CENTRAL MANCHESTER UNIVERSITY HOSPITALS NHS FOUNDATION TRUST

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1 CENTRAL MANCHESTER UNIVERSITY HOSPITALS NHS FOUNDATION TRUST Agenda Item 8.3 Report of: Paper prepared by: Executive Director of Human & Corporate Resources Margot Johnson Director of Corporate Services / Trust Board Secretary Alwyn Hughes Date of paper: July 2017 Subject: Establishment of the Interim Board of Directors for the Single Hospital Service Indicate which by Information to note Purpose of Report: Support Resolution Ratify Consideration of Risk against Key Priorities Failure to establish an Interim Board of Directors for the Single Hospital Service would significantly jeopardise the delivery of Locality Plans (particularly in Manchester and Trafford) and a successful merger with UHSM. The Board of Directors is asked to: 1. Ratify the Interim Board Terms of Reference approved by the Joint Steering Board (JSB) on 13 th June Agree to the dis-establishment of the JSB at the point of establishing the proposed Interim Board of Directors on 11 th July 2017 Recommendations 3. Note the appointment of the Chairman, Deputy Chairman, CEO, s and Executive Directors to the proposed Interim Board of Directors. 4. Agree the existing IOG and JSB Delivery Sub-Groups be repositioned as sub-groups to the proposed Interim Board of Directors. 5. Note that an Interim Remuneration Committee will be established by the Interim Board of Directors. Contact Name: Alwyn Hughes (Director of Corporate Services / Trust Secretary) Tel: P age

2 CENTRAL MANCHESTER UNIVERSITY HOSPITALS NHS FOUNDATION TRUST 1. Background The process of merging two acute NHS Foundation Trusts is novel territory that requires interim management arrangements to be put in place prior to the substantive appointment of a Trust Board of Directors. Subject to suitable progress in the NHSI and CMA assessment processes, it was intended that an Interim Board would be established late in Q1 2017/18, and would coordinate processes through Q2 2017/18, to the anticipated implementation at 1 st October The Interim Board would then provide the core leadership function for the new FT during Q3 2017/18. Progress in establishing a new Council of Governors would be pursued as rapidly as possible, with the intention of being in a position to have a substantive Board of Directors in place from early in Q4 2017/ Transitioning to the Interim Board of Directors Joint Steering Board In February 2017, the Joint Steering Board (JSB) was established, with the approval of NHS Improvement (NHS I) and the Competition and Markets Authority (CMA), to provide a forum for targeted joint working between CMFT and UHSM. The JSB was intended to be operational in the period immediately before an Interim Board could be established which, under NHS I Transaction Guidance, could not happen more than three months before the planned authorisation date. The JSB was authorised to initiate a review of its terms of reference after three months to ensure it remained fit for purpose. Any proposed changes were to be endorsed by CMFT and UHSM Boards of Directors. To support the work of JSB, two Delivery Sub-Groups were introduced; first to address finance with the involvement of NHS I and a second involving all Executive Directors essentially for the purposes of ensuring both Trusts remained fit for merger. In this context, the JSB and both Delivery Sub-Groups had not transacted business which was strictly the responsibility of CMFT and UHSM Boards of Directors. The New Interim Board of Directors During June 2017, and following due process and oversight by NHSI, steps have been taken to establish an Interim Board of Directors with appointments successfully completed to the Chair, Deputy Chair, CEO, Non-Executive and Executive positions by the end of June 2017 (ref: Appendix A). Terms of Reference for the Interim Board have also been developed and approved by the JSB on 13 th June 2017 and are now presented to the CMFT & UHSM Board of Directors for ratification (ref: Appendix B). The role of the Interim Board differs significantly in the pre and post authorisation phases of the transaction. Pre-authorisation - the Interim Board will focus on the SHS Programme to deliver the merger, and undertake the necessary preparatory work to ensure continuity of service from day one. The two existing Trust Boards of Directors will continue to exercise their statutory powers and responsibilities and the Interim Board will not be involved in the day to day delivery of contracted services or any aspect of the regulatory obligations of either Trust. 2 P age

