Hospital Chains

Hospital Chains.  If you want to implement US managed care some structures are bog standard, and none more so than competing, for-profit hospital chains. As with all aspects of NHS transformation such changes need gilding and chain formation has turned to some tried and trusted favourites as well as some brand – pun intended – new ones. The former include improving efficiency and ensuring uniformly high standards across hospital trusts to combat what many argue are unacceptable variations in care provision, whilst financial austerity proves ever reliable in ensuring that high performing trusts will be allowed to partner, if not take over, their less competent peers. Newer rationales include ending the era of go it alone trusts and, as NHS Chief Executive Simon Stevens told last years CBI Conference, superseding these with new integrated partnerships, such as buddying arrangements, multi-site specialty franchises, accountable clinical networks, and of course hospital chains. This neglects to mention that NHS hospitals were always part of a national framework and the whole reason for splitting these off into foundation trusts was to remove them from public ownership and later regroup into private or mixed economy chains .

Chain formation however can be seen as progressing from two nominally distinct but increasingly ‘integrated’ levels. As far as the NHS is concerned the main impetus has been through the Dalton Review which was set up following a meeting in February 2014 between NHSE, Monitor, the Trust Development Authority, et al, to discuss new forms of acute care collaboration as a “longer term vision for the provider sector”. Led by the CEO of Salford Royal NHS Foundation Trust, Sir David Dalton, the Review’s remit also included examining mechanisms for the spreading of best practice through leadership regimes, the credentialing of such leaders, and potential competition issues. And while the Review has avoided a one size fits all approach, chains have consistently been the core recommendation.

Some definitions are necessary. According to PwC, a hospital chain is a group of hospitals operating under the same centralised strategic leadership, and which could be publicly or privately owned. All sites in the chain are managed for the group by a devolved management team that have delegated decision-making responsibilities for their own hospital(s), and operate within the parameters set by the overarching chain leadership. Distinguishing features may include: group headquarters; standardised governance, protocols and procedures; and centralised back-office functions (e.g. HR, Finance, Procurement, Legal, Media, Communications and PR).

So far so global advisory, and perhaps unsurprisingly the Expert Advisory Panel that supported the Review was led by someone on secondment from KPMG. Equally unsurprising is the fact that the Panel comprised various dyed in the wool privateers, including Sir Andrew Cash, Dame Julie, Mark Newbold and Jim Mackey, and that the minutes from the meetings were redacted to the point of non-existence. The Guardian also made rather a fuss over the fact that Jim Easton was there, supposedly “in a personal capacity” according to the DH, but in fact representing the NHS Partners Network, the UK’s primary lobbying group for the private healthcare industry, although it has to be said the Panel’s cast and character were always fairly clear. And as the group’s Chief Executive David Hare wrote, “We have welcomed our seat on the Dalton review and have continually pressed to ensure that the option of independent sector leadership or partnership in hospital chains remains open”.

Also welcoming their seat on the Panel was Circle Healthcare, fresh from helping to instigate a Competition Commission inquiry into the state of the private hospital market, and the various adverse effects on competition that could be found there. As a somewhat brash new entrant the company felt it had suffered at the hands of incumbents and welcomed the Commission’s identification of the high barriers to entry, dodgy referral practices, and weak competitive constraints that resulted in a lack of genuine competition.

However while the eventual report did make some recommendations, very few of these were carried out with the majority of hospital divestitures by BMI and the Healthcare Corporation of America (HCA) being reversed. From a distance it instead appears the inquiry was more about establishing the market’s readiness for including a far wider range of participants, particularly from those NHS hospitals reformulating into mixed economy and geographically non-contiguous chains. And also about removing its more egregious practices, such as grossly overcharging both insurers and patients, in preparation for wider acceptance of this market.

Certainly the recommendations from the Dalton Review includes examples of for-profit chains in Germany, Spain and the US, and indeed many of the Advisory Panel’s constituencies are included in the Acute Care vanguard chains, with Sir David himself leading the way in Salford & Wigan and insisting on private sector quality regimes for his brand. Indeed Circle’s Hinchingbrooke regime’s descent into special measures halfway through the Review – the first time the Care Quality Commission found a trust to be inadequate in how it cared for patients – hardly gave Dalton pause. Various other takeovers, sorry partnerships, are rapidly gaining speed across the country and the vanguard programme itself is already at its third stage.

Again it’s the melding of the two sectors that’s most indicative of the direction of travel. One of the largest chain collaborations routinely mentioned is that between the Christie Hospital in Manchester, University College London Hospitals, and the Royal Marsden. All the above have perhaps the strongest links with the private sector, and derive the highest percentage of income from treating private patients. Significantly they all have joint venture programmes with HCA, supposedly the main culprit of the Competition Commission inquiry, and surely it’s only a small step towards the mixed healthcare economy that all the participants are eagerly anticipating and increasingly reliant upon.


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