Oceans apart

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

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