News / MPs call for foundation trust review

Foundation trusts have proven strengths but there must be a full and independent evaluation of their impact on the NHS, according to the House of Commons health committee.

In a report on foundation trusts and Monitor, published in October, the committee said there was a lack of objective evidence about, and evaluation of foundations’ performance.

MPs were concerned about the extension of payment by results to mental health. They said mental health trusts were treating more patients out of hospital, in part because PBR has not yet been introduced for these trusts. They did not get more income for treating patients in hospital so it was in the trusts’ interest – as well as the patients’ – to reduce bed occupancy and treat patients out of hospital. But the committee feared this could be undermined by the planned introduction of PBR into the sector because the trusts could be given a perverse incentive to treat patients in hospital.

Committee chairman Kevin Barron was concerned primary care trusts were ill-prepared to take on the strategic planning role in the face of FTs’ strength.

That was demonstrated in Monitor’s consolidated FTs’ accounts for 2007/08, which showed foundation trusts made an aggregate surplus of £395.3m for 2007/08, after they had paid taxes and £352m in public dividend capital dividends.

EBITDA margins grew from 6.8% in 2006/07 on average to 8.1% in 2007/08, though the range varied from 16.6% to 2.1%.

FTs increased capital expenditure by more than £300m to £889m in 2007/08, but made little use of borrowing .  At 31 March 2008 borrowing was £191m against a prudential borrowing limit of £3.2bn.