Health and Social Care Bill

Memorandum submitted by Monitor (HSR 40)

1.0 Introduction

1.1 This written memorandum addresses points raised by the Committee in Monitor’s second oral evidence session that we wish to respond to in greater detail in order to assist the Committee in its consideration of the Health and Social Care Bill. It does not address all of the elements of Monitor’s proposed new role.

2.0 Monitor’s proposed new role following the Listening Exercise

2.1 Following the Listening Exercise, the Government set out changes to the Health and Social Care Bill. A number of these changes impact on the role proposed for Monitor. This section outlines what the key elements of Monitor’s role would be following these changes, if they are approved by Parliament.

How Monitor would carry out its proposed new role

2.2 Much of the detail relating to how we would carry out these duties is still to be worked out. However, our absolute priority is that everything we do must be driven by what is best for patients and taxpayers.

2.3 Supporting this, there are three principles we will be guided by:

· First, any actions we take must be measured;

· Second, they must reflect the specific circumstances of health;

· Third, they must reflect the views of stakeholders – we must always consult extensively.

2.4 We are also clear that s trong and effective relationships will be vital to the success of this next phase of health service reform. Partnership working with the NHS Commissioning Board, the Care Quality Commission (CQC), the National Institute for Clinical Excellence (NICE) and other bodies will be a key priority for Monitor.

Monitor’s continuing responsibilities during transition

2.5 Although the blanket 2014 deadline for an all foundation trust provider sector has been lifted, all trusts will be required to become foundation trusts as soon as clinically feasible and there will be an agreed deadline for every trust.

2.6 There are currently 137 foundation trusts (as at April 1 2011). There are c.96 [1] NHS acute and non acute trusts, 9 ambulance trusts and 16 community trusts still to become foundation trusts. Monitor will continue to assess and authorise these trusts as they seek to become foundation trusts by 2014.

2.7 To become a foundation trust, the organisation must be able to demonstrate that it is financially robust and that it has strong governance, both in terms of quality and finances. In Monitor’s view, these are standards that all providers of NHS care should be expected to meet.

2.8 We believe that the process of preparing for, applying and achieving foundation trust status improves the quality of governance and financial management at a trust, to the benefit of patients and tax payers. There is analytical evidence to support this view.

2.9 We will maintain the high standards which trusts will need to meet in order to achieve foundation trust status and we will continue to obtain assurance from the CQC as part of the authorisation process. The Government has said that it has no intention of asking Monitor to lower its assessment bar and this is something we are equally clear about. It is not in the interests of patients and the public for trusts that are not well run or financially strong to be granted the independence and autonomy that comes with foundation trust status.

2.10 Monitor will continue to have transitional powers over all foundation trusts until 2016 to maintain high standards of governance during the transition. This will give foundation trusts time to develop their governance arrangements, and will give governors time to learn how to use their powers effectively, which is in the best interest of patients. 

Monitor’s proposed new responsibilities

2.11 Monitor will be the sector regulator for health. Our core duty will be to protect and promote patients' interests. We will do this by promoting the provision of care that is economic, efficient and effective. We will also ensure that quality is maintained and where possible increased. This makes it clear that Monitor's role will be to put patients first and to protect and promote their interests above all else. 

2.12 We believe it is valuable to have a sector regulator which is independent of direct political influence, accountable to parliament, can build specialist skills and ensures that there is transparency over its actions.

2.13 In carrying out our duty, we will be required to support the delivery of integrated services for patients where this would improve quality of care or improve efficiency. We have always been clear that we support better integration of health services where this is of benefit to patients. We believe that there are significant opportunities to promote the interests of patients through the integration of care and are fully supportive of any changes to the reforms that make this clear and help us to make this happen.

2.14 The new duty means that Monitor will have a remit to support efficient integrated care and a duty to consider the benefits of co-operation alongside the risks of anticompetitive behaviour. This is a way of ensuring we have the right kind of competition and only where it is helpful for patients. It could mean, for example, that tariffs for whole pathways of care need to be developed, but the detail of how we implement the duty is something that we will have to consider once Parliament has had its say on the Bill.

2.15 Monitor will retain the proposed new functions on price-setting and supporting the continuity of vital services in the event of financial failure, and its function of licensing providers, as outlined in the original Bill.

2.16 We will have a vital role in making sure that the players within the sector work together to give patients choices about their health care. This means that we will tackle specific abuses and restrictions that act against patients' interests, including ensuring a level playing field between providers. A level playing field is important to allow the best providers to flourish. A lack of a level playing field between providers of healthcare could result in resources not being allocated to the best provider. This in turn could result in higher costs and/or poorer choice and service quality to the detriment of patients and tax payers.

