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NHS: Cottage Hospitals

Volume 756: debated on Monday 13 October 2014

Question for Short Debate

Asked by

To ask Her Majesty’s Government what plans they have to assess the possibility of all cottage hospitals, both current and future, being established on a mutual model.

My Lords, one has to look at this subject against the background of a Government who have taken through some of the biggest reforms that the NHS has had. On the whole, the analysis of those reforms is that basically they have gone down well, despite enormous challenges in the early stages. I say that because satisfaction levels for the NHS today are standing at a high level. It is to the credit of the Government that they have seen them through. Not least, they have provided proper money and resources for the NHS, as they said they would.

Nevertheless, one element is missing. It is the element that will provide the answer to the extreme pressure that A&E units are under up and down the country, basically because of rising demand for healthcare—which is not surprising when the population is increasing at the pace it is—and the fact that regardless of who is in government there will inevitably be tight budgets. That is what prompted this debate. Indeed, the missing link in our healthcare in this country is something that is not missing in much of the world. I say that having looked at a number of examples across the world, which I shall cite later. I refer to the cottage hospitals.

The reason why I was prompted to raise this debate at all was that back in April I used the 24-hour care telephone link and was asked to go to the Biggleswade Hospital, which is about five miles from where I live. I think that it was once a sort of cottage hospital; now the 24-hour unit is there, plus one or two other minor health services. It is in a pretty sorry state, quite frankly, and there have been numerous moves by the NHS to close it, but thank God it is still there. That is what prompted me to do something about this whole topic.

I asked myself whether there was a demand. Yes, there is. Are the public in favour? Yes, they are. Are the chiefs in the NHS in favour? Much to my amazement, when I did a bit of digging for this debate, I found that the new head of the NHS, Simon Stevens, said back in May—thankfully, after I had decided to table this debate—in his first interview:

“The NHS must stop closing cottage-style hospitals and return to treating more patients in their local communities”.

So the leadership is there and they are onside—that is great. There is a need, plus latent enthusiasm. The question is how we make it happen, organise it and pay for it. What should a 21st-century cottage hospital look like?

What I want to hear from the Minister is that we are going to do some blue-sky thinking. First, we should look at the case histories from around the world. I have looked at Holland, where the Dutch have basically decided that it has to be the local municipalities that determine what each and every cottage hospital does. There is not a formula set up from above; it is totally up to the local municipalities, which involve all the local organisations to decide what they want.

Then I looked at Singapore. I happen to be vice-chairman of the All-Party UK-Singapore Parliamentary Group, so I know a bit more about that in detail, and how good it is to see the president come here next week. They do it differently but, basically, they look at real value for money and really push down hard to make sure that whoever offers the service provides good value for money. Secondly, they have appointed a specific Minister for Wellness. I think that there should be a junior Minister with responsibility for cottage hospitals.

What is to be the catalyst? It has to be the community where there is the ownership; it means a structure where the organisation has involvement at a local level. To me it does not matter whether it is the public sector in terms of parish councils, town councils or district councils. I want to see voluntary groups involved as well as local medical charities and organisations such as Rotary. But you still have to have leadership somewhere, which means that we have to find leadership within those communities. Perhaps that will come from some of the GP practices, or maybe not. Perhaps we can enthuse the Deputy Lieutenants throughout our counties, but we have to find it somewhere.

I move to the nub of the problem—money. We have to find external capital to set up these cottage hospitals. Of course, I accept that the NHS has to determine what the facilities are that have to be provided and to provide the framework and template, but there is no money lying around for more cottage hospitals. That is where, in my judgment, the mutual movement has something to offer. Back in the 1930s, the mutual movement was highly involved through the friendly societies in setting up healthcare and was the backbone of healthcare provision.

I chaired the Tunbridge Wells Equitable Friendly Society for seven or eight years, and we tried desperately to get into healthcare, but we were unable to raise the capital to do it. At the moment, there is one particular friendly society that is at work—Benenden Health. Interestingly, it has announced that it is going to run a pilot with a local healthcare trust to extend the support of the NHS into the community, but it goes on to say:

“Lack of access to capital prevents mutuals exploring this potentially more significantly at present”.

