New guidance on statutory transactions involving NHS trusts and Integrated Care Boards

With the aim of helping to ensure that transactions involving NHS trusts are a success, NHS England has issued new guidance and a fresh risk assessment to cover:

  • Mergers: mergers between NHS foundation trusts and other foundation trusts or a NHS trust
  • Acquisitions: an acquisition by a NHS foundation trust or another foundation trust or a trust
  • Dissolutions: dissolutions of either a NHS foundation trust or trust
  • Separations: a separation of a NHS foundation trust to create two or more foundation trusts
  • Transfer Schemes: a scheme whereby the property, liabilities and rights are transferred from one NHS body to another

Under the NHS Act 2006 (as amended by the Health and Care Act 2022):

  • all statutory transactions are reportable to NHS England regardless of their size;
  • participating trusts must apply to NHS England for approval;
  • any application must have been approved by more than half of the members of the governors of each applicant; and
  • the Competition and Markets Authority no longer has a role in reviewing transactions between NHS providers.

Given the role of NHS England, the guidance sets out their stall when it comes to how they will assess any application. In doing so, it makes clear that they will be looking at whether the risks outweigh the benefits focusing on the risk of transaction failure.

With this in mind, NHS England will first look to classify the proposed transaction as either material (which, despite the name, is one that would deem to be lower risk) or significant with the former attracting a lighter touch process.

Reporting and risk assessment

Looking at the key requirements of each.

Material transactions

Where NHS England classifies the transaction as material there are two general requirements.

The first is that the boards of the participating trusts must submit their self-certifications in connection with key risk areas covering:

  • quality and patient benefits;
  • integration delivery;
  • finance; and
  • more general items (covering the need to certify that they have considered detailed option appraisals and taken appropriate external advice from professional advisers).

The second, which is relevant to all statutory transactions, is that the participating trusts must submit certain prescribed additional documentation. This includes the transaction agreement, evidence of approval by the boards of the trusts, evidence of approval of the transaction by the majority of the governors (for foundations trusts only) and the proposed constitution for the enlarged trust.

Significant transactions

Where NHS England classifies a transaction as significant then beyond providing the same level of self-certification and documentation as would be required for a material transaction, an additional and more involved process applies, which comprises two gateway processes that trusts must prepare and secure approval for the following:

  • A strategic case – setting out the rationale for the transaction.
  • A full business case – setting out how the transaction will be executed and how the benefits will be delivered.

In each case, NHS England will consider the documentation by reference to specified key lines of enquiry under specified domains and provide a green, amber or red rating. In addressing concerns outlined at the consultation phase, the guidance makes it clear that receiving a red rating in any domain is not necessarily terminal to the transaction, as NHS England will be balancing the gains against any risks.

What is the role of Integrated Care Boards in these transactions?

The role of the ICB is an important one. The support of ICBs for any transaction is now a key test in determining whether it will be approved as is the alignment of the proposals to integrated care strategies and five-year joint forward plans.

The guidance anticipates that trusts will involve ICBs in the development of the transaction proposals and agree the nature and timing of their involvement. 

This is a very important point, particularly given the strategic case of a significant transaction will be assessed through discussion with the trust, ICB and Integrated Care Partnership leaders.

Additionally, the guidance document makes it clear that there is no central funding available for these transactions. Consequently, if any funding is required as part of the transaction then this will need to be discussed and agreed locally with the ICB.

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