The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust - Trust Development Authority
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Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust
Contents
Introduction 1 Executive summary 2 Background 3 The Transaction 4 Clinical Quality
Agreement Due Diligence
3.1 Commissioner engagement 4.1 Introduction
at Gateway 4 4.2 Outline of Approach
3.2 Developing the Transaction – Clinical Quality Oversight
Agreement from the Heads Group (CQOG)
of Terms 4.3 Identification of key risks
3.3 Financial Support and confirmation of
3.4 Value for Money assurance position
4.4 Clinical due diligence
of the receiver
4.5 Clinical quality due
diligence of handover
documentation
3 4 5 6 4.6 Summary
4.7 Conclusion 9
5 Transition plans 6 Legal process 7 Regulatory Approvals 8 Summary 9 Gateway 4
and documentation Chronology
5.1 Approach, governance Consideration of the transaction
and progress against the TDA Accountability
5.2 External Due Diligence Framework at Gateway 4
5.3 Ongoing assurance
5.4 Equalities Impact Assessment
5.5 Conclusion
14 16 17 18 19
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 2
Introduction
Barnet and Chase Farm Hospitals NHS services as a standalone organisation. The Trust board Of course these benefits do not come without investment.
agreed it would be beneficial for local people if it could work The overall financial support package is in the region
Trust has faced significant challenges in
with a partner organisation to come up with a new plan. of £263m over five years. All of this investment – the
recent years. breakdown of which is set out in this paper – helps
A number of organisations initially responded to this
to achieve the benefits for patients listed above. For
Since 2007 local clinicians have been developing the invitation, and in September 2012 the Barnet and Chase
example, £75m of this is capital investment provided
Barnet, Enfield and Haringey clinical strategy which has Farm Hospitals NHS Trust board examined the Royal Free
by the Department of Health. Part of this is to make
led to important improvements to the clinical sustainability London NHS Foundation Trust’s business case, and formally
necessary changes to the estate at Barnet and Chase Farm
of services in the area. The changes mean that services will accepted the Royal Free as its preferred partner.
Hospitals that will enable improvements to services. On
be safer and higher quality with the right staff in place to
Since then they have worked closely together to make top of this the Department of Health is funding £104.7m
improve outcomes for patients. This only provides part of
sure the plans progressed with the necessary pace and over five years to ensure the Royal Free London NHS
the solution to the challenges faced by Barnet and Chase
always kept the most important thing in mind – how Foundation Trust is able to transform care in a way that
Farm Hospitals NHS Trust. The Trust ended 2013/14 with a
this could benefit local patients. There are numerous puts the services on a more sustainable footing. Locally,
deficit of some £16m and it is clear that it is not sustainable
advantages, including: commissioners are jointly funding a smaller sum of money
financially as a standalone organisation. The planned deficit
to ensure services are integrated safely and effectively.
for the Trust for the full year 2014/15 on a standalone basis • Joining the Royal Free will secure the future of
is in excess of £32m. It has become clear that significant both Barnet and Chase Farm Hospitals and provide Throughout this process, the commitment of staff at
organisational change is needed in order to ensure public more opportunity for investment in services in these all levels at Barnet and Chase Farm Hospitals has been
money can be spent on improving local services. local areas. unwavering. In a period of uncertainty they have continued
to put their patients first and focussed on delivering
Our priority has always been to find a sustainable solution • The Royal Free has an international reputation in
essential care to the local community.
to these challenges that will safeguard health services in many areas of specialist care, meaning closer links
the area for generations to come. Local people need between specialist care and patients living in Barnet, It is also important to thank all those involved at Royal
services that are of high quality now and are able to Enfield and Hertfordshire. Free London NHS Foundation Trust. It has been clear that
be provided long into the future. they have been driven by the aim of creating the very best
• There will be new and exciting opportunities for staff
healthcare services for the populations they will serve.
This is precisely why we have worked closely with Barnet with a greater critical mass for teaching the clinicians
and Chase Farm Hospitals NHS Trust and Royal Free London of tomorrow. It is this commitment that has given us the confidence
NHS Foundation Trust to put local services on a more secure to agree to this change. We are confident that under the
• The single larger NHS Foundation Trust will build
footing in the interest of patients. new arrangements the services are on a better financial
strong links with local GPs and the services they
footing and, as a result, will be continually improved for
The agreements set out in this paper are the conclusion of provide, leading to improved care for local people.
local people.
two years of hard work. In July 2012 the Barnet and Chase For patients this could mean fewer hospital visits,
Farm Hospitals NHS Trust board concluded that it was not shorter hospital stays and, when appropriate, more The following paper sets out the detail of the agreement.
