London Eye: Waxing of the merger moon

Four stops south on the train

Lots of questions about a pretty significant move for London’s acute sector.

Plenty of trusts have shared chairs, and even shared chief executives, but these often involve at least one smaller partner – Ipswich and Colchester (as was) or Heart of England’s takeover by University Hospitals Birmingham.

But a shared chair between two Shelford Group trusts, as Sir Hugh Taylor’s is across Guy’s and St Thomas’ and King’s, is unprecedented.

It is also interesting that the move was announced by NHS Improvement rather than King’s itself. Foundation trusts appoint their own chairs, via their governors committee. Was Sir Hugh the only candidate to replace Ian Smith? A bit of a loss of status for King’s if so.

NHSI takes a bigger hand in FTs subject to financial special measures, which probably explains its involvement, though it doesn’t change the FT’s legal position.

King’s announced last week what HSJ reported in January, that Bradford FT’s Clive Kay would be its new chief executive. London Eye understands he was Mr Smith’s pick.

Does NHSI’s specific involvement in the appointment of a chair mean anything in particular?

Potentially, because, short of commissioning a governance review, the centre does not have many tools to use on an FT which can sometimes seem only dimly aware of its own role in building up its huge deficit. Interesting to recall that, as part of discussions going into the NHS long-term plan, legal changes were considered which would have allowed NHSI to direct FTs to merge, among other controls. Will they come back to the table?

NHSI chair Baroness Dido Harding’s announcement of Sir Hugh’s new role certainly can’t be a signal of less involvement from the centre.

Mr Smith was an interim, and has served just over a year. Sir Hugh is also an interim at KCH, but his term will be two years. That’s an unusually long time for an interim appointment, but coincides with the remainder of his term at GSTT.

What does he hope to achieve in those two years?

Perigee Syzygy?

The obvious answer would be merger of the trusts.

This was last seriously mooted seven years ago, when the area’s mental health provider, South London and the Maudsley, was also involved. It got to strategic outline case but no further and would’ve created a £1.9bn turnover organisation (well over £2bn now).

Why no further?

One factor was what a previous consultant called the “considerable” evidence of “passive aggressive behaviour” between the trusts.

William McKee’s report said: “The waxing and waning of support over two decades for a merger between the two acute trusts is an issue, which in turn has led to defensive and aggressive behaviours.

“An analogy would be a colourful quote ‘land grabs before the armistice’, given to me by a clinical academic group leader.”

The waxing of this particular moon was always going to be hampered by King’s not wanting to end up a satellite of Guy’s and St Thomas’ (the next literal supermoon is on 19 February, FYI).

Has the alignment in the firmament of senior medical leadership changed enough that this is no longer the case?

If haematology is reflective, no: HSJ reported last year on NHSI withholding support for KCH’s new haematology institute in the face of its financial problems, and highlighted its “difficulty” with its counterparts at GSTT.

In 2012, the participants were keen to stress a merger was about even whizzier synergies and integration between the 21 clinical academic groups that work across the two acute trusts and their academic partner King’s College London – and was specifically not for financial reasons.

Gnarled arrangements

The situation is somewhat different today.

GSTT is far more stable than King’s and not in financial special measures. Both trusts have some gnarled governance arrangements relating to joint ventures and private enterprise. Reconciling these across two trusts would be interesting.

The 10-year contract for Viapath, the pathology partnership between the two trusts and Serco, is due to expire in September 2020.

This venture has seen some messy governance – south London’s pathology work is being tendered at the moment by a consortium involving GSTT and KCH. Will Viapath (part-owned by those trusts) bid?

PwC’s report into what went wrong at KCH’s finance recommended these arrangements be reviewed.

Viapath has failed to expand to include the logical next partner, Lewisham and Greenwich Trust, just down the road. The private sector component of this is thought to be what spooked some potential Viapath partners. Whether GSTT or King’s exits or continues remains to be seen.

Both trusts have business development and consultancy arms at various degrees of arms-length. KCH recently had to restructure King’s Interventional Facilities Management, its arms-length company, after the PwC report into what went wrong with its finances found it was not sufficiently on top of what the outfit was doing.

It was also accused by a union of worsening staff terms and conditions.

Meanwhile, GSTT ordered a never-publicly-disclosed governance review into the relationship between a board director and the trust’s spun-out estates company Essentia, whose board he also led. The trust did reveal there was a “clear potential conflict of interest”.

The trust also faced some questions over the tax arrangements for its lucrative work for the army in Germany.

So plenty to keep a new chair occupied, even without attempting the biggest trust merger in the history of trusts, and one that could be bad for patients – at least according to the government’s competition watchdog.