The government and PCTs are contemplating the benefits of community foundation trusts, but are they really the future for provider services, asks Kaye McIntosh

The government and PCTs are contemplating the benefits of community foundation trusts, but are they really the future for provider services, asks Kaye McIntosh

  • The DoH and PCTs are exploring foundation status for community services, but there is no clear model.
  • Community foundations could take over PCTs' provider arm, leaving them to focus fully on commissioning.
  • There are concerns about bureaucracy and that another type of foundation would 'compartmentalise' the NHS.

Community services have long been the Cinderella of the NHS. District nursing or speech and language therapy just don't have the high profile of heart surgery or accident and emergency. No one is about to make a peak-time TV soap opera featuring learning disability services to replace Casualty.

But these traditionally low-profile areas are suddenly a hot topic. With primary care trusts encouraged to separate or hive off provider arms and focus on commissioning, could community foundation trust status prove a solution to the headache facing chief executives?

Initial enthusiasm at the Department of Health seems to have cooled. Last August the DoH's commissioning framework said the idea was being considered, adding that the government is 'attracted to this model'. But earlier this month it e-mailed PCTs warning them not to discuss community foundation trusts ahead of a national announcement. Rumours spread that the DoH was disappointed with the quality of initial applications from interested trusts.

The DoH is certainly cautious; a spokesperson told HSJ last month: 'The foundation trust model for community services is not a DoH directive. There is no requirement for PCTs to make any organisational changes, unless they decide that it is the right way forward for their services.'

The DoH is keen to make clear that community services could remain in-house with separate governance arrangements for each arm of the PCT, or be provided by the voluntary sector, private companies, social enterprise, local government or general practice.

Civil servants are now working with a small group of PCTs to explore the feasibility of foundation status for community services. This is because the DoH was approached by PCTs that wanted to explore the model for their provider services. The first CFT will not be launched before the end of 2008, as preparations continue.

The DoH is clear that there are distinct advantages: 'The foundation trust option is a tried and tested regime. It focuses on robust management systems, and has the freedom to work across organisations to develop the best care package for patients.' CFTs would benefit from greater flexibility to provide innovative services responding to local needs and raise the profile of community services. Meanwhile legally binding contracts would create greater transparency about the level and quality of services.

Both foundation trust regulator Monitor and pilot sites stress that nothing has been decided. Monitor policy director Robert Harris says CFTs are just one model for delivering healthcare outside hospital, emphasising: 'We have been assisting the DoH but it is very much their baby.'

And Moira Dumma, chief executive of South Birmingham PCT, one of the seven PCTs working on proposals for a CFT pilot, says: 'We are not making any assumptions that we will become a foundation trust because we are focused on the function of that organisation.'

The NHS Confederation is equally unsure about CFTs. Director of its PCT network David Stout says: 'I don't think there is a worked up model for how they will look or whether they will exist at all.' But foundation trusts can work outside the acute setting, he adds, citing mental health trusts as an example.

Mr Stout says the DoH has taken a 'refreshing' approach to opening up the provider arm of PCTs, offering a range of options. 'We have been trying to encourage the DoH not to tell PCTs what the answer is.' But that does lead to unpredictability, he adds - whether all the PCTs that have expressed an interest will gain pilot status, for instance.

Clearly, CFTs are at an early stage of conception. So far, Monitor's role has been merely to advise the DoH and PCTs interested in running pilots of the basic requirements: a CFT must be legally constituted, well governed and financially viable.

Mr Harris says it is not possible to assess the performance of organisations that have been 'buried' in the provider arms of PCTs. The regulator would only step in once the potential CFTs had been operating as autonomous bodies for a year. Previous waves of foundation trusts have all had a track record as separate businesses but, unlike acute and mental health trusts, community services have never operated alone.

The bigger the better?

