Focus, leadership and governance
NHS trusts are highly complex organisations; they deliver a wide range of services, employ tens of thousands of staff and can manage billion pound budgets. In setting up a wholly owned subsidiary and separating the management of a subsidiary from the trust board, change can be achieved much faster through a focus on a specific service. For example, a trust CEO told us that their estates management company has created an opportunity for developing a strategic estates management programme, for which it would have been difficult to dedicate the required senior management time at the trust board.
Supporting patient care
Trusts tell us that establishing a wholly owned subsidiary can support the development of responsive and high quality services. For example, a new outpatient pharmacy subsidiary was able decrease average dispensing times from 45 to 10 minutes. Many subsidiaries are held to account through a detailed contracts, specifications and quality KPIs - this provides greater scrutiny, accountability and continuous improvement in the delivery of these services which would not have been in place before.
Reinvestment of income into NHS
Wholly owned subsidiaries are 100% owned by trusts, ensuring that profits are reinvested back into the NHS. One trust’s wholly owned subsidiary has even received a social enterprise award for the benefits it has brought to its local community and the public more generally. For example, a trust has told us that their wholly owned subsidiary has invested £1.4m in developments on an existing site to deliver new clinical services, as well as investing in new technology in the pharmacy to improve performance.
Wholly owned subsidiaries are 100% owned by trusts, ensuring that profits are reinvested back into the NHS.
Employment flexibility
Wholly owned subsidiaries offer a range of opportunities, employment flexibilities and benefits for both the trust and staff. Within the existing Agenda for Change contracts, many trusts struggle to recruit staff with the necessary experience and expertise for roles in areas such as estates and facilities. Establishing a subsidiary allows trusts to create pay scales that are more flexible and often more attractive. By creating pay scales that reflect market conditions, many trusts report improved recruitment rates from both the NHS and the private sector. Where existing trust staff on Agenda for Change terms and conditions move to the subsidiary via the TUPE process, trusts will ensure there is meaningful engagement and dialogue with staff and unions throughout the process, as well as taking legal advice.
Alternative to outsourcing
Wholly owned subsidiaries provide an opportunity for trusts to access, develop and retain specialist expertise. This means they can improve efficiency in-house and run a service or function more effectively as it is solely focused on providing high quality services to meet the needs of the Trust. The alternative would be to outsource to the private sector. Creating a wholly owned subsidiaries also provides an opportunity to bring previously outsourced services back into the trust, which some trusts refer to as ‘in-sourcing’. This brings benefits for the trust and also the staff who then feel part of the trust and no longer fear the uncertainty of their jobs when services are tendered at the end of a contract.
Staff engagement and training
Engagement with staff can be higher when they are employed by a wholly owned subsidiary, particularly estates and facilities management staff. One trust has told us that in a recent staff survey they found that 90% of the staff in their wholly owned subsidiaries for these services felt part of the trust. In addition to investing savings or additional income into patient care, many trusts also invest in the training and development of the staff employed by the wholly owned subsidiary. It is important to remember that staff employed by wholly owned subsidiaries are still working within the NHS family. From attending social events and all staff meetings to using the staff car parking pass, many staff do not see changes to their day to day jobs.
Operational productivity
Setting up a wholly owned subsidiary must be seen in the wider financial context of the current NHS funding squeeze. This year trusts are expected to make savings worth £3.7bn, or 4.3% of turnover, despite all the evidence suggesting the provider sector cannot deliver in excess of 2% efficiency a year. Nevertheless, the NHS is already delivering productivity gains of 1.8%, nine times that of the wider economy. In setting up wholly owned subsidiaries, trusts are acting on all the recent reviews that recommended significant service reconfigurations needed to maximise quality and value for money.