Foundation hospitals make encouraging start but jury still out on overall impact, says The King's Fund

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The jury is still out on the government's flagship foundation trust health reform but the early signs show potential for more responsive and innovative services.

That was the view of The King's Fund today in response to the Healthcare Commission's review of the first 20 foundation trusts.

The King's Fund chief executive Niall Dickson said:

'As today's report shows it is too early to reach any definitive conclusion about the impact of foundation hospitals, although there are some welcome signs of progress and areas of concern.

'We still believe giving real decision making power to local level is the right way forward and that foundation hospitals have the potential to be innovative and responsive. But they will need time to establish themselves. We welcome the Healthcare Commission's recommendation of a further review in two years' time - when the impact of a range of critical reforms will be starting to emerge.

'A major concern is that today's report further highlights the challenging new financial environment developing in the NHS. While most foundation hospitals appear to have sound financial management, it is already clear that a minority have significant projected deficits. We welcome the new financial regime but it is clearly putting even the best-performing hospitals under demonstrable pressure. Foundation status alone isn’t the main reason for hospitals experiencing these difficulties, but other new reforms introduced at the same time such as payment by results and the demand for greater financial transparency. To keep foundation status, foundation hospitals will need to demonstrate that they are going concerns, and for some this will be difficult.'

He added: 'The Healthcare Commission's report does make it clear that some of the promised freedoms have failed to live up to their billing and that foundation hospitals are justified in wanting more independence and less control from central government. The lack of real freedoms may be a big factor in the apparent lack of impact they have had at this early stage. Or it could be because the freedoms introduced have been the wrong ones or are not strong enough.

'It is encouraging that foundation hospitals have put effort into making themselves more accountable to local communities but our evidence also suggests locally elected governors are struggling to make the new system work. We welcome the Healthcare Commission's call for a formal network to help governors share learning. This will go some way to helping them become clearer about their roles.

'We are also encouraged that the Healthcare Commission found no evidence that foundation hospitals were reducing levels of co-operation at local level or avoiding the treatment of patients with complex conditions. One of the fears we have all had is that a combination of the freedom given to foundation hospitals and the new market-style incentives would conspire to encourage hospitals to admit patients unnecessarily. There is no evidence of this so far.'

Notes to editors

1. For further information or interviews, please contact the King’s Fund media and public relations office on 020 7307 2585. An ISDN line is available for interviews on 020 7637 0185.

2. The King's Fund published Governing Foundation Trusts: A new era for public accountability on Monday, 12 May 2005. The report explored possible roles for governors drawing on evidence from a national workshop which for the first time brought together foundation trust governors from all over England. Fourteen of the 20 'first wave' Trusts were represented at the event organised by the King’s Fund in January 2005.

3. The King's Fund is an independent charitable foundation working for better health, especially in London. We carry out research, policy analysis and development activities, working on our own, in partnerships, and through funding. We are a major resource to people working in health, offering leadership development programmes; seminars and workshops; publications; information and library services; and conference and meeting facilities.