INTRODUCTION

  1.  The NHS Confederation broadly welcomes the principles behind the Government's new policy on Foundation Trusts. We welcome the innovation and sense of local ownership that the Government is trying to encourage through Foundation Trusts, and the commitment to a more decentralised NHS.

  2.  Foundations should be seen in the context of a wider, more radical agenda to develop choice, diversity of provision and a system of payment by results in the health service. These proposals offer some exciting opportunities to improve the quality of patient care, but there is considerable work to do to understand the implications.

  3.  Whilst broadly welcoming the policy on Foundations the NHS Confederation has two main concerns:

—  Freedoms for all. If freedoms are required by Foundations to achieve modernised and innovative care then they are required by all NHS organisations. The NHS Confederation has long argued that there needs to be a real change in the balance of power in the NHS and in the level of regulation and top down control. This is essential to get staff engagement and local ownership of the improvement agenda. Foundation trusts represent one part of a move in this direction. However, many hospitals and other health care providers will not be Foundations and therefore the issue of the overall regulation and performance management regime still needs further attention and reform. Rewarding the high performers must also be supplemented by more effective work to support struggling organisations if we are to encourage excellence across the NHS.

—  Developing the whole system. Most healthcare is delivered in systems that cross organisational boundaries and hospitals increasingly need to work as part of these wider networks. Changes to Foundation Trusts need to be accompanied by an equivalent investment and strengthening of Primary Care Trusts to allow them to be able to actively commission services on behalf of their local populations and to ensure the development of innovative, integrated patient-centred pathways of care. Commissioning needs to be informed by clinician to clinician dialogue and it will be important that the creation of Foundations does not lead to the fragmentation of care. To prevent stagnation, domination by the hospital or disaffection in primary care strong, innovative Foundations need to face imaginative and well developed PCTs. This should be a key criterion for the selection of hospitals for Foundation status.

  4.  While the recently published Guide to NHS Foundation Trusts has clarified a number of important issues about the implications of Foundation Trust status, the NHS Confederation believes that there are a number of significant issues that still need further attention. The Confederation's key outstanding concerns are set out below.

GOVERNANCE AND ACCOUNTABILITY

  5.  The idea of a Board of Governors as a method of creating an increased sense of ownership in the local community helps to address long standing concerns about the connection of health services to local people. The proposals represent an improvement over the current position but further work will be required to ensure that they can operate effectively and that they will really provide this connection, particularly as many local people tend to identify with a site rather than the parent Trust. The extent of local ownership and the ability of local people to determine the direction of the organisation will be constrained by the requirements for Foundations to be regulated, subjected to NHS standards and legally binding contracts.

  6.  We welcome the assurance in the recently published Guide to NHS Foundation Trusts that there will be flexibility in the determination of local governance arrangements. The Foundation's governing bodies must effectively represent the interests of all local NHS organisations and the wider community, to ensure a focus on the whole health economy, not just the acute trust. A number of likely candidates for early Foundation status have significant amounts of specialist and tertiary work and particular care will be required to ensure that the interests of different groups are properly balanced. The status of hospitals as major local employers as well as health care providers further complicates the range of interests that need to be taken into account. The guidance on this will need further development. For example, in the recent consultation over the closure of Harefield Hospital local residents were unhappy but the "community" actually served included much of the South of England.

  7.  The concept of membership requires further exploration. People tend to use hospitals episodically and relatively rarely and those with an interest in their operation may be least able to exercise membership rights. The main benefit of membership is an opportunity to elect the Board of Governors, to be consulted and to receive information. The last two of these should not be privileges but should be available to all and done by all trusts. The election proposals also need to be developed; the current guidance does not make it clear how this system will work or how it will ensure that those elected are genuinely representative of a wide cross-section of interests.

  8.  There are a number of unanswered questions about how members of the Board of Management and Board of Governors relate to the wider members of the Foundation Trust in a way that will genuinely create a sense of local ownership.

STAFFING IMPLICATIONS

  9.  The proposals on pay are somewhat ambiguous and it is not clear what is promised or how much additional freedom will really be available. The proposals do recognise the concerns of many in the service about the destructive potential for bidding wars for staff in short supply. The guidance goes further than before in offering some reassurance, but further clarification is required.

IMPLICATIONS OF THE NEW FINANCIAL FREEDOMS

  10.  We welcome the ablity of Foundation Trusts to retain any surpluses and proceeds from the more efficient use of their assets. However, to make the new payment by results system work a number of these freedoms will be required by other NHS organisations as well and there will need to be a more fundamental review of the entire trust finance regime.

  11.  Whilst we recognise the importance of the freedom to dispose of assets we would hope that Foundations would take into account the interests of the wider community in how the proceeds were applied. This was not always the case in the early period of trust status with sometimes regrettable results.

  12.  Preferential access to capital does provide a real incentive for Trusts to consider Foundation status. However, this does raise potential equity issues. As long the NHS underspends its capital allowance the differential access to capital enjoyed by Foundations should not present a problem. However, it can not be assumed that this underspending will continue and in this case there is a danger of rewarding successful organisations whilst depriving those that are struggling and that need capital to solve their problems.

SUPPORTING EXCELLENCE ACROSS THE NHS

  13.  The programme of support for Foundation Trusts appears impressive. However, there is also a need for support to PCTs beyond the legal and financial competences. The NHS Confederation is in discussion with the Department of Health and the Modernisation Agency over how best this can be provided.

  14.  Freedoms for the successful are desirable but there is an equally important need for better support for organisations that are struggling. While we welcome the wider range of Modernisation Agency programmes for one and zero star trusts, we believe that much more needs to be done. The Confederation's recent report on turning around failing hospitals[14] particularly highlighted the need for earlier identification of problems, and a response that focuses on the provision of practical assistance rather than simply stricter performance management.

CONCLUSION

  15.  The NHS Confederation supports the broad thrust of the Foundation Trust proposals. We believe they could be an important step towards a new relationship between central government and the NHS, based on greater accountability to local people, rather than to the centre, and greater freedoms for NHS staff to innovate to meet the particular needs of their local communities.

  16.  However, we believe further work is required on the detail of the new proposals, particularly to ensure the new governance arrangements encourage real local ownership, and that Foundations support, rather than undermine efforts to create more integrated services across organisational boundaries.

  17.  It will be equally important to ensure that Foundation Trusts actually experience significant freedom from Whitehall control. Foundations appear still to be subject to the full range of DH data collection and the star rating regime, and PCTs, CHAI and the regulator will be responsible for a very rigorous oversight of each organisation. Whilst there will be more freedom at a strategic level much of the current bureaucratic burden could remain unless the system is carefully designed.

  18.  There is also further work to be done to reconcile the Government's intention to encourage innovation with patient choice and a system of legally binding agreements, which, experience in New Zealand suggests, could lead to a significant and expensive bureaucratic burden in themselves.

  19.  While we welcome the fact that there will be no arbitrary cap on the number of Foundation Trusts, Foundations are likely form a minority of trusts for some time to come. The need for a more radical package of deregulatory reform for all trusts—and a more sophisticated performance management regime—remains as pressing as ever if we are to unleash innovation across the service and free up staff to focus on new ways of improving patient care.