Kieran Walshe PhD
Journal of the Royal Society of Medicine 2003:96:106-110 March 2003 (with minor amendments)
The Government's proposals to create new 'foundation hospitals' are moving
forward rapidly, despite considerable political opposition not least within
the Labour Party itself, and deep scepticism about the ideas in many quarters
of the National Health Service and the professions. Advocates claim they will
lead the way to a new understanding of public services and public ownership,
'set the NHS free' from the iron grip of Whitehall control, and make health
services more accountable to and responsive to patients and local communities.
Critics argue that the ideas are, at best, a half-baked, reheated version of
NHS trusts launched in the early 1990s, At worst, they assert, foundation hospitals
are the start of the break-up of the NHS, a creeping form of privatization that
will undermine the fundamental values of social solidarity, care according to
clinical need rather than ability to pay, and equity in healthcare provision
on which the NHS was founded. Although the necessary legislation has yet to
be passed, the Government has already issued a prospectus for potential applicants
for foundation status, and set out a timetable that would see the first foundation
hospital identified this year and coming into being in April 2004.
This paper examines the case for foundation hospitals, and tries to set it in
the wider context of health policy development and NHS reform over the past
two decades. It argues that there is a need for a fundamental change in the
systems for governance and accountability in the NHS and examines how the creation
of foundation hospitals might help to meet that need.
The NHS has been in a state of almost continuous reform and restructuring for
two decades or longer. There has been some kind of organizational upheaval in
some part of the NHS almost every year for the past twenty years, and the pace
of change seems to grow ever faster. (See chronology below)
The adverse effects of this perpetual process of reform are almost self-evident.
First and perhaps most obviously, the theoretical benefits of each set of changes
are usually not realized in practice. The advocates of every new reform argue
that it will make the NHS more efficient or effective, save money, or produce
more or better patient care. But they have little appetite for proper, rigorous
evaluation-and with good reason, because their bright ideas often do not work
very well. By the time that the researchers have painstakingly documented and
measured progress and assessed the impact of one set of reforms , the next wave
of organizational change is already upon us and the attention of policymakers
is always firmly fixed on the future.
Secondly, all this reform is costly, since managers and other NHS professionals
invest a huge amount of time and effort in each reorganization, and there are
always new offices to rent and furnish, new letterheads to print and new signs
to put up everywhere. It is also costly because most reorganizations leave some
NHS managers displaced and their redundancy or early retirement is expensive
and entails the loss of their talents, knowledge and experience. The NHS managers
who survive and prosper in this turbulent and rather introspective environment
are those who are good at negotiating their way through each organizational
change and using it to push forward their own career. The system does not necessarily
reward or promote the good leaders and managers. Organizational restructuring
tends to divert time and effort from the challenges of improving healthcare
delivery, and the impact on frontline clinical staff or patients is often negligible.
Thirdly, the process of reform is commonly circular, so we end up back where
we started. For example, between 1985 and 2000 the Department of Health first
split off responsibility for managing the NHS at a national level into the NHS
Executive, then reorganized that function several times, and finally reintegrated
it back into the Department of Health. To take another example, the primary
care trusts created in 2002 look remarkably similar in function and boundaries
to the district health authorities created in the 1982 reorganization of the
NHS and subsequently merged and reorganized repeatedly. And, of course, the
current proposals for foundation hospitals and 'payment by results' for NHS
trusts are seen by many as a repackaging of the 1990 NHS reforms and the internal
market. There are no new ideas, it seems, just new names for old ideas.
Finally, it is worth considering the unhealthy cumulative effects of all this
reform on the NHS and its culture. I believe it engenders a deeply cynical and
dismissive attitude to any innovation and change-'we've seen it all before,
nothing works, just ignore it and keep your head down because it won't last
very long' -which makes the advancement of real changes in health services much
more difficult. The NHS has become highly change-resistant precisely because
it has been exposed to so much organizational restructuring. The constant process
of reform also leads NHS managers to take a short-term view of everything--after
all, they are unlikely to be in the same jobs or the same organizations in two
or three years' time. There is little point in investing in the long-term development
of NHS organizations because they do not usually have a long term-and so the
NHS more and more resembles an organizational shantytown in which structures
and systems are cobbled together or thrown up hastily in the knowledge that
they will be torn down again in due course.
Paradoxically, the more things change, the more they stay the same. None of
this bewildering succession of health service reforms has changed the fundamental
governance and accountability arrangements of the NHS. The service remains,
just as it was when it was founded in 1948, a vertically integrated public bureaucracy
run from Whitehall. despite repeated changes in the labels on the boxes on the
organizational chart-regional, district, area and strategic health authorities,
family practitioner committees, family health services authorities, NHS trusts,
primary care groups, primary care trusts, and so on - the lines of accountability
still run in one direction only, upwards, to the Department of Health and the
Secretary of State for Health. The ceaseless reorganization of the NHS can perhaps
best be understood as a fruitless search for a way to manage the unmanageable.
