NHS foundation trust
NHS foundation trusts are semi-autonomous organisational units within the National Health Service in England. They have a degree of independence from the Department of Health (and, until the abolition of SHAs in 2013, their local strategic health authority). As of February 2016 there were 152 NHS Foundation Trusts 
Alan Milburn's trip in 2001 to the Hospital Universitario Fundación Alcorcón in Spain is thought to have been influential in developing ideas around foundation status. The hospital was built by the Spanish National Health System, but its operational management is contracted out to a private company, and exempt from many of the rules normally imposed on state-owned hospitals, and in particular, the hospital was allowed to negotiate its own contracts with workers. The governance of the hospital includes local government, trade unions, health workers and community groups.
Foundation trusts were announced by Health Secretary Alan Milburn in 2002. The legislative basis was the Health and Social Care (Community Health and Standards) Act 2003. The first 10 NHS hospitals to become foundation trusts were announced in 2004. Gordon Brown prevented plans by Alan Milburn that they should be financially autonomous in 2002. By the end of 2012, the Monitor website listed 144 Foundation Trusts.
Successive governments have set target dates by which all NHS Trusts are supposed to have reached Foundation status. In 2011 the 116 Trusts then in the pipeline to make applications were required to sign a formal agreement with a deadline for the application to be made. Board members at a number of Trusts which missed the deadline were sacked. It is now officially admitted that a number of Trusts will never reach Foundation Trusts status and a new organisation the NHS Trust Development Authority was established by the Health and Social Care Act 2012 to supervise Trusts which have not reached Foundation status, of which there were 99 in April 2013, 47 of which were not expected to reach Foundation status.
The Health and Social Care Bill 2011 proposed that all NHS Trusts become NHS Foundation Trusts or part of an existing NHS Foundation Trust by April 2014, a deadline which has passed.
Foundation trusts have some managerial and financial freedom when compared to NHS trusts. The introduction of foundation trusts represented a change in the history of the National Health Service and the way in which hospital services are managed and provided. At the time of introduction they were described "as a sort of halfway house between the public and private sectors". This form of NHS trust is an important part of the United Kingdom government's programme to create a "patient-led" NHS with an internal market. The stated purpose is to devolve decision-making from a centralised NHS to local communities in an effort to be more responsive to their needs and wishes. But after Gordon Brown prevented plans by Alan Milburn to make them financially autonomous they have been much more in the public sector and less autonomous than was originally expected.
Each Foundation Trust has a Council of Governors. This is made up of elected Governors and appointed Governors. Elected Governors are chosen by a secret, postal ballot, of the membership. The elections are usually held in separate constituencies. Typically there is a staff constituency, a patient constituency, and a "public member" constituency consisting of members who are neither patients nor staff but live in a defined geographical area. In addition there are appointed Governors, appointed by bodies with whom the trust works in partnership. So, for example, appointments may be made by local Councils, local medical Schools, and local Voluntary organisations. Governors are intended to act as a link between the community and the Board of Directors. The size of the Council of Governors and its exact composition is determined by the constitution of the particular Trust. Each Trust adopts its own constitution subject to certain restrictions in legislation. (For example, a majority of the Council of Governors must be elected Governors and Governors must be unpaid volunteers. They are intended to act as a link between the community and the Board of Directors. Some trusts are more committed to co-operative principles and have even written the Rochdale Principles into their constitution and aspire to work closely and in partnership with other mutual as well as local organisations. But on the whole "Foundation Trusts [have]... not deepened in terms of democratic practice and participation".
By March 2013 there were 145 NHS foundation trusts (41 of them mental health trusts and five ambulance trusts). They are authorised and regulated by Monitor, the independent regulator of NHS foundation trusts. They include acute trusts, mental health, community and ambulance trusts. A full list of NHS foundation trusts can be found on Monitor's website. With the authorisation of North East Ambulance Service in November 2011, the North East became the first region with all trusts having gained foundation trust status.
The trade body for foundation trusts is NHS Providers, formerly known as the Foundation Trust Network, which has 95% of all acute, ambulance, community and mental health foundation trusts and trusts in its membership. The chief executive of NHS Providers is Chris Hopson.
Equivalent Foundation Trusts (eFT)
Formerly referred to as Foundation Trust equivalent (FTe), this designation applies only to trusts providing high secure psychiatric services. There are three: Nottinghamshire Healthcare NHS Trust, West London Mental Health NHS Trust and Mersey Care NHS Trust. Nottinghamshire Healthcare gained Foundation Trust standard on 2 November 2010. The other two trusts are in the assessment process.
