Governance for NHS foundation trusts

Now that England's health secretary, Alan Milburn, has published his Guide to NHS Foundation Trusts,¹ it is apparent that the proposed model is more radical in its implications but also more problematic in its implementation than had been anticipated. It is radical in that it is based on a new notion of social ownership modelled on cooperative societies and mutual organisations: the rhetoric of devolving power in the NHS is, in effect, to be institutionalised by transferring control to the “local communities” served by foundation trusts. Moreover, the first generation of foundation trusts is seen as preparing the way for their status becoming the norm in the NHS in time. If so, then the relation between centre and periphery in the NHS could change dramatically. It is problematic, however, in that the proposed system of governance for foundation trusts could make those working in them look back nostalgically to the days when their chief concern was about the heavy hand of central government.

Some of the initial fears about foundation trusts were clearly misplaced. They do not represent a backdoor form of privatisation. They will not be given a free hand to expend their facilities for treating fee paying patients: the percentage of income derived from this source is to be capped. They will be obliged to offer a set of “regulated services” to ensure that NHS commissioners, and eventually individual consumers, have an adequate menu of choice. And, of course, they will have to comply with national clinical and quality standards. Worries that the autonomy of foundation hospitals will be severely circumscribed by tight regulation² have more substance than apocalyptic charges that the new model threatens the principles of the NHS or will lead to a two tier service. As it is, the NHS is a multiple tier service, with trusts varying considerably in the quality of the services provided: witness the notorious star system.

It is the proposed model of governance that prompts serious doubts. Ideologically it seems adaptable: it harks back to a strong tradition in socialist writing yet also has the sympathetic attention of the London based Institute of Directors, the leading membership organisation for directors who are responsible for the strategic direction of companies.³ But translated into a plan of action it is seriously flawed. Consider, first, the internal governance of trusts. They will have boards of governors, of which most will be elected by “the patient and public membership,” some from the “employee membership,” and the rest will be nominated by “partner organisations” such as local primary care trusts or universities. In turn, the board of governors will choose the chief executive and the non-executive members of the management board responsible for the day to day running of the trust.

But who will be the members electing the board of governors? Seemingly, they will be self selected. Anyone who is living in the local area, who has been a patient of the trust, or who is an employee will be eligible to register and vote. Details on how to organise all this is left to aspiring foundation trusts. The first safe prediction therefore is that the membership will be unrepresentative. It will be skewed towards members with intense but possibly atypical views about the NHS and will reflect the organising activities of pressure groups. The second safe prediction is that apathy will rule. This is what the history of the cooperative movement documents⁴ and what the recent experience of mutual organisations such as building societies illustrates: in the latter case, members took an active interest only when the issue of demutualisation came up.

Also, the model conflates two quite different types of mutual organisations—cooperatives of producers and cooperatives of consumers. Combining the two internalises the inevitable tensions between the two sets of interests. It might have been wiser to have experiment with producer cooperatives by allowing the staff of the foundation trusts to run themselves. Staff responsible for their own institution are much more likely to welcome strong management—instead of resenting it—than if they see themselves as manipulated by others: this is, perhaps, one of the lessons to be drawn from the success of the Kaiser Permanente organisation in the United States. A necessary condition would, of course, be rigorous accountability for the way in which the trust's resources are used. But Mr Milburn's scheme of things has no shortage of accountability mechanisms.

On the contrary, the problem is an excess of accountability. In the first place, foundation trusts will be accountable to the newly created independent regulator who will license them, monitor them, decide what services they should provide, and if necessary dissolve them. In the process, the regulator will be able to impose additional requirements on the trusts, remove members of the management board, and order new elections. The regulator will also determine the limits of the trust's capital spending and will be informed by the reviews carried out by the new Commission for Health Audit and Inspection. Foundation trusts will also have to answer to the overview and scrutiny committee of the local authority (which may interpret the wishes of the local population rather differently). Finally, foundation trusts will be accountable to primary care trusts (who may have yet another, yet again different view about the local population's needs) for fulfilling contracts. Overlapping accountabilities are likely to mean conflicting pressures: how far, for example, can national priorities to be adapted to local ones?

So there is much for the Health Committee of the House of Commons to sort out in its inquiry into Mr Milburn's radical but flawed plan. Not only do the governance arrangements of individual foundation trusts need to be sorted out, but so, most crucially, does the role of the independent regulator who is to be accountable to parliament through the secretary of state. Will he or she be the secretary of state's creature or act as a baffle, protecting foundation trusts from political intervention? Who will answer questions from members of parliament and who will react to newspaper headlines if not the minister's private office? Potentially Mr Milburn offers the vision of a transformed NHS, but if the promise of a devolved service with greater autonomy for those actually doing the work is to be achieved the model needs a great deal more development.