Item 2

Health Review Committee Briefing Note: March 2004

NHS Foundation Hospitals

Summary

This note provides a brief overview of NHS Foundation Trusts. It includes feedback from a presentation given by Southampton University Hospitals Trust and Winchester and Eastleigh Healthcare Trust on 11 February and some of the discussion points that have be raised nationally and locally relating to the establishment of Foundation Hospitals.

Three acute hospitals in Hampshire and two in neighbouring counties are applying to be NHS Foundation Trusts (NHSFTs) with effect from October 2004. As part of the application process each Trust has to undertake a 10 week consultation period, commencing on the 23 February 2004.

Whilst the consultation process focuses on the intended governance arrangements, the Trusts need to include an outline service development strategy that describes how services will be provided in the future.

Local authority interest in these arrangements may include

· The way in which local authority representation on the Board of Governors is secured and arrangements for engaging a representative membership. This is likely to be complex where specialist services are provided across a wide population.

· Ensuring that any proposals for significant variation or development in service provision is subject to appropriate consultation and scrutiny. Although it is unlikely that the consultation on the governance arrangements will include proposals to substantially change services the service development strategy may include developments that will need to be subject to scrutiny and formal consultation.

· Consideration of any impact that the proposals may have on services provided by local authorities and the voluntary sector

The anticipated scope of the consultation process is attached at Annexe One.

Feedback from the presentation on service development strategies made by Southampton General Hospitals Trust and Winchester and Eastleigh Trust on 11 February is attached at Annexe Two.

Further information can be found on http://www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/SecondaryCare/NHSFoundationTrust

Background

Wave 1a of applicants for Foundations status includes the following acute hospitals in Hampshire

· Southampton University Hospitals Trust (SUHT)

· Winchester and Eastleigh Healthcare Trust (WEHT)

· North Hampshire Trust

In addition the following neighbouring Trusts are also likely seek Foundation status

· Royal Bournemouth and Christchurch Hospitals Trust

· Frimely Park Hospital Trust

If approved these Trusts will be launched as Foundation Hospitals in October 2004. Each will be undertaking a 10 week consultation period about their governance arrangements, commencing 23 February

It is intended that NHSFTs will be:

· part of the NHS family, providing healthcare to NHS patients within a framework of national standards but not line managed by the Department of Health;

· held to account locally by the communities they serve and through `cash for performance' contracts - based on regulated price tariffs;

· inspected by CHAI to a set of national standards along with all NHS and independent healthcare providers;

· provided with new governance structures to reflect the different relationships with patients, staff, the local community and other key stakeholders in order to enhance accountability within the local community;

· given additional freedoms (although these are yet to be defined);

· established as free-standing legal entities

There are three key ways in which NHSFTs will be accountable:

· Governance arrangements that ensure Trusts will be accountable to local communities and front line NHS staff through their Board of Governors and Board of Directors. Local people and staff will directly elect representatives to serve on the Board of Governors. The Board of Governors will appoint the chair and non-executive directors of the Board of Directors. It will work with the Board of Directors - responsible for day-to-day running of the Trust e.g. setting budgets, staff pay and other operational matters - to ensure that the NHS Foundation Trust acts in a way that is consistent with its terms of authorisation. The Governors, in appointing the chair and non-executive directors, will be in a strong position to influence the direction of the NHS Foundation Trust.

· Performance agreements with Primary care trusts (PCTs) through legally binding agreements to provide agreed levels of service which accurately reflect local needs and which reward results.

· Independent regulation providing a `licence' to operate - to each NHS FT. This authorisation will set out the conditions under which each NHS FT will operate (the terms of authorisation). The Independent Regulator will have powers to step in if there is evidence that an NHS FT has significantly breached the terms of its authorisation, or has failed to comply with appropriate legislation.

Annexe One

Scope of consultation

The key issues to be addressed in the consultation document are

· the case for NHSFT status: a description of the pros and cons arising from NHS Foundation Trust status.

· governance arrangements: proposals for new governance arrangements; proposed membership community, composition of Board of Governors and Board of Directors, election processes, proposals for communicating with and recruiting members and for ensuring a representative membership; proposed roles and responsibilities of Governors, Directors and members; proposed transition arrangements for present executive team and chair.

· service development vision: a description of what the NHSFT expects to achieve in broad terms over the next five years, focussing on patient benefits rather than organisational gain. The vision for the first two years should be consistent with (and will largely reflect) developments agreed as part of the LDP process, which have been subject to consultation and agreement with local stakeholders. The vision for 2006/7 onwards can be presented in very high-level terms. It does not need to be agreed in detail with PCTs although it should as far as possible chime with the SHA view of what is required within the local health economy and reflect the financial environment of principal commissioners.

