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Foundation Trust failure?

3rd April 2006

Foundation Hospital Trusts still have no clear idea of what will happen to those that stumble by the wayside, says the HSJ. More than 18 months after the creation of first trust the Department of Health has still not come forward with its insolvency regime.

Monitor has drawn up a system based on the principle of securing high performing parts of the service for the foundation trust, and restructuring and selling the rest. There is currently no opportunity to do this. The legislation provides 'no middle ground'. The lack of an insolvency regime for trusts means that when they try to borrow from the private sector, banks will consider the risks too great.  If banks do not want to lend, 'foundation trusts do not have any more tangible freedom that the rest of the NHS.' A further problem is the lack of guidance available when foundation trusts consider mergers.  Under current legislation, in the event of a merger, or if one trust is acquired by another, it has to be denuded of its original foundation status and must apply again.

The government is said to be 'considering the insolvency regime for foundation trusts within the context of the wider health reform agenda and the support and action regime for organisations in difficulty'.  As one foundation trust put it; 'the government is acting on a wing and a prayer' desperately hoping Monitor will intervene way before insolvency becomes a real issue.

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