I ask my noble friend to encourage his noble friend in the Treasury to support my Private Member’s Bill, which comes up on Friday 24 October. That Bill is geared to mutuals and mutual friendly societies and their ability to raise capital; it is geared to deferred shares—in other words, to the community. Perhaps we as Members of this House as well as local MPs and all the other leaders in the community can chip in 4,000 or 5,000 as a family unit to get these cottage hospitals going. A market rate will be paid on the interest, but it is locked in there—and that is good, because you want families to continue their association with these units. It is a very exciting opportunity. I have had encouraging meetings with a fair number of mutuals and friendly societies which say, “This is the answer, because then we can raise capital”. It is brand new capital; it has nothing to do with existing capital in the NHS. Without disclosing any confidences, I have to say, having had a meeting with the Treasury this afternoon, that things look encouraging, but you must never count your chickens before they are hatched. But this proposal would allow the local community to run an appeal and have a legacy programme, and it would allow the local community to tap into either the national lottery or the health lottery. Perhaps it is time that we looked more closely at getting the health lottery locked into something local throughout the United Kingdom.

There are so many opportunities, and it is possible to make it happen. Of course, someone has to do the groundwork—and I suspect that the Minister will tell me who is doing the groundwork at the moment. Perhaps an organisation such as the Nuffield Trust should set up a task force involving certain of the mutuals, and there should be a specific Minister, perhaps from the Opposition, because this is totally non-political. But to succeed, we have to tap into the community. I do not know about your Lordships’ local communities; all I know is that it is perfectly viable, as far as I can see, in east Bedfordshire. We live in a vegetable-growing area of the country, and I can see people wanting to look after the ground, the flowerbeds and vegetable patches, growing tomatoes and so on. There is a great drive there, but we have somehow to unlock it, and that is the whole purpose of the debate. It needs a great deal of thinking outside the box, but the building blocks are potentially there. It is politically neutral, and I hope that the details will be the catalyst to make it happen.

My Lords, I begin by congratulating the noble Lord, Lord Naseby, on obtaining this debate and on his contribution to it, which I found extremely interesting. I agreed with every word that he said. I completely support the principle of mutualisation in our smaller hospitals, believing, as I do, that in medical matters particularly no one understands the needs of an area better than local people and the medical professionals who support and care for them.

I want to say a few words about the functions and funding of smaller hospitals, with particular reference to the possibility of direct public funding for specific projects. Along with others, as the then Member of Parliament for that part of Suffolk, I fought successfully to keep open Hartismere Hospital in Eye and, after its refurbishment, I was given the honour of performing the opening ceremony in 2012. Hartismere now provides a large number of excellent services for which everyone involved is extremely grateful. But this gratitude is tempered, at least in my case, by what it does not provide and what I had expected it would provide. Perhaps the clue was in the change of name. It is no longer called Hartismere Hospital; it has become Hartismere Health and Care.

Hartismere is 45 minutes from the nearest hospital—not from the nearest acute hospital but from any hospital. This was one of the main reasons for keeping it open. Your chances of surviving a stroke in Eye are a fraction of those you would have from within striking distance of Ipswich, Norwich or Bury St Edmunds. A stroke unit is perhaps too much to expect but we do not have even an X-ray unit. How can you possibly have a hospital that cannot X-ray patients? The other big reason for keeping Hartismere was to provide beds. We were assured that beds would be provided to give proper medical care for patients on their way into or out of the other hospitals—what are commonly called step-up and step-down beds. They went when the old hospital was closed. These beds have not appeared, and although beds have been made available in the nearby Paddock House care home, serviced by a community nursing team, it is not the same. It is really not as efficient—with great respect to all those who run the service well—and it is certainly not what was promised. A large care home development is planned for part of the hospital site and it is hard not to wonder whether the medical services provided and the needs of the local people are not coming second to the development plans. I feel sure that mutualisation— the kind of thing that my noble friend Lord Naseby talked about—would prevent this sort of situation arising and ensure that priority was always given to the medical needs of the local people.

I would like to tiptoe very gingerly on to hallowed ground. I say at once that I have absolutely no wish to disturb the current financial arrangements of the NHS. I am talking about extra funding for hospitals such as Hartismere. At the moment, the Hartismere Hospital League of Friends does a splendid job in raising funds but cannot possibly find the amounts needed on a regular basis to make a significant difference. The following are rough figures that I have put together. The two district councils in the catchment area of Hartismere are Mid-Suffolk and South Norfolk. The total number of households in these two areas is 100,000. If every household was happy to contribute as little as, say, £10 a year to Hartismere, that would total £1 million. That might well get the hospital an X-ray unit. It is the principle I am interested in. One pound per week per household would produce £5.2 million. Perhaps the Government could provide matched funding, in which case the prospect becomes quite exciting. To satisfy those contributing to the scheme, there would have to be some very strict rules. The money would have to go directly to the hospital and not come into contact with any NHS funds or management. It would be administered by a small team of mostly medical people and be used for a specific purpose. The households concerned would have to be consulted and give their consent. I feel sure that for the returns that would be received these amounts of money would be forthcoming.

