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The NHS White Paper, “Equity and Excellence: Liberating the NHS”  represents the completion of a devolution journey the NHS has been undertaking for over a decade. Moving all service providers either to Foundation Trust status or to one of a number of social enterprise models, it effectively de-nationalises NHS organisations.

In future, NHS services would be delivered through a wide range of diverse organisations – based on different legal frameworks and working in different ways.

When it comes to workforce issues, most people are currently focusing on the impact on those involved in commissioning, planning, inspecting, monitoring and managing the NHS. Staff losing jobs, reassigning function to new GP consortia, possible TUPE transfers and skills retention challenges.

But what does all this mean for the workforce delivering care? When the dust settles, these are the people we rely on to maintain high quality patient experiences.

While it might feel a little early, it’s worth considering what the provider organisations emerging from the shake up might look like.

Working for Foundation Trusts

Foundation Trusts are accountable to the patients, staff and public who elect their boards rather than the Department of Health and have greater freedoms than normal NHS Trusts. An earlier review of Social Enterprises in Primary and Community Care saw the Foundation Trusts as a part of the social enterprise continuum and looked to extend their use into community settings.

NHS unions, stressing the need to avoid a two-tier workforce, would like to see most people working to deliver integrated services within Foundation Trusts. The coalition government may be concerned the organisations’ systems and culture are insufficiently engaging for clinicians which frustrates entrepreneurial change and innovation.

Once Foundation Trusts find their feet, newfound independence and revamped governance arrangements should influence strategy and direction. These organisations should begin to innovate, introduce new ways of working with different roles and responsibilities, even using their additional flexibilities within (or outside) the Agenda for Change reward strategy.

With a familiar culture and standard NHS terms of employment, including the NHS Pension, for most NHS employees, working in a Foundation Trust will not seem particularly novel or worrying.

The NHS and Social Enterprises

Work underway on commisioner / provider separation opened the door for a range of social enterprises to provide healthcare. Social Enterprises are organisations which bring a business ethos to social or community aims and objectives. The most common legal form for such organisations are -

• Industrial and provident societies  – (the usual form for co-operatives and community benefit societies) where each member has equal voting rights regardless of financial investment and dividends can be paid,
• Companies limited by shares – where control rests with shareholders who can benefit from dividends,
• Companies limited by guarantee – underpinned by members acting as guarantors. These generally do not distribute profits through dividends (though they can),
• Community Interest Company (CIC), a limited liability company where assets and profits are locked in to benefit the community
• Charities – voluntary organisations (taking a number of forms) required to use any profit or surplus only for its purposes.

Each of these forms has different strengths and weaknesses in various areas, including allowing stakeholders to share in the benefits of surplus creating business (by receiving dividends on shares), the degree to which assets are locked into the organisation and the degrees of both control and disruption for employees.

A UNISON report based on research by Durham University on Social Enterprises and the NHS suggests the aim to diversity in suppliers and the “business ethos” could undermine the appeal of social enterprises. One of the most interesting findings was that boundaries between social enterprises, charities, “responsible business” and mutual associations are becoming increasingly blurred.

The right to request initiative, started under Labour, encouraged NHS staff in primary and community care to set up social enterprises, requiring PCTs to consider them as options for service delivery. This initiative has been grasped firmly by the Coalition, as an approach decentralising power and allowing people to deal with issues that concern them.

Francis Maude has just launched a first wave of “Pathfinder” mutuals, expressing excitment that public services can be “spun off”, suggesting this is a ” ….ground-up movement where staff, who are the real experts, can come together to take over and deliver better services.”

Working in Social Enterprises

Social enterprises are expected to strengthen engagement and encourage innovation – adopting organisation forms, power structures and voting arrangements which give staff a real stake in the business. With greater control over the deliver of health services, these organisations could work very successfully, but for employees accustomed to familiar national employment frameworks, there are some important impacts -

Employment Contracts - Generally, for people moving when their service is contracted to a social enterprise, employment conditions remain similar. Anyone transferring to a social enterprise in this way has their existing contracts transferred, but no longer has the automatic right to future improvements in NHS employment terms.

Pensions - Most legal forms allow not-for-profit organisations to give existing employees access to the NHS Pension scheme while they work on NHS-funded activities. This is not the case where organisations allow employees to share profits. Staff engaged on non-NHS work and all new staff would be ineligible to join the pension scheme. Staff would not benefit from injury benefits, compensation for early retirement, early retirement pensions and redundancy.

Job Security – Given the nature of NHS contracting, with 3 to 5 years contracts for services, the issue of redundancy protection could be a significant barrier to staff acceptance. At the end of an NHS contract, staff would not receive the same payments made to NHS staff when jobs are lost.

Implications for Employers

In the short term, current challenges with NHS pensions will be a significant barrier to immediate and future staffing of social enterprises. Existing staff and staff looking at new jobs, will think twice before joining social enterprises, or might seek a pay premium reflecting the loss of benefits in other areas. If plans assume benefits will be realised through innovation rather than cheaper labour, it would be rational for government, keen on mutual and other social enterprises, to remove barriers facing NHS employees.

With the changes in employment terms needed, the new social enterprises will have a greater need for proactive and local reward strategies. This will be even more important as organisations change services, look to expand into new areas or new staff. Over time, this is likely to lead to the erosion of familiar univerally transferable employment terms across the NHS.

With multiple challenges facing new social enterprises, to act commercially, resolving financial risks creating appropriate HR strategies, these independent organisation also have to provide a range of corporate functions – HR, Finance, Payroll, Estates and Information Technology. Overall this might increase administrative cost, even if it boosts demand in the market for shared services solutions.