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Planning for a new hospital foundation trust is taking place right now near you, and the intention is that trust status will become the norm in the next few years. Initially this will apply to acute hospitals, but it will then extend to other NHS provider trusts and probably to primary care trusts (PCTs). This is a matter of some consequence for the world of social care, as well as for local government more widely, and it would be unwise for social care interests to ignore what is going on.


The notion was first mooted by the health secretary, Alan Milburn, in a speech to the New Health Network in January 2002, when he said the chief executives of the highest graded three-star hospitals had asked him for greater freedoms and independence. In another speech in May, he declared his support for the concept and outlined the nature of such bodies. They were to have privileges denied to other hospitals: they would be free of legal direction from the secretary of state; freed from an excessive number of prescriptive central demands; free to retain proceeds from land sales, to borrow and make decisions about capital investment; and free to vary national pay deals by paying staff more. And last week, the Health and Social Care (Community Health and Standards Bill) was published - the first stage towards the legislative existence of foundation trusts.

Guidance has been issued indicating that foundation trusts will be run by a board of governors elected from a "community membership" open to all who live in the area or work for the hospital - a move described as the rebirth of popular socialism.^1,2

This might all seem marginal to what goes on in social care, but if the past few years have taught us anything, it is that what happens in the NHS today will affect social care tomorrow. The creation of primary care groups, PCTs, care trusts and the introduction of fines for bed-blocking all bear testimony to this. There is a strong danger that the granting of independent foundation status to one part of a local health and welfare economy will undermine partnership working across a "membership community". Acute hospitals are already the weakest link in local partnership chains, and giving them the additional freedoms associated with foundation trust status will increase their insularity to the detriment of the wider community.

The crucial local relationship will be that between a foundation trust and its corresponding primary care trust. Those hospitals acquiring foundation status will not be subject to performance management by the Department of Health or strategic health authorities, but instead will be held to account for delivering the outputs agreed with PCTs and others as part of the commissioning process.

These outputs will be agreed with PCTs and formalised under legally binding agreements that will, according to the guidance, introduce greater clarity into the relationship. But, generally, PCTs have yet to establish a strong commissioning role in relation to their local acute trusts, and these proposals will weaken their position.

Foundation trusts will enter into legally binding contracts with PCTs for five to seven years. The imperative is to give foundation trusts financial stability to attract private sector investment rather than to ensure a stable and coherent local planning environment. Accordingly, the potentially crucial alliance between PCTs and social services will be weaker.

Little thought seems to have been given to the relationship between foundation trusts and the wider local spectrum of commissioners and providers of health and welfare. The guidance contains the usual exhortation to be a good partner. One of the tangible ways in which such sentiment could be expressed is to ensure the main stakeholders - especially local government - are represented in governance arrangements, but this is left entirely to the trust.

There are two formal constraints on unilateral action by a foundation trust. First, the "duty of partnership" that is already laid upon NHS bodies. The guidance says: "In line with its statutory duty of partnership, a foundation trust will be expected to use new freedoms in a way thatÉdoes not undermine the ability of other providers in the local health economy to meet their NHS obligations." Elsewhere, it is stated more strongly: "As a condition of legislation and the licence a foundation trust will be subject to a general requirement to co-operate with other public service providers and NHS bodies." Particular mention is made of NHS and social care providers and commissioners, education and training bodies and the Department for Work and Pensions.


Second, like other NHS bodies, a foundation trust will be expected to develop a co-operative working relationship with the local overview and scrutiny committee. It remains to be seen how tough the proposed independent regulator of foundation trusts will be on the issue of partnership working, but it would be naive to expect much more than lip-service.

The potential insularity of foundation trusts from the rest of the local health and welfare economy will increase as the promised roll-out of foundation trust status unfolds. Ministers are coy about how widely the status will be awarded, but the guidance states: "As more NHS trusts improve, more will be eligible to apply for foundation trust status and, in later waves, eligibility will be opened up to other types of NHS trust." Indeed, it is further suggested that "in time, foundation trust status could also be opened up to organisations that are not currently part of the NHS".

It seems, then, that the charge of elitism levelled at the first wave of foundation trusts is to be countered by making foundation status the norm for all NHS bodies and for some unspecified non-NHS bodies.

Such an extension of foundation status would replace elitism with a local administrative nightmare. It is bad enough to have one part of the local public sector separately and indirectly elected. To have similar arrangements for many bodies in an area would take us back to the administrative entanglements of the 19th century. Then, local acts of parliament established all kinds of ad hoc authorities - some elected, some appointed - each providing a specific service within a particular area. These included improvement commissioners, boards of guardians, local health boards, and sanitary districts. Such fragmentation collapsed under its own weight and resulted in the Local Government Act 1888, which created 62 county councils and 61 county boroughs, all directly elected.

This lesson from history points to a more coherent way of shifting power from the centre to local communities.

One option would be to focus on coterminosity and local authority representation on traditional NHS boards. Essentially this is the Welsh model. From next month the five health authorities will be replaced by 22 health boards which match the boundaries of the 22 councils, with town halls guaranteed strong representation.

A second option would be to use a revitalised and modernised local government system as the overarching body responsible for local health and welfare - the model that is found in most European countries and one that has the virtue of strengthening direct democratic representation. It is hardly surprising that voters are apathetic about their local councils in the most centralised state of western Europe.

What these options offer is a chance to avoid the reinforcement of a hospital-dominated health service that foundation trusts will bring. Hospitals are no longer the stand-alone institutions they once were. The aim today is integrated hospital, primary, community health and social care; it is about whole-systems working, not competitive bodies; it is about building networks of professionals across agencies and traditional boundaries, not about locking them into a series of local silos; it is about local communities feeling a sense of ownership for facilities and services across a locality. This is the real challenge of "local ownership" and decentralisation. 

Bob Hudson is principal research fellow at the Nuffield Institute for Health, University of Leeds.

References

¹ Department of Health, A Guide to NHS Foundation Trusts, Department of Health, 2002

² I McCartney, "Keep your nerve: this is the rebirth of popular socialism," The Guardian, 12 December, 2002