NHS bill will put hospital governance in the hands of unskilled volunteers
The first Foundation Trusts were created in April 2004 and now some two thirds of hospital trusts are foundations. Monitor was created as the regulator of Foundation Trusts and the intention was to remove acute hospital and mental health trusts from the direct control of the Secretary of State for Health and make trusts accountable to the community they serve. To achieve authorisation as an FT a trust must show that it will:
- stay solvent
- be well-governed (from both a financial and quality perspective)
- operate effectively within its constitutions
- engage with patients, service users and commissioners
- provide all the services that it is required to deliver by law.
Monitor authorises trusts as Foundation Trusts and ensures that they continue to meet these criteria. If a trust shows that it will breach any one of these, Monitor will initially issue a warning, and if the condition does not improve then Monitor can replace the management. This is similar to the powers of the Department of Health over NHS (non-FT) hospital trusts, but as an "arms-length body" Monitor is independent of the government.
Foundation Trusts are public benefit corporations and this means that the legal owners of an FT are the members. FTs have staff and public members: public members are typically opt-in and are drawn from patients, carers and the wider community; staff members are typically all staff with the ability to opt-out. Public and staff members elect governors and these, together with governors appointed by local stakeholders (for example local authorities), form the trust's council of governors.
Currently governors have few statutory responsibilities and the main ones are to appoint the auditors and to appoint the trust's non-executive directors (NEDs) including the chair of the trust. The NEDs appoint the chief executive (with the approval of governors) and the chief executive appoints the executive directors. This means that the board of directors of an FT is part appointed by the governors (NEDs and chair) and part appointed by the chief executive.
All of this means that currently Monitor has the responsibility to ensure that FTs are well run and it will take action if an FT shows signs that it may fail.
The Health and Social Care Bill changes the role of Monitor entirely. Monitor will be a financial regulator and its duty will be to make sure that all providers (NHS, private and charity) do not show anti-competitive behaviour. In spite of reassurances during the "pause", Monitor will also promote competition through a separate body called the Cooperation and Competition Panel (which will be transferred to Monitor from its current home in the Department of Health).
Monitor cannot be the arbitrator of anti-competitive behaviour and have a responsibility for the good governance of FTs, so from 2016 it will lose its responsibility for the latter. So who will ensure that trusts are solvent, well governed, meet their constitutional requirements, etc? It is the governors – untrained, unqualified members of the public who volunteer their time for the benefit of their local hospital. Are they equipped to do this? I fear not, and the Department of Health is worried too. Earlier this year, Nick Timmins of the Financial Times wrote:
"According to other senior NHS figures, governors vary 'from those with extensive business backgrounds to people with tea cosies on their heads'."
From my experience as a tea cosy wearer – an FT governor who treats the FT as a community service not a business – the ratio of fellow tea cosy wearers to businessmen is something like five to one. Yet under the Bill we will be responsible for ensuring that our trusts (organisations whose turnovers range from £100m to almost a billion pounds of public money) are kept solvent. We don't have the skills to do this. The government's drive to force competition on the NHS means that the vital task of scrutinising Foundation Trust balance sheets and holding boards of directors to account will be taken away from the organisation created to do this and handed over to people who neither have the skills nor volunteered to do this work.
Richard Blogger writes about the NHS and social policy at NHS Vault.
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