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15 September 2010: Foundation Trust Network

  • Last modified date:
    8 February 2011


Almost 10 years ago, the last Government came up with a genuinely good idea – Foundation Trusts.  These new, autonomous, locally accountable institutions would be let loose to innovate, to run themselves as they saw fit, to borrow money and to use the income they generated privately for the benefit of NHS patients. 

Sadly though, the original proposal was diluted by Gordon Brown as the legislation passed through Parliament during one of his interminable battles with Tony Blair.
However, the concept was excellent.  A real success story.  Across the country, Foundation Trusts have generally demonstrated that they can operate independently, with boards taking responsibility for delivering high-quality care. 

I believe they are proof that when Ministers take a deep breath and let go, far from everything collapsing in a heap, the innate professionalism and expertise of the people inside the NHS can scale new heights.  Within an environment of robust, economic and quality based regulation, the more freedom we devolve to Trusts, and to you, the people who work within them, the better the patient care.

So first I want to thank you for everything you have done already to improve the NHS. 

But, as I have already said, Foundation Trusts have been an excellent idea only part realised.  Let loose to innovate, but only within limited parameters.  Free to run themselves, but only to an extent.  Free to borrow money, but with tight restrictions.  And able to keep funds raised privately but, for most, capped at below 1% of income. 

When Enzo Ferrari dreamed of creating the perfect racing car, he didn’t limit the engines to 35mph, he let them fly.  This is what we want to do with Foundation Trusts.

The government’s mission

This government’s highest priority is the Health Service.  That’s why, recognising the impact this will have on other departments as we reduce the budget deficit, we guarantee that health spending will rise in real terms in each year of the Parliament. 

But a protected budget does not mean protection from change.  Far from it.  In order to preserve the and improve the NHS, to meet the increasing demands of an aging population, to cope with the ever growing costs of new drugs and new treatments, inefficiency must be rooted out.  And in return, every penny saved with be reinvested back into the Health Service to improve patient care.

For too long - and here I’m not only talking about the last government, although they certainly accelerated the trend - the flow of power has been towards the centre.  Ministers in Westminster and civil servants on Whitehall have taken ever more control over public life. 

Local authorities, the professions and individual people have been increasingly disempowered.  It is perhaps understandable then that people have also become increasingly disengaged with the political process.

So across the public services, this government is reversing that trend and giving back power.  We’re overseeing a fundamental shift, away from Westminster down to councils, communities and homes across the nation.  A radical localist vision that is turning Whitehall on its head. 
And leading the way are the NHS reforms set out in the White Paper, Equity and Excellence: Liberating the NHS.

Operating Framework

We’re putting an end to the pointless and wasteful obsession with process based targets.  Instead, we’re focusing on what really matters - health outcomes.  We’ve already made a start with this year’s revised Operating Framework. 

We’ve stopped performance managing the 18 Week target; we’re making primary care a local rather than a Whitehall issue; and we’ve changed the A&E waiting time threshold to a more clinically relevant 95%. 

And next year we’ll go further.  We’re looking at all current indicators and if they are not clinically relevant, if they are not about improving health outcomes, then we’ll ditch them too.  Replacing them with a series of performance measures that actually work to improve performance.

Other White Paper reforms

The White Paper sets out other major structural changes.  We will abolish Strategic Health Authorities and Primary Care Trusts and their £1.5 billion a year administration costs.  We will hand power for commissioning to general practice through the new GP consortia, a partnership lead by GPs but encompassing professionals from across primary, secondary and community care. 

So far, most of the publicity around the White Paper has been focused on GP Commissioning.  About how commissioning will be re-drawn with a new, clearer clinical focus. 

But GP Commissioning is not uniquely radical.  Across the whole of the NHS, our reforms are about a new partnership between management and clinicians jointly leading for excellence.

Increasingly, money will follow the patient.  And because of patient choice it will flow to the very best providers.   

The challenge for Chief Executives, freed from the remaining shackles of central control, will be to lead their organisations in a spirit of openness and collaboration. 

The challenge for senior healthcare professionals will be to stand up and be counted, to put their heads above the parapet and take decisions jointly with management to improve the services they offer.

The reward for meeting these challenges will be a more vibrant, dynamic and entrepreneurial NHS.

What does all this mean in practical terms?  It means that there is a genuine opportunity to deliver clinical excellence and to be rewarded for it.  As the money flows to the best providers, they will be able to develop and grow their services as they see fit.  The State will no longer stand in the way of spreading excellence.  Instead we will do everything we can to encourage it.

For this to happen, we need to do two things.  First we need to make every NHS Trust a Foundation Trust, and then we need to free Foundation Trusts so they can finally realise their incredible potential.

Both aspects of our policy towards Foundation Trusts - expanding their number and their freedom - will require a great deal of thought, work and cooperation.  And while we may set the direction from the centre, we do not flatter ourselves to think that we have all the answers when it comes to implementing our plans.  That is why we’re consulting with you and others on a wide range of issues. 

Every Trust a Foundation Trust

When it comes to making all Trusts Foundation Trusts, there are a number of bridges we need to cross.  Already, more than half of Trusts have Foundation status [130 of 234, or 56%].  But that still leaves more than 100 [104] that don’t enjoy that status. 

To focus minds, we have set a deadline of 2013 to make the transition.  Many will make the deadline with ease.  But some will find it more difficult.  The simple and easy answer would be to just lower the bar.  To make it easier to become a Foundation Trust.  That might hit the target, but it would entirely miss the point.  To earn Foundation Status, Trusts must have strong boards, good governance, robust business plans and deliver high standards of care.

