Subsidiaries face tighter control

Previously, foundation trusts had the power to set up wholly owned subsidiary companies on their own, while NHS trusts needed permission. But following a consultation, NHS Improvement requires all providers to submit a business case for all proposed subsidiaries or material changes to existing subsidiaries.

The review process – for all subsidiaries, regardless of value – will be in two stages. An initial panel review of about three weeks will determine if transactions are ‘material’ (lower risk) or ‘significant’ (higher risk). Significant transactions will then be subject to a detailed review, which could lead to approval, approval with additional oversight or stopping the transaction.

The tighter grip on subsidiaries comes in the face of opposition from NHS Providers. ‘We are concerned the level of detail and the steps outlined in the new review process go a long way beyond what is normally expected of trusts and what is required for other transactions and commercial activities,’ said its deputy chief executive, Saffron Cordery (pictured).

An HFMA response to the earlier consultation claimed the new companies were no riskier than other transactions covered by existing guidance.