Foundation Trusts: economics in the 'postmodern hospital'

Foundation Trust Hospitals are community-controlled health care providers which have increased autonomy about how they produce outcomes for the British National Health Service. Although there is a literature on hospital economics it is unclear how these innovative providers will behave, if they have to compete for scarce resources with other hospitals. This paper reviews some of the earlier theories, such as the neoclassical theory of the firm, and discusses their relevance along with 'newer' economic theories such as the transaction costs and evolutionary theory of the firm, plus organizational and human resources theory, to the performance of Foundation Trusts. Much contemporary health care provision is shaped along modernist lines, using scientific endeavour to maximize the impact on health outcomes and technical and social efficiency. However, there is an increasingly postmodern standpoint--critical of modernity--being taken by both patients and hospital staff, to deconstruct processes in the organizations that serve them. Foundation Trusts are postmodern hospitals insomuch as they (to attract scarce resources in a competitive environment), need to marshal the diverse theories of the firm together in order to provide a mass-customized, quality experience, transparently and at least cost--whilst maintaining a stable organizational culture for staff.