Published: 05/02/2004, Volume II4, No. 5891 Page 3 4

Trusts whose applications for foundation status have been shelved until July will be allowed to operate as foundation trusts in shadow form, HSJ has learned.

Go-ahead came from the Department of Health on Monday. This followed urgent discussions between chief executives and senior officials after independent regulator Bill Moyes announced that the first wave of applicants will be split. Half are due to go live in April and the other half deferred until July.

Mr Moyes has yet to grant a licence to either cohort of trusts: he will now embark on a full financial assessment of the first 12 trusts, scheduled to launch in April.

The ability to run as shadow foundation trusts will mean the July cohort is free to continue to run elections to their board of governors.

And, crucially, it will allow trusts to become early implementers of the payment-by-results system in April, at the start of the new financial year - an issue important to many hospitals because it means access to potentially millions of pounds in extra revenue.

One senior manager said: 'I've never seen the department work so fast to sort out an issue like this... There was huge concern among trusts facing delays [in implementing payment by results] at the weekend. And the DoH gave a decision on that from Hugh Taylor [DoH director of strategy and business development] within hours.'

However, the July cohort will not have access to the much-vaunted borrowing freedoms until they receive a formal foundation trust operating licence from Mr Moyes.

And as HSJ went to press, managers were still seeking clarification from Richmond House on how they would make the transition to foundation status in the middle of the financial year. In particular, they want guidance on negotiating commissioning arrangements with primary care trusts, when those arrangements have to become legally binding contracts once foundation status is won.

In an e-mail leaked to HSJ, Mr Taylor was told by one chief executive: 'You will appreciate how difficult it is going to be to have two sets of accounts, two sets of contracts, two financial years running basically in parallel. I am sure you appreciate the absolute complexity of arranging legally binding contracts with PCTs and we would appreciate a clear steer from the DoH on these matters.'

Sheffield Teaching Hospitals trust foundation project director Heather Drabble said: 'I think there will have to be discussions with the DoH, the independent regulator and the strategic health authority about what 'shadow form' really means. We haven't had those conversations yet.'

'If you are an eternal optimist, you can look and say the delays will allow us to get the governance structures in place and we will have people on the board [of governors] that have a full understanding of what is required. I think that is one of the good things to come out of this.'

One finance director of a trust due to win foundation status in April said they were 'bloody relieved' they had not been forced into the second cohort.

But asked if he was disappointed not to be among the first trusts to win foundation status, University Hospital Birmingham trust chief executive Mark Britnell laughed and said: 'It is better to be the best than first.'

Mr Moyes made the decision to create two cohorts because of the protracted battle to push the foundation legislation through Parliament last year.

Over the last two weeks, he met with chief executives of all 24 trusts given the green light to apply by health secretary John Reid.

Mr Moyes told HSJ that few 'were standing up and giving me a round of applause' when he revealed his decision.

'Some trust chief executives are disappointed. That is understandable. There is considerable momentum; a lot of enthusiasm within the NHS for foundation trust status.'

He said: 'We had to make fairly rudimentary assessments [before deciding which trusts were delayed]. But it was about deciding which trust applications seemed straightforward and could proceed quickly - no more than that.'

Mr Moyes recognised some of the fears over the complexity of making a mid-year transition from trust to foundation trust, but stressed there were still the socalled '1a wave' foundation trust candidates who, if successful, were happy to be moving to foundation status in October.

Mr Moyes said the compressed timetable meant some trusts had suffered a 'rough justice'. But he said they would all face a rigorous assessment of their applications.

A spokeswoman for King's College Hospital trust, whose application has been put back to July, said the trusts in the second cohort were more complex organisations than those lined up for the April launch.

She said: 'I think if you look at the two groups, [Mr Moyes] has made a decision to wait with most of the teaching hospitals simply because their commissioning arrangements with PCTs are more complicated. The first cohort consists mainly of district general hospitals.'

The April cohort

Basildon and Thurrock University Hospitals trust

Bradford Teaching Hospitals trust

Countess of Chester Hospital trust

Doncaster and Bassetlaw Hospitals trust

Homerton University Hospital trust

Moorfields Eye Hospital trust

North Tees and Hartlepool trust

Peterborough Hospitals trust

Rotherham General Hospitals trust

Royal Devon and Exeter Healthcare trust

Stockport trust

Royal Marsden trust

The July cohort

Addenbrooke's trust

Calderdale and Huddersfield trust

City Hospitals Sunderland trust

Gloucestershire Hospitals trust

Guy's and St Thomas' Hospital trust

Kings College Hospital trust

Papworth Hospital trust

Sheffield Teaching Hospitals trust

Southern Derbyshire Acute Hospitals trust

The Queen Victoria Hospital trust

University College London Hospitals trust

University Hospital Birmingham trust