able to put together a plan to provide sustainable health care closer to their homes.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 3
1 Executive summary
This paper reports on the proposal for was subsequently signed by the NHS TDA, NHS England,
the Royal Free London NHS Foundation Trust Royal Free and BCF and was developed, with very little
amendment, into a Transaction Agreement that provides the
(“Royal Free”) to acquire Barnet and Chase legally binding basis for the transaction. Commissioners have
Farm Hospitals NHS Trust (“BCF”). been involved in this process and it was agreed that clinical
commissioning groups (CCGs) providing funding towards the
As reported to part two of the NHS TDA Board in January, transaction should also sign the Transaction Agreement. All
the Royal Free’s Integrated Business Plan (IBP) for the funders – including NHS England’s Finance and Investment
transaction is based on a clinical model and demonstrates Committee – have approved the remaining 13% of funding.
how, with capital investment, the loss-making clinical
services at Chase Farm Hospital (CFH) can be turned around BCF was legally obligated by the Heads to formally
to become both clinically and financially sustainable. consult staff interests and local Healthwatch organisations
about the transaction and this formal consultation
Since January 2014, the NHS TDA has continued to work was concluded on 16 April. The results – which were
closely with Royal Free and BCF to progress the three core uncontentious – were reported to the BCF Board on 9 May.
elements of quality assurance and clinical quality due
diligences of transactions, namely: assurance of ‘receiver In summary therefore, in considering Gateway 4 in part 2 of
and sender’, assurance of the quality due diligence process its meeting on 15 May 2014, the NHS TDA Board was advised
undertaken by the ‘receiver’ organisation and assurance that sufficient assurances were in pace to confirm that:
of the transition and handover process. Based on this work, • The transaction offers value for money.
the Transaction Board was sufficiently assured that detailed
• Funding had been identified and agreed from all
planning was well advanced, on track to deliver a successful
relevant sources. • To the Secretary of State that the dissolution of BCF
integration from 1 July.
• Quality assurance had taken place and following should be enacted on 1 July 2014 and that the services,
The NHS TDA and Royal Free have now concluded this process the findings confirmed that there is no staff and assets of BCF should be transferred to the
discussions with the Department of Health (DH) / Her reason on the grounds of risk to quality to prevent the Royal Free, with the requisite assurances in place.
Majesty’s Treasury (HMT) in order to confirm that the transaction going ahead. • To give delegated authority to the Chief Executive
required cost support of £262.8m over five years is available
• Robust transition arrangements were in place. to sign the finalised Transaction Agreement on behalf
in a form that will allow the Royal Free to achieve an
• Legal process had been followed and necessary of the NHS TDA.
acceptable risk rating with Monitor. Approximately 87%
of the funding is to be provided via DH. DH has also documentation is in place. This was confirmed in part two of the NHS TDA Board
confirmed that the value for money (VFM) assessment is • All necessary regulatory approvals had been received due to the confidential elements of the transaction.
robust and based upon a satisfactory risk rating by Monitor. or were on track, in order to complete the transaction
Subsequently, the Secretary of State has signed the
on 1 July 2014.
A Heads of Terms, setting out the financial and dissolution and transfer orders and all parties have now
contractual basis for the transaction was prepared ahead On 15 May 2014, the NHS TDA Board was therefore signed the legally binding Transaction Agreement.
of the 23 January NHS TDA Board meeting. The Heads asked to approve the recommendation:
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 42 Background
This paper reports on the proposal for the A paper presented to part two of the The paper presented to the 15 May 2014
Royal Free London NHS Foundation Trust 28 November 2013 NHS TDA Board included: NHS TDA Board meeting confirmed that:
(“Royal Free”) to acquire Barnet and Chase • some background to BCF and to the Royal Free, • the financial negotiation had been concluded and
Farm Hospitals NHS Trust (“BCF”), with as the preferred acquirer; incorporated within the Transaction Agreement, funding
had been identified and agreed from all relevant sources
effect from 1 July 2014. • a description of the NHS TDA’s process as vendor and
the governance arrangements, to achieve a solution; and that the Transaction Agreement itself was in a form
The NHS TDA Board was asked to recommend to the ready for signature;
• a summary of work to date on clinical quality due
Secretary of State that BCF be dissolved and assets and diligence; • the NHS TDA and DH was satisfied that the transaction
liabilities transferred to the Royal Free. The Board was offers value for money;
• a summary of the Heads of Terms being negotiated
also asked to give delegated authority to the Chief between NHS TDA officers, the Royal Free, NHS England • quality assurance had taken place and was satisfactory;
Executive to sign the finalised Transaction Agreement on and BCF; and • robust transition arrangements are in place;
behalf of the NHS TDA, which was also to be signed by
• an assessment of the risks associated with the • legal process had been followed and necessary
the Royal Free, BCF, NHS England (NHSE) and seven clinical
transaction. documentation was in place;
commissioning groups.
A further Board paper presented at part two • all necessary regulatory approvals had been received
of the 23 January 2014 NHS TDA Board included: or were on track, in order to complete the transaction
on 1 July 2014.
