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Hospitals' corporate structure is key to unlocking their potential

Beaumont Hospital – one of the joint Board Hospitals with St James’s

Mr Vincent Barton says that a fundamental question for hospitals - and indeed the health service as a whole - is how the major hospitals will be governed in the future. He argues that it makes sense for HSE hospitals to have their own 'legal identity and protection'

Our major hospitals have found themselves battered on all sides in recent years. Typically, they have been castigated as underperforming, overstaffed and outmoded. Not to mention the sustained media revisiting of ‘MRSA-laden’ wards and ‘battle-zone’ emergency departments.

Behind these hot issues - of very immediate concern to the institutions and their staff, as well as their patients - lies a more fundamental question which has received almost no public scrutiny in recent years. How should our major State hospitals be governed?

The overall process of health-system reform which began in 2003 had at its heart the belief that better role definition and clearer accountability would drive a high-performance service for us all. As a result the HSE was established, HIQA was put in place and the role of the Department of Health and Children was redefined.

Major players

Within this new architecture the weight of the acute hospitals group remains very large. The figures are staggering. The ten largest acute general hospitals, ranked by budget, will account for spending of €2.077 billion in 2007, a full 16 per cent of the total net HSE budget on their own. They each employ thousands of staff and treat 200,000 in-patients between them. Bogey men or heroes, they amount to major players in our health system and their ability to respond to the demands being put on them critically affects patient care.

But in governance terms these hospitals are a very mixed bag. Two of the biggest are so-called Joint Board Hospitals (Beaumont and St James’). These are State-established and owned, but with their own governing Boards. Three are Public Voluntary Hospitals (Mater, St Vincent’s, Tallaght). These are private independent institutions with a public, not-for-profit mission, largely funded by the State.

Like the Joint Board Hospitals, the voluntary hospitals each have their own Chief Executive who reports to a Board. The remaining five are HSE hospitals (Galway, Cork, Limerick, Waterford and Sligo), fully-owned, staffed, operated and funded by the HSE itself.

A legacy situation

These are very varied governance approaches for institutions which are all operating within the same policy and funding framework. Clearly this is a legacy situation relating to the way in which Irish healthcare has evolved. But is it the best arrangement for now or next year?

Is it reasonable or fair to expect the General Manager of a major HSE hospital who is part of a multi-layered chain of command, to achieve the same levels of performance from his hospital as his peers who have the more immediate protection and guidance of a Board? The Audit of Structures and Functions in the Health System (Prospectus Report) in 2003, which formed the basis for the decision by Government to set up the HSE, referred to the need to give the then Health Board hospitals “their own legal identity and governance structures”.

There were a number of reasons behind this. Firstly, the scale, complexity and cost of these hospitals has no match anywhere else in the health system. Their management and overall governance needs to be of the highest calibre.

Secondly, it was anticipated that the HSE would increasingly seek to purchase acute care from a wide range of possible suppliers – statutory, voluntary and private - and that this would be more effective, and equitable, if the HSE was not to continue also to be direct owner/operator of some of these hospitals. This purchasing move is under way and will increase as the new co-located private hospitals come into operation.

Finally, the introduction of Boards in some form to major HSE hospitals, would provide the opportunity for engaging a wider range of talent in the task of governing these vital elements of public infrastructure, as well as offering the possibility of another point of engagement for the wider community with these publicly-funded institutions. Despite some internal reflection by HSE, no concrete moves have yet been forthcoming to put this rationale into practice.

Foundation Trusts

Interestingly, the NHS has been pushing ahead with new approaches in relation to governance of their major acute hospitals in recent years, based on the idea that large hospitals – and those whom they care for – benefit from having their own governance responsibilities. In England this has taken the form of Foundation Trusts.

These are hospitals established as ‘public benefit corporations’ with their own Boards of Governors. It is envisaged that their relative autonomy, as compared with traditional NHS hospital status, will make them more responsive to patient needs, more accountable to their communities, more innovative in their overall management and increasingly efficient.

Of course the NHS environment is different to ours, and the Foundation hospitals have to be seen very much as a ‘work in progress’, but very many of the same forces apply in Irish healthcare. In our Joint Board hospital model referred to above (Beaumont and St James’), we have had for many years now State-established hospitals which combine a certain degree of autonomy with a clear public benefit mission.

Concepts such as linking payment with performance, as represented recently in the 60 consultant posts awarded by the HSE to certain hospitals under the 100+ Scheme, would be seen by many as a good idea. But this type of programme has to be seen to be disinterested and objective.

This will become an increasingly difficult balancing act for the HSE as we move towards a funding system which pays all hospitals on the basis of a standard national rate for any given patient type.

An even more important issue is the critical relationship between primary care and the acute hospital sector. The thrust towards a dynamic and high-performing primary care service will depend to a good degree on them having hospital partners who are enlightened and flexible — doing only what they can and should do best.

Loss of control

Policymakers and senior health service managers will worry that increased autonomy will amount to an erosion of accountability, or loss of control. Financial discipline is the key concern and litmus test here, and it is a topic of prime concern at the moment. But, building on the principle behind the 100+ Scheme, it would be possible to imagine that good financial performance could be used as a trigger for increasing degrees of governance autonomy for the hospitals in question.

It would also be important not to lose sight of the other dimensions of performance which combine with good financial management to make our top hospitals excellent at their complex multiple mission of caring, teaching and research.

The recent hospital hygiene audits by HIQA stressed the point that performance in this crucial area was a governance issue – something in which Boards should take an interest and, ultimately for which they should be responsible.

The correct mix

Equally, the composition of Boards of the sort proposed and their means of appointment would need to be carefully considered. What is the correct mix of competencies for such Boards? Who appoints the members? How long do they remain in place and how or why can they be removed?

However, as long-overdue progress is made in being clearer about the rules of the game in our health system - formalising policy-setting, putting in place funding mechanisms which reflect performance, establishing systems to prescribe and evaluate the quality of care provided - is it not time to take advantage of this by unlocking the potential of these major State hospitals and allowing them to compete and to innovate on equal terms and by the same rules as their voluntary and private sector peers?

Vincent Barton is Managing Director of Prospectus, offering strategy advice, development and implementation support to the health and social services sector.

Posted in Features, Health Management on 11 February 2008
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