Conceptualising Foundation Trust reform in the NHS: an empirical analysis of three NHS organisations

Abstract

Beginning from the 1990s when the ‘New Public Management’ was introduced in the public sector, many countries around the world embraced this new way of working, especially in the developed countries. This adoption kept public sector services in economies like the United Kingdom (UK) under a tremendous pressure to become more efficient in the delivery of effective services. This phenomenon was named - ‘Value for Money’ initiative within the UK public sector.

In order to achieve these goals, the public sector has been inundated with several reform regimes, thereby adopting management techniques and tools, which are arguably similar to that being used in the private sector. The National Health Service (NHS) was not left out of this wave. The NHS introduced the market system in the 1990s, in which the providers and purchasers of health services were segregated, giving them the opportunity to negotiate price of services with each other.

The wave of reforms have since not stopped; by 2004, Foundation Trust (FT) status was introduced in the NHS, where the government chose to devolve accountability for health service to the local communities. The purpose of the devolution is to allow NHS hospitals to become locally accountable to their communities. The conferment of a new status on the NHS organisations is expected to set them loose from the government’s apron, granting them financial freedom, where they can keep surpluses generated for reinvestment in services, make investment decisions without deferring to the government and have a better control of the organisation.

This research has six major objectives. First, it seeks to understand the entirety of Foundation Trust Status in the NHS, second, to outline the role of accounting as the controlling tool in the organisational setting, third, is to identify the string of local accountability within and outside the FT organisation, fourth, is to establish the effect of the structural change witnessed within organisation types, fifth, is to locate the FT change within the general form of the New Public Management (NPM), thereby evidencing the study as an empirical learning and finally evaluating the effectiveness of the FT reform within the organisations being studied.

The study adopted an interpretive perspective, gathering data through interviews, documentary analysis and researcher’s observation. The study later adopted the thematic synthesis strategy in analysing the data. It is a multi-case study research, which involved three (3) NHS Trusts in the UK. The first organisation is a non-FT hospital, undergoing the process of becoming a Foundation Trust, the second and third operates as fully licensed Foundation Trust hospitals.

This paper reflected on institutional theory as a tool, to understand the FT status in the NHS. In particular, we identified the forces that exerted pressure on the NHS organisations, the place of accounting as a tool in the process, how these organisations responded to innovation uptake. Data analysis unveiled organisation’s struggle for compliance through legitimacy for power and resource, which became the central phenomenon of this study. The NHS organisations were found to be resolute in their choice to implement the FT reform, in spite of the inherent complexity of the process on top of their day to day operational challenges.

The struggle for compliance resulted in a mixed result, initiating an active pursuit of efficiency especially in the early adopter and then a negative influence on the late adopter organisation as actors engaged in a number of creative activities as they seek legitimacy. The result from this thematic study proposed that organisations adopt and implement accounting changes for the purpose of achieving legitimacy and promoting efficiency, as well as advancing self-interests. The effect of each choice was found relative to organisational motive for the adoption of the change, either for efficiency or legitimacy.
This paper contributes to the theoretical understanding and relevance of institutional theory, particularly the New Institutional Sociology (NIS) in the NHS. Thus, providing a framework for legitimacy, this further illuminates possible explanations for the interrelationships between organisation’s adoption and the implementation of an accounting change in organisations, with the attendance of loose coupling. In addition, it contributes to the practical understanding of the FT change amongst practitioners in the NHS, an understanding, which helps grasp the importance of the change within the context of today’s society, as driven by the current and developing economic terrain.

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