These trusts abide by the same Department of Health definition for a Foundation Trust but the Secretary of State (SoS) for Health maintains a direct line of communication and accountability with them because the SoS has the responsibility to provide healthcare to patients who have been detained under the Mental Health Act, and have been judged to pose a grave and immediate danger to the public.
Unlike full Foundation Trusts, Governors have no statutory role. The Board of Directors have no statutory duty towards the governors. The governors cannot, without the Board of Directors' permission, have any control over the direction of the FT. The governors cannot appoint or remove trust auditors. The chair and directors are not appointed by their board of governors. Equivalent Foundation Trust organisations are still regulated by Monitor, and can retain surplus cash and can sell property and retain the cash from the sale.
Comparison with other NHS trusts
Foundation trusts had a cap on the proportion of their income that can come from non-NHS treatments. It did not only apply to income derived from individual patients, it covered income from all non-NHS sources. This could include joint ventures to develop medical technologies, employers paying for counselling services or income from treating UK military personnel overseas.
The Health and Social Care Act 2012 abolished the private patient income cap but FTs have to do the majority of their work for the NHS. This restriction was kept to reassure those concerned about future developments that FTs would continue to have NHS work as their central concern. Previously each FT had its own cap, set at the level of its private activity when the first FTs were established in 2003/4. About three quarters of all FTs had a cap of 1.5% or less. Until 2010 all mental health trusts were completely barred from undertaking non NHS work, but after lobbying from the Foundation Trust Network it was raised to 1.5%. These caps disappeared on 1 October 2012. Collective earnings from private patients increased 14%, from £346.1 million in 2012-13 to £395.9 million for 2014-15. Private earning is concentrated on specialist hospitals in London who see many patients from other countries. Most Trusts have negligible private income.
Foundation Trusts also have different reporting requirements. They produce their accounts under the Foundation Trust Financial Report Manual, which is collated and authorised by Monitor, in liaison with HM Treasury. They also have to produce annual Quality Accounts.
Achieving Foundation Trust Status
In order to achieve Foundation Trust Status NHS Trusts have to pass a variety of tests, which have changed over time. In 2003 only trusts with three stars from the Commission for Health Improvement were eligible for foundation status. In that year Aintree Hospitals, Essex Rivers Healthcare, Newcastle upon Tyne Hospitals and Walsall Hospitals were all downgraded to two stars and so did not make the first wave of Foundation Trusts.
The public's perception of Foundation Trust status implying a high standard of clinical care was changed by the Mid Staffordshire NHS Foundation Trust scandal (Stafford Hospital Scandal) and the Francis enquiry published in 2013. At the outset some critics claimed that Foundation Trusts go against the spirit of the principles laid out by Aneurin Bevan (who founded the NHS). Others feared that it would lead to a two-tier system. Others doubted whether the Foundation Trust members would succeed in having any effective influence over hospital management. A study undertaken in 2005 by the King's Fund of Homerton University Hospital NHS Foundation Trust found some governors disappointed and disillusioned.
Another report found that it was too easy to invite members to sit on sub-committees, where they quickly became bogged down in the minutiae of operational planning, whilst the main decisions were taken at meetings that they only heard about after they took place. This study was funded by the Nuffield Foundation.
In June 2014 Bill Moyes, former Monitor executive chair, urged the NHS to reconsider “whether the model of foundation trusts is sensible”, arguing “If one-third of the hospital system is permanently not demonstrating good viability and good governance, is that telling you something about actually how the system should run as opposed to how we thought it should run?”
The early foundation trusts were generally financially buoyant, but during 2013 and 2014 more faced financial difficulties. A foundation trust finance facility, managed by an advisory committee to the Department of Health, dealing with loans to foundation trusts was established to cover capital developments, but during 2014 applications were made by trusts which had trouble paying utility bills or replacing medical equipment. Guidance issued in October 2014 said that conditions could be set which could include: reductions in the use of temporary staff, “use of collaborative procurement routes” or “the adoption of a shared services solution”. By the end of 2013-14 Foundation Trusts collectively had built up cash reserves of £4.3 billion and it was suggested in the NHS Five Year Forward View, that the government would “support” foundation trusts to spend this money “to help local service transformation”. In response the chief executive of the Foundation Trust Network Chris Hopson said: "The responsibility for these surpluses lies with the FTs; any attempt by the statutory bodies to make a grab for them will be furiously resisted.”
By 2016 the distinction between Foundation Trusts and other NHS trusts was widely regarded as eroded. The two separate regulators were combined into a new body NHS Improvement. The notion that every trust should become a Foundation Trust was abandoned and the widespread financial crisis undermined the supposed autonomy when almost all had to rely on money borrowed from the Department of Health to which strings were attached.
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