• a summary of the proposal made by the Royal Free to
acquire BCF, including the expected benefits and an
assessment of the proposal against the benchmark set
in the NHS TDA Accountability Framework;
• a further update on clinical quality due diligence;
• an assessment of value for money for the transaction;
• a conclusion to the financial negotiation; and
• a summary of the Heads of Terms.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 53 The Transaction Agreement
3.1 Commissioner engagement at Gateway 4 The Transaction Agreement explicitly documents The remaining 13% of funding to support the
commissioner intent to take all reasonable steps to transaction is to be provided over five years by
The Royal Free’s Integrated Business Plan (IBP) for the
support the implementation of referral protocols at commissioners, the majority from NHS England and
acquisition of BCF sets out a transformation agenda,
all GP practices in their respective areas and to support the remainder shared between seven CCGs, each
positioning the Royal Free at the centre of a managed
the specification and implementation of standard IT of which already has governing body support for
care network. This involves the Royal Free reaching
systems and equipment across community and primary its investment and delegated authority to sign the
agreements with its commissioners to, for example,
care services in their respective areas. Transaction Agreement.
invest heavily in a programme of service redesign with
its CCGs; implement GP referral protocols, reducing Monitor considered the acquisition proposal, after
3.2 Developing the Transaction Agreement
demand on hospital-based care; manage a range of a 3-month period of review, in May and subsequently
from the Heads of Terms
community hospital services complementary to its wrote to the Royal Free Board to advise it of its future
referral base; invest in the redevelopment of Chase The process for developing the Transaction Agreement Risk Rating. The Royal Free Board then decided along
Farm Hospital site as a high quality outpatient and has been relatively straightforward, as it followed with its Council of Governors, to formally submit to
elective hospital with an urgent care centre; and directly from the Heads of Terms discussed at the acquire BCF. Subsequently, the NHS TDA signed the
maximise the use of Edgware Community Hospital. January NHS TDA Board meeting and subsequently Transaction Agreement and submitted BCF’s application
signed by all parties. CCG Governing Bodies had sight for dissolution to the Secretary of State.
In particular the Transaction Agreement includes
of the Heads and therefore there were “no surprises”
provision for substantial capital investment in the
in translating the Heads into what is a legally binding 3.3 Financial support
Chase Farm Hospital (CFH) site, to ensure that facilities
contract. For the reasons given above, CCG Governing
at CFH site remain at a reasonable standard in delivering The total support, at the conclusion of the financial
Bodies are parties to the Transaction Agreement,
the Barnet, Enfield and Haringey clinical strategy negotiations and included in the Transaction
putting funding in place and committing to the strategy
and also to enable greater operating efficiency and Agreement, is demonstrated in Table 1.
set out in the IBP in full.
thereby eliminate the financial deficit at CFH. This will
entail development of a business case and involve The Transaction Agreement is based upon the business
CCG engagement in a full option appraisal process, case submitted by the Royal Free and which has been
over the next 2 years. assessed by NHS TDA with external due diligence of
the financial and quality aspects of the business case
Also, commissioners have agreed to incorporate in
undertaken. As an arms-length body of the DH, the
the Transaction Agreement their shared commitment
NHS TDA has signed the Transaction Agreement on
to establish and deliver a jointly managed project
DH’s behalf, having now substantiated DH and her
to implement the integrated care strategy across
Majesty’s Treasury (HMT) support for the transaction.
their respective areas and the local health economy,
Approximately 87% of the funding package agreed is
supported by the Royal Free’s complementary plans.
with DH, over a five year period.
This project forms an integral part of the CCG five
year plans to be agreed by NHSE.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 6The Transaction Agreement
Table 1 – Summary of financial support
Cost support Funded via Funder £m
Transaction costs Costs associated with achieving a contractual close on the transaction. NHS TDA/ 5.2
Department of Health
Integration costs Costs of implementing the integration of the two organisations and achieving a common platform NHS England and CCGs 33.5
for equipment and for adopting consistent systems and processes. These will be time limited and will
be funded by NHS England / commissioners.
Transformation Support for the Trust to develop to transform its clinical services. It will be provided by the DH for a Department of Health 104.7
support time-limited period on the basis that a financially sustainable solution will be delivered. It is contingent
on delivery of the transformation as evidenced by delivery of cost improvement plans. There is a risk
of up to 5% for under delivery and a reward for over delivery.
Historic debt Funding to cover the forecast net current liabilities position in the closing Balance Sheet of BCF at Department of Health 44.8
the point of acquisition.
Capital Both for integration and long term investment on the site to maintain the estate and achieve an Department of Health 74.6
efficient operating model. These funds will be provided by the DH.
