Regulators propose curbs on foundation trusts' freedoms

NHS England and NHS Improvement have also outlined further potential changes to the national payment tariff, and provided more detail on plans to roll back key parts of the Lansley reforms on competition.

In a report discussed at a joint board meeting today, the arm’s-length bodies outlined “proposals for possible legislation” to ease implementation of the NHS long-term plan.

It proposed:

• NHSI should have targeted powers to direct mergers or acquisitions involving foundation trusts (as it can for non-FTs);
• that NHSI have powers to set annual capital spending limits for foundation trusts (as it does for non-FTs);
• national tariff prices be set as a “formula” rather than a fixed value, to reflect local factors;
• a new power for local areas to agree appropriate payment arrangements and national prices to be applied only in specific circumstances, such as to allow out of area treatments;
• the power of trusts to apply to NHSI to make local modifications to tariff prices should be removed;
• commissioners and providers be effectively removed from the scope of the public contracts regulations, with commissioners subject to a “best value” test instead;
• removing the powers of the Competition and Markets Authority to review mergers involving FTs; and
• various measures to ensure greater integration between national and local bodies.

HSJ revealed in December the regulators were considering proposing they take on powers to direct FTs to merge, and impose capital controls. Another option considered, for the centre to be able to direct FTs’ senior appointments, appears to have been dropped.

Ultimately, the proposals would need to be backed by government and passed in Parliament if they are to become law.

On mergers, the report said: “Wherever possible, we would want local provider organisations and their system partners to agree where improvements of this kind are needed and how to take them forward.

“In some circumstances, however, such improvements could be frustrated by the reluctance of one local trust to consider such arrangements….

“We are proposing that NHS Improvement should have targeted powers to direct mergers or acquisitions involving NHS foundation trusts, in specific circumstances only, where there are clear patient benefits.”

It said FTs’ current ability to set their own capital plans has led to situations where it has been necessary to constrain or delay urgent spending by non-FTs, due to the uncertainty around the level of overall spending.

The report referred to ongoing changes to the tariff, such as the “blended” payment system for emergency care, and said “choice will still exist for elective care and money will need to continue to follow patients accordingly”.

But it added the legislative changes proposed would offer more flexibility to support “new ways of delivering care”.

A period of engagement on the proposals has been launched with feedback requested by 25 April. At the board meeting, NHS England national director of strategy and innovation Ian Dodge said his estimate was that any legislative change would probably not come into effect until 2022 at the earliest.

He claimed the proposals on FTs were “highly targeted” and would not change “the core FT model and freedoms”.