Mental health foundation trusts: F marks the spot

Last month the regulator Monitor gave authorisation to Sussex Partnership trust to become a foundation trust. The move took the number of mental health foundation trusts to 31.

It was a proud moment for chief executive Lisa Rodrigues. After 18 months of preparation she says becoming a foundation trust means that the organisation finally has the incentive to create a financial surplus, knowing it can plough the money back into services.

"We have developed a clear long term strategy which is stable into the future looking forward for the next five years; [becoming a foundation trust] has made us think in the way we need to think. Previously there was no incentive to plan long term but being a foundation trust makes NHS organisations think in the same way you or I would to plan our finances and spending," she says.

Mental health trusts seem to be ahead of the game in terms of foundation trust status. Just under half of the 69 mental health trusts in England have become foundation trusts in a little over two years - the first three were authorised in April 2007. The progress is quicker than their acute trust counterparts.

However, 38 trusts are yet to be authorised and, as with their acute counterparts, it is fast becoming clear that not all will make it. Suffolk Partnership put its application on pause so as to concentrate on improvements to its inpatient and learning disabilities services.

Most recently, last month Derbyshire Mental Health Services trust had its application turned down, due to "severe concerns" related to its business plan.

Ms Rodrigues, who is to take up the position of chair at the Mental Health Network this month, says that as with acute trusts, some mental health organisations need extra help both with governance and with strengthening their financial situation in order to prepare their application.

She says her trust took 18 months to go through the process - longer than some of original mental health foundation trust applicants - as it was not in such a strong position.

Helping hand

Now the Mental Health Network is planning to look into mentoring and offering "in-house consultancy" by authorised mental health foundation trusts to those that have yet to make the grade.

Mike Cooke, chief executive of Nottinghamshire Healthcare trust and former head of South Staffordshire and Shropshire Healthcare foundation trust, acknowledges not all trusts will make it to foundation status.

"There will be some mental health trusts that are too small and some with structural capital problems that do not have the borrowing power. Some will need help turning round and others won't make it. The numbers of mental health trusts have already moved down quite a bit [as a result of mergers] and bigger is better in the market we are in. I also see more pluralism and interest from the private sector in future."

Mr Cooke says it is unlikely that mental health foundation trusts will become "predatory". "I think there will be a more collaborative approach," he adds.

Berkshire Healthcare foundation trust chief executive Philippa Slinger is more sanguine about the possibility of mergers, acquisitions and franchising.

"Franchising - where we lend our brand to somebody else - is a possibility. We already have a shared service organisation and a procurement hub which separately have their own managing directors who report to me. It could be that a trust could oversee another organisation. In some cases this will have to happen because some mental health trusts won't make it. We have got a hotchpotch in terms of mental health in the NHS at the moment and it is not in everyone's gift to become a foundation trust."

Cumbria Partnership foundation trust chief executive Stephen Dalton is even more explicit. "We need to be more sophisticated and if somebody has a good product, why should they not be in a position to spread excellence?" he asks.

New models

Mr Dalton says that in order to rescue mental health trust services that will not become foundation trusts, those not authorised should consider the acquisition route rather than undertaking a merger.

"There is also an interesting debate at the moment around the future of the provider arm of primary care trusts. For ourselves, although we would not want to take all of the PCT provider services in Cumbria, we would hope we would be the preferred provider for a number of them."

At the time of the first mental health foundation trust authorisations, Monitor executive chair Bill Moyes said mental health trusts were "among the most innovative of our health and social care providers".

Monitor chief operating officer Stephen Hay says the mental health applicants being seen by the regulator are beginning to truly incorporate service development in their proposals; often more so than the acute sector: "A number of mental health trusts are coming to us with new or developing business plans," he says.

He does though add there will future instances where mental health trusts that do not make it are acquired or franchised.

Camden and Islington foundation trust director of corporate and business development Dave Lee praises the regulator for working hard to develop its understanding of the work mental health trusts do.

"Both sides have learnt a lot of tricks of the trade," he says. Mr Lee believes there will be opportunity for mental health foundation trusts to "parachute in to manage a particular service of another trust". However, he adds that this is likely to be the case for more specialist services rather than the standard care.

"What clearly has the potential to happen is that some of the mental health foundation trusts that have been successful will work in partnership and collaboratively with others in a supportive partnership."

One major issue for mental health organisations in becoming foundation trusts is that they do not yet have a payment by results tariff in the sector. While work including trusts is under way to remedy the situation with a tariff based on 13 "clusters" of care pathways, opinion on whether payment by results can or even should be applied to mental health in the way it has been to the acute sector remains divided.

"It is difficult to develop services around demand rather than need," says Ms Slinger. Mr Lee also questions the need for a tariff.

"There is a lot of security in block contracts. Mental health foundation trusts need to focus on why they need payment by results. It has been a rocky process in the acute sector and would be for us; we need to be careful."

Stumbling blocks

Big issues for mental health trusts applying for NHS foundation trust status

• Financial stability and contracting in the absence of payment by results

• Partnership agreements

• Secondary commissioning

• Agreement on mandatory services

• Information systems that can support activity recording and costing

The security service

Three mental health trusts - Nottinghamshire Healthcare, Mersey Care and West London Mental Health - will never become foundation trusts. Because they provide high secure services (at Rampton, Ashworth and Broadmoor hospitals respectively) the government has ruled out foundation trust status for them.

It does so because it insists a "line of sight" is needed between the organisations and both the health and home secretaries, as high secure service users are likely to have committed an offence.

Between them and the government these trusts are trying to develop a third way and become "foundation trust equivalent" organisations.

In the report High Quality Care for All, health minister Lord Darzi stated the government is aiming to "give similar freedoms to organisations which achieve and maintain similar levels of good governance and financial stability to those required of NHS foundation trusts".

These trusts could achieve "authorisation" from the government and possibly foundation trust regulator Monitor as early as next year, although the exact model for their operation has yet to be decided and there are a number of issues still to be resolved. These include the assessment process and whether it will be undertaken by Monitor and be the same process as for foundation trusts; the financial regime and whether these trusts will be given the same freedoms as foundation trusts; and status and branding - although they will not be able to call themselves foundation trusts, will they have a brand that conveys equal status?

Nottinghamshire Healthcare trust chief executive Mike Cooke explains the three trusts are trying to "achieve the same status and broaden the church without lowering the bar".

"We are an organisation with a£300m turnover and we want to get foundation trust benefits to all services and organisations in terms of clear plans, financial flows able to follow those plans and clear lines of accountability and engagement.

"We want to get genuine authentic engagement and to do that we have to be on a level playing field. We want to go down the full-on authorisation process and we are in discussion with Monitor at the moment about this.

"In principle Monitor thinks it is a very good idea. 2009-10 will be a very busy year for us."