Mr Harris says the development of pilots was 'a sensible, measured and prudent approach' that would allow providers to 'flesh out some of the issues' around foundation status. Monitor says CFTs would need to have a minimum turnover of£30m to ensure the stability of their cashflow.

Size does matter. After all, community services represent£10bn of NHS spending. Mr Harris points to South Birmingham PCT as an example of a provider arm big enough to be sustainable even if some commissioners were to take some of their business elsewhere (see case study below). But the PCT is much larger than the Monitor minimum, with a£133m turnover and serving all three PCTs in the city as well as other commissioners.

Being big enough to be financially secure can have a downside. NHS Alliance chair Dr Michael Dixon says he is 'agnostic' about the proposals but concedes there are risks. 'How in tune with local people will they be?'

Big healthcare providers might become local monopolies, stifling innovation from other players such as social enterprise and the voluntary sector, he explains. Dr Dixon believes that there will be different models for different PCTs.

Certainly there are concerns about the downside to CFT status. For instance, it might tie community services up in needless red tape. Cliff Prior, chief executive of UnLtd, a charity which promotes social enterprise, says: 'I think it is questionable whether the enormous burden of regulation for the acute foundation trusts is going to be worthwhile for community trusts.

'If you take an acute hospital with massive capital investment and 24/7 functions, such as A&E, taking them out of the direct line-management of the NHS makes regulation understandable.' Foundation trust standards give confidence to stakeholders and investors. But for community services that are catering for long-term conditions 'the question is whether that amount of regulation makes sense.' CFTs could be 'hampered' by excessive bureaucracy.

Monitor is clear that there will be no relaxation in the burden of regulation. Mr Harris says: 'We are not looking to create a second tier of foundation trusts.' It would be 'unfair' to existing foundations and it is important that there is a single model, with community services having to meet the same requirements. The DoH agrees, saying 'there would be no lowering of the bar'.

So what might CFTs look like? The DoH says they could provide services across wider geographical areas than current PCTs. They might choose to narrow their focus onto particular client groups or specialties or broaden into 'umbrella' providers working with small local voluntary organisations. Alternatively they could go for vertical integration, merging with existing acute services to be more community-facing.

Potential pilot sites are nervous of talking about their plans publicly, following the DoH e-mail earlier this month. But a spokesperson for Ashton, Leigh and Wigan PCT says there will be no announcements until the DoH announces whether pilots will get the go-ahead later this summer. Liverpool PCT is equally discreet.

Pilot in practice

But South Birmingham provides some clues. Ms Dumma says the pilot is aimed at developing care closer to home and providing real alternatives to hospital care for people with long-term conditions. The focus is on 'person-centred care for the most vulnerable people, providing a bespoke package of care.' For example, patients would have care managers who could bring in support from the voluntary or social care sector as well as encouraging self-management.

She recognises that 'we don't need foundation status' to do that; other models could achieve the same. But the CFT plan emerged as an option from a 'diagnostic' review of services and would allow the provider arm to become a sustainable organisation, with appropriate governance structures, leaving the PCT to focus on commissioning. It found CFT was 'the optimum solution'.

There are two key benefits of working on a CFT pilot scheme, Ms Dumma says: 'The process required to prepare for CFT application will in itself give a focus to driving some of the changes we need to make to prepare services for a consumer-driven health system. In addition, the CFTs require extensive community engagement with clear routes for representation, which lends itself to the type of services we provide.'

South Birmingham's staff have been 'supportive' of the proposals, Ms Dumma says, recognising the benefits of greater public involvement. Clinicians and staff have been involved in discussions about the options for the future of provider services, and the CFT is seen as the solution. Foundation status makes sense in an area that is a 'foundation trust economy', with University Hospital Birmingham, Birmingham Children's Hospital and the Royal Orthopaedic Hospital foundation trusts all on the patch.

But Dr Dixon says creating yet another type of foundation trust beyond acute, children's and mental health trusts may risk compartmentalising the NHS. It can be more straightforward to redesign services that are kept in-house rather than working with a separate provider unit.

