What are foundation hospitals - and will they make any difference?

What will foundation hospitals be?

Not much different from other hospitals at first. They will be set up as non-profit, public-interest companies and will be independent of Whitehall control. Their much-vaunted freedoms will be curbed by an independent regulator who will make sure they don't a) go bust and b) become predators on the rest of the NHS.

What is the point of them?

To replace the one-size-fits-all, monolithic, top-down health service with a locally run, democratically accountable health service. That is the ministerial rhetoric, anyway.

Is it believable?

The real test, says Julian Le Grand, professor of health policy at the London School of Economics, is if the Government actually does pull back from its command-and-control approach to the NHS.

Won't it introduce a two-tier service?

Yes, initially. The first wave of foundation trusts, to be announced next month, will have advantages. But Alan Milburn, the Health Secretary, has pledged all trusts will have the opportunity to attain foundation status within five years.

What are the advantages?

They will manage their own assets and be able to keep any surplus, they will set their own pay and conditions and will have freedom to borrow. The idea is that it will encourage a more entrepreneurial culture. Foundation trusts could set up subsidiary companies to provide pathology services. They will be unable to sell NHS assets, their borrowing will be limited and they will be under a legal duty to improve care throughout the NHS.

Isn't this just the Tories' internal market reinvented?

Up to a point. But the difference is that competition will be on the basis of quality, not price. There will be a single national tariff and trusts that do more will be paid more.

Can it be worth it?

Managers hope so – and they don't want to miss the boat. One chief executive said: "It is always worth fighting for an extra inch of freedom." Another said: "You can't win the lottery without buying a lottery ticket."