1 The problems trusts are facing in
achieving foundation trust status |
1. Since the first NHS foundation trusts were
created in 2004 it has been government policy that NHS hospitals
should be more independent, running their own affairs and being
accountable to local people and patients.
To achieve foundation status, trusts must be able to show they
are financially and clinically sustainable over the next few years,
and that their board and management have the skills to govern
the trust as an autonomous body.
The Department of Health (the Department) believes that trusts
need to attain foundation status to succeed in a highly constrained
financial environment where past increases will not be continued.
2. By 1 October 2011 there were 139 NHS foundation
trusts, and 113 NHS trusts at various stages in the 'pipeline'
towards foundation trust status. Only 14 trusts have achieved
foundation status since the end of 2009.
The Department expects the majority of trusts to achieve foundation
trust status by 2014, but recognises that a small number may not
do so before 2016.
3. The development of the 'tripartite formal
agreements' (TFAs) signed by trusts, Strategic Health Authorities
(SHAs) and the Department has highlighted the extent of problems
that some trusts face in achieving foundation trust status. These
challenges are far more severe than trusts' and SHAs' initial
assessment had suggested.
The proportion of trusts which stated that financial difficulties
could be an obstacle to achieving foundation status, for example,
has increased from 49% in 2010 to 80% in 2011. In addition, 78%
of trusts need to tackle strategic issues, 65% have quality and
performance issues; and 39% need to strengthen their governance
4. Twenty trusts have already identified themselves
as not viable in their current form.
This number does not include some trusts, such as the South London
Healthcare NHS Trust, already known to be facing serious difficulties,
and others whose Private Finance Initiative (PFI) schemes have
been identified by the Department's consultants as unaffordable.
The Department accepts that more trusts will need to be added
to the list, but does not believe that the total number will grow
because, as some trusts join, others will become viable following
merger or acquisition.
5. All NHS trusts have now agreed with their
SHA and the Department the actions they need to take to achieve
foundation status. Not all trusts have so far published their
TFA documents or are prepared to release them when asked to do
so. The Department maintained that TFAs are locally owned and
that, as soon as they have been approved by trusts' boards, they
will be published by each trust so that communities can see what
has been agreed.
It is essential that local people should be involved in decisions
about what services are available, and that trusts should gain
the support of communities for the changes they are proposing.
6. The Department told us that responsibility
for achieving foundation status, which will depend on implementing
the commitments set out in the TFAs, rests with the trust's own
board. The SHA in its oversight role, and the Department in turn,
nonetheless retain a responsibility to ensure that adequate support
is in place to enable trusts to achieve foundation trust status.
The Department confirmed that it would not let trusts pursue strategies
that were not viable, and would intervene to ensure that trusts
reach foundation status, either in their own right or as part
of a larger organisation. The range of actions included self-assessment
tools to help trusts develop board capability, bringing new expertise
into the organisation, drawing in clinicians and clinical leaders
from other organisations and, if necessary, replacing the trust's
7. The quality of leadership at board level,
and particularly the ability of non executive board members to
hold the executive to account, is crucial to the trust's success.
The independent regulator, Monitor, has identified the lack of
quality on boards as being a major impediment to applicants for
foundation trust status, and 39% of trusts in the pipeline identified
board capacity and capability as an obstacle they need to overcome.
Witnesses from three trusts also emphasised to us the importance
of boards in providing clear leadership in difficult times, and
in ensuring that patients and clinicians understand and support
future plans. The
Department told us that from January all trusts would be expected
to go through a process of board support and development which
the Department was piloting.
8. It is not clear why an organisation would
want to merge with, or take over some of the most troubled trusts,
some of which are very large and are facing severe financial problems,
including debt as well as poor performance.
It is not a convincing solution that combining trusts which are
already challenged or unviable will somehow create a more sustainable
successor, without some form of further intervention.
Ultimately, the Secretary of State retains responsibility for
ensuring the sustainability of healthcare services provided to
local communities, but the Department has not yet developed a
failure regime to deal with trusts that prove unable to resolve
their problems. 
2 C&AG's Report, Para 1 Back
Q 100 Back
C&AG's Report, Para 2 Back
Qq 92-93 Back
Qq 96-97 Back
Q 96, C&AG's Report, Para 2.4 and Figure 7. Back
C&AG's Report, Para 9 Back
Qq 94-95; 121-123 Back
Qq 94 -95; Q 119 Back
Qq 56-57; 177-178; Ev 22 Back
Qq 68-70 Back
Qq 98; 104 Back
Qq 109-112; 114-115 Back
Qq 72; 85; 184 Back
Q 183, C&AG's report Para 2.23 Back
Qq 43; 68-70, 72, 176, 213 Back
Q183; C&AG's report, paras 2.25-2.26 Back
Q 209 Back
Qq 206, 210 Back
Qq 113; 190; C&AG's report, para 3.14 Back