Insights from the 10-Year Health Plan: what lies ahead for Foundation Trusts?
In the second of our article series analysing the implications of the NHS 10-Year Plan for healthcare providers, we turn our focus onto the future of Foundation Trusts. We consider some key aspects of the Plan such as the potential opportunities for Foundation Trusts, the types of autonomy they will have and the changed to financing.
The future of Foundation Trusts
The Plan makes it clear that the Government is fully committed to the development and improvement of Foundation Trusts (“FTs”) making it an imperative that all NHS providers should reach this objective by 2035. For those who are already at this level they are encouraged to aspire to become Integrated Health Organisations (“IHOs”) who will manage the whole health budget for their areas.
They further reiterate that these ‘will always and only ever be NHS organisations.’ The Plan does see an important role for private providers but there is no intention of moving away from the current nationalised model for the core functions delivered by existing NHS providers.
Opportunities to become Integrated Health Organisations
For those high-performing FTs, and those NHS providers with major aspirations for the future, the potential reward will be the opportunity to transition into IHOs. IHOs will be tasked with overseeing the entire health budget for a defined local population, offering a fully integrated approach to care. This model is designed to address inefficiencies in the NHS, where the benefits and savings from preventative interventions often result in savings for other providers. By aligning both investments and savings within a single organisation, IHOs aim to create a more efficient and unified healthcare system.
IHOs will be incentivised to deliver high-quality, efficient care, with the ability to retain and reinvest savings into improved services, vital infrastructure, or digital transformation initiatives.
The opportunity to be an IHO is reserved solely to NHS organisations which clarifies the importance of FTs within the new NHS. They will be required to support integration across service areas, redirect resources from hospitals to community care settings, focus on improving population health, and actively work to reduce health inequalities. These organisations will also have the flexibility to contract with other service providers, both within and outside the NHS, fostering a collaborative and adaptable care environment.
All FTs seeking to become a IHOs will undergo what is stated will be a rigorous authorisation process, overseen by NHS Regions, to ensure they meet the high standards required for this new model of care.
The Plan sets out its aim to designate the first IHOs in 2026, with these organisations becoming operational by 2027. Further details have yet to be published, but those FTs who wish to be considered in the early implementation rounds may wish to review their strengths and weaknesses and look at which areas need development and which are exemplary examples of high performance. Engagement with primary, community, social and voluntary sector partners will also be essential for those FTs which become IHOs in order to meet the goals of supporting integration, shifting resources from hospitals to community and tackling inequalities.
Clarifying freedoms
The Plan re-enforces the original intention behind FTs of having a greater degree of autonomy than other providers to allow them to improve local services. To achieve this they have confirmed that they will work with FTs to ensure that they have the following freedoms:
- Strategic autonomy over their performance and delivery
- Freedom to control their board composition
- Financial freedom to retain surpluses and to reinvest in themselves; and
- Freedom to raise capital investment.
To achieve these the following changes are included within the Plan.
Governance reforms for FTs
FTs will no longer be required to have governors. Instead, the Plan outlines the implementation of a system designed to integrate insights from patients, staff, and stakeholders, including measures of patient-reported experiences and outcomes.
To adapt to this change, FTs will need to update their constitutional documents and establish alternative governance models that facilitate meaningful stakeholder engagement while remaining compliant with regulatory standards. The authorisation and oversight of these reforms will be managed by a newly established function within the DHSC, supported by a panel of independent members to ensure transparency and accountability.
Changes to financing
Payment linked to performance
The Plan outlines its ambition to raise leadership standards across NHS providers, with pay being directly linked to performance. High-performing providers will be granted greater autonomy, giving them the authority and flexibility needed to drive improvements in local services and better meet the needs of the communities they serve.
The Plan also introduces a shift in how NHS providers are funded, moving from block contracts to outcome-based payment models. This new approach aims to incentivise effective, high-quality care by linking payments to the quality of services delivered. Providers may be rewarded with bonuses for delivering exceptional care, while poor-quality care may result in withheld payments.
This model has been considered with varying degrees of success in the past. The challenges associated with the integrated funding and service delivery requirements within a block contract cannot be underestimated. NHS providers will need to consider how they will address this and this may include difficult discussions about the actual costs of the services being provided.
It may be beneficial, if it has not been undertaken already, to start mapping some of these relationships and then looking at the consequences of these changes. Service redesign often includes staff restructures, contract reviews and new supply lines.
Capital
Providers will gain greater control and flexibility over their budgets under the Plan, with multi-year capital budgets, streamlined approval processes, and fewer restrictions designed to accelerate project delivery and reduce approval times for both large and small schemes.
