Shaking Nye's foundations

Health Correspondent Barry Nelson looks at the issue which could prove to be Labour's equivalent of the poll tax - foundation hospitals.

THE Government faces what could be the biggest backbench revolt in history today over its controversial plans to create foundation hospitals. Health Secretary Alan Milburn is staking his reputation on pushing through these reforms, which he maintains will lead to better performing NHS hospitals.

Backbench critics in his own party are fearful that the move will create a two-tier Health Service and be a Trojan horse which will allow a creeping privatisation of the NHS.

So what are foundation hospitals? Will they be an asset or a threat to the Health Service?

Q How will a foundation hospital be different from existing NHS hospital trusts?

A Instead of being local branches of the NHS the new foundation hospitals will be established as non-profit, public-interest companies. They will elect their own board of governors made up of local residents. This new type of board will guide the policies of hospital managers.

The theory is that this new type of NHS hospital, free from rigid control from Whitehall will be better placed to meet the particular needs of the local community. This could lead to new, improved services to local residents.

Q What will foundation hospitals be able to do that NHS hospitals can't do already?

A The new foundation hospitals will have more freedom to borrow money to improve buildings and services, although the Government has made it clear that the amount hospitals can borrow will be limited by a new independent regulator. They will also be able to set up independent money-making ventures which will be able to sell medical research to other hospitals and even abroad.

The intention is that foundation hospitals will use their freedoms to build on existing strengths, leading to some hospitals becoming centres of excellence for some diseases and condition.

Crucially, foundation hospitals will be able to keep the proceeds of any surplus land they sell off and plough it into service improvements, although hospitals in the North of England will make far less than hospitals in the South-East because of differing land values.

Q What will foundation hospitals not be able to do?

A Health Secretary Alan Milburn has stepped in to make it clear that foundation hospitals will not be able to pay nurses more than a non-foundation hospital down the road. The new-style hospitals will have to provide the same range of treatments to patients: for instance, they would not able to stop doing hip replacements.

While foundation hospitals will have greater freedom to borrow money, the Chancellor, Gordon Brown, has intervened to ensure that this must be within the Health Service's overall borrowing limit.

Mr Milburn has also made it clear that the new freedoms will not extend to treating more fee-paying private patients than other NHS hospitals in a bid to increase income.

This week he said: "I will resign if there is a question of introducing more charges for NHS patients - that is not what this is about."

Q Will this lead to a two-tier health service?

A Arguably there is already a two-tier NHS because some hospitals have been awarded three stars by the Government and others only have two or even one star. Only NHS trusts which have three stars are currently eligible to become foundation trusts.

The Government denies that the foundation hospital experiment will lead to a two-tier system but it is difficult to see how this can be avoided during the starting up period. The first wave, which are due to be announced next month, will clearly get a head start and if services are improved, local residents will, of course, be the first to benefit. However, Health Secretary Alan Milburn has stressed that all NHS trusts will have the chance to become foundation hospitals within four years and this week announced that an extra £200m is to be injected into all NHS hospitals to improve standards.

Q What do hospital managers think about foundation hospitals?

A Most are keeping their heads down because it is a political hot-potato. One chief executive of a large big-city trust has said becoming a foundation hospital would give the trust more freedom to build on the hospitals' considerable research capacity. This should generate more income "which will be put back into providing better patient services".

On a practical day-to-day basis the manager would have more freedom to make the most of bright ideas submitted by nurses or doctors to improve services.

Bill Murray, chief executive of South Tees Hospitals NHS Trust, recently compared the controversy over the introduction of foundation hospitals with the introduction of NHS trusts in the early 1990s. Mr Murray, who runs the large James Cook University Hospital in Middlesbrough, said some suggested that the setting up of trusts doing more specialist work would lead to a stampede of staff from smaller hospitals to larger hospitals.

"When the changes came in, that didn't happen," said Mr Murray.

Q Will this lead to the privatisation of the NHS?

A Yes, according to the main health service union Unison, which vehemently opposes the creation of foundation hospitals. The reason so many Labour backbenchers are likely to vote against the reforms, including former Health Secretary Frank Dobson, is that they are concerned that this could lead to more private companies operating within the NHS.

But Health Secretary Alan Milburn strongly denies that foundation hospitals would pave the way for privatisation. He has said that legislation to create the new hospitals would contain an "equity guarantee" to ensure that foundations remain part of the NHS, providing services according to the Health Service principles of "care for free, based on need, not ability to pay."

Q Which health trusts in the North-East are interested in becoming foundation hospitals?

A So far three trusts have expressed an interest in being in the first wave of foundation hospitals. They are: The flagship Newcastle Hospitals trust, which includes the Royal Victoria Infirmary, Newcastle General Hospital and the Freeman Hospital; North Tees and Hartlepool, which includes the University Hospital of North Tees and the University Hospital of Hartlepool and City Hospitals Sunderland, which includes Sunderland Royal Hospital.