whole organisation
and wider stakeholders in if SaSH wish to further pursue a mutual model.
2.4.3 Types of Mutual
Within the context of exploring the options of mutualisation and the roles it can offer, for the sake of
completeness within this study it was felt useful to also briefly consider and profile the different types
of mutual model that exist, and how each can be structured within respective legislative frameworks.
Historically, mutuals have usually adopted a specific legal model based on that of Friendly or (what
used to be called) Industrial and Provident Societies (now referred to in legislation as Co-operative
and Community Benefit Societies). These organisations developed around an ethos of existing
primarily for the benefit of its members, though from the first co-operative society in 1844 it is clear
that they had a wider social purpose and operated for the good of the communities they served.
The recent move to reconsider public services within the values of mutuality has seen the traditional
co-operative model being recognised as having certain draw-backs, in particular through its ability to
distribute surplus to members. A public sector mutual must be inherently committed to the interests
of the public and its community, and not any private constituency of users or employees. This has
resulted in a much greater use of community benefit societies, which are becoming the longer-term
vehicle for public service mutuals.
Further, in seeking to harness the potential of mutual values in transforming public services, the State
has recognised that there needs to be a range of models that can be adopted to allow a flexibility of
approach to enable further innovation in different contexts according to both service type, and the
geographic scale at which the mutual will be operating. These fall into one of three broad types
(although each of these types can be incorporated within different legal forms):
Employee owned - where employees hold a significant stake through one of various types of
membership or shareholdings (either in the organisation directly, or in a Trust, through which
they have influence from that Trust being a majority shareholder in the organisation). Where
such organisations enable employees to derive a personal financial benefit, they are generally
not regarded as operating for a public purpose. In other cases such as the community health
spin-outs, there is no intention for employees to receive any financial benefit from
membership and they remain committed to the public good.
20
Co-operative – where the organisation is majority or wholly owned by its members who are
defined by having a common interest or shared defining characteristic (such as being
employees, all using the services offered, or all residing in the immediate locality). No
substantial co-operative public mutuals are known by the team – new co-operatives tend to
be small in scale
Wider social enterprise - where the organisation is defined primarily by its social objectives
rather than its membership
2.4.3.1 – Different legal forms for mutuals to incorporate within
As referred to above, these types of public sector mutuals can be incorporated within a range of
different legal forms, and the principle options usually adopted are briefly: Companies including
Community Interest Companies, Community Benefit Societies and Charities. However, it is also of note
to highlight that within each there can be significant flexibility with regards to how membership is
defined and structured, and how governance arrangements can be enacted. These are explored
further in this report in relation to SaSH’s own vision.
A study of public sector mutuals in 2014 by the Transition Institute17 identified that against the above
choices, there appears to be a clear preference for Companies that are Limited by Guarantee, and
Community Interest Companies:
Legal form Proportion of organisations incorporating with this form
Company Limited by Guarantee 38.5%
Community Interest Company 33.8%
Company Limited by Shares 12.3%
Community Benefit Society 12.3%
Charity 3.1%
The data should be treated with some caution and read in the context of the whole report, as not all
of the organisations came from positions relevant to SaSH.
The below briefly profiles each of the principle options in more detail for reference:
COMPANY (OTHER THAN A COMMUNITY INTEREST COMPANY)
The Company form is very flexible in being able to accommodate a range of different governance and
Membership structures. It is also widely recognised. Within the context of mutuals, generally only
companies limited by guarantee are used, because distribution of profits to shareholders (the principle
of companies limited by shares) is contrary to the Co-operative Principles.
Companies limited by guarantee see their Members guaranteeing any debts to a pre-set amount
(usually £1) and are widely used by non-profit organizations; worker co-operatives have also used this
model.
COMMUNITY INTEREST COMPANY (CIC)
CICs were introduced by the State as a legal form specifically for social enterprises, and act as an
additional layer to an ordinary Company (see above) – in effect a CIC must also be either a Company
limited by guarantee or shares. A CIC limited by guarantee is prohibited from making any distribution
to members. A CIC limited by shares may make a distribution, but subject to a dividend cap.
17 See table 4.7 (page 24) of http://www.transitioninstitute.org.uk/wp-content/uploads/2012/03/Public-service-spin-outs.pdf
21
Crucially, a CIC is subject to an additional regulatory body (the CIC Regulator) whose powers allow it
to intervene in the Board and trading activities of a CIC to ensure that it does not become subverted
or start to act in ways that may be felt to be contrary its stated community purposes. The CIC Regulator
is generally more of a “light touch” regulator, but it is necessary for CICs to file annual Reports with
the Regulator to demonstrate that it is complying with its requirements for being a CIC.
Additionally, CICs are subject to a statutory ‘asset lock’, protecting the value of the CIC in the interests
of the community in perpetuity, which also underpins the dividend cap.
CO-OPERATIVE SOCIETY
A Co-operative Society is formed primarily for the benefit of its members, and is able to distribute
surpluses amongst its members. Although being structured in legislation on a ‘one member one vote’
governance structure, these other characteristics and its inability to include an asset-lock mean it does
not make it an easily reconcilable option within the context of public sector mutuals or SaSH’s values.
COMMUNITY BENEFIT SOCIETY
In contrast to a Co-operative Society, a Community Benefit Society’s principle focus in on benefitting
a wider local community, with membership being drawn from anyone with an interest in its activities
and services (although still on a ‘one member one vote’ basis). In this way it will have membership
drawn from different constituencies, with each such group having a different interest in the
organisation and subsequently, their expected relationship with it.
A Community Benefit Society may also include a statutory asset lock (a standard feature of both CICs
and charities). Community benefit societies have been used on other occasions to create public
service mutuals based on the Foundation Trust model – e.g. Rochdale Boroughwide Housing18.
CHARITABLE INCORPORATED ORGANISATION (CIO)
The CIO model was introduced to simplify the previous arrangement of charities needing to be
registered with both the Charity Commission and Companies House in order to afford their Members
a protection of their personal liability.
While charities must have exclusively recognised charitable purposes in order to quality as such, they
are able to trade and enter into various contracts.
Important: The final determination of the appropriate corporate form to use is something to be dealt
with at a late stage when all other aspects of a proposal are fully developed. It is a matter of detailed
legal advice, which needs to take into account a range of issues including ownership, governance,
funding, tax, and intended relationships with different stakeholders. At this stage we would suggest
that the likely options for SaSH will be a public benefit corporation (if legislation can accommodate
what is desired) or a community benefit society.
Further discussion: SaSH would need to carry out detailed assessment and legal advice on the
appropriate corporate form.
18 For further reference on Rochdale Boroughwide Housing see: http://www.rbh.org.uk/about_us/history_our_mutual_vision.aspx, http://www.rbh.org.uk/about_us/our_mission,_vision_and_values.aspx and http://www.rbh.org.uk/about_us/governance-1.aspx
22
2.5 BENEFITS AND RISKS In the staff engagement workshops with SaSH employees, the key benefits that were identified by
staff members were:
Empowerment of staff and increasing personal responsibility
Sense of ownership – beyond formal legal structures (i.e. including psychological ownership)
Increase pride in the organisation
Greater control of own destiny and ability to author own story (more autonomy)
Broader representation and a shared voice
Pioneer status & opportunity to shape national policy
Potential to become a more agile organisation
Potential to create a new NHS sub-brand
Process of engagement is good of itself
There are also a range of “mutual assets” that are commonly found in mutual organisations, which
can be audited, measured and disseminated. For example increased innovation and overcoming
organisational silence.
In the staff engagement workshops with SaSH employees, the key concerns that were identified by
staff members were:
Need to ensure governance is agile and unlocks potential benefits
Scale of potential membership could become unwieldy
Lack of a safety net, being on your own financially
Increasing scrutiny on organisation as a vanguard
Lack of reference points and precedents
Complexity – hard to explain the model and wide parameters make it feel like a big step
Potential to lose NHS brand
Further discussion: These benefits and risks were drawn up in the staff engagement workshops but it
was only possible to include a small group of the Trust’s thousands of staff and wider stakeholders,
and this was done over a limited time period. If SaSH were to progress with becoming a mutual then
this should form a far wider programme based on the ideas in these workshops. This would form a
two-way discussion on these topics (e.g. allowing stakeholders to express their concerns about the
risks and the Trust to further understand potential risks), and also helping stakeholders to become
comfortable with the concepts and be able to fully engage in discussions and decisions.
2.6 CONSTRAINTS The main constraints identified for the Trust to become a mutual are the policy and legislative
environment. At this stage in the feasibility study, these constraints will prevent the Trust from
developing into a fully mutualised model. Based on recent political history it seems reasonably likely
that these constraints will be removed in time, however this would require legislative change and at
the time of writing this there is a high degree of political uncertainty that will delay any immediate
legislation (at the very least until the outcome of forthcoming elections).
The table below sets out the list of constraints identified and potential responses to overcome these
barriers:
23
Constraint Description Impact Response
FT Legislation Legal barriers to incorporating elements of mutuals
High Specific areas of legislative change requested highlighted through pathfinder participation
Policy environment Supportive national policy required High Continued participation in path finder programme and contribution to policy and legislative change.
Maintaining staff enthusiasm Staff members needed to shape and drive mutual model
High Initial engagement positive, however communications plan will be paused whilst FT commences to prevent distraction. Staff engagement planning undertaken for future mutuals project, interface with SaSH+ programme reviewed. Staff involvement and voice to be monitored through FT membership engagement strategy to provide baseline to articulate benefits of mutualisation in future.
Board Development Different skills required from board in mutual organisation
Medium Board development planned as part of transition to FT status. Board development work-stream planned into next steps of project.
FT Transition Time required for FT model to be tested and bedded in
Medium Transition to FT will required board time and attention in short term, so mutual project will be paused whilst this process undertaken. Mutuals communications plan used to position mutual organisation as a potential future evolution of FT model and Mutuals programme included in FT post-evaluation review planning and in membership engagement strategy to allow evaluation of whether FT model meeting Trust’s needs or evolution beyond FT would be beneficial.
Community engagement Support from community essential High Preferred mutual model incorporates community and patient voice, however all mutual models likely to increase staff voice. Engagement programme planned in next steps planning.
External stakeholder engagement: Commissioners
Support from commissioners required
Medium Engagement programme planned in next steps planning.
External stakeholder engagement: Politicians
Support from local politicians beneficial
Medium Engagement programme planned in next steps planning.
External stakeholder engagement: Unions
Support from unions beneficial Medium Initial involvement of union representatives on project board positive. Agreement on transparency of working on project and clarity agreed. Engagement programme planned in next steps planning.
Change Management Strong processes required to ensure successful transition
Low Well organized change management processes developed for FT transition. Constraint to be reviewed when mutuals project reassessed to ensure robust process still in place.
Cultural alignment Mutual values need to align with Trust values to create mutual organisation
High SaSH values and principles of mutualisation closely aligned already. Constraint to be reviewed if SaSH values further developed to ensure continued compatibility.
24
2.7 DEPENDENCIES
Dependencies for SaSH becoming a mutual have been divided into internal activities over which SaSH
largely has control of timing and external environment factors where SaSH will have little influence on
the activities required. It is important to note that these dependencies refer to the process of
becoming a mutual; the ‘mutual difference’ will be manifested in collaborative working, generating
momentum around innovation in inter-departmental, functional or organisational processes
The key barrier to SaSH becoming a mutual is the policy development and legislative change
programme. Whilst all other activities can be taken speculatively independent of the wider policy
support, ultimately SaSH’s plans will be determined by the policy context, so it is not recommended
to commence detailed mutual model development work in advance of policy guidance. Due to the
electoral cycle, this policy guidance is not expected before summer 2015, with an expectation that it
would become available in Autumn/Winter 2015 at the earliest.
This dependency fits conveniently with SaSH’s application for Foundation Trust status where a
decision is expected in summer 2015. Allowing for a period of bedding in the Foundation Trust model
if (as expected) the application is accepted, or allowing for a period of strategic recalibration if the
application is not accepted, the next steps planning for the mutuals programme assumes a review of
the potential to create a mutual in late 2015, early 2016 (subject to any delays in the FT application
process). This is expected to coincide with a six month Post Evaluation Review (PER) of the Foundation
Trust model in operation and therefore the interface with the Foundation Trust PER is a key
dependency of the mutuals project.
•Purdah begins
March 2015
•General election
May 2015•FT Decision
Summer 2015?
•Mutuals in Health legislation?
Autumn/Winter 2015 at earliest
25
The outcome of that review is expected to either identify (1) no changes required, (2) minor changes
that can be made within the FT model, (3) changes required to meet SaSH’s vision of staff engagement
that do not sit within the FT model. The matrix provided in section 3.2 is designed to assist the
evaluators to understand the flexibility provided within the FT model and determine whether a mutual
model outside the scope of current FT legislation could better meet SaSH’s objectives. The
membership engagement strategy will help provide a baseline for the levels of engagement achievable
through the FT model. In the event that the PER identifies that SaSH would like to improve these
metrics, the staff engagement programme set out in section 5.5 could be used to identify
modifications to the FT model to improve the metric targeted and to re-commence the process of
engagement to develop a mutual model to suit SaSH’s needs. The pace of this development process
and detail that can be developed will be determined by the policy environment and changes to
legislation.
2016/17
Outcome of review
End of 2015
Outcome of decision
Spring/Summer 2015
FT application decision
FT application approved
FT post evaluation review
FT model provides staff engagement desired
Review amendments permitted if minor
improvement sought
FT model not providing staff engagement
desired
Commence staff engagement on mutualisation?
