Accountability hearing with Monitor (2012)

Licensing and regulation

Since our previous report Monitor’s role has been amended by the Health and Social Care Act 2012. The new legislation gives Monitor a complex and demanding remit within the new NHS system architecture. The requirement for all providers of NHS services to be registered with the CQC, as the quality and safety regulator, will continue. Monitor, in discharging its licensing function, will be under a statutory obligation to operate a joint licensing regime with the CQC, by means of “a single application process”. In our previous report on Monitor we drew attention to the risk of overlap between its new role as sector regulator and the continuing role of the Care Quality Commission. We remain concerned that the parallel roles of Monitor and the CQC create significant scope for confusion which could result in either regulatory lacunae or regulatory duplication – or both. In our recent report on the CQC we recommended that the Government needs to clarify the roles of the two organisations; we further recommend that this review should be undertaken as a matter of urgency in the light of the recommendations of the Francis inquiry into events at the Mid Staffordshire NHS Foundation Trust.

The Government intends that all remaining NHS Trusts will have become FTs in their own right, or become part of other FTs, by 1 April 2014. Monitor is thus faced with the challenge of dealing with an increased “pipeline” of Trusts applying to become FTs, as well as a wider range of applicants than has hitherto been the case. In our previous report we welcomed assurances that regulatory standards would not be compromised as a result of the Government’s desire to see all NHS Trusts become Foundation Trusts by April 2014.

We were pleased on this occasion to be told by Monitor that its prime objective is still “to continue to maintain a rigorous standard” in assessing applicant Trusts.

After the serious shortcomings in quality and safety of care at Mid Staffordshire FT came to light in 2009, questions were raised about Monitor’s authorisation processes. Monitor subsequently stated that lessons had been learnt regarding its procedures for the assessment of applications for FT status. However, fresh doubts about the reliability of Monitor’s approach to authorisation have been raised by the case of University Hospitals of Morecambe Bay FT. Here, once again, serious failings in quality and safety (this time in maternity care) emerged after authorisation had been granted by Monitor, who said that it had done so after assurances from CQC. We welcome the internal review undertaken by Monitor into the “lessons to be learnt” from the case of University Hospitals of Morecambe Bay FT. The Committee does not however believe this is sufficient. It believes that the Morecombe Bay experience further reinforces the need for an urgent review of the respective roles of Monitor and the CQC.

We previously urged Monitor not to be reticent in the use of its powers of intervention in its current role as Foundation Trust regulator, and we welcome its continued willingness to use them. We urge Monitor to continue to deal robustly with those Foundation Trusts which experience serious failings in their finances and/or governance.

4 2012 accountability hearing with Monitor

Monitor’s future role

In its final form the Health and Social Care Act 2012 provides that Monitor will licence FTs as part of its general licensing role for all NHS providers. It provides that current Terms of Authorisation for existing FTs will be replaced by licence conditions and those Trusts which are authorised as FTs after 1 April 2013 will be granted licences rather than given Terms of Authorisation. The legislation is complex, but the Committee believes that the arrangements for the continuing role of Monitor with respect to Foundation Trusts are particularly unsatisfactory. They appear to rely either on “transitional powers” which are open ended and seem likely, in practice, to be permanent or on the licensing system which is supposed to apply to all providers of NHS, and ultimately social care services, which will include a wide variety of providers who are not FTs. The Committee recommends that the Government should work with Monitor to clarify its long term role with respect to FTs and provides a clear statement of the basis for that role.

Handling conflicts with Monitor’s other functions

In their evidence last year both Monitor and the Government accepted that the dual role of Monitor as a sector regulator and the regulator of FTs created a potential for conflict of interest between the two roles. They therefore proposed the establishment of a “Chinese Wall” between the two functions. The Committee has now been told that any such conflict can be easily resolved by reference to its new single primary duty (to protect and promote the interests of patients). The Committee is not convinced that the acknowledged conflict of interest is so easily resolved. It recommends that Monitor should set out in detail how it will apply its single primary duty in a way that either avoids or resolves potential conflicts between its Foundation Trust oversight role and its other functions.

Competition

As we noted in our previous report, the most controversial aspect of Monitor’s proposed new role (as originally formulated) was the intention that it should be charged with a duty to promote competition in the NHS. Following the “pause” in the Health and Social Care Bill, Monitor’s role was recast with a single primary duty to “to protect and promote the interests of people who use health care services”. It was also charged with a secondary duty to “exercise its functions with a view to preventing anti-competitive behaviour in the provision of health care services for the purposes of the NHS which is against the interests of people who use such services”. The likely practical effect of these provisions has been the subject of considerable argument; the Committee will seek evidence of their actual effect in practice at our next accountability session with Monitor.

Integrated care pathways

The Committee has repeatedly argued that both the quality and efficiency of health and care services would be significantly enhanced if services were better integrated both within the NHS and between the NHS and other agencies. Against the background of the “Nicholson Challenge”, and developing concerns about the quality, in particular, of care services provided to elderly people, the Committee regards the requirement to deliver 2012 accountability hearing with Monitor 5 more integrated services as a priority. The Committee welcomes Monitor’s positive approach towards the commissioning of integrated care pathways. We continue, however, to be disappointed at the slow pace at which proposals for integration of NHS services as well as health and social care services, in particular for the elderly, are being implemented.

We urge Monitor to encourage and facilitate the development and implementation of these proposals – both through its role as system regulator and through its oversight role of FTs.

The Committee will continue to seek reliable evidence of the pace, scale and effectiveness of these changes; in particular we shall seek such evidence from Monitor at our next accountability hearing.

Pricing

A key new responsibility of Monitor (from April 2014) will be to publish the National Tariff for NHS services covered by Payment by Results. The National Tariff may also set out proposed variations to national prices and associated rules. Monitor and the NHS Commissioning Board will become jointly responsible for the National Tariff from 2014– 15; in the meantime, the DH remains responsible for tariff pricing at the national level in the NHS. The setting of the tariff is of great significance to the NHS because of its implications both for short term cash flows in the system, and for longer term incentives for service design. The Committee recommends that Monitor and the NHS Commissioning Board should attach a high priority to this process both because NHS parties need to know the likely tariff in 2014–15 as soon as possible, but also because the long term framework of the tariff will have an immediate effect on service design and the integration of service provision. Evidence submitted to us supports the view that anomalies in the National Tariff contribute to the phenomenon known as “cherry picking”, that is, the inappropriate selection of patients on economic rather than clinical grounds. We welcome the willingness of Monitor to work with the NHS Commissioning Board to reduce such anomalous tariff incentives.

Continuity of services

The Health and Social Care Act 2012 provides Monitor with an ongoing oversight role for FTs alongside its broader “system regulator” role. In both roles, however, Monitor has an important responsibility to provide reassurance for patients that essential caring services will not be disrupted by provider failure. This requirement applies whether the provider is a public, private or third sector entity. The Committee welcomes the fact that a provider failure regime has now been established and that it provides (a) a basis for early intervention and (b) arrangements for protecting services provided to patients by entities that are not FTs. The pre-failure regime, the arrangements for Health Special Administrations, Commissioner Requested and Protected Services and the risk pool are however not fully developed. We shall seek further evidence of progress on these issues from Monitor at our next accountability hearing.