COUNCIL OF GOVERNORS

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1 COUNCIL OF GOVERNORS Report provided (check necessary boxes): Paper No: COG16/17/005 To Note: For Decision Meeting Date: Friday 6 May 2016 Acquisition of Calderstones Report Author(s): Chris Lyons, Acquisition Programme Director Andy Meadows, Trust Secretary Summary of Key Issues: Mersey Care has been working collaboratively with Calderstones Partnership NHS Foundation Trust since May 2014 In July 2015 Mersey Care prepared an Outline Business Case to acquire the forensic services only (i.e. not all of the trust), subject to Mersey Care becoming a Foundation Trust (FT) In October 2015 NHS England made a number of announcements o Homes not Hospitals for People with Learning Disabilities (a new national policy) o plans to close Calderstones main hospital site in Recommendation: PURPOSE o Whalley Lancashire by the end of 2018 that Mersey Care would acquire the whole of Calderstones In March 2016 Mersey Care submitted a Full Business Case to NHS Improvement to acquire Calderstones NHS Improvement is currently assessing the application to acquire Calderstones The Council of Governors is asked to: 1) note this report 2) note that the Council of Governors will be asked to formally consider the proposed acquisition at an extraordinary Council of Governors meeting on Thursday 16 June from 4.00 p.m. to 6.00 p.m. 1. To provide the Council of Governors with an update on Mersey Care s plans to acquire Calderstones Partnership NHS Foundation Trust (Calderstones) from 1 July 2016 ROLE OF THE COUNCIL OF GOVERNORS 2. When a NHS Foundation Trust is proposing to merge or acquire another NHS Foundation Trust then under its Constitution (for Mersey Care this is paragraph 48) a trust can only apply with the approval of more than half of the members of the Council of Governors. At the meeting on Friday 6 May governors will not be asked to make a decision on this matter, as such decisions can only be taken once NHS Improvement (the regulator for NHS Foundation Trusts, formerly known as Monitor) has issued its Risk Rating for the proposed transaction. This paper, together with the presentation to Friday s meeting, will be to provide background briefing. Page 1 of 8

2 BACKGROUND 3. Calderstones provides on-site assessment and treatment for people with complex learning disabilities at their hospital-base at Whalley in Lancashire together with community service that includes more than 40 houses across the North West. Calderstones has an annual income of 37.5 million and 868 full time staff. Calderstones and Mersey Care manage significant number of patients who need differing levels of secure inpatient care and treatment and who have multiple diagnoses. 4. Both Mersey Care and Calderstones share a common goal to provide better managed care pathways so that people in secure services progress through a care pathway in the most effective, and least restrictive environment and that they are cared for as close to their homes and communities as possible. 5. On 30 October 2015 NHS England, in conjunction with the Local Government Association and the Director of Adult Social Services, announced the introduction of a 45 million transformation plan called Homes not Hospitals for People with Learning Disabilities (this is supported by a national plan called Building the Future). The objective of this initiative is to move people with learning disabilities (LD) into more appropriate community settings, with the NHS providing funding to local authorities where people with learning disabilities have been inappropriately housed in NHS hospitals for more than five years. The report also signalled a 25% reduction in the number of medium secure LD beds and a 50% reduction in low secure LD beds, again with people being supported in the community. 6. Calderstones and, independently, family members, also took part in a major consultation, called No Voice Unheard, No Right Ignored, which opened in the spring of This asked about the transformation of the care of people with learning disabilities, autism and mental health problems, as promised in the wake of the Winterbourne View scandal. The results of this consultation were announced on 10 November 2015 and supported the statement by NHS England in October. 7. Calderstones had carried out a review of its clinical and financial viability in early This concluded that Calderstones was not sustainable either from a financial perspective or clinically. In order to ensure safe continuity of service and to preserve the skills base of staff it was deemed necessary to identify a partner organisation to align with. A number of possible partnership options were identified and investigated at a senior level. This was done in terms of their service provision (in particular the secure service provision), quality, values and other features of potential compatibility. As a result, Mersey Care was identified as the organisation with the greatest synergies. Staff and stakeholders were informed of the Trust s strategic direction. 8. Since this decision the Trusts have increased their close working arrangements and a number of joint appointments are in place. These include the secondment of the Medical Director and the joint Director of Development and more recently have led to the secondment of two Executive Directors of Finance and an Associate Director of Workforce. The close cooperation between the two Trusts also led in September 2014 to the approval of a Strategy for Collaborative Clinical Working which described a Page 2 of 8

