The foundation trust pipeline could start flowing the wrong way unless there is an early move to push provider reform.

The government has been saying for several years that all providers should become foundations, and the Conservatives have said they would be more committed to the aim.

But primary care trusts are responding to the investment cuts by significantly squeezing foundation hospitals’ income. This, coupled with Monitor’s increasingly stringent scrutiny of finance and performance, means even well performing trust boards will delay their applications where possible, several chief executives told HSJ.

Where the income squeeze makes foundations unsustainable regulator Monitor may begin to strip them of their foundation status. The number of foundations rated poorly for finance or governance has increased steadily over the past year.

Last month HSJ revealed foundation applications had slipped an average of 11 months over the past year, raising significant questions about how any party will achieve their aim.

University College London Hospitals Foundation Trust chief executive Sir Robert Naylor said he had asked politicians to push the reform. This might not need legislation - which would have made it less likely under a coalition - but would require political will. The Conservatives have proposed expanding Monitor’s role with it regulating a system of autonomous providers and taking on the role of the Cooperation and Competition Panel.

Pushing through provider reform is likely to involve unsustainable trusts being taken over by others. This, along with reductions in PCTs, could be seen to reduce administration and management costs – which both the Tories and Liberal Democrats see as a politically palatable form of cut, increasing its chances of happening early.

Sir Robert said the number of NHS organisations, currently about 391, should be reduced to about 250. This would not in itself make significant savings but it would be a “catalyst” to service change.

Sir Robert said the private sector should be involved in provider reform, with firms potentially contracted to run management or services at NHS hospitals. Hinchingbrooke Health Care Trust, where services are currently being franchised, has been cited as a potential model for the future, though it has attracted significant media attention and criticism from unions.