The Dalton Review & NHS Five Year Forward View An at-a-glance guide to new organisational forms and care models Smarter healthcare for the 21st century1 About Bird & Bird The UK is on the cusp of a revolution in how healthcare is delivered and managed, as the NHS and other providers look to adopt innovative technologies, business models and medical techniques to address the enormous challenges of the 21st century. The Bird & Bird healthcare team is uniquely positioned to support the NHS and its suppliers in responding to, and ultimately benefitting from, these challenges and developments. We specialise in: innovative joint ventures and partnerships transformational NHS projects international expansion strategic advice on revenue-generating projects M&A and investments in the healthcare sector e-health and data protection Our team has been working in these areas for many years, and is widely recognised for its extensive experience of advising clients on critical and innovative healthcare projects, with a particular emphasis on providing strategic advice to the boards of NHS trusts – see page 9 for some recent examples of our work. Introduction In February 2014, the Secretary of State for Health appointed Sir David Dalton to lead a review into "how we enable the best leaders and organisations in the NHS to expand their reach and deliver more for patients". The Dalton Review was asked to consider a wide range of issues, including buddying, management contracts and arrangements for networks of hospitals and services to operate under one leadership team. The Dalton Review was published in December 2014. The Review (which totals almost 600 pages) concludes that, for many NHS organisations, existing organisational models will not deliver financial and clinical sustainability in the face of ageing populations, the management of chronic illness and increasing funding gaps: "Even the best providers will struggle to meet the challenges of the future without looking outside traditional organisational boundaries". The Review identifies a number of alternative organisational forms which could be more widely adopted within the NHS (see pages 3-6), together with a range of supporting proposals to encourage successful NHS organisations to expand their reach and impact (see page 7). The Review is at pains to emphasise that there is no "one size fits all" solution for the NHS and that the choice of organisational form must be a local one: "Central, top-down solutions should be avoided". One area of criticism is that many of the Review's proposals are hospital-centric and that greater emphasis could have been given to the need for greater integration with primary and social care. The Dalton Review is intended to complement the NHS Five Year Forward View (published by NHS England in October 2014). The Forward View emphasises that new care models are needed to address the challenges faced by the NHS. The Dalton Review aims to provide "the organisational delivery vehicles that can help to translate its ideas into reality". This guide also looks at the different care models identified by the Forward View (see page 8).2 The Dalton Review: organisational forms The Dalton Review considers 7 different types of organisational form, which are categorised as either "collaboration", "contractual" or "consolidation":3 Collaboration Federation A simple form of collaboration, allowing the sharing of resources and costs, but with members retaining autonomy. Federations have a wide range of applications, including the sharing of support services (e.g. HR or procurement), creating standardised care pathways or consolidating specialised clinical services. The federation would be governed by a Partnership Board including representatives from each member. Federations may be most useful to trusts in close proximity, although technology could be used to share resources over a wider area (e.g. the use of telemedicine to electronically share clinical resources). The Review emphasises that federations can often be created without a legal agreement, although a detailed MOU is likely to be necessary in the majority of cases. A legal agreement may be required for more intensive federations. A key issue to address up front will be to ensure that each member's objectives are aligned. Competition issues may arise if certain specialisms are consolidated into one of the members. Examples: London Procurement Partnership, King's Health Partners, The Southern Sector Partnership. Joint venture Two or more providers create a new structure to provide a particular service on their behalf. A JV will typically be created to provide a single service (e.g. pathology). This allows the JV to become an efficient, high-volume centre of excellence, generating economies of scale and driving innovation. JVs are either a corporate JV (involving a separate legal entity (often an LLP)) or a contractual JV. A corporate JV often provides a more stable basis for the JV, with a clear allocation of funding, risk and liability. In a contractual JV, the host member will typically bear many of the risks (e.g. compliance with waiting