FTs will have enhanced autonomy to manage their assets, no longer relying on NHS capital allocations, and will have the freedom to determine their capital spending levels in alignment with agreed plans.
All FTs will be required to set out clear capital spending plans as part of this process. To ensure fairness, safeguards will be implemented to prevent disparities in capital access across the NHS.
Research, innovation, and collaboration
The Plan places a strong emphasis on the importance of research and innovation, with hospitals and NHS providers expected to make these activities central to their objectives. NHS providers are tasked with embedding research and development into their core operations, ensuring that advancements directly translate into improved patient outcomes.
Overtime all organisations will be required to allocate at least 3% of their annual budget to one-time investments in service transformation initiatives.
The role of the Multi Neighbourhood Provider
Another opportunity for NHS providers is to consider becoming involved in the proposed Multi Neighbourhood Provider arrangements.
These new arrangements are being developed to work at the scale of approximately 250,000 people. This will cover between three and seven single neighbourhoods each responsible for integrating services around a foot print of approximately 50,000 people. It is not yet clear how the collaborations for these arrangements will be organised, whilst the plan itself is critical of the fragmented and silo arrangements with which the NHS is very familiar.
The role of the Multi Neighbourhood Provider is split into two functions.
The first is largely administrative. In accordance with the Model ICB Blueprint (The Model Integrated Care Board Blueprint – key insights – Hempsons – Hempsons) many of the roles currently provided by ICBs are to be delegated to providers. For larger NHS providers this does not necessarily cause concerns but they cannot be divided between the large number of smaller primary care providers.
Consequently the Multi Neighbourhood Provider will be required to provide services such as overseeing digital transformation, creating shared back-office functions, developing an estates strategy and providing data analytics and quality improvement functions. Other functions such as infection, prevent and control, SEND management and safeguarding are also referenced in the Blueprint even if they are not expressly referred to in the Plan.
In many areas GP federations are targeting these functions to support their membership but much of the country does not have GP representation at sufficient scale to undertake these roles. It would therefore be suitable for NHS providers to undertake these functions especially as they often already have specialists in these areas within their current teams.
There are issues about the delivery of these services in terms of the contractual relationship and potentially VAT which will need to be considered but the principle of NHS providers undertaking these services is one which will be developed across the country.
The second function is a provider function. The Multi Neighbourhood Providers will be in a prime position to undertake the provision of services at scale. This could include a large number of existing community services and primary care services. However, it is likely that much of this will be acting as a contract holding and management function with sub-contracting to the neighbourhood level to actual providers such as GP practices.
The Plan expressly states that this entity ‘will actively support and coach individual practices who struggle with either performance or finances – including by stepping in and taking over when needed.’ A lot of focus has been given on this wording within general practice as it is clear that practices could be taken over by Multi Neighbourhood Providers.
NHS providers must be aware of the discussions going on in primary care over the 10 Year Plan’s implications for GPs, and both the concerns felt by some, and opportunities seen by others with a potentially expanded role for NHS providers in this sector. For any FTs striving towards becoming an IHO working collaboratively with, or being a part of, any Multi Neighbourhood Provider developed in their area is going to be essential.
Integrator role
Outside of the plan itself, developments continue at pace. NHS providers potentially have another essential role within the development of the Neighbourhood Health Service, the role of ‘integrators’. NHS providers are in a prime position to hold budgets, recruit the necessary workforce and allocate resources to support the implementation of neighbourhoods at different scale.
This should be undertaken in a collaborative spirit with the PCNs and other entities involved in their area. This can help to develop the infrastructure subsequently needed between provider organisations to implement the shift to the neighbourhood.
Early adopters of this integrator model have been identified in South East London a summary of which is available in this article from Pulse which also includes a link to the ICB’s board papers which provide a useful insight into how they see the integrator function working, ICB appoints hospital trusts – not GPs – to lead neighbourhood teams – Pulse Today.
How we can support NHS providers
We are closely monitoring the development and implementation of the Plan and its implications for NHS providers. We are able to assist by:
- assisting NHS providers in achieving FT status, including compliance with governance and performance requirements;
- advising on updating constitutional documents and adapting to the removal of governors in FTs;
- assisting FTs achieving IHO status;
- advising on adapting to outcome-based payment models and negotiating contracts with ICBs;
- assisting Trusts looking to setting up joint ventures or collaborative arrangements with federations and other parties; and
- offering advice on embedding research and development into operations and forming partnerships with third-party innovators.