Has Dalton found a way forward for struggling organisations?

Over the past 10 months the Dalton review has generated considerable interest in the role that new organisational models might play in finding a clinically and financially sustainable future for struggling NHS providers.

We have previously argued that while there are no panaceas, there is enough evidence to suggest that further testing of various models – for example, buddying arrangements, joint ventures, hospital chains, franchises and various forms of networks – would be justified. So does the final report, published last week, offer a way forward?

The most important sections of Sir David’s report deal with the ‘how’ questions - how can national system leaders make it easier for local areas to experiment with new organisational models? How can innovation be encouraged? How can the best be incentivised to support the rest? The report offers some specific suggestions:

• a new ‘kitemark’ of success beyond foundation trust status – so-called ‘credentialing’; the intention of this is to identify high-performing organisations that are willing and able to support other providers by entering into new organisational arrangements with them
• expansion of the existing buddying system beyond special measures trusts 
• reforms to the bidding and assessment processes that organisations have to pass through when a change of management control is proposed  
• batched procurements through which the NHS Trust Development Authority would tender for a management or franchise partner for a group of NHS trusts collectively
• demonstrator sites to test the new organisational models mentioned above.

These ideas depend on successful leaders being willing to take on additional management responsibilities in relation to poorer-performing trusts, which currently they seem to have little appetite to do. A key question is therefore how to make this a more attractive proposition. Sir David’s recommendations deal with one of the key disincentives, by suggesting that regulators apply a ‘grace period’ after an organisation assumes responsibility for a struggling trust – to allow for a possible short-term dip in performance. There is also a suggestion that leaders could see their additional responsibilities reflected in their pay package, creating an individual incentive if not an organisational one.

Another critical question is whether the proposed credentialing system will succeed in making it easier to enter into new organisational arrangements. The processes involved in these kinds of changes are generally highly complex and, as the review acknowledges, much of the time taken to complete them is spent on necessary activities such as building a local consensus. Under Dalton’s proposals, credentialed providers would be able to skip the first stage of the process (the pre-qualification questionnaire), but it is not clear that this would outweigh the burden of passing through the credentialing process in the first place. The history of the FESC framework does not give grounds for confidence here.

In some ways the current environment is difficult for Dalton’s ideas. We are no longer looking for solutions for only a handful of persistently weaker trusts. Organisations whose performance and finances remain on solid ground are becoming an ever more select group, while the list of trusts in dangerous waters grows by the month. The kinds of solutions covered by the review will struggle to provide an answer to this rising tide of distress appearing across the NHS, and were not designed to do so.

The other significant development since the Dalton team began their work is the release of the NHS five year forward view. The new models of care in the forward view will set the agenda for many local health economies, and will involve profound and complex changes in how acute trusts work with local partner organisations. Stevens’ new models of care and Dalton’s new organisational models are by no means incompatible – in principle they could be mutually supportive – but the question is whether there is capacity in the system to engage with both agendas simultaneously.

The central premise of the Dalton review is that NHS organisations need to be encouraged to look beyond their own organisational boundaries. That is something we would wholeheartedly endorse, and indeed something that is already evolving in many parts of the country. The question is how that existing process of change can be accelerated and scaled up. The Dalton review provides some useful indications of actions that could help, but encouraging leaders to take on new responsibilities will be challenging at a time when financial pain is driving many organisations to focus inwards rather than outwards.

• Read our report: Future organisational models for the NHS
• See our work around the Dalton review
• Watch Chris Ham in conversation with Sir David Dalton
• Find out more about our leadership development work
• See our resources on the NHS five year forward view