Employee ownership in the NHS

BMJ 2010; 341 doi: http://dx.doi.org/10.1136/bmj.c6759 (Published 25 November 2010) Cite this as: BMJ 2010;341:c6759
  1. Chris Ham, chief executive1,
  2. Jo Ellins, research fellow2
  1. 1King’s Fund, London W1G 0AN, UK
  2. 2University of Birmingham, Birmingham, UK
  1. c.ham{at}kingsfund.org.uk

Mutual models may help to deliver higher levels of performance

Although the coalition government’s plans to put general practices in charge of commissioning have attracted widespread interest and comment, its proposals for provider reform are equally radical. By 2013 it is expected that all NHS trusts will have become foundation trusts, and that providers from the independent sector will play a bigger part in delivering services to NHS patients. The government also wants to encourage employee owned healthcare providers, with the aim of creating “the largest and most vibrant social enterprise sector in the world.”1

These plans are part of a broader programme of public service reform, at the heart of which is a concern to move away from state ownership to greater diversity in how public services are run in pursuit of the “big society.”2 Cabinet Office Minister, Francis Maude, announced recently that the government will take this programme forward by putting in place a right for public sector workers to take over the running of their services.3 This builds on the previous government’s interest in mutualism in the public sector, and it signals a renewed commitment to explore alternatives to state ownership and for profit private provision.4

Cross party support for public service mutuals derives in part from concern that state run services can be slow moving and unresponsive to the needs of users, and in part from evidence that employee ownership brings benefits in terms of increased productivity, reduced staff absenteeism and turnover, and higher levels of innovation. Experience has shown, however, that employee ownership in itself is not sufficient to deliver the advantages claimed for mutuality.5 Equally important is staff involvement in decision making and the development of a culture of ownership that gives staff a real voice in the organisation.

Central Surrey Health is the longest standing example of an employee owned organisation created by staff previously employed directly by the NHS. Established in 2006 as a not for profit limited liability company owned by its employees, Central Surrey Health employs around 770 nurses, therapists, and support staff, who deliver care to NHS patients in the community under a contract with the primary care trust. As co-owners of the company, workers are involved in shaping the organisation’s future as well as delivering patient services.

The pioneering work of Central Surrey Health is being taken forward in 61 other initiatives in the NHS in England under the “right to request” introduced in 2008, which has enabled staff providing community services to set up social enterprises. These initiatives vary in their scope and focus, ranging from small scale projects aimed at meeting the needs of specific groups of patients to schemes where all the community services previously managed by a primary care trust are taken into employee ownership. The Department of Health has estimated that services to the value of £900m (€1060m; $1450m) that employ almost 25 000 staff will be affected.6

The future of employee ownership outside community services hinges on how the government takes forward its commitment to allow foundation trusts to go down this route. The white paper on NHS reform published in July stated that, “As all NHS trusts become foundation trusts, staff will have the opportunity to transform their organisations into employee-led social enterprises that they themselves control, freeing them to use their front-line experience to structure services around what works best for patients.”1 The implication is that, in future, foundation trusts will take different forms, with some retaining the current governance model involving multiple stakeholders, while others become employee owned.

Several practical barriers may get in the way of the government realising its ambition. These barriers include maintaining access to NHS pensions for staff making the transition, and ensuring that employee owned organisations are not at a disadvantage in the application of tax rules. Also important is providing access to legal, financial, and other advice to organisations considering going down this route, as well as support from employee owned companies in other sectors able to offer mentoring and guidance.

In promoting mutuals, the government will also have to tackle concerns that employee ownership entails the privatisation of NHS services. The support given by the former Labour government to public service mutuals suggests that these concerns may not be insurmountable, even if trades unions need to be persuaded that their members will benefit. The history of workers’ cooperatives in the labour movement may also make it easier to promote diversity in service provision through employee ownership than by giving investor owned companies a bigger role in healthcare.

Assuming that public service mutuals are here to stay, they need to be given time to evolve if they are to emulate the levels of customer service, quality, and innovation seen in organisations like the John Lewis Partnership. Giving staff a stake in the organisations they work for needs to be combined with much deeper staff engagement in decision making than has traditionally been the case in the NHS and real empowerment of front line teams. Changing cultures is much more difficult than altering structures, but it is essential if further improvements in performance are to be achieved. This has implications for workplace relationships and calls for leadership styles that foster collaborative approaches to problem solving.


Cite this as: BMJ 2010;341:c6759


  • Competing interests: All authors have completed the Unified Competing Interest form at www.icmje.org/coi_disclosure.pdf (available on request from the corresponding author) and declare: CH and JE had financial support from the Nuffield Trust for work cited in the editorial; no financial relationships with any organisations that might have an interest in the submitted work in the previous three years; no other relationships or activities that could appear to have influenced the submitted work.

  • Provenance and peer review: Commissioned; not externally peer reviewed.