That is where we need your help.  What are the problems and the solutions involved in making this dramatic change?  What incentives will be most effective?  And beyond 2013, what can the system do to protect patients should things go wrong?  How do we best deal with failure?  These are big questions.  We’re only going to find the answers if we work together.

Increasing the powers of FTs

The same is true of our plan to increase the powers of Foundation Trusts.  We want to create the largest, most vibrant social enterprise sector in the world, with providers free to innovate in the pursuit of ever better care for patients.  But this isn’t going to be easy.  There are many practical obstacles to overcome too.  Let me list a few examples.

Subject to consultation, we propose to abolish the cap on the amount of private income Foundation Trusts can raise themselves.   

This is about using the entrepreneurial spirit of Foundation Trusts to generate new sources of income that will benefit NHS patients. 

The core legal purpose of a Foundation Trust will always be to provide high quality services to NHS patients.  This will not change.  But we want to free Foundation Trusts to pursue commercial opportunities that will ultimately result in better care for NHS patients.

Similarly, we propose to abolish the limits on borrowing.  Foundation Trusts need to be treated like adults and trusted to manage their own finances.  Now, because of the newness of this market, private finance may be expensive, so we will keep a mixed market of public as well as private funds available.  And there are issues of equality of access to address, like ensuring that Foundation Trusts don’t have preferential treatment compared to private hospitals.

We also propose to make it easier for Foundation Trusts to merge without having to obtain permission from Monitor, the Department of Health or the Secretary of State.  Where this leads to better patient care and better value for money for the tax payer, it is surely ludicrous that bureaucratic rules should get in the way.

And while the broad framework of Foundation Trust governance will remain the same, I believe we should give them the flexibility to govern themselves for the benefit of their patients as they see fit. 

The role of Monitor will change.  While the Care Quality Commission will focus on quality and safety, Monitor will become an economic regulator for all of health and social care.  But we need your help. 
Monitor must avoid any possible conflict of interest within the system or risk being undermined from the start.

There are many questions to be answered around the period of transition from the present system to the new one.  And I am looking forward to working with you to answer these questions together.

Education and Training

And vital to all of these reforms will be to ensure we have a workforce with the most appropriate, high quality education and training.  It will be for individual providers to decide on their own education and training system. 

But it will also be up to them to ensure that appropriate investment is made in the workforce to ensure better outcomes for patients and value for money.  We want to work with Foundation Trusts to shape the system and so we will be consulting on this separately, later in the year.

Patient Choice

So far I’ve spoken of how the framework will improve.  About how we want all trusts to become Foundation Trusts and how we will expand what it means to be a Foundation Trust. 

But none of this really means anything, none of the real benefits can be fully realised, unless we make sure that the right incentives are in place.  And that the money really does follow the patient and that patients, with the help of their GP, can and do make informed decisions about their care.  Here, the White Paper heralds a new era of patient power.

As all good professionals know, the outdated, paternalistic caricature of Dr. Finlay’s “doctor knows best” attitude is out of keeping with the modern provision of healthcare.  The patient must be central to all decisions taken about their care.  To put it another way, there must be “no decision about me, without me”. 

This isn’t just cosy sentiment.  The evidence from around the world shows that involving patients in their treatment improves the effectiveness of that treatment, it increases their understanding of their condition and boosts their satisfaction.

Importantly, with the support of their doctor, they will be able to choose their provider, their named consultant-led team, their GP practice, and their treatment where clinically appropriate.  We will shortly be consulting on opportunities to increase choice in maternity services, in mental health services, in end of life care, the provider of any  diagnostic tests and any further treatment needed after a diagnosis has been made. 

And to help them make these decisions, and to help clinicians respond to their decisions, they will have access to a huge amount of easy-to-understand data, published online.  Over the next few years, patients will experience an information revolution. 

This will do two things.  As well as helping patients to make informed choices about their care.  It will also show hospitals, departments and even groups of consultants how they are performing in relation to their peers. 

If you ask people if they would like their local hospital to be as good as the very best in the country, of course they will say yes.  I would, and I’m sure you would too. 

But the public aren’t fools.  If they can see for themselves, or if their GP shows them, how one hospital will give them a far better standard of care than another, even though it’s further away, most people will go for the best care.  To pretend otherwise is, I think, somewhat patronising.

And as I said before, this will be an incredible incentive for everyone in the system to strive for greater quality.  For as patients opt for the best care, so the money will follow them.  The best hospitals, the best departments, the best consultants will be free to invest that money in even better services, or to expand them across the region or even across the country.

And the hospitals that don’t fair quite so well will have a very strong incentive to examine what they might do to improve their performance.

However, the White Paper is not only about the autonomy of providers.  It is also about putting patients at the centre of decision-making and about helping people to make informed choices about their care. 


These are, I’m sure you’ll all agree, exciting times for the NHS.  I believe we stand at the beginning of a potentially golden age for healthcare in this country.  An explosion of clinically-led innovation and creativity that will produce some of the best health outcomes anywhere in the world. 

But for this to happen we need to get these reforms right.  And for that we need your help and we are very much in listening mode.  While we have set the destination, we need you to help lead us there. 

Alone, government doesn’t have the answers.  But by working closely together, and by trusting each other, I believe that we can overcome anything in our path.

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