A Collection is a selection of features, articles, comments and opinions on any given theme or topic. It allows you to stay up‑to‑date with what interests you most.
Login here to access your saved articles and followed authors.
We have sent you an email so you can reset your password.
Sorry, we had a problem.
Tags related to this article
Published 10 diciembre 2018
NHSI has now issued guidance (the “Guidance”) which is effective from 26 November 2018. The substance of the proposals, as detailed in the consultation, has remained largely as originally framed and therefore Trusts wishing to establish or invest in subsidiaries will need to factor in the additional regulatory requirements and amend timelines accordingly. Some of the key points to note are:
A subsidiary has been defined by NHSI as “a separate, distinct legal entity for the purposes of taxation, regulation and liability owned or partly owned by a provider. ‘Subsidiary’ includes companies limited by shares or companies limited by guarantee, limited liability partnerships and community interest companies.” Trusts should also note that joint ventures which fall into this definition will also be caught.
All subsidiary related transactions will be subject to a desktop review by a NHSI panel. The panel will review the business case and financial projections “alongside the overarching governance, financial, quality and operational impacts of the proposals on the trust, the wider health system and its patients”.
Given the concerns that were raised in relation to the make-up of the panel in the consultation feedback, NHSI has confirmed that panel experts will be aligned to the proposals being considered. Additionally, Trusts may prevent the involvement of a particular expert provided there are reasonable grounds to do. It is not clear as to what would constitute a “reasonable ground” and so when such veto power could be exercised, however, we would envisage this to cover cases where there may be conflicts or concerns regarding commercially sensitive information or links to competitors.
Where the proposals are considered to be material NHSI will require a Trust board certification in accordance with the provisions of Appendix 1 of the Guidance.
The Guidance does not change the situations in which NHS Trusts can participate in, or form, subsidiaries, and therefore, in accordance with the NHS Act 2006, proposals must be for income generation relating to non-NHS services. NHS Trusts should seek Secretary of State approval as early as possible and note that such approval is in addition to the review by NHSI. Further updates are expected in relation to the process for NHS Trusts in the new year and we will update you further at this point.
If the desktop review determines that the transaction is significant, NHSI will undertake a detailed review, which will look at up to four domains: strategy; transaction execution; quality; and finance. An indicative review scope set out in Appendix 2 of the Guidance.
Once the detailed review has come to a conclusion, a RAG rating will be provided to the Trust and the following consequences should be noted:
All material changes will be reportable and subject to the same review process set out above. What constitutes a material change will be determined by NHSI, and therefore, Trusts are encouraged to engage with their regional NHSI leads as early as possible so that this can be determined.
NHSI has indicated that any of the following may be “material”: asset sales or transfers, and changes to the subsidiary’s risk profile including those to the terms and conditions of employment of staff; theownership share of the subsidiary; or the scale or scope of the activities of the subsidiary.
NHSI has stated that once there is a better understanding of the inherent risks associated with proposals NHSI will set a threshold for reportable transactions and clearly determine the level of reviews that are required.
We hope that once this better understanding is achieved, a clear balance is struck between the autonomy of Trusts and the requirement for regulatory oversight, which ensures that the rights and powers of Trusts are not unduly fettered.
*unless stated otherwise “Trust” refers to both NHS Foundation Trusts and NHS Trusts
You can read our response to the consultation here: Regulating NHS provider-owned companies – our response to NHS Improvement
The consultation and response are available here:Consultation on our proposed extension to the review of subsidiaries Proposed extension to the review of subsidiaries: consultation response
London - Walbrook
+44 (0)20 7894 6411
+44 (0)20 7894 6531
+44 (0)20 7894 6020
+44 (0)191 404 4093
+44(0)117 918 2324
Hamza Drabu, Alison McAdams, Jonathan Bonser, Christian Carr
Hamza Drabu, Alistair Robertson, Charlotte Burnett, Katherine Calder
Kristian Hansen, Nicola Kumi
Katy Barraclough Jones, Stuart Wallace
Katherine Calder, Hamza Drabu, Charlotte Burnett, Stephen Hocking, Alistair Robertson, Victoria Fletcher
Catherine Burt, Chloe Davies
Mark Ashley, Benjamin Newall, Shaswati Pal
Corinne Slingo, Anna Hart, Peter Merchant, Sarah Dobson
Stuart Keyden, Mark Ashley
Heather Durston-Hillyer, Sean Doherty, Ciaran Claffey, James Oelschlaegel
Gill Weatherill, Helen Kingston, Sarah Woods
Darryn Hale, Sophie Devlin, Amie Roberts