Foundation distrust
pharmafile | November 6, 2003 | Feature | |Â Â NHS, foundation hospitals, healthcareÂ
Despite fierce opposition from several areas, foundation hospitals look set to become a reality in 2004. But what will they mean for the NHS, pharma industry and patients?
National Health Service change carried out by two successive Labour Governments has been characterised as the 'third way'. Rarely defined, policy on foundation hospitals is consistent with this even if it wasn't in the manifesto and was curiously missing from the NHS Plan for a move that has been described as key to the future of the NHS.
Former Health Secretary Alan Milburn's big idea has caused major controversy politically and threatened to open up major rifts in the Labour Party. The Conservatives didn quite know what to make of a policy that they never dared to introduce when in government and hence voted against the plans whilst supporting them in principle. Meanwhile, the Liberals voted against – largely because they failed to deal with their own concerns about undemocratic Primary Care Trusts.
Let's set the politics aside if only to avoid confusion. Freedom from the shackles of Whitehall control or first step to privatisation – who knows? So let's stick to the facts – what are they anyway? And what are the implications for the pharmaceutical industry? These are just some of the questions considered below.
Foundation hospitals are a kind of halfway house between publicly managed institutions and private industry. Technically labelled Public Benefit Corporations (PBCs) they are based on the models of co-operative and mutual organisations both here and in Europe, most notably in Spain, where Milburn is said to have discovered the idea applied to hospitals. Local people will be invited to become members of the Trust and elect representatives to serve on a board of governors that will have overall control of the Trust. Thus control of the organisation will transfer from the Department of Health (DoH) to local communities as Foundation Trusts will no longer be part of the chain of command of the NHS.
Joining the family
The Government answers the accusation that the plan is privatisation by the back door by planning a law that will require the new bodies to use their assets – mainly land and buildings – to provide NHS services to NHS patients. This is an important safeguard and for the time being at least, fixes the Foundation Trusts firmly inside the NHS family.
Foundation Trusts (subject to legislation of course) will be part of the NHS family in other ways. They will be subject to 'licensing' by a new independent regulator, subject to inspection by the new Commission for Healthcare Audit and Inspection and required to provide services commissioned by Primary Care Trusts.
Originally it was proposed that Foundation Trusts would have freedom to borrow money on the open market and to introduce their own pay and benefits packages for staff. It said that the chancellor, Gordon Brown, blocked the first freedom by ensuring that any borrowing showed on the DoH balance sheet at least for the next three years and the second was modified in the Commons as the proposals were watered down to get them passed by the 'party faithful'.
Whilst Foundation Trusts will come into being in England next year, the policy has been firmly rejected by the Scottish parliament and Welsh assemblies – another example of divergent NHS policy across the UK.
So where are we now? Well, John Reid seems set on maintaining the direction set by his predecessor and Foundation Trusts are a key part of the NHS bill that will go before the Lords shortly where it is bound to face its most searching and intellectual scrutiny to date. The unions and other opponents have been marshalling their arguments, but so has the government and other political issues have come to the fore. While there is no doubt that opponents will continue to fight the policy, it will almost certainly become law. About 25 NHS Trusts have entered the race to become the first Foundation Trusts at the beginning of April 2004. Many believe that within five years or so all hospitals will be managed as Foundation Trusts. So what all the fuss about?
Going private?
Opponents have based their arguments on one or both of two fundamental points. Fundamentally – the road to privatisation, and practical issues – how Foundation Trusts will work and what their impact will be.
Those who oppose the idea on grounds of principle do so because they believe this is the first step in the dismantling of an all-embracing NHS, free at the point of delivery, and managed as a public sector body. However as we can see, this is hardlyprivatisation for now. What is clear is that it puts a little distance between the Secretary of State, formally the executive chair of every NHS hospital, and the new Trusts. It breaks the mould and could evolve in the future.