FT application Declined
Commence staff engagement on mutualisation?
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3 OPTIONS APPRAISAL
Key messages:
To determine the preferred mutual model, further staff and stakeholder engagement will be required
once the FT model has been embedded at SaSH. The section below sets out the “Long List” of potential
models that could be adopted as a continuum from evolution to a new form of FT with greater voice
and participation of members to revolution to create a fully staff controlled mutual following existing
community services precedents.
Short-listed options along this continuum can be selected once the current FT application has been
decided and the new governance models embedded and reviewed for effectiveness. Areas of
potential change are set out in a matrix in Section 3.2 below to aid future discussions of which areas
of SaSH’s governance framework could be developed. The matrix separates potential changes into
those which sit within the existing legal framework and those where legislative change will be
required. It also orients to what extent changes would be consistent with a modified FT model or a
new type of organisational form.
The selection of options will ultimately rely on the critical success factors (CSFs) determined, balancing
the benefits and risks of the potential models. This section develops an initial list of CSFs to be refined
with future engagement and sets out methodologies that can be utilised for assessments of the
qualitative benefits and risks of the short-listed models.
Due to the lack of policy guidance and legislation, the options appraisal produced takes a blue-sky
thinking approach to organisational design, and then identifies where legislative and policy barriers
currently inhibit SaSH’s desired outcome. The viability of the options cannot be fully considered until
the trajectory of policy development is known.
The options appraisal also does not focus on the “do nothing” option due to the current uncertainties
stemming from the dependency on the FT application outcome. In particular:
1) Prior to a decision on the FT application, SaSH’s future organisational model (when the policy
and legislative framework is established to permit a mutual model) is unknown.
2) Assuming a transition to FT, there is currently no relevant baseline to reference. The next steps
planning seeks to integrate with the FT transition and utilise the FT PER to provide an
opportunity to assess the value of a fully mutual organisation compared to the emergent FT
structure.
A further caveat to performing an options appraisal at this stage in the development of a mutual
organisation relates to the timeline of the potential transition to a mutual model. As noted above in
section 2.7, this timeline is dependent upon policy formation and the FT application process and as
noted below in section 0, a typical transition process will last many years.
In the wider Mutuals in Health sessions with other pathfinder Trusts, a key concern of the programme
panel is maintaining momentum in developing mutual organisations in the acute sector. Previous
programmes that have resulted in mutual spin-outs have gained momentum from “burning platforms”
that have required organisations to develop new organisational forms. In particular, the Transforming
Community Services (TCS) policy in 2008 triggered a wave of mutuals because it required PCTs to
divest themselves of their community services. The main options pursued were to merge the services
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with an NHS body e.g. an acute or mental health trust19, create a community NHS Trust/Foundation
Trust20, become a “social enterprise” (mutual organisation)21 or contract the services to a private
firm22. Creating a mutual spin-out presented an attractive option in numerous areas for various
reasons including freedom, independence and innovation. A Parliamentary Seminar in 2009 provides
a comprehensive discussion of the choices faced by commissioners and service providers at the time23.
Between 2009 and 2014, 42 new mutuals were formed from parts of the NHS24 – largely community
services, with some examples of highly successful organisations resulting. It is currently too early to
evaluate the sustainability of these spin-outs as most have not yet reached the end of their initial
service contracts.
Whilst the Transforming Community Services policy has been used as a reference point for the current
pathfinder, there is currently no directly analogous immediate drive or crisis to fundamentally change
the way acute services are provided that would create the “burning platform” seen with the TCS
policy. In workshop discussions with SaSH it became apparent that a more approach than a “burning
platform” may be areas that would “build appetite” for a mutual. This approach focusses on the
potential upsides of a mutual and what it may enable SaSH to achieve rather than events that would
force it to become a mutual. Initial ideas included the possibility of far deeper involvement of a wider
community in a possible “health campus” at the East Surrey Hospital site through their participation
in a SaSH mutual.
A workshop with the other pathfinder Trusts also investigated the potential “trigger” issues that would
provide momentum for policy development to support the mutuals programmes, at which it became
clear that whilst the crisis was not immediate, it was approaching rapidly:
• Productivity/Efficiency improvements and savings required for financial survival and to
meet increasing service demands
• The Five Year Forward View vision of a “more engaged relationship with patients, carers
and citizens” which is a radical new approach
• Integration initiatives within the health care system and between health and other sectors
which need to be genuinely transformative
At the time of writing it is unclear whether the “leading cohorts” investigating Primary Acute Care
Systems (PACS) and Multi-Specialty Community Provider (MCP) models may be fore-runners of a
wider sector organisational transition driven by integrating health services25.
Future question: SaSH should engage with internal and external stakeholders to understand what
would truly build an appetite for a mutual (and ensure that there is genuine appetite). This will help
inform the direction of any mutual programme and also build stakeholder understanding and support.
19 E.g. Rotherham NHS FT http://www.therotherhamft.nhs.uk/community_health/ 20 E.g. Birmingham Community Healthcare NHS Trust http://www.bhamcommunity.nhs.uk/ 21 E.g. Essex community health provision http://www.provide.org.uk/who-we-are/ 22 E.g. Surrey community health provision http://www.virgincare.co.uk/virgin-care-signs-contract-for-community-services-in-surrey/ 23 “A Mutual Health Service” 18th December 2009 https://www.conted.ox.ac.uk/research/projects/AMutualHealthService.pdf 24 http://www.theguardian.com/society/2015/jan/25/nhs-mutuals-not-all-like-hinchingbrooke 25 http://www.england.nhs.uk/wp-content/uploads/2014/12/forward-view-plning.pdf
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3.1 DEVELOPING CRITICAL SUCCESS FACTORS
3.1.1 What should relations with stakeholders be like?
Staff were asked to provide an ideal vision of the relations of the staff, patients and community with the Trust in 2025:
Stakeholders: Staff Patients Community
Ideal Relationship by 2025
Staff feel empowered, listened to and valued and take responsibility for service provided.
Staff are driven but not stressed, know why they are doing their job and how they contribute to outcomes
Staff influence decisions, innovate, are competent and excelling
Patients choose SaSH and are confident of feeling looked after
Patients receive integrated, quality care and then leave with all the information to not need to return.
Patients receive a consistently good experience that they would recommend to friends and family
Patients take personal responsibility for own health.
Everyone receives seamless service across health and care regardless of where they live in Surrey & Sussex
There is an understanding of who does what in community care.
The social value of the Trust is understood. The community is loyal to their local hospital and the 3rd sector supports the hospitals activities
2015 progress towards ideal
6-7 /10 5/10 3/10
3.1.2 What should the Trust retain, begin and end from different perspectives?
Staff were asked to set out the key activities that they believed the Trust should start, stop and continue from a range of perspectives:
Perspective: Staff Patients Carers & Relatives Other health & public services
Start these activities
Increase support staff levels with activity
Increase ways to listen to good ideas staff generate and implement
Embed values and behaviours in line with values
Empower staff with more info to enable them to do their job
Better access – 7 day services
Set patient expectations appropriately
Make navigating the system easier
One point of contact in hours and better contact out of hours
Improve facilities for dad’s in maternity
Use technology better
Work more collaboratively
Demonstrate how we evidence social value
Stop these activities
Using escalation areas Stop rescheduling appointments
Don’t give defensive answers
Being rigid in approach e.g. visiting hours
Admitting patients to hospital
Planning without wider stakeholders input
Continue these activities
Culture of patient safety
Stable management team
Recruitment to ensure minimal vacancies and less reliance on temporary staff
Training provision
High quality treatment + service
Maintain patient focus
Improve communications e.g. texts
Patient opinion
Engagement & co-design of services
Providing an excellent service
Working in partnership
Focus on quality & safety
Put patients first
Delivering more efficient services
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3.1.3 What Critical Success Factors would a mutual have and how could they be
measured?
In order for SaSH to be able to commit to pursuing mutual status at a future date, it was agreed
through the workshops and focus groups that a series of Critical Success Factors that are distinctive to
the Trust would need to be met. These reflect the Trust’s key priorities, values, and likely concerns of
its stakeholders – all of which the prospect of becoming a mutual will need to clearly meet and be able
to be subsequently reported against in order to elicit their support.
These supplement the list of ‘Red Lines and Requirements’ at section 0 in this report that SaSH have
previously identified as being key to assuring themselves that the pursuit of a mutual form should
enable it to be able to further achieve its vision (or if not, that they can be successfully managed and
mitigated). This subsequent list of issues further clarify what SaSH would be keen to monitor on an
ongoing basis in assuring itself that a mutual form is realising the benefits it anticipates for itself and
its stakeholders.
While these will be subject to future review in light of the outcomes of the Trust gaining Foundation
Trust status, and future legislation and changes within the wider political context, these were captured
as being the below for the time being:
POSITIVE IMPACT ON PATIENT SAFETY
The broadening of the Trusts’ membership within a mutual model would need to be managed with
regard to patient expectations – patient members may begin to expect and demand changes to the
care they receive by virtue of their membership which would be at odds with the regulatory context
in which SaSH delivers its services.
Patient safety is already the key focus for SaSH, with patient surveys already under-taken as part of
national NHS Survey programmes and specific local surveys as required. A Patient Engagement Forum
already provides the Trust with feedback from patients, as do the patient representative groups and
tools such as “Patient Opinion”. These initiatives could be supplemented within a mutual context by
seeking the views of its patient members as part of regular surveys of this group. Making forecasts
about the extent to which the adoption of a mutual status would enhance this in advance could be
explored through focus groups drawn from patient and staff representative forums and asking them
to reflect on the likely impact that the change of status and associated impact on services through
having relationships reframed through the focus of membership might create.
POSITIVE IMPACT ON PATIENT EXPERIENCE (FRIENDS & FAMILY TEST SCORE/PATIENT OPINION FEEDBACK)
As with the above consideration regarding patient safety, a mutual model would allow SaSH a greater
flexibility with regards to possible options through which it could elicit feedback and reflect on current
patient experiences. To this end, the same method of using existing forums to explore potential
impacts and identify possible concerns might also seem prudent.
However, as with patient safety, the use of wider membership models to directly seek views and
inform decision-making within SaSH with regards to patient experience would need to be carefully
managed to ensure that expectations amongst these stakeholders were not allowed to inflate to levels
where they believed that they would be able to have more influence that legislation would allow, thus
giving rise to resentments and conflict.
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INCREASED COMMUNICATION AND INFORMATION
In order for a mutuals’ governance to fulfil its potential, its membership need to be actively engaged
and will need access to timely and relevant information to enable them to do so. Part of this overall
study has begun to explore the implications of what becoming a mutual might mean with regards to
expectations from information by different stakeholder groups within the context of the membership
strategy. However, this still is felt to need further exploration with regards to the types of information
that members of a mutual might expect, would need, and what the Trust would be able to share with
them in the context of sensitive and commercial information as members would be accessing this
knowledge and be able to share it with others in the wider public realm.
INCREASED INNOVATION TO IMPLEMENT STAFF IDEAS AND IMPROVE PATIENT EXPERIENCE (CO-DESIGN)
A key aspiration of SaSH is to harness the wider latent potential innovation that may exist amongst its
constituent stakeholders. A mutual model would clearly need to offer a route through which this might
be not only encouraged but also appropriately captured in continuing to maintain and further enhance
SaSH’s standards of service.
Methods through which potential innovations might be identified and begun to be enacted have
begun to be explored within the context of the additional support offered to this study in reflecting
with SaSH on their existing membership strategy.
ARTICULATION OF SOCIAL VALUE (E.G. SROI – SEE SECTION 3.3.1.1)
Part of articulating a final business case for the pursuit of a mutual would need to include the
identification of the wider social and qualitative impacts that this model would create. This would not
only need to be on a forecast model as part of supporting the business case, but also within a
framework that would allow the Trust to subsequently ascertain how far these expected benefits have
been realised.
An initial review of such existing frameworks and models has been included in this Study and detailed
in section 3.3.1.
Further discussion: As referred to above, this list is not a final schedule of Critical Success Factors that
SaSH will wish to consider at any point at which it begins to formally pursue the move to a mutual
status. SaSH should revisit this initial list at that time with key stakeholders, and it is suggested that
this be done through the methodologies enacted through this Study, which engaged with key
stakeholders, and from which this initial list was generated. Details of these workshop schedules and
structures are included as appendices to this report, see section 6.2.
3.2 MUTUAL MODELS CONSIDERED: LONG LIST The “Long List” of options developed for this feasibility study is a spectrum of options ranging from
the FT model being adopted by SaSH to the maximum freedom permitted under the FT legislation (FT
possible) to a modified FT structure not permitted under the current legislation (FT +) to a full mutual
structure based on a community benefit society structure (Beyond FT).
The details of SaSH’s vision for its organisation are in development, but sit broadly in the area of FT+
i.e. not permitted under existing legislation, but clearly an evolution from the existing permitted
structure. This could be enabled with some minor modifications to the FT legislation.
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Comparison FTs Now FT Possible FT + Beyond FT
Description Structures seen in current FTs Based on where SaSH is with its draft constitution at the moment and other options it may want to consider
Modifications to the FT legislation that may meet SaSH’s requirements if enacted
Broadly, this summarises models seen in the health spin-outs in other health sectors
Ownership Members (legally), but continuing public dividend capital, monitor regulation etc. and other state interference diminishes that
Active member engagement strategy, but no constitutional powers beyond electing governors.
