Feature

Building on shaky foundations

How do first wave foundation trusts plan to engage their stakeholders? Martin Rathfelder and Pauleen Lane have been through their applications to find out

Escaping from the frying pan of Whitehall control into the fire of local politics may be a difficult transition for the first wave of foundation hospitals. Some of these august institutions, originally erected by public subscription, were nationalised in 1948, promised independence in 1990, and have been reconfigured every other year since. What effect will the introduction of democracy have on them?

What are foundation hospitals for?

The motivation for establishing foundation trusts seems to have come from managers who wanted to be free from control, encouraged by politicians who wanted to be free from blame.

Professor Paul Corrigan, formerly of the Public Management Foundation, and now special adviser to the health secretary, is thought to be responsible for formulating the idea.

Many three-star hospital trusts have jumped on to this bandwagon, reasoning from the experience of previous reforms that benefits will be made available to first-wave institutions but denied to laggards.

It is clear from the bid prospectuses that not all would-be foundation trusts have fully understood the concept as it has developed. But they may have recognised the guidance issued by the Department of Health as echoing almost exactly that issued to the first wave of NHS trusts in 1990 (when then health secretary Kenneth Clark is reported to have said that hospitals did not have constituencies).

Proposed freedoms for foundation trusts have considerably reduced in the past two years because of the political tussles. But notions of community ownership and mutualism have developed under the influence of former public health minister Hazel Blears,¹ Labour Party chairman Ian McCartney and the co-operative movement (in a rather unexpected alliance with the Institute of Directors).^{2 3} According to Peter Kellner, mutualism represents the ‘third way’,⁴ the essence of New Labour. Whether foundation hospitals will accord with the notion that individual and collective well-being is obtainable only by mutual dependence remains to be seen. Mutualism, community ownership and not-for-profit status are not identical. It seems likely that foundation trusts will have far more in common with existing not-for-profit organisations, such as housing associations and chartered corporations, than with any mutual.

The proposed governance arrangements for foundation trusts have been heavily criticised. ‘The arrangements are wholly inadequate to ensure that these institutions are really held to account by local people. The new “members”, who will be the legal owners of foundation trusts, will be a self-selecting group drawn from a constituency proposed by the trust itself. The three-tier governance structure, in which the members elect representatives to the governing board, which itself only has a loose influence over the real holders of power — the management board — means that most members will be far removed from decisions about services,’ argues the Democratic Health Network.⁵

And health trade union UNISON says: ‘The governance framework for foundation trusts will not lead to greater local accountability or social ownership. For example, foundation trusts will be able to run with only a very small number of members in relation to the population that uses them.’ ⁶

But if the alternative is the status quo, where non-executive board members are appointed by the NHS Appointments Commission and are accountable to nobody except the health secretary, it is not clear why these critics prefer it.

There are not going to be sudden changes: the Health and Social Care (Community Health and Standards) Act 2003 stipulates that there should be a transitional period during which the existing non-executive trust directors become directors of the foundation trust for a year or for their unexpired term of office, whichever is longer.⁷

Role of the regulator

An independent regulator will scrutinise the proposed constitution and governance arrangements before a foundation trust is established. It is not clear how he will evaluate proposed governance arrangements, except as a point of appeal for any election irregularities.

Nothing directly comparable exists in the UK, because these organisations are being asked to set up their own systems of governance. Local authorities do not set up their own constituencies – the Boundary Commission for England does it for them, against notionally uniform criteria. Schools’ parent governors are elected (if there are enough candidates) from a constituency that is fairly clearly defined and from which all members are invited to participate.

Perhaps more comparable are ballots of parents and prospective parents on the future of selective schools, and the votes for the transfer of housing stock away from local authorities, where existing but not potential tenants have a vote.

But hospitals are much more complex than schools or housing services, and what is on offer here for democracy is an ongoing responsibility, not just a one-off event. It remains to be seen how much involvement patients and the public will want in the running of hospitals — and how much the institutions themselves can cope with.

The health secretary is responsible for making regulations governing the conduct of elections for foundation trusts’ boards of governors. The Department of Health has published guidance on the electoral process for the first wave of applicants, but detailed regulations are not yet available.

From Wyre Forest to Tatton

The first consideration for foundation hospitals will be to establish their membership. This will depend on their own idea of their stakeholders’ constituencies. The Royal Marsden Hospital rather ambitiously proposes to include the whole of England, but most of the trusts claim less territory. The act specifies that there must be a minimum number of members in each constituency, but doesn’t say what should happen if insufficient are recruited.

The constituencies will overlap, so in some cities the busy citizen could be a member of up to a dozen different foundation trusts. Given the drift towards a market economy, these trusts may have divergent or competing interests, and it will be interesting to see if hospitals have to canvass public support for plans that may not be welcomed by neighbouring institutions canvassing for rival plans.

The requirement that members may be obliged to pay a pound has been dropped, so the possibility of signing up people on an opt-out basis is now viable. University Hospital Birmingham is proposing to invite all new patients to become members in this way and expects to be able to recruit up to 10,000 a week.

If successful, of course, recruitment on this scale would answer those critics who claim that foundation hospitals will become the property of a self-selecting oligarchy.

This recruitment method is unlikely, however, to lead to as much commitment to the hospital as the opt-in method. And there are real organisational and financial costs to mass democracy: Birmingham is expecting to pay up to £3 a member each year, so the annual bill could easily come to £1m for a large hospital. It seems likely that the work will be contracted out, possibly to local authorities.

In the published prospectuses of the 25 remaining candidates for the first wave, all staff are proposed as members, normally including contractors and temporary staff. Some propose excluding those with short-term contracts — likely candidates for sex discrimination claims. Some include volunteers within the staff definition. Proposals differ as to whether staff have to apply for membership or will be given it; some even propose that staff are contractually obliged to be members.

