Patients as guests, payment by results ... death-knell of the NHS?

In the wards and theatres of the NHS hospitals in Peterborough there is no sense of the liberation that yesterday's award of foundation status was meant to bring.

Doctors and nurses do not intend to change how they work. And patients cannot see how they will be affected by a reform that brought the government very close to defeat last year.

From today, all foundation hospitals will be self-governing, responsible to a local membership of patients and staff belatedly being assembled to foster accountability.

This is a huge ideological change and the start of the end of the nationalisation of healthcare. Nye Bevan, the Labour minister who founded the NHS in 1948, said the sound of a bedpan dropped in a distant hospital should reverberate through Whitehall. Now the power of the civil service is to follow the bedpan into history, as England's hospitals move towards foundation status over the next five years.

Peterborough hospitals will stay in the NHS, treating patients for free, but with a name change to Peterborough and Stamford hospitals NHS foundation trust. Senior managers are wondering now whether to treat everyone - the group serves 300,000 people and spends about £130m a year - as "guests", even using hotel industry skills to boost "customer satisfaction".

For the time being, the biggest change is in the boardroom. Last week the trust announced the results of its first election to the foundation's governing body. There were only 169 responses to consultation on the change, and 40 candidates for the 14 places on the body. Public meetings had been poorly attended. John Toomey, regional officer of the public service union Unison, says: "This new system has no local support."

However, Chris Banks, the trust's chief executive, thinks the new governors fairly represent the public. The body, he says, will take on the scrutinising role of the health secretary and plug the trust into the community.

It is clear the trust has huge ambitions. It is working on a £300m redevelopment plan to combine Peterborough's two hospitals into a state-of-the-art facility and convert the old district hospital site for primary care - though this plan is partly a private finance initiative, unaffected by foundation status. The big projects, such as a £15m upgrade to the Stamford and Rutland hospital, are likely to be done through PFI in consultation with civil servants.

In the finance department, they are getting ready for payment by results: foundation hospitals will be the first adopting a system that rewards trusts that treat more patients more efficiently.

Joan Tiplady, a general manager at the trust, says the reorganisation over the past year has turned Peterborough from a poor performer into the best in the Norfolk, Suffolk and Cambridgeshire division. In February 97.8% of patients were seen and discharged or admitted within four hours.

Mr Banks sees the NHS eventually offering genuine patient choice. With waiting times dropping and overseas firms competing with the local providers, hospitals will have to adopt a new approach. "Our reputation will depend on quality of service," he says.