Establish members as custodians for themselves and future generations and increase their power and influence (NB this would require a reduction in the influence of regulators and Secretary of State)
Shareholders of CICs Members of mutuals. Those cited generally employee-owned
Purpose Provision of goods and services for the purposes of the health service in England and ensuring financial constraints met regarding NHS/private income. General duty to exercise its functions “effectively, efficiently and economically”.
May be possible in Standard Constitution to include further wording which does not conflict with statutory purpose but is more inspiring for staff and patients e.g. by greater reference to benefits to patients, quality of care, community engagement etc...
Per FT Possible Generally carrying on business for the benefit of the community (public purpose)
Ability to distribute profits
Not possible – though note many FTs do have charitable activities.
Potential to use surpluses more effectively in meeting principal purposes.
Potential to allow more integrated and joined up thinking about how to use its funds, capital assets etc… within its local health and social care economy, beyond just payment and capitation models.
Surpluses reinvested to meet purposes for those established as CICs without shares or a community benefit society. If a CIC with share capital, there is power to distribute to members with some limitations
Legal structure Public Benefit Corporation which is a body corporate constituted in accordance with Schedule 7 of NHS Act 2006.
Per FTs Now Legal form not a key driver provided that organisation remains within NHS (if it remains an FT then it would continue to be a Public Benefit Corporation).
Community Interest Company, Community Benefit Society
Governance Prescribed by NHS Act 2006. Three tiers: members, Council of Governors, Board of Directors. Act also prescriptive about eligibility criteria.
Per FTs Now Three tier structure preferred. Composition of tiers and powers to be considered.
Subject to the legislation governing incorporation. Those cited are either two tier (members and a multi-constituency board) or three tier similar to FTs
Power of Regulators
FT is less restricted than NHS Trusts, but subject to Monitor who impose financial monitoring & regulatory restrictions. CQC also imposes regulatory requirements. Also need to ensure compliance with any Monitor Licence requirements and/or conditions. General power to do anything which appears to it to be necessary or expedient for the principal purposes of or in connection with its functions.
Potential to interpret general power to undertake activity “necessary or expedient for the principal purposes” more widely e.g. to pursue partnership and healthcare integration opportunities, but will need regulatory permission.
Less prescriptive regulatory oversight preferred and more accountability to patients. SaSH’s growth strategy would benefit from greater power to form partnerships and provide wider more integrated services in line with patient expectations.
Generally unrestricted, subject as below. Need to comply with CQC Regulatory Requirements if undertaking regulated activities.
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Comparison FTs Now FT Possible FT + Beyond FT
Borrowing No longer subject to Prudential Borrowing Code, but effectively subject to Monitor. Secretary of State also has power to give financial assistance. May borrow money for the purposes of or in connection with its functions subject to any limits imposed by its authorisation.
Possibility of using its existing powers more widely in the delivery of its functions and in order to benefit the wider health economy, if Trust in financial position to do so.
Wish to retain access to public support capital and have freedom to use other funding sources as appropriate.
Unrestricted (subject to constitutional limits)
Disposal of Assets
Protected assets governed by NHSA 2006 although importantly not assets of the Crown.
May be more that can be achieved through rationalisation/shared usage, particularly regarding the integration and links with primary care and social services.
Would want more flexible approach to asset ownership to complement partnership model and creation of health campus at East Surrey Hospital.
Unrestricted, subject to asset-lock which preserves asset value and prevents distribution to members (apart from dividends in CICs subject to overarching cap levels or permitted disposals for market value)
Investment Broadly unrestricted – but for the purposes of or in connection with its functions.
Per FTs Now – note that the limits are currently being explored by some of the new “Vanguard” models in response to the Five Year Forward View
Flexibility to form partnerships and integrate with other healthcare providers beneficial where not already granted.
Unrestricted (subject to constitutional limits)
Purchasing Subject to public procurement rules/ any specific NHS procurement requirements.
Per FTs Now Would potentially want flexibility to opt out of procurement regulations, but not if this prevented retention of NHS organisation status. Unlikely to be able to “opt out” of procurement regulations under this model.
Potentially unrestricted, provided the new entity is not caught by the definition of a “body governed by public law” in the Regulations. See section 4.2.2 for further details.
Rewards and Incentives to Employees
Agenda for Change Per FTs Now Modifications to Rewards and Incentives may be possible but are likely to be largely based on AfC
Unrestricted subject to any positions inherited on TUPE Transfers and any subsequent harmonisation exercises
Pension NHS Pensions Per FTs Now Per FTs Now Due to TUPE, generally been a mix of LGPS Admitted Bodies, NHS Direction Status and private pension provision.
Ability to generate other income
Private patient income restricted – cannot interfere with fulfilment by the FT of its principal purpose, and NHS income must be more than 50%. Requirement for more an increase of more than 5% in non NHS income to be approved by Council of Governors.
Per FTs Now Further flexibility potentially required for integration and forming partnerships with other bodies e.g. Macmillan cancer information centre.
Unrestricted – subject to any overriding requirements e.g. if public sector Teckal vehicles.
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Comparison FTs Now FT Possible FT + Beyond FT
Membership Very prescriptive and set out in NHSA 2006. Any deviations from Schedule 7 and Standard Constitution have to be explained to Monitor – “comply or explain” approach adopted. Act also makes it clear, even if approved, amendments are of no effect if the result of the amendments would be non-compliant with Schedule 7.
Discussion e.g. on staff re agency staff and bank staff as members may be possible. Also, if a new vision suggests this, SaSH could adopt Patient and Carer constituencies which it does not presently have.
Would like more flexibility to define constituencies as below
Subject to incorporating legislation, their choice.
Categories of members
Public (compulsory), staff (compulsory), patients and carers (optional)
Public including out of area & Staff constituencies used
Patients/Public & Staff Membership constituencies and categories not the focus – wish to ensure that governors are able to represent members
Health spin-outs generally had employee share-holders because of pensions/NHS contracting restrictions, some also extended to service users and Carers. Public Sector entities limited to participating contracting authorities and no external private ownership, including employees.
Definition of public members
Living within a local authority ward Per FTs Now. Out of area patients defined separately.
Flexibility to create locally appropriate definition especially in light of strategy to increase market share of elective services geographically.
Their choice – might be geographical, or related to usage of services
Definition of Employee
Full or part time employees, and others “carrying out functions” for the trust, e.g. seconded people. Can’t include short-term employees
Discussions with Monitor would be needed – more could be done in relation to other staff “carrying out functions” in integrated models, particularly in relation to the cross over between health and social care.
Flexibility to define employee to include volunteers, partnerships and other services provided on site e.g. social workers. Would potential want to exclude agency/temporary staff?
Their choice
Definition of patient members
Those who have attended “any of the corporation’s hospitals” as a patient within a specified period
The wording about attending hospitals is clearly out of date and arguably inappropriate e.g. in relation to mental health FTs and initiatives to move care close to home.
The wording about attending hospitals is clearly out of date and arguably inappropriate e.g. in relation to mental health FTs and initiatives to move care close to home.
Their choice
Definition of carer members
Those who have attended one of the hospitals within a specified period. Excludes professional carers
As above As above Their choice
Volunteers Have to be included in public constituency, unless they can fall within the “carrying out functions” test for employees above (but then problematic)
Per FTs now Would want to classify as staff members Their choice
Sub-dividing constituencies
Can (effectively) subdivide any of the constituencies (but cannot subdivide wards)
Geographic constituencies being used to enable member engagement, but members also being asked for interest to enable other types of engagement.
Other categorisations e.g. by type of service used may be more relevant than geography
Their choice
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Comparison FTs Now FT Possible FT + Beyond FT
Power of members
Although members are notionally “the owners”, there is no real sense of this as members do nothing except elect representatives. They can’t call a meeting, remove anyone from office or hold anyone to account. Members don’t even have to approve changes to the constitution, which means they are more or less insignificant in governance terms. Any decision making powers from a member perspective effectively rest with the Council of Governors and so is reliant on that being representative and effective in its function.
Training being provided to governors to assist them in representing members. Member engagement strategy developed to give members additional voice and input.
Greater power to members to increase accountability to members.
Their choice. Generally all provide that members have to approve constitutional change. Some have the power to appoint and remove the CEO and NEDs. Organisations also have difficulty engendering a sense of member ownership, but easier because there are clearly no other owners (state/DH/investors play no part in ownership).
Representation: Composition of elected representatives
NHSA 2006 very prescriptive about composition of Governors. Must have overall majority of public/patient governors. Must have at least 3 staff governors, 1 local authority, 1 university where relevant
Per FTs now Would want to increase staff and patient/public representation relative to appointed constituencies.
Their choice, subject to incorporating legislation. Generally the spin-outs cited have elected representatives of members on the board (in a two tier structure) or comprising the majority of the Council of Governors in a three tier approach.
Public and patient representation vs Employee representation
Because the majority of the Governors are public or patients, they have more influence than staff. This is deliberate as do not want staff to have a greater voice than the public. Effectiveness of representation varies greatly and concerns that in some cases more closely aligned with senior management teams than the public constituent they are supposed to represent.
Training and membership engagement strategy to increase effectiveness of representation
Would seek to increase staff representation (initial target 50% public/patient, 50% staff) to benefit from long term commitment of staff and in-depth knowledge of processes and impact on patient experience and outcomes. Note requirement to address the conflicts position presently protected by the Act e.g. staff influence not overriding public constituencies.
Generally much less substantial than employee representation as they tend to be employee-led or owned. Some have public governors or NEDs on the board. Generally employee-led or owned.
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Comparison FTs Now FT Possible FT + Beyond FT
Powers of elected representatives
All precisely set out in legislation, and limited scope for real change. Certain nuclear powers, such as ability to remove NEDs, but limited in practice. Board “must have regard to the views” of governors in forward planning, but do not necessarily have to follow them. Governors now required to approve strategic corporate decisions such as mergers, acquisitions, disposals and other significant transactions, big increases in private income, amending the constitution etc.
Ability to further enhance these and grant further powers, but would need Monitor approval. Need to ensure this did not operate so at to become divisive though.
Per FT Possible Their choice, but those with three tier structure generally have the power to appoint/remove NEDs like FTs. Ability to give elected representatives more power than in an FT, e.g. in relation influencing forward planning.
Board composition
Prescribed by NHSA 2006. Must have a majority of NEDs which includes chair; certain executive directors specified.
Per FTs now Per FTs now Their choice. Generally includes executive directors and NEDs. In two tier structures, NEDs tend to represent different interests; in three tier structures, tend to independent
Board powers Board has all the powers except those reserved elsewhere. Limited flexibility.
Options to give greater powers to Council of Governors and Members, but would require further discussions with Monitor.
Their choice.
Financial viability/ financial failure
NHS Failure regime would apply – potential for merger and dissolution, acquisitions and de-authorisation.
Per FTs now Per FTs now, although further discussions may involve a change in failure regime to reduce the disempowerment of members in the process
Depends on form adopted. For companies (including CICs), generally sold and or wound up in accordance with Companies Act/Insolvency Act requirements, though CICs would need to transfer any residual assets to specified asset locked body or as determined by the Regulator. Community Benefit Societies have the additional option of transfer of engagements, which has traditionally been the way that restructuring has taken place in the mutual sector without the economic and social costs of insolvency/failure.
Inclusion of partnered organisation
Not represented on Council of Governors or Board unless specified in legislation e.g. local authorities
Per FTs now Flexibility to include partner employees or organisations in governance structure for integration or cultural assimilation
Subject to incorporating legislation, their choice.
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Further development: SaSH needs time to let its (hopefully successful) FT status settle in before
deciding whether any shortcomings need addressing and if so which are the most important (including
reflecting on the effectiveness of the membership engagement strategy). SaSH would also need to
continue to consider its major growth plans and ambitions, and how well the FT structure supports
these.
3.3 SHORT-LISTING OPTIONS In a future business case, the short listed options will be dependent on policy development and the
legislative framework. This feasibility study sets outs a methodology for evaluating options qualitative
benefits and risks to assist with short-listing options when a business case is being created.
3.3.1 Methodology for evaluating qualitative benefits
A key part of the business case for a mutual and the engagement plan will be an ability to explain and
demonstrate the qualitative benefits anticipated by the organisational changes. There are several
methodologies that exist to allow this – Social Return on Investment (SROI) and Cost Benefit Analysis
(CBA), both endorsed by the government are outlined below. The challenge with several of these
methodologies are producing consistent, meaningful outputs without over-investment of resource
into the analysis. As an alternative, many previous pathfinders have continued to use internal tools
and methodologies.
It has been identified with SaSH that the setting of the FT membership engagement strategy presents
an opportunity to collect baseline data on the performance of the FT model in the areas where a
mutual may be beneficial. By building in these metrics to the membership engagement strategy, the
Trust may be able to define specific qualitative benefits that it would hope to achieve through a mutual
in the future.
3.3.1.1 Social Return on Investment (SROI)
The Cabinet Office recommend the use of “Social Return on Investment26” (SROI) to articulate the
social value produced by an organisation.
SROI as a methodology originated in the US in 1997 with an employability support charity seeking to
better understand and article the benefits its support was creating. This initial model was
subsequently explored through various national and European networks before an agreed framework
to use in enacting this methodology was finalised in 2005.
