New government policy for the NHS could allow doctors and nurses to ‘own’ hospitals

The Government is examining ways to operate health services as mutual companies with shared ownership

Whitehall Editor

Ministers are drawing up plans to allow doctors and nurses to own and run the hospitals they work in as part of a radical blueprint to change the way the NHS is run.

Under proposals to be floated tomorrow, staff could be able to take over hospitals and other NHS responsibilities and run them as new mutual companies in the style of the department store chain John Lewis.

Staff would then become “shareholders” in the new company with the power to dismiss the chief executive and board members as well as set policy and targets for the new organisation.

Ministers are not ruling out the possibility that staff could even be given a financial stake in the organisations for which they work – sharing bonuses if their hospital makes a profit on NHS work. The new policy comes after an independent review, led by the independent think-tank the King’s Fund, found what it described as “compelling evidence” that NHS organisations with high levels of staff engagement  delivered better quality care.

By contrast, hospitals like the one at the centre of the Mid Staffordshire scandal had low levels of staff engagement.

Ministers have been particularly taken by the success of Hinchingbrooke Hospital in Cambridgeshire, which had been losing £10m a year and had very low levels of patient satisfaction until taken over by the private provider Circle, which manages it for the NHS. Circle is owned jointly by the staff who work for it and private-equity funders. Since taking over Hinchingbrooke, Circle has brought it to financial break-even point. It was recently named the top hospital in England for quality of care.

While the Conservatives and Liberal Democrats are sensitive to accusations that mutualisation amounts to back-door privatisation, they point out that if the worst-performing hospitals could be brought up to the standard of the best then the NHS could save billions of pounds a year. Today the Health minister Norman Lamb and the Cabinet Office minister Francis Maude will announce that ten NHS organisations will share a £1m fund to investigate different forms of mutualisation within the NHS.

They will report on what they’ve found next spring, setting out the main benefits of mutualisation in the health sector and the main barriers to implementation. Both the Liberal Democrats and the Conservatives are likely to commit to implement the changes should they be in power after the next election. Labour’s shadow Health Secretary Andy Burnham has also expressed enthusiasm for the plan.

Mr Lamb said all the evidence showed that trusts with staff who feel empowered and have a shared sense of ownership performed better while Mr Maude hinted he was happy with the ideas of the new mutual making profits.

“You only need to turn to Cambridge’s Hinchingbrooke Hospital for inspiration,” he said. “Letting frontline staff take ownership of their services and giving them the power to do their jobs in the way they know best results in higher quality and more efficient public services.” Chris Ham, who carried out the review into mutuals for the Department of Health, said: “It is time to give serious consideration to the role staff-led mutuals could play in increasing staff engagement.”

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