Following the first merger between a foundation trust and an NHS trust earlier this year,.other acquisitions are now in the pipeline. Melanie Print reports on recent developments.and asks whether private sector purchasers will be able to get involved

Following the first merger between a foundation trust and an NHS trust earlier this year,.other acquisitions are now in the pipeline. Melanie Print reports on recent developments.and asks whether private sector purchasers will be able to get involved

Earlier this year, the first merger between a foundation trust, Heart of England, and an NHS trust, Good Hope Hospital, was completed.

The merger, which Bevan Brittan advised on, is unique to the health economy of the West Midlands. It was a 'merger by absorption', involving the dissolution of Good Hope Hospital trust and its transfer as an entity to the foundation trust.

The process revealed the difficulties that future mergers and acquisitions will face under some circumstances, such as.when there is a willing purchaser but no willing seller, when there is.a vacant board or a franchised trust, or when there is an unwilling seller in the absence of a clear failure regime and policy to support it.

Monopoly game

Following the merger, other acquisitions are now.in process or under discussion.in the national health economy. These include the acquisition by foundation trusts of provider arms of primary care trusts. In other circumstances, however,.acquisitions are more competitive and driven by the acquiring foundation trust with the aim of preserving its monopoly base.

These developments may have come about.through choice, or may be due to an accident of geography and the willingness of the acquiring foundation trust to extend its.services and brand into the wider community when others are unwilling or unable to do so.

There is one.major lesson to date: a clear and transparent plan that.offers continuity of goods and services is that.the key to future mergers and acquisitions.activity among foundation trusts that may seek mergers or acquisition of third-sector businesses.

Such a plan will ensure that.the regulatory requirements of Monitor are met and the assurance of the strategic health authority.obtained. It will also ensure the acquisition is seen to be 'choice neutral', to ensure patients actively choose the acquiring trust and are confident that the NHS brand is not diluted.

Private players

A separate issue is the extent to which.private sector purchasers can enter the very public arena for future mergers and acquisitions.

Can a market be developed that permits the buy-out of public dividend capital.of the target trust, by say a private equity group, while maintaining patient and commissioner confidence in the NHS brand?

This presupposes an additional standard besides that of the Healthcare Commission, to protect and preserve the integrity of the NHS brand and to commit to the NHS principles incorporated in the acute services contract.

It is arguable that the acquisitions market for the private sector will arise out of catastrophic failures at a trust that require an immediate 'step in' and turnaround to secure clinical services. This presupposes that a competitive framework to establish a pool of providers will be.provided. This would avoid the delays inherent in securing another NHS provider.

Melanie Print is a commercial partner at Bevan Brittan LLP. She advised on the first merger by a foundation trust and is currently acting on another acquisition.