No organization with a turnover of over £70 billion a year can be run
from its central office by administrative diktat, yet that is how generations
of politicians have tried to run the NHS.
Ever since the NHS was founded, the Secretary of State for Health has been
held accountable to Parliament for every dropped bedpan, trolley wait, cancelled
operation or long waiting list. It is a managerial nonsense, but a political
reality, that the Secretary of State can be asked to account for almost anything
that happens in so large and complex an organisation. The result is that, almost
inevitably, health ministers and the Department of Health are driven to centralize
and control the NHS, in order to exert some power over those things for which
they will be held responsible. They issue floods of directives, establish endless
central plans, appoint national 'czars' to direct the service, and exhibit a
hyperinterventionist style of micromanagement that simply cannot work. And the
more the Department of Health creates the appearance that ministers are in control,
the more they are held to account for the details of local health service performance,
and so the more they then try to tighten their grip on the NHS even further.
The perpetual process of NHS reform that was described earlier results in part
from the somewhat fruitless search for a better way to manage the NHS directly
from Whitehall, but also from the dynamics of political control. Each new government,
and even each new Secretary of State or health minister, is keen to make a mark
on the NHS. Doing so by bringing about real service changes or improvement is
slow and laborious, and is likely to take more time than most ministers or governments
have at their disposal. However, structural reform offers the appearance of
immediate and substantial change. Ministers are seen to be doing something-even
if what they are doing has little actual value and may be harmful in the long
term.
If we step back from the NHS, the unique nature of its governance becomes apparent.
No other national public service in the UK is so directly managed from Whitehall
(except, perhaps, the armed forces), and none is subject to such detailed and
continuous political intervention. No other comparable European country has
a health service run by central government, even in countries where the state
plays just as large a role in funding healthcare through taxation.
The current proposals for foundation hospitals are radical and exciting because,
for the first time, they promise not further organizational restructuring within
the NHS but a real change in the relationships between NHS organizations and
Central Government, and reform of the arrangements for governance and accountability.
In brief, foundation hospitals will be independent not-for-profit entities,
part of the NHS but outside the control of the Department of Health and the
Secretary of State for Health. A new term - the 'public interest company'- has
been coined to describe these bodies, but in fact they have much in common with
long-established forms of non-profitmaking institutions that serve the public
good such as charities, housing associations, universities and mutual or cooperative
associations. Foundation hospitals will still derive the bulk of their income
from government (as, indeed, do many universities, housing associations and
charities) and they will function within a framework of nationally set NHS standards,
regulation and inspection. But they will be run by boards of governors elected
and appointed locally. Crucially, the Secretary of State will no longer have
catch-all 'powers of direction' over these NHS organizations that enable him
or her to intervene at any time on any issue and tell them what to do.
These reforms could bring about four important changes in the governance and
accountability of the NHS. First, they could help to decouple or insulate NHS
provider organizations from the political process and political control, stopping
national politicians interfering constantly in how local NHS services are delivered
and saving these individuals from being held to account for everything in the
NHS. This does not mean a reduction in accountability but a move away from a
totemic belief that the Secretary of State controls everything to a more realistic
focus on management and accountability at a local level. Secondly, they could
promote the decentralization of health policy and health service management
in the NHS. The unhealthy monopoly of power and influence currently held by
the Department of Health could be broken up, and a plural and more multilateral
style of health policy-making could develop, in which other stakeholders such
as professionals, patients and community groups could wield much greater influence.
Thirdly, the reforms could introduce much greater community involvement in and
governance of NHS organizations. NHS trusts currently have boards of executives
and non-executive directors chosen by the NHS Appointments Commission, and they
report upwards - to strategic health authorities and the Department of Health
- rather than to their local communities. Foundation hospitals will be unambiguously
accountable to the populations they serve, which will appoint and remove their
boards of governors, and they could gain an organizational legitimacy and sense
of local ownership that NHS trusts have never achieved. Fourthly, the NHS desperately
needs stable and robust organizational forms whose life will be measured not
in months or even years but in decades. Foundation hospitals could make it much
more difficult for future Secretaries of State for Health to reorganize the
NHS every two or three years, and could promote the kind of organizational stability
that is needed for real leadership to develop and for meaningful service improvements
to take place.
The establishment of foundation hospitals could also have some adverse or unintended
consequences. It might reinforce the traditional power of acute hospitals, make
collaboration and integration between primary and secondary care more difficult,
and hamper necessary acute services reforms. One way to deal with this might
be to allow primary care trusts to have foundation status, or even to create
integrated foundation organizations running both primary and secondary care.
