Briefing

All you need to know about…

foundation hospitals

What’s all the fuss?

Health secretary Alan Milburn has pretty much staked his political credibility on the idea of foundation hospitals. Risking the wrath of his own sceptical backbenchers and provoking damaging rows within the Cabinet over their borrowing powers, Mr Milburn insists his Big Idea is just what the NHS needs. The rhetoric certainly sounds attractive. Reaching out to Labour stalwarts, Mr Milburn has invoked the legacy of Nye Bevan and even suggested his new offspring will be akin to lovable, old co-operative societies. Opponents – of whom there are many – fear that while the ideology smacks more of Thatcher’s divisive NHS reforms than Bevan’s vision of equality in healthcare, the reality could be even more painful.

What’s behind it all?

The NHS is the ‘greatest post-war reform’, liberating millions from fear of illness, according to Mr Milburn’s guidance on foundation trusts issued in December. But its weaknesses – inequalities, lack of accountability and disempowerment of staff – remain. Foundation trusts will place hospitals in the hands of local people under a ‘social ownership’ model. Freed from Whitehall control, they will have greater powers to tailor services, raise capital and vary staff pay while still being subject to NHS clinical standards and inspections, Mr Milburn says. Freedom with safeguards is the mantra.

How will they be run?

Each foundation trust will have a self-determined boundary area. Within this area any resident – and anyone who has been a patient in the past three years – can register as a member. These members will elect representatives from among themselves as the majority section of a board of governors. The remaining governors will be representatives of staff and local primary care trusts. The board will elect the chair and non-executives of a management board – which will be responsible for day-to-day running – and approve the appointment of a chief executive.

What freedoms will they have?

Freedom from Whitehall control – from all the daily missives and targets issued by the secretary of state – is the key attraction. Foundation trusts will also be able to retain year-on-year surpluses, sell off assets to an agreed maximum, raise public or private capital and offer staff extra pay or other incentives.

And what are the safeguards?

Foundation trusts will be licensed and monitored by an independent regulator, a new post to be appointed by – you guessed it – the secretary of state. The regulator will ensure foundation trusts provide key NHS services, called ‘regulated services’, assure these meet accepted clinical standards, set borrowing limits and approve disposal of assets. Foundation trusts will have legally binding long-term service agreements with PCTs and will be subject to monitoring by the Commission for Healthcare Audit and Inspection. They will have to stick to NHS staff terms and conditions.

Who’s up for it then?

Only acute trusts which have attained three stars in the NHS league tables are eligible. They had to express an interest by the end of February. The Department of Health has not yet released names but a number of prominent hospitals have revealed an interest, including University College London Hospitals NHS Trust and Bradford Teaching Hospitals NHS Trust.

What’s in it for them?

Not a lot, as far as UCLH is concerned. The trust’s board has ‘considerable reservations’ about the scheme, its chair Peter Dixon told the health select committee last month. He warned that allowing foundation trusts to pay higher wages could unleash a pay spiral putting neighbouring hospitals at risk. In addition, inviting all and sundry to vote and stand for election as governors would expose hospitals to the risk of ‘entryism’ so that well-organised interest groups could take control and impose policies at odds with the needs of local people and staff. As Mr Dixon memorably warned MPs: ‘I could be replaced by the man in the monkey suit.’

With friends like these who needs enemies?

Other applicants are obviously more gung-ho, arguing that foundation status will unleash innovation, introduce direct local democracy and allow managers to reward good service. They insist inbuilt safeguards and the directions of PCTs will keep foundation trusts in check.

What do others say?

Mr Milburn has stoked up some formidable opposition. Some weighty Labour backbenchers, including former health secretary Frank Dobson and health select committee chair David Hinchliffe, oppose the plans. They warn of a two-tier NHS where foundation hospitals poach staff and patients while their non-foundation competitors spiral into decline, ultimately becoming ‘failing hospitals’ like the ‘sink schools’ created by education reforms. The BMA agrees, warning that the plans could repeat the disadvantages of the Tories’ internal market. Health union Unison echoes this, fearing ‘elitist’ foundation trusts will replace co-operation with competition and privatisation. The distinguished NHS commentator Professor Rudolf Klein has warned that the new governing bodies will be unrepresentative, making foundation hospitals prey to organised pressure groups and creating conflicts between staff and patient interests.

So what’s the verdict?

Power to the people may sound cute in principle but only time will tell how that power is used – or abused. While foundation trusts may ensure that Bevan’s proverbial bedpan is no longer heard clanging in Whitehall, its contents may still hit somebody’s fan.