'Self-governing hospitals: an initial guide'

In June 1989, Self-governing hospitals: an initial guide set out further detail on the scheme for self-governing hospitals, as proposed in the January 1989 white paper Working for patients.

The guide followed a working paper Self-governing hospitals (published in February), which outlined that self-governing hospitals would remain firmly within the NHS, and there would be safeguards to ensure that essential local services would continue to be provided locally. The working paper anticipated three types of contract:

• block contracts (payment of an annual fee for services provided)
• cost and volume contracts (cost per case contracts agreed above a baseline)
• cost per case contracts for referrals from other districts.

According to Self-governing hospitals: an initial guide, the hospitals would be established under statute as separate legal entities within the NHS and would be known as NHS trusts. It was intended that each trust would be run by a board of directors. NHS trusts would be given the following freedoms:

• acquisition, ownership and disposal of assets
• borrowing, subject to an annual financial limit
• retention of operating surpluses (although the secretary of state would have a reserve power to require a trust to relinquish its reserves – the 1990 act legislation made provision for the secretary of state to direct trusts to pay surpluses back to central government)
• determination of their own staffing structures and terms and conditions.

The document suggested that detailed departmental guidance would not normally apply to NHS hospital trusts, but would simply be made available for information. However, there would be some expectation about complying with non-statutory requirements relating to safety and public health.

A decision on whether a hospital could become an NHS trust would rest with the secretary of state. Sponsors of a proposal for self-governing status would be required to submit an application document outlining a detailed development plan (akin to a business plan).

The plan would focus on:

• the overall aims of the trusts and benefits for the community
• progress in arranging contracts with commissioning agents
• service development and quality assurance
• leadership and management arrangements
• personnel issues
• information systems, finance and estates.