Australian interest in foundation trusts has thrown their achievements into stark relief

Prime minister Julia Gillard’s Australian Labor Party forming a new government with the support of independent MPs marks an interesting point of reflection for health reform in the NHS, particularly for foundation trusts.

There’s a growing consensus in Australia that improving efficiency and responsiveness in public hospitals can only come from greater autonomy, so our experiences with FTs have become a subject of fascination.

Australia spends 9.8 per cent of its GDP on health. This expenditure has been growing by around 8 per cent per year, yet there is a growing sense that public hospitals are inefficient and underperforming, especially with up to 12 month delays for elective care and long waiting times in accident and emergency.

Before this August’s election, reforms for healthcare were largely confirmed at the Council of Australian Governments (state premiers and the prime minister), which sought to end the funding “blame game” between state and federal administrations. The agreement sought to establish the federal government as the majority source of funding for healthcare.

These reforms will create an independent hospital pricing authority, a national performance authority, and separate legal healthcare entities known as local hospital networks and “Medicare locals”. The purpose of these will be to drive integration across GPs and other primary and community services.

Sound familiar? Well, yes and no. The UK’s centralised funding system has little in common with the fragmentation between state and federal levels in Australia.

I recently met senior officials and managers across a number of Australian states and there was universal interest in our foundation trust movement, but a deep-seated cynicism still resides about Australian politicians’ willingness to let go.

This prompted me to think about whether our foundation trusts have realised their potential over the past six years. In one sense, they have raised standards but, in another, they have not really challenged the status quo since 2003-04. As Tony Blair reflects in his recent autobiography, he regretted not going further with health reform - a fact certainly understood by Andrew Lansley.

The recent consultation document Regulating Healthcare Providers poses some rhetorical and axiomatic questions that, quite rightly, imply a bias to greater autonomy. Greater governance, fiscal and legal freedoms should enable FTs to become more agile. Of course, this can only truly happen if commissioning is liberated as well. The accompanying consultation document Commissioning for Patients forensically notes how commissioning “has been beset by political interference and micromanagement, with a rhetoric of PCTs being free to reflect local health priorities but the reality of having to pursue targets and ministerial demands”. Quite.

Getting the right taxonomy for reform is important if you wish to see a system that truly works in patients’ interest in a sustainable fashion. The reform programme over the past 10 years never quite wanted to let go and, accordingly, power was inevitably centralised, which emasculated the foundation movement.

While a good taxonomy may help keep the system honest, it is not capable of delivering better care for patients. Only clinicians and managers working in a more liberated, yet accountable, fashion can do this.

Australian audiences were stunned to learn that FTs were owned by their members and held to account by locally appointed boards - not politicians. But those leading the FT movement in the NHS know it is capable of much more.

Indeed, many non-FT chief executives I have spoken to wonder what the current benefits of FT status are and there has been a predictable slowing down in the application pipeline. As one chief executive bluntly put it: “Why would I want to be an FT when Monitor will be able to sack me much more quickly than our current NHS performance regime could ever do?”

Mindsets like this are entirely understandable in the current environment, but hardly an indicator for restless innovation and improvement.

So what can the foundation movement do? First, it can set new standards for patient quality (outcomes, experience and safety) and focus on the innovation of services, such as joint-venture integrated care organisations with GPs. Second, it can set new industry standards for productivity.

Third, Monitor will all but be abolished in its current form and FTs should realise it is no longer their performance manager. Commissioners need to be much more adept at determining local healthcare priorities and then set binding contracts with any willing provider. There needs to be a maximum tariff and with prices finding their natural level locally.

Existing FTs could begin to think bigger and start to establish shared service organisations between themselves. They could explore the potential for national chains, which would have much greater leverage over the “cost curve”, especially in procurement. The threat of compulsory merger or acquisition for non-foundation hospitals seems to be the right incentive, providing the “price is right” for takeover and the failure regime finalised.

Finally, a political desire to push through the totality of these reforms once and for all is a fundamental necessity, but we should not forget how far we have come. After all, Australia is watching us.