24 January 2011
A leading health think-tank has cast doubt on the ability of the new NHS economic regulator to ensure both good services for patients and value for money.
Anna Dixon, director of policy at the King’s Fund, told Public Finance that the government’s major shake-up of the health service, outlined in last week’s Healthand Social Care Bill, had resulted in ‘rather too much reliance’ on the new economic watchdog Monitor and its statutory powers.
Under the health reforms, Monitor, which currently regulates foundation trusts, will be turned into a full-blown economicwatchdog. It will oversee all health and adult social care provision in England, licensing providers, setting prices, promoting competition and supporting service continuity. Its new role has been likened to an ‘Ofgem’ for health.
‘Monitor’s powers in relation to the rest of the system do seem very strong,’ Dixon said, adding that that there was little international evidence to suggest that the model would work. ‘It is very untested as to whether by using a price mechanism and competition rules you will end up in a place where the configuring of services delivers best value and good outcomes for patients,’ she said.
But David Bennett, interim chair of Monitor, has welcomed the body’s new powers. Following the publication of the Health Bill he said: ‘We believe it is right to have an economic regulator which is independent of political influence, can build specialist skills and is transparent in the way it sets prices, promotes competition and deals with failure, both of markets and institutions.’
But others have expressed concern at a clause in the Health Bill which gives the secretary of state powers to ‘direct’ Monitor in case of failure on the part of the regulator.
Alan Maynard, professor of health policy at the University of York, told PF that the move ‘challenged’ the independence of the watchdog.
‘It’s likely, given the flat funding for four years and increasing demand, that hospitals will run into debt and Monitor is supposed to take a tough line. It’s a question of how tough that line is and the secretary of state’s worries about the political implications of that tough line.
‘The likelihood is really that the secretary of state is going to want the capacity to bail out [hospitals in financial trouble], in which case you are taking away attempts to make them [health providers] more independent and efficient,’ he said.
Monitor has called for clarity over the secretary of state’s powers as the Bill moves through Parliament. ‘We are keen to see whether, in line with the government’s own objectives, some further strengthening of the independence of both foundation trusts and the economic regulator will be possible,’ said Bennett.
Interviews are currently taking place for anew chair of Monitor, to take over from current chair, former Audit Commission chief executive Steve Bundred, by the spring.
Dixon commented: ‘Clearly ,this is a very different organisation from the old Monitor. It has a significant scope in terms of the work it will have to undertake and it will need expertise in many areas, including the work that will need to be done around price setting and how it interprets the competition powers it has. It will be very important that the person heading up this organisation has an understanding of both regulation and health care.’
Maynard added: ‘It’s going to be a really tough and challenging job.’
Once a chair has been appointed, Monitor will begin recruiting a permanent chief executive. Bennett took on the interim role following the departure of executive chair Bill Moyes in January last year.
