Monitor needs to be clearer about its regulation style

The establishment of Monitor as an economic regulator for the healthcare sector dominated much of the parliamentary debate on the Health and Social Care Act. Much of this focused on its role in regulating competition, an issue brought to the fore recently by the furore surrounding the section 75 procurement regulations.

The “fair playing field” review, which aims to ensure fair competition between statutory, private and voluntary providers, added more fuel to this fire.

‘Monitor needs to be clearer about its intended approach and consider carefully its early decisions and actions’

Preventing anti-competitive behaviour is not Monitor’s only function, however; it will continue to license foundation trusts, set prices for NHS-funded services in partnership with NHS England and work with commissioners to ensure continuity of services when providers get into financial difficulty. Following amendment during the passage of the legislation, it also has a duty to promote integrated care.

New responsibilities

A blizzard of consultations emerged as Monitor took up its new responsibilities at the start of April. These have set out the technical details about the licensing regime for providers, plus its competition and price setting powers.

Despite this, a lack of clarity remains about the style of regulation Monitor will adopt. The consultations could be interpreted as giving it a set of very heavy-handed and interventionist powers, which risk stifling the sector rather than encouraging innovation. Is this its intention?

Monitor needs to be clearer about its intended approach and consider carefully its early decisions and actions as these will send a signal to the sector and influence how it responds. The experience of other regulators is that a range of tools should be used, including information and guidance, rather than simply resorting to enforcement action.

The Commons health committee’s report following its annual accountability hearing recognised that Monitor has a “complex and demanding remit”. As the King’s Fund has highlighted in its work, there is a high risk of regulatory failure, particularly if Monitor fails to attract sufficient staff with the right mix of skills and expertise.

The task of licensing the remaining NHS trusts alone requires a significant expansion in capacity, and its oversight of existing foundation trusts is likely to become increasingly challenging as more of them get into financial difficulties. Add to this the range of its new responsibilities and the implications of the Francis report, and David Bennett looks to have his hands full.

So what should Monitor do to manage these challenges?

Manage expectations

The change in Monitor’s role is at least as significant as the creation of the Care Quality Commission, so it would do well to heed some of the lessons from its experience.

‘It is vital to set out what it can realistically deliver and not to over-promise’

First, it needs to express its purpose and mission clearly and succinctly. The process of engagement and consultation recently completed by the Care Quality Commission in developing its new strategy could provide a model.

Second, it needs to signal its early priorities. There is a risk that it focuses on the implementation and execution of functions rather than on the outcomes and impact it is seeking to have. We suggest it takes the priorities set out in the mandate to NHS England as a starting point for this − this will also have the benefit of aligning objectives of the two organisations.

Third, Monitor needs to manage expectations. It is vital to set out what it can realistically deliver and not to over-promise. The example of Morecambe Bay highlights the risk to patients if it takes its eye off the ball, or fails to work effectively with the CQC. The two organisations have started to develop a “single failure regime”, which is encouraging although likely to be difficult in practice.

Heed others’ lessons

Monitor also needs to agree a set of performance measures with the Department of Health. As with the CQC, this will not be easy and will need to balance process measures with indicators linked to its primary objective of promoting the interests of patients and the public.

Alongside this it needs to engage with providers and commissioners to ensure they inform the development of the regulatory model and to identify any potential unintended consequences early on.

Finally, Monitor should endeavour to learn from other sectors and countries about how best to develop and deliver its regulatory functions. It should also put in place a research and evaluation programme to track the impact and effectiveness of its activities, for example whether it is striking a balance between enabling integration and tackling anti-competitive behaviour.

The ultimate test of a regulator is whether it creates greater benefits than the harms it seeks to address. Monitor needs to determine where it believes it can add most value to the way healthcare services are provided and focus its effort there. Otherwise it may find itself in for a bruising encounter with the Commons health committee next year.

Anna Dixon is director of policy at the King’s Fund