3 Post authorisation - the Interim Board will act as if it were the substantive Board of the new Trust adopting the full range of statutory responsibilities usually reserved for substantive Boards. Once the Interim Board has been established there will be a clear overlap between the Interim Board s pre-authorisation responsibilities and those of the current Joint Steering Board. In these circumstances, the JSB will be dis-established in early July 2017 and its responsibilities transferred to the Interim Board of Directors. Approval to dis-establish the JSB is now sought from the two Trust Boards of Directors and if approved, the Chair of the JSB will be asked to formally handover its responsibilities to the Interim Board. 3. Interim Board Accountability Structure During the transitional period, when the Interim Board is in place and until Central Manchester University Hospitals NHS Foundation Trust (CMFT) and University Hospital South Manchester NHS Foundation Trust (UHSM) is dissolved, existing Committee structures at both Trusts will remain in place and will retain their defined responsibilities as set out in their terms of references. In parallel to this, an Interim Remuneration Committee will be created during Q2 (2017/18) and report to the Interim Board and the current JSB Delivery Sub-Groups and IOG will also be repositioned as sub-groups of the Interim Board. The proposed reporting arrangements following establishment of the Interim Board of Directors in July 2017 are shown below. Interim Board Integration Oversight Group (IOG) Interim Remuneration Committee Delivery Sub- Groups The Interim Board will be asked to approve a new Board and Committee structure immediately ahead of the establishment of the new FT in October 2017 to enable it to come into force immediately after authorisation. Sub-Committees and Groups below Committee level will continue to operate until January 2018 after which a new Sub-Committee structure will be developed. In the interim period, the new Board Committees will take reports from the existing Sub-Committees and Groups until such time as the Sub-Committee structure and reporting systems are rationalised. The Terms of Reference for the Interim Remuneration Committee were endorsed at a previous JSB meeting and will be presented to the Interim Board for consideration and ratification. Existing Terms of Reference for the Delivery Sub-Groups have been reviewed to ascertain whether the membership should be changed to reflect the composition of the Interim Board. No alterations are proposed except to qualify the changed reporting arrangements to the Interim Board. This is because the responsibilities of the Delivery Sub-Groups remain pertinent to the work of the Interim Board. Advice has been sought from the Programme Legal Advisors as to the best way of handling any potential conflicts that may arise for Directors who are members of both the Interim Board and one of the two Boards of Directors. The advice as proffered has been incorporated in to the final Interim Board Terms of Reference. 3 P age

4 The current Memorandum of Understanding (MoU) between CMFT & UHSM includes a requirement for both Trusts to consult each other, in a timely manner, prior to taking any major decisions, and this requirement will be carried through to the soon to be adopted Heads of Terms. It is proposed that any consultation of this sort should be carried out through the business of the Interim Board. Recommendations The CMFT Board of Directors are invited to: 1. Ratify the Interim Board Terms of Reference approved by the Joint Steering Board (JSB) on 13 th June 2017 (ref: Appendix B) 2. Agree to the dis-establishment of the JSB at the point of establishing the proposed Interim Board of Directors on 11 th July Note the appointment of the Chairman, Deputy Chairman, CEO, Non-Executive Directors and Executive Directors to the proposed Interim Board of Directors (ref: Appendix A) 4. Agree the existing IOG and JSB Delivery Sub-Groups be repositioned as subgroups to the proposed Interim Board of Directors. 5. Note that an Interim Remuneration Committee will be established by the Interim Board of Directors. 4 P age

5 Appendix A INTERIM BOARD OF DIRECTORS (Appointed June 2017) Name Mrs Kathy Cowell OBE DL Mr Barry Clare Mr John Amaechi OBE Professor Dame Sue Bailey OBE DBE Mr Roger Barlow Dr Ivan Benett Mrs Jane McCall Mr Nick Gower Mrs Chris McLoughlin Mr Trevor Rees Sir Michael Deegan CBE Mrs Gill Heaton OBE Mr Silas Nicholls Mr Darren Banks Mrs Julia Bridgewater Mrs Margot Johnson Professor Cheryl Lenney Professor Robert Pearson & Miss Toli Onon Mr Adrian Roberts Interim Board Position Chairman Deputy Chairman Chief Executive Officer Deputy Chief Executive Deputy Chief Executive Director of Strategy Chief Operating Officer Director of Workforce & OD Chief Nurse Joint Medical Directors Chief Finance Officer Mr Alwyn Hughes Trust Board Secretary 5 P age