times). A JV could be created entirely within the NHS or include a private sector partner. The members will need to consider how to share surplus/deficits and the impact on staff. TUPE may apply. Many JVs will need to be reported to Monitor (e.g. where the JV involves more than 10% of the trust's assets, revenues or capital). Competition and tax issues will also need to be carefully considered. A successful JV could become a hub for a service-level chain (see below). Examples: Viapath, Radiology Reporting Online, The South West London Elective Orthopaedic Centre.4 Contractual Service-level chain Individual services are outsourced to a specialist provider. The service-level chain is similar to an outsourcing arrangement, which are already common in the NHS. The model can vary from the adoption of clinical standards and protocols to a full outsourcing of the relevant service. The model enables the customer organisation to access "best of breed" services, including new technologies and best practices, and can help in achieving financial and clinical sustainability. The model allows both the customer organisation and the specialist provider to focus on core areas of expertise. The legal agreement will need to have clear liability protocols, data sharing regimes and clinical governance arrangements, particularly where patients will cross the boundary between the two organisations. The specialist provider could be an NHS or private sector entity (e.g. Newmedica providing eye care within the NHS). Examples: Moorfields Eye Centre at Ealing Hospital, Royal Marsden & Kingston Hospital cancer services. Management contracts The delegation of the management of the whole or part of an organisation to a different organisation. This model is often thought of as a means to achieve transformational change of challenged providers, but can potentially be used on a wider basis (e.g. as a first step towards greater consolidation). Hinchingbrooke Health Care NHS Trust is the only current example in the NHS. This model is more established in other countries, including the US. The manager will generally have standardised practices (which will need to be replicable at other organisations). These will typically include financial, strategic and HR functions, but could also include clinical expertise. The manager will ordinarily use the existing estate and facilities of the organisation under management. The manager will typically receive a management fee or benefit from a profit share arrangement. Examples: Hinchingbrooke Health Care NHS Trust.5 Consolidation Integrated Care Organisation (ICO) A vertically integrated organisation including primary and acute services. This model can take various forms, including: alliance contracts: the commissioner contracts with an alliance of providers, with shared risks and rewards lead contracts: the commissioner contracts with a lead provider, who subcontracts to other providers integrated providers: the commissioner contracts with an entity formed by various providers (e.g. primary and acute providers) full integration: the commissioner and providers join together as a single entity. There is increasing interest in this model in the UK, in line with initiatives to integrate health and social care. Some pilots and early adopters are exploring opportunities in this area. Integration at this level is likely to require significant upfront investment, which may only generate savings or other benefits over the longer term. It is not a quick route to cost savings. The ICO model is similar to the "Primary and Acute Care System" discussed in the NHS Five Year Forward View (see page 8 below). Examples: Lambeth Living Well Collaborative, Chelsea & Westminster Accountable Care Group. Multi-site trust Through a series of transactions, one provider owns and operates a number of provider facilities in the same area. This model could occur through merger, acquisition or new development. There is potential for economies of scale through rationalisation of services and unified support functions, and the ability to move staff between sites to meet demand. The Review identifies 5 key success factors: clinician support staff engagement public acceptance adequate resources consistency in approach Examples: Frimley Park acquisition of Heatherwood and Wexham Park Hospitals, King's College Hospital's acquisition of Princess Royal University Hospital.6 Multi-service chain / Foundation Group One provider owns and operates a number of facilities across a large geographical area. This model provides for a single organisation, but with a degree of operational autonomy at individual sites. This model is likely to occur through the acquisition of, or merger with, other providers. The "group HQ" exercises strategic leadership and sets quality and financial frameworks. There is less potential to rationalise clinical and support services if sites are spread over a large geographical area, but there is strong potential to drive standardisation. "Feedback loops" can ensure that innovations developed at one site are spread to other sites. The relationship with Monitor and CQC would need