Total 262.8
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 7The Transaction Agreement Table 2 shows the distribution of funding support over 5 years. Table 2 – Five year profile Royal Free support £m FY14 FY15 FY16 FY17 FY18 FY19 Total Revenue 5.2 43.9 33.9 26.5 21.8 12.1 143.4 Net capital 0.0 70.5 8.3 3.5 27.9 9.2 119.4 Total 5.2 114.4 42.2 30.0 49.7 21.3 262.8 3.4 Value for Money The Department of Health’s Value for Money test has been completed. The Department of Health is satisfied that the transaction offers good value for money for the tax payer and that the assessment meets HMT guidance for public sector bodies on how to appraise proposals before committing funds. NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 8
4 Clinical Quality Due Diligence
4.1 Introduction The NHS TDA combined a number of approaches • Contributing to the development of a safe and
in relation to the quality assurance and clinical due effective handover process between BCF and the
The NHS TDA’s Accountability Framework (2014/15)
diligence process to assure the three core components Royal Free.
outlines the approach to discharging its responsibilities
listed above. • Providing assurance that clinical benefits and
regarding the quality assurance and clinical due
diligence processes that have been undertaken. A programme governance process was established synergies will deliver sustained high quality
This is in order to advise and provide assurance to the in line with the principles laid out in the NHS TDA health care.
NHS TDA Board, as ‘vendor’, that there is no reason Accountability Framework and implemented through
In addition, throughout the clinical due diligence
on the grounds of risk to quality to prevent the the following forums:
process, key lines of enquiry have been posed for the
transaction going ahead. • A Transaction Board, chaired by Alwen Williams, purposes of gaining additional assurance throughout
This section outlines the approach that the NHS TDA NHS TDA Delivery and Development Director, the process.
has taken in relation to the three core elements of involving all key stakeholders.
Through routine NHS TDA quality monitoring and
quality assurance and clinical due diligence of the • The Clinical Quality Oversight Group (CQOG) surveillance it was identified that the rates of pressure
acquisition of Barnet and Chase Farm Hospitals chaired by the NHS TDA London Clinical Quality ulcers were rising above the expected level at BCF.
NHS Trust (BCF) by the Royal Free London NHS Director, reporting to the Transaction Board. This information triggered a further key line of enquiry
Foundation Trust (Royal Free), including conclusions and to understand better why this was happening and
recommendations arising from the assurance process. 4.2 Outline of Approach – Clinical Quality to support BCF to identify additional mitigation and
Oversight Group (CQOG) actions to address quality of care issues. A review was
The three core elements of the quality assurance
process were: The CQOG provided co-ordination and oversight of undertaken and this identified that the pressure ulcers
all clinical quality aspects relating to the transaction. that were being reported by BCF had been acquired in
• Assurance regarding the ‘receiver’ and ‘sender’ the community or at home rather than at BCF. The NHS
The key functions included:
trusts’ capacity and capability; this was concluded TDA continued to monitor this situation through the
at Gateway 3 of the Accountability Framework. • Identifying and monitoring the key clinical risks of quality monitoring and surveillance process.
• Assurance of Quality due diligence processes the two providers as they progressed to approval
of the transaction. Membership of CQOG was drawn from Trusts,
undertaken by the Receiver Trust, in this case the
the NHS TDA and local CCGs, NHSE and the CQC.
Royal Free. • Obtaining and reviewing briefs and reports on
The CQOG is chaired by the NHS TDA Clinical Quality
• Assurance of the transition and handover processes both provider organisations from external bodies
Director and has met monthly or fortnightly, depending
both for BCF and the Royal Free relating to quality including the Care Quality Commission (CQC),
upon the stage of the transaction.
and safety. Health Education England’s local education and
training board and the General Medical Council.
• Taking account of any clinical due diligence
undertaken by both the acquiring trust and the
trust being acquired.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 9Clinical Quality Due Diligence
Through the CQOG, the clinical due diligence report, 4.3 Identification of key risks and confirmation
led by the Royal Free, was considered, reviewed and of assurance position
feedback was given. In addition, key lines of enquiry
Key clinical risks associated with the current services
were identified where further assurance was sought and
were identified through use of a variety of intelligence
followed up. The clinical due diligence report informed
sources including the CQC intelligent monitoring
the core risk register developed by key stakeholders
reports, Trusts’ and CCGs’ information and intelligence,
within the CQOG and monitored mitigation.
analysis of quality indicator information from the NHS
The NHS TDA worked with the respective Trusts TDA Business Intelligence Unit, information arising from
providing support in relation to the development of the work programmes in relation to service delivery
a robust framework for the safe and effective transition performance and the NHS TDA’s regular clinical quality
of services, drawing from learning from previous oversight meetings with BCF.
transactions.
A detailed risk register was developed by key
Monitor and the NHS TDA met to share relevant stakeholders of the CQOG, reflecting the changing risk
key clinical quality information in undertaking their profile since November 2013. The key risks indicated
respective statutory and non-statutory roles in the within the table have been identified through Trust
proposed acquisition. Risk Frameworks and completion of the clinical due
diligence process and are summarised in Table 3.