3 shared clinical vision and identified high priority areas for joint working. In July 2015 both Trusts approved an Outline Business Case for the Acquisition of Calderstones by Mersey Care, based on acquiring the forensic services. The proposal now being considered by the Board is a lift and shift model incorporating all the services provided by Calderstones, which in turn has been informed by the Homes not Hospitals policy and the announcement by Simon Stevens outlined below. 9. These appointments have supported the work programmes that resulted from Calderstones Care Quality Commission inspection in July That inspection had led to significant adverse publicity about the Trust however following the implementation of the action plan and the joint work the second CQC inspection in October 2015 rated the trust as Good. 10. In addition to the national announcement made in October 2015, and specifically regarding Calderstones, Simon Stevens (Chief Executive of NHS England) stated that: NHS England will [also] cease commissioning secure services on the Calderstones site. and all hospital beds on the current Calderstones site will therefore, subject to consultation, close and be re-provided over the next three years on a case by case basis for each patient, in the community or in new state of the art units elsewhere in the North West, and the Calderstones site will close This announcement crystallised the discussions between Calderstones and Mersey Care, the principles of which had already been endorsed by both Trusts boards: a) Calderstones will be acquired Mersey Care by the 1 July (subject to Mersey Care being granted Foundation Trust status); b) The Calderstones service for people with Learning Disabilities will be a separate clinical division of Mersey Care in the first instance (to be called the Specialist Learning Disability Division); c) transferring services will become the responsibility of the proposed new Executive Director of Operations from 1 July 2016, with responsibility for the relevant corporate and support services being mapped to the existing portfolios of Mersey Care Executive Directors when they transfer, see sub-paragraph (e) below; d) Calderstones staff will lift and shift to Mersey Care on day 1; e) corporate services will be restructured within 12 months of acquisition. BENEFITS AND OPPORTUNITIES 12. In the lead up to the Outline Business Case in July 2015 by Mersey Care to acquire Calderstones Trust, a strategic analysis of the benefits and opportunities likely to be created as a result of the Acquisition was undertaken. This has been updated to take account of Homes not Hospitals for People with Learning Disabilities, Building the Future and Simon Stevens announcement. This analysis set out in the business case identified the following three compelling arguments for both the joint working and the Acquisition as follows: 1 NHS England, Building the Right Support Page 3 of 8