The principle of taking small amounts of money from lots of people for their mutual good is sound and long established. Provided that consent is given and the scheme is soundly and tightly controlled, it could work; and at a time when the NHS is in a perilous state in many ways, this could provide a welcome boost for improved care in our smaller hospitals. I look forward to the Minister’s response.

My Lords, I am sure that we are all grateful to the noble Lord, Lord Naseby, for raising this interesting Question. I enjoyed his heroic defence of the 2012 Act and the remarkable—and really quite dangerous—changes it brought about. I thought that today’s Times was an interesting read, and I recommend it to the noble Lord.

The role of cottage hospitals in the National Health Service is a very interesting question. We do not really call them that now; we call them community hospitals. It would be fair to say that they have had a mixed experience in the past few years. They are valued by the local community but are often at risk from the centralisation of services, and have tended to see their role downgraded over the past few years. Like the noble Lord, Lord Naseby, I was interested in the comments of Simon Stevens, the NHS chief executive, when he spoke about the experience of what he called running smaller, viable hospitals in other countries. I should be interested to know from the noble Earl, Lord Howe, what he thinks about that. Does he think that clinical commissioning groups should be encouraged to reverse the flow of services away from community hospitals into larger, centralised services? If he agrees, what attitude does he think that the regulatory bodies are likely to take? I am thinking here particularly of the Care Quality Commission, which has the responsibility of regulating all hospitals and care institutions.

I take it from the comments of the noble Lords, Lord Naseby and Lord Framlingham, that they would like to see an expansion in the services provided by community hospitals. However, that is unlikely to take place unless the regulator believes that it is safe to do so. I would be interested in the noble Earl’s comments on that. I have no doubt whatever that in terms of the current pressure on acute hospitals in particular, the more rehabilitative services and respite care that can be provided locally the better. Perhaps this could be an exciting role for smaller hospitals in the future.

As far as mutuals are concerned, I do not know if either noble Lord has read a report, sponsored by the Department of Health, called Improving NHS Care by Engaging Staff and Devolving Decision-Making: Report of the Review of Staff Engagement and Empowerment in the NHS. I do not know whether the noble Earl will refer to it but it is interesting because, on the one hand, it makes the point that,

“there should be greater freedom for organisations to become staff owned and governed, on a strictly voluntary basis, following detailed consultation with staff and staff-side trade unions”.

Clearly, some thinking is going on, which suggests at the very least that staff ownership—I know a mutual goes much wider than that—is one building block in the establishment of mutual organisations. On the other hand, I put to the noble Earl the comment made by the UNISON head of health—I should declare my interest as a member of UNISON—stating that there was,

“a very real danger that bringing the mutual model into hospitals will be a Trojan horse for privatisation”.

I did not take it from the comments of both noble Lords that that was what they had in mind. I took it that they both saw mutuals as being a support to the National Health Service and that they would not envisage patients paying money to go to those hospitals, which would very much be seen as being part of the NHS—although perhaps not run as other NHS bodies are. I thought that I should raise that issue.

I should also like to ask the noble Earl, Lord Howe, whether another approach could be to extend the foundation trust model. I have just given up chairing a foundation trust where we had 100,000 members, consisting mainly of members of the public but also 11,000 staff members. As members, they elect the governing body of the organisation. The governing body in turn appoints a board of directors. I have found that to be a useful mechanism whereby the board of the organisation is locally accountable. I have found the regular meetings of the governing body to be one of the most challenging experiences as chairman because there was a sense of accountability to the governing body, which represented both the locality and the members of staff.

I wonder whether the noble Earl, Lord Howe, thinks that perhaps we need to refresh the governance of NHS institutions in a way that allows much more mutual ownership. If he agrees, does he not think that clinical commissioning groups are an area where we should start? In our debates on the Health and Social Care Bill, one of my concerns about clinical commissioning groups was that essentially they have no accountability to their local population. One way around this would have been to adopt the foundation trust governorship model. Although the CCG is essentially a membership organisation of general practitioners, it could have a much wider responsibility and accountability as well.