It is designed as a comprehensive process that maps affected stakeholders to an organisation
(although principally in relation only to a specified service), and then consults with them to identify
and understand the impacts and outcomes (both intention and unintentional, and positive and
negative) that each stakeholder experiences. These are then assigned a monetary value, and
compared to the cost of delivering the original service in order to create a ratio (allowing for outcomes
that would have been generated regardless, and any displacement of existing activity from other
providers). This ratio is a comparable model to accountancy practices of a ‘financial return on
investment’, but in considering qualitative impacts and benefits, represents the wider ‘social’ return
on investment.
26 Further details can be found in http://www.bond.org.uk/data/files/Cabinet_office_A_guide_to_Social_Return_on_Investment.pdf
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As a change management and stakeholder engagement model, SROI offers a strong methodology
through which an organisation might better identify and understand how its activities impact on
stakeholders in different ways.
However, SROI is also recognised as complex and requiring significant resource to fully enact.
Additionally, although a recognised and auditable methodology, there are no universal guidelines as
to which stakeholders should be consulted with regards to specific services; and there are also various
approaches that can be taken in assigning monetary values to the same outcomes and impacts. This
means that any SROI report cannot be easily compared or externally benchmarked by commissioners
of public services, and internal decision makers.
Also, researches commissioned by other Government bodies have concluded that owing to the range
of methods and methodologies through which wider qualitative benefits might be captured and
quantified, and the complexity arising from the range of ways in which similar services can be
delivered in different localities, that while SROI offers some benefits, commissioners of services should
not mandate that organisations adopt a specific approach27.
3.3.1.2 Cost Benefit Analysis (CBA)
Although based on a French economic model from the 19th century, CBA has recently begun to be
revisited by modern policy makers as a robust framework within which to reflect on the anticipated
relative gains of policy and service proposals.
Building on consultative work commissioned in the late 2000’s in relation to the ‘troubled families’
agenda, the new economy strategy and research consultancy has created an ‘open source’ CBA model
with pre-set public policy outcomes and values that have been endorsed by Government. This enables
an organisation to more readily and easily evidence and argue its business case for a proposed service
with policy makers and public commissioning bodies. It has also led to some Government bodies
endorsing this approach over SROI with organisations it is considering investing support into, or in the
case of local authorities, in considering the benefits of asset transfers of public buildings into local
community ownership.
CBA begins with the development of a ‘theory of change’ model – mapping out the context and
rationale for the intervention or service model, its required inputs and expected outputs, outcomes
and impacts. This is then used to map the model against the pre-populated framework of a range of
public policy outcomes using proxies and values that have already been agreed with government. The
framework then captures costs, and considers how far the proposed model may be able to justifiably
claim it will be generating these benefits by drawing on other research into comparable models
elsewhere.
It also outputs the benefits of the proposal model in both financial and social terms – collectively and
with regards to each stakeholder.
The CBA model therefore offers a more practicable and appropriate framework to consider the
qualitative benefits that are expected to be created – it is designed as a forecasting tool only (whereas
SROI was originally designed to be reflective against activity already delivered). Further, it is based on
a more rigorous and objective approach in considering how far outcomes and impacts might be
attributable to the model, and uses standardised outcomes and values agreed by government to be
able to make a more credible case with commissioners and also more easily benchmark externally.
27 creating sustainable social enterprises in the criminal justice system – a comparative study, 2012 pan-regional social value commissioning project final report (ref p6), NHS and cpc, 2010
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However, it is a complex tool that considers all affected stakeholders and requires extensive research
into evaluated comparable models elsewhere to inform its adoption. Given the relative lack of
published research into public sector mutuals to date, this would mean that this approach would
require significant additional support to fully inform its completion.
3.3.1.1 Use of metrics within existing management accounts information
In considering the qualitative benefits that will be created, it would be prudent to also look to data
that SaSH is already capturing through its existing management accounts and other information
systems.
These could be interrogated to identify the extent to which SaSH is impacting upon:
- the wider local economy through the extent of its procurement with local suppliers and
employees who live locally;
- the wider community through the extent of volunteering activity of staff and support to local
charities and groups on in-kind basis;
- its engagement with the community through profiling the makeup of its Board and the
makeup of other senior governance structures against demographic data;
- its environmental impact through energy use, waste management, and staff travel habits
These could all be captured as baseline figures at the outset of the transition to a mutual model, and
subsequently monitored to identify the extent to which the new mutual structure has enabled it to
further impact upon these themes.
This approach would require little additional resource, and also allow SaSH to be able to present its
role and impact in local and global contexts in ways that all stakeholders would be readily able to
engage with.
While not as sophisticated as the other frameworks profiled in this section, this approach may also be
beneficial in encouraging such impact reporting to be more easily embedded, and subsequently
enhanced in the future. It would also easily enable staff to identify the tangible impact of their actions
and choices within the larger role, contribution, and impact of SaSH as a whole.
3.3.1.3 Balanced Scorecard Approach/Specific Metrics
Kaplan & Norton’s Balanced Scorecard is a process designed to provide balance between short and
long term objectives, financial and non-financial measures, lagging and leading indicators and external
and internal perspectives. In 2005 the Chartered Institute for Management Accountants published “A
Practitioner’s Guide to the Balanced Scorecard”28 that provides a comprehensive guide to the
methodology and theory of the approach and provides a case study of the Scorecard being
implemented in a health economy setting.
The four quadrants highlighted by the Scorecard help to focus attention on the importance of
developing organisational capabilities through processes and learning & growth in order to achieve
outcomes for customers and financial returns.
28 http://www.cimaglobal.com/Thought-leadership/Research-topics/Management-and-financial-accounting/A-practitioners-guide-to-the-balanced-scorecard2/
39
Whilst the Scorecard was originally developed for commercial organisations, this model has been used
by public sector organisations with the CIMA research from 2005 identifying a similar level of uptake
between large UK corporates and public sector organisations in a telephone survey (p47 of the
Practitioner’s Guide). One of the main strengths of the Scorecard is its adaptability.
Implementing the full Scorecard process is a significant organisational development programme that
may be of benefit to SaSH in the future. For the purposes of understanding the qualitative benefits of
different organisational models, the principles and metrics of the Scorecard approach can be quite
simply adapted to create reliable baseline data to better understand the development of SaSH as an
organisation.
Mutualisation would be expected to have the most direct impact on the “Internal Business Process”
and “Learning & Growth” quadrants. Through developing metrics in these areas to understand the
impact of the member engagement strategy of the FT, a baseline of data can be collected.
Typical metrics to develop in this area include:
Employee satisfaction
Productivity measures
Employee retention
Employee training / competency levels
Based on the feedback from workshops, appropriate specific measures may include:
Use of member voice mechanisms – attendances of events, improvement suggestions made
and followed through
Use of staff engagement mechanisms – innovations / improvements introduced
metrics against key elements of the membership strategy to reflect on how far the Trust has
been able to engage and actively involve members – growth in membership, proportion of
members voting, contested elections
Further discussion: There are different methodologies for evaluating benefits and measuring
performance. SaSH may wish to engage in a wider discussion on which measurement system(s) are
most appropriate, useful and workable for the organisation and its stakeholders. Questions could
include: For whom does the measurement system exist? Who in the organisation / system needs to
know how well the organisation is doing? What do they need to know? How is this knowledge to be
acquired?
FinancialInternal Business
Process
Customers Learning & Growth
Vision & Strategy
40
3.3.2 Methodology for Risk Appraisal
This sections presents a methodology for assessing risk and highlights the general concerns raised by
staff members during a workshop on the principles of mutualisation.
In section 4.2 below, consideration is given to some specific commercial concerns such as asset
ownership, VAT and TUPE considerations that are likely to apply. The nature of these risks will be
highly dependent on the specific policy and legal framework development and cannot be assessed at
this stage. The commercial considerations and risk implications for the Trust have been reported to
the Department of Health and Cabinet Office through a Project Report and participation in the
Pathfinder workshops to assist with policy formation.
3.3.2.1 Managing Risk?
The risk management methodology presents here is based upon the Chartered Institute of
Management Accountants (CIMA) methodology29 and the risk management advice given in the Green
Book30 in Chapter 5 “Appraising the Options” and Annex 4 “Risk and Uncertainty”
3.3.2.2 Risk Assessment
Risks have been identified through a workshop approach to understand the concerns of staff regarding
a mutual organisation. These risks have been further investigated and developed for this report to
allow analysis and response development.
An initial estimation of their impact and likelihood has been undertaken by the project team to create
an initial risk register for development when the policy and legislative framework is agreed.
A template risk register is given on page 80 of the Green book in Box 4.1. The items included on the
register below were identified at a workshop on the 3rd February 2015 with the project board.
# Description Type Dependencies Likelihood Impact Date
identified
1 Increased scrutiny from regulators and media
Strategic/ Compliance
Model chosen Legislation
Medium Low 3rd Feb 15
2 Loss of NHS Brand Strategic Model chosen Legislation
Medium31 High 3rd Feb 15
29 http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_intro_to_managing_rist.apr07.pdf 30 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf 31 Retention of the NHS Brand may be dependent upon the level of autonomy granted to the mutual e.g. GP partnership retain NHS brand, but have prescriptive contract of services and regulation, Community Interest Companies do not generally retain brand, but have more operational autonomy
Risk assessment
Identification
Description
Estimation
Creation of Risk Register
Risk management policy
Risk response
Risk reporting
“Managing Risk – a generic approach” CIMA 2007
41
# Description Type Dependencies Likelihood Impact Date
identified
3 Scale of membership becoming unwieldy
Operational Model chosen Legislation
Medium Medium 3rd Feb 15
4 Lack of financial safety net in failure regime
Financial Model chosen Legislation
Low High 3rd Feb 15
5 Complexity – members/governors may not understand roles
Operational Model chosen Legislation
Medium Medium 3rd Feb 15
3.3.2.3 Risk response
A list of typical risk responses is given on page 81 of the Green book in Box 4.2. The items included on
the register below were identified at a workshop on the 3rd February 2015 with the project board.
CIMA provide a more generic risk response matrix based on impact and likelihood of risk events:
Based on the generic strategies, a specific mitigation can be developed or investigated for each risk:
# Description Risk Strategy Mitigation Actions
1 Increased scrutiny from regulators and media
Accept Increased communication with regulators, members and the wider community
2 Loss of NHS Brand Avoid Mutual to be structured as NHS organisational form
3 Scale of membership becoming unwieldy
Reduce Utilise technology solutions to improve mass communications e.g. “gamefied” solutions to sift comments and suggestions e.g. Idea Street used by DWP32
4 Lack of financial safety net in failure regime
Transfer Continuity of care is a key concern for policy makers and regulators. It can be assumed that in development of the Mutuals in Health policy a robust failure regime will be developed (see section 4.2.4 for further discussion)
5 Complexity – members/governors may not understand roles
Reduce Training events for members and governors tailored to new roles. Lessons learnt from FT board development sessions
Further development: As SaSH develop their thinking and direction for a mutual model, this risk
assessment and response framework should continue to be developed. It is also a good tool for
engaging stakeholders in an honest conversation about the potential risks and mitigating actions of
becoming mutual (including some ‘myth busting’).
32 http://www.sparkcentral.co.uk/showcase/show/idea-street
42
3.3.2.4 Comparison to FT application risk management
Whilst the risks above are specific to a mutual model, the risk assessment of developing and
implementing a mutual model will sit within the wider risk assessment of the governance system. The
excerpt below shows the current status of the risk assessment during the FT transition process:
In transitioning to a mutual model, it is envisaged that a similar process to the current FT project would
be under-taken e.g. Mutual Project Board, Mutual Project Plan. The development and transition would
be included in the Long Term Financial Model and Integrated Business Plan. The BGAF and QGAF
would be refreshed and any action plans implemented to provide assurance. An external assessment
of BGAF and QGAF could be undertaken to provide further assurance. The level of assurance required
would depend on the nature and complexity of the changes required by the proposed mutual model.
The role of the regulator in the transition will be determined by legislation, but it is anticipated that
Monitor would provide support and guidance to the project corresponding to the TDA Readiness
Review.
The current preferred model in section 4 below represents an evolution of the proposed FT structure.
To address the risks in developing this model, as the role of Governors and the Board would remain
similar, but the voice of patients and staff increased, it would be anticipated that a more extensive
refresh of the membership engagement strategy and Public Consultation would be required with less
emphasis on a refresh of the Board Development Programme or Governor Awareness Sessions may
be required.
43
4 CURRENT PREFERRED MODEL
Key messages:
From the pathfinder engagement a preferred model would be an evolution of the current FT structure,
building from the proposed FT governance structures and increasing staff voice and engagement and
accountability to patients.
This model is specified in a template below that can be adapted as this model is designed to be
adapted in future engagement sessions.
The key commercial considerations for the feasibility of the mutual model chosen are discussed in this
section and should be reviewed once the short-listed models are chosen and in the light of revised
legislation and policy guidance. At present, VAT is the key concern and a potential barrier to the
feasibility of a mutual model; the Department of Health are liaising with HMRC to address concerns in
this area.
4.1 TEMPLATE MODEL SPECIFICATION The template below sets out a potential model that subject to legislative change could be adopted by
SaSH as an evolution of the FT model:
Element Specification
Structure Three Tier Structure: Owned by Members who elect Council of Governors to oversee Board of Directors (as
per FT)
Organisational Form Public Benefit Corporation, Community Interest Company33 or Other legal form34 dependent on legislation.
