21 March 2003
Private and voluntary sector organisations could apply to become NHS foundation trusts under proposals being put forward by Health Secretary Alan Milburn, it emerged this week.
In a move that will further blur the lines between the public and private provision of health care, independent sector care providers could apply to become not-for-profit public benefit corporations. This status will also be given to successful NHS applicants, and all foundation trusts will be registered as separate corporate entities at Companies House.
The Health and Social Care Bill, published on March 13, says that in addition to NHS trusts, 'persons other than an NHS trust' could apply if they are backed by the health secretary.
The Department of Health clarified the point this week, telling Public Finance: 'We are talking about the private sector here. We hope by becoming foundation trusts it will create certainty and credibility for them and enhance their reputation.'
The benefits of foundation status could range from Treasury-backed borrowing to the ability to apply for compulsory purchase orders on land and property.
Foundation status may prove attractive to lesser-known UK or overseas providers to incorporate 'NHS' into the name of units that will provide services funded by the taxpayer. The status would also put private sector applicants on a similar footing to their NHS counterparts by opening up the possibility of applying for DoH loans or grants to expand buildings or buy equipment.
Private sector applicants may have fewer restrictions on the levels of private work they do than their NHS counterparts. NHS trusts that win foundation status will have their private income capped at the proportion of the total income they earn from such work in the current financial year.
There is no such provision for non-NHS applicants, though the new Independent Regulator of NHS Foundation Trusts could curb their private earnings.
Unison general secretary Dave Prentis attacked the proposal. 'The government should concentrate on improving staff morale, recruiting and retaining staff rather than trying to outdo Thatcherism by bringing in private providers and a competitive market into the NHS. If they don't, we will end up with a health care lottery, with a return to the fear and uncertainty that were part of life before the NHS,' he said.
NHS Confederation policy director Nigel Edwards thought it unlikely private companies would apply. 'Some charities that do a lot of work with the NHS may feel it is a good thing for them but I don't see it happening with companies that have shareholders.
'There will be a lock on foundation trusts' assets so they won't be able to redistribute profits – the whole point of having shares is that they may pay a dividend,' he added.
If their application is supported by the health secretary, aspirant foundation trusts must apply to the regulator for an authorisation certificate. The application must be accompanied by a description of the goods and services that the trust plans to provide and be accompanied by a copy of its proposed constitution.
The regulator, which will be paid an annual fee by foundation trusts, will be powerful. It will be able to require applicants to alter the services they intend to provide. It will be able to put any terms and conditions on the authorisation it deems necessary. It will also put together a prudential borrowing code, in line with financial institutions' policies on loans to non-profit making organisations.
The regulator will have a number of possible sanctions against the directors and governors of failing foundation trusts, including forcing them to carry out actions it deems appropriate and removing any or all of them. It will also be able to suspend them or disqualify them from holding office. Finally, it could dissolve the foundation trust or transfer it to another NHS body.
These restrictions, together with the long-trailed limitations on foundation trusts' ability to take other trusts' staff, are being portrayed as an attempt to appease Labour opponents of the initiative.
However, it is unlikely to ease their concerns, and Milburn faces a long battle ahead as he moves to bring his vision to life.
PFmar2003