6 CITY OF MANCHESTER SINGLE HOSPITAL SERVICE Pre Completion of Merger INTERIM BOARD OF DIRECTORS TERMS OF REFERENCE Overall Purpose The Interim Board has delegated responsibility for: Appendix B All aspects of the delivery of the SHS Programme to merge Central Manchester NHS FT and University Hospital of South Manchester NHS FT (CMFT and UHSM) in accordance with NHS Improvement (NHSI) Transaction Guidance including engagement with regulators and stakeholders. Undertaking the necessary preparatory work to ensure continuity of services from the date of completion of the anticipated merger. In the period prior to completion of the anticipated merger, the two Boards of Directors (CMFT and UHSM) will continue to exercise their statutory powers and responsibilities as the Boards of the two separate organisations. The Interim Board will not be involved in the day to day operational delivery of contracted services or any aspect of the regulatory obligations of governance of either CMFT or UHSM as currently constituted. Nevertheless, the Interim Board must avoid acting in a way which might give rise to a perception of an actual or perceived conflict of interest. It will therefore adopt a robust and clearly documented procedure for the declaration and recording of any such conflict. Post Completion of Merger From the date of completion, undertaking the transitional governance of the Trust, as if the Board of Directors, under S 56(11) of the National Health Service Act 2006 (NHS Act 2006). As a matter of principle, the creation of the Interim Board does not pre-determine that a merger will occur since this is dependent on both Boards of Directors recommending approval of a Full Business Case that has been risk rated by NHS I and on a vote of both Councils of Governors. For the transaction to progress and to allow the submission of a formal authorisation application of a new organisation, the majority of the Council of Governors of each organisation must vote in favour of the merger proposal in accordance with the NHS Act 2006 and their respective constitutions. Name: Reporting to: Interim Board of Directors Boards of Directors of the two Trusts (pre-merger only) Authority: Pre Completion of Merger: Prior to completion the Interim Board: i. Is constituted as a working group of both Trusts Boards. Its constitution and terms of reference are set out below. 6 P age

7 ii. iii. iv. Is authorised by both Boards of Directors to act within its terms of reference. Shall have no delegated executive powers for the day to day operational delivery of contracted services or any aspect of the regulatory obligations of governance of either CMFT or UHSM as currently constituted. Will be delegated a budget from both Boards of Directors that can be used to deliver the programme in accordance with these Terms of Reference and the Heads of Agreement for the merger proposal. Post Completion of Merger: From the establishment of the new FT, the Interim Board will undertake the transitional governance of the Trust as if the Board of Directors under S 56(11) of the NHS Act 2006 and as set out in the new organisation s constitution, annex A. The Interim Board will act in accordance with the new organisation s Standing Orders and current best practice. Terms of Reference/Functions Pre Completion of Merger: In the period before completion of the merger, the Interim Board shall: 1. Develop the necessary strategies and policies to enable the merged Trust to operate without diminution in the quality of service to patients in the transition period. 2. Consider and manage the risks and their mitigations arising from the merger 3. Ensure that a full Equalities Impact Assessment is undertaken and reported to the Boards as part of the Full Business Case. 4. Ensure that the necessary stakeholder engagement for the merger transaction is undertaken in accordance with the Communications & Engagement Plan. 5. Manage the delegated budget in line with [CMFT / UHSM s] Standing Financial Instructions and Standing Financial Orders whilst also ensuring that the statutory Boards receive all relevant financial reporting required by their Standing Financial Instructions. 6. Have responsibility for the work streams supporting the merger process and the application process. 7. Report to the two Boards of Directors, Councils of Governors, Audit, Risk and Investment Committees, and other relevant Committees, as required. 8. Undertake the necessary preparation for confirmation of the merger by NHSI, including the Board-to-Board meeting. 9. The statutory Boards of CMFT and UHSM will manage the process and procedure for the vote by each Council of Governors on the proposed merger. 10. Submit the final authorisation application to NHSI for the new organisation. 7 P age

