Foundation trusts: fans and critics speak out

From the back benches to the front pages, the foundation trust model was hotly disputed in its early days. Some were adamant it would lead to the downfall of the NHS while others heralded the move as a new era of a patient focused health service. Five years since rollout, HSJ talks to those who were at the centre of the row.

Simon Stevens

Simon Stevens, then prime minister Tony Blair’s health adviser and one of the chief architects of the NHS Plan, was instrumental in developing and bringing the foundation trust model into the NHS.

He explains the reasons for introducing the model, including what he describes as “the over-centralisation of hospitals”.

“Some trusts seem to think they are only accountable to themselves, an approach mirrored by the regulator”

“The process of centralisation began in 1991, when self-governing hospitals were introduced under (then health secretary) Ken Clarke.

“But in the name of freeing them from local health authority control, they in fact became accountable to the Department of Health. So centralisation over time meant there was a direct line of command from hospitals to the DH and the middle layer of management had been eroded.”

This form of centralisation continued after the Labour Party came to power in 1997, adds Mr Stevens.

“The new government was surprised to find that despite this apparent accountability to the DH, the department [for example] in the middle of a winter beds crisis had no idea how many intensive care unit beds were in the NHS. A period of attempting to manage hospitals through tight national targets followed.”

By 2001, there was a sense that “hospitals were accountable to and hard-wired straight to the DH.” The crunch point came following the Bedford Hospital mortuary scandal, where bodies were being stored on the floor of the chapel of rest and in refrigerators while part of the hospital’s mortuary was undergoing maintenance.

“It struck (then health secretary) Alan Milburn and myself that it was a crazy situation where the secretary of state was being called over to the House of Commons to talk about the maintenance of a hospital building. If hospitals were legally accountable to the secretary of state, this would carry on happening.”

Mr Stevens says trusts needed to become “legally accountable to someone else”. To counter this problem, the government created the foundation trust regulator Monitor while using foundation trusts as a “mechanism and model for community engagement”.

Developing the idea of earned autonomy for the NHS would give high performing trusts a set of freedoms to innovate, he says.

Mr Stevens admits that, in hindsight, it would have been better to strengthen primary care trusts at the same time as the acute sector. But, he explains, at the time, the health service was complaining of reform fatigue, while long waiting times and a bad winter in 1999-2000 meant the government decided to concentrate its efforts on the acute sector.

He has mixed feelings on foundation trusts’ success to date.

“They could have been more aggressive with the use of their efficiency savings to innovate services.

“There is a huge pile of cumulative savings in the NHS which could have been used to innovate further so, going forward, how will foundation trusts innovate now?”

Lord Warner

In 2003, Lord Norman Warner became known as the “ping pong wizard”. As the government’s then junior health minister, it was his job to steer the Health and Social Care Bill - containing the key legislation that would create foundation trusts - through the House of Lords.

The task involved trying to convince many sceptical members from across the political spectrum that foundation trusts would bring hospitals the freedom to innovate while enhancing safety and patients’ experience of the NHS.

“It took two years to get foundation trusts into legislation and implement them,” he recalls. “I have always been a strong fan of foundation trusts. I did not think trusts were shackled to strategic health authorities and the DH, nor that a default setting of command and control was a good way to run the NHS.”

Looking at their performance now, Lord Warner says being able to say foundation trusts are performing excellently in both their financial management and governance can only be a good thing - and something that cannot be said of the rest of the NHS.

“What the Monitor process has done is make the NHS more businesslike. Critics [of foundation trusts] failed to realise the management of the NHS needed an electric current through it - Monitor has done that.”

He believes the main advantage in having foundation trusts is their ability to innovate while investing and making surpluses and is particularly impressed by the work of organisations such as Moorfields Eye Hospital foundation trust and Guy’s and St Thomas’ foundation trust. One regret though is the private patient cap.

“That was a blot on the legislation. It was a mistake - a sop to critics in the Labour Party. It was crazy to stop UK Plc making savings in this area.”

He also notes London has the worst record on foundation trusts and is the “most disappointing aspect of the foundation trust model”, while admitting there are some trusts throughout the country that will not make foundation status by the 2010 target.

“With that and the economic situation in the next year, foundation trusts will have to step up to the plate and start taking over their weaker brethren. The failure regime also recognises that some of these organisations are going to fail,” he says.

Sir Jonathan Michael

In 2003, Sir Jonathan Michael was working as chief executive of London’s Guy’s and St Thomas’ hospital - one of the first organisations to achieve foundation trust status. Unsurprisingly, he describes himself as someone who “was and always has been an enthusiastic believer in foundation trusts”.

“At the time, I along with a relatively small number of like-minded people were actively talking to the DH and ministers about the concept of earned autonomy and the recognition that good performance might result in less hands-on management from the centre,” recalls Sir Michael.

His thinking was that if organisations could prove they could run themselves well, then they should be allowed to get on and do just that. He admits getting the “pretty controversial” legislation passed was a tense time.

“Becoming a foundation trust was like moving from a parent-child relationship with the government to an adult-adult relationship, where there are a set of agreed standards of behaviour and functioning. It was and is for foundation trusts to prove they can run themselves efficiently without having to constantly answer to the centre.”