The consultation does not have to be on the basis of finalised proposals. Many applicants have already started discussing aspects of their proposals for NHSFT status with stakeholders: the consultation process should mesh in with this rather than running in parallel. It is entirely acceptable (and indeed desirable) for the consultation document to set out the range of options that are being considered at this stage. So for example on governance, the document might outline the basic shape of the governance arrangements and present alternatives for the size and composition of the Board of Governors

The governance arrangements proposed by the Trusts will be a central feature of the consultation document. As such it should include:

· Who (in terms of geographic area) can become a member in the public constituency;

· If appropriate, provision for patients and their carers from outside the area to be members in the public constituency;

· Eligibility for membership in the staff constituency;

· Processes for recruiting, retaining and communicating with members;

· Process for the election of the Board of Governors; and

· Process for the appointment of the Board of Director

The Board of Governors

Arrangements for the Board of Governors must include:

· _public governors. It may also have patient and carer governors. More than

half of the board of governors must be public, patient or carer governors

· _at least three governors elected by members of the staff constituency

· _at least one governor appointed by a primary care trust for which the NHS

Foundation Trust provides goods and services

· _at least one governor appointed by a local authority whose area includes all or

part of the NHS Foundation Trust's public constituency

· _at least one governor appointed by a university, if the NHS Foundation Trust's hospitals include a university medical or dental school

· _the option of appointing one or more governors from a partnership organisation

Governors, through their involvement in appointing the Chairman and non-executive directors will be in a strong position to influence the direction of the NHS Foundation Trust.

The Board of Governors will be responsible for:

· Representing the interests of NHS Foundation Trust members and partner organisations in the local health economy in the governance of the NHS Foundation Trust;

· Regularly feeding back information about the Trust, its vision and its performance to the `constituency' they represent;

· If necessary, chairing or attending relevant sub-committees;

· Appointing the non-executive directors, including the chair, of the Trust;

· Appointing the Trust's auditor;

· Working with the Board of Directors to produce plans for the future development of the Trust;

· Receiving, at a public meeting, copies of the Trust's annual accounts, auditor's reports and annual reports; and

· If concerns about the performance of the management board cannot be resolved at a local level, informing the Independent Regulator for NHS Foundation Trusts.

Local authority representation on the Board of Governors must be at least

one governor from a local authority that falls wholly or partly within a public

constituency of the NHS Foundation Trust. There may be more, if the Trust so

chooses. Again, an NHS Foundation Trust should agree with the relevant local

authorities how many local authority governors there should be on the board of

governors and the method of selection (for example rotation, one to represent all

local authorities). They must leave the selection process to the local authorities

themselves.

The local authority governor does not need to be elected to the

board of governors nor do they need to be an elected member of the local

authority - for instance they could be a relevant officer such as the Director of

Social Services. Local authority governors should not be appointed to represent

the interests of their specific local authority. Their role is to provide the

perspective of the wider community and be a knowledgeable source for governors

to develop better understanding of the environment in which the NHS Foundation

Trust operates.

Annexe Two

SUHT and WEHT presentations: Key Points

· Foundation Status will provide both NHS Trusts with

o Legally binding income for work done

o An ability to borrow against this income

o Freedom to form joint ventures with other (including commercial sector) to spread risks

· Consultation will only be on the constitution of the Foundation Trusts, not whether to go ahead or the service development strategy (SDS)

· Both Trusts indicated that their costs were well below the national tariff but no further detail was available. Reference was made to the need to look at alternatives to service provision where costs exceeded to national tariff.

· Both Trusts were basing their proposals on the delivery of `HealthFit' and the notion of `single service delivery' in the health system

· SUHT was proceeding on the basis of the following assumptions

o Emergency care will increase (including night time provision)

o Elective workloads will be increasingly complex, reflecting higher levels of acuity and clinical input

o This work will be moved to SUHT from other areas of the health network

· In responding to these assumptions SUHT will seek to consolidate rather than grow in terms of service provision. This will need

o Shifting less complex care to other Trusts and PCTs

o Extended A&E capacity

o Extended critical care and high dependency capacity within Soton General

o Totally reconfiguring the Royal South Hants site to provide all out patient clinics, the Department of Psychiatry, residences and `commercial capacity'

· WEHT were proceeding on the basis of

o Clinical governance dictating what could or could be done in a particular care setting

o WEHT would be the provider of choice for local people requiring acute care

o Capacity will need to be released to provide this (e.g. the reconfiguration of Andover Hospital)

o Greater integration with community services, including social care will also be required

Questions and Comments

These came from the PCTs but reflect a number of areas that may need further exploration. They are not in any particular order.

· There is a tension between the commercial drivers and the aspirations to provide better health care

· Better joint working is required

· Coherent commissioning by PCTs is assumed

· Are the proposals affordable and sustainable

· Funding shifts to primary care must happen- otherwise the PCTs will effectively be paying twice for a service. The implications for reproviding services for people with a chronic illness in the community indicates disinvestment from the acute sector by PCTs

· How will systems working and clinical networks be managed to ensure transparency

· There is a danger of these services ceasing to be needs led

· What is the population to be served by these arrangements

· How will private work be managed in this arrangement

· What is the role of community hospitals

· Can services be withdrawn if they become financially unviable or fall outside the national tariff rate.

· How is capacity in community and social care going to be built to managed these service reconfigurations

· What about the public health agenda

· How can chronic conditions be managed to promote independence

· It is not clear exactly what this would mean for the provision of routine elective care currently provided at SUHT.

· Surgical provision would need to be redesigned and agreement reached on the way in which patient activity could be allocated

· What would the impact be of a `single service delivery system' and how would equity in access be ensured across the area.

· The focus of both presentations was on acute and emergency care. Community and other support required in such a system also needs consideration.

· The provision of specialist services and how these would be managed needed to be addressed (these are often low volume, high cost and purchased across a wide population)