Published: 17/11/2005 Volume 115 No. 5982 Page 7

A third of trusts would need to shut hospitals or services to become credible candidates for foundation status, Monitor chair Bill Moyes has warned.

Mr Moyes said just one-third of acute trusts were currently 'capable of applying credibly' to become foundation trusts. One-third would require new national policies on historic debt and specialist services, while the remainder would only make the grade if they rationalised services.

His conclusions came from diagnostic programmes being piloted in Cheshire and Merseyside and Birmingham and the Black Country strategic health authorities to help trusts prepare for foundation status.

Speaking to HSJ, Mr Moyes described the idea that all acute trusts would be in a position to apply for foundation status by 2008 - as outlined in the government's manifesto - as 'adventurous'.

After suggesting that one-third of trusts were credible candidates for foundation status, he said the Department of Health would need to 'sort out policy issues... and develop a suite of policies' addressing historic debt and establishing specialist tariffs to allow a further third of trusts to go ahead.

The remainder would require more radical action, including accident and emergency closures: 'The issues [with these trusts] are about the healthcare system, either It is wrong specialties, too many hospitals, too many specialties in different sites, there is a need for rationalisation, ' he said.

'If You have got two or three A&E departments [in a health economy] then you might conclude that there is only one That is truly viable, ' he said.

Mr Moyes urged trusts to use the new diagnostic tool, set to be rolled out across all 28 SHAs next year, to identify quickly how to change their organisation to try for foundation status.

Monitor is due to authorise another group of foundation trusts early next year after it receives about 20 applications from the DoH in December. The regulator is then preparing to assess the same number every three or four months as the DoH tries to push ahead with the government's manifesto promise.

Earlier this month health secretary Patricia Hewitt announced that trusts will no longer need three stars to apply.

The DoH has said a combination of its new diagnostic tool and the annual health check by the Healthcare Commission would be used to asses which trusts would be eligible to apply for foundation status when the star-ratings system is replaced next summer.