2.17 The Bill has made it much clearer that competition is a means to an end and not an end in itself. This means, amongst other things, that we will need to look closely at costs and benefits where competition is used to promote patients' interests and these will always have to be evaluated against other ways of promoting and protecting patients’ interests. Our position has always been that we support competition only where it is appropriate and can deliver benefits for patients, rather than for its own sake. Although it was never Monitor’s intention to promote competition for competition’s sake, this provides certainty and reassurance to those who had voiced concerns over how we might approach our role.

2.18 The Co-operation and Competition Panel (CCP) will have a continuing role in advising Monitor on competition issues. This is something we welcome as a sensible way to manage the risks of the transition given the CCP’s skills and experience in this area. We already work closely with the CCP and look forward to continuing to do so.

2.19 We also welcome the Government’s proposal to retain the existing competition rules for the NHS introduced by the last Government (the Principles and Rules for Co-operation and Competition), and give them a clearer statutory underpinning.

2.20 In terms of other changes, there is now more clarity on some of the key areas of Monitor’s proposed new role that caused concern. For example, the proposals are very clear that there will be no privatisation or cherry picking:

· There was some concern that the original proposals created the potential for privatisation. There is now an explicit requirement in the amended Bill that Monitor should not seek to increase the market share of any type of provider. This makes it clear that Monitor’s role is to champion patients’ interests, rather than to act in the interests of any particular provider group.

· There was also concern that the Health and Social Care Bill would enable private providers to ‘cherry pick’ routine and less complex healthcare services and interventions that are cheaper to provide and more profitable. The concern was that this would leave the NHS to deal with the higher-cost, more complex and long-term conditions with inadequate prices, causing the destabilisation of local hospitals. A proposal has now been included in the Bill to address this concern, which means that Monitor would be given a specific duty to set prices that reflect underlying costs, so there should no longer be any cherries to pick. Cherry-picking should not be an issue if NHS prices are designed to reflect complexity of treatment so that appropriate payments are made for both simple and complex services.

· In order to ensure that patients always remain at the heart of everything Monitor does, the Bill places us under a new duty to carry out appropriate public and patient involvement in the exercise of our functions. Monitor will also be under a new duty to obtain appropriate clinical advice .

2.21 The Government has decided to retain proposals to give Monitor concurrent powers with the Office of Fair Trading, to ensure that competition rules can be applied by a sector-specific regulator with expertise in healthcare. The Future Forum recommended that this was the best safeguard against competition being applied disproportionately.

2.22 It is Monitor’s understanding that the original Bill did not change the application of EU competition and procurement law to the NHS and that this has not changed with these amendments

2.23 In Monitor’s view, the significant changes outlined above define and constrain the way in which Monitor has to behave, focusing on areas where people expressed concerns.

2.24 However, there are a small number of areas in the Bill, such as access to facilities (for example, where commissioners might apply for access to provide GP-led services in a Trust’s Accident and Emergency facility) which - used only in exceptional circumstances - might have been beneficial as a way of integrating services, but which are no longer possible. In our view this could have encouraged innovation and the provision of services in ways that benefit patients.

2.25 We look forward to seeing the proposals relating to the failure regime. We support the Government’s determination to bring forward an effective failure regime that reduces the risk of hidden bailouts, while protecting essential services.

2.26 In Monitor’s view, it is important that there is a robust failure regime covering all providers, which protects the services that patients need without propping up failing management teams if they are doing a bad job of running a service. The most important thing from a patient’s point of view is that they are reassured that, even if their providers get into financial difficulty, the service will still be there.

2.27 It is also important that reconfiguration remains possible where it is evidence-based and clinically-led and leads to high-quality patient care.

2.28 Overall, our view is that the new proposals are helpful in providing clarity on Monitor’s primary duty and responsibilities and in making it clear that Monitor’s role will be to put patients first and to protect and promote their interests.

3.0 Accountability

3.1 Monitor’s accountability is clearly set out in the Bill. It outlines that:

3.2 Monitor is and will remain an independent non-departmental public body. What we can and cannot do will be set out by Parliament in legislation.

3.3 We will continue to be accountable to Parliament and subject to parliamentary scrutiny: as Accounting Officer, Monitor’s Chief Executive can be called to account in Parliament for the stewardship of the resources within the organisation’s control; Select Committees can call us in and hold us to account; we will still be required to account to central Government for our use of resources, to lay our annual accounts and annual report before Parliament; and MPs and Peers can table questions about us.

3.4 The Secretary of State will appoint (and can remove) the Chair and non-executive members of Monitor’s Board.

3.5 Monitor will be under a specific duty to ensure that its regulatory activities are transparent, proportionate, consistent, targeted only at cases where action is needed and not in conflict with our transitional role over foundation trusts.

3.6 We will also be accountable to those we will regulate, who will be able to appeal, for example, to the Competition Commission or to go to the courts if they feel that we are not operating fairly.

July 2011

[1] There is no exact number, as some trusts may consider options such as merging with existing foundation trusts.

Prepared 19th July 2011