Becoming a Foundation Trust

1. Becoming a Foundation Trust A brief guide for Clinical Commissioning Groups

2. Contents • Introduction - • Role of Clinical Commissioning Groups in Provider Development - • Overview of provider side reform - • Overview of Health and Social Care Bill - • The landscape for providers will change significantly - • As a result there will be reforms to the provider landscape and a new role for Monitor - • New provider landscape - • The Government’s reforms have substantial impact on the provider landscape - • Deadline for FT status - • Criteria NHS Trusts must meet - • Traditional route to becoming a Foundation Trust - • Key principles for Foundation Trust authorisation - • Tripartite Formal Agreements -

3. Contents (Continued) • NHS Foundation Trusts - The benefits to commissioners of Trusts gaining Foundation Trust status • The Role of Monitor - • Potential obstacles to becoming a Foundation Trust - • Economic regulation - • Introducing economic regulation to the NHS - • Further Information -

4. Introduction All NHS Trusts should become Foundation Trusts on their own, as part of an existing FT or in another organisational form by April 2014. It is government policy that NHS hospitals should run their own affairs and be accountable to local people and patients, as opposed to being subject to top-down direction from the Department of Health (DH). To obtain FT status requires strengthened board governance, financial disciplines that promote long-term financial viability, and a framework to secure delivery of quality services. Monitor is the independent regulator of NHS FTs and is responsible for assessing applicants for FT status and subsequently regulating them once they are approved. Monitor sets out the criteria aspirant Trusts must meet.This brief document outlined the key stages to becoming a Foundation Trust and the points at which commissioners will become involved in that process.

5. Role of Clinical Commissioning Groups in Provider Development CCGs must: NHS Foundation Trust NHS Trust

6. 1. Overview of provider side reform

7. Overview of the Health and Social Care Bill • The Health and Social Care Bill and the Government’s response to the White Paper consultation include plans that will affect every part of the NHS • Commissioners: radical reforms to devolve commissioning responsibilities to GP commissioning groups • Regulators: Monitor to become economic regulator from 2012 and will run a joint provider licensing programme with CQC • Providers: Implementing “any willing provider” alongside mandating all NHS acute and mental health trusts to become FTsKey themes • Moving away from “excessive bureaucracy and top-down control” towards more decision making by patients and health professionals • Using market mechanisms (including competition and failure) to drive improvements in value and quality

8. The landscape for providers will change significantly

9. As a result there will be reforms to the provider landscape and a new role for Monitor New provider landscape Role for Monitor Licensing providers of NHS care Any qualified provider Protecting and promoting patients’ interests Market entry All NHS providers to become FT on their own, part of an existing FT or in another organisational form Setting prices for NHS care Reforms to the FT model Preventing anti-competitive behaviour Supporting service continuity

10. 2. New provider landscape

11. The Government’s reforms have substantial impact on the provider landscape • The Health and Social Care Bill proposes several key reforms to the provider side of the NHS, all of which will have potentially significant consequences • In broad terms, the Bill and the consultation response split providers into three different groups, • NHS Trusts that have yet to become Foundation Trusts; • Current Foundation Trusts; and • Independent Sector providers • The reforms have differential impacts on each of the groups • As a result of the changes to the provider landscape there will be changes to the role of Monitor in its role as regulator of Foundation Trusts

12. Deadline for FT status • There is a strong expectation that all public sector health providers will be Foundation Trusts by April 2014 if possible. However a number of Trusts have said themselves they are not clinically of financially viable for the longer term and might not meet this deadline • As a result of this and the abolition of Strategic Health Authorities, all NHS Trusts that have not gained FT status by April 2013 will be put under the guidance of a newly-constituted Special Health Authority, the NHS Trust Development Authority (NTDA) • The NTDA will support Trusts to FT status, OR work on an agreed solution to their future form, for example merge with an existing FT. Clear signals are being sent to providers indicating that they are co-responsible for achieving this. • A new single operating model for the four SHA clusters’ management of the FT Pipeline will be operational by January 2012, foreshadowing the single national approach. Monitor will continue to assess whether organisations meet the necessary financial and governance requirements (the “FT Bar”). There will be no lowering of the assessment bar in order to ensure that organisations will be fit for purpose.

