NHS trusts — foundations trusts < Influencers contents | Print this page Foundation hospitals have proved to be a hugely controversial area for this government, with widely differing and largely polarised views being taken. Many questions have been asked such as: Will they lead to a two-tier service? Is the NHS to be privatised? And for NHS managers, how much financial freedom will they really have? The ideas around foundation trusts largely fell out of Shifting the balance of power. The emphasis was on giving local health communities more responsibility and accountability in delivering local healthcare. According to the Alan Milburn, Health Secretary at the time: ‘The establishment of NHS foundation trusts aims to bring about improved access to higher quality services for NHS patients by harnessing the creative energy and expertise of NHS managers and clinical staff from the highest performing NHS organisations’. The development of NHS foundation trusts Early applicants found that a three star rating would not be enough to guarantee foundation status, and aspiring candidates had to face a round of tough assessment to ensure their high performance was sustainable. This extra hurdle was put in place to deal with concerns about awarding foundation status to three star trusts that subsequently slip back to two stars. Public consultation documents are available on all applicants and these should be invaluable to both local hospital representatives and NHS influencers. The Treasury was concerned that the new ‘public interest companies’ might engage in a borrowing free-for-all, leading to possible bankruptcies. Talks between the Treasury, the Department of Health and Number 10 appeared to resolve this and it was agreed that a new independent regulator would be set up (now called Monitor). The new trusts would be run on a two-board model, with the main board supplemented by a local stakeholder council of around 20-30 local people representing community interests and staff. The Department
says that NHS foundation trusts are part of an integrated programme
of reforms aimed at improving performance and decentralising control
throughout the whole NHS. Foundation trusts will be part of the
NHS, subject to NHS systems of inspection and will treat patients
according to NHS principles and standards. However, they will be
controlled and run at a local level by people from the local community
and from the trust itself — not at a national level. ‘Localism’
is the new buzz phrase. Before the summer parliamentary recess in 2003, nearly 50 rebel Labour MPs, led by former Health Secretary Frank Dobson, defied the government and voted against plans to introduce the new trusts. According to evidence submitted to a Commons inquiry, scepticism about foundation trusts has increased since the government first published its guidance. For instance, written evidence from the NHS Confederation and the NHS Alliance submitted in early 2003 to the Health Select Committee's inquiry on foundation trusts clearly shows that these two organisations were particularly worried about the level of attention on the role of the acute sector at the expense of PCTs. ‘The principle that people get much more freedom from central control is absolutely right. However, if it is right for some, it is right for all. There is no point just developing the hospital end of the system. If you are going to have foundation trusts, you also need strong commissioners,’ said Nigel Edwards, Confederation policy director. The Commons Health Select Committee then published its highly critical report on foundation hospitals. The government’s response was not really a reply to the significant number of concerns, but more of a replay of the policy in place and a list of further intentions. One of the many amendments to the Bill was the requirement to have a ‘time-out’ after the first wave and to put in place a 12-month evaluation. This 12-month review should examine not only the experiences of the first foundation trusts but also their wider impact on the rest of the health economy. Some commentators have said that an appraisal after only 12 months is silly. This moratorium will mean that no more foundation hospitals will be created until after the next general election. So we will have a two-tier and two-speed service for a while now after all! Some are also worried that foundation trusts will have rather a botched birth because their freedoms will now be too restricted. Around 40 foundation trusts are expected to be in place by April 2005. A guide to NHS foundation trusts The DH has produced A guide to NHS foundation trusts, a useful easy-to-read overview on foundation trusts. NHS influencers should read this document. The ten key points are interesting — foundation trusts will:
Despite the moratorium, the DH has said that within five to 10 years, foundation hospitals will become the norm. But doctors in Spain, where the idea has come from, are surprised that the UK is going ahead with an idea that ‘has caused so many problems’ there. The varying views on foundation trusts Foundation hospitals remain a central problem for New Labour and there is real tension at the heart of this policy. On the one hand, the government has presented the new trusts — especially to managers — as independent entrepreneurial organisations, whilst on the other hand, they have been sold — especially to sceptical MPs and the public — as a new form of local representative organisation. For NHS acute trust managers the problems centre around the growing complexity of governance arrangements. Are we heading back to an age of consensus management? It also looks like local authorities will have a seat around the table for the first time. Some commentators have suggested that this move from a national health service to a ‘national health system’ presages the most fundamental change to the NHS since it was created and that the NHS in five years time could look radically different. If independent foundation trusts can say no to the DH then performance monitoring will simply stop working, they say. Pressure to create foundation PCTs would also build and there would be no reason why foundation PCTs should then not only commission secondary care but provide primary care, and then what is the function of the SHAs? Jennifer Dixon, policy director of the King’s Fund, also agrees — see her BMJ editorial. There were some interesting comments in the HSJ too last year too from Dr Dixon on the various ‘policy currents’ following the publication of their paper, Can market forces be used for good? ‘It would be a mistake to think that the future holds a 1991-style internal market with knobs on. The chronic care challenge, sharper market incentives, plus the possibility that there will be a diversity of commissioners of NHS-funded care, are all likely to spawn new vertically integrated partnerships between providers. The future then could be no more, or less, than effectively regulated, managed care, with all the permutations that brings.’ The King’s Fund has also produced a useful briefing on foundation trusts whilst the New Health Network has published Foundation trusts: a new era for stakeholder engagement? Professor David Hunter, professor of health policy and management at Durham University, had a real go at foundation hospitals in the HSJ in 2003: ‘The closer one looks at the policy on foundation hospitals the more it resembles the Swiss cheese model of policy making. It is riddled with holes.’ He suggests that this does not augur well for a policy quite so confused in its intent and subject to so many conflicting interpretations. ‘Not that this has ever stopped policy-makers imposing their cherished schemes on a sometimes reluctant NHS.’ Also see In place of Bevan? for a detailed analytical and highly negative critique from Professor Allyson Pollock and her team at University College London. It is argued that the latest reforms pave the way for multiple providers of healthcare and that it may even herald the end of Bevan’s vision for the NHS — a major ‘policy reversal’ by New Labour. An abridged article of this can be found in the BMJ: ‘NHS and the Health and Social Care Bill: end of Bevan's vision?’ More supportive comments were made in a The Sunday Times editorial (04/05/03) along with a one-page spread: ‘Foundation hospitals have become a touchstone of the government’s commitment to reforming public services. The Prime Minister has correctly identified the NHS’s central problem. Almost everything nationalised by the Attlee government in the post-1945 orgy of extending the boundaries of the state has been privatised or broken up. Except that is, the NHS, which has trundled along as an inefficient, centrally run command and control model that would be more at home in North Korea than a supposedly modern western economy. The government purchases healthcare and also provides it, and it does neither well… What matters to patients is not who provides the care that the NHS funds but whether hospitals are clean, efficient and offer timely, quality treatment.’ Foundation trusts will not be allowed to ‘take over the world’ and damage commissioning relationships, according to the independent regulator. Mr. Moyes stressed that he would intervene if a foundation trust refused to act in the wider interests of the NHS, as laid down by its operating licence. And he urged SHAs to back PCTs if they ended up struggling to negotiate with the new trusts: ‘The lack of commissioning capacity may mean that consortia need to develop to do the complex commissioning. It is not for me to say, but there may be a role for SHAs to provide support for commissioners’. He has criticised the quality of non-executive directors amongst the first tranche of foundation trusts. It would be well worth NHS influencers having a look at the Monitor website as there are direct links to each of the foundation trusts. The information will allow some fine-tuning of account management plans. See DH press release 2004/0280 for the full list of the second wave of 20 or so foundation hospitals going live. Professor Rudolf Klein has argued strongly that membership of the governing boards will be unrepresentative and skewed towards those with intense, possibly atypical, views about the NHS and will reflect the organising activities of pressure groups. He also predicted that apathy might rule. But foundation trusts that have allowed people as young as 12 to be members of their local trust membership boards have been labelled ‘crackers’ by the Commons Health Select Committee. The ‘democratic mandate’ of the first wave has been slammed by former Health Secretary Frank Dobson, following seemingly widespread apathy over the trusts’ board of governor elections. Apparently around 20 per cent of the publicly elected seats were uncontested, or have been left vacant because no candidates came forward. There were mixed views from foundation trust medical directors on the effect of foundation status, with some saying that community engagement and patient input is the future; others saying the most important thing is actually the relationship with primary care. Isn’t it both guys? Either way, the role of these medical managers is likely to change. Some foundation trusts have already begun to say that they are failing to see the benefits of their newfound status with a few chief executives complaining of ‘unfair’ treatment from the DH, interference by SHAs and confusion between regulatory bodies — foundation trusts were supposed to be the vanguard of a policy shift promising greater autonomy for NHS organisations! They were fed up too when it was suggested that they would not get their extra £1m for keeping their three star status, although this did happen after a DH U-turn. Brewing also is the possibility that they could lose millions of pounds under proposals to cap any ‘windfall’ savings from being under national tariff prices in payment by results. SHA chief executives are urging acute trusts to redistribute these monies to the local health economy and a DH review (driven by SHAs) is also suggesting money being given back to PCTs. As with the Tory internal market years, it looks like the centre just cannot let go and may already be loosing its nerve over more freedom and devolution. Some foundation trust chief executives have said that diluting any further the freedoms they have in this way will destroy both foundation trust and payment by results policies. The remit for the 12-month independent review of foundation trusts has now been set by John Reid, with the impact of the first two waves of 20 on the whole local health economy being examined by the Healthcare Commission. Incredibly early, the report will be presented to Parliament in autumn 2005. The Health Secretary has effectively ‘breached’ the moratorium rules by announcing that mental health trusts can be in the next wave (because all trusts are to be foundation by 2008) and so if they apply by this September then the Health Secretary could be in a position to sign them off immediately the Healthcare Commission’s review is out of the way. As to the future, some commentators have suggested these trusts will eventually merge with their PCTs and that the purchaser-provider split will finally become abolished in England. So note the following in a quarterly bulletin from the BMA’s health policy and economic research unit (Vol 18 No 1 spring 2003): ‘Meanwhile, the prospect of foundation trusts merging with PCTs is appearing over the horizon. This model of vertical integration, which would have strong similarities with the health maintenance organisations (HMOs) of the USA, seems at odds with the current policy trend of commissioning services from an increasingly diverse range of provider. However the development of HMOs in the USA itself suggests that the drive to contain costs ultimately leads to long-term agreements with preferred providers which effectively constrains the diversification of provision.’ Bearing all of this in mind, we do certainly seem to be in for yet another period of major change and for companies some judgement may be needed here as to the real impact of these new hospitals. Certainly new levers are now in place around hospital admissions and local prescribing policies may be subject to change. Foundation trusts will also be getting involved in local marketing initiatives and there may well be opportunities here.
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