A new era? The Southern Health Annual Report and Accounts 2016/17

Just over a year ago, I went through Southern Health’s Annual Report and Accounts for 2015/16, looking mainly at what the figures told us about what Southern Health was doing and where it was heading. My conclusion at the time was that the figures showed Southern Health to be failing and flailing: shrinking; shipping skilled professionals at a rate of knots and replacing them with unskilled staff; paying executive directors more whilst paying other staff less; and still forking out a fortune in dubious ‘training’ and ‘consultancy’ contracts. At the same time, the annual report was trying desperately to fend off and ignore the pressing realities of their situation and to pretend that everything would be fine if it wasn’t for those meddling kids/#JusticeforLB/#JusticeforNico/other campaigners/the media/Monitor (sort of)/CQC (sort of)…the list goes on.

The year 2016/17 has been somewhat, er, turbulent, for Southern Health, with the Chief Executive, Katrina Percy, departing with a humungous payout and an almost complete replacement of everyone (both Executive Director and non Executive Director) on the Southern Health board. This blog looks at the 2016/17 annual report figures to see if there are any signs of changes in Southern Health’s direction as they moved into the post-KP era.

The money

Southern Health is continuing to shrink, for two main reasons: 1) shuffling off their social care service, TQ21, to other organisations (why were Southern Health running social care services in the first place?); 2) continuing to offload learning disability services acquired during the ‘absorption’ of Ridgeway/Oxfordshire Learning Disabilities NHS Trust in 2012. By the end of 2017, when services in Oxfordshire will finally transfer to the Oxford Health NHS Trust, I think this will mean that none of the Ridgeway services acquired by Southern Health will remain in their hands, although Southern Health will have pocketed over £8 million in reserves transferred from Ridgeway and kept the proceeds from the sale of a number of former Ridgeway properties. To my mind, it is no coincidence that both TQ21 and the Ridgeway acquisition were driven by the venture capital mindset of Katrina Percy and the Board at the time. People died preventable deaths in these services.

Financially, this means that the income to Southern Health continues to shrink, from £353.9 million in 2013/14 through £330.8 million in 2015/16 to £321.6 million in 2016/17 (a decrease of 9.1% in three years). Overall expenditure has also dropped over this time period, from £348.5 million in 2013/14 (when there was an operating surplus of £5.4 million) through £331.6 million in 2015/16 (with an operating loss of -£5.8 million) to £314.4 million in 2016/17 (a decrease of 9.8% in three years). The income figure for 2016/17 includes a bung of £5.3 million from the Sustainability and Transformation Fund, resulting in an operating surplus of £7.2 million. It is also worth noting a final financial gift from Ridgeway in 2016/17 – the sale of the West View/Home Farm site for £0.8 million.

How does Southern Health spend this income? Some specific lines of expenditure suggest that Southern Health is still an organisation in trouble. For example, ‘purchase of healthcare from non-NHS bodies’ (principally buying inpatient mental health services from private companies such as Huntercombe) rose from £5.0 million in 2015/16 to £9.1 million in 2016/17. Expenditure on clinical negligence cases continues to increase rapidly; from £0.6 million in 2013/14 through £1.1 million in 2015/16 and £1.6 million in 2016/17.

As with all NHS Trusts, by far the biggest expenditure is on staff. Reflecting the continuing shrinkage of Southern Health, spending on all staff (excluding Directors) continued to drop; from £258.9 million in 2013/14 through £236.5 million in 2015/16 to £225.2 million in 2016/17 (a decrease of 13.0% in three years).

Continuing to buck this trend is expenditure on Executive Directors. This has increased from £1.0 million in 2013/14 through £1.6 million in 2015/16 to £1.9 million in 2016/17, a 90% increase in three years. Some of this is undoubtedly due to changes in the Board throughout 2016/17, where there are signs of attempts to regularise some of the more outrageous ways in which Executive Directors (and a select few others) were paid in the Katrina Percy era. Of course, this doesn’t mean that new Executive Directors are exactly donning hairshirts and taking vows of poverty themselves.