13. Criteria NHS Trusts must meet Monitor is responsible for assessing and authorising applicants for NHS Foundation Trust status and for their regulation afterwards. Before submitting an application to Monitor, trusts have to gain the approval of their Strategic Health Authority (upon abolition of the SHAs the NHS Trust Development Authority will take on this role ) and the Secretary of State. Part of this key initial approval is the support of their local commissioners – formerly the PCT, but increasingly of their CCG(s). Once these support areas are secured, the application goes forward to the Department of Health’s Applications Committee which reviews it and advises the Secretary of State on its merits. If approval is secured, the Trust then submits its application to Monitor. • Monitor Phase • Department of Health advises Monitor of supported applicants • Trusts formally apply to Monitor • Monitor will carry out its full assessment process • Is the applicant legally constituted? • Is the applicant financially viable? • Is the applicant well governed? • Interviews with the Care Quality Commission, SHA, and PCTs/CCGs • Board to Board meetings • SHA led Development Phase • SHA works with Trusts to develop robust and credible NHS Foundation Trust applications. Activities include: • 1. Pre-consultation: • Trust review • Board review • Draft business plan and financial model • Bespoke support • SHA decides that the applicant is now ready to proceed to: • 2. Public consultation – minimum 12 weeks • 3. Post consultation: • Finalisation of consultation • Final business plan and financial model • Historical due diligence sourced and actioned • Board-to-board practice • All actions from 1) above, delivered • 4. SHA confirms the Trust is ready to move into second phase • Secretary of State Support Phase • When SHA is satisfied that Trust is ready, Trust formally applies to Secretary of State, with SHA full support • Applications Committee considers applications and provides advice to Secretary of State which Trusts be supported to proceed to Monitor for assessment and, if successful, authorisation • Final decision by Secretary of State • SHA led Development Phase • Pre-consultation • Public consultation • Post consultation • Historic due diligence report • SHA and trust submit application to the Department • Secretary of State Support Phase • Applications committee review application and make the recommendation to the Secretary of State • Secretary of State support granted • Trust is invited to formally apply to Monitor • Monitor Phase • Application review by the Assessment Team • Is the applicant legally constituted? • Is the applicant financially viable? • Is the applicant well governed? • 2. Interviews with the Care Quality Commission, SHA, and PCTs/CCGs • 3. Board to Board meetings Commissioner support – vital in planning, monitoring, and FT application Authorisation granted Deferral Rejection See next page

14. Traditional route to becoming a Foundation Trust Intervention Points for CCGs • SHA Led Development Phase • Commissioner signatory to TFA • Negotiation and Agreement over contract income • Negotiation and Agreement over changes to clinical pathways • Commissioner input to the Trust’s business plan and financial model • SHA/NTDA check commissioner support for FT application • Monitor Phase • DH advises Monitor of the applicant’s support from commissioners • Monitor carries out full assessment process including direct discussions with commissioners, with focus on commitment to financial model for Trust, satisfaction with quality standards of Trust and commitment to Trust’s clinical strategy • Commitment to commissioning plans to ensure robustness of aspirant Trust financial projections • Secretary of State Support Phase • When SHA is satisfied that Trust is ready, Trust formally applies to Secretary of State, with SHA full support • Commissioners provide a letter of support • Applications Committee considers applications and provides advice to Secretary of State which Trusts be supported to proceed to Monitor for assessment and, if successful, authorisation. • Final decision by Secretary of State

15. Key principles for Foundation Trust authorisation Eight Domains There are eight domains against which the Department of Health considers applications from NHS Trusts prior to recommending that the Secretary of State for Health supports an application being progressed to Monitor for authorisation as an FT. The eight domains are:1. Legally constituted and representative – the aspirant FT will have to ensure an appropriate legal constitution which gaining appropriate representative members of the local community2. A good business strategy – CCGs will be expected to discuss their commissioning intentions in their business strategy. Strategic convergence with commissioning intentions and local health economy requirements will be tested3. Financially viable – CCGs commissioning plans will form a central part of the aspirant FTs business plan and in turn its financial viability as an organisation. A well developed approach to contracting for services on the part of CCGs will be essential to the aspirant FT being able to meet Monitor’s tests of viability4. Well governed – SHAs/NTDA and subsequently Monitor will test out the relationship between commissioners and providers. Good relationships are the key to ensuring continuity and development of services and meeting the needs of patients5. Capable board to deliver – All aspirant FTs will be required to undertake a board assurance process to ensure that the organisation will be led by capable individuals6. Good service performance – CCGs will be asked to input their views on the quality of the service performance that their patients are experiencing as part of the FT process. SHAs performance manage trusts currently against all the key performance targets. CCGs should be aware of both delivery against national metrics and also performance against key local priorities7. Local health economy issues/external relations – Key stakeholders, including CCGs and local authorities will be asked for their views of the aspirant FT and these views will be triangulated against others, including the media, and also considered against any pending issues such as disinvestment in services, when forming a view of the organisation’s suitability to progress to FT status. CCGs will be expected to put forward a letter of support as the main commissioners8. Quality of services – The quality of services offered by an FT will be a key consideration. Clinical views will be sought from a variety of sources and a standard framework will be produced to ensure a thorough assessment is made in this area. The views and experiences of CCG members will be sought by the SHA, DH and by Monitor.

