In breach of trust?: Co-operative News


The Paul Gosling Column


The conversion of NHS trusts into largely autonomous foundations trusts (FTs) has split the co-operative movement. On the one hand, prominent co-op figures – notably Co-op Party sponsored MP, David Taylor – have bitterly opposed the creation of FTs as a move towards privatisation. On the other, the Co-operative Party and the Mutuo think-tank have been strong advocates of an initiative they say is move from a state-owned monolith towards the type of self-governing and locally responsive organisation that exemplifies co-operative principles. FTs were proposed as bodies that would be held accountable to local stakeholders, including patients and staff.


Writing two years ago, the now departing Co-op Party general secretary Peter Hunt explained: “The establishment of NHS Foundation Trusts represents a radical change in the nature of public healthcare providers. NHS Foundation Trusts are required to deliver NHS care to national standards whilst complying with a more commercially-focused approach to financial management. A major issue is how they operate as mutual organisations – attracting a representative body of members and encouraging them to participate in the organisation’s activities, particularly the appointment of Trust Governors.”


Speaking in the House of Commons when FTs were initially being proposed by then health secretary Alan Milburn (the MP for Darlington – Tony Blair, of course, was MP for Sedgefield), David Taylor put forward a contrary view. “The Government’s commitment to a primary care-led NHS with high national standards and free from excessive bureaucracy is most welcome, but does not the foundation hospital ideology run directly counter to those values? Is not the Secretary of State engineering a US-style system of health care rooted in market morality and private provision that is not old values in a new setting, but a mistake of fundamental historic importance—a Trojan horse for Sedgefield privatisers and Darlington money changers, perhaps?”


The key issue lying behind these conflicting approaches is the question of whether FTs add to or reduce local NHS accountability. Results from a just-published review of NHS reforms, produced by the two main government audit bodies – the Audit Commission and the National Audit Office – goes some way towards answering that question.


Accountability seems, for the moment at least, to have diminished in FTs. The report (‘Is the treatment working?’) is actually rather worried by the lack of accountability of FTs, despite this being one of the rationales for their creation. “FT status does not yet seem to be empowering organisations to deliver innovative models of patient care,” the report observes.


Nor is there evidence that becoming an FT makes a hospital perform better. “There is no significant evidence yet that FTs are delivering higher quality of care as a result of their status,” observes the report. Yes, FTs provide better treatment and care than non-foundation NHS trusts – but they were before they became FTs. Trusts had to be performing strongly in order to become FTs. What has not been demonstrated is that converting to an FT has had any additional beneficial impact in terms of quality of care.


There are certainly other positive results of becoming an FT – at least for the trust itself. Their ability to generate cash surpluses has been significantly improved. While less than half of NHS trusts have yet become FTs, most of the hospitals sitting on large cash surpluses are FTs. “FTs are becoming even stronger organisations when compared with other acute trusts,” note the two audit bodies. “In the three years that FTs have been operational, their cash surplus has increased to £1.5bn as at the end of the first six months of 2007/08 and is expected to continue to rise,” the report adds. This is an increase of £600m over the position at the end of 2006/07.


FTs are doing nothing wrong in retaining their surpluses – it was always the idea that they should, to encourage innovative practices and sound financial management. “Income growth overall has been a significant contributor to the FT net surplus before exceptional items…. Efficiency gains have also contributed to their improved financial position,” explains the report.


At present, then, the evidence is that foundation status has achieved half its objective, but not yet the other half. It is improving commercial and financial acumen, but not apparently doing anything significant in terms of quality. The report is largely quiet about accountability arrangements, but the implication appears to be that these are weak in terms of accountability to the wider stakeholder interests of patients and staff.


The key conclusion from the study is that FTs “need to take further steps to improve the quality of their services, making greater use of the cash surpluses available to them”. It continues: “Their performance has generally been better than that of other trusts, although they started from a higher base position. Nevertheless, the logic of FT status was that greater accountability would lead to better, more responsive services. That now needs to be demonstrated across the sector.”


There is also an important issue, highlighted by the report, that decentralisation and the devolution of decision-making to FTs has come at the expense of the ability of Primary Care Trusts to plan the organisation of their local health economies. PCTs , the auditors point out, need to thoroughly understand the capacity and commitments of local health providers.


Overall, the two audit bodies include that the NHS has “made significant progress” as a result of a raft of reforms over the past eight years and the doubling of revenue support going into health care (rising from £43.9bn in 2000/01, to £90.7bn in 2007/8). This view is supported by the latest performance statements from the Department of Health, backed by analysis from the independent King’s Fund, which point to significant improvement in productivity and performance outcomes.


However, support for FTs from the co-operative movement was specifically related to the promises made on accountability. If those accountability outcomes do not become more evident, and quickly, many more people within the movement will start to question at the very least the way the model is being implemented.



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