Sir Robert Naylor is one of the best-known acute trust chief executives in the NHS. After a decade at the helm of first-wave foundation trust UCLH, Naylor’s influence at the leading edge of acute modernisation is as unmistakable as his nickname ‘Bob The Builder’, earned for his dramatic remodelling of UCLH’s physical estate under PFI.

In this interview, Naylor tells HPI editor Andy Cowper about UCL Partners; the challenges of austerity; taking FT physical assets off-balance sheet; GP-led commissioning’s chances of success – and the two biggest mistakes in NHS management over the past decade.

What have been UCLH’s principal successes over recent years?

RN: “It’s nearly 10 years since the £422m University College Hospital PFI was signed off and I arrived here – it subsequently opened on time and on budget. Now, with the help of our fantastic staff, it is maturing into one of Europe’s finest hospitals. Last year we were designated the top hospital in the NHS according to Dr Foster, and our partnership with UCL has helped them to become the fourth-best University in the world.

“Strategically, we set out to create a centre of excellence in patient care, education and world-class research. It may sound simple, but only a handful of hospitals can realistically aspire to deliver world-class R&D. It’s no longer all about brilliant individuals, but more a case of excellent team working between clinical and academic researchers, mathematicians and epidemiologists, to name but a few. Few research specialties stand alone, they need synergies over a broad range of basic and laboratory science.

“UCL’s job is to support basic science and ours is to translate those from the laboratory, through clinical trials to the bedside and into the community. Our new £100m Ambulatory Cancer Centre, currently in construction, integrates cancer researchers and clinicians in specialty groupings with each floor designed for the particular needs of those patients – treating breast, brain and colon cancer are all quite different.

"More recently, we became a founding member of UCL Partners, one of the 5 Academic Health Science Centres in the UK, bringing together a number of world-class names such as Great Ormond Street and Moorfields.

“But most importantly today’s healthcare at UCLH is unrecognisable from 10 years ago. Then, we had patients waiting 3 years for cardiac surgery and the occasional overnight trolley wait in A&E – today, waiting times are virtually non-existent.

“We don’t always get it right, but the vast majority of patients and staff would recommend UCLH as a place to be treated.”

What are the main challenges facing UCLH over the next five years?

RN: “Our challenges are the same as the service’s as a whole. Clearly, the biggest is dealing with the economic recession, whilst maintaining the quality of patient care.

“Before the recession we were well positioned to continue on a rapid growth curve, but all that will now be challenged by funding shortages. The new mantra is ‘efficiency and productivity’ despite the fact that the NHS will have more protection than the rest of the public sector.

“Becoming a first-wave foundation trust, with the associated freedoms has been crucial to our development – it means that we can take advantage of opportunities as they arise rather than waiting in the queue for the next subsidy. It’s essential that all trusts move rapidly to FT status so that the rest of the system can concentrate on getting the best value and quality for the taxpayer’s pound.

“We have been in a relatively strong financial position, having made a surplus in recent years. We are able to finance our own capital developments due to sale of assets, most notably the Middlesex Hospital site - which was valued at £32 million but sold for £175 million. The profit will fund much of the new cancer centre.

“Our next development is even more ambitious, a potential £300 million project, which we intend to fund from asset sales and joint ventures with the private sector.”

How do you work strategically and operationally with UCL Partners?

RN: “There are three important set of relationships - UCL, UCL Partners (UCLP) and other NHS services in our network.

’There’s an open invitation to any significant local health-related organisation to apply to join UCL Partners’

“UCLP was formed nearly 2 years ago and was developed from our close relationship with UCL and our previous designation as a comprehensive biomedical centre. We decided to invite other specialist centres: Great Ormond Street Hospital, Moorfields and the Royal Free to join as founding members.

“UCLP was established as a limited company with the intention of fostering closer collaboration between the founding members and anyone else who chooses to become a member of UCLP. There’s an open invitation to any significant local health-related organisation to apply to join UCLP.

“Our whole ethos with UCLP is to improve the health status of the populations we serve, networking over wide catchment areas of North London and beyond.

“Our plan is to treat locally where possible, but to provide a rapid pathway to a centre of excellence where necessary. So if a patient has a common cancer, they could expect to be treated locally – but if it’s complex or rare, you need to get rapid access to a centre that has the expertise to deal with it effectively. Survival often depends on the expertise that comes with critical mass.

“UCL Partners also offers clinicians an opportunity to be involved in clinical trials and research programmes. UCLH has over 1,200 active research programmes at any one time: significantly the largest in the UK.”

What are the financial governance arrangements in place between UCLH and UCL Partners?

RN: “All five founder-members contribute equally to costs, as there are mutual costs and benefits. Until now, all contribute equal shares as equal partners, though as we’re different sizes of organisation, future contributions may reflect the different size of turnover. So effectively, UCLP can only do what the five founder members collectively support.

“The overarching governance is by the UCLP board, and the members of the board – the directors of the company if you like – are the chairs and chief executives of the five founding members.”

If UCLP reaches bigger scale, will the board always be the chair and CE of each partner?

