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Barts: Too big to fail?

‘Too big to fail’ is a term often associated  with financial institutions and used to suggest that certain businesses, so interconnected and so large are worth being supported by government when facing potential failure.   

So why discuss Barts Healthcare NHS Trust?

It is, after all, a public service organisation. When we ask if an organisation is too big to fail, I think we are asking if a big organisation, for what it provides or serves, is best in this form – in this case clinically and financially.  I also use the term ‘failure’ very carefully. Barts has many positives to shout about too, with a very dedicated workforce, working within a significantly challenged organisation.

Barts is the largest NHS Trust with five hospitals and an income in excess of £1.2 billion.  The Trust was placed in special measures in March 2015 by the NHS Trust Development Authority due to a critical CQC report combined with challenges in meeting national waiting time standards and a very challenging financial position. As an interim management provider of healthcare finance professionals, the financial challenges facing NHS organisations and Barts interest me enormously.

The financial challenges that Barts faces are immense.  In February 2015 it was announced that the predicted year end deficit for the Trust had doubled to £93 million.  The Trust has an unaffordable PFI contract, and in 2010 there was discussion surrounding a merger between Barts & The Royal London (as it was then) and University College London Hospitals to avert unmanageable PFI repayments.  Bart’s Cost Improvement Programme has been watched with interest and the Trust’s CIP slippage against projections has been ongoing for some years.

Do these financial challenges (admittedly, which many NHS organisations – and not just the biggest face) suggest that the NHS Trust model needs to change or that there needs to be a move towards larger NHS Trusts?  It’s a very interesting question (do read my blog on whether the FT model is relevant). Many of the largest NHS Trusts have faced financial difficulties or their financial challenges are ongoing and indeed exacerbated due to the scarcity of money within the system.  In my view, the NHS needs significantly more money, and it needs it quickly.  In the case of Barts, I also believe that siphoning off the PFI contract is a necessity. The push towards NHS Vanguards and vertical or horizontal integration presents opportunities and challenges to the big bastions of NHS Healthcare.

Are Trusts like Barts the future, either in terms of the challenges that will be faced or in terms of their size and scale? Consolidation within many parts of the private and public sector has been a trend for years. Should or will NHS Trusts continue to mirror this? (Several have merged or been ‘acquired’). I suspect larger NHS Trusts are the future, but only those that have vertically integrated.

What do you think? Are large NHS Trusts best?  Are they ‘too big to fail’ or do the services that they provide need reconfiguring?  Do the largest NHS Trusts have a future or will their composition change? As always, I’m very interested to hear from you.

David Rason is a Consultant for Healthcare at Interim Partners.

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