8 Post Completion of Merger: From the establishment of the new FT, the interim Board shall: Exercise the functions of the new organisation on its behalf until such time as a substantive Board of Directors is appointed. Sub-Committees / Groups / Work Streams Pre Completion of Merger: The Interim Board will appoint such sub groups / work streams as it sees fit to ensure the objectives of the anticipated merger are delivered. Post Completion of Merger: The Interim Board will establish a governance structure of formally constituted standing committees subject to the NHS Act 2006 and the regulatory framework. The Interim Board will delegate certain functions to these Committees (or officers) as detailed in the Trust s Scheme of Reservation & Delegation. The constitution and terms of reference of these committees and their specific executive powers shall be approved by the Interim Board. Membership The membership of the Interim Board shall be: Ten Interim s, of whom one shall be designated as Interim Chair An Chief Executive An Director of Finance An Medical Director A Chief Nurse Up to five further Executive Directors All members of the Interim Board must be members of the Board of Directors of one of the Trusts. The following requirements will apply to the Executive Directors of the Interim Board of Directors. The Interim Medical Director must be registered with the General Medical Council or the General Dental Council. The Interim Chief Nurse must be registered as a Nurse or a Midwife with the Nursing and Midwifery Council. At all times, the number of Interim s must exceed the number of Interim Executive Directors or, if they do not, the Interim Chair must have a casting vote. Appointments The Interim to be designated Interim Chair and Interim Non- Executive Directors shall be selected by a process agreed with NHS I. The Interim Chief Executive shall be selected by the Interim Chair in accordance with a process supported by NHS I. 8 P age

9 The other Interim Executive Directors are selected by the Interim Chair, Non-Executive Directors and Chief Executive in accordance with a pre-determined process. Pre Completion of Merger In the event that it is necessary to make a further appointment of an Interim Non-Executive Director (including the Interim Chair) the Interim Board may take advice from NHS Improvement as to how that vacancy can be filled. Post Completion of Merger Following the establishment of the new FT, in the event that it is necessary to make a further appointment of an Interim (including the Interim Chair) if a member stands down, the Interim Board of Directors may take advice from NHS Improvement as to how the vacancy can be filled. In Attendance Other persons may be invited to attend a meeting of the Interim Board of Directors to assist in deliberations. Support to Committee Support for, and the administration of, the Interim Board will be undertaken by the Interim Board Secretary. Quorum Five Executive Directors including not less than two Interim Executive Directors (one of whom must be the Interim Chief Executive or Interim Deputy Chief Executive) and not less than six Interim s (one of whom must be the Interim Chair or the Interim Deputy Chair) shall form a quorum. Reporting Arrangements to the Trust Board Minutes of meetings of the Interim Board and any actions required will be recorded and circulated to members for approval. Pre Completion of Merger The minutes of the Interim Board will be reported to Part 2 of CMFT and UHSM Boards of Directors; a public summary of the progress of the merger project will be reported to each public meeting of each Trust Board and a summary will also be made to both Councils of Governors. As requested, and agreed with the Interim Chair, update reports may be made to any other formal or informal parts of each Trust s governance arrangements, including, but not limited to, the Audit Committees and the Investment & Planning Committees. Frequency of Meetings The Interim Board shall meet as often as considered appropriate for the discharge of business. A schedule of meetings shall be put into place as early as possible. 9 P age

10 Pre Completion of Merger Pre completion of the merger, there is no requirement for the Interim Board, as a working group of both Boards, to meet in public. The provisions in the new organisation s Standing Orders for the Board of Directors shall have effect for the procedure of meetings of the Interim Board. Post Completion of Merger Post completion, the Interim Board shall meet in public, except where considering specific terms of business in public would prejudice the public interest owing to their content. The Interim Board shall determine if such prejudice might reasonably be expected to arise. Approval Date: June P age