Throughout the transaction process, the NHS TDA
As a result of the detailed due diligence undertaken
worked with BCF and key stakeholders to maintain
by the Royal Free, it has plans in place to mitigate all
clinical quality oversight to strengthen the quality
the risks identified.
and safety of services further, including planning and
implementing arrangements for the safe transition The key risks were monitored through the CQOG
of services. process. The mitigation and monitoring arrangements
are included in Table 3. The mitigation plans have been
The NHS TDA Clinical Quality Directorate was fully
reviewed and discussed through the CQOG process.
engaged in reviewing quality at BCF, including
input from the national and local clinical specialists.
Review and scrutiny included relevant NHS TDA
quality surveillance data including CQC intelligent
monitoring reports.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 10Clinical Quality Due Diligence
Table 3 – Summary of key risks
Summary of risk Mitigation How risk oversight was managed
A&E performance at Barnet The risk is known to the receiver. There is a significant programme of work in place to support Monitored through regular Integrated Delivery Meetings
and Chase Farm Hospitals (BCF) an improvement in performance. with NHS TDA, clinical quality oversight and CQOG.
Overseen through urgent care working group.
Referral To Treatment (RTT) The risk is known to the receiver. BCF has undertaken a review of demand and capacity which The RTT performance monitoring process was led by the NHS
and data quality has resulted in the development of a new demand and capacity model. The Trust has started to TDA through bi-weekly performance group meetings with
reduce the gaps in capacity by a combination of service improvement and outsourcing to other the Trust and CCGs.
Lack of assurance regarding data
hospitals in the area. The national Intensive Support Team continues to support
completeness, accuracy and
validation of reported measures This has been assured by the national Intensive Support Team. the Trust to oversee the safe installation of a robust new
The Trust ensured the longest waiting patients were prioritised. monitoring system as patients who have been waiting too
long are treated.
A clinical harm review group was established, chaired by an external clinical expert, with a remit
to identify and address clinical harm that may have arisen due to patients waiting longer than
the national standard.
The receiving organisation will continue implementation of existing action plans following review.
Healthcare Associated The risk is known to the receiver. NHS TDA completed weekly and monthly monitoring.
Infections (HCAI) Refresh of clinical policy where appropriate has taken place.
Issues regarding MRSA and CDI Refresh of aseptic non touch technique training is being rolled out through the medical workforce.
performance, isolation capacity Post HCAI prevention and control training competence assessments are carried out for nurses.
and outbreak management
Serious Incidents (SIs) and the The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
effective management of serious SI rates were reduced as a resulted of improvements on slips, trips and falls and also by the and monitoring and the CQOG process.
incidents due to current fragility reduction of HCAIs. However, additional governance resources were also put in place by BCF to Weekly SI monitoring reports.
of existing processes support clinical governance functions.
The risk management systems and processes already in place at Royal Free, and which are described
in their quality governance plan, will be extended to Barnet and Chase Farm Hospitals.
CQC, regulatory and legal The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
compliance Latest CQC intelligence monitoring reports (IMRs) indicate an improvement in the risk profile for and monitoring and the CQOG process.
the Trust (moved from IMR banding 3 to 4 in April 2014). CQC Intelligent Monitoring Reports.
These risks are monitored as a key part of routine clinical quality oversight and monitoring and
the CQOG process.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 11Clinical Quality Due Diligence
Table 3 – Summary of key risks
Summary of risk Mitigation How risk oversight was managed
Patient Experience The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
Patient experience steering committee (PESC) in place reporting to the quality and safety committee. and monitoring and the CQOG process.
Lack of effective complaints
handling within BCF BCF introduced a range of initiatives and approaches to improve patient experience. A new head
of patient experience has been appointed and a patient experience strategy is in place which
Risks highlighted regarding patient includes expanding patient feedback.
focussed behaviours The Royal Free clinical due diligence process has found there is no serious cause for concern.
Strengthened arrangements for managing complaints within BCF in place.
Acknowledgement rates for complaints increased to 90% during Q4 of 2013/14.
Clinical negligence claims, The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
staff claims and coroners cases There is significant evidence of assurance following a review by the Royal Free. and monitoring and the CQOG process.
Profile of claims deemed a risk The Royal Free received necessary assurance from the NHS Litigation Authority (NHSLA) and
BCF and has therefore been able to close the associated risks. No further action required.
Unclear process regarding risk
assessment of the above
Staff engagement The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
Full staff engagement programme in place and key to the wider transaction process. and monitoring and the CQOG process.
Risk regarding the integration and
Use of eLearning and temporary expansion of BCF workforce team to confirm training shortfall Workforce due diligence report from Royal Free to gain
also period during transition and its
and rollout of programme to address this. additional assurance: Progress update given to CQOG by the
impact on staffing
Compulsory training for substantive staff at BCF met the 85% target in April 2014. Director of Human Resources on 8 May 2014.