First of all there is Katrina Percy herself. Including her pay-off of a year’s salary and pension benefits, she ‘earned’ £295,000 - £300,000 in 2016/17 (and she wasn’t even there for the whole financial year). Senior cronies such as the Chief Operating Officer, Chris Gordon (now gently eased to a secondment to, er, NHS Improvement) still raked in as a Director £105,000 - £110,000 from Southern Health in 2016/17 – not to mention an additional £70,000 - £75,000 in income from Southern Health for his work in ‘other roles’ for them. Whether appointed at the tail-end of KP’s reign or just afterwards, other Executive Directors include Christopher Ash (Director of Strategy; £180,000 - £185,000 including pension contributions), Gethin Hughes (Director of Integrated Services; £185,000 - £190,000 including pension contributions), Sara Courtney (Acting Director of Nursing and Allied Health Care Professionals; £165,000 - £170,000 including pension contributions) and Paul Streat (Director of Corporate Governance; £155,000 - £160,000 including pension contributions).

The new Interim Chief Executive Officer, Julie Dawes, took home £150,000 - £155,000 in salary and a further £62,500 - £65,000 in pension contributions in 2016/17. The Interim Chair Alan Yates, appointed by fiat by NHS Improvement, isn’t doing badly either, taking home £100,000 - £105,000 in total in 2016/17.

The Director of Operations for Mental Health, Learning Disabilities and Social Care is Mark Morgan, who seemed to perform a similar selling off role for Castlebeck after Winterbourne View. Under the KP era he was being paid eye-watering amounts by Southern Health via his company. The annual report for 2016/17 reports that he now takes a salary rather than being paid through this company, although he still managed to rake in £265,000 - £270,000 from Southern Health in 2016/17. A number of other Directors were earning substantial additional amounts for ‘other roles’ in Southern Health under the KP era in 2015/16, but this seems to have stopped for four Directors in 2016/17.

For reasons which are not obvious to an outsider like me, the great survivor of this turbulent period is the Medical Director, Lesley Stevens, with a total £165,000 - £170,000 (including pension contributions) from Southern Health in 2016/17.

One of the indicators that NHS Trusts have to report is the ratio between the highest salary in the Trust and the median salary of all staff in the Trust. In 2015/16 the median salary in Southern Health was £24,500 and the ratio was 7.6. In 2016/17 the median salary increased to £26,900 (largely because poorly paid workers in the social care TQ21 service no longer worked for Southern Health). The 2016/17 annual report states that the ratio of highest paid worker to median salary dropped dramatically to 5.7. It turns out this is because the Trust decided that Katrina Percy’s income didn’t count because of the payoff – the ratio would then have rocketed to around 11. The Trust also decided that the next highest income, for Mark Morgan, didn’t count either, because he was paid via his company for most of the time (or something like that) – the ratio would then be approaching 10.

Through the nose

Last summer, Michael Buchanan of the BBC reported the hugeamounts of money being paid by Southern Health to two consultancy companies, Talent Works and Consilium, both of which were led by people with connections to Katrina Percy. Trusts have to report in their annual report and accounts total spending to external agencies in three categories: legal fees; consultancy; and training/courses/conferences. Much of the gargantuan spending to Talent Works in particular was categorised as training rather than consultancy, particularly for the infamous ‘Going Viral’ collection of happenings (I’m struggling to find a neutral but descriptive term) inflicted across Southern Health.

In 2016/17 are there signs that Southern Health is curbing its dangerous addiction to consultants, in whatever form?

First, Southern Health spending on legal fees is continuing to increase: from £1.1 million in 2014/15 through £1.4 million in 2015/16 to £1.7 million in 2016/17. How much of this legal spending is necessary to work through the consequences of Katrina Percy’s actions (the annual report states expenditure of £14,256 to the legal firm Capsticks specifically related to Katrina Percy’s departure), and how much is engaged in aggressive and unnecessary actions like the legal bullying involved in the @LBInquest, is unclear.

Second, spending on training, which had shot up from 2014/15 (£1.0 million) to 2015/16 (£2.7 million), possibly involving recategorising consultancy spending during that time, decreased slightly to 2016/17, but was still running at £1.9 million.

Thirdly, spending on consultancy, which had ostensibly dropped from 2014/15 (£1.5 million) to 2015/16 (£0.7 million), increased again in 2016/17 to £1.3 million.

