“The incentives for individual trust leaders are blunt. The only criteria by which trust chief executive pay is set is the turnover of the organisation. Neither the timeliness of access nor the quality of care are routinely factored into pay. This encourages organisations to grow their revenue rather than to improve operational performance.”
— Independent Investigation of the NHS in England, p. 129

There was a section in Lord Darzi’s review of the NHS that stuck with me. It pointed out something quietly powerful: NHS trust CEOs aren’t paid based on outcomes. They’re paid based on the size of the budgets they control. The bigger the budget, the bigger the pay. It’s a simple and scalable logic, like how we expect someone managing a team of 20 to be paid more than someone managing 10. More complexity, more risk, more money.

But has this created unintended consequences?

1. Not Letting Go

If your pay reflected the number of people or services under your control, would you voluntarily shrink it? Even if you could do more with less, even if it made clinical or operational sense, would you? Human nature kicks in. NHS leaders are no different. If they’re rewarded for scale, not sense, why would they give services away to someone else?

2. Hoovering Up Services

When new initiatives are launched, such as virtual wards or community diagnostics, trusts often scramble to pick them up. Why? Because more services mean more turnover. And more turnover means a bigger pay band. In areas with multiple providers, larger trusts tend to win by default. The incentives are aligned to acquire. Not necessarily to collaborate.

3. Internal Outsourcing to Retain Control

Sometimes trusts outsource these services, to private providers or, bizarrely, to other NHS organisations, but retain the budget line. The trust top-slices the funding, then passes the delivery to someone else. It’s not always wrong. Sometimes collaboration or scale makes sense. But sometimes it’s about keeping it on their spreadsheets, not the service effective.

A New Framework, Same Foundations

In April 2025, a new pay framework came in for very senior NHS managers (yes that is what its called). It tries to shift pay closer to performance. There’s now a 10% bonus for exceptional outcomes, and restrictions on pay rises if the trust is underperforming. But let’s be clear. Base pay still scales with budget size. Its performance layered onto the same structural foundation.

And here’s the tension. One of the government’s goals is to shift services out of hospital and into the community. That means shifting money out too. Will trust leaders let that happen easily? Or will they resist, politely or structurally, because losing the budget risks losing their salary?

That’s the quiet tussle worth watching.

References

https://www.gov.uk/government/publications/independent-investigation-of-the-nhs-in-england

https://www.england.nhs.uk/publication/nhs-very-senior-managers-pay-framework/

Incentivised to Hold On: Why NHS CEOs Resist Letting Go

The NHS says it wants care closer to home, but its pay structure rewards holding on, not letting go.

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