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Published: 30/01/2003, Volume II3, No. 5840 Page 11 12

As potential foundation trusts grapple with the precise nature of what is on offer, they are expressing fears that the freedoms they hoped for have been the victims of a clampdown to placate Labour backbenchers. Paul Smith reports

The fervour with which some managers greeted the announcement of foundation trusts 12 months ago has apparently cooled. It is not going to result in the chief executives of three-star trusts walking away. But 'highly sensitive' negotiations - according to one of those involved - are going on between those NHS managers most keen to take the policy forward and senior Department of Health officials.

Much centres on the precise nature of the freedoms which will be available when the new foundation trusts go live - in shadow form - this October. Ministerial fears of backbench rebellions - inspired by former health secretary Frank Dobson and the influential health committee chair David Hinchliffe - is certainly evident in the government's vocabulary.

The new trusts are now officially known as NHS foundation trusts - the NHS prefix considered of crucial importance.And there is much talk from health secretary Alan Milburn about how the trusts, as public interest organisations, are rooted in the history of the cooperative movements so close to the heart of early Labour history.

But it is the nuts and bolts of the policy rather than the principles behind it which are of central interest to senior management toying with the idea of applying for foundation status before the end-of-the-month deadline.

The government has already placed strict limits on the number of private patients a foundation trust can treat and ensured that any trust borrowing will need the approval of the new independent regulator. The regulator will also determine whether any proposals for 'substantial' change in services can go through where there is disagreement with local stakeholders.

Then there is the important question of the star-ratings - to be run by the Commission for Health Improvement. Will foundation trusts be subject to the same rating criteria as the rest of the NHS? If they are, then foundation trusts will be duty bound to meet the same range of targets and indicators.How much real freedom from Whitehall control will there be for clinicians and managers?

CHI communications director Matt Tee says: 'At the minute, we do not know - and I do not think anyone else knows - whether there will be a different star-rating system for foundation trusts. It is a crucial issue because it goes back to this question of the freedoms these trusts will get from meeting government targets.'

For Homerton University Hospital trust medical director John Coakley, clinical freedom were one of the central attractions of the foundation policy when it was first unveiled: 'We have been extremely interested [since] the idea of foundation hospitals was put forward. But for us the attraction was about the freedoms to improve patient care. If it is not about that - if It is about the financial freedoms and land sales, then it doesn't offer us much.As a medical director, I am not that interested.

'We were hoping that it would allow us more scope to decide clinical priorities, freedom to set our own targets.'

He also questions plans around 'membership' of the new trusts.

The membership will be made up of local stakeholders, local people and past patients and will elect the board of hospital governors (formerly known as stakeholder councils). But during last month's Commons debate on foundation trusts, Mr Milburn revealed that he would 'prefer' local people to apply before they became members of the new trusts rather than operate a system of automatic entitlement based on the electoral register.

Mr Coakley says: 'We have concerns over the idea that people will have to register [and] opt-in to become members of the trust.

In Hackney, of the people who have the vote, about 30 per cent bother with it.

'I think there is a serious risk that we could become subject to special interest groups who are willing to make the effort to become members rather than what it should be, which is about local people and our patients.'

In practice, the extent to which trusts will be freed from the topdown management of the current system will depend on how the independent regulator works. Its powers - at least on paper - are wide, and though the DoH has stressed in practice it will operate a 'light touch' some managers remain concerned.

'Put it like this, ' one chief executive keen on making a first-wave application, says: 'The regulator cannot become the DoH by another name. It would undermine the reasons behind the [foundation trust] policy.'

Another issue will be the willingness of private sector investors to give foundation trusts cash for service development.According to Association of Chartered Certified Accountants health committee member Tom Jones, concessions already made by the DoH to both the Treasury and back-bench critics is making the City wary.

'There are historical parallels.At the moment, it seems as if foundation policy is developing in the same way private finance initiatives did. PFI was formed as it went along.

'Of course today It is a lot more secure than it was, but I think City investors were very cautious about it for a long time.

'Foundation trusts are in the same position. There is a lot more detail needed, but investors will be looking very closely at the business plans put forward. And they are going to have to be far more detailed than the NHS is used to.

Too often, trusts have seen it as enough to stick the words 'business plan' on the front cover and leave it at that.'

He says foundation trusts will also have to offer an account of their performance for around five years to satisfy the City. And that will ultimately depend on the success they have in attracting cash on the basis of the proposed national tariff system - whereby trusts will be paid a fixed rate on the work they actually carry out.

'The trusts will have to compete for business from primary care trusts and also show they can expand their market share. This is where people start talking about the internal market.'

There may be a suspicion about whether the 'cooling' of enthusiasm among chief executives for foundation status is part of a simple cat-and-mouse game with the DoH, a way of ensuring Richmond House delivers what has so far been promised to highflying trusts.

But Walsall Hospitals trust chief executive John Rostil remains convinced: 'We are up for it [becoming a foundation trust].

There is no way that we are going to let the opportunity go by. We were one of the first-wave trusts and we were able to get the maternity wing - it was under budget and delivered ahead of schedule.

It still looks as good now as when it was built.'

Now, he says, excessive bureaucracy is making it difficult to get the trust's much-needed capital projects completed - causing delays and extra cost.

He is part-way through redeveloping the east wing at the trust's Manor Hospital - a project Mr Rostill says would have cost£5m in 1995 but because of delays has risen to around£20m.

And he claims quicker delivery would have also saved him spending£3.5m on ensuring the wing retained its fire certificate.

The ability to set up public-private partnerships for smaller scale capital projects, rather than entering the bureaucratic labyrinth of PFI, is an obvious attraction.

'When you're having to deal with something as idiotic as that, we believe [foundations] will give us the kind of freedom we need.'