to be considered – the chain could potentially operate under a single licence from Monitor but be subject to separate CQC inspections. Multi-service chains are common in the private hospital market, but none yet exist in the NHS. Examples: BMI Healthcare, Helios Hospital Group. Other models Buddying / informal partnerships The buddying scheme was introduced into the NHS in the context of the special measures regime. Trusts in special measures were "buddied" with high-performing partner organisations. The Review concluded that the buddying scheme has been generally well-received by organisations in special measures. The Dalton Review recommends that any provider, not just those in special measures, could benefit from two-way learning and improvement. The Review refers to this broader model as "informal partnering" (i.e. where there is not necessarily a "stronger" and "weaker" partner). However, the Review cautions that: these arrangements need time for them to have a positive impact partnering with a poorly-performing trust exposes the other partner to risks (e.g. a risk that standards in the high-performing partner could fall if excessive management time is directed towards the weaker partner). Clinical and strategic networks Clinical and strategic networks have been used within the NHS to develop best practice and disseminate know-how for a significant time. In November 2012, the National Commissioning Board (now NHS England) set out a single operating framework for strategic clinical networks. Mutual or social enterprises The Review coincided with a joint Cabinet Office and Department of Health programme of support – the "Mutuals in Health: Pathfinder Programme", which will be running in early 2015. The Review concluded that this was an ownership/governance model which could be applied to all of the different organisational forms described in the Review.7 The Dalton Review: supporting proposals The Dalton Review also included a range of supporting proposals aimed at encouraging NHS organisations to take advantage of the proposed reforms: Organisation Relevant proposals All NHS trusts Determine the scale and scope of their service portfolio. Consider whether new organisational form(s) would be suitable to support their service portfolio. Consider new strategic and operational leadership roles required to support new organisational forms. High-performing NHS trusts Develop an enterprise strategy for your organisation. Consider developing standard operating models that could be replicated at other NHS organisations. CCGs and NHS England Identify, in their strategic commissioning plans: the types of service models they wish to support; and how they will allocate funds to support the necessary transformational changes. Monitor/ CQC Develop a new credentialing system to recognise successful NHS organisations capable of spreading their services A list of all credentialed organisations should be made available to CCGs (for use in identifying ideal partners) Monitor / TDA Develop a new procurement framework allowing credentialed organisations to register for management contract or acquisition opportunities. Inclusion on the register would mean that an organisation automatically passes the PQQ stage of relevant tenders. Department of Health / Monitor / CQC Implement a grace period against performance and financial requirements for acquiring trusts. This would mitigate a significant disincentive for trusts to acquire struggling providers. TDA Consider running "batched procurements" for challenged NHS trusts (Categories B1 and B2) Monitor Ensure that FTs in persistent difficulty implement a strategic plan that determines the appropriate organisational form. If this fails, Monitor could compel the FT to pursue a transaction with a credentialed organisation. Department of Health Implement a national programme of learning and sharing of best practice. Support demonstrator sites highlighting organisations that have implemented a change to their organisational form.8 NHS Five Year Forward View: new care models In the Forward View, NHS England identifies 7 new care models that it intends to promote over the next 5 years. This section summarises those models and highlights some key areas of overlap with the Dalton Review proposals: Multi-speciality community providers (MCPs) Expanded GP practices that would include nurses, consultant physicians, geriatricians, paediatricians and psychiatrists working alongside community nurses, therapists, pharmacists, social workers and other staff. These practices would shift the majority of outpatient consultations and ambulatory care out of hospital settings. Primary and acute care systems (PACS) A single organisation would provide GP and hospital services, together with mental health and community services – similar to the ICO structure above. For example, hospitals would be permitted to open their own GP surgeries. Alternatively, a mature MCP (see previous box) could take over the running of local community hospitals. Urgent and emergency care networks NHS England intends to do better at organising and simplifying the urgent and