16. Tripartite Formal Agreements • The Department of Health has developed new processes to help progress aspirant FTs towards FT status. A key element of this process is the Tripartite Formal Agreement (TFA). The TFA summarises the main challenges facing each organisation, the resulting actions to be taken by the Trust, the SHA and the DH. There is an explicit timescale in this document for the Trust to become an FT. Because of the influence that commissioning intentions and overall commissioner support to applications have on whether Trust’s financial plans are viable, the lead PCT for each Trust has also endorsed the TFA. This responsibility will pass to the lead Clinical Commissioning Group (CCG) once it is authorised. The actions outlined in the TFA to become an FT primarily rest with the NHS Trust board and management, supported regionally by their SHA and nationally by the DH. When SHAs are abolished in April 2013, the NHS Trust Development Authority will become responsible for progressing the remaining Trusts. The TFA forms the main public document giving the Trust’s commitment to becoming an FT and is the commitment against which the health economy, and particularly the Trust, will be measured. All aspirant Foundation Trusts have a signed TFA which is available on the Trust’s website.

17. NHS Foundation Trusts • The benefits to commissioners of Trusts gaining Foundation Trust status • NHS Foundation Trusts • are free from central government control. The board has the authority to run its Foundation Trust as it judges best, but is accountable for the success or failure of the organisation. This is a cultural shift which fosters improved leadership and innovation • have greater financial freedoms – they can borrow commercially and generate surpluses to expand, improve quality or develop new services. And • are accountable to: • their local communities, through their members and governors • commissioners, for delivery of services specified in their contracts with PCTs, CCGs and other specialist commissioners • Monitor as their regulator • Parliament, by laying their annual reports and accounts before the House of Commons and House of Lords. Monitor as the regulator of FTs has said it is keen to develop closer and more effective relationships with commissioners

18. The Role of Monitor • Monitor is responsible for assessing and authorising applicants for NHS Foundation Trust status. It is the independent regulator of NHS FTs and has a role to ensure that FTs are professionally managed, legally set up and run and have their finances in good order. • Monitor assesses each applicant’s eligibility for FT status by considering: • The Trust’s legal constitution, including its level of public membership and draft constitution • The quality of governance, including the quality of the board, and its performance and risk management arrangements • Evidence on the quality of services • The Trust’s financial viability, including its integrated business plan, short term financial health and long-term financial projections

19. Potential obstacles to becoming a Foundation Trust • The FT Pipeline is all about creating clinically and financially sustainable organisations that as a result become FTs. So those that can’t show how they will be clinically and financially sustainable won’t be able to become an FT in their current form. 20 Trusts, through the TFAs, have signalled this and there may be a few more. • It is clear that not all NHS Trusts will become Foundation Trusts in their current form. A number of these organisations have complex and substantial issues to resolve. Tackling these issues will required innovative and in some cases, radical solutions. Some of the challenges identified for organisations include: • Historic financial difficulties within the local health economy • The need to improve clinical outcomes • The need to improve patient experience by redesigning services to move procedures from a hospital to a community setting, where appropriate • The need to replace facilities which are no longer fit for purpose • In these cases, more than others, it will be vital to have strong commissioner input to the solutions to providing healthcare for local people. These solutions may include mergers, reconfiguration of services, services closing in some areas and expanding in others.

20. 3. Economic Regulation

21. Introducing economic regulation to the NHS • To realise the benefits from the market based reforms the Government has proposed the introduction of Economic Regulation for the NHS which will be led by Monitor • Government has argued that Economic Regulation is warranted to correct specific market failures seen in healthcare in order to protect patients and the taxpayer • As a result, economic regulation led by Monitor will cover three aspects: • Competition – all of healthcare and social care in the future • Pricing – NHS funded care – in agreement with the NHS Commissioning Board • Continuity of Service – designated service providers • These aspects will apply to all providers of NHS funded care (not just FTs) • Monitor’s role will often be a balancing act between action to promote efficiency and action to ensure service continuity • Patient safety and quality will remain the jurisdiction of the CQC though there will be joint working between the two organisations

22. Further Information Further information can be found at : www.monitor-nhsft.gov.uk www.dh.gov.uk/ www.ccpanel.org.uk/