24 May 2002
Trusts awarded three stars under the NHS ranking system will be allowed to apply for 'foundation' status and freedom from the prescriptive system of performance management and monitoring arrangements assembled in recent years.
Instead, foundation trusts will be held accountable by the new NHS super-regulator – the Commission for Healthcare Audit and Inspection – and by the primary care trusts with which they negotiate contracts.
Significantly, Milburn pledged that for trusts granted the new freedoms, he would also give up his powers of direction, which allow him to intervene directly in failing hospitals.
'Instead of being line-managed by the Department of Health, they will be held to account through agreements and cash-for-performance contracts they negotiate with the local primary care trusts and other commissioners, as well as through independent inspection,' Milburn told a seminar in London on May 22.
The foundations will still be part of the NHS and subject to its principles, but will have greater freedom to act. They will be able to invest the proceeds from asset sales in patient services, rather than giving them to the Department of Health. They will also be granted prudential borrowing powers to finance capital investment similar to those being given to local authorities.
Milburn said the government was considering establishing the foundations as public interest companies, which would be not-for-profit and protected against takeovers by private firms.
The first wave of foundations will be selected from trusts awarded three stars in July. Four have already expressed firm interest in winning foundation status – Northumbria Healthcare, Peterborough Hospitals, Norfolk and Norwich University Hospital, and Addenbrooke's NHS trusts. If successful, they would be fully operational by the end of next year.
Milburn said the plan would have far-reaching consequences. 'NHS health care no longer needs to be delivered exclusively by line-managed NHS organisations. The task of managing the NHS becomes one of overseeing a system, not managing an organisation,' he said.
Health managers' immediate response to the proposals was lukewarm. NHS Confederation chief executive Gill Morgan called for the freedoms being offered to foundation trusts to be made available to all parts of the NHS.
She said: 'The creation of a small number of foundation organisations does not address the problem of central control. If freedoms would improve performance then they are needed by all. The most important change is to the overall system of performance management. This is not conducive to creating high performance at present.'
PFmay2002
