THE government recently struck a 'deal' to allow 'foundation hospitals' to go ahead. These plans caused a huge rift inside the Labour Party. On one side was health secretary Alan Milburn, backed by Tony Blair. On the other was chancellor Gordon Brown. What are the foundation hospitals?
The first set of foundation hospitals could be in business by April 2004. They will be a giant step towards the wholesale privatisation of the NHS. Foundation hospitals are based on a Tory idea from the 1980s to turn hospitals into businesses - a plan that Margaret Thatcher did not dare to push through. They will mean a return to the kind of fragmented and unequal health system that existed in Britain before the Second World War.
In every town there were well-funded hospitals for the middle class while workers had to make do with virtual workhouse conditions. Under the plans a minority of elite hospitals will be able to apply for 'foundation' status, effectively 'opting out' of the NHS. These hospitals will no longer be owned by or under the control of the Department of Health.
The government calls them 'public interest companies'. But they will be run just like private corporations. They will be able to raise money on the stockmarkets, get automatic access to government money and be less subject to regulation and inspection. And they will be able to set up 'joint venture companies' to provide medical services like pathology and radiology.
The government is setting hospital against hospital, and patient against patient - just like the Tories did when they introduced the internal market in the early 1990s. Only hospitals that have been given 'three stars' in the government's league tables will be allowed to apply for foundation status. This will mean a two-tier system.
Rich hospitals will get richer and poor hospitals will get poorer. A few elite hospitals will flourish, with access to more funds to buy in the best equipment and facilities. But those the government deems to be 'failing' will be like 'sink hospitals' with fewer resources and inferior facilities.
This will put them on a downward spiral - so they will never be able to achieve foundation status. To top it all the government plans to send in private business people to run the 'failing' hospitals.
The foundation hospitals will be able to sell off their assets and land. This money used to go into a general 'health pot' to be used where it was needed. Now it will go back to the very hospitals that already have greater access to funds.
Foundation hospitals in wealthy areas will make more on land sales, while those in poorer areas, where land values are lower but the population is in greater need, will get less.
Foundation trusts will also be able to alter staff's pay and conditions as and when they want - driving a hole through national pay in the NHS. Foundation hospitals offering bonuses and higher pay could drain the NHS of desperately needed workers, making dire staffing shortages worse. There will be a two-tier workforce with better pay for a tiny minority, while the rest are driven down.
The row between Milburn and Blair on the one hand and Gordon Brown on the other was not about whether foundation hospitals were a good idea. Both sides support them.
Brown is not against hospitals opting out and all the divisions that creates. He wants to ensure that any borrowing by the elite hospitals remains under government control. He was worried about the government having to underwrite huge debts.
He won that demand in the recent deal. The foundation trusts will be still be able to borrow from the private sector. But the amount will have to be within limits the treasury sets. That means foundation hospitals will in effect be robbing the amount of money available for hospitals which don't make the elite grade.
This could also open the way for hospitals to start charging patients for treatment.
Former Labour health secretary Frank Dobson has been scathing about the plans. In a survey in the magazine of the doctors' BMA organisation, eight out of ten doctors said they believed foundation hospitals would lead to a two-tier NHS. In pushing ahead with this scheme New Labour has taken a huge step towards dismantling the NHS.