He admits the argument that primary care trusts - as representatives of the local community - should have been developed into foundation trusts first still holds weight: “It might have made sense to start at that end.”

He is also candid on foundation trust performance so far. “The promised financial freedoms have been more illusory than real and people have been cautious in recognising that in the next two years there will be a reduction in cash flow into the NHS. But the opportunities for innovation, partnerships and joint ventures are there.”

Evan Harris MP

Liberal Democrat MP Dr Evan Harris was the party’s health spokesman at the time foundation trust legislation was introduced. He remains staunchly opposed to them.

“My view at the time was that the essential thing to do was to tackle the community provision of health and the barriers to good access which desperately needed to be improved.”

What he wanted to see and says he is still waiting for is the strengthening of commissioning. “Creating foundation trusts just further strengthened the providers, we needed to give more power then and still do to the commissioner.”

Dr Harris is also critical of the argument that foundation trusts - through their governance structure and elected boards - are democratic. “That idea was and is flawed because of the opt-in system. It gives a pseudo-democratic base for providers to argue with commissioners. The government should be democratising the commissioners not the providers.”

He says there remain local “quangocracies” that the government blames for the ongoing postcode lottery of services but he believes could have been abolished with the establishment of locally elected commissioners.

On the future of foundation trusts, though, Dr Harris is pragmatic. “We are where we are. (The Liberal Democrats) are not arguing for another reorganisation, but the priority remains making commissioning more accountable, with the ability to raise resources and improve.”

Karen Jennings

Head of health at public sector trade union Unison, Karen Jennings has been against the model from the off. She says that when the idea was first floated the government said only a small number of organisations - those at the cutting edge with the best practice - would be authorised to become foundation trusts.

“We believed they would be rolled out across the NHS and were suspicious it was part of a wider privatisation agenda.”

Her opinions have not changed; indeed, she says they have been strengthened. “Our worst fears have been realised. Solidarity is very important in the NHS because not every trust can always be completely and financially sound.”

Ms Jennings is concerned about the increasing privatisation of NHS services but also about the erosion of the support NHS organisations have historically given each other.

She is also critical of the fact that foundation trusts have been rolled out to nearly all NHS organisations with “very little evidence base”.

“This is a developing policy. As a result, issues have emerged which result in us very, very quickly starting to see changes: in governance arrangements, for example. Financial governance became very secretive,” she claims.

She also feels many trusts applying for foundation status have suffered as a result, as managers take their eye off the ball and off their key responsibilities of patient care and workforce provision in their bid to become authorised.

“The issues at Maidstone and Tunbridge Wells trust are a very good example that the hospital’s management was not listening to staff.”

She also questions the strength and role of the Audit Commission, which by law has a responsibility to report to Parliament on the work of the public sector. Ms Jennings claims the commission is having increasing difficulties in getting foundation trusts to account to them.

She also has considerable ongoing concerns about the private patient cap.

“Some trusts seem to consider that they are only accountable to themselves, which is an approach mirrored by the regulator,” she says.

Nor does Ms Jennings pull any punches in her opinion of Monitor.

“It is not doing a very good job of overseeing financial regulation; Derby Hospital trust’s debt is a case in point. But my other concerns are that in terms of the quality of care the Healthcare Commission often spotted quality issues before Monitor.”

She adds that foundation trust governors are becoming increasingly dissatisfied by the “lack of engagement” of the regulator and with the financial secrecy of trusts.

In conclusion, she says: “I can see absolutely no purpose to the introduction of foundation trusts in the way that has happened, other than as a pilot of new ideas.”

David Hinchliffe and Frank Dobson

At the time foundation trusts were first proposed, Labour MPs (now retired) David Hinchliffe, then chair of the House of Commons health select committee and former health secretary Frank Dobson became government rebels with their vociferous opposition to the policy.

Both have since moved on from the debate and were unavailable for comment, but at the time their attacks on the government’s plans were scathing.

In July 2003, 60 Labour MPs led by Mr Dobson and Mr Hinchliffe defied the Labour government whip to vote against the foundation trust plans.

The move meant the government only just passed the legislation - with a mere 35 vote lead - largely thanks to a number of Conservatives and Scottish MPs (who were not affected by the policy) voting in the government’s favour.

A rebel amendment tabled by Mr Hinchliffe was defeated by 286 votes to 251.

At the time, Mr Hinchliffe said: “I’m concerned this policy is part of a growing trend of policy making on the hoof. It is not properly thought through, not consulted on. Where was our manifesto commitment? I wasn’t elected on foundation hospitals.”

He believed the principles behind foundation trusts were “exactly the same” as those that drove the previous Conservative government’s efforts to introduce an internal market to the health service.

He went on: “The last thing we need in our healthcare system at the moment is further restructuring and change, ill thought out change that hasn’t in any way been worked through in terms of its consequences… It restores the competitive ethos, hospital against hospital, doctor against doctor. This policy is about winners and losers.”

Mr Dobson also claimed the plans would mean a return to a dog-eat-dog culture in the NHS while also being “astonishingly expensive” and complicated.

He also compared the policy to the internal market, adding that policy had resulted in lower care standards and higher death rates.