It is 10 years since Alan Milburn’s foundation trust project began. In a new book published by the Foundation Trust Network, the former health secretary, David Bennett, Nigel Edwards and others assess the current state of FTs and predict where they are going. Here HSJ presents some of the highlights




Alan Milburn: ‘An irreversible shift in power’

However hard you tried, the NHS simply could not be run from the top down. If bedpans that dropped in Tredegar were ever to be heard there, the ties that bound Whitehall to local health services had to be severed. The inspiration for this thought was the creator of the NHS, Nye Bevan, who argued that the ultimate purpose of Labour being in power was to give it away.

An irreversible shift in power in the NHS was both necessary and long overdue.

Ten years of FTs

Contrary to those who argued that FTs would mean privatisation of the NHS, I saw them as a means to strengthen public ownership, since they would be owned and controlled by the public locally. A decade on, notwithstanding the appalling failures at Mid Staffordshire Foundation Trust and some other FTs, service innovation and improvement have become watchwords for the foundation movement.

Alan Milburn

‘The way we think and talk about the NHS also needs to change: less the language of challenge and more about opportunity’

The balance has swung far too far towards top-down regulation as the primary instrument for improving standards. It needs to swing back to reforms that empower patients, engage staff and embrace competition.

The policy agenda fundamentally needs to change.

The way we think and talk about the NHS also needs to change: less the language of challenge and more about opportunity. Doing more with less and doing it better, more quickly and more cheaply has become the new normal. This is the time for healthcare to catch up.

The current ambiguity about where organisational power really lies in the NHS is the product of a bifurcated system. Today, while there are 147 foundation trusts, there are a further 99 providers operating under the national control of the NHS Trust Development Authority.

The long term objective remains for all trusts to become FTs, but the pace is glacial at best. This organisational impasse needs to be broken once and for all, not just because the current parallel provider system is overrun with complexity and bureaucracy, but because it leaves the NHS with too much ambiguity and too little clarity.

I’d like to see the current FT approval process scrapped and within the next three years, every trust being made an FT. Some would need to be placed in a special measures category but, as a general rule, all other FTs should be given greater independence and more financial freedom to run their affairs.

In future, providers should be paid less on the basis of the quantity of what they do and more on the basis of the quality of what they achieve. The focus should not be on inputs but on outcomes. Critically, the key financial incentive across the whole care system needs to be targeted on keeping patients healthy and out of hospital.

Alan Milburn was health secretary from 2000-03 and oversaw the legislation that created the FT model

David Bennett: ‘We aim to support, not punish’

The need to treat more patients outside hospital closer to home inevitably means some restructuring of the way provider organisations deliver care. Change has to happen much more quickly: we have to “turbo charge” change.

Monitor has to change, too. We have a new duty to focus on the interests of patients. We know that we are not going to get change happening if we are rigid in the way we look at a provider’s business model where trusts have the impression that only one model is acceptable in order for them to achieve foundation status.

David Bennett

‘We should always be flexible about business models, never more so than in these challenging times’

We should always be flexible about business models, never more so than in these challenging times when innovation is at a premium.

We have to minimise the impact of failure simultaneously to allow good performers to innovate and improve while monitoring everyone carefully, and stepping in quickly when and where foundation trusts are struggling.

Our objective in doing so is not to punish but to support, to nip potential issues in the bud and prevent them from spiralling into serious problems.

David Bennett is chief executive of Monitor

Stuart Bell: ‘Competition policy makes things harder’

As foundation status has become the norm and we have more FTs than non-FTs, it has altered the way Monitor has to act.

In many ways, it was easier to be the regulator of a small, tightly contained elite drawn from the best performers, rather than of the majority and in time the totality.

The system still needs further change to provide truly 21st century care. Most importantly, the integration of provision of general practice and primary care.

Stuart Bell

‘There have been a few tentative examples of FTs entering the world of primary care, but we need more’

If the NHS compares itself with the most effective, best developed healthcare systems internationally, we still see primary care provision being in a separate box based on the 1948 compromise, rather than as central to the whole.

There have been a few tentative examples of FTs entering the world of primary care, but we need more to develop strategically thought through health systems.

System is the paradigm that should drive our attitude to competition, which as it currently stands is conceived in a way fundamentally out of kilter with the true nature of most healthcare, and is more often than not manifesting itself as a powerful dysfunctional disincentive to progress.

We still struggle to tackle what are often deep and unresolved strategic problems of organisations currently configured in outdated patterns of provision. Competition policy makes dealing with this harder than it used to be.

