Tackling the system governance challenge

by Lisa Robertson

20 October 2017


Governance is poorly understood, but it is vital to securing good decisions and best outcomes, as well as avoiding problems.

Governance remains a term that is poorly understood by the broader population and often not fully valued. For the public, governance in the NHS is too often confused with bureaucracy. Most of the time they think there is too much of it. But when something goes wrong, where were the managers and processes to stop the problem – whatever it was – from happening?

Definitions probably don’t help. The classic description of governance as ‘the system by which organisations are directed and controlled’ probably doesn’t exactly help the image of governance come crashing into focus in many people’s minds.

But that is what it is. Governance is about how organisations run themselves, how they take decisions that will help them deliver the required outcomes, how they are led and how they are held to account. It may appear to be about processes – standing orders, financial instructions and committees. But governance is as vital for getting the right decisions and outcomes as it is for avoiding problems.

Governance is always important and needs to be kept under review. The HFMA Governance Award – shortlisted entries for which, alongside other HFMA award categories, will be announced very shortly – is evidence that there are always opportunities to innovate or find better solutions to meet continuing challenges.

But there is a new governance challenge that is occupying NHS bodies currently – the governance of sustainability and transformation partnerships. These STPs – announced in planning guidance published in December 2015 – were introduced in 2016 to develop local system-wide solutions to the current challenges of developing sustainable services that will meet the needs of their local populations. They bring together all the players in public health and healthcare – principally NHS providers, commissioners and local authority social services.

These bodies have to think differently from the way their individual constituent organisations have been set up. It would be wrong to say that health bodies have, in the past, always taken an interest in their own sustainability, rather than that of the whole system. But they have been – and continue to be – regulated in this way.

Regulators have broadly viewed organisational compliance with required performance levels in isolation from system-wide challenges. A provider operating in an area where the commissioner was significantly under their target allocation could expect no different treatment in terms of its must-do targets than a provider where funding had been above target for several years, for example.

To an extent this has led to adversarial behaviour and organisational self-interest in some parts of the health service, with some annual negotiations over contracts more about where a deficit will sit than about addressing the underlying system-wide imbalance.

STPs are an attempt to fix this and put the focus firmly on sustainability at the system level. New models of care – perhaps taken forward by accountable care systems or organisations – are at the heart of this system-wide approach. Rather than considering the impacts of changed service provision on individual organisations and budgets, the questions are: what is the right pathway for the patient; what structures are needed to deliver this model; and how do we get there from the current situation?

But there remain huge question marks over how these new partnerships can be governed – especially as the regulatory focus remains firmly on individual organisations. Key issues are being grappled with across the country. For example, how do STPs take forward plans in a way that enables them to make as rapid progress as possible without having to refer every single decision back to the board of their constituent organisations?

A good first step is ensuring there is an agreed view of the future and organisational plans and assumptions are reflected in other organisational plans across the local system, as well as in the sustainability and transformation plan itself and at least jointly understood budgets. But it is not a simple task.

System leaders have started to edge towards system-wide regulation with moves towards simple system control totals. But it is likely that these will only start to have a major impact when the regulatory focus also moves more to the system level.

In the meantime, STPs around the country are breaking new territory – finding out how they can make governance arrangements work for them locally. The HFMA published a briefing earlier this year looking at emerging approaches in STP governance and it has now supplemented that with a further briefing looking at developing robust governance arrangements.

This includes a diagnostic tool – developed by the HFMA Governance and Audit Committee – which can be used to underpin board/governing body/ audit committee discussions to highlight where robust arrangements are already in place and where more work is required. Whatever point organisations are up to in the development of STP governance arrangements, this may provide a useful way of gauging progress or identifying next steps.