We are all interested to hear the noble Earl’s comments on this interesting issue. I hope that, at the least, we get a sense of where the Government stand in relation to the role of community hospitals in the future.

My Lords, I first congratulate my noble friend on securing this debate. I know that the role that mutuals play within our society is a subject close to his heart, as he has indicated tonight, and of course the future of our hospitals is a subject of utmost importance to all noble Lords. Before I respond to the particular points raised by my noble friend, I should like to acknowledge the great benefits that cottage or community hospitals provide to those in their local area. I shall set out how the changes we have made to the NHS have provided protection to community hospitals wherever they are needed. Finally, I will describe the role that mutuals play in the delivery of our health services, including our community hospitals, both now and in the future.

Cottage hospitals, generally referred to as community hospitals, are local hospitals, units or centres providing a range of accessible healthcare facilities and resources. They can be invaluable assets that make it easier for people to get care and treatment in the community, closer to where they live. They allow large hospitals to discharge patients safely into more appropriate care, freeing up beds in major hospitals for people who need them, and they can reduce the need to travel long distances to larger facilities.

There are many excellent reasons why people are often extremely protective of their local community hospital. It may deliver a range of essential services, provide employment for local people and afford space for community groups. It is understandable that community hospitals are fiercely defended and inspire such loyalty. It is right that people think about their future place.

The changes that this Government have made to the NHS have given the power to local clinicians and patients to make improvements to their local NHS. Clinical commissioning groups, led by local clinicians, are now responsible for commissioning services. They are free to work out which services are needed and where they should be located to best meet local needs. I beg to differ from the noble Lord, Lord Hunt, about the accountability of clinical commissioning groups, which is real in the sense that they are accountable to NHS England for the outcomes that they produce and the plans that they put in place; they are accountable to the health and well-being boards on which they sit; and they are accountable to their local Healthwatch, which is the body that represents patients and the public in the local community. So I do not share the view of the noble Lord, Lord Hunt, in that sense.

It may be helpful if I explain the ownership of community hospitals. Ownership of the physical premises of many of our community hospitals changed when primary care trusts were abolished. Some were transferred to local NHS trusts and NHS foundation trusts. Other hospitals went to NHS Property Services, the Department of Health-owned property management company. I recognise that some noble Lords had concerns about these transfers when they occurred. We have been extremely clear that the conditions attached to these transfers mean that these hospitals will be retained unless local commissioners determine that they are no longer appropriate for delivering the local services that the community requires. As with all decisions about local patient services, it is right that these decisions are taken locally, taking account of local views. However, we must acknowledge that sometimes old infrastructure, although much loved, cannot keep up with the community’s needs. Changes in treatments and communities may require new and innovative models of care. Local commissioners should be able to explore a full range of options to ensure that services meet the needs of patients.

I now turn to the potential role that mutuals and staff ownership models could play in the future of our hospitals. However, I need to be clear from the outset that mutualisation is about the services that our hard-working NHS staff and their organisations deliver. It is not about the bricks and mortar where they work. I hope that will not disappoint my noble friend, but we are not considering the transfer of NHS property out of the ultimate ownership of the Secretary of State—unless, as I have said, it becomes surplus to NHS requirements.

Public service mutuals, as we define them, are organisations that originate in the public sector, deliver public services and involve a high degree of employee control. Over the last four years, this Government have worked tirelessly to ensure that citizens have access to effective and high-quality health provision. This is why we have broadened approaches to the delivery of healthcare, including through public service mutuals—a model which is revolutionising front-line provision and bringing benefits to staff, local commissioners and service users.

The Transforming Community Services programme, started under the previous Government, saw the separation of commissioning and provision within primary care trusts. As part of this programme, some organisations spun out of the public sector. We now have over 45 mutuals delivering community healthcare across the country, including in some community hospitals, transforming the quality of patient care through a more engaged and empowered workforce. To build on these successes, last year my right honourable friend Norman Lamb, alongside my right honourable friend Francis Maude, asked the highly esteemed Chris Ham, chief executive of the King’s Fund, to consider the options for strengthening the voice and the stake of employees in NHS provider organisations, always with the aim of empowering them to deliver efficient, high-quality services centred on the needs of patients. When he published his report in July of this year, he presented clear evidence that more engaged staff are linked to lower rates for some hospital-acquired infections and positive patient reports of dignity and respect. One study demonstrated that each increase of one standard deviation in levels of satisfaction was associated with a 2.4% drop in patient mortality.