Stuart Bell is chief executive of Oxford Health Foundation Trust

Nigel Edwards: ‘Providers need to think strategically’

We have not seen great strategic steps from providers realigning their portfolios of work or fundamentally rethinking their strategies.

Internationally, independent standalone hospitals tend not to be great at strategy. They are very tactical and operationally focused, which is appropriate given the safety critical nature of what they do. But they tend not to be strategic.

Mental health trusts tend to be a bit more strategic: they have a different culture and tend to think longer term and treat people with what’s often a long term condition.

Nigel Edwards

‘A membership model is not obviously as good for a chain as for a standalone institution’

When FTs were first set up, the policy insider’s view was that once all providers became authorised Monitor might still be required in its non-authorising oversight functions; less like a regulator, and more like a private equity fund owning a large block of shares in an enterprise.

Monitor was not originally conceived as an eleventh strategic health authority, but it is steadily becoming much more interested in the detailed operation of FTs.

If management chains of providers go down the route of standardisation of processes and quality, it may give economies of scope and scale. Inevitably some of their localism goes and some decision rights will be sacrificed: that is the whole point. A membership model is not obviously as good for a chain as for a standalone institution.

Nigel Edwards is chief executive of the Nuffield Trust

Leonard Fenwick: ‘Everything changed after Mid Staffs’

For providers today, small ones do not tolerate the ebbs and flows of change, investment and risk. There is a required size, and for district general hospitals narrow service portfolios will be an issue.

For a progressive FT, autonomy was music to our ears. We did not have to deal with anxiety about waiting list checking or cross-boundary flows. Our focus was on quality improvement and how we could better meet public expectations, investing in service benefits, translational medicine and innovation.

Sir Leonard Fenwick

‘FT status has brought about a regeneration of that freedom to think outside the hospital box without fear’

FTs rose to the challenges, but after Mid Staffordshire everything changed to a very risk averse environment and a focus on avoiding getting a kicking.

Disappointingly, we are returning day by day, as the mood takes, towards an overcrowded bureaucracy with a new initiative.

FT status has brought about a regeneration of that freedom to think outside the hospital box and to change and challenge without the fear of someone coming along to clip your ear.

Freedom does breed enhanced accountability, even if some providers seem to fear their own shadow. Or that of Monitor.

Sir Leonard Fenwick is chief executive of Newcastle Upon Tyne Hospitals Foundation Trust

Alastair McLellan: ‘FTs signed a Faustian pact’

Already strong organisations that became FTs have used these freedoms more fully than less strong organisations. You could say they’ve made the strong stronger without making the weak stronger.

We’ve seen that an increased use of regulation has degraded that sense of autonomy. Though in many cases, FTs were effectively involved in a Faustian pact of surrendering some autonomy via Monitor for extra cash.

Logically, meeting the needs of the public and delivering efficiency of service means a move to accountable care organisations, judged on population based outcomes and paid on that basis.

Alastair McLellan

‘It’s currently really hard to find acute trust chief executives, partly because nobody wants to do the job’

To build these organisational models, less defined by bricks and mortar and more by service pathways, we can turn to the FT model aspects about freedom and democracy.

Management chains could work with the grain of the FT model if the best provider organisations earn the right to lead chains. It could certainly help with the leadership challenge.

It’s currently really hard to find acute trust chief executives, partly because nobody wants to do the job.

There are 243 NHS provider organisations; there are probably about 50 people with the entire skills mix for successful leadership, including experience, knowledge and robustness – so they can lead chains and grow new talent under their protection and tutelage. That works beautifully with the earned autonomy elements of the FT model.

Alastair McLellan is editor of HSJ

Robert Naylor: ‘This is no time to lower the bar’

As a specialist provider of regional and national services, there’s no question that bigger is better. You simply cannot provide complex cancer services in a fragmented way any more. 

You need critical mass in specialised services for the best outcomes – exemplified by the stroke strategy for London, and we are about to do the same with a complex cancer care rationalisation.

Can smaller provider organisations justify the overhead costs of being separate organisations? Of course, there are some very successful small FTs but they are coming under growing pressure as financial constraints bite.

Robert Naylor

‘I think many non-FTs will fail to meet the standards to achieve foundation status and will need to seek partnerships’

Of the 99 non-FTs, I think many will fail to meet the standards to achieve FT status and will need to seek partnerships with others.

So I disagree with Alan Milburn’s suggestion that all non-FTs should become FTs. Frankly, I was surprised.

