The British Geriatrics Society in submitting this evidence to the Health Select Committee wishes to comment about two aspects of the proposals.

  Firstly, in general terms the Society, is concerned to note that when a Foundation Trust fails to fulfil its financial duties, there is provision to dissolve the Board of Governors as a first step; however failure to provide services which are clinically adequate has no such provision except in extremis (para 3.37). This seems a poor balance of risks for patients.

  Likewise, in general terms, the reintroduction of cost and volume contracts seems a costly retrograde step towards the internal markets of the 1980s. As the population ages and technology advances, volumes are bound to increase, and without a concomitant increase in financial resources for commissioners, measuring activity in terms of volumes rather than outcomes, which stimulates innovation will not stimulate change and modernisation.

  Secondly, the British Geriatrics Society is concerned about the risks for potential adverse effects that these proposals may have on the care and well being of older people.

  The risks arise from a combination of two fundamental strands in the proposals:

(1)  The freedom that Foundation Trusts will have to make a profit (ie "retention of operating surpluses" and "retention of proceeds from asset disposals"—paragraph 5.2). This freedom will be seen as the major incentive for many managers, including some clinician managers, to aspire to Foundation Trust status.

(2)  The replacement of negotiated Service Level Agreements with legally binding "cost-and-volume" contracts (paragraphs 4.4, 4.5 and 5.29). The inflexibility of such contracts will put Foundation Trusts under even greater pressure than other NHS Trusts to succeed financially.

  This combination will inevitably lead Foundation Trust managers to attempt to avoid contracting for the provision of services for financially risky patients ie vulnerable frail older people with multiple problems and indeed all those with chronic illnesses. This is well known to happen in American health organisations that are successful financially, and leads to premature discharge to Nursing Homes and other institutional care.

  The Society recognises that the licence for Foundation Trusts will include a schedule of services to be provided, which initially is likely to mirror existing services provided under the Service Level Agreements. However subsequently the guidance notes that existing services do not have to be expanded by the Foundation Trust without its express intention and indeed para 3.7 acknowledges that Foundation Trusts may try to make "substantial changes in provision of existing clinical services" that may "lead to Primary Care Trusts being unable to commission services to meet the needs of local people."

  The Society does not believe that there are adequate safety nets for services for vulnerable people in these proposals, thus endangering one of the fundamental principles of the NHS, to provide a comprehensive range of services.

  The only safeguard in fact is that that Foundation Trusts will be under an obligation to provide "regulated services". However these will be "particular" to an individual Foundation Trust "specified in a schedule to its licence" (paragraph 3.8). Thus the commissioners, largely Primary Care Trusts, will be responsible for defining these regulated services for a particular Foundation Trust. Experience so far suggests that PCT's have inadequate resource and expertise to enable this to happen in a way, which is not led by the powerful Foundation Trusts.

  The British Geriatrics Society, which represents specialist physicians in health care in older people, is thus very anxious about these proposals, which if widely adopted, would be greatly to the detriment of the quality of patient care for many of the most vulnerable in our society.

6 January 2003