The pragmatists are less concerned with this argument and base their opposition on how the policy will work and what its likely impact on the NHS locally will be.
The impact on staff needs to be considered. Will Foundation Trusts entice staff from the 'normal' NHS? Will the new links into local communities confuse the public and detract from the role of Primary Care Trusts as champions of public health? Will the new accountability mechanisms actually work and what will the pecking order be and shouldn't the policy apply to local health economies, producing foundation status for all and not just secondary care?
Time will tell, but as the arguments rage on, let's step back and think for a moment of the number of implications for the pharmaceutical industry. Several questions arise from the introduction of Foundation Trusts that can't be answered just yet, particularly as the bill is subject to further consideration in the House of Commons. Partnership is also important – partnership not with the industry (an overused and inappropriate term in my judgement), but within the NHS. The government is adamant that the duty of partnership will remain on Foundation Trusts and that they will still be part of the NHS. But culturally, Foundation Trusts must develop a new sense of purpose and independence and freedom otherwise why become one? This sense of independence may start to challenge the 'corporate' nature of the local health economy. At a practical level this may mean it becomes harder to develop, for example, joint formularies and common strategies.
How will commissioning of services work in this context? On one hand we are told that Foundation Trusts will be free (or at least more free) to tailor services to the needs of local communities and on the other that they will be responsive to Primary Care Trust commissioners which will interpret local need.
Which is it? If both, what will the balance be? We know that the relationship between the two will be through legally binding commissioning contracts based on the principle of nationally set prices, where every patient episode is allocated to a diagnostic related group. Commissioners may want to specify medicines usage in contracts but the question is do they have the knowledge and skills to do this? Or Foundation Trusts could set the pace as has been the case with some of the early diagnostic and treatment centres.
Foundation Trusts will be free from Whitehall control, but subject to NHS standards. This means NICE guidance could apply and in the same way or just via commissioning arrangements and Primary Care Trust Funding. Will Foundation Trusts abide by the national guidance about partnership with the pharmaceutical industry? Or will some, as seems likely, become industry-free zones as they try to exclude those they see as having their own agenda?
Watered down proposals
So much for the questions what about answers? On balance I feel that in the early days at least, the move to Foundation Trusts will not have a significant impact on the NHS or the industry. The proposals have been so watered down that some would argue that this is a policy being pursued in name only. I think this is a move that the industry should watch with interest and care, but not one that calls for an immediate strategic change or even tactical response.
This is clearly an important watershed for the NHS if only because it breaks the model of the NHS as a nationalised industry. It can be seen as a 'thin end of the wedge' and could develop into full blown privatisation which is where the Tories would now like to take the NHS. But for those who feel another Labour term is likely, what does this mean for the next few years in the NHS, and how should we interpret what appears to be pretty radical stuff?
To find the answer, we might want to return to Alan Milburn's words – after all, he was the architect of the entire policy: "Our reforms are about redefining what we mean by the NHS. Changing it from a monolithic, centrally run, monopoly provider of services to a values-based system where different health care providers in the public, private and voluntary sectors provide comprehensive services to NHS patients."
This changes the landscape and the argument about public and private provision completely. An NHS that is largely funded from the public purse but one in which there is a free-for-all in provision may not be one that the founding fathers of the NHS had in mind or even the Labour Party less than two years ago but it is one that is shortly to become a reality, and Foundation Trusts are just one small step in that overall departure from the past.
Related Content
A community-first future: which pathways will get us there?
In the final Gateway to Local Adoption article of 2025, Visions4Health caught up with Julian …
The Pharma Files: with Dr Ewen Cameron, Chief Executive of West Suffolk NHS Foundation Trust
Pharmafile chats with Dr Ewen Cameron, Chief Executive of West Suffolk NHS Foundation Trust, about …
Is this an Oppenheimer moment for the life sciences industry?
By Sabina Syed, Managing Director at Visions4Health In the history of science, few initiatives demonstrate …
