Lessons from New Zealand for England's NHS Foundation Trusts

The legislation to devolve responsibility for the management and operation of England's top-performing NHS hospitals to community-owned NHS Foundation Trusts raises several issues relating to the challenges posed to governance structures by private non-profit ownership and control of assets used to provide government-financed services. Building upon the lessons learned from devolution of public hospital governance in New Zealand to boards at arm's-length from central control during the 1990s, this paper analyses the English NHS hospital changes. Whilst local political accountability and competition between hospitals indicate that the English reforms may be more successful in meeting patients' needs more efficiently than the New Zealand reforms, the English proposals may be compromised by the ability of staff to become members of Trusts, boards bearing risks of decisions outside their control whilst simultaneously being insulated from the consequences of their decisions by a 'soft budget constraint', and conflicts of interest as boards simultaneously act as agents of both central regulators and local beneficiaries.