Next year could see foundation trusts taking control of significant areas of NHS activity.

The operating framework’s March 2010 deadline for all providers to set out how they intend to become either a foundation, or, for community services, a viable alternative by March 2011 is deliberately designed to flush out those that cannot achieve it and offer them up to foundations for takeover.

There may be ways we can provide… safety net support for the organisation or a different sort of organisational model

NHS chief executive David Nicholson told HSJ there were not enough incentives for existing foundations for this to

happen and there were also impediments - for example the financial risk of taking on a failing organisation, causing the acquiring foundation to be downgraded in Monitor’s risk ratings.

Mr Nicholson said the DH was working with Monitor on both issues, which might result in deals involving the inherited debt or recurrent overspending of the failing organisations - as in “reverse considerations” in commercial transactions.

He said: “There may be ways we can provide… safety net support for the organisation or a different sort of organisational model, whether it be a management contract or whatever to give security. Or we organise it in such a way as to ringfence the debt in the organisation.”

He said there were ongoing talks on how acquisitions were dealt with in Monitor’s ratings.

But he believed there were “upsides” to takeovers, particularly if they allowed foundations to integrate with potential “feeder organisations”.

The DH has said it will also support vertical integration between foundations and community services, an idea frowned on by some who claim hospitals could use it to drive up their own workload. But Mr Nicholson said he had “never bought” that theory and said the capped two-part tariff for 2010-11 would act against that happening.