Over many years we have seen the NHS develop some really stupid ideas. To be fair realising that they were stupid may only have become obvious with hindsight – but not always. Key characteristics of stupid ideas are that they rest of dubious assertions not solid evidence; they make wildly optimistic assumptions; they lack (or refuse to publish) the details of the case; they are not independently assured; they are driven by outsiders (usually management consultancy firms); and those who decide to go ahead are never there to be accountable when everything goes wrong.

Many PFIs, a lot of the ISTC’s, much in Connecting for Health, Commissioning Support Units, Regional Procurement Hubs, outsourcing commissioning (Cambridge, Staffordshire etc), outsourcing patient transport, pay cartels, management franchises, some STPs and so on ad nauseum (literally).

You might say this is the price of being innovative and trying things and that failure is one way of learning. But evidence of any learning from failures is scant.

So, the latest wheeze is wholly owned companies – arm’s length bodies. The ideas around setting up arm’s length bodies is hardly new as it has been done for two decades in local authorities. But some parts of the NHS are determined to ignore all that has been learned.

There are examples of sensible approaches to arm’s length bodies – where the reasoning behind the venture is clear. An example would be some ALMOs set up to manage council housing. One NHS FT has set up a company to better deal with facilities management and some other services using a model that makes some sense.

But what we seeing now in the NHS is the use of such a devise simply to undermine national terms and conditions – with claims that workforce costs can be reduced by 15% (or pluck any figure you like) simply be taking the staff out of the mainstream NHS. This is just like the argument that brought us Circle managing Hinchingbrooke – that a new model of management has to be better and cheaper – which proved eventually to be nonsense.

Other reasons offered as a smokescreen are that there are tax benefits or the ability to be more “commercial” or the idea that the shiny new organisations adds new customers which then add income – these are all fanciful and risky. It’s amusing that making profits for one part of the NHS as service provider out of another part of the NHS as a customer is supposed to be sensible.

There is no doubt that this is all about an attack on the workforce. One case set out that “flexibility” was needed, that sickness absence must be better controlled and that new kinds of jobs were necessary – all of which are perfectly possible within the mainstream NHS. Again, the echoes are there from a time when facilities management of various kinds was outsourced simply because the Trusts were unable to manage their staff properly.

Setting up new bodies that are outside the NHS, behaving like commercial companies, setting their own bargain basement terms and conditions and competing for business from other NHS bodies is surely exactly what we are all trying to get away from. The most likely scenario is that the change will cost a lot to implement, will alienate a large section of the workforce and make others fear they may be transferred later. Why not deliver all services through arm’s length arrangements? We could have commissioning Trusts that just meet once a year and place contracts – a nightmare dreamed up by some local authorities.

This is a stupid idea and those who should know better in NHS England and NHS Improvement should step in and stop it, because this kind of outsourcing does not work. Just as they should have stopped the outsourcing of commissioning debacles in Cambridge and Staffordshire or the never-ending saga of the in/out CSUs. Get a grip!

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2 Comments

  1. adrian mercer says:

    Thanks or the article Richard.Is there any source/further info on these companies and who is proposing them?

  2. grahambrack says:

    There are actually two cogent reasons why some Trusts use wholly owned companies for pharmacy services. One is the VAT position. I have long contended that it is actually very difficult to use these to recoup VAT because if they reclaim VAT on inputs there are very limited areas in which they can avoid charging it on their outputs. The second is that the Hackett Report (wrongly, in my view) made hospital Trusts the commissioning management bodies for homecare. If they also want to be a provider, they now need to become a different entity to do so or they’d be in the position of awarding contracts to themselves. That aside, I think all the benefits can be delivered within the existing NHS structure without needing new companies.

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