People with tea cosies on their heads

Today there was a piece in the Financial Times about Foundation Trust (FT) governors.

According to the white paper, all hospital trusts have to be FTs by 2014 (although the Department of Health admits that about 20 have no hope of getting their finances in a state to qualify as a FT).

A FT is semi-autonomous organisation. The state still owns the trust (indeed, every year they have to pay the Secretary of State a public dividend), but (nominally at least) the state does not run the trust. FTs are run by a board of directors. The board is made up of executive directors and non-executive directors. The executive directors are the managers who run the trust: the chief executive, the finance director, the medical director, the director of nursing, etc. These are people who know how the hospital works and are expert in its day-to-day running.

The non-executive directors (NEDs) are part time and are appointed from the community. According to the Appointments Commission:

Non-executive directors are responsible for providing independent scruitiny and constructive challenge of their executive colleagues and their organisations.  It is a role which has taken on new importance in today’s economic and political climate.  Budgets are tight and there’s an increased need to account for the proper use of public money while at the same time delivering high-quality.

Consequently, NEDs are specifically chosen for their business acumen. Their skills in business means that they can scrutinise the hospital's finances and the ways that the executives run the hospital. The chair of the trust is a non-executive director and chairs the board meetings.

A Foundation Trust also has governors. When the FT is created it determines how many governors it has, but the majority must be publicly elected by the "trust membership". Trust members are members of the community that use the trust and again, the trust determines the criteria for membership (some have an opt-out scheme, so that all patients are members unless they opt out; most trusts are opt-in where members of the community opt to be a member). The non-publicly-elected governors are "stakeholder" and staff governors. The stakeholder governors represent some other part of the community: local authorities, GPs, voluntary groups, local medical schools, PCTs etc; the staff governors are elected by the trust's staff.

The board of governors appoints the NEDs (including the chair of the trust) and they hold the NEDs (and through these, the board) to account. The board of governors is chaired by the chair of the trust, so this gives a link between the governors and the board.

The main role of the governors is to represent their members (the public membership, the staff membership or the stakeholders they represent) and ensure that their members are properly served by the trust. The governors do not run the trust. They are expected to influence the trust strategy and to highlight when the trust's decisions will affect their members adversely. This means that governors do not have an implicit right to inspect wards, nor rebuke staff. They do not have the responsibility of scrutinising the trust finances or care quality other than on a general sense that if the trust has poor finances and care quality it will adversely affect their members. (On this last point, Mid Staffs FT governors failed, however, I have spoken with a staff governor from this trust and she told me that the trust did not co-operate with the board of governors and consequently the governors did not know the full extent of the situation in the trust.)

In some respects the role of Foundation Trust governor is quite weak: they have no powers other than the ultimate extreme power to dismiss one or all of the NEDs - including the chair of the trust. Note that the most powerful member of the board of directors is the chief executive of the trust, not the chair. However, if the Foundation Trust is properly constituted and the board of directors treats the governors correctly, they can be very useful to the trust as a two-way channel to the community: determining what the community wants and as an advocate for the trust to explain to the community the trust policy.

The main regulating body, Monitor, is more powerful than the Foundation Trust governors, because Monitor can intervene in the running of a trust. For example, if a trust consistently shows poor financial governance Monitor can intervene ranging from taking a closer day-to-day oversight of the trust's finances, to replacing the financial team. In the future Monitor will not have this power since it will act as the regulator of all hospitals providing NHS-funded care (ie including private hospitals over which it has no governance control).

The Financial Times article is a bit thin on new information, it simply explains what the white paper says about governors as modified after the so-called "consultation" on the white paper. The article explains:

Under one of health secretary Andrew Lansley’s more radical changes to the health service, all public hospitals are to be turned into NHS foundation trusts – free-standing operations able to borrow, make surpluses and losses and no longer directly answerable to the Department of Health.

This has been the case since 2004, all FTs have been making surpluses (and hopefully not losses) although their ability to borrow has been restricted. The FT article goes on to explain that Lansley's policy is to put more responsibilities on governors:

locally elected governors, who currently appoint the chairmen and non-executive directors of trusts, will have almost full responsibility for the safe conduct of the business

This is a large change since, as I explain above, the NEDs currently scrutinise the boards decisions and hence the "safe conduct of the business". I wonder what the role of NEDs will be, since it appears to me that much of their responsibility will be handed over to governors. The response to the white paper consultation Legislation Framework and Next Steps section 6.15 says that the new bill will:

• make explicit the duty of governors to hold the board of directors to account, through the chair and non-executive directors (whom they have power to appoint and remove);
• give governors power to require some or all of the trust’s directors to attend a meeting. For transparency, the FT’s annual report would have to list any occasions when this power was used;

This sounds not much different to what governors do already, however, the Next Steps document goes on to say that this:

reflect a significant cultural shift: placing genuine responsibility on FTs themselves rather than on Monitor as FT regulator

In other words, it shifts this responsibility from Monitor to the governors.

Bear in mind what this shift means. Currently the governors represent their members. Their influence on the trust is solely for their members. If the trust wants to change the services it provides, the governors have a responsibility to ensure that the service change will benefit their members. Under the new arrangements the governors will have a responsibility to ensure that the service change will not affect the safe conduct of the business. Can you see the shift? Governors currently put their members first, but in future they will have to put the business of the trust first. Currently governors are community representatives, in future they will have to be business-savvy.

The Financial Times points out that the shift will mean a change in the skills of governors and it quotes David Bennett, the interim chief executive of Monitor:

there is a worry that as a whole they do not look like a group that is yet well equipped to take on this new role

Indeed not. Most elected governors stood for election to represent their community, not to run the trust. The article has a rather insulting quote from a "senior NHS figure":

According to other senior NHS figures, governors vary “from those with extensive business backgrounds to people with tea cosies on their heads”. 

I am an FT governor and I can say that out of the 14 elected governors at our trust just one is a current businessman, and two others have business backgrounds. The remainder have academic or medical backgrounds, or non-NHS related backgrounds; these I suppose are the "tea cosy wearers". (Under this definition, I am a "tea cosy wearer".) The "tea cosy wearers" are the community representatives and are the sort of people Lansley does not want, yet the community is best served by such people. At our FT meetings we do not spend time talking about productivity of the staff, or cost improvement programmes (we are shown the figures), instead we spend our time determining how the trust can provide the best service for the community. In my opinion the "tea cosy wearers" are far more important than the business people. At the last FT meeting, the businessman governor did make a fuss about productivity (unwarranted, the productivity is high at our trust), which drew the response from one of the "tea cosy wearing" governors "this is a hospital with patients, not a business with customers!".

We are constantly bombarded with the Big Society rhetoric from this government that says that people who care about their community should be running public services. We get the impression that Cameron wants "tea cosy wearers" running public services, but Lansley says he wants business people. I suspect he will not get what he wants. FT governors are unpaid and business people are unlikely to devote much time to an enterprise if they are not paid for that time (if they give away their skills so freely they cannot be successful business people).

I had better go shopping tomorrow for some new head wear for our next Foundation Trust governors meeting.