Frequently asked questions
The questions answered are:
What are foundation trusts?
Are foundation trusts able to charge patients?
What is the governance structure of foundation trusts?
Are foundation hospitals able to vary the range of services they provide?
Are foundation hospitals required to comply with national standards?
What is the role of Monitor, the Independant Regulator?
Who can become a foundation trust?
Why does UNISON believe that foundation trusts are part of the marketisation of the NHS?
Have foundation trusts led to greater inequalities in patient services?
Won't foundation hospitals lead to greater local control and accountability?
NHS Foundation Trusts are a new type of NHS organisation, established as independent, not for profit public benefit corporations. They are independent legal entities owned by their members who include patients, staff and local people. Foundation trusts are granted a licence to operate by the Independent Regulator, Monitor, and are not under Government control.
Foundation Trusts have greater powers and flexibilities than traditional NHS hospitals. In particular they are able to:
borrow from the private sector
retain their surpluses
keep hold of all money from the sale of land and assets
exercise a greater degree of flexibility in setting pay and benefits packages
Foundation Trusts are controlled by a Board of Governors who are elected annually by their members. For more details of foundation trusts' governance structure, see What is the governance structure of foundation trusts?
UNISON is opposed to the principles behind the foundation trust reforms. In particular, we are concerned that foundation trusts are part of a process of marketisation in the NHS, involving the reintroduction of competition and an increased role for the private sector. We believe that this may undermine the public service principles of the NHS, leading to poorer and more unequal services and the extension of charging. See Why does UNISON believe that foundation trusts are part of the marketisation of the NHS for more information.
Are foundation trusts able to charge patients?
In general, foundation trusts are not able to charge patients for treatment received under the NHS. Charges for NHS health services are limited to those authorised by the Secretary of State or other authorities under current powers, for example charges for prescriptions and for intermediate care extending beyond a six week period.
Foundation trusts are be able to raise income by charging for the treatment of private patients. However, their private work is be limited by a cap on the proportion of their income that can come from private treatment. The level of the cap differs for each foundation trust, and will be equal to the proportion of their income from private income over the financial year.
While foundation trusts' abilities to charge for healthcare services are restricted, they have considerable abilities to charge for other services not directly related to the provision of healthcare. This includes charging patients for items such as car parking, additional catering and hotel facilities and cable and satellite TV. Many of these practices already take place, but foundation status has encouraged their extension by strengthening the commercial incentives on trusts.
What is the governance structure of foundation trusts?
Foundation trusts have a governance structure that differs from other NHS trusts. This involves members, a Board of Governors, and a Management Board.
Foundation trusts are owned by their members, who are drawn from patients, staff and local people. Individuals wanting to become a member of a foundation trust are required to register on the hospital's membership list and to agree to pay up to a pound if the hospital becomes bankrupt. Staff working at a foundation hospital are automatically eligible for membership; members of the public are eligible for membership if they fall within the catchment area of the foundation hospital's membership community. Although UNISON remains opposed to foundation trusts in principle, we recognise that branches have to work with foundation trusts in order to protect the interests of our members, while at the same time exposing of the shortcomings of the foundation trust reforms. How involved branches get involved in the governance structures has to be a local decision based on relations with local management sides, and the views of branch members.
Once a year, the members of the foundation trust elect representatives to its Board of Governors. They has the responsibility for approving the annual report and accounts, for setting the foundation trust’s strategic direction, and for ensuring that it does not breach the terms of its licence. A majority of the members of the Board of Governors must be members of the public, and it must also include at least one staff member and one representative each from the hospital's main commissioning Primary Care Trusts and any universities responsible for undergraduate training at the hospital. The Board of Governors must elect a chair, who may be drawn from outside its own number.
As well as the Board of Governors, each foundation trust has a Management Board. This has a duty to consult the Board of Governors concerning the development of the trust’s forward plans and regarding any significant changes to the business plan. The Management Board is chaired by the chair of the Board of Governors and at least a third of the places excluding the chair must be filled by non-executive directors elected by the Board of Governors. In addition the Management Board must include a Chief Executive, who is appointed by the chair and non-executive directors of the management board, a medical director and a finance director.
