New Foundations for the NHS


March 2003

The case for Foundation Hospitals
Setting up the National Health Service in 1948 was the most important achievement of the post war Labour Governments.  It freed millions of people from the fear of becoming ill and not being able to afford the cost of treatment.   When Bevan became Minister of Health in 1945, the  pre-war insurance-based health service was on  the point of collapse.  Mass unemployment in the 1930s and the  Second World War had left many of the schemes virtually bankrupt.  Again because it was insurance-based, it was not universal.  The unemployed, chronically sick and children were often excluded. Bevan swept away the whole antiquated system and replaced it with a modern comprehensive state-run service.  The new NHS was to be comprehensive, universal and free at the point of useThough some charges were introduced later, the principle of a free health service remains intact to this day.  . 
The management structure of the new NHS was highly centralised.  For many years it worked very well and the health of the nation improved enormously.  The downside was that the community involvement and social solidarity which typified the old mutuals like the friendly societies and co-ops faded away.  These were replaced by a more managerial approach: efficient but remote.  But looking back over fifty years of the NHS, perhaps it’s time to re-assess how the service should interface with the local community?  
But how do you make an organisation which employs over a million people responsive to local needs?  How can you decentralise and still retain a consistent quality of service.  The Tories version of decentralisation was the internal market and GP fund-holders?  It didn’t work and only made things worse.  It meant armies of accountants but less doctors and nurses.  The fundamental principle was wrong.  It was producer led not consumer led.  Local communities were disregarded.  The government is seeking to remedy this.  That’s why it has decided to introduce NHS Foundation Trusts.   The Foundation Trusts will be a new form of social ownership.  Central-state ownership will be replaced by local ownership by the public.  

How will it work? 

  • A Trust will consist of a Board of Governors and a Board of Management.  The former will be responsible for policy making and scrutiny while the latter runs the day to day operation. 

    Who will be eligible to be members of a Trust?

    • Local people
    • Patients
    • Staff

    Who will be on the Board of Governors?

    • The majority of places will be elected by public and patient members of the Trust
    • Employees
    • Representatives from Primary Care Trusts and other medical bodies

    Who will pay for the Trusts?

    • The Trusts will receive money from central government
    • The Trusts will be allowed to keep any surpluses they make.
    • There will be more freedom to borrow

    Who will see that standards are maintained?

    • A new Independent Regulator
    • Commission for Healthcare Audit and Inspection
    • Local Authority Scrutiny committees

    What is there to stop privatisation/demutualisation?

    • There will be a legal lock on the assets
    • Surpluses can only be spent on improving services for NHS patients not private patients.

    How will the first Trusts be chosen?

    • The first Trusts will be chosen on the principle of Earned Autonomy

Earned Autonomy means that hospitals will have to prove they are very efficiently run before they will be ‘given’ the extra freedoms.  Only the top performing 3 star hospitals will be considered.  This needs looking at.  If mutual governance is better, as it should be, then it should benefit ‘under performing’ Trusts just as much as the ‘high fliers’.  Selecting only the top hospitals lays the government open to the charge of elitism.  Perhaps it would be better to twin the new Foundation Trusts with one of their ‘failing’ neighbours.  Both would then benefit.  Some critics are worried about the Trusts being able to have separate agreements with their staff.  They fear that this could lead to the Trusts ‘poaching’ staff from other parts of the NHS.  This need not happen but would have to be kept under review.  

Writing in the recent Mutuo pamphlet ‘Making Healthcare Mutual’**, Health Minister Hazel Blears MP has indicated that the Government is committed to extending mutual ownership across the NHS.  She said, ‘Foundation Hospitals will only be a start.  The new governance arrangements for Primary Care could also be modelled on successful mutual and co-operative organisations too.  These reforms are every bit as radical and progressive as those which created the NHS over fifty years ago.  They draw on the traditions of social and community ownership and place a premium on local accountability’.  Making Foundation Hospitals directly accountable to the communities that they serve should bring the NHS closer to them by giving them a real sense of ‘ownership’..  We should give this bold initiative our full support and wish it every success.  
**Making Healthcare Mutual’  by Hazel Blears MP and others is published by . Price:£10

This Article was first published in the Chartist March 2003

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