UK: NHS Corporate Governance Best Practices

Research shows that there is a direct relationship between good corporate governance and the quality of care at an NHS Trust. The NHS has developed a Code of Governance which has proven effective at making that relationship work for the UK healthcare system. The ‘Comply or Explain’ principle is also applied at the NHS. 

Good Corporate Governance leads to quality care

Research has found that there is a direct relationship between good corporate governance on UK National Health Services (NHS) boards and the quality of care at a given NHS Trust.  According to the UK National Leadership Council (NLC), where the NHS has failed patients on quality, too often a dysfunctional board has not had the appropriate governance arrangements in place to improve quality for patients.

“The purpose of NHS boards is to govern effectively and in doing so to build public and stakeholder confidence that their health and healthcare is in safe hands,” the NLC states. The NHS has developed a specific Code of Governance for its Trusts, last updated in 2014, and which each individual Trust applies with attention to local issues.

Corporate Governance starts at the board level

Good corporate governance practice starts at the board level for NHS Trusts, and then a culture is built that should permeate the entire organisation. When the principles of best-practice corporate governance are maintained, then the correct implementation is in place to assure the highest quality of care, and to take steps should the level of care decline, as the Code points out.

Good corporate governance is the means by which quality governance is overseen, as the Code states:

“Robust corporate and quality governance arrangements complement and reinforce one another. Individuals working in clinical teams providing NHS services are at the front line of ensuring quality of care to patients.

However, it is the board of directors that takes final and definitive responsibility for improvements, successful delivery, and equally failures, in the quality of care. Effective governance, therefore, requires that boards pay as much attention to quality of care and quality governance as they do to the financial health of their organisation.”

The NLC research provides more detail:

“The board has a statutory duty of quality. In support of this, good practice suggests that:

  • All board members need to understand their ultimate accountability for quality.
  • There is a clear organisational structure that clarifies responsibility for delivering quality performance from the board to the point of care and back to the board.
  • Quality is a core part of main board meetings both as a standing agenda item and as an integrated element of all major discussions and decisions.
  • Quality performance is discussed in more detail regularly by a quality committee with a stable, regularly attending membership.”

The board becomes a driving force for continuous quality improvement across the full range of services.

Corporate governance fundamentals: board composition, board effectiveness

Many of the basic best-practice corporate governance principles that apply to most businesses and charities also apply at NHS Trusts, as the Code explains. “The board of directors and its committees should have the appropriate balance of skills, experience, independence and knowledge of the NHS foundation trust to enable them to discharge their respective duties and responsibilities effectively. There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board. Directors of NHS foundation trusts must be ‘fit and proper’ to meet the requirements of the general conditions of the provider licence.

All directors should be able to allocate sufficient time to the NHS foundation trust to discharge their responsibilities effectively. All directors and governors should receive appropriate induction on joining the board of directors or the council of governors and should regularly update and refresh their skills and knowledge. Both directors and governors should make every effort to participate in training that is offered. The board of directors and the council of governors should be supplied in a timely manner with relevant information in a form and of a quality appropriate to enable them to discharge their respective duties.

The board of directors should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. The outcomes of the evaluation of the executive directors should be reported to the board of directors. The chair should take the lead on the evaluation of the executive directors.”

Corporate Governance: ‘Comply or Explain’ Principle

The ‘Comply or Explain’ principle, which is one of the cornerstones of British Corporate Governance, applies to NHS Trusts’ governance as well.

The Code states: “The provisions of the Code, as best-practice advice, do not represent mandatory guidance. Good governance is an important tool for ensuring the quality of care. Some trusts may decide that the provisions are disproportionate or less relevant in their case. Such trusts may still consider that it would be appropriate to adopt the approach in the Code, and it is recognised that departure from the specific provisions of the Code may be justified in particular circumstances. Reasons for non-compliance with the Code should be explained. In providing an explanation for non-compliance, the NHS foundation trust should aim to illustrate how its actual practices are consistent with the principle to which the particular provision relates.”

Research in the UK and in the NHS has demonstrated that boards have a responsibility to embed innovation in the organisation’s culture, according to the NLC. Organisations that are innovation-friendly encourage frontline and managerial staff to innovate – they are characterised by decentralised but clearly defined structures, which allows them freedom to make their own decisions and to take risks (but not at the expense of safety). Their boards avoid a top-down, rule-driven approach, but do monitor, evaluate and learn.

Thus, the two priorities, safety and innovation, are amply supported by best-practice corporate governance at the NHS.

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