Are foundation trusts able to vary the range of services they provide?
Each foundation trust’s licence specifies which services it is required to provide as a condition of its authorisation. This list must initially mirror the clinical services provided by the foundation hospital at the time of its establishment. If a foundation hospital wants to substantially vary the services listed in its licence it is required to consult with the public, Primary Care Trusts and the local authority's Overview and Scrutiny Committee. Having consulted, the foundation trust is then required to submit its proposed changes to Monitor, the Independent Regulator, who checks that the correct procedure has been followed and that the proposals do not undermine the foundation trust’s primary purpose of health service provision.
Should a foundation trust’s proposals to vary the services listed in its licence give rise to concerns that cannot be resolved, the local authority's Overview and Scrutiny Committee can refer them to the Independent Regulator for a decision. When this happens the Independent Regulator has the power to determine that the proposals go ahead, to reject them, or to require further consultation.
Are foundation trusts required to comply with national standards?
Yes, foundation trusts are required to comply with most national standards. It is a condition of each foundation trust’s licence that it meets national clinical and quality standards. In addition, foundation trusts' service agreements with Primary Care Trusts should specify that the services provided must comply with national quality and safety standards. However, foundation trusts are not required to comply with Department of Health management and operational guidance, and are exempt from some current management targets.
Like all other NHS bodies, NHS Foundation Trusts are inspected against national standards by the Healthcare Commission which produces an annual performance rating for the Trust. Monitor receives copies of inspection reports and decides what, if any, action is needed in the event of failings.
What is the role of the Monitor, the Independent Regulator?
Monitor is the independent regulator created by the Government to oversee the operation of foundation trusts. Unlike other NHS hospitals, foundation trusts are not be subject to the direction of the Secretary of State but instead will be licensed, monitored and regulated by Monitor.
Monitor was be appointed by the Secretary of State and it has a general duty to act in a way that is consistent with the Secretary of State's duty to provide a comprehensive health service. However, the Secretary of State cannot instruct Monitor and it is not be possible to appeal to the Secretary of State regarding Monitor’s decisions. The Secretary of State has the power to dismiss Monitor, but only on grounds of incapacity or misbehaviour and not simply because the Secretary of State does not agree with the way the Monitor is carrying out its duties.
The main functions of Monitor are:
approving organisations' applications for foundation status, and issuing them with licences setting out the terms and conditions of their authorisation. This may include matters such as the services to be provided by the foundation trust and the protection of property essential for the provision of these services.
periodically reviewing licenses, and responding to requests from foundation trusts for variation of the terms of their licences.
vetting applications by foundation trusts to dispose of property which has been given 'protected status' under the terms of their authorisation.
drawing up a prudential borrowing code for foundation trusts, and yearly reviewing each foundation trust’s borrowing limit.
monitoring foundation trusts’ compliance with their licences, and taking steps to deal with any breaches.
Monitor has the power to require foundation trusts to disclose information and to enter and inspect the foundation trust’s premises. In the event of a foundation trust breaching their licence, the Independent Regulator may take steps to intervene, for instance by removing some or all of the Management Board or ordering new elections to the Board of Governors.
Monitor has significant discretion in a number of areas, including the rules governing foundation trusts’ private borrowing and decisions regarding the variation of services. Much depends on Monitor’s interpretation of the ways in which it is appropriate for foundation trusts to behave. UNISON believes that this is worrying, as it will be difficult to hold either the Secretary of State or Monitor accountable for Monitor’s performance.
Who can become a foundation trust?
Formerly only those with trusts with 3 stars in the Healthcare Commission’s performance rating had been eligible. This was later reduced to two stars. However from autumn 2006 eligibility became dependent on the outcomes of the “Whole Health Community Diagnostic programme”, rather than rely solely on the Healthcare Commission’s annual health check. This means that a rating of “fair” in the annual health check does not in itself debar a trust from applying to be a NHS foundation trust. However the Department of Health expects all trusts to be in a position to achieve core standards in terms of service quality. A rating of “poor” in either finance or quality would call the application into question. As well as hospital trusts, both Ambulance and Community Trusts are now eligible to apply for Foundation status.