RN: “That’s the board as of now. At some stage, we may need to review our constitution to more fairly reflect the expected increase of participants and partnerships. It’s unclear to what extent more distant DGHs will want active involvement. Some may want to give their consultants easier access to research programmes and clinical trials for example. Here, all our consultants want and expect that.

“So we’ll have to see how it develops. So far, we’re very pleased with its development and engagement. I think we made absolutely the right decision to create UCLP as a partnership, as opposed to a system dominated by either UCLH or the university.”

How effective is the membership of UCLH on your way of working?

RN: “The membership elects over thirty governors, representing a variety of interests: patients, public stakeholders staff. The majority of governors are elected from patient groups and local people. They tend to have the biggest influence and be more actively engaged than the stakeholders (university, PCT, local education interests).

“The elected governors have a huge impact on our strategy. An example – every year, we agree our top 10 priorities, negotiated across the whole organisation so everyone has a say in the organisation's priorities.

“After that, we expect staff to align their work with our top 10 priorities, as an essential part of their own personal priorities. It’s proven a very successful way to get everyone working in the same direction.

“This year, our top three were patient safety, outcomes, and experience - the three key components of quality. Ten years ago, our top priorities were financial management, and hitting national targets. This represents the increasing and welcome influence of the patient and public Governors.”

Monitor chair Steve Bundred suggests that FTs’ assets should be taken off the government balance sheet. What would be the practical and political implications of such a change?

RN: “We’ve started to look at what impact this would have on us. Our initial view is that this could have a positive impact on us, but like many financial matters, a lot depends on interpretation and application.

’If we create an asset or increase its value by good management, such as the increased value of the Middlesex site, we have to pay a return on that to the government. That can’t be right.’

“As a long-term supporter of FT freedoms it seems intuitive to me that this will be a good thing – essentially the current situation means that assets are still Secretary of State-owned. Hence if we create an asset or increase its value by good management, such as the increased value of the Middlesex site, we have to pay a return on that to the government. That can’t be right.

“If we’re off-balance sheet, we can be more entrepreneurial and innovative in our use of assets, for the benefit of patients”.

How does UCLH plan to achieve its cost improvement programme targets over the next few financial years?

RN: “By becoming more efficient and more productive. For two years, we have been saying that we need a 20% efficiency improvement, constraints on new developments and pay freezes. This is equivalent to £20 billion on the NHS annual budget. What this means to us in real terms is an efficiency target of 5% for each of the next four years.

“So we have to be more productive and efficient in the way we treat patients. Fundamentally, this is not different to what we’ve had to do for the last five years, in order to pay for the increased costs of our PFI. In context: when we opened our PFI, the unitary charge we pay now is equivalent to £42 million a year, and we saved only a fraction by closing old sites. We still had to make huge efficiency gains on top of the mandatory annual NHS 3%. We’ve already had to do 5% efficiency a year for half a decade. There will be little difference to the next five years.

“The impact will be different across the NHS. I think the financial impact will be more profound on district general hospitals (DGHs). They’ll be threatened from two directions: the push to centralise specialist work into specialist centres and the pull to deliver more routine care in the community.

“So we will all have to be more productive and efficient in the way we treat patients, and this will be a challenge to everyone. There are many areas we can look at, such as treating more patients as day cases; rationalising clinical support functions; and forming partnerships between the public and private sectors.

“Over the next five years, we’ll have to up the tempo. I also think UCLP and the networks we’ve created will allow us to rationalise duplication of services with other acute trusts. For example: our relationship with the Royal Free Hospital has been greatly improved through UCLP. We’ve agreed to centralise pancreatic cancer care up at the Royal Free in recompense for centralisation of brain cancer care at UCLH. We’ve traded off some services where small volumes of complex surgery should only be provided in one place.”

Will the reduction in funding to 30% of tariff for emergency care over contract challenge UCLH?

RN: “Yes it will. We think the net annual cost to us will be around £5-£6 million each year. But the expectation is that the baseline will be re-set every year: policy is currently that we’ll only be paid 30% of tariff for any increased activity over last year’s contracted levels.

“It has forced us to look at ways in which we can work with community and primary care to reduce emergency admissions. But I see very little evidence of significant investment in these areas."

Will the no-pay-in-30-day emergency readmission policy challenge UCLH?

RN: “Yes, of course, but again it depends on how it’s implemented.”

What are the pitfalls?

RN: “Technically, the tariff should be recalibrated to reflect this new demand, but I suspect it will just become yet another cost pressure.

“The second issue is that many readmissions are not due to failure following a previous discharge: they’re because of another medical problem, or a deterioration of the patient’s condition. So we have to be careful how we apply this, because we don’t want clinicians not to readmit when it’s clinically indicated.”

How does UCLH work with its main PCTs and local GPs to improve care pathways and manage demand?

RN: “I support the principle, and agree with the government’s strategy to align acute services more closely with community services. But we need to have investment in community care to make it work. I’m also very supportive of moving PCTs' provider services into local acute trusts, and not having a different solution for every area of London.

“The key issues are good communications between the hospital and GP’s, and the development of patient pathways that everyone can understand”.