Note: see earlier caution on choosing organisational forms in section 2.4.3
Purpose of Organisation Provision of high quality, safe health care for patients
Members
Constituencies
Patients & Public (per existing FT definition)
Employees (per existing FT definition with potential addition of partner organisation staff
working on site and potential exclusion of some temporary staff, potential further sub-division
to increase number representatives)
Council of Governors All governors elected by members in constituencies.
Representation of Patients & Public and Employees (in proportions weighted towards staff)35
Chair of Board also chairs Council of Governors
Powers &
Responsibilities of
Governors
Represent members: Bringing innovative ideas from members, enabling members to become
involved in service co-design, provide
Oversee board: Holding to account NEDs and Chair, ability to appoint Chair and approve
appointment of CEO, setting of NED and Chair remuneration
Involvement in strategy implementation: Assist board in choosing between strategic options
and providing member voice in implementation decisions provide external view to Board to
assist decision-making,
Statutory role of FT governors in approving significant transactions etc.
33 This has some risk; if CIC is used without share capital, then that may inhibit the financing of the organisation in the long-term. If you use the CIC with share capital, (a) this leaves the organisation open to distribution of surplus to shareholders; and (b) the mechanics of running a share register a large and fluid membership with Companies Act requirements in relation to redeeming shares is very laborious. 34 Most likely alternative option is the community benefit society, which avoids the CIC problems and has the benefit of an asset lock. 35 this is because SaSH have an understandable concern that as its staff will be actively engaged with its services on an ongoing basis, whereas public constituencies of membership may be more transitional or subject to specific interests, that the respective influence of each group reflect this to ensure the standard of service and ability to continue to act in the wider interests of being a public service.
44
Element Specification
Attendees at Council of
Governors
Standing invitation to attend given to key community and healthcare organisations e.g. CCGs, Local
Authorities, University, Healthwatch and Council of Voluntary Services as non-voting participants in the
Council.
Board Powers All powers not reserved elsewhere. Set strategic direction of Trust
Rights of Members More extensive rights to systematic consultation36 on service co-design and strategy
In the future, SaSH may wish to consider further member rights (including formal annual members
meetings which receive the annual report and accounts, members approving constitutional changes etc.),
all of which would need primary legislation.
Regulation and
Oversight
Monitor (or other regulatory body as set out in statute) to provide guidance and support to organisation,
less oversight than present FT structure expected in accordance with greater oversight37 of members and
Governors.
CQC inspections as per statutory requirements.
Integration of health
sector
Purpose of organisation expanded to facilitate integration 38with other healthcare providers if
commissioned to provide such services.
Other healthcare and public sector organisations not formally included in governance structure unless
strategic partnership exists. Stakeholders will be able to input into Council of Governors meetings, but
integration efforts to be mainly directed through System Resilience Group, Chief Accountable Officers
group and other committees answerable to Board.
Strategic Partnerships Enabled through ability to incorporate organisations into governance structure. Active process for defining
strategic partners to create more meaningful involvement.
All other elements to remain as per current FT governance proposal39
Further discussion: The technicalities and implications of these different elements require a lot of time
and consideration, and the initial views above are almost certainly not the final structure that SaSH
would decide on. In particular the options on how the Members Constituencies should be decided
were hotly debated and this would need to be discussed far more widely and in far greater detail.
4.2 COMMERCIAL CONSIDERATIONS
4.2.1 VAT
Healthcare services are exempt supplies under EU directives and UK legislation. Currently NHS entities
such as CCGs, NHS Trusts and NHS Foundation Trusts are covered by the VAT rules in Section 41 of the
1994 VAT Act. Under this Act, VAT is reclaimable on “business activities” e.g. Car parking, private
patient income under normal VAT rules (i.e. if the supply of the services is VAT-able (e.g. drug sales),
VAT can be recovered, if it is exempt (e.g. Creche income), VAT cannot be recovered on associated
running costs). There is then a special concession that allows s41 bodies to reclaim an amount equal
to the VAT incurred for “non-business activities” providing that if falls under the list of “Contracted
36 If the organisation is to become more mutual (i.e. transfer more power to the grass roots), it may want to move from the idea of “consultation”, and instead give members / Governors the power to approve things like forward plans after being involved in the development of ideas 37 Note that this may be difficult if the members and Governors do not have the skills and experience to “interfere” more in the governance 38 SaSH may wish to pursue this further to include explicit commitments to work co-operatively with other organisations committed to the public good. This includes looking beyond organisational boundaries and accepting that the public good can come before local institutional interests. 39 Per section 6.4 Governance Rationale for Foundation Trust
45
Out Services”40. Through these rules, the majority of VAT is in some form recoverable for the Trust
with little “VAT-leakage”.
In addition to the “non-business” activities concession, the majority of NHS bodies are also included
in the NHS Divisional VAT registration. VAT is not charged between on any transaction between NHS
bodies within the Divisional VAT registration with further reduces VAT-leakage and VAT administration
for the health economy.
Community health spin-outs have experienced significant increased costs due to VAT treatment. In
general they are neither section 41 entities (and so do not receive the non-business activity
exemption), nor are they included in the NHS Divisional VAT registration (so VAT is chargeable on
services supplied to or received from NHS entities at applicable rates). If as a mutual, the VAT rules
applied to SaSH in this way, it could mean that all VAT incurred on input costs would be essentially
irrecoverable. Based on the 2013/14 annual report, this would be a maximum of £15m cost to the
Trust41.
The Department of Health is discussing the VAT implications of mutualisation with HMRC currently.
As part of this Pathfinder programme, they may suggest that a new mutualised form of NHS Acute
Trust is added to Section 41 and included within the NHS Divisional VAT registration (ensuring that the
VAT position of mutualised Trusts would be no different to NHS Trusts or NHS Foundation Trusts).
Another precedent exists in education where local authority schools received a similar concession
under section 33 of the Act to allow them to reclaim amounts equal to the VAT incurred on costs
despite education services being VAT exempt. Academies – as they were not controlled by the local
authority - initially did not receive this concession. Section 33b of the Act was subsequently created
to allow Academies to be able to reclaim amounts equal to VAT incurred on costs using a “non-
business activities” concession.
The issue of VAT has been raised as a “show-stopper” by a number of pathfinder projects and it is
therefore anticipated that a solution will be found to the VAT leakage as the policy and legislative
framework for mutual Acute Trusts is developed. Whilst inclusion of the new organisation in section
41 (as per Foundation Trusts) or the creation of a section 33d giving mutual Acute Trusts a specific
exemption along the lines of Academies could ensure the same VAT position as currently, it is possible
that other solutions could be enacted.
Depending on the specific legislative solution found, the key questions to consider are:
Is the new entity part of the NHS divisional VAT registration?
o If not, what VAT will be chargeable on suppliers to/from other NHS entities?
o Could any VAT leakage be reduced through cost sharing groups or joint employment
contracts for shared staff?
o Will VAT inhibit future integration in the health economy even if the immediate
additional costs through VAT leakage can be mitigated or absorbed?
Will the new entity benefit from the COS non-business activity concession?
o Which services that the Trust has contracted out would the Trust not be allowed to
reclaim an amount equal to the VAT on (e.g. Soft/Hard FM)?
o Would VAT leakage make contracting out a service unaffordable in the future?
40 See Enclosure B S41 Guide for NHS Apr 2014 provided by Department of Health for current list. 41 20% VAT potentially irrecoverable on £72.8m “Other Operating Costs”
46
VAT is presently the most significant risk to the affordability of a mutual model, however the risk is
acknowledged by the Department of Health and may be mitigated through legislation or VAT guidance
to support the Mutuals in Health policy.
4.2.2 Procurement requirements
Public Procurement regulations are designed to ensure a level playing field for suppliers wishing to
provide goods or services to public entities and are governed by a number of Directives and
Regulations which are then implemented in national legislation, the most recent being The Public
Contracts Regulations 2015 (the “Regulations”). They are a key part of the Common Market.
Some entities spinning-out from the public sector have been freed from the constraints of the
procurement Regulations to enable more flexibility with regards to how they procure goods and
services for their business and/or enter into strategic partnerships. As analysis would be required to
ensure that any new entity is not inadvertently construed as a “Contracting Authority” for the
purposes of the Regulations by virtue of the fact it is a “body governed by public law”. There may be
other negative impacts associated with this too such as it impeding access to procurement frameworks
and the volume discounts and competitive prices achieved.
Mutual spin-outs from the NHS in community services are not caught by the Regulations as they are
no longer public sector bodies nor do they fall within the definition of “bodies governed by public
law”, though this does need to be assessed on a case by case basis.
There is a precedent for an entity indefinitely providing health care services as an NHS entity without
being subject to procurement regulations. GPs providing services under a GMS contract as an
independent contractor are also exempt from procurement regulations and have an indefinite
contract subject to re-tendering. A recent policy challenge has highlighted the legality of services being
commissioned in this way. In August 2014, NHS England policy was changed to prevent procurement
of indefinite GMS contracts on the basis that they could not be procured under international
procurement law on competition grounds as a temporary alternative (APMS) existed42. After taking
legal advice, the Chair of the GPC wrote to NHS England arguing that “NHS procurement regulations,
as well as guidance from Monitor, clearly allows flexibility on whether to choose open competition,
taking into consideration ‘securing the needs of patients’ as well as ‘value for money’.”43 NHS England
subsequently reviewed their policy and agreed to review procurements on a “case-by-case basis”
allowing procurement of GMS contracts.44
Despite this precedent, the option to be exempt from public sector procurement legislation is unlikely
to be included in legislation. The regulations that apply will likely be determined by legislation. The
experience from community providers that have become mutuals suggests that there is a risk to new
mutuals from commissioners retendering services, however this same risk is increasingly applying to
NHS Trusts and FTs and in the view of pathfinder panel community mutuals it is counterbalanced by
the increased control of their own destiny.
4.2.3 NHS Pension
The change to NHS Foundation Trust status would not affect the ability of staff to remain in the NHS
Pension Scheme. If SaSH were then to change legal structure to a different kind of mutual organisation,
42http://www.pulsetoday.co.uk/home/stop-practice-closures/revealed-all-new-gp-contracts-will-be-thrown-open-to-private-providers/20007596.article#.VPWSNXmzXX4 43 http://www.pulsetoday.co.uk/story.aspx?storyCode=20007695&preview=1#.VPWYvHmzXX4 44http://www.pulsetoday.co.uk/home/stop-practice-closures/nhs-managers-backtrack-on-vow-that-all-new-gp-contracts-will-be-apms/20007915.article#.VPWqWnmzXX4
47
then we would expect that the staff would be able to continue to participate in the NHS Pension
Scheme through the Secretary of State making a Direction Order.
4.2.4 Financial failure regime
For NHS Trusts and NHS Foundation Trusts, there is a similar financial failure regime called the “regime
for unsustainable NHS providers” also known as the Trust Special Administrator regime45. This regime
has been used twice since it was established in 2009 and in both cases resulted in the dissolution of
the Trust and transfer of services to other health providers with no financial loss to employees or
suppliers. It is particularly noteworthy that in the case of Hinchingbrooke hospital, run by private firm
Circle, the provider exited the contract again with no loss to employees or suppliers to the hospital or
impact on continuity of care. It is also worth noting that whilst the precedent has been set that all
creditors have been paid in acute sector financial failures, the regulator has required significant
savings programmes to be enacted with redundancy programmes and cuts to services.
Other NHS institutions do not always have formal financial failure/commercial distress regimes, a
notable recent example being Commissioning Support Units (CSUs), who were set up to provide IT and
other support services to Clinical Commissioning Groups (CCGs). NHS England created the Lead
Provider Framework (LPF) in 2014/15 to allow CCGs to procure professional support services that they
require through the framework. At the time of the announcement an NHS England board paper noted
that fourteen out of eighteen CSUs were already planning redundancies in order to cut costs. In
response to the procurement of the LPF, Central Eastern CSU decided to close down in October 2014.
Two further CSUs – North West CSU and Yorkshire and Humber CSU – were unsuccessful in their bids
to join the framework and are expected to no longer be financially viable.
Non-NHS institutions generally do not receive special support in financial distress. Community
provider mutuals set up under Transforming Community Services have mainly not yet faced re-
tendering of their contracts, although this is starting to become an issue. There is no government
supported regime to assist these organisations if they fail to secure new contracts, although many
frontline staff would likely TUPE to a new provider if the contract for services were not renewed with
the mutual provider.
Due to the importance of acute services in the community, it would be anticipated that a formal
financial failure regime would be created for any new organisational forms of acute provider (this
would require primary legislation). This “financial safety net” should provide reassurance to staff and
suppliers that the Trust would continue to receive support from public money should financial deficits
be incurred. However, it is likely that this regime will require oversight of the Trust by a regulator as
currently. Depending on the development of the legislation and regulatory framework, there is a
concern that as with the current FT model, the regulator could reduce the autonomy of the
organisation and ability of members to influence the direction of the Trust. Ultimately the balance
between autonomy and provision of a financial safety net will be struck by policy development.
It is to be noted that in the mutual sector, different failure arrangements come into play which results
in a far lower failure rate than with profit-maximising businesses. This is the “transfer of
engagements” mechanism, whereby the members of a mutual in financial distress can pass an
appropriate resolution to transfer all of its assets and liabilities to a mutual of similar type. For 150
years or so, this has been the mechanism by which weaker mutual societies have “merged” with
stronger societies. This option would be open to SaSH if it was established as a community benefit
45 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/268689/Factsheet_18_TSA.pdf
48
society, but this would only really be effective in the event that this corporate form became common
in the future, providing potential merger partners when required.
