What are the alternatives to foundation trust status?

The Health & Social Care Act includes plans for the abolition of NHS trusts. Exactly when this will happen is unclear. But what is certain is that a significant number of the 110 remaining NHS trusts are not going to meet the Department of Health’s target date of 2014, if at all, to become foundation trusts.

So what are the options open to NHS trusts who may be struggling to achieve foundation trust status, or indeed may already have given up?

For strategic health authorities looking at acquisitions as a solution, there does not seem in most cases, a shortage of foundation trusts and private sector providers prepared to throw their hats into the ring.

Any foundation trust looking at a possible acquisition is likely to be looking for transitional funding to ensure the transaction is viable. If there are a significant number of such transactions in the next two years, this could start to prove a costly solution for the Department of Health.

The private sector may be prepared to look at sharing risk and reward, but the issue then will be whether they are prepared to underwrite the special purpose vehicles that may be set up for such transactions.

Acquiring foundation trusts will also be required to satisfy the Cooperation and Competition Panel that there are sufficient financial and clinical benefits to counterbalance any loss of patient choice or other cost to patients and taxpayers.

Acquisitions or mergers could also be at the core of what are referred to as “new models of service provision”, such as setting up federations of several hospitals under common management of a foundation trust.

Some of the more interesting solutions are linked to new models of integrated care which are being developed across local health economies. A trust might still achieve foundation trust status by reinventing itself as a community foundation trust acting as lead contractor for all the providers in the model. The trust would hold the principal contract with commissioners, delivering integrated services through subcontractors with providers in the primary care, mental health and third sectors, as well as with local authorities and possibly other acute trusts.

A variation on this might involve creating a “super” community foundation trust which absorbs all or part of the other providers into a single entity rather than following the sub-contracting route. These models might, for example, mean losing some or all of the A&E and maternity services to neighbouring foundation trusts which have a better capacity to deliver such services.

Appropriate incentives will need to be built in to make the model viable for participants. This would have to be carefully designed and managed to ensure it was acceptable to stakeholders and did not lead to judicial reviews or challenges under procurement law and the Principles and Rules of Cooperation and Competition. System wide foundation trusts have been mooted which mange both the budget and its delivery along the Kaiser Permanente model in the USA.

What are the options involving the private sector? Circle, of course, is now running Hinchingbrooke Hospital. The Department of Health may be hoping this is a solution for other challenged trusts but only time will tell how successful this is. The Health & Social Care Bill only allows acute trusts to remain as NHS trusts if managed under a “franchise” and the arrangements are in place before the abolition provisions of the new act come into force.

Joint ventures with the private sector would not in themselves solve the problem of trusts struggling to achieve Foundation Trust status. Unless the Department of Health allows the private sector to take over running a trust (other than following the Hinchingbrooke franchise model), the private sector may be limited to offering  support to help trusts towards foundation trust status.

Trusts can of course be downgraded or closed, subject to public consultation. There are clearly too many hospitals in some parts of the country, especially London, at a time when the aim is to keep patients outside the acute setting whenever possible. The difficulty is that politicians of all persuasions are nervous about such proposals when they affect their constituencies, even where it may be the best solution both financially and clinically.

It seems unlikely that many, if any, hospitals are going to disappear even if services are reconfigured. This will be confusing for patients who have had to endure months of speculation and comment about the Health Bill and who will be concerned about changes to their local services. More than a decade on from the fallout following the closure of Kidderminster Hospital as a district general hospital, it may not be easy to sell any of these solutions to those who provide and use the services set for change.