Across all three categories, spending increased from 2014/15 (£3.6 million) through 2015/16 (£4.8 million) to 2016/17 (£4.9 million). Southern Health’s addiction continues under new management.

If you want to look in more detail at who Southern Health have been paying, this Freedom of Information request has details of exactly when Southern Health paid invoices to which organisations in 2016/17 under the three categories of training, consultancy and legal/professional fees. I haven’t gone through all of this myself (yet), but one thing did jump out at me: even at the end of March 2017, after KP had departed, Southern Health were still paying large sums to Talent Works Psychologists Ltd for ‘training’, over £137,000 in March 2017 alone.

Staffing

As I mentioned earlier, Southern Health continued to shrink in 2016/17, with expenditure on (non-Director) staff also decreasing. What have the consequences been for the number of staff in different roles employed in Southern Health? A year ago, it looked to me like the figures were suggesting a deprofessionalisation of the Southern Health workforce, with from 2014/15 to 2015/16 big reductions in the number of doctors/dentists; nurses/midwives/health visitors; and scientific/therapeutic/technical staff to set alongside a big increase in healthcare assistants/other support staff.

What has happened from 2015/16 to 2016/17? As you would expect from a shrinking organisation, the total Whole Time Equivalent (WTE) staffing time available reduced again, from 7,282 WTE staff in 2014/15, through 6,468 WTE staff in 2015/16, to 6,028 WTE staff in 2016/17.

However, within these overall figures there are signs of at least a stalling of the staffing plans of the late-KP era. For example, the WTE number of healthcare assistants/other support staff, after increasing drastically from 1,587 in 2014/15 to 2,033 in 2015/16, dropped dramatically in 2016/17 to 1,484.

Other groups of staff that had reduced from 2014/15 to 2015/16 showed signs of small reversals in 2016/17. The WTE number of doctors/dentists, which had reduced from 238 in 2014/15 to 211 in 2015/16, increased again to 230 in 2016/17. The WTE number of nurses/midwives/health visitors, which had plummeted from 2,507 in 2014/15 to 1,748 in 2015/16, had stabilised at 1,786 in 2016/17. Similarly, the number of scientific/therapeutic/technical staff, which had dropped from 823 in 2014/15 to 529 in 2015/16, has stabilised at 557 in 2016/17.

Southern Health is still quite highly reliant on agency staff (227 WTE in 2016/17 compared to 211 in 2015/16 and 287 in 2014/15) and Bank staff (350 WTE in 2016/17 compared to 365 in 2015/16 and 461 in 2014/15). Staff sickness rates are high at 4.5% in 2016/17 compared to 4.8% in 2015/16, with an average of 11 working days per full-time post lost due to sickness.

Who let this happen?

As Southern Health struggles to emerge from the disastrous reign of Katrina Percy (and unlike when it is applied to football managers, the word ‘reign’ feels appropriate here), there are so many unanswered questions. Principally, how was the catastrophic direction Katrina Percy took Southern Health not only allowed to happen, but actively encouraged? There are so many people and organisations part of making this happen who have evaded any scrutiny or accountability. The murky deal for Southern Health to ‘absorb’ Ridgeway brokered by the Primary Care Trust at the time (remember that the other NHS Trust shortlisted to take it on was Calderstones). The replacement health service commissioners (Clinical Commissioning Groups) who studiously looked the other way while continuing to blandly hand over the cash. Oxfordshire social services commissioners who were so busy protecting their own reputations they neglected to do their jobs. The whole self-serving shiny panoply of the Health Service Journal awards circuit. Where were Monitor/NHS Improvement? The CQC? NHS England? The Department of Health? (who they?). Without #JusticeforLB and other campaigners wanting accountability and justice at Southern Health, Katrina Percy would still be in post now rather than advertising her wares as aStrategic Consultant on LinkedIn, and I shudder to think where Southern Health (and the people using its services, and its staff) would be headed.

I’m not privy to the internal workings of these organisations so I have no idea whether they have engaged in any real reflection on their role in this disaster, and whether they have changed what they do as a result. My question to them would be, not only could it happen again, but is it happening somewhere on their watch right now, and does it look to them like failure or success?