The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust

The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust
Trust Development Authority




The acquisition of Barnet and Chase Farm Hospitals NHS Trust
by the Royal Free London NHS Foundation Trust
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
The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust
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
The acquisition of Barnet and Chase Farm Hospitals NHS Trust by the Royal Free London NHS Foundation Trust
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   4
2   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   5
3   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   6
The 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   7
The 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   9
Clinical 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   10
Clinical 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       11
Clinical 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           12
Clinical 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   13
5   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     14
Transition 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   15
6   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   16
7   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   17
8       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      18
9   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   19
You can also read
Next part ... Cancel