Insufficient levels of statutory and Update to CQOG on workforce on 8 May 2014.
mandatory training for in-house Mandatory and Statutory Training (MAST)
temporary staff to ensure the
Levels of compliance monitored.
provision of safe high quality services
Recruitment to vacant posts in The risk is known to the receiver. Monitored as a key part of routine clinical quality oversight
clinical services and corporate Ongoing recruitment and retention campaigns were implemented to ensure BCF vacancies filled. and monitoring and the CQOG process.
governance roles Joint recruitment processes with Royal Free where appropriate. BCF Director of HR provided an update to CQOG on
Use of agency staff to bridge staffing gaps. workforce on 8 May 2014 including the successful nurse
recruitment and retention campaign undertaken in 2013/14.
BCF Director of Nursing advised that the recruitment and
retention plans are yielding results.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 12Clinical Quality Due Diligence
4.4 Clinical due diligence of the receiver 4.6 Summary The NHS TDA has overseen safe handover
arrangements for clinical and corporate services and
As a Foundation Trust, the Royal Free is regulated Following the clinical quality due diligence process,
close down arrangements for BCF. There are robust
by Monitor. As the sector regulator for health services it can now be confirmed that:
transaction programme arrangements in place to secure
in England, Monitor has responsibilities to ensure:
• any significant risks to quality have been identified; the safe handover and sustainability of clinical services,
• independent NHS Foundation Trusts are well led • the Royal Free, as the ‘receiver ‘organisation, has work led by the Royal Free that will continue through
so that they can provide quality care on a risk mitigation plans in place to address all key the integration process.
sustainable basis; quality risks; No key clinical quality gaps have been found either in
• essential services are maintained if a provider • there is an effective transition and post- relation to the identification and mitigation of clinical
gets into serious difficulties; implementation risk identification, mitigation and risk or in the transaction programme arrangements for
• the NHS payment system promotes quality and assurance process in place; the safe and effective handover of services.
efficiency; and • quality assurance of the transition and handover Therefore, the NHS TDA Board was advised that there
• procurement, choice and competition operate process, with key stakeholders, was undertaken was no reason on the grounds of risk to quality to
in the best interests of patients. between Gateway 3 and Gateway 4; prevent the transaction going ahead.
The Royal Free has a risk rating of 4 with no evident • enhanced quality monitoring was undertaken in
concerns. A risk rating of 4 is the lowest level of risk. the weeks leading up to the acquisition transaction.
4.5 Clinical quality due diligence of handover 4.7 Conclusion
documentation Through the quality assurance and clinical due
A review of clinical services handover documentation diligence processes, key clinical risks were identified
was undertaken including risks and mitigation as part and assurance was sought that appropriate mitigation
of the transaction pre-handover phase. A range of actions are in place. There is a clear and agreed position
clinical services and governance arrangements were across all key stakeholders regarding the current risk
reviewed. It was agreed that, with completion of a few profile and work has continued during the final weeks
areas where clarification was required, the risks and of the transaction process to understand any changes
mitigation were sufficiently robust. to the position.
Assurance was secured that, in the final weeks leading
up to the transaction, the outstanding areas of
clarification would be addressed.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 135 Transition plans
5.1 Approach, governance and progress 5.2 External Due Diligence
The Royal Free issued a draft Integration Plan for the Supplementing the assurance received by the NHS TDA
acquisition of BCF in January 2014, which has been working alongside the Royal Free and BCF, the Royal Table 4 – Summary of external due diligence report
the subject of ongoing assurance via the Transaction Free shared with the NHS TDA its external due diligence by independent accountants
Board as detailed integration planning has developed. report (required by Monitor) into integration planning. Monitor-defined review Pricewaterhouse
The Integration Plan includes a work-stream explicitly Relevant extracts from the external due diligence questions Coopers’ risk
dealing with BCF close down activities, itself broken report’s Executive Summary are set out below: assessment
down into a series of work-streams led by a named
Do the applicant trusts have a Amber
Director. “Our work has been structured around 3 key feasible plan in place to quickly and
questions defined in the Monitor guidance” effectively merge, upon approval?
The NHS TDA had senior level representation at the
[see Table 4].
Royal Free-led Joint Steering Group (chaired by the Are potential risks inherent in the Green
Chairman of the Royal Free) – which has overseen merger well understood and is there
“We have noted that RF has a strong and clear a plan in place to manage them?
progress with integration activities on a fortnightly basis
reporting process in place to monitor progress,
and over the last 18 months. Governance arrangements Does the proposed merged trust Green
which is both built upon and integrated with the
for the overall integration project, together with a have the organisational capacity to
Trust’s broader clinical and operational programme
report on progress, were presented to the Transaction carry out post-merger integration?
management capabilities.”
