Following 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, such that those public sector services in economies like the United Kingdom (UK) have come under a tremendous pressure to become efficient and effective, this was tagged - ‘Value for Money’ initiative in the UK public sector.

In order to achieve these goals, the public sector has been inundated with several reforms, introducing many management techniques and tools similar to that being used in the private sector. Indeed the UK National Health Service (NHS) introduced the market system in the 1990s, in which the provider and purchasers of health services were split, giving them the opportunity to negotiate prices of service with each other. The reforms has since not stopped, by 2004 the Foundation Trust (FT) status was introduced in the NHS, where the government chose to devolve control to the local level, the purpose is to allow NHS hospitals to be locally accountable to its local population, to let them loose from the government’s apron and grant these organisations financial freedom, where they can keep and reinvest their surpluses.

 In this paper, we explore the implications of institutional theory for the successful implementation of FT status in the NHS. In particular, we identified the forces that exerted pressure on NHS organisations, how these organisations were steered by the pressure and the organisational response as they take on the implementation of the change. This is a case study research, which interviewed two (2) NHS Trusts in the UK. The first organisation is a non-FT going through the process of acquiring a Foundation Trust status while the second is a trust which is already operating as a Foundation Trust hospital.

 This paper will contribute to the theoretical understanding and relevance of institutional theory in the NHS and practical understanding of this change among practitioners in the NHS – the introduction of Foundation Trust Status in the NHS, which has impacted on both the financial and structural form of the organisation. An understanding of this change will also help grasp the importance of such a change within the context of today’s society as driven by the current and developing economic terrain.