Hospital trusts bring internal health market

Trust status comes to Burnley General Hospital

The introduction of The National Health Service and Community Act (1990) allowed hospitals and other health care providers to be given trust status and become independent of health authority control.

It was also part of the move towards the creation of an internal NHS market, with Health Authorities, GP fundholders and other health organisations having to purchase care from trusts.

Purchasers sign contracts with the trusts, which are responsible for delivering the amount and levels of care specified within them. Performance tables allow them to assess standards.

Trusts are 'self-governing', but remain within the structure of the National Health Service (NHS). They are run by boards of non-executive directors and report directly to the Secretary of State, bypassing the district or regional health authorities. In addition to hospital trusts, there are a variety of other health trusts, including those dealing with mental and community health issues.

Raising standards

The Conservatives' stated aim in creating NHS trusts was to raise standards of care for patients through devolving power and responsibility away from health authorities and towards managers and medical staff. By April 1997, all NHS hospitals in Britain (other than in the Scottish Islands) had become trusts.

However, concerns about the accountability of trusts led the new Labour government to require all trusts to hold their board meetings in public from June 1997. It is also seeking to ensure trust boards are more representative of the local community.

It claims the make-up of trust boards was too heavily slanted towards business people and political appointees under the Conservatives. It wants to see more members of the community, such as patients, carers and others on the boards. It claims the appointment system will be open and independent.

Trusts can:

• determine their own management structures.
• employ their own staff and set their own terms and conditions of service.
• own, buy and sell their own assets.
• retain any profits and borrow money subject to annual limits. Trusts are also involved in negotiating for private capital for major new projects under the Private Finance Initiative. In May 1997, the government introduced legislation to clarify trusts' powers.
• carry out medical research and provide facilities for medical education and other forms of training.
• treat private patients for profit if this does not obstruct their NHS obligations.

In return, they are required to produce an annual business plan, detailing their aims in areas such as service development and capital investment. These plans are discussed with the NHS Executive, but are not published. However, trusts must also produce and publish an annual report and accounts.

Increasing income

Trusts range in size from small district hospitals to large teaching hospitals.

As part of the internal market and other health reforms, some of the larger hospital trusts have developed specialisms and now act as centres for the treatment of certain diseases. This helps them to increase their income.

The new government states that it wants to abolish the internal NHS market and create a spirit of co-operation, rather than competition. It plans to merge several NHS trusts as part of this programme. It says this will streamline management and reduce bureaucracy, allowing more money to be spent on patient care. It also proposes to give health authorities a stronger strategic role in determining local health needs and the kind of services that should be provided by trusts.