4.2.5 NHS Branding & Logo
Membership of the NHS family was identified as an important concern for staff. It is anticipated that
the new organisation detailed above would be able to retain NHS branded. The most direct precedent
is Hinchingbrooke Hospital where the hospital retained full NHS branding, but added the Circle logo
to key documents and marketing e.g. the Trust website46.
A range of other branding is possible, for example GPs as independent contractor are allowed to use
NHS branding and typically do not develop strong brands or logos separately, with a few exceptions
where chains of practices have been formed such as Hurley Group47 and Vitality Partnership48.
Community Interest Companies spun out of the NHS typically use the NHS logo to indicate that they
provide NHS services, but have separate logos and brands that are fully developed, for example CSH
Surrey49. In all these scenarios, SaSH would need to continue to comply with NHS Brand Guidelines50.
It may be desirable for SaSH to develop a unique brand or identity as a mutual organisation. In the
workshops, the ability to develop an NHS sub-brand was particularly highlighted as an opportunity.
4.2.6 Assets and Liabilities
If SaSH were to move to an alternative form of legal structure, it would be necessary for it to consider
how existing assets and liabilities would transfer to that new entity. Many of the NHS organisational
changes that arose as a result of the Transforming Community Services Agenda (transfers to
Community NHS Trusts) and the implications of the Health and Social Care Act were achieved through
the Statutory Transfer Order process which, transferred everything to those new successor entities.
However, some of the NHS “spin outs” to new mutuals and social enterprises were achieved through
agreeing and negotiating business transfer agreements, which essentially transferred everything to
the new entity that it needed for the purposes of delivering the services. The usual apportionment of
risks between the parties on these sorts of arrangements is that the transferor takes the risk of all
liability up to the point of the Transfer Date and the Transferee takes the risk of everything post
transfer date, subject to any specifically negotiated exceptions such as pensions or redundancy
liabilities etc.
The transfer and apportionment of assets and liabilities and risk is crucial to the underlying financial
model for the services and it would therefore be necessary for SaSH to undertake a substantive
amount of both commercial and financial due diligence before making a decision on moving to
alternative forms or vehicles.
4.2.7 TUPE
Where there is a transfer to Foundation Trust status, TUPE will not apply because there will not be a
change in legal structure and so there will be no change in employer. If SaSH were to change legal
structure, then TUPE would apply at that time and it would be necessary to comply with obligations
to inform and consult with trade unions which would inevitably impact on the timing of such a move.
46 http://www.hinchingbrooke.nhs.uk/ 47 http://www.hurleygroup.co.uk/ 48 https://www.vitalitypartnership.nhs.uk/ 49 https://www.cshsurrey.co.uk/about-us/about-csh-surrey/csh-brand 50 http://www.nhsidentity.nhs.uk/
49
5 NEXT STEPS
Developing the Trust to become a mutual will require a significant investment of time and money to
achieve (and this is hard to quantify). The plan outlined below is intended to aid planning of the project
and set out the key tasks to be achieved during the business case processes.
External specialist support is likely to be required at various stages in the project, however internal
costs, especially the investment of time from senior personnel should also be considered when re-
commencing investigation of mutual models.
Transitioning to FT whilst implementing this project plan could risk confusion in communications and
overload for senior personnel. SaSH will need to balance this risk with the risk of the mutual
transformation project losing momentum, including possibly pausing the mutuals project whilst the
FT governance structure beds in.
Assuming the FT application is successful, the post evaluation review of the FT transition may provide
a suitable trigger to commence looking at mutual models, responding to any concerns or deficiencies
in the FT model identified. This will however be dependent on the speed of formation of a supportive
policy and legislative framework.
5.1 PROJECT PLAN The Cabinet Office have published template guidance51 on the process to start a public sector mutual,
and this following section is mapped against this.
The following project plan is also subject to the assumption that the Trust subsequently decides to
pursue becoming a mutual in further extending the benefits it anticipates realising through becoming
a Foundation Trust.
In pursuing becoming a mutual, it is assumed that following the transition to becoming a Foundation
Trust that it has identified following an internal review that the full range benefits it seeks to realise
cannot be fully achieved within this form, following its operation within this form for an initial period,
and neither is it able to evolve this status into the ‘Foundation Trust Plus’ model imagined earlier in
this report.
It also assumes a supportive political context and environment at the time of the decision, that there
is sufficient resource available to it to be able to enact the required stages, and that the Trusts’ services
are stable, allowing the senior management the time needed to fully enact this plan without it being
at risk of disruption.
The plan is also subject to a number of review points at which the Board of SaSH would agree to
commit to the next phase, or to cease pursuing this option. This ensures that the risks associated with
such a transition can be appropriately managed, with resources and costs required rising as the plan
progresses, and subject to the outcomes of each phase, the next elements of the plan can be
subsequently reviewed and refocused appropriately. Regulators would also need to be on-board with
any transition plan.
51 See https://www.gov.uk/start-a-public-service-mutual-the-process
50
The below sections profile a summary of what this plan would entail, supplemented by additional
detail against each stage, and how SaSH has either already progressed against them, or might begin
to approach in the future.
5.1.1 Overview
The plan has been structured in four phases, with three decision “gates” separating them. The key
objectives of each phase are explained in greater detail below.
Phase Objectives Timescale Cost
1. Exploration and development
A. Explore concept of mutuals B. Clarify values and support C. Develop business case
>=12 months £275k
RECOMMENDATION APPROVED BY BOARD
2. Preparation phase D. Develop five year business plan E. Engagement and consultation
>=6 months £240k
BUSINESS PLAN BOARD APPROVAL
3. Transition planning F. Development of legal framework G. Resolving TUPE and HR issues H. Finance, governance and IT systems
3 months £280k
LAUNCH
4. Consolidation I. Develop membership J. Align management and governance practices K. Iterate reporting frameworks
13-18 months
£350k
5.2 ROLES AND RESPONSIBILITIES Against this overview, the below table also profiles the key areas of work likely associated roles, and
needed deliverables against each aspect of the above, with indicative timescales as to how long might
be needed for the completion of each. These are then combined into the subsequent summary Gantt
chart.
Area of work Responsible Deliverables Phases in plan Costs
Commercial and market analysis
Heads of services Business case; Business plan
1, 2 £90k
Future plans for services Heads of services Business case Business plan
1, 2 £65k
Management review (including risk and audit)
Chief Exec Business case; Business plan; Implementation plan
1,2,3,4 £165k
Membership and governance
Board Business plan; transition plan; consolidation
2, 3, 4 £100k
Communications & stakeholder engagement
Communications team
Business plan; implementation plan
2, 3 £520k
Transition planning Chief exec Implementation plan 3 £100k
Identifying and securing investment needed
FD Business case; Business plan; Implementation plan
1, 2, 3 £105k
Important: These phases, their details and timing have been written based on the team’s experience
of change management, those of other mutual organisations and the outline direction discussed with
SaSH during the pathfinder programme. There have been no direct precedent mutualised services to
compare timing with, so all plans outlined below should be approached with an element of caution.
Costing is done on very broad assumptions and far more detailed costing exercise would need to be
completed.
51
Further development: If SaSH wish to further pursue a mutual model, far more work will need to be
done on refining this project plan, including refinement throughout all further development. It is an
area where we would recommend SaSH seek specific experience and advice52.
52 The support team are able to provide further details upon request about the architecture for change, include the elements of: values, processes and identity. These can guide a change process which integrates different levels, includes diverse stakeholders and balances (permanent) tensions such as control/empowerment. By incorporating the Mutuality Principle as a strategic philosophy and set of organising values at this early stage, the organisation will be able to prepare the ground for transitioning to a new legal form.
52
Enacting of mutual Month
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26+
Exploration and development
identification of benefits
map risks and contingencies
creation of case by management
RECOMMENDATION APPROVED BY BOARD
Preparation
business plan development Development may be started earlier
financial case development
consultations
BUSINESS PLAN BOARD APPROVAL
Transition planning
legal frameworks
transfer agreements
financial and operational systems
BUSINESS PLAN BOARD APPROVAL
Transition enacting- launch
Consolidation
membership ongoing
embed governance structures ongoing
review with stakeholders ongoing
53
5.3 DETAILS OF PHASES
5.3.1 Exploration and development
The initial stages (phase 1) through which any public service would begin to explore and consider
redeveloping itself into a public sector mutual are crucial for shaping the whole programme. It is
extremely difficult to place a firm timescale on this phase, as it is more based on the progress the
organisation is making than the time invested, however a minimum period of one year should be
considered. SaSH’s involvement in the wider Pathfinder programme has given a flavour of these
discussions and considerations but importantly these need to be developed far deeper (with more
time available to consider) and involving a far wider stakeholder group.
The enacting of each of the stages within this initial phase allow for a clear picture to be established
as to the relevance, interest, and potential ability for the service to pursue mutual status. Once this
has been established, the Board will be in a position to review this and decide whether it is appropriate
to continue the process, or whether to end at this initial stage.
While SaSH has not been able to fully engage in, and complete, all these initial stages, this is a
reflection of it having engaged with this process to explore how it might build upon its success and
future progression after its gaining of Foundation Trust status which has been continuing in parallel
to this feasibility study.
Should SaSH revisit this plan at a future date, it shall therefore already have initial processes and
findings on which it can commence the process, offering it a ‘head start’:
A. Explore concept of mutuals
(started through Pathfinder programme)
The initial exploratory stage of the plan would consider the potential benefits and implications that
pursuing a mutual form might create and offer to the organisation and its service(s). As referred to
above SaSH has already begun to explore these with support from Bolt Partners through the feasibility
study and so is able to identify and article the potential benefits that might make pursuing the mutual
option appealing and relevant:
BENEFITS TO SERVICE OFFER/DELIVERY
Through a series of workshops with key internal stakeholders, SaSH has now considered at a strategic
level the potential benefits that may accrue to its services through the pursuit and adoption of a
mutual model.
Through the workshops that were staged, these were broadly identified as being in relation to further
entrenching SaSH’s values into all of its processes, systems and procedures so that behaviours that
are sought to be encouraged can be done so in a sustainable way, and not just when there is felt to
be the time and resource to do so. The identity of a mutual was also felt to offer a stabilising factor
for the long term development and operation of SaSH in offering staff and other stakeholders more
control and autonomy than other forms might be able to.
54
BENEFITS TO STAFF
The same workshops have also, in parallel, begun to identify and capture not only idealised benefits
that SaSH understand and believe that the pursuit of a mutual model will afford them, but also
concerns amongst staff as to the impact that doing so might create. Identifying such concerns are a
positive outcome to these workshops as it allows SaSH to better critically reflect on any likely
resistance or specific objections that a subsequent decision to commit to pursuing mutual status will
need to address.
Further details are included in the appendix on the Rewards & Incentives working sessions, see section
6.3.
POTENTIAL FOR VALUE FOR MONEY IN PUBLIC SERVICES
Within the wider context of acting as a provider of public services funded by the State, it was not
possible to begin to explore the ways in which a mutual model might enhance its existing financial
profile and model.
However, within the framework of this report, a range of potential methodologies and approaches
have been profiled at section 3.3.1 which SaSH might enact to begin to identify the potential financial
case that transitioning to a mutual might have with regards to public value for money.
B. Clarify values and support
Started through Pathfinder programme.
Having ascertained the in principle benefits that a mutual form could offer, SaSH has subsequently
also begun to reflect how well the adoption and move to such a model would impact upon its current
operational practices. This is a crucial stage to ensure that the move to a mutual enhances and
strengthens organisations existing values and systems, rather than disrupt them – and is even more
important within the context of health services where patient safety and care needs to manage to
avoid any potential deterioration in standards.
WORKSHOPS WITH STAFF AND OTHER KEY STAKEHOLDERS
As an organisation that prides itself on its values, SaSH has been keen to reflect on the potential for
how becoming a mutual might further embedded and deepen their enactment. It has done this
through the workshop programme that has profiled these alongside the values of mutuals.
In having these workshops engaged with by senior management and other key internal stakeholders
to SaSH, it has also been possible to assure that there are no critical barriers to moving to become a
mutual in the future from the perspective of existing systems and practices.
EXPLORING DIFFERENT PUBLIC SECTOR MUTUAL MODELS (LEGAL, MEMBERSHIP, AND GOVERNANCE) AND AGREE
PREFERRED CONFIGURATION(S)
The Pathfinder workshops have offered SaSH the opportunity to begin to identify and reflect on the
range of mutual models and potential configurations of their governance that might be most
appropriate to its own vision.
55
Given its current progress in applying for Foundation Trust status, it was not appropriate to openly
explore the full range of these with key stakeholders, but this should be revisited at a future date to
enable SaSH to develop and articulate a preferred specific model to be able to use in explaining its
interest in becoming a mutual by defining how it will be structured and operate in practice.
C. Develop business case
Started to be explored through Pathfinder programme.
Through being engaged with the Pathfinder programme, SaSH has begun to start to develop an outline
business case to support an argument to become a mutual, but this still requires further detailing and
clarifications before its Board would be able to formally approve or decline the proposal:
WHAT BECOMING A MUTUAL WILL MEAN IN PRACTICE REGARDS OPERATIONS/GOVERNANCE/ETC.
(What difference will it make in how things are done?)
Until such time that SaSH’s have been granted Foundation Trust status, and been able to objectively
reflect on how well it has enabled them to realise their vision and expectations of it, it is not possible
to identify the extent to which there may be additional potential benefits that becoming a mutual
might subsequently offer.
