Foundation Hospitals

What are Foundation Hospitals?

'Foundation Hospitals' are hospitals that are run by NHS Foundation Trusts - a new type of NHS body introduced by the Health and Social Care (Community Health and Standards) Act 2003.

Foundation Trusts differ from mainstream NHS Trusts in a number of ways: firstly, they have greater freedom to decide how to meet local health obligations; secondly, they are intended to be more directly accountable to local people; and thirdly, they are authorised and regulated by a separate Independent Regulator of NHS Foundation Trusts - Monitor - which was established in January 2004.

In all other respects, Foundation Trusts have the same responsibilities as NHS Trusts. However, they have a different legal basis, as independent 'Public Benefit Corporations'.

NHS Trusts can apply to become Foundation Trusts. The Secretary of State and the Independent Regulator then consider the application and the ability of the Trust to better fulfil its responsibilities to the public in the new form.

Only the best-performing Trusts that have achieved Three Star status in NHS Performance Ratings are eligible to seek Foundation Status.


The NHS Plan published in 2000 proclaimed the Government's commitment to relaxing centralised control of the NHS as a means of improving services and providing greater choice to patients.

This policy, and that of Foundation Trusts, was fleshed out in the April 2002 document, 'Delivering the NHS Plan: next steps on investment, next steps on reform', followed in July 2002 by the 'Eligibility Criteria and Timetable'.

The legal basis for Foundation Trusts was provided by the Health and Social Care (Community Health and Standards) Act 2003.

In autumn that year, a pre-selected group of 29 Trusts' applications for Foundation status went forward, 24 of which the Government was supporting. The first Foundation Trusts began to function in April 2004.


Foundation hospitals have been one of the most divisive issues in contemporary domestic politics.

Central to the Government's plans was the concept of 'earned autonomy' - the idea that a Trust that performed well could 'earn' additional powers and funding. Among the extra powers earmarked for Foundation Trusts were powers to borrow money and decide on capital investment, powers to enter into contracts, and powers to diverge from national pay settlements.

There was also a new 'payment by results' funding system to replace the 'block settlement' arrangements for Trusts, which came into force in April 2004 for Foundation Trusts, to be implemented incrementally for the rest of the NHS.

Opponents of Foundation status claim that the extra powers for Foundations and the new funding system will lead to the new Foundations prospering at the expense of other Trusts. They argue that the policy will widen the gap between the best NHS bodies and the worst, by rewarding the best-performing Trusts, and particularly by giving them the power to pay staff more than the rest of the NHS. The way to improve the NHS, these opponents argue, is by improving the levels achieved by all, rather than by favouring the high-performing few.

Similarly, it has been suggested that permitting Foundation Trusts to select their own local clinical priorities could lead to closures of expensive units, disposals of assets and other unwanted changes to services. Some are concerned that giving Trusts freedom to borrow and spend in line with their own priorities will result in the build up of large deficits and debts, underwritten by the Government.

Supporters of Foundation Hospitals argue that the new powers will ensure that hospitals are better able to respond to local health priorities, free from Whitehall interference and the "dead hand" of central bureaucracy. Dismissing the two-tier argument, the previous Labour Government said that it hoped to see all NHS Trusts become Foundation Trusts within five years.

However, the whole concept of Foundation Hospitals was brought into question following shocking revelations about patient care at the Mid-Staffordshire Foundation Trust, revelations that only came to light through the determination of patients' families to expose the truth.

Julie Bailey's 86 year old mother Bella was admitted to Stafford hospital in 2007 for a routine hernia operation, but died in the hospital eight weeks later. For those eight weeks Ms Bailey never left her mother's side and was horrified by the appalling conditions she witnessed during that time - patients not being given pain relief, not being fed, or even given water, etc.

Ms Bailey subsequently set up the 'Cure the NHS' campaign together with families of other patients and called for a full public inquiry into the hospital's failings. A damning report was published by the Healthcare Commission in March 2009 following its investigation into the Mid Staffs NHS Foundation Trust, detailing serious concerns about mortality rates, patient neglect, inexperienced medical staff and a board focusing on financial imperatives rather than patient services.

In June 2010 Health Secretary Andrew Lansley announced that there would be a full public inquiry into the Mid-Staffordshire NHS Foundation Trust with a final report due by March 2011. And Mr Lansley acknowledged that one of the main questions would be - how was the Trust able to gain Foundation Status when standards were so poor?

Nevertheless, the Health Secretary made it clear in September 2010 that the present Coalition government believed Foundation Trusts were "an excellent idea only part realised".

 Under the Health and Social Care Act which received Royal Assent in March 2012, all remaining NHS Trusts are expected to obtain foundation status by April 2014.


The first ten Foundation Trusts authorised in April 2004 were:

Basildon and Thurrock University Hospitals
Bradford Teaching Hospitals
Countess of Chester Hospital
Doncaster and Bassetlaw Hospitals
Homerton University Hospital
Moorfields Eye Hospital
Peterborough and Stamford Hospitals
Royal Devon and Exeter
The Royal Marsden

There are currently 144 NHS foundation trusts, of which 41 are mental health trusts and three are ambulance trusts.

Source: Monitor – March 2012


"The Health and Social Care Act gives you – as an NHS foundation trust – genuine operational independence to determine how best to meet the needs of your commissioners..........The Act prevents the Government – or anyone else in the NHS – from discriminating against you in favour of the private sector....

"The Government’s ambition is to ensure all providers of NHS-funded care – both within the NHS and outside it – are genuinely free from political interference to focus on how best to treat their patients, free to design their services according to what their commissioners want and free to continuously improve the quality of their services."

Health Secretary Andrew Lansley; letter to NHS Foundation Trust chief executives – April 2012

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