4 a) the integration of Calderstones and Mersey Care pathways and the co-location of their services could enable significant improvements in care, including care being provided to people closer to their families and friends, and to help people step down into less restrictive community settings over time, making better use of the combined workforce skills and expertise. This aligns with the aspirations set out in the Homes not Hospitals for People with Learning Disabilities/Building the Future programme. There is a compelling case for better redesign of learning disabilities and mental health pathways to shift care from hospital to community settings based on natural synergies between Mersey Care and Calderstones combined expertise. In recent years Mersey Care has chosen to work differently with community providers and primary care to deliver better out-of-hospital care and more integrated care pathways. Nowhere has this shift from inpatient to community-based care been more evident than in its learning disabilities services. Mersey Care has some invaluable organisational learning to help the services provided by Calderstones make a similar shift; b) there is already significant overlap and similarities between the services provided by both Trusts particularly in the secure services arena. Both manage patients that require differing levels of secure inpatient care and treatment. Calderstones has around 200 inpatients within its medium secure, low secure and enhanced/step down services whilst Mersey Care has around 400 patients within secure mental health provision which includes high, medium and low secure services and a community forensic team. Both Trusts care for patients with multiple diagnoses, including significant number of patients with personality disorder and other developmental disorders, cognitive impairment (including learning disabilities) and mental illness. The full spectrum of mental disorder is found in patients from both services. Both Trusts have patients who also have significant long-term physical health needs. Both Trusts have patients with similar offending profiles such as sexual offences, fire setting and seriously assaultive behaviour including homicide. Both Trusts are seeking to develop a continuous care pathway from high secure through to community support and independent living, with the emphasis on reducing lengths of stay and placing patients in the least restrictive environment possible; c) there is a national and international shortage of skilled clinicians from all professional groups. Clinical expertise is necessary for high quality care and senior clinicians often set the culture and direction of service changes. Attracting a critical mass of clinical leaders who can introduce new ways of thinking about care is vital for progress. The influence can be profound advanced models of care can be developed through a larger pool of staff to collaborate with each other. This is more difficult when working across different and potentially competing organisations and innovation can be competitive rather than collaborative. The NHS acknowledges that the spread and adoption of innovation is perhaps the most difficult aspect of innovation. A unified vision in a single organisation will help break down resistance, creating a greater body of expertise for these highly specialised services. There are opportunities for joint appointments across mental health and learning disabilities with specialisms and super-specialisms where it can be challenging to attract and retain clinicians; Page 4 of 8

5 d) the completion of the acquisition will result in the enlarged Mersey Care becoming one of the largest and leading providers of Forensic Learning Disability Services in the country. In time this will allow for the further development of these services in a way which may not be possible within the two standalone Trusts. DEVELOPMENT OF THE CLINICAL MODEL 13. In early January 2016 a Working Group was established with senior clinical, operational and financial staff representation from Mersey Care and Calderstones Partnership. The role of this group was to identify and analyse the clinical and financial implications of the acquisition. A series of round table meetings were facilitated jointly by the Acquisition Programme Director and Deloitte in order to develop an appropriate clinical model which would meet the requirements for future service provision set out in the Homes Not Hospitals and the Building the Future policy documents. The group agreed to use four levels of service provision as the building blocks for developing the future model of care. These are: a) Medium Secure Services b) Low Secure and Step Down Services c) Enhanced Support Services d) Community Services 14. The work of this group resulted in the development of a comprehensive Clinical Model paper which describes the restructuring of Clinical Services over a 3-year period. The key characteristics of this restructuring of Clinical Services from an institutional based model to a more community based model 15. This clinical model was outlined to Mersey Care s Board in January Mersey Care s vision for perfect secure and community care offers an exciting and ambitious solution to the changes taking place for the LD/autism population but also the mainstream forensic services (e.g. the Scott Clinic) by providing perfect care standards, i.e. care that is a) Safe: least restrictive ethos, integrated fully with local services b) Effective: state of the art centres of excellence, internationally renowned innovation and research c) Experienced positively: co-produced quality improvements e.g. No Force First d) Efficient: significantly reduced lengths of stay e) Equitable: mainstreaming LD services, gender appropriate, PD, offender population; and f) Timely: access and assessment 16. The diagram on the next page shows the current bed number for the services within the secure division and Calderstones. Page 5 of 8

6 17. The following diagram shows the proposed clinical vision for the LD pathway. 4 County LD pathway Overall secure bed reduction approx. 40% over 5 years LLSU (C&M) (20) Alderley Unit/Auden Unit High secure (Rampton) Medium secure (Maghull new build) LD (46) Scott Clinic (56) + (10-15 decant) LLSU (Lancs) (20) LSU (Man) (20) Short term intensive support (10 beds) (step down, crisis beds, STAR unit) LD Forensic Transition team LD Community Transition team Short term intensive support (10 beds) (step down, crisis beds, STAR unit) LD Forensic Transition team LD Community Transition team Short term intensive support (10 beds) (step down, crisis beds, STAR unit) LD Forensic Transition team LD Community Transition team Local CCG services (bed reduction ESS/Step down?60%) Page 6 of 8

