NHS England and NHS Improvement have begun a consultation in respect of changes to guidance for NHS Trusts and Foundation Trusts looking to undertake transactions including those which would be classified as being "significant".


The Transactions Guidance, with a particular focus on Trusts undertaking mergers and acquisitions, was most recently updated in November 2017, with an Addendum relating specifically to subsidiary transactions issued in 2018. The Consultation paper issued on 9 November 2021 sets out the proposals in full.

The intention of the changes is to accommodate the general shift towards systems and collaboration between providers in advance of more formal transactions. The Consultation paper acknowledges that collaborative working between organisations as a precursor to a transaction can reduce risk created by transacting, but sets out that these arrangements can also result in structures which can be difficult to unwind being put in place as precursors to formal transactions.

In summary the proposals seek to:

1. expand the scope of the current guidance to include:

a. significant service contracts, described as contracts where Trusts and their systems may be exposed to significant incremental risk – particular examples given include:

i. NHS to non-NHS contracts with risk sharing mechanisms; and

ii. contracts changing the scale or scope of a Trust's activity;

b. novel, contentious or repercussive financing arrangements;

c. collaborative agreements that give rise to material risk / may be difficult to unwind without creating significant risk – particular examples given include:

i. significant joint working between boards; and

ii. committees in common to which operational management of services is delegated,

although provider collaboratives will be excluded for the most part;

2. create a new test for approving a transaction is also being considered, specifically: "do the deliverable benefits to patients and the wider public materially outweigh the costs and risks in the medium to long term?" – evidence of:

a. improvement in quality;

b. planning of patient and population benefits;

c. financial benefits outweighing transaction costs; and

d. sustainability at system level, aligning with ICS strategy,

will need to be provided by Trusts and Foundation Trusts wishing to transact; 

3. focus on four key qualitative areas deemed critical to a transaction's success, being:

a. culture;

b. staff engagement;

c. digital integration; and

d. readiness for transformational change; and

4. set out that capital projects for Foundation Trusts not in financial distress will be out of scope of the guidance and be dealt with by the capital regime to ensure all capital proposals are dealt with using the same process.

The consultation window closes on 21 December 2021. Updated guidance is expected to be issued from 1 April 2022. Responses can be submitted here

Should you wish to discuss the above in further detail and the potential impact on your organisation and planned transactions before submitting a response, please don't hesitate to contact us.

Key Contacts

Stephanie Townley

Stephanie Townley

Legal Director, Infrastructure, Projects & Energy
Manchester

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Chris Hardy

Chris Hardy

Associate, Infrastructure Projects & Energy
Manchester, UK

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Rajdip Kaur

Rajdip Kaur

Associate, Infrastructure, Projects & Energy
Manchester

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