A new chair is not the only major change that the foundation trust watchdog is undergoing. In the post-white paper world, it will need to oversee a liberated, market-based health sector
By David Williams
10 December 2010
The news that Monitor, the NHS foundation trust regulator, is to appoint a new chair and an expanded board early in 2011 has placed the watchdog under renewed scrutiny.
Monitor, which currently approves new foundation trusts and regulates their financial management and governance, has been easy to overlook in the ongoing debate around Health Secretary Andrew Lansley’s planned reforms.
But Lansley’s white paper – Equity and excellence, liberating the NHS – recommends a shake-up of health regulation every bit as radical as the more widely discussed proposals for commissioning. A Bill following the paper is due early in 2011. It is clear that Monitor in 2012 is likely to be a completely different organisation to the one we know today.
The statutory body, which the trading name ‘Monitor’ is attached to, will be transferred from the Independent Regulator of NHS Foundation Trusts to a new body. Monitor will then become an ‘economic regulator’, overseeing the newly liberated health care market that Lansley hopes his changes will usher in.
According to the white paper reforms, the new Monitor will work with the Care Quality Commission to issue licences to all health care providers – be they public, private or third sector.
At the same time, it will be overseeing competition between those providers – hearing appeals from providers who feel they have been frozen out of the system, for instance – and setting rules for how the new market will operate.
Current chair Steve Bundred says the wording of the white paper indicates the tone Lansley wants Monitor to set. He tells Public Finance: ‘We’ll have to see how aggressively the new organisation interprets its powers and its duties, but it’s significant that the duty, as defined, is to “promote” competition, not merely to police it. That implies a more proactive role in identifying, for example, any unnecessary barriers to entry and seeking to remove them.’
GPs will be regulated twice: once as providers of care, and a second time as leaders of Lansley’s new commissioning consortiums, with Monitor ensuring that they are not rigging the system against private and voluntary sector providers.
‘It will do a huge job,’ says Sue Slipman, director of the NHS Confederation’s Foundation Trust Network. She tells PF: ‘It will be one of the biggest regulators in the UK. As a result you would expect the skill base of its leadership to get broader and deeper’.
If the coalition’s recent appointments to the Audit Commission are an indicator, we can expect more private sector representation at board level.
‘People from the private sector can bring a lot to the health service… but the NHS is the biggest bastion of social solidarity that we have left as a nation. It has certain values that it needs to deliver. You would want anyone chairing that organisation to have a very deep and profound commitment to those social values.’
Slipman says the ‘scariest’ part of the coming reforms is the transition from the current model. ‘No-one will have experience of operating in the new system. We’ve had an administration-based system with the NHS Co-operation and Competition Panel hearing complaints. We’re going to a legally-based system with regulatory rules applying.’
It will be some months or years before all involved fully understand what a ‘normal’ application of those rules feels like. But how Monitor interprets its remit in enforcing the market could have tangible effects on the quality of care. Martin Roland, professor of health services research at Cambridge University, says the regulator’s application of the ‘any willing provider’ principle, which dictates that publicly-owned organisations should not receive preferential treatment, will be critical.
‘Very many people have been pointing to an urgent need for care to be more integrated in the NHS,’ he says, ‘but one of the fault lines of the market model is that it doesn’t necessarily allow for integrated care.’
Roland adds: ‘What [the any willing provider approach] doesn’t allow for in this case is for purchasers and providers to work together to provide pathways of care… you can imagine rules being constructed in a way that would be highly damaging to patients.’
However, Anna Dixon, director of policy at the King’s Fund, says there are ‘myths going around’ about what Monitor’s role in enforcing competition will mean in practice.
Dixon says it is more likely that, rather than intervening in every area of the market, Monitor will instead focus on ensuring that monopolies are not abused.
She believes joint ventures between, say, GPs and acute providers will not be considered anti-competitive as long as the arrangements are entered into openly and without favouritism. Also problematic is the fear and uncertainty that such a massive shake-up brings. ‘There is a danger that, even before we have the economic regulator and before it has made any decisions, the NHS is running scared and avoiding having productive conversations about collaboration, saying, “we’ll be found to be being collusive”.’
Bundred identifies another potential risk in the transition from the existing governance regime to the new one. Under new arrangements, the role of NHS trust boards will be enhanced to ensure hospitals are properly managed.
But Bundred observes: ‘There have been instances when boards haven’t succeeded in fulfilling their responsibilities. It will happen again in future and, when it does, the regulator won’t be there to intervene. Governance will have to intervene.
‘In the past [trust boards] have been able to rely on Monitor to act as a kind of a backstop… that won’t be there in future.’
Comparisons between the new health market and privatised utilities can be taken too far, Slipman says. ‘There is clearly a difference between an open market where the customer picks up the bill in prices, and a more closed market where it’s the tax payer that picks up the bill.’
The size and nature of that bill depends on the NHS treatments tariff – the elaborate pricing system that determines how much money various parts of the NHS pay one another for the work they do. Currently set by the Department of Health, responsibility for the tariff is set to transfer to Monitor in April 2012, when much of the new health economy is timetabled to be up and running.
Part of Monitor’s job will be to balance the needs and interests of both sides of the internal market. They will have to devise a pricing system in which purchasers are able to afford to commission all the treatments necessary, while not being so cheap that it will bankrupt providers. To make the matter even more complex, the tariff will be constructed to promote the outcome priorities set by the new NHS Commissioning Board.
It is also proposed that Monitor will become responsible for safeguarding as-yet undefined ‘essential services’ – which could include maternity, ambulance and accident and emergency provision.
‘It’s a construct,’ says Slipman. ‘But then, any regulatory remit is a construct.’
