The alternatives to foundation status are still shrouded in mystery, say Jo Eastaugh and Jonathan Shapiro

Monitor’s increasing conservatism has been creating problems for non-foundation trusts with ageing buildings and estate. Pre-election, there seemed to be some choice between public-private partnership and FT status, but work by Birmingham University suggests the government’s pressure to move all trusts to FT status without loosening Monitor’s grip is tipping that choice into an unresolvable conundrum.

Survival could be assured, albeit in a different guise

The rationalisation of clinical services into larger, more centralised hospitals may be one answer, but this puts another nail in the coffin of the district general hospital, ignores public perception, and assumes that existing FTs are prepared to take on that burden.

FT status was expected to be achieved by all NHS trusts by the end of 2008 but applications from only around 55 per cent of eligible organisations have been accepted, at least partly because of Monitor’s response to concerns about finances and governance at some FTs.

Interviews (pre-election) with senior staff in five non-foundation acute trusts, carried out as part of Theme 1 of Birmingham and Black Country Collaborations for Leadership in Applied Health Research and Care, indicated that Monitor’s approach has had a significant impact on how non-FTs see the value of FT status, and on their perceived ability to negotiate the application hurdles (see box below).

Acute trusts face demands to balance many requirements. The emphasis on safety, quality, competition and choice, and the associated changes to funding mechanisms, mean they are trying to be more patient friendly. But many hospitals must reconcile this with outdated buildings that risk compromising safety and quality standards.

Past governments have provided opportunities for NHS organisations to address capital issues through joint ventures involving public-private partnerships. These policies were intended to reduce the financial risk to NHS organisations but most interviewees thought that the financial commitments involved in such partnerships were perceived as risky by Monitor, because they had the potential to affect clinical services far into the future. 

Different landscape

Monitor now requires applicants for FT status to meet highly restrictive ratios between the amount of money borrowed and trusts’ assured income, insisting they show significant financial surpluses despite the long-term financial burdens of a partnership.

Interviewees suggested such requirements were untenable: Monitor was viewed as risk averse and against these partnerships, and the endeavour to gain FT status was seen as irrelevant or even damaging to non-FTs with ageing capital stock.

As a result, before the election the pressure to achieve FT status seemed to be losing both focus and authority, and many non-FTs went ahead with public-private partnerships believing foundation status was of secondary importance.

Post-election, the political landscape looks very different. There is a clear commitment from the government to an FT-only NHS by 2013, with more autonomous providers. Competition is set to escalate through any willing provider arrangements and this will increase the financial risk to smaller district general hospitals. So what does the future hold for non-FTs? 

  • One alternative to public-private parnerships is the gradual renewal of building stock but this has obvious limitations in terms of wholesale redesign and could probably only be viewed as a long-term strategy - a concern for trusts that feel more imminent threats to their survival.
  • For trusts already tied to long-term partnership commitments, writing off their costs is theoretically possible, but seems unlikely.
  • One option is for hospitals to identify their clinical market “niches”, pinpointing services which are lacking locally or which they can provide more cost effectively, and thus protect their income and provide the financial stability required by Monitor.

This option was recognised by interviewees at one of the study sites, and may be the most prudent approach for those wishing to continue as independent organisations.

  • There are signs that Monitor may relax its criteria for FT status, which would clearly help the government to achieve its targets; the impact of such change on the risk ratings of new FTs (and on the standing of the whole concept of FTs) remains to be seen.
  • A final scenario suggests smaller hospitals merge into larger organisations. The key would be to approach such mergers proactively, initiating discussions with surrounding trusts to ensure appropriate local service provision. This option, however, was not raised by any of the interviewees.

Taking control of your own future has obvious advantages, giving merging hospitals greater leverage in rationalisation while working towards efficiency savings and income protection. In this way, the various targets and policy requirements handed to acute trusts could possibly be reconciled, and survival assured, albeit in a different guise.

Birmingham and Black country CLAHRC

Birmingham and Black Country Collaborations for Leadership in Applied Health Research and Care is one of nine pilot CLAHRC’s funded by the National Institute for Health Research.

The aims of the project are concerned with investigating service redesign in relation to:

  • the effects of different drivers for change
  • their impact on services
  • the way that services subsequently evolve within three NHS acute trusts.

In the project’s baseline phase, 77 interviews about these issues were conducted (see box). Interviewees were executive team members and other strategic staff within trusts as well as external stakeholders. One aspect of the results concerned the tensions in attaining FT status, particularly in relation to concurrent public-private partnerships.

Top issues highlighted in the interviews

  • Monitor had increased regulation of FTs over recent years
  • Decreased flexibility meant that FT status was less attractive
  • Interviewees felt limited to a choice between FT and public-private partnership, with the latter often taking precedence (before the election)
  • There was little sense of threat from not achieving FT status (pre-publication of the white paper)


National Institute for Health Research