To receive a presentation by the Chief Executive of the Trust.

The Committee received a presentation from the Chief Executive of the Hereford Hospitals NHS Trust on the consultation exercise which had been launched inviting views on the Hospitals Trust seeking Foundation Trust Status.

Mr Rose had briefed the Committee in June on the consideration being given to an application for Foundation Trust Status as part of his presentation on the work of the Trust in the preceding year and future plans and thoughts.

Copies of the published consultation document, “Your hospital in your hands” and the published summary were circulated at the meeting.

Principal issues raised in Mr Rose’s presentation were as follows:

·         The Trust’s Track Record.  Mr Rose commented that it was the Trust’s track record which enabled it to consider applying for Foundation Trust status.  It was one of the best performing Acute Trusts in relation to improvements to access and treatment times in the West Midlands.  It was a national exemplar site for Cancer Services, had established a much needed unit for stroke patients and had a dedicated workforce focused on the needs of the patients.  The Trust had also balanced its books in the last two financial years.

·         The key features of being a Foundation Trust.  The Foundation Trust would be a not for profit hospital business providing care mostly to the NHS.  It was accountable to staff and local people who could become members or governors of the Foundation Trust.  It was free from Central Government Control and the Strategic Health Authority, being answerable instead to the Independent Regulator of Foundation Trusts (Monitor).  It was not required to break even each year but had to be financially viable.  There was a potential advantage in being able to retain any surpluses (a surplus of £2,000 had remained in 2005/06) and borrow money.  The Trust would be independent, making it much more difficult for it to be taken over.  It would need to understand what people wanted and work with Commissioners of services to ensure that it could stay in business. 

·         The reasons why the Trust wanted to become a Foundation Trust.  The vision in five years time was that of a strong, independent hospital, accountable to the local community not Government Ministers.  The Trust would provide the best hospital experience for patients, make decisions locally benefiting from strong partnerships with GPs and others, use funding flexibly to improve services, be paid for the patients it treated under legally binding contracts and be the hospital of choice.

·         The risks of becoming a Foundation Trust.  The Government’s expectation was that all Trusts would eventually become Foundation Trusts, but with the possibility of larger Trusts being formed.  However, there was the danger if Hereford did not seek Foundation Trust Status that it could be taken over by a neighbouring FoundationTrust were one to be established.  On the other hand if patients did not choose the County Hospital, a particular risk if GPs did not recommend it, the Foundation Trust could struggle to survive.  There were also risks in the requirement to meet legally binding contracts, particularly in some smaller specialities.  The Foundation Trust would lose its licence if it were unsuccessful which could include going bust.  If this were to occur the Foundation Trust would be taken back into NHS ownership or taken over by another Trust.

·         Governance Structures.  Mr Rose explained the proposed governance arrangements comprising the members of the Foundation Trust (public, stakeholders and staff), the Council of Governors and the Board of Directors, how they would be elected and their respective roles (as described in the consultation document).  He particularly invited the Committee’s views on the proposed number of Governors and the proposal that there should be a minimum age limit of being a member of the Foundation Trust of fourteen years old.  He noted that responses to date showed 50% in favour of a minimum age limit of fourteen, with 48% against and 2% undecided.

·         The consultation process was outlined and the feedback to date which indicated 86% support for a Trust.  This was complemented by an indication that 93% would choose Hereford hospital if they required treatment (the recommendation of the GP being an important aspect in this thinking).

In conclusion Mr Rose drew attention to the role of the Independent Regulator in determining whether the Hospital Trust’s application for Foundation Trust status was viable.  The Trust’s current view was that further work needed to be undertaken with social care and health partners if an application were to be successful. 

A number of questions were asked and a number of points made.  These are summarised below.

·          A question was asked about whether, as a small Trust, the Trust’s senior management costs were disproportionately high and a burden on the Trust’s finances.  Mr Rose replied that the Trust had balanced its budget for the last 5-6 years, even though as a PFI hospital there were some higher costs to be met for some services compared with other NHS hospitals.  Action had been taken to achieve a lean management structure, although there was a concern that it was now almost too lean to deliver all that was now being demanded of it.  A leadership programme had been developed for the top 40 managers in the Trust to grow capacity locally, because the Trust could not rely on being able to recruit externally.  Management costs were, however, a potential risk to the finances of a Foundation Trust.

·          Mr Rose acknowledged that, unlike a university teaching hospital, Hereford Hospital  was reliant for all its income on patients choosing to use the hospital.  There was a possibility that even if there was public support for an application for Foundation Trust status the Hospital Trust Board may consider it too much of a risk to proceed at this time.  He reiterated that the Independent Regulator made a rigorous assessment of applications.

·          The question of the costs associated with running PFI hospitals was raised.  Mr Rose stated that the Government had issued national guidance on where the level of costs might become problematic.  Hereford Hospital’s financial commitments under the PFI scheme were below the thresholds the Government had identified.  He added that, whatever happened, £1 million a month for 26 years had to be paid to the run the site whether it was used or not.  This was a strong argument for the site’s future as an acute hospital.

·          In relation to the flow of Welsh patients to Hereford hospital he said that he thought it unlikely that a new hospital would be built in Powys.  Provision at Abergavenney was being moved to the South West of the area.  It therefore appeared that there might potentially be an opportunity to increase the numbers choosing Hereford hospital.

·          Asked about the impact of the scope for GPs to use alternative providers Mr Rose said that the Trust wanted to demonstrate that it could remain viable if it lost some referrals.  Discussions were taking places with GPs explaining the importance of patients being referred to the hospital if it were to succeed.

·          Mr Rose confirmed that, although independent of the NHS, Foundation Trusts were still subject to the NHS’s clinical standards.

·          Concern was expressed about the proposed governance arrangements.  It was suggested these would reduce the level of public accountability.  The level of representation from Powys was also questioned.  It was also argued that the minimum age for being a member of the Foundation Trust should be 18 at which age people were legally accountable for advice and decisions.

·          The question was raised as to how much worse off the Trust would be if it did nothing, whilst recognising that the current Government policy was that Foundation Trust status should be sought.  An assurance was sought that if the Trust Board decided not to make an application pressure to take a different course would be resisted.  In reply Mr Rose said he was happy to give that assurance, referring again to the role of the Independent Regulator and the stringent tests to which applications were subjected, noting that of the 40 applications made to date 20 had already been rejected.

·          The extent to which a Foundation Trust would be truly independent of the Government was questioned.

The Committee noted the current position and that it would wish to consider developments before formulating its formal response to the consultation exercise.