emergency care system, recognising that A&E hospital departments are only part of the overall system. Proposals include greater evening and weekend access to GPs and developing hospital networks to build on the success of major trauma units. Viable smaller hospitals NHS England wishes to help sustain local hospital services where appropriate. This could be achieved through the adoption of some of the models proposed by the Dalton Review (e.g. service level chains, ICOs or foundation groups). NHS England also intends to review the NHS payment regime and staffing models to support these new business models. Specialised care NHS England will drive the consolidation of certain services into specialist centres where this will increase quality of care. Specialist providers will be encouraged to develop networks of services over a wider area (e.g. through the service level chain model proposed by the Dalton Review). Enhanced health in care homes More active health and rehabilitation support could reduce both unnecessary hospital admissions and permanent care home admissions. NHS England will work with local authorities and the care home sector to develop new models of in-reach support, including medical reviews, medication reviews and rehabilitation services. Modern maternity services Births are the most common reasons for hospital admissions in England. NHS England will commission a review of future models for maternity units and make it easier for midwife groups to set up their own midwifery services.9 Our recent work highlights Frimley Park's ground-breaking NHS acquisition We advised Frimley Park on the acquisition of Heatherwood and Wexham Park Hospitals. This was the first ever acquisition of one NHS Foundation Trust by another NHS Foundation Trust. The establishment of an innovative pathology joint venture We have advised Viapath (a joint venture between Guy's and St. Thomas' NHS FT, King's College Hospital NHS FT and Serco) for a number of years, from its inception to a recent major rebranding and restructuring project. A joint venture to provide care to the British Forces in Europe We advised Guy's and St. Thomas' NHS FT on an innovative joint venture with a UK charity to provide comprehensive primary and secondary services to all British forces in Germany, The Netherlands and Belgium to 2020. The acquisition of a leading NHS support services provider We advised Serco on the acquisition, development and operation of the Anglia Support Partnership, a grouping of 16 NHS organisations that provides 21 different support services to a wide range of public sector organisations. A joint venture to establish a clinic in Abu Dhabi We advised King's College Hospital NHS FT on the establishment of a joint venture to establish a clinic in the United Arab Emirates to provide medical services ranging from gastroenterology to obstetrics and gynaecology. KCH's acquisition of Princess Royal University Hospital (PRUH) We advised King's College Hospital NHS FT on a range of strategic issues relating to the acquisition of PRUH, following the appointment of a Trust Special Administrator for South London Healthcare NHS Trust. A joint venture to deliver mental health services We advised the Priory on the establishment of the Recovery First joint venture with Greater Manchester West Mental Health NHS Foundation Trust to deliver mental health services at a state-of-the-art facility in Widnes, UK Outsourcing of pathology services We advised North Middlesex University Hospital NHS Trust on the outsourcing of its pathology services to a joint venture between University College London Hospital NHS FT, Royal Free London NHS FT and The Doctors Laboratory. A joint venture to provide radiology reporting services We advised University College London Hospitals NHS FT on the establishment of the Radiology Reporting Online JV which provides radiology reporting services from Australia to radiology departments in the UK, Europe and the Middle East. An innovative collaboration for nurse training We advised King's College Hospital NHS FT on a long-term collaboration with King Fahad Medical City which was designed to train nurses from Saudi Arabia to BSc level.10 Contacts David Ayers Tel: 020 7415 6020 email@example.com Dominic Cook Tel: 020 7415 6146 firstname.lastname@example.org Helen Gavin-Brown +44 (0)20 7905 6349 email@example.com Picture Ian Edwards Tel: 020 7905 6377 firstname.lastname@example.org Simon Phillips Tel: 020 7415 6022 email@example.com Simon Shooter Tel: 020 7982 6456 firstname.lastname@example.org Testimonials “Bird & Bird has the ability to support the 'bigger picture' and provide strategic advice in terms of healthcare business, accessibility and a common-sense approach to complex technical and operational matters.” Chambers UK 2014 “Bird & Bird LLP provides ‘clear unambiguous advice' on transformational projects, e-health and data protection, and innovative partnerships.” Legal 500 UK 20141 This document gives general information only as at the date of first publication and is not intended to give a comprehensive analysis. 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