Board (17 March). The Transaction Board’s assurance of
integration plans was therefore grounded in an ongoing “We note that… RF has [also] developed a high Following issue of the draft due diligence report,
involvement at a senior level with work led by the level 3 year transformation strategy which includes the NHS TDA attended the Trust Executive Committee
Royal Free over a sustained period of time, with regular a list of areas of action.” of Royal Free / BCF (8 April) set up to provide internal
checks and reports to the NHS TDA Transaction Board leadership and assurance to integration planning.
through a Transaction Group work-stream. “As you would expect, there are less detailed plans NHS TDA officers participated in this session,
The Transaction Board was also made aware of the for some elements of some work-streams… we have checking progress face to face with the Royal Free
integration plan Risk Register and mitigating actions, assigned an “amber” rating to the question “Is there and BCF executive teams. The session also provided
developed by the Royal Free. This showed sustained an actionable plan in place to capture the merger an opportunity to observe first-hand the governance
progress in reducing key risks, particularly those benefits?” as management is still in the process processes for ensuring that integration planning is on
highlighted as part of Royal Free’s ‘First 100 days’ priorities. of producing plans for some benefits areas in the track to deliver benefits from 1 July over both ‘First 100
period prior to Day 1. However, when considering days’ and over the next 2-3 years.
The Transaction Group has worked closely with CQOG the complexity of the transaction we agree that
to ensure a consistent approach to integration planning progress towards the production of plans is
and BCF handover arrangements. This has involved appropriate given the time remaining to Day 1 at
fortnightly review of progress on BCF handover and the date of our report.”
close-down activities.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 14Transition plans
5.3 Ongoing assurance 4 CCGs (not the NHS TDA) retain an ongoing 5.5 Conclusion
responsibility to monitor the impact of the
To complete the NHS TDA’s assurance, the NHS TDA In conclusion, it is the view of the Transaction Board
strategy implementation on services and their
was invited to participate in two ‘deep dive’ review that governance arrangements put in place by the
impact on equalities.
sessions when individual directorates were reviewed Royal Free appear well defined, even exemplary,
using detailed handover checklists to ensure continuity 5 A range of benefits are anticipated to arise from and that progress has been made towards delivering
of service in July. the transaction for staff and patients in the local an effective handover in July, with every prospect of
health system (summarised in the January NHS TDA achieving the benefits set out in the IBP.
5.4 Equalities Impact Assessment board report). These benefits will be available to
all patients and staff and better health outcomes,
It is a requirement for all business cases requiring
resulting from the transaction, will contribute to
Secretary of State approval to undertake an Equality
reducing local health inequalities across Barnet,
Impact Assessment (EqIA). During this process it was
Enfield and parts of Hertfordshire. These benefits
noted that:
were highlighted in a high level EqIA undertaken by
1 The transaction involves no service change, with the Royal Free as part of its IBP submission.
the Royal Free taking on the full existing range of
6 Additionally there will also be wider economic
service commitments, so there is no direct impact
benefits generated by the proposed investment in
on patients.
a new Chase Farm Hospital facility (subject to option
2 Staff employed by BCF will transfer under TUPE appraisal and business case approval processes).
arrangements to the Royal Free, under existing terms The transaction secures funding that has the
and conditions, so there is no direct impact on staff. potential to generate jobs and further work in the
3 The transaction is a direct consequence of construction sector arising from the transformation
implementing the BEH Clinical Strategy, which of the current site into new facilities. These wider
resulted in changes to A&E and maternity services economic benefits are only made possible through
at Chase Farm Hospital. This impacted on the the transaction.
financial sustainability of the organisation (and DH has been appraised of the NHS TDA’s consideration
hence the transaction with the Royal Free as the of the impact of the transaction on equalities and
preferred solution). The Secretary of State was has concurred with the view that the transaction
satisfied with the detailed EqIA undertaken on the should serve to improve equalities through local
proposed service changes at Chase Farm Hospital investment and by enhancing (post-BEH clinical strategy
before his decision to endorse the implementation implementation) the provision of services, particularly at
of the changes. the Chase Farm Hospital site.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 156 Legal process and documentation
The Transaction Agreement was entered • The NHS TDA has signed the Transaction Agreement;
into prior to the dissolution of BCF and prior • The CQC’s registration of the Royal Free has been
to the Transfer Order becoming effective. amended;
The Transaction Agreement is intended to • The membership of the relevant NHSLA risk sharing
scheme(s) of the Royal Free has been amended;
supplement the Transfer Order and was
signed in anticipation of the Transfer Order • The Dissolution Order has been signed by the Secretary
of State, to take effect on 1 July 2014;
and the Dissolution Order.
• The Transfer Order has been duly signed by the Secretary
The following has been undertaken: of State for Health, to take effect on 1 July 2014.
