Could Hinchingbrooke set a benchmark for health organisation ownership?

The £1bn, 10-year deal for Circle to take over the management of Hinchingbrooke Hospital from February has, as expected, been met with controversy. While this is not the private takeover that some might have feared – the hospital is still owned by the NHS, and its employees remain on the same terms and conditions – there is a feeling that this could be the thin end of the wedge. 

In the prison service, a process that began with private management has recently progressed to Birmingham Prison being transferred to G4S – so could the next logical step be for a private contractor to take over a hospital?

The general view among staff and service users is that the NHS is special.  Privatisation in which the directors of a business have a profit focus and a duty to benefit shareholders is still regarded as an uncomfortable bedfellow with the provision of public healthcare and the NHS is likely to be the last bastion of public sector ownership.

If we are moving into a world in which the government is contemplating actual transfers of hospitals therefore, logic suggests that this should involve organisations which are not privately owned. This was the thinking which informed the foundation trust programme, but a more open market may enable new non-statutory models for healthcare.

The thought behind foundation trusts was that if the state did not own hospitals, then their natural home was their local communities, with membership drawn from patients, staff and local people in a structure based on mutual principles. This thinking was then expanded to community foundation trusts, which were intended to take over primary care trust provider services. 

In each case organisations had to demonstrate to Monitor that the new trust would be viable, and an assessment was made in relation to finance, people and governance to establish whether it would work.

So far as hospitals are concerned, the stringent quality targets set by Monitor mean that although many hospitals are in the process of applying, some will never be able to achieve foundation trust status. Only a very small number of people have expressed an interest in setting up community foundation trusts.

In the meantime some have taken the initiative and set up new mutual organisations to take over PCT provider services outside the community foundation trust framework.

The first of these was Your Healthcare in Kingston, and, more recently, Locala has embarked on a mutual project in Kirklees with early indications of genuine staff and community interest and engagement.

Takeovers such as these are much closer to the basic principles of mutuality – people have decided to do it themselves outside the government framework, deciding what entity to set up, how to govern it and how to run it.

A key feature of the mutual structure is its flexibility. New mutual organisations tend to value their freedom from nationally agreed or dictated methods of working. This is not primarily about paying less; it is more often about working more flexibly and making the best use of people’s time.

Mutuals can also find ways of rewarding staff beyond the public sector norms where their performance of the performance of the organisation justifies it.

Through the stake which staff and the local community have in their organisation they have a stronger sense of ownership and responsibility, creating an environment in which over time people can have more rational discussions about doing things differently. 

In successful mutuals, staff take pride in the service which is delivered and understand how their work contributes to the whole. They are prepared to be more flexible, whether in the hours of day they work or in the type or amount of work they do. They may also be more sympathetic to action taken to deal with those who are not contributing properly.

The community stake, too, can change the way the organisation works. For those who choose to become members, the relationship and the way of dealing with problems is transformed; instead of simply complaining about a state service, for example, and hoping the issue gets to the right people, they can be given a real involvement in driving change.

Letting the people who are using the service say how it ought to work is completely logical, and it is a concept that is the founding principle of well-run mutuals.

The community stake may also over time alter the way people use services. For example, hospitals might set up a dialogue with the community and get them talking about what makes a difference to waiting times, such as missed appointments. If you are dealing with a provider that is your mutual, your hospital, you may be more likely to turn up for appointments, or at least to inform the hospital if you cannot attend.  

This is the holy grail of the mutual project, allowing providers to deliver services more cheaply not by making cuts, but by reducing demand. 

This will not happen immediately, but it is a legitimate goal. Mutual organisations in other sectors have found this to be true; in insurance, claims statistics for Friendly Societies show that people tend not to claim unless they really need to, where those dealing with other insurance companies will broadly claim for anything to get the most they can out of their provider. Members of Friendly Societies understand their responsibility to maintain the society, which is there to support them and others in their time of need.

Of course, setting up a mutual is not without its difficulties, and in the context of hospitals there is a particular issue when it comes to funding. With no shareholders, finding capital for investment can be a real issue – there is nobody to risk their money in the hope of a substantial return. 

In order for mutuals to succeed, we will need to explore new methods of funding, and consider how to build partnerships with other organisations. Mutuals are likely to have an important role to play in the future of the health service, and Hinchingbrooke could be the catalyst; if nothing else, it gives an indication that the government is willing to consider new ideas of ownership.