Conflicts of interest, difficulties in demonstrating autonomy and low pay are just some of the potential problems facing community foundation trusts.

The community foundation model, first floated by the Department of Health in 2006, is being piloted by six primary care trusts, with the aim of increasing the distance between PCT provider and commissioner functions.

An NHS Confederation report on the initiative, Towards Autonomy, reveals that two of the eight original trusts in the pilot have already decided to leave it.

The initiative has set up stand-alone autonomous provider organisations, with their own non-executives, management and financial structures. The report warns that these will remain in existence even if community foundation trust bids are rejected.

Non-executives sitting on both boards may face conflicts of interest. Another "continual theme" is the difficulty of demonstrating autonomy - a requirement of foundation trust regulator Monitor.

In addition the report says that, as managing directors of provider organisations are paid less than PCT chiefs, provider organisations may struggle to recruit senior PCT staff or will face higher salary bills. The model is "by no means the only answer", the report says, and there are still "many lessons to be learned from the pilot sites".

Kate Fallon, medical director of Ashton, Leigh and Wigan PCT and managing director of Ashton, Leigh and Wigan Community Healthcare, the trust's provider arm, said staff at her trust were "100 per cent" behind its bid.

Dr Fallon said: "The main duplication is around board costs. But part of the assessment the commissioners had to undertake was acknowledging they were effectively spending to save.

"We don't believe we've done anything so far that we wouldn't have needed to do to set up an arm's-length PCT organisation. The only difference is the cost of the acting chair and extra lay members for the board which the secretary of state has given us permission to recruit."

But a spokeswoman for Newcastle PCT, one of the pilots that has pulled out, said that following consultation with local acute hospitals, social care providers and local authorities the trust had decided to strengthen provider management arrangements and conduct a series of individual service reviews instead.

PCT Network director David Stout insisted that, although there were "logistical challenges" in the process, there was "quite a lot of enthusiasm" from organisations in the pilot.

NHS chief executive David Nicholson has said that, although it is for PCTs to decide what to do with their provider arms, "we need to make sure we are commissioning these services appropriately and we don't have 152 community foundation trusts just reinventing a monopoly" (PCTs pressured to lose provider arm).

Progress of pilots

Community foundation trust pilots still in the race:

  • Ashton, Leigh and Wigan PCT

  • Cambridgeshire PCT

  • Liverpool PCT

  • Middlesbrough PCT and Redcar and Cleveland PCT

  • Oldham PCT

  • South Birmingham PCT

Out of the running:

  • Newcastle PCT

  • Southampton City PCT