Do you observe any correlation between high-users of emergency care and patients of single-handed GPs?

RN: “I don’t think we’ve looked at that in detail. We have developed an excellent healthcare service for the homeless, who are really high users of emergency care. We’re looking at funding that, and have had lots of offers from different sources.

“We found a ‘revolving door’ problem with homeless patients, because services were not integrated. It’s a brilliant service, hugely supported by local politicians and London-wide politicians, and a real exemplar for others to follow.”

Was the decision to send Healthcare For London back to the drawing board about health policy or about politics?

RN: “I’m not sure that there is a real difference between the two? Health policy is greatly influenced by a change in political landscape, or indeed a simple change in the Secretary of State, as is clear from recent events. There have been 10 different Secretaries of State over past decade, each with their own view and philosophy as to how the NHS should be structured and run.

“I guess that the real intention behind the current proposals is to replace the previous top-down planning approach with a more devolved bottom-up approach with greater GP influence. Healthcare For London was in the former mould, and political philosophy has dictated this change.”

The Coalition government puts great faith in GP commissioning to drive change. Does your experience of GP commissioning lead you to share that faith?

’The big unknown (on GP-led commissioning) is accountability. Who will be the accountable officer?’

RN: “There are very different opinions on GP fundholding. I think the big unknown is accountability. Who will be the accountable officer?

“We understand that this question has now been asked by the Treasury – can GP’s really be held to account for the majority of the NHS budget? And it needs to be answered, before the government's new policy is implemented.”

Does commissioning require secondary care input to stand a chance, and if so how might that work?

RN: “A number of us have argued for a long time that there are far too many PCTs. They’ve been small and acted parochially to maintain local services. This worked against patient choice – a key plank in the new Government’s strategy. I hope the new commissioning arrangement will give GPs and patients a much wider range of choice.”

Do clinicians in primary and secondary care trust one another’s data?

RN: “I think there is a high degree of trust, both ways. There will always be some differences at the margin, but we have very effective mechanisms to iron out differences of opinion.

“We welcome any challenge to our data as a means of identifying improvement. Good quality coding is especially important for UCLH as we have a higher proportion of complex, high-cost patients who need more expensive treatments. Service line reporting and patient level costing are increasingly important to us, and help to achieve greater transparency between us and commissioners.”

How do you achieve a healthy culture between managers and medics?

’It’s vitally important to engage clinicians integrally within the management structure’

RN: “It’s vitally important to engage clinicians integrally within the management structure. Ten years ago, I replaced the existing administrative structure of UCLH with a flat clinician-led one. I did this by appointing four medical directors and 22 clinical directors – previously, people who’d not been exposed to management responsibility. Now these clinicians make all the important decisions in the Trust, and have become much better at it than their predecessors.

“The medical directors are effectively the chief executive of their own part of the organisation. In UCLH, clinical directors work for medical directors. So we have a very high degree of devolved management. The role of clinical directors is to balance quality of care with financial responsibilities.

“In practice, what this means is that at clinical level, differences of opinion are resolved by clinical directors; at hospital level, they're resolved by medical directors; and at trust-wide level, they're resolved by me.”

What are the biggest mistakes or worst ideas in NHS management?

’The main failures in the last decade were paying our staff too much without getting increased productivity in return, and creating elaborate and costly bureaucratic structures which add little value to the quality of patient care at the front line.’

RN: “Looking back over the last 10 years there have been many successes and failures. In the late 1990s, cardiac patients waited three years for surgery - today, our maximum wait is 18 weeks. We’ve driven remarkable improvements in accessibility, quality (lowest mortality ratios in country) and physical environment (by building the best hospital in the NHS).

“The main failures in the last decade were paying our staff too much without getting increased productivity in return, and creating elaborate and costly bureaucratic structures which add little value to the quality of patient care at the front line.”

Which bureaucracies?

RN: “Mainly the Department of Health, strategic health authorities and PCTs. I’ve long argued that there needs to be a substantial reduction in bureaucracy, and I’m supportive of the government’s line to address this.”

What will the landscape of NHS commissioning and provision look like in a decade?

’There is talk about 500-600 GP commissioning groups, but it’s hard to see that there will be that number of GPs who want to take on these responsibilities’

RN: “It depends on the success of GP-led commissioning and the uptake by GPs in that process. There is talk about 500-600 GP commissioning groups, but it's hard to see that there will be that number of GPs who will want to take on these responsibilities. This, aligned with the question of accountable office status, will be key determining factors.

“If these are resolved then primary care commissioning will replace the majority of the functions of the existing bureaucratic structures of PCTs and SHAs.”

And you don't see a future in commissioning for UCL Partners?

RN: “No. We’re about creating networks of care. We’re providers of care, not commissioners.

“For any successful market (which is what the NHS has been trying to achieve for many years), you need clear distinction between buyers and sellers. If one is stronger than the other it will compromise value. Historically, the NHS has had strong providers and weak commissioners, and we need to get the balance right.

“Whether GP-led commissioning will be more successful that PCT commissioning, only time will tell.”