News Roundup [abridged Versions Appear In The Paper Journal]

Foundation trusts could be divisive, MPs claim

BMJ 2003; 326 doi: (Published 04 January 2003) Cite this as: BMJ 2003;326:10
  1. Matthew Limb
  1. London

    Details of the government's plans for foundation hospitals in England, published in December, have failed to allay fears that they might lead to a two tier health service.

    Central to the plans and the controversy are the “significant” new freedoms that foundation trusts will enjoy, subject to legislation being passed. These include the ability to borrow money without having to go through the Treasury.

    Up to 12 foundation trusts could be operating from spring 2004. Critics, including many Labour MPs and doctors' leaders, fear that the NHS as a whole will suffer from giving an “elite” cadre of providers more licence to expand services and reward staff.

    The BMA council last week expressed “very serious concern that foundation hospitals risk creating the unfairness and inequality of the internal market.”

    “By attracting the cream of NHS funding, they will draw valuable staff away from less favoured hospitals and areas,” said the council's chairman, Ian Bogle.

    Foundation trusts will be set up as not-for-profit, public interest organisations, outside Whitehall control but part of the NHS and held to account by locally elected boards. They will operate under a licence granted by an independent regulator that will require them to meet national clinical standards and duties of partnership.

    Ministers reject accusations of “elitism,” saying the plans hold true to Labour's traditions, reinforce local “ownership” and bring Bevanite “radicalism” up to date.

    But concerns remain over the financial leeway being offered to some hospitals as a reward for performing well. To apply for foundation status, NHS trusts will already have to have a three star rating.

    The 50 page document says foundation trusts wishing to fund “mid-size” capital schemes, such as new facilities, will have “free access” to capital and be able to borrow money from public or private lenders. Overall amounts will be subject to a “prudential borrowing limit,” set by the independent regulator, who has yet to be appointed by the health secretary. However, major projects procured under the private finance initiative process will stay subject to current approval mechanisms and the “same degree of oversight.”

    Foundation trusts will also be able to retain year-end operating surpluses, either to use to reduce debt or to build up reserves to support future capital schemes.

    They will not need external approval to set up subsidiaries and joint ventures provided that these comply with the public interest mandate.

    Ministers insist that foundation trusts will be rooted in the NHS and made accountable and subject to inspection in a way that will guard against a two tier system emerging.

    The trusts will deliver services under long term service agreements and a proposed national tariff structure that will prevent them undercutting neighbouring providers.

    There will be a strict cap on the services they can offer to private patients. Ministers also cite a legal lock on assets to protect the new trusts from the sort of “demutualisation” seen in the building society sector or from “any future threat of privatisation.”

    Foundation trusts will be free to recruit and employ their own staff and offer new rewards and incentives that “explore innovative ways of working.”

    But these, say the document, must “not undermine the ability of other providers in the local health economy to meet their NHS obligations.”

    About 100 MPs have signed a parliamentary motion warning that the proposals will be divisive.

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