News / Nicholson sets FT deadline

All NHS trusts will have become foundation trusts, been taken over by a foundation trust or will have set up alternative management models by the end of the next spending review period (probably 2014), NHS chief executive David Nicholson told the HFMA annual conference.

‘By the end of March 2010, every non-foundation trust will set out its trajectory to be an FT and those incapable will be taken over by somebody else,’ he told attendees. ‘It also gives the opportunity for those organisations working on innovative alternative models, such as the John Lewis Partnership model. If you can come up with a plan by the end of March we’ll work with you to make it a reality. So by the end of the next comprehensive spending review, all organisations [will be]  FTs or alternatives to FTs.’

Mr Nicholson acknowledged the Department had to ‘make it more attractive for FTs’ to take on unviable organisations. He also promised clarity by March about options for community services provision, although only a handful will be allowed to become FTs.

‘It seems inconceivable, when we are attacking overheads and management costs, to be creating a whole new set of organisations. That seems absolutely nonsensical,’ he said. PCTs would be allowed to continue to run provider arms in certain circumstances, he added, but most would be expected to make other arrangements.

Mr Nicholson has already identified the need to find £15bn-£20bn in savings in the next period.  

He said the plans for foundation trusts and community services would help deliver lower unit costs and overheads – which would need to be characteristics of services in future. But managers also needed to keep three other issues in mind: the importance of quality in addressing the financial challenge, the need to integrate quality across pathways and ensuring risks were managed across systems.

He acknowledged that the payment system would need to be aligned around quality. Increasing the CQUIN payments to 1.5% of contract value and future moves to link tariff to patient experience were a start. On integration, he said vertical integration – acute hospitals joining with community services – could provide one way of managing whole pathways, though horizontal integration, with local government was also an option.

Integration was not about ‘take over’, he warned. ‘It is about coming together to create new businesses,’ he said, adding that new year-of-life tariffs were likely to be needed. The NHS chief also called for a more holistic approach to risk management.