Most do not have an age limit for membership and some explicitly envisage the possibility of children being governors. Others require their members to be over 16 or on the electoral register (which means over 18).

Many have a touching faith that the whole population of their area will be on the electoral register, which is unlikely to be true. In some areas, the proportion of people who are on the register can be as low as 50 per cent. And the name on the register and that given to the hospital may not match.

The most common public membership proposal is to include all patients treated in the past three years, plus all residents in a catchment area. Most proposals make some provision for carers, either in addition to or instead of patients, which could be problematic if there is any argument about who is a carer.

This membership is then usually combined into one constituency. If there are separate constituencies by category, people have to choose which one they are in.

Fifteen of the 25 applicants propose to divide the governors representing the public into constituencies, some on a geographical basis and others by age, ethnic group or medical condition. Yet the act only permits the public to be divided geographically, and says that electoral wards must be used.

Many of the trusts’ documents show a lack of familiarity with the technicalities of running elections, which require firm and unambiguous definitions — some constituencies overlap or lack clear definition.

Some propose using primary care trusts as the constituency, not realising that PCTs are based on registered, rather than resident, populations and therefore do not have definable boundaries.

Several suggest that anyone who has ever been a patient or carer could be a member, or that anyone with a genuine interest outside the specified area will be considered. But it is hard to see how genuine interests could be differentiated from obsession, or what sort of bogus interest they want to exclude.

Staff cannot be members in the patient or public category, but it is not clear how they could be excluded as the list of patients or residents would not identify staff, and there is no indication of what would happen if people were to change from one category to another.

Of course, all this would be made much easier if we had identity cards. In the meantime, even the best data-matching programmes will not weed out all people in more than one constituency — geographic or by category — and voting early and often may yet make a come-back.

Will voting make any difference?

Media reports last year said local NHS chiefs had warned ‘they were open to takeover by Trotskyists and other extremist groups’.8 It was not clear what prompted the story, and no evidence of entryism was produced, but clearly it would not be difficult for an organised group to make a big impact in a small electorate, especially if it was not divided into separate constituencies.

However, it seems more likely that the level of participation in initial elections may be embarrassingly low. The 10 hospitals featured in the article claimed 15,195 members between them. There is clearly a danger that voting will be so low as to deny any legitimacy to those elected.

The most obvious group who might want to take over the board of a hospital would be the staff, whose interest is more enduring than that of most other parties. The staff constituency on its own is a small minority of the governing body, but even if staff don’t break the rules by pretending to be members of the public, they could quite legitimately recruit their friends and relations. In the event of an industrial dispute, it would be surprising if there were not attempts to involve the governing body on one side or another.

Up to now there have been no reports of any political organisations planning to put forward candidates for foundation hospital boards, but it is hard to believe this won’t happen in the long run. No politician will leave a platform for election unchallenged.

The guidance envisages candidates declaring membership of any political party and submitting statements about themselves that will be circulated to members. The prospect of circulating material at public expense to large numbers of voters will also attract both conventional and non-conventional politicians of all kinds. We are also likely to see electoral activity from the various patients’ organisations, some of which are large and well organised.

But political organisation and influence are inversely related to age and infirmity. Those most dependent on the NHS are those least likely to get elected. Trusts are encouraged to recruit members from sections of society traditionally excluded, but it is hard to see them being able to do much in this direction. It seems more likely that members of foundation hospitals will resemble members of the National Trust — affluent, white and middle-aged — but who leave governance of the organisation to the gentry.

There is a lot of political mileage in being seen to defend your local hospital, as Richard Taylor’s election as independent MP for Wyre Forest testifies. It is, however, unclear what long-term impact foundation hospitals, and even more the financial flows regime, will have on reconfiguration debates.

Giving patients more choice may rapidly expose some institutions as not financially or clinically viable. If a hospital, or part of it, is struggling we can envisage candidates standing on a ‘Defend Our Hospital’ platform, although it is not clear that success in such an election would necessarily help the institution’s chances of survival. Perhaps standing for election to the board of a rival establishment and attacking it from within would be more productive.

No politician wants to be seen to be closing hospitals, and many facilities that should have been closed for sound reasons have been dramatically reprieved on the eve of an election. However, if foundation trusts are regarded as free-standing players in a market place, it may be that a future health secretary will take the attitude that if patients choose to go elsewhere such a hospital should close — and it will be nothing to do with him or her.

The wrong foundations?

If we are moving to a health service with diverse providers and a marketplace of sorts, it is hard to see why providers should be democratically controlled. Democratically controlled organisations, such as the Co-op, have not been more conspicuously successful in the market than those with more conventional structures.

Local authorities are the biggest democratically controlled organisations in the UK. Opinions vary about their effectiveness, but for the past 50 years governments have worked hard to persuade or coerce them into separating their direct service provision from the elected side, which is supposed to commission or purchase services.

Most hospitals do not have a clearly defined catchment area, and district general hospitals in their present form are clearly not going to be with us in the longer term. More routine work will be handled in primary care and specialised work will go to regional centres serving a wide area.

Do we need a complex and potentially expensive structure to persuade us that we own the NHS? Most people think they own it already. Will this structure enable patients and the public to challenge the interests of professionals? An injection of democracy into the secondary sector will probably increase the power of hospitals at the expense of unelected PCTs. The commissioning organisations, which exist to deal with the needs of a defined area, should be democratically accountable — they are better placed to challenge the interests of providers. Roll on the foundation PCT!

Martin Rathfelder and Pauleen Lane are writing in a personal capacity. For further information visit www.sochealth.co.uk