Will foundations’ patients come before creditors?

The new insolvency regime for foundation trusts at risk of going bankrupt must reflect their directors’ key obligation to provide healthcare, the Association of Chartered Certified Accountants has warned.

Consultation on the proposals closed in May and will need secondary legislation to become law. ACCA’s head of health sector policy Sharon Cannaby queried whether the government ‘really expects the directors of foundation trusts in financial difficulties to put the interests of trust creditors above the interests of all other stakeholders and to make the directors personally liable for the trust’s debts if they do not do so’.

In the case of a significant outbreak of infection at a hospital the directors might take the decision to close part of the building. ‘This would temporarily stem income flows, putting the organisation at financial risk, but the decision would have been out of necessity to safeguard public interests,’ said Ms Cannaby.

The government has recognised that as providers of NHS care, foundation trusts need an insolvency regime different to that for limited companies. Its proposals aim to ensure that NHS patients are protected by stopping ‘essential services’ being sold off to settle money owed to creditors.

ACCA stressed that the provisions of the Insolvency Act ‘should be amended to recognise the crucial differences between the position of directors of trusts as public benefit corporations and that of directors of limited companies’.

As healthmatters went to press, the independent regulator Bill Moyes was considering applications for foundation status from a further 13 NHS trusts hoping to become foundation trusts from July 1. These include Addenbrooke’s, Calderdale and Huddersfield, City Hospitals Sunderland, Gloucestershire Hospitals, Guy’s and St Thomas’, King’s College Hospital, Papworth Hospital, Sheffield Teaching Hospitals, Southern Derbyshire Acute Hospital Services, The Queen Victoria, University College London Hospitals and University Hospital Birmingham.