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Last Updated: Wednesday, 7 May 2003, 10:50 GMT 11:50 UK
Q&A: Foundation trusts
The first wave of NHS foundation trusts came on stream on 1 April 2004. In total, there are now 25.

BBC News Online examines how they differ from existing hospitals and what it means for patients.

What are foundation trusts?

Foundation trusts are a new type of NHS hospital. They are independent, not-for-profit organisations which will have more freedom from government control.

They are only being introduced in England. The first foundation trusts were established on 1 April 2004. Since then there have been four further waves, creating 32 elite trusts in total.

Prime Minister Tony Blair has said that every NHS trust in England could obtain foundation status by 2008.

Initially, only only three star rated acute and specialist Trusts were able to apply for foundation status.

But, in September 2004, mental health trusts were also invited to apply and, in November 2005, ministers said two-star hospitals would be allowed into the club.

The trusts are based on a similar type of hospital in Spain.

How different are they?

Foundation trusts have more freedom to set their own priorities and decide how best to spend their money.

But most importantly they have new powers when it comes to raising money.

They are able to keep any surpluses, which should act as an incentive to keep costs down.

They are also able to keep any proceeds from the sale of assets and land.

But crucially, they are able to raise money on the open market - i.e. take out loans from banks.

However, there is a limit on how much money they are allowed to borrow. This limit is set by an independent regulator.

Trusts are expected to use all of this extra money to improve patient services.

For instance, they can recruit extra staff or build new wards. They can pay existing staff to carry out more operations or fund treatments in the private sector.

Will patients benefit?

The government obviously thinks so. Ministers say foundation trusts have the power and flexibility to develop those services that local patients actually need.

They also hope the extra freedoms will encourage trusts to develop more innovative and effective ways of cutting waiting times.

They say these trusts will also help to drive up standards in other hospitals, as they try to learn from the best and strive for foundation status themselves.

Critics, however, say foundation trusts will create a two tier health service.

They say the extra freedom and money will help the best to become better, while the not-so-good languish and fall further behind.

There is also concern that some of the first foundation trusts have struggled to make the transition from central control to greater autonomy.

Monitor, the independent regulator, removed the chairman of a trust in Bradford in December 2004, after the trust run up millions of pounds of debt.

Other trusts have also had to agree improvement plans with the regulator.




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