The Government is determined to introduce foundation trusts to the NHS. These bodies will form a new type of organisation within the health service, managing their own operations and being overseen by a locally-elected board of governors.
Yet rather than receiving the thanks of a grateful nation for this proposal, the Government was almost defeated by its own backbenchers in a recent House of Commons vote. So why is the concept of foundation trusts causing such a split in the Parliamentary Labour Party and dividing much of the NHS? And what are the legal, social and political issues involved?
The evolving health service environment
To answer these questions we must look to the origins of the NHS. It was conceived as a monolithic structure under the centralised control of the Secretary of State. The Department of Health has been run on that ‘command and control’ basis for much of its life. In the early 1990s, the then Conservative Government introduced the concept of the ‘NHS internal market’, believing that the introduction of ‘market discipline’ would improve NHS performance. To achieve this, a distinction was made between the providers of secondary healthcare – the hospitals – which all became NHS trusts, and the health authorities, which purchased, or ‘commissioned’, that care from them.
When Labour came to power, it abolished the internal market and mapped out the future of the NHS in the 10-year ‘NHS Plan’. This has already seen the NHS transformed in many ways, with a number of new NHS bodies having been introduced to help implement the plan, to promulgate national standards and to regulate the sector.
However, there is now a candid recognition by the Government that the Secretary of State and the Department of Health can no longer ‘micro-manage’ the NHS in the traditional way. The NHS commissions healthcare from an ever-widening provider network (hence, in part, the emphasis on national standards and having stringent sector regulation), and purchasing care from the private sector or from overseas is increasingly part of a mixed health economy.
The Government has realised that such developments require changes in management processes. This acknowledgement coincides with public pressure for improvements in standards, in responsiveness and in indicators of improved performance (such as shorter waiting times). Also, wider patient choice and greater diversity of provision and provider are now embedded in Government thinking and widely accepted in the NHS.
All of this has driven the Government to consider changes to the current model for healthcare delivery – a step that is a cause for concern for some, who fear the impact of change on the core values of the NHS or the start of a process leading to its ‘privatisation’.
Issues and implications
In an attempt to move away from the centralised management of the NHS, the
Government proposes to turn a number of leading NHS trusts into ‘foundation trusts’, with greater legal and operational freedoms and a different model of ultimate accountability.
The current candidates for foundation trust status are all NHS three-star trusts (ie top-rated). The thinking is that these will benefit most from the greater freedoms that foundation trust status has promised to bring, and that they will be most able to cope with the rigours of change. From a narrow legal standpoint, the powers of foundation trusts are, in general, markedly similar to those of existing NHS trusts, albeit with certain limited but important differences. The most radical changes, however, do not concern these powers – they impact on the nature of NHS trusts’ relationships with their local communities, with their staff and with the Department of Health.
First, unlike all previous NHS bodies, foundation trusts will neither be created by, nor directly or indirectly line-managed by, the Secretary of State. An NHS trust, and potentially certain other types of ‘public benefit corporation’, can apply to the independent regulator to become an NHS foundation trust. If the application is allowed, the foundation trust will be established and thereafter the regulator will police its compliance with the terms of that authorisation. Although the regulator will be appointed by the Secretary of State and accountable ultimately to Parliament, they will be independent and will have the power, for instance, to intervene in the management of a foundation trust where failures are occurring. While this means the Secretary of State is no longer responsible as ‘line manager’, the key question remains over whether the Secretary of State will ever be able (or allowed) to accept the political implications when the conduct of a foundation trust is called into question and the public and media are demanding action.
Second, NHS foundation trusts will be corporate bodies (the public benefit corporations mentioned previously) and will have ‘members’, each of whom must be prepared to subscribe £1 for membership. Members will have the right to elect the majority of the foundation trust’s board of governors, which in turn will have the power to appoint the chief executive and the non-executive directors on the body’s board of directors.
A key challenge that foundation trusts will face is how to engage and retain the interest of their local population in becoming members. They will also need to consider how to prevent that membership from becoming dominated or manipulated by unrepresentative socio-economic groups, political activists or special interest groups. The draft legislation requires the membership to be representative of its local constituency as a whole, but how this is to be achieved in practice will plainly be problematic.
Third, the applicants for foundation trust status must devise their own internal constitution for approval by the regulator. This constitution will govern not only how members of the public can become ‘members’, but how they can elect their representatives to the board of governors, how the mix of elected and appointed members on the board of governors will interact and, crucially, what the nature will be of the legal relationship between the board of governors and the directors of the foundation trust.
At the moment, this is largely the classic ‘blank canvas’, each candidate for foundation trust status being required to devise their own draft constitution, which they will then be required to put to the regulator for authorisation.
The road ahead
This process – the move from Department of Health line management control to a currently uncertain and untested model, based on local accountability and autonomous action within a broad regulatory framework – represents the significant legal and cultural change underpinning the advent of NHS foundation trusts. It could also have a significant impact on other participants in the health sector, in both the public and private sectors, who will need to adjust to the new regime and the needs of these more autonomous bodies.
Yet the model is not yet confirmed. The Government is currently responding to various pressures to keep the proposal moving forward. This may mean that it makes concessions requiring a foundation trust to retain elements of ‘traditional’ NHS accountability, while at the same time striving to retain enough of the original concept so that candidate foundation trusts will see sufficient benefits for service delivery for patients to justify going forward.
Such uncertainties mean that prospective foundation trusts must plan for the future while remaining agile enough to adapt to changing circumstances. And there is not much time left: assuming the Health and Social Care (Community Health and Standards) Bill is passed (it has now been sent to the House of Lords), the first wave of NHS foundation trusts is scheduled to become operational on 1 April 2004. With the range of remaining issues, there must be some doubt about how realistic this timetable is, but the Government shows no signs of slowing the pace. Many challenges remain – for all those involved.
Trevor Blythe is a partner and head of the health and social care division at Beachcroft Wansbroughs