There is a risk that this could be reorganisation for the sake of it, he says. 'If it is a return to the old community trusts and decanting staff into provider units it is not an improvement on what we have.' Instead, pilot schemes should be about doing things differently, integrating general practice, primary care and community services.

But one voice from the third sector thinks it is not so bad if CFTs are merely the provider arm of PCTs under a new name. Social Enterprise Coalition lead on health enterprise Julie Dent says: 'CFTs may be the answer for carving out the provider function of PCTs.' This is due to the complexity of transferring NHS staff to new organisations under the TUPE regime for protecting employment conditions.

'CFTs and social enterprise are not in competition, she adds. 'They are different vehicles to deliver public benefit.' CFTs may be geographically focused around their original PCT, while 'social enterprise can take a horizontal slice', providing specific services.

Mr Prior, however, is concerned that they may encourage what he sees as the conservatism of PCTs. 'PCTs as commissioners are inherently cautious and tend to commission what they have already done.' For instance, the mental health service provider Rethink runs a nursing home in an area where the PCT is comfortable commissioning those services but reluctant to consider others. A CFT could be seen as the safest option by commissioners, elbowing out other sectors.

Mr Stout recognises the danger that some commissioners will stick to what they know. PCTs have to ask themselves how they would relate to these new organisations. 'The risk is we create something that does what it always did.' PCTs that investigate CFT proposals must ensure 'there is a rationale and a robust process that is sustainable in the face of challenge'.

But in South Birmingham, Ms Dumma says, the CFT proposals will not exclude other organisations: 'As a community service, we recognise that we cannot work in isolation. We need to work with the independent and voluntary sector to develop partnerships.'

Mr Stout warns that primary care has had 'enough' reorganisation - managers interested in the CFT model have to be clear that there is a benefit to set against the costs in terms of money, time and staff uncertainty. 'You have to be clear that you know and can articulate to your local people what the benefits are going to be.'

Anyone wanting to work on a CFT will be embarking on a lengthy, challenging process, with little certainty about the final outcome. A DoH spokesperson says: 'It is for PCTs to decide how services are best provided and which provider they should commission from.'

It seems it may be PCTs, not the centre, that are held responsible for the successor failure of the CFT model.

Case study: South Birmingham PCT

South Birmingham PCT's community services arm has a£133m turnover, equivalent to an average district general hospital.

It provides services for children, people with learning disabilities and physical disabilities or long-term conditions and services for the elderly, as well as specialist rehabilitation services.

Current plans for the community foundation trust pilot include a governance structure with a separate board for the provider organisation, and a separate audit committee. The PCT has recently recruited a managing director for provider services.

Other board members will include a medical director and a finance director.

Budgets are to be separated from the PCT in preparation for a trial period of autonomous operation that is necessary for foundation status.

The move to a CFT will mean finances shift from the current block contract system to a cost per-case basis, where activity determines income.

The CFT will provide only those services that suit that model.

For instance, learning disability services that sit more easily with social care, such as day centres and residential care, could possibly be transferred to another provider.

The PCT is already providing services outside its own patch, across Birmingham for children and across the whole West Midlands region for rehabilitation.

The focus of the CFT will be on 'individually tailored services in line with commissioners' demands' and not on geography.

The potential future organisation is under development but is expected to be flexible and focused on service users as well as the commissioners' expectations and requirements.

The services will be designed around the patient or service user, with bespoke packages of care providing alternatives to hospital. For instance, supporting people at risk of falls with preventive services and rapid response support.

Community foundation trusts: potential pilot sites

The PCTs working with DoH to explore whether the foundation trust model can be extended to community services:

  • Ashton, Leigh and Wigan
  • Cambridgeshire
  • Middlesbrough with Redcar and Cleveland
  • Newcastle
  • Liverpool
  • South Birmingham
  • Southampton City.