We also know that mutuals can lead to greater job satisfaction, higher productivity and reduced absenteeism, and social enterprises and mutuals have a proven track record of delivering high-quality, responsive, cost-effective services. While there are significant numbers of mutuals delivering community services in a range of settings, a number of different opportunities and challenges arise when thinking about how these mutual principles can be applied to a wider range of acute hospital services where they do not currently operate. That is why, in response to Chris Ham’s report on staff engagement and empowerment in the NHS, we have established a pathfinder programme to support NHS trusts and foundation trusts in exploring the potential advantages of the mutual model. We have made available a £1 million fund to support a number of pioneering pathfinder organisations in understanding what mutualisation could mean for them and identifying solutions to practical barriers. We will use this pathfinder programme to explore and identify the benefits and risks of the mutual model in new areas of the health sector—which could include, but is not limited to, staff working in community hospitals.

I must be clear, however, that the establishment of a mutual model is not a panacea. Mutuals can succeed or fail, as can any organisation. Participation in our pathfinder programme, and any subsequent decisions by organisations to consider the benefits of the mutual model, must be on a voluntary basis, driven by the views of both staff and their patients and users in the local community. Therefore, while I can be clear that this Government understand the benefits of the mutual model and want to explore its potential across a range of health services, we do not anticipate that we would seek to roll this out across all staff working in community hospitals.

I now turn to some of the questions that have been posed. First, my noble friend queried whether we could look at international examples here. He may know that Sir David Dalton, on behalf of my right honourable friend the Secretary of State, is currently leading a review looking at new provider models. The review includes a detailed look at what we can learn from international examples, perhaps bringing those examples to bear in the NHS.

I was aware of my noble friend’s Private Member’s Bill. I am happy to take away his remarks and to discuss with my colleagues in the Treasury the ideas that he has put forward in relation to health services.

My noble friend Lord Framlingham, in his very powerful speech, signalled his concern about the paucity of facilities in some of our community hospitals and the threat of closure that might ensue from that. I hope that I can give him some words of comfort there. As I have indicated, the majority of NHS services, including those provided in community hospitals, are commissioned by clinical commissioning groups, so how those hospitals are funded is very much a matter for local determination rather than a national decision. However, NHS England expects CCGs’ commissioning decisions to be underpinned by clinical insight and knowledge of local healthcare needs, and that those decisions should have regard to the need to address health inequalities.

As I said, I do not think that mutualisation by itself would provide a panacea to prevent community hospitals closing. Where a community hospital is judged to be no longer viable—for example, because of the age of the fabric or a significantly diminished volume of services being provided—a change of organisational form or ownership alone is unlikely to affect local commissioning decisions. I shall come on in a minute to the issue of funding if I have time—although I suspect that I will not and that I will need to write to my noble friend further on that score.

My noble friend raised the possibility of external funding from the community, and I was interested in his remarks. Our view is that that kind of local levy should not be necessary. The Department of Health capital budget continues to rise in real terms, and indeed provider trusts are funded through the depreciation element of their income, with funds to cover their capital expenditure. Where trusts can prove their business case, the department will provide them with capital loans through the independent trust financing facility and may choose to provide public dividend capital directly in exceptional circumstances. Therefore, capital funding is available where it can be justified.

The noble Lord, Lord Hunt, suggested that CCGs should be reversing the flow of services away from hospital. To an extent, I agree with him, although I think that largely we are talking about acute settings rather than community settings. Simon Stevens, the chief executive of NHS England, has made it clear that there should be no national blueprint for this: CCGs have to be free to determine the services that they commission based on local needs. Of course, this issue does not bear upon NHS privatisation. Indeed, the pathfinder programme is there to explore the benefits of the mutual model and ways in which staff can be actively engaged. That is a million miles away from privatisation and, as I have said on a number of occasions, the Government have absolutely no agenda on that score.

In conclusion, as I have overshot my time, the Government have taken steps to secure the sites of community hospitals and ensure that they are used for the benefit of the community. Local clinical commissioners are best qualified to take decisions about the services required locally. We are supporting organisations that wish to explore in detail the feasibility and viability of the mutual model for their organisation or significant parts of their services and explore the benefits of mutualisation in a wider range of services within the health sector.

Sitting suspended.