LIKELIHOOD OF HAVING TO COMPETE IN FUTURE FOR CONTRACTS TO DELIVER CURRENT SERVICES?
Given some of the uncertainties regarding the future of clinical commissioning at the time of the
Pathfinder programme and this feasibility study, it is unclear how well a mutual model would further
enhance SaSH’s ability to renew contracts and commissions it currently holds, as well as pursing new
ones. As with the Foundation Trust status (above), it is suggested that this be reviewed by SaSH as
part of a future review and reflection.
STRATEGIC FIT WITHIN LOCAL AND WIDER CONTEXTS
As highlighted earlier within this document, there is a clear national strategic context and interest in
encouraging the emergence and growth of public sector mutuals. However, it is less clear how this is
reflected within the local context – to date, only 2 of the 101 public sector mutuals are located within
Surrey and Sussex53, and it is likely that the outcomes of the forthcoming national elections will impact
upon the local political interest in seeing more.
At the time of the future revisiting and enacting of this plan, the level of such political interest and
support for mutual would need to be carefully considered in being either an enabling or restrictive
one.
COMMERCIAL CASE (INCLUDING APPRAISAL OF ‘DO NOTHING’ OPTION)
SaSH will have already created a commercial case as part of the process of its application to gain
Foundation Trust status. This approach and framework could be readily repeated by SaSH with little
additional support required from it having previously developed the skills to do so.
53 First Community Health and Care CIC, and Bewbush Nursery
56
INVESTMENT NEEDS AND PROJECTED RETURNS
Part of the initial business case being developed through this initial phase of the plan will need to
include a profiling of any future investment needs that SaSH would incur in relation to transferring
into a mutual model (including transfers of pension liabilities, contract securities, etc.) from coming
out of ‘State ownership’. This development of the commercial case would also help to identify the
extent to which such a need for any additional investment might exist, and the options that exist to
how these finances could be raised within the context of the type of mutual model selected as the
preferred option.
IDENTIFY RISKS, CONTINGENCIES, DEPENDENCIES AND MITIGATIONS TO THREAT OF FAILURE
Through the Pathfinder support, SaSH has already begun to identify and map key risks, contingencies
and dependencies to the pursuit of becoming a mutual and these are detailed earlier in this report in
section 0. However, these would need to be further explored to agreed appropriate mitigation
strategies and approaches to manage them.
Upon completion of these stages, there would be sufficient detail and findings to collate a case that
the Board could consider in deciding whether it would be appropriate for SaSH to subsequently pursue
the next phase of becoming a mutual.
5.3.2 Preparation
Once agreed by the Board, SaSH would need to plan for how the proposed new mutual form will
operate in practice – not just in terms of its governance, but how wider services and finances will be
impacted and subject to change within this new form.
This would take the form of a detailed business plan with supporting financial projections, and these
would be used to support subsequent wider consultations to gain approval and support for the
proposed change to a mutual:
D. Develop five year business plan
Continuing from the initial business case developed in phase 1, a fully detailed 5 year business plan
will be drafted – as well as detailing the operations of the mutuals’ services and governance
arrangements, this will also profile its financial model in light of how investment needs identified will
be met and serviced, and how it will be able to use its status as a mutual in the further enhancement
of services and activities.
A key part of the plan would need to consider and detail measures through which impact and
innovation will be able to be identified and captured as occurring within the new mutual form, (as
these are key political drivers and expectations on the part of wider commissioners and with the
political context). However, some of these issues have already begun to be explored by SaSH through
the Pathfinder feasibility support and so as with elements of phase 1 in this plan, it would have an
initial position from which to build.
The plan will also need to detail how its proposed enacting and the transition in to the mutual form
will be resourced appropriately to ensure that staff are able to be engaged in the process without
disruption or displacement to their ‘day jobs’ – again, within the context of delivery health services
and patient care, this will be a critical success factor as previously identified by SaSH.
57
E. Engagement and consultation
Part of the business plan will also need to profile how SaSH will retain the engagement of current key
internal and external stakeholders through the period of transitioning into a mutual, and how it will
ensure that the associated required resources are able to be secured.
Once completed, this plan will be subject to approval and agreement by the Board and form the basis
of consultations with wider constituencies to elicit and gain the necessary support and approvals
needed to move into a mutual form.
Detail within the plan will also inform the next development phase. It will also allow the Board another
opportunity at which to consider the practical relevance, benefits and implications of moving to a
mutual form, having previously considered the broad arguments to do so, in order to ensure that the
mandating of this progression can be renewed in support of undertaking the next phase.
5.3.3 Transition
F. Development of legal framework
DEVELOPMENT OF PROJECT/IMPLEMENTATION PLAN
Once the necessary due diligence, assurance process and full business plan have been approved, a
detailed transition plan will need to be drawn up and agreed, through which to enact the transfer of
SaSH into the new mutual structure to enable it to be able to deliver the plan and realise its vision.
This will involve a number of distinct elements profiled below in summary:
INCORPORATION OF NEW ENTITY
Dependent upon the identified preferred mutual model, this will entail an application to either
Companies House (Company), the Financial Conduct Authority (Community Benefit Society), CIC
Regulator (Community Interest Company), or the Charity Commission (Charitable Incorporated
organisation).
A key part of this work will also be agreeing and documenting the governance and ownership structure
for the new entity to ensure that it encapsulates and is cable of achieving the main aims and visions
of the new model. The Articles of Association or constitutional documents will be an important aspect
of this work.
‘BUSINESS TRANSFER AGREEMENT’
The Business Transfer Agreement will need to be agreed and negotiated to reflect the agreed financial
and commercial risk apportionment between the parties. This contains all of the provisions regarding
how everything required to deliver the services will be transferred to the new entity. It will cover areas
such as assets to be transferred or licensed, premises arrangements, third party contract novation,
apportionments of risks and liabilities pre- and post-transfer, insurance and NHSLA implications,
warranties and indemnities agreed between the parties, TUPE/Pensions, transfer of records and
sharing of data and other areas such as branding and IPR.
SERVICES AGREEMENTS
Depending upon the Services in question, the legal entity may need to enter into Standard NHS
Contracts for the provision of the services with its NHS Commissioners and so these will also need to
be agreed and negotiated.
58
Subject to existing sub-contractual arrangements that SaSH may hold, and the detail of its intend
operational activities and structures as profiled within its agreed full business plan, it may need to
review existing Service Level Agreements, as well as drawn up additional ones with new partners and
supporters.
SHAREHOLDERS AGREEMENT
Depending upon the final model chosen, e.g. if a joint venture arrangement, it may be necessary to
have an agreement which documents what the shareholders have agreed in relation to the business
of the Company going forward and their respective roles, responsibilities and contributions.
REGULATORY APPROVALS, REGISTRATIONS AND CONSENTS
The new entity would also need to ensure that it had all of its required regulatory approvals,
registrations and consents in place.
G. Resolving TUPE and HR issues
HR will present perhaps the largest and most resource intensive element of the transition into a
mutual, and need to consider a number of specific themes:
MAPPING OF SKILLS NEEDED WITHIN THE NEW MUTUAL STRUCTURE, AND SUBSEQUENT STAFF AND BOARD
DEVELOPMENT PLANS (INCLUDING SUPPORT DURING TRANSITION NEEDED FROM ‘EMOTIONAL IMPACT’)
It cannot be assumed that the new structures and systems being created within the mutual can be
automatically fulfilled amongst existing staff and governance bodies – there needs to a review of the
skills, competencies, and aptitudes that will be needed throughout the new mutual structure. Against
this, SaSH should reflect on its current staffing profiling and plan and enact a programme of training
and skills enhancement as appropriate.
MANAGING CONFLICTS OF INTEREST
(Staff due to transfer shouldn’t be involved in negotiating terms of transfer)
As a new body, all staff will need to be formally transferred into the new mutual. At the point of this
transfer there is the opportunity to review and enact a refreshed set of terms and conditions that may
be felt appropriate within the new structure, its values, and in keeping with the agreed business plan
for it. In keeping with principles of good governance and mitigating any future threat of recrimination
against this process, any staff who are likely to be directly affected by any such proposed changing of
terms should not be directly engaged with the negotiations associated with their agreement.
UNIONS, MEDIA, PROFESSIONAL BODIES
In making sure all staff and wider stakeholders are comfortable and confident about the processes
that the transfer into the new mutual structure will entail, there needs to be a clear and throughout
communications and engagement plan with all external stakeholders.
Details of the communication plans used in the programme are included in section 6.2.
59
TUPE, PENSIONS
In transferring staff into the new mutual, there will need to be appropriate consultations and
representations made to ensure that relevant TUPE legislation is met, and will not subsequently stall
the process from it being discovered that there was a procedural error made in this process. Linked to
this, staff pension programmes and schemes will also need to be transferred, or arrangements made
for them to be retained in their current provision – the cost of the pension liability both at the point
of transfer, and projected liability within the life of the full business plan will be a key influencing factor
as to the viability of the mutual.
REGULATORY COMPLIANCE
As a statutory health body, SaSH is accountable to Monitor with regards to its clinical services, but is
also subject to additional regulatory bodies with regards to other aspects of its operations (public
licensing, pensions authority, HMRC, etc.). All of these agencies will all need to agree to the transfer
of SaSH into the new mutual and so all should be engaged with early in the transfer planning process
to ensure sufficient time to resolve any arising queries or clarifications that they may demand before
agreement is made.
H. Finance, governance and IT systems
BANKING, AUDITORS AND INSURANCE
As part of the transition, all financial services and support will also need to be migrated – discussions
therefore need to be held with SaSH’s bankers, auditors, and insurance agents to ensure that it can
schedule the transfer date in line with the transfer of these services that the new mutual will need to
continue to draw upon as part of its ongoing activities and operations.
FORMALISATION AND CONVENING OF GOVERNING BODY/IES
The exploration stage will have identified a preferred governance structure within the new mutual,
and the HR elements of the transition plan will have subsequently identified and agreed the skills and
competencies that officers within these will need to hold.
As part of ensuring a smooth transition, and that these structures will act as needed from the point of
formal transfer into the new mutual, a series of ‘shadow boards’ with nominated initial officers that
will hold the posts in the new structure should be convened to run in parallel to SaSH’s existing
structures. Board development requirements should be considered as a separate work-stream with a
skills and capability gap assessment undertaken of the new skills required from the Board of a mutual
organisation. Depending on the form of mutual considered, the Governor Development programme
would also need to be refreshed and the membership engagement strategy reviewed.
IT INFRASTRUCTURE
As with its financial services and support, there will need to be a formal a transfer of IT infrastructure
and services into the new mutual. The implications of this will need to be mapped in detail so that it
can be managed to assure that any disruption this will entail can be either mitigated or minimised to
ensure the continuation of services.
Given SaSH’s role as a provider of clinical and health services, this will be a critical aspect of the transfer
in ensuring the continuation of patient care, and the appropriate management of clinical data.
60
FINANCE
The full business plan will have profiled the financial model of the new mutual, and a process of
clarification will be needed to ensure that the assumptions made within this are robust, and that any
additional finance identified as being needed is secured.
Once finalised, this implementation plan will be subject to a final approval by the Board – the final
stage at which the process to becoming a mutual may be halted by its current Governance, should the
preparation of this final stage phase have highlighted concerns that are not felt able to be sufficiently
managed against SaSH’s own critical success factors.
However, following its approval, adoption and enacting, SaSH would then transition into its new
mutual form. At this point of final approval SaSH will also need to develop a consolidation plan as part
of its final phase of transitioning into a mutual.
5.3.4 Consolidation
The final phase of the plan to transition into a mutual concerns the period following the transfer into
the new form. SaSH will need to ensure that it appropriately consolidates itself within this new
structure to best realise its planned benefits and outcomes from doing so.
To this end the consolidation plan, which will have been informed by both the full business plan, and
the implementation plan will be concerned with the following broad themes:
I. DEVELOP MEMBERSHIP
At the point of becoming a mutual, SaSH will have an initial membership defined by its preferred
model and governance structures. However, membership bodies need to actively manage and
develop their memberships to ensure that this key stakeholder group remain fully engaged, and are
also able to be supported as wider services and operating environments change in the future. Failure
to do so would erode this defining feature of the mutual model, and cause weaknesses to emerge
within its wider governance and leadership.
There should therefore be a clear strategy linked to the mutual model adopted as to how its
membership shall be pro-actively supported, remain positively engaged with the governance of the
mutual, and where appropriate, grown.
J. ALIGN MANAGEMENT AND GOVERNANCE PRACTICES
Part of the preparation for transferring into the mutual will have included the modelling of ‘shadow
Boards’ to ensure that the initial post holders within the governance structures are appropriately
skilled and able to enact these roles post-transfer.
Post transfer, these post-holders should be engaged with to ensure that they remain confident and
competent to retain these roles, and be able to fulfil the duties associated with them. Further, given
that for the sake of expediency it is likely that these initial post-holders will not have been fully or
formally appointed by the future membership, their appointments should be subject to a ratification
as part of the wider membership development strategy and plans.
K. ITERATE REPORTING FRAMEWORKS
As part of the agreements with external stakeholders and relevant regulatory bodies during the
transition process, a schedule of revised reporting and returns will have been agreed with each.
61
Within this initial period (and final phase of the transition plan), the new mutual should review and
reflect on how well these reports and returns are not only able to be made within its new structure,
but also engage with these stakeholders to ensure their satisfaction with the new arrangements now
that they are being enacted to ensure their future and ongoing support for the mutual.
