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Foundation hospitals plan 'jeopardised by curbs'

Jeremy Laurance
Thursday 13 March 2003 01:00 GMT
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Alan Milburn's plans for a new era of public service entrepreneurialism in the NHS by creating "foundation" hospitals risk being strangled at birth because of restrictions that will curb hospitals' freedom, a leading health economist has warned.

The Health and Social Care (Community Health and Standards) Bill, setting out the reforms, will be published today. The new NHS trusts – which Mr Milburn, the Health Secretary, at first called "foundation" trusts – will become in effect non-profit making public interest companies, but Labour MPs' sensitivity to the word "companies" means it will be omitted from the Bill. Instead, the foundation hospitals will be called "public benefit corporations", with no mention of the phrase "foundation hospital".

A total of 32 NHS trusts have applied for the new status and the list of those to be given the go-ahead will be announced later this year. They will be given greater freedom to set pay and conditions, the right to retain the proceeds from land sales and the right to borrow commercial funds.

The plans caused a row between Mr Milburn and Gordon Brown, the Chancellor, and have divided the Labour Party over the role of private finance and the market in the NHS. But the ideological split does not reflect the practical reality in which "corporation" hospitals will have to operate.

John Appleby, chief economist at the King's Fund, said yesterday that the trusts would be accountable to four organisations and any entrepreneurial activity they planned would have to satisfy their requirements.

Trusts will have to answer to their own governance boards of local people, hospital staff and GPs, to the independent regulator which will limit their borrowing, to the Commission for Healthcare Audit and Inspection which will monitor their performance, and to their local Primary Care Trust with which they will have legal contracts.

Mr Appleby said: "The need for this regulatory set up seems undeniable, but it already looks ominous for foundation trusts. Their freedoms are more apparent than real. A lot of managerial and other effort will be expended over not much. They will have some limited scope for innovation, but little more than is currently available."

Gill Morgan, chief executive of the NHS Confederation, said the biggest advantage enjoyed by corporation trusts would be freedom from central management. "But they are only going to be able to develop new services if they can find someone to pay for them," she said.

Robert Naylor, chief executive of University College Hospitals NHS Trust, said the plans were crucial to change the "monolithic bureaucracy" of the NHS. But he added: "The dilemma is how far and fast to go. This is about freeing potential by releasing hospitals from the bureaucratic process. Unless you release [their] potential ... we will end up in the same position in 10 years time as we are now."

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