Having set a high barrier to exercise these freedoms, surely the last thing you would want is to lower the bar to make it less meaningful? Many people in my position will argue that we need to rationalise non-FTs, either into organisational groups or chains of hospitals, but we certainly cannot allow ourselves to continue to subsidise failing organisations – that is just creating a dependency on the centre.

I accept the urgency to develop the integration of services, but the “I word” can be interpreted in many ways. By integration, I mean closer collaboration between primary, community and secondary care in organisations with a common purpose and integrated systems.

We can no longer sustain single-handed contractors in general practice, particularly in urban areas. So we need reform in primary care alongside the acute sector. We need to test out the development of accountable care health organisations.

Sir Robert Naylor is chief executive of University College London Hospitals Foundation Trust

Angela Pedder: ‘Monitor has become an SHA’

In the early days, when there were 10-20 foundation trusts, the philosophy in Alan Milburn’s lecture to remove the secretary of state from the operational running of FT organisations was absolutely achieved.

However, as the number of FTs grew, the centre regrouped and demanded standardisation and a single interface with the sector.

Angela Pedder

‘In the guise of making reporting and accounting easier, the direction of policy was incrementally rolled back and the direction of travel changed’

Over time, Monitor has become something much more akin to an eleventh strategic health authority.

The indicators of FT operational freedom’s death knell started to clang for me when Monitor was required to put in consolidated accounts for the whole of the FT sector, and year on year NHS England imposed national contact terms and reinstated control mechanisms that had been removed in the Health and Social Care Act 2003.

In the guise of making reporting and accounting easier for NHS England and the DH, the direction of policy was incrementally rolled back and the direction of travel changed.

Angela Pedder is chief executive of Royal Devon and Exeter Foundation Trust and is the only first wave FT chief executive still in post

Tracy Taylor: ‘More creativity and localism’

As a community service provider organisation, one of the benefits that FT status has for us is in the governance model. We see the model as being a very real, tangible part of our accountability to and relationship with the public and the patients we serve.

Our commitment to being really rooted in our communities across the city means that we are planning and doing our work in a more integrated and meaningful way than perhaps community providers in the NHS have generally tended to historically.

Tracy Taylor

‘The healthcare delivery systems we need today may not be something traditional FTs can do alone’

Having a 16,000 membership base and an elected council of governors representing them means we have additional formal avenues through which to connect with and hear what our public think and want from our services. This enhances our ability to work on a macro and micro level dependent upon the issue.

The healthcare delivery systems we need today may not be something traditional FTs can do alone. The concept of a foundation community, embracing health and social care with FTs as lead providers for a system, perhaps with a capitation funding arrangement, would be an attractive option.

Changing to a more local foundation health system approach would require changes to the funding and commissioning system. Similarly, to the approach to tariff setting; the 4 per cent annual efficiency savings and 30 per cent emergency tariff would also need to be changed.

There is a risk currently, particularly among acute FTs, of having to focus so much on money in the narrow silo of acute care that it constrains creative solutions and limits the changes we need to make.

Tracy Taylor is chief executive of Birmingham Community Healthcare Trust, an aspirant FT

Tony Thorne: ‘Foundation trusts can still succeed’

The process by which FTs get permission for significant investment or merging and acquisition is unclear. It is also not clear whether those with responsibility for approving mergers, acquisitions and service changes have the experience to judge the benefit to risk ratio.

There will be errors, but without providers being able to grow in areas where they have advantage, through investment or consolidation, we will remain with a cohort of providers trying to improve but only with the assets they currently have; this limits the opportunity for significant innovation. I feel that the foundation concept has got ahead of the permission structure.

Tony Thorne

‘I feel that the FT concept has got ahead of the permission structure’

FT status is not of itself the answer: decentralisation and local accountability are hard. You have to back your judgement, sell your approach to commissioners who have many calls on the money and then deliver.

Nevertheless, I feel that a foundation trust’s local accountability makes it more likely for it to succeed, so long as the leadership is given the space to get on with the job and the rules covering future development are clear.

Tony Thorne is chair of South East Coast Ambulance Service Foundation Trust

This article contains extracts from Seizing the opportunity: Ten new perspectives from healthcare leaders, published by the Foundation Trust Network. The publication follows the FTN’s inaugural annual lecture on 1 April by Alan Milburn. Other contributors include FTN chief executive Chris Hopson and chair Dame Gill Morgan. Share your thoughts on a decade of FTs using the hashtag #10yearsofFT