• A full and appropriate due diligence exercise, the Based on the above and the terms of the Transaction
outcome of which is satisfactory to the NHS TDA, Agreement:
the Royal Free and NHSE; • The transferring assets and liabilities will transfer
• BCF has completed its consultation with local from BCF to the Royal Free in accordance with the
Healthwatch organisations and staff interests on behalf Transfer Order;
of the Secretary of State as required by the National • The transferring employees will transfer from BCF to
Health Service Trusts (Consultation on Establishment the Royal Free in accordance with the TUPE Regulations
and Dissolution) Regulations 2010; and the Transfer Order; and
• On the NHS TDA’s recommendation, BCF has applied • Financial support will be made available to Royal Free
to the Secretary of State for its dissolution; in accordance with Paragraph 11 and Schedule 3 of the
• NHSE Finance and Investment Committee and Transaction Agreement, as summarised in section 3 of
CCGs’ Governing Bodies have considered the proposed this report above.
transaction and subsequently have signed the
Transaction Agreement;
• The board of directors of the Royal Free have signed the
Transaction Agreement (after considering the outcome
of Monitor’s revised Risk Assessment);
• The Royal Free’s board of directors and Council of
Governors have approved amendments to its constitution
(to take effect from 1 October 2014);
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 167 Regulatory Approvals
The Cooperation and Competition Panel’s report dated
13 August 2013 concluded that the Royal Free, following
the acquisition of BCF, would continue to face a range of
competitors for its services, and therefore the proposed
transaction was unlikely to give rise to material costs
to patients or taxpayers as a result of a loss of choice
or competition and was likely to be consistent with the
Principles and Rules for Cooperation and Competition.
This outcome is posted on the Monitor website.
In January 2014 the Royal Free made a submission to
Monitor in accordance with the requirements of the
Risk Assessment Framework, including submission of an
Integrated Business Plan (IBP) and draft Heads of Terms.
Under Monitor’s Risk Assessment Framework, the proposed
Transaction is a ‘significant transaction’ (as defined in the
Risk Assessment Framework).
The NHS TDA met with Monitor on 11 March as part of
its risk assessment process. Monitor has now completed
its risk assessment of the proposed transaction. Monitor
does not consider that the risks identified as a result of
its detailed review require the Trust to consider stopping
or delaying the transaction. The Royal Free’s Board was
formally notified of this ahead of its 3 June meeting.
The Royal Free Board, having had the opportunity to
consider the outcome of the due diligence process and
Monitor’s assessment of the proposed transaction, then
formally submitted its application to acquire BCF.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 178 Summary – Consideration of the transaction against the TDA Accountability Framework at Gateway 4
In summary, the NHS
Table 5 – Gateway 4 requirements
TDA Accountability
Framework identifies 11 Ref Accountability Framework Approach Assessment
core requirements for a
Gateway 4 submission to R1 Post-merger Implementation Plans including Reviewed through the Transaction Board On track for 1 July
the Secretary of State and benefits realisation from the Royal Free
Table 5 below appraised
progress against each of R2 An updated LTFM from the Royal Free Reviewed by Deloitte, consistent with Gateway 3 Completed
these at the time of the
R3 Documentation of the transfer of assets Reviewed by Hempsons, transfer and dissolution orders to be prepared by DH On track for 1 July
15 May NHS TDA Board
and liabilities solicitors during May
meeting.
R4 Monitor to issue an FRR of at least 3, Royal Free Board and its Council of Governors to meet 3 June to consider the FRR Monitor Board 28 June
following its review of the Royal Free IBP
R5 Assessment by NHS TDA of the impact of Systematic and ongoing review through the Clinical Quality and Oversight Group Assessment completed and on track
the proposal on quality (reporting to Transaction Board) for 1 July
R6 Assessment by Monitor of the impact of No significant costs arising from loss of competition Completed
the proposal on competition and choice
R7 Implementation Plans covering mobilisation Reviewed through the Transaction Board, with NHSE and CCG engagement On track for 1 July
and benefits realisation
Commissioners have contract management 2014/15 contracts agreed and in place 2014/15 contract is not yet agreed
plans in place
R8 NHS Commissioner Board approval of the Approvals in place for delegated signature to the Transaction Agreement from Agreement secured – signatures awaited.
revenue funding set out in the Transaction all 8 commissioning bodies
Agreement
Signed Transaction Agreement
As can be seen from R9 Assurance and due diligence completed All assurance and due diligence completed, including review by the Completed
NHS TDA’s Medical and Nursing Directors
Table 5, the requirements
for a Gateway 4 approval R10 DH / HMT approvals Written confirmation of financial support from DH / HMT Correspondence in draft form awaiting
were largely in place and NHS TDA Board approval at Gateway 4
were all subsequently
completed, to enable the R11 Implementation Secretary of State signature To be completed in June
final decision to be made Dissolution order
by the Secretary of State Transfer order
for Health. Orders placed before Parliament (government website)
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 189 Gateway 4 Chronology
• BCF Board applied for dissolution of the Trust (9 May)
• BCF, NHSE and CCGs signed the Transaction Agreement (May)
• Monitor Board sets out a revised Risk Rating for the merged
FT (May)
• Royal Free Board and Council of Governors consider the
Risk Rating and signed the Transaction Agreement (3 June)
• NHS TDA CEO signed the Transaction Agreement and
submitted BCF application for dissolution to Secretary of State
(4 June)
• Dissolution and Transfer Orders finalised; parliamentary
process (June)
• Formal application by Royal Free to Monitor (June)
• RF completes acquisition of BCF – 1 July.
NHS Trust Development Authority The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust 19You can also read
