Achievement of foundation trust status by NHS hospital trusts - Public Accounts Committee Contents

1  The problems trusts are facing in achieving foundation trust status

1.  Since the first NHS foundation trusts were created in 2004 it has been government policy that NHS hospitals should be more independent, running their own affairs and being accountable to local people and patients.[2] To achieve foundation status, trusts must be able to show they are financially and clinically sustainable over the next few years, and that their board and management have the skills to govern the trust as an autonomous body.[3] The Department of Health (the Department) believes that trusts need to attain foundation status to succeed in a highly constrained financial environment where past increases will not be continued.

2.  By 1 October 2011 there were 139 NHS foundation trusts, and 113 NHS trusts at various stages in the 'pipeline' towards foundation trust status. Only 14 trusts have achieved foundation status since the end of 2009.[4] The Department expects the majority of trusts to achieve foundation trust status by 2014, but recognises that a small number may not do so before 2016.[5]

3.  The development of the 'tripartite formal agreements' (TFAs) signed by trusts, Strategic Health Authorities (SHAs) and the Department has highlighted the extent of problems that some trusts face in achieving foundation trust status. These challenges are far more severe than trusts' and SHAs' initial assessment had suggested.[6] The proportion of trusts which stated that financial difficulties could be an obstacle to achieving foundation status, for example, has increased from 49% in 2010 to 80% in 2011. In addition, 78% of trusts need to tackle strategic issues, 65% have quality and performance issues; and 39% need to strengthen their governance and leadership.[7]

4.  Twenty trusts have already identified themselves as not viable in their current form.[8] This number does not include some trusts, such as the South London Healthcare NHS Trust, already known to be facing serious difficulties, and others whose Private Finance Initiative (PFI) schemes have been identified by the Department's consultants as unaffordable.[9] The Department accepts that more trusts will need to be added to the list, but does not believe that the total number will grow because, as some trusts join, others will become viable following merger or acquisition.[10]

5.  All NHS trusts have now agreed with their SHA and the Department the actions they need to take to achieve foundation status. Not all trusts have so far published their TFA documents or are prepared to release them when asked to do so. The Department maintained that TFAs are locally owned and that, as soon as they have been approved by trusts' boards, they will be published by each trust so that communities can see what has been agreed.[11] It is essential that local people should be involved in decisions about what services are available, and that trusts should gain the support of communities for the changes they are proposing.[12]

6.  The Department told us that responsibility for achieving foundation status, which will depend on implementing the commitments set out in the TFAs, rests with the trust's own board. The SHA in its oversight role, and the Department in turn, nonetheless retain a responsibility to ensure that adequate support is in place to enable trusts to achieve foundation trust status.[13] The Department confirmed that it would not let trusts pursue strategies that were not viable, and would intervene to ensure that trusts reach foundation status, either in their own right or as part of a larger organisation. The range of actions included self-assessment tools to help trusts develop board capability, bringing new expertise into the organisation, drawing in clinicians and clinical leaders from other organisations and, if necessary, replacing the trust's leadership team.[14]

7.  The quality of leadership at board level, and particularly the ability of non executive board members to hold the executive to account, is crucial to the trust's success.[15] The independent regulator, Monitor, has identified the lack of quality on boards as being a major impediment to applicants for foundation trust status, and 39% of trusts in the pipeline identified board capacity and capability as an obstacle they need to overcome.[16] Witnesses from three trusts also emphasised to us the importance of boards in providing clear leadership in difficult times, and in ensuring that patients and clinicians understand and support future plans.[17] The Department told us that from January all trusts would be expected to go through a process of board support and development which the Department was piloting.[18]

8.  It is not clear why an organisation would want to merge with, or take over some of the most troubled trusts, some of which are very large and are facing severe financial problems, including debt as well as poor performance.[19] It is not a convincing solution that combining trusts which are already challenged or unviable will somehow create a more sustainable successor, without some form of further intervention.[20] Ultimately, the Secretary of State retains responsibility for ensuring the sustainability of healthcare services provided to local communities, but the Department has not yet developed a failure regime to deal with trusts that prove unable to resolve their problems. [21]

2   C&AG's Report, Para 1 Back

3   Q 100 Back

4   C&AG's Report, Para 2 Back

5   Qq 92-93 Back

6   Qq 96-97 Back

7   Q 96, C&AG's Report, Para 2.4 and Figure 7. Back

8   C&AG's Report, Para 9 Back

9   Qq 94-95; 121-123 Back

10   Qq 94 -95; Q 119 Back

11   Qq 56-57; 177-178; Ev 22 Back

12   Qq 68-70 Back

13   Qq 98; 104 Back

14   Qq 109-112; 114-115 Back

15   Qq 72; 85; 184 Back

16   Q 183, C&AG's report Para 2.23 Back

17   Qq 43; 68-70, 72, 176, 213 Back

18   Q183; C&AG's report, paras 2.25-2.26 Back

19   Q 209 Back

20   Qq 206, 210 Back

21   Qq 113; 190; C&AG's report, para 3.14 Back

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© Parliamentary copyright 2011
Prepared 15 December 2011