7 18. The clinical visions at a high level involves: a) incorporating the secure services currently provided by Calderstones with the secure services provided by Mersey Care; b) relocating the Scott Clinic to Maghull and expanding it to accommodate all MSU patients from Calderstones; c) developing pathways that extend into the community (forensic) and support to mainstream and LD specialist community teams; d) having pathways that reduce unwarranted variation, enabling the reduction in the number of secure beds; e) create a new centre of excellence at Maghull, including the Centre for Perfect Care; f) providing high quality community provision for people with LD / autism; and g) provide an opportunity to create leading services and develop new approaches to mental health and LD care KEY ISSUE 19. The key issue following the detailed clinical and financial analysis carried out by the Working Group referred to above, is that the acquisition of Calderstones by Mersey Care Trust is only viable; if following acquisition a comprehensive restructuring of the inherited Clinical Services is implemented based upon delivering the new clinical vision. This restructuring will ensure that the principles for future care as set out in the Homes not Hospitals for People with Learning Disabilities and the Building for Future policy framework are achieved and the synergies in terms of joint use of buildings and teams of staff are realised in order to reduce overall costs. Furthermore the financial analysis has clearly demonstrated that the running costs from year 4 onward associated with simply taking over the Calderstones Clinical Services without the subsequent restructuring are significantly higher than the onward year 4 running costs following restructuring. FINANCIAL ANALYSIS AND DUE DILIGENCE 20. In determining whether or not to proceed with the acquisition Mersey care has commissioned Deloitte (management consultancy) and Hempsons (solicitors) to undertake detailed scrutiny of the trust s plans. This is to ensure that the proposal to acquire Calderstones meets all the checks and requirements set out in Supporting NHS Provides: guidance on transactions for NHS foundations trusts published by Monitor (now NHS Improvement) 21. This has not only involved the detailed review and scrutiny of the plans to acquire Calderstones contained in the Full Business Case, but the review of clinical services model outlined above and the detailed financial implications and a range of due diligence exercises to ensure Calderstones has disclosed all relevant information to Mersey Care. Page 7 of 8

8 22. The Board has been provided with a full and detailed financial analysis which cannot be shared in the public domain due to the commercially sensitive nature of the information. Discussions have been ongoing with commissioners to agree the transitional funding over and above what it already costs to provide the service at Calderstones - which will be made available over the next three years which will be used to implement the transformation of clinical services in line with the clinical vision; pay for the additional management support necessary to manage the acquisition and subsequent service transformation; help fund the new buildings that will be required due to the closure of Whalley; and where necessary fund any redundancy costs. The transitional funding agreed is of a level Mersey Care believed will not impact on the overall performance of the trust. NEXT STEPS 23. The timetable for the acquisition of Calderstones by Mersey Care is dictated NHS Improvement, which regulates such matters within the NHS. a) by 1 April 2016 Mersey Care was required to submit the Full Business Case together with the Post Transaction Implementation Plan (which outlines the action that would be taken in the first year should Mersey Care acquire Calderstones); b) NHS Improvement has now established an assessment team to formally review the proposed acquisition. The first outcome of this assessment will be a risk rating of the proposed transaction which NHS Improvement will make available to both trusts by Friday 10 June 2016 c) In the week commencing Monday 13 June both Mersey Care and Calderstones will each have to decides if they wish to proceed with the acquisition, taking account of the Risk Rating. Extraordinary meetings of both organisations Boards of Directors and Council of Governors will have to be held. Mersey Care is proposing to hold the extraordinary Council of Governors meeting on Thursday 16 June from 4.00 p.m. to 6.00 p.m. d) Following the confirmation of the outcomes of these meetings, NHS Improvement s Board will formally consider the proposed merger, letting the trust s know the outcome of it deliberation by the end of June 2016 e) If approved, the acquisition would take effect from 1 July RECOMMENDATION 24. The Council of Governors is asked to: a) note the contents of this paper ANDY MEADOWS TRUST SECRETARY Page 8 of 8