At the time of writing there are 70 Foundation Trusts, and the government is committed to offering all NHS Trusts the opportunity to apply to become NHS Foundation Trust status by 2008.
Other types of organisation than NHS Trusts are eligible to apply for foundation status. The Government claims that this gives the option of opening foundation status to voluntary sector organisations such as hospices. However it also allows the Government to permit applications for foundation status from private companies, such as perhaps BUPA or Boots. Such private companies acquiring foundation status would not be subject to the cap on private work, as this applies only to former NHS trusts. However, in common with other NHS hospitals, they would be exempt from corporation tax. It still remains to be seen if any private sector companies will show an interest in foundation status.
Why does UNISON believe that foundation trusts are part of the marketisation of the NHS?
The Government is moving away from the model in which NHS healthcare is provided predominantly within the public sector. Instead, this is being replaced by the creation in the NHS of a competitive commercial market. In this market, public and private hospitals will compete against each other for NHS patients and funding will follow the patients.
UNISON believes that foundation trusts are one part of the creation of this new market. As a form of organisation that is independent of the Secretary of State they sit between the public and the private sectors and increase the diversity of healthcare providers. They compete against other trusts, incentivised by their ability to retain surpluses. Finally, in common with other public services that have been exposed to privatisation and competition, they are regulated by Monitor, the Independent Regulator, and are not accountable to the Secretary of State.
UNISON is concerned that competition from foundation trusts will lead to financial instability for other trusts, undermining their ability to continue providing some services. Foundation trusts may use their financial freedoms, such as borrowing from the private sector, to attract patients from other trusts.
Will foundation trusts lead to greater inequalities in patient service?
Foundation trusts have several advantages over other trusts:
they will be able to hold on to all of the money raised from selling land or other assets. This can be a very large amount - one Foundation Trust applying for foundation status, University College Hospital London, is estimated to own £100 million in surplus property.
* they will be allowed to retain any surplus they make.
they will be able to borrow from private sector lenders as well as the Government, giving them access to higher levels of investment.
they will have a greater degree of flexibility in setting pay and benefits packages
So far it is too early to say what effect Foundation Trusts will have on other non-foundation trusts. A recent UNISON survey of UNISON branches showed that foundation trust status had a detrimental affect on co-operation between foundation trusts and other trusts. All foundation trusts are financially self-sufficient, and this combined with Payment by Results, had led to Foundation Trusts putting heavy pressure on Primary Care Trusts to pay their bills on time.
However the majority of branches said that despite all their financial freedoms Foundation Trusts had been unsuccessful in poaching staff from other trusts. However many branches attributed this to the restraints imposed by the current financial climate within the NHS. This may of course change if the financial climate within the NHS changed.
Won't Foundation Trusts lead to greater local control and accountability?
No. The Government claims that foundation trusts increase the accountability of hospitals to their communities, strengthening local control and resulting in services that are more responsive to their users. However, UNISON disputes that this is the case. As public services, the public already owns NHS trusts. And unlike a mutual, NHS trusts should be for the benefit of the whole public, not just a small number of 'members.' (For a description of foundation trusts' governance structure, see What is the governance structure of foundation trusts? above.)
UNISON believed that the proposals for community involvement in the governance of foundation trusts were flawed in the following ways:
The membership profile of foundation trusts would be unrepresentative.
It was unclear that foundation trust members would be able to exercise a genuine influence over the running and development of services.
The proposed governance structure for foundation trusts would be complex, costly and difficult to understand.
A recent survey of UNISON branches exposed significant flaws in the governance structures of foundation trusts. Two thirds of branches said local accountability had decreased or stayed the same .In addition many branches said there was no division between patient and community reps, and that neither patients nor local community reps ultimately had much impact on board decisions. Many branches also said that the staff representatives on the Boards of Governors were unrepresentative, with a disproportionately high numbers coming form professional groups such as doctors.