Some fear that foundation hospitals will use their freedoms to poach staff and
other resources from traditional NHS organisations and so increase inequalities
in healthcare provision. This might only be a temporary effect, growing less
as more and more NHS trusts achieved foundation status. More fundamentally,
it is clear from the experience of the charities and not for profit sector that
institutional independence from the Department of Health, while it is very welcome,
is no guarantee of good management and governance. Locally selected hospital
boards of governors could exhibit a parochial, short-term, reactive style of
governance, and end up replacing one set of dysfunctional behaviours with another.
The proposals for foundation hospitals offer a tantalizing vision of a different
way of running the NHS-less as a monolithic bureaucracy, more as a network of
smaller, more autonomous healthcare provider organizations that could be flexible,
responsive and innovative. But there are several reasons to be cautious about
how these ideas might translate into a political and organizational reality.
First, many commentators believe that the NHS is too politically important for
any Government (and especially the present one) to hand over control of large
parts of it. Whatever fine words about autonomy and independence are used, they
argue that, when a crisis occurs or an election looms, the reflex political
response will be to grab the wheel and resume control. Secondly, even if the
present Government does stick to its brave intentions, it is hard to see what
there will be to prevent a future Government reversing these changes and renationalizing
foundation hospitals for all sorts of reasons, not least to get a quick electoral
fillip. Thirdly, as the initial guidance on foundation hospitals already makes
clear, the constitutional, financial, and contractual structures for foundation
hospitals will be complex, and need to be worked through very carefully lest
unforeseen difficulties should undermine the whole enterprise. Fourthly, just
like many past reforms, foundation hospitals are being oversold by their advocates
to overcome opposition: the reality is that they could have both advantages
and disadvantages. Fifthly, as so often before, these reforms are being rushed
by impatient politicians with one eye on their next high office and the other
on the next election. A more considered and measured approach would mean that
the first foundation hospitals could test out and evaluate different models
of governance and organization, and their experiences could shape the development
of the concept. This strategy might also mollify some of the doubters, whose
distrust of the scheme is amplified by its precipitate pace.
Nevertheless, the proposals for foundation hospitals in the NHS deserve a qualified
welcome, because they make explicit what is fast becoming a matter of cross-
party consensus - that the attempt to run the NHS from Richmond House makes
no political, financial or organizational sense and that new structures for
governance are needed that will make NHS organisations much more accountable
to the communities they serve.
1982 Reorganization of health authority tier-abolition of area health authorities
and restructuring of district health authorities
1983-1985 Introduction of general management function throughout the NHS, with
appointment of general managers in all NHS health authorities and units, and
establishment of separate NHS board within the Department of Health
1989-1993 Establishment of NHS trusts to manage health service provision, previously
directly managed by health authorities but now accountable directly to the Department
of Health while contracting with health authorities and GP fundholders as healthcare
purchasers
1989-1995 Establishment of GP fundholding (and other models of GP commissioning),
giving general practices direct control over an increasing proportion of healthcare
services purchased from NHS trusts
1989-1995 Creation of the NHS Executive (first called the NHS Management Executive)
as a separate entity from the Department of Health, and the separation of responsibility
for policy development and implementation/ service delivery
1990 Abolition of family practitioner committees accountable to health authorities
and establishment of family health services authorities (FHSAS) as separate
organizations from health authorities to manage primary care services
1991-1997 Reconfiguration of district health authorities as health authorities,
and then continuing reduction in number of health authorities (from around 200
to around 100) through mergers and consolidation
1991 Restructuring of the boards of NHS organizations to create executive and
non-executive membership (replacing the distinction between members and officers)
1994 Reorganization of regional health authorities to reduce numbers from 14
to 8 regions
1994 Abolition of FHSAs and incorporation of their responsibilities into those
of health authorities
1995-2000 Reconfiguration of acute services involving extensive reorganization
of acute trusts and many mergers
1996 Abolition of regional health authorities and their incorporation into the
NHS Executive as its regional offices
1997-2000 Abolition of GP fundholding and its replacement initially with primary
care groups (PCGS) and subsequently by primary care trusts (PCTS)
2000 Abolition of the NHS Executive and the incorporation of its functions into
the Department of Health
2002 Abolition of the NHS Executive regional offices, devolution of some functions
to new strategic health authorities, and the creation of four new regional directorates
of health and social care in the Department of Health
2002 Reorganization of health authorities, going from around 100 to 28 strategic
health authorities in England, and the devolution of many responsibilities of
health authorities to PCTs
2002 Creation of PCTs in all areas, replacing PCGS, including some mergers and
restructuring, and transfer of responsibilities from health authorities
2003 Creation of first wave of foundation NHS trusts, based on existing NHS
acute hospital trusts with proven good performance records