HR STRATEGY
Within the transition plan, a revised HR strategy will have been explored and agreed for the new
mutual to adopt. As with the other aspects profiled above, this should be reviewed and reflected upon
during the initial period to ensure that it is delivering the anticipated and needed outcomes in support
of the new mutual.
5.4 FINANCES Through the creation of the business case and the subsequent 5 year business plan, the financial
model of the new mutual will become apparent, as will the extent of any additional investment it will
need to secure to realise its ambitions and vision.
Additionally, there are also various national and global social investors with an interest in supporting
public sector mutuals. However, these should be approached on the basis that the mutuals model will
be capable of generate sufficient surpluses and returns to service these investment.
However, the overall costs associated with pursuing and transferring into a mutual model at this time
cannot be forecast with a high degree of certainty – this is due to a number of factors that need to be
clarified:
the identification of a preferred mutual model
potential legislative changes with regards to the mutuals agenda that may have implications
with regards to fees and costs
the extent of any payment terms agreed within existing SaSH contracts that would need to be
enacted in order for them to be able to be transferred into the new mutual
that if it was to pursue a mutual model, SaSH would be a vanguard in doing so from no other
acute Trusts, or Foundation Trusts having done so54
Further funds for development of the mutual model may become available from the Cabinet Office.
An application can be made through the Mutuals Information Service: https://www.gov.uk/start-a-
public-service-mutual-the-process
5.5 STAKEHOLDER ENGAGEMENT PLAN A thorough communications strategy to negotiate stakeholder relationships effectively, and managing
staff expectations throughout a potentially lengthy and inconvenient process will be crucial to the
lasting success of the project.
Mutualisation requires a rewriting of the ‘social contract’ between employees and employer, and so
staff relationships need to be handled particularly carefully throughout. For this not only must the
vision be clear and shared amongst staff, but the transition itself must be professional an efficient,
embodying the principles of the new organization
54 To the best knowledge of the project support team at the time of writing
62
5.5.1 Exploration and development
During the exploration phase, the focus has been on internal stakeholders. The leadership team and
staff representatives have been engaged primarily through workshops. All staff were made aware of
the pathfinder program and given access to materials on the intranet to get further understanding of
the project. They have also been able to contribute to the discussion through a dedicated email
address.
Before this phase can be complete, external stakeholder groups (patients, public and government)
should also be consulted in small/focused fora to explain the options under consideration, the
implications of these and obtain high-level feedback. To prevent the messages becoming confused, it
will be necessary in the case of SaSH to facilitate these discussions after a response to the Foundation
Trust application has been received.
5.5.2 Preparation phase
Staff interactions must become more focused, and are primarily to align the organizational
goals and to set expectations for the coming program.
Consider use of existing staff engagement programmes such as SaSH+
Review existing staff voice mechanisms through membership of FT and internal processes
More comprehensive engagement with the wider patient body and the public as well as
commissioners, local politicians and union representatives. The Trust’s members must be
consulted.
Debates and objections should be dealt with during this period.
5.5.3 Transition
Interactions focused around achievement of specific objectives
Administrative burden for TUPE and financial transition will require dedicated resources to
handle issues
5.5.4 Consolidation
differentiation in messages to separate constituencies of membership to be agreed to
encourage their continued engagement, but also consistency with other communications
initial outcomes of new governance structures to be identified to further encourage
engagement by membership groups through maintaining interest, awareness and
commitment of their role(s) within these
focus on achievements against key critical success factors identified in 3.1.3, regularly
reported to sustain commitment to mutual model amongst all stakeholders
63
6 APPENDICES
6.1 SUMMARY OF PROJECT ACTIVITIES
13th January 2015: Project kick-off meeting
20th January 2015: Panel discussion with other Pathfinder Trusts
27th January 2015: Workshop 1 on principles and values of mutualisation
3rd February 2015: Workshop 2 on principles and values of mutualisation
17th February 2015: Panel discussion with other Pathfinder Trusts
23rd February 2015: Discussion group on communications and next steps plan
27th February 2015: Workshop 3 on development of SaSH vision for mutual model
3rd March 2015: Focus group on membership engagement strategy
11th March 2015: Discussion sessions on incentives and reward for SaSH staff
11th March 2015: Workshop 4 on draft report
27th March 2015: Workshop 5 on next steps for SaSH
64
6.2 SUMMARY OF SASH MUTUALS COMMUNICATIONS Mutuals in Health - Pathfinder programme
Version 1.4 - RA - 9th Febuary 2015
Objectives
1
2
3
Methods
In person Distributed Timing
Stakeholder
Engageme
nt level Approach and actions
One-to
-one
Invite
mee
tings &
wo
rkshops
Dep
artmen
tal
mee
tings
Walk &
talk
Open
mee
tings
Clo
sed fora
Personal
written
/em
ail
correspo
nden
newsletter
Printed
repo
rts /
newsletters
Intranet page
Web
site
Social m
edia
Help line /
email /p
ostal
address
Lead
05-Jan-15
12-Jan-15
19-Jan-15
26-Jan-15
02-Feb-15
09-Feb-15
16-Feb-15
23-Feb-15
02-Mar-15
09-Mar-15
16-Mar-15
23-Mar-15
30-Mar-15
06-Apr-15
13-Apr-15
20-Apr-15
27-Apr-15
04-May-15
04-May-15
Public / patients Patients -
Patient engagement not relevant during pilot stage.
Public members (5,000) can be involved at next stage.
PALS team briefed to handle and refer questions.
Y LW
Community groups
Health and wellbeing boards not considered relevant at
this stage, no proactive communications. Simplify
message during FT application.
Y LW
Press L
Involvment made public with release of board papers
(January). Simplify explicit messaging during FT
application.
Reactive strategy if press enquiries come in.
Y LW
Internal
Staff communications must reach all groups and to
include:
1. Create single internal reference point on trust intranet
to disseminate correct information and reduce
rumours/concerns.
Y LW
2. Inclusion in weekly all staff briefing (electronic)Y LW
3. Blog post from CEO ('Michael's Message') Y Y MW
4. Agenda item in all staff meeting and senior leaderss'
briefingsY SJ
5. Focus groups in Feb & Mar Y SB
Clinical staff
(specifically)H
Included in specific focus groupsY Y Y Y
Unions H
Unions updated on situation 20th Jan. [TBC - update
from Michael].
Invitation to workshops
Y Y LW
Leadership team HAgenda item at senior leaders' meetings, involvement in
workshops, 1 on 1 meetingsY Y Y Y
Board HAgenda item at January and February board meetings.
CEO verbal update.Y SJ
Wider HC
economyOther acute providers L
Communications through CEO at 'Other Accountable
Officer' meetingsY Y MW
Commissioners L Email from CEO to make aware of project. Y LW
GPs - None. n/a
Other providers (MHT,
private)L
MHT - Communications through CEO at 'Other
Accountable Officer' meetings.
Private provider - none
Y Y
LW
Other Gov't
stakeholdersCouncils M
Inform with a summary of the project and its objectives.Y
LW
MP(s) MInform with a summary of the project and its objectives
YLW
Department of Health HThree pathfinder workshops, fortnightly catch up calls &
project status updatesY Y Y JK, SJ
Monitor & TDA LMonitor and TDA have been made aware.
Y JK
Meaningful discussions with key stakeholders on the pros and cons of mutualisation
Distribute accurate information on mutualisation to inform discussions and engage the wider staff body for
their feedback
Prevent spread of misinformation regarding project
All staff H
Comms strategy - pilot stage
65
6.3 DETAILS OF REWARDS & INCENTIVES SESSIONS On the 11th of March, Sarah Billiald of Collaborate led five one hour workshops with staff from across
SASH on one day to explore levels of engagement, what currently motivates and demotivates them
and what rewards/incentives might look like in the future. Each workshop was in two halves: the
participants’ views on the influence various parties could have on SaSH, and key motivating and
demotivating factors.
6.3.1 Influence on SaSH
We asked individuals to self-assess their answers on a sliding scale (from "yes always" to "no never")
to four questions:
1) I feel I have the opportunity to input my views/ideas into SASH
2) I feel my (and my teams) views are listened to and acted upon by SASH
3) I feel that patient views are sought, heard and acted upon
4) I feel I can influence decisions about the long term future of SASH
Overall most were very positive about the first question, recognising this was clearly a priority for
SASH however there was more of a mixed picture in response to listening and acting upon those views
with several participants saying that their line manager listened but then the organisation didn't act,
or than more broadly not only were views not acted upon but there was no feedback as to what had
happened or why things had not been taken forward. HQ staff felt the hierarchy and clinical /
managerial divide got in the way of good ideas being heard and taken forward, whereas for those
working directly with patients the quality of their line manager was the key differential in whether
they were happy with the feedback loop. Several felt that good ideas were not heard because of an
organisational resistance to change and that recent engagement activity was a veneer or after the fact
rather than genuine consultation.
In regards to the third question there was a marked
difference between HQ and administrative staff and those
working with patients: the two focus groups comprised of
corporate and secretarial staff felt strongly that patient
views were always sought, heard and acted upon, whereas
the two groups of therapists and nurses were not quite as
positive putting their assessment in the middle of the
spectrum, saying they were sometimes heard but more in
reaction to complaints than routine feedback or
engagement. There was a strong feeling of missed
opportunity here particularly from the therapists who had a wealth of knowledge from long periods
of time with patients which was currently untapped but also that they were preventing complaints
escalating because of their pastoral role.
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The fourth question had most consistency of response
with all bar one respondent saying they had no influence
in decisions about the long term future of SASH and that
there was no forum for this type of conversation although
there was a strong appetite for these longer term strategic
conversations from all attendees (not always the case in
organisations) and a desire to create a safe space to have
a more challenging dialogue about the future.
6.3.2 Incentives and demotivation
The second half of the workshop explored three themes:
- What one thing currently incentivises you to deliver the best outcomes?
- What one thing currently demotivates you at work?
- What two things would incentivise you personally in the future?
We asked people to consider these because understanding what currently motivates people (and
protecting it) is often more useful than developing a wish list which people struggle with as they can't
see beyond the existing constraints/package.
KEY MOTIVATORS ALL CENTRED AROUND THREE MAJOR THEMES:
1) Job satisfaction due to knowing I'm making a real difference by fulfilling my role (to patients
and/or colleagues),
2) Strong team ethos - particularly acute with operational teams - there maybe something of
Leicester's autonomous, incentivise teams worth exploring here, so strong was the sense of
team
3) Good work/life balance
DEMOTIVATING FACTORS CLUSTERED AROUND THE FOLLOWING FIVE THEMES:
1) Not feeling valued or supported - particularly due to a lack of feedback (more emphasis on
this from corporate/secretarial staff)
2) Lack of capacity to do job or staff shortages (only an issue for operational staff)
3) Barriers to doing a good job e.g. things not working, people passing the buck, poor processes
and systems, too much paperwork.
4) Negativity from other staff particularly to change
5) Poor patient outcomes
IDEAS FOR INCENTIVES
Looking to the future people struggled with the concept of thinking flexibly about what might
incentivise them, with most operational staff purely wanting to 'fix' the demotivating things for
example through more staff, increased resources, better team-working, more supportive
managers. However there were some other ideas including:
a) Personalised recognition and a more well developed feedback loop - trite as it may sound this
came up frequently as a quick fix, both corporate communications but also
recognition/acknowledgement from both managers and the organisation of a job well
done. Thinking creatively about how this might be done would be an obvious next step - there
was a plea for a more positive feel to this (more praise, less problems and a more positive
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culture) so using techniques such as appreciative enquiry or a strengths/asset based approach
could work well.
b) More flexible rewards package e.g. ability to buy/sell annual leave, be paid for overtime rather
than taking ‘Time Off In Lieu’ (TOIL) which never happens, and preserving work/life balance
options.
c) Social, health and well-being space and facilities: good feedback on the recent wellbeing event
but a desire that this is more routine and to explore longer term on site facilities such as
classes, gyms and a social space to allow people to enhance their own well-being but surround
by colleagues as friends. Worth considering as part of health campus concept.
The workshops had variable attendance and, in future, we would recommend better advance
communication of the date/issues and taking the questions out to people in the hospital rather than
asking them to come to HQ.
6.4 BENEFICIARY TRUSTS IN PATHFINDER PROGRAMME
Trust Type Notes
Norfolk and Norwich University Hospitals NHS Foundation Trust
Acute Left programme due to operational pressures
Oxleas NHS Foundation Trust Mental health and learning disability
Surrey and Sussex Healthcare NHS Trust
Acute
Tameside Hospital NHS Foundation Trust
Acute Investigating mutualising cardiology pathway
Cheshire and Wirral Partnership NHS Foundation Trust
Mental health and learning disability
Moorfields Eye Hospital NHS Foundation Trust
Specialist Investigating whole Trust mutualisation and senior staff mutualisation
Norfolk and Suffolk NHS Foundation Trust
Mental health and learning disability
Left programme due to operational pressures
University Hospitals of Leicester NHS Trust
Acute Investigating Automated Incentivised Teams as well as mutualisation of the whole Trust
Liverpool Heart and Chest Hospital NHS Foundation Trust
Acute Specialist
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6.5 GOVERNANCE RATIONALE FOR FOUNDATION TRUST See separate document.
6.6 SASH PATHFINDER APPLICATION See separate document.
