Glimpse of the future? Monitor reveals proposed licensing regime

Let's get ready to license

The Health and Social Care Bill 2011 (the "Bill") will not complete its passage through Parliament for some months and may be further amended. However Monitor has started to prepare for its new role as regulator of NHS healthcare providers, should the Bill become law.

Monitor has stated that it is likely to need to develop and introduce a new regulatory regime relatively quickly on the back of the Bill becoming law and for that reason they have started thinking about the shape and content of the proposed regime. This has been set out in "Developing the new NHS Provider Licence: A Framework Document"  (the "Framework").

This seems to be a sensible approach given the general consensus is, that in one form or another, the Bill will become the new shape of the health service. Although, given it has not been finalised yet, you could ask whether Monitor is jumping the gun. Monitor has moved to combat this particular question by stating that its aim in publishing this Framework is to obtain input from stakeholders as they develop their thinking.

The Bill

The Bill proposes significant changes to the regulation of providers of NHS services, including changes to Monitor's role. Under the Bill, Monitor would be required to develop a licence for all providers wishing to offer NHS-funded services with limited exemption.

The current proposals have taken into account the negativity which had been expressed around Monitor's role in promoting competition. It is now proposed that Monitor's main general duty is to protect and promote the interests of patients and service users. However, it is also proposed that Monitor will have duties to promote the provision of care services which are economic, efficient and effective and which maintain or improve the quality of those services.

The Framework

Monitor's proposed areas of responsibility as regulator will be:

• to develop better pricing in the area of price regulation
• to oversee competition to deliver benefits to patients and taxpayers
• to ensure that care is centred around patients and that more efficient and seamless patient pathways can be created in terms of enabling integrated care
• to ensure the continuity of services, reducing the disruption to patient facing services and the loss of value that can result from the unmanaged financial failure of providers.

The proposed licensing regime envisages a licence which would contain conditions which the licence holders would be required to comply with. Registration with the CQC, where necessary, would remain although Monitor and the CQC intend to work together closely.
 
Monitor needs to develop its licensing regime by October 2012, as this is when the first licenses are expected to be granted to foundation trusts, replacing Terms of Authorisations. All other providers of NHS funded healthcare would fall to be licensed from April 2013.

The proposed approach to Monitor's development of the licence is based on five key principles:

• a willingness to draw on and learn from best practice from other regulators or regulated sectors
• a commitment to evidence based regulation
• full compliance with the requirements of the legislation
• a commitment to co-development and partnership working with the health care sector
• adherence to the principles of Better Regulation.

Monitor will develop its proposed regulatory regime in a way that is consistent with these principles and  will conduct a statutory consultation on the proposals once the Bill becomes law. However, stakeholders can contribute to the initial engagement process, of which the Framework is the first part, from this month with an end date of 12 December 2011. So it would seem it is time for Providers and Commissioners to get their thinking caps on quickly and feedback to Monitor in relation to the proposed regime.

Proposed licence chapters and regime components

Currently Monitor thinks the proposed licence would have a modular structure, with licence conditions grouped into chapters relating to a particular theme or issue. Chapter 1 – 4 relate to Monitor's role as sector regulator and Chapters 5 – 6 relate to their role as  foundation trust ("FT") Regulator. The chapters are:

• Chapter 1: General Conditions – while other chapters relate to specific regulatory themes this chapter supports the working of other provisions of the licence and requires licensees to share information with Monitor and other bodies, abide by certain NHS or sector-wide standards and pay fees
• Chapter 2: Pricing Conditions – under the proposed reforms Monitor will share responsibility for pricing with the NHS Commissioning Board, this chapter requires the licensee to provide high quality, complete and relevant information on activity levels, costings and performance
• Chapter 3: Competition Oversight and Integrated Care Conditions – this chapter is designed to help Monitor prevent anti-competitive behaviour and enable health care services to be provided in an integrated way
• Chapter 4: Continuity of Service Conditions – this chapter will protect certain important services, identified by commissioners, and facilitate their continuity in the event of a licensee becoming financially unstable or insolvent
• Chapter 5: Foundation Trust Governance and Financial Oversight Conditions – this replicates Monitor's current role as regulator of FTs in areas of governance and finance. This role will continue for a transitional period with the ultimate aim being for FTs to manage their own governance and financial performance
• Chapter 6: Foundation Trust Enduring Conditions – these conditions only apply to FTs and are ongoing. The majority of the conditions in this chapter are likely to relate to Monitor's function as the registrar of FTs.

In addition to the licence conditions there are a number of "key components" that are to be put in place to try and ensure the effective and efficient operation of the licensing regime. Effectively this is how the proposed licensing regime would operate in practice.

The key components are:

• identifying providers that will require a licence and those that will be exempt
• the licence application, inclusive of a fee, and the issuing of a licence process
• identification of regulation required by each successful applicant through the setting of conditions that can be flexibly applied to providers based on their regulatory needs
• ensuring there are rules governing how licenses can be modified so there can be modification of licence conditions if necessary
• enforcement powers that allow the regulator to take action against licence breaches.

So remember…

…in order to be able to shape the future licensing regime, which will have implications for the majority of NHS providers, your views need to be with Monitor by 12 December 2011.

How can we help?

Our commercial team would be happy to assist you with understanding the Bill, the initial engagement including the Framework and what this may mean for your organisation, how to make preparations for the future and what we consider the issues which require consideration. We can also provide training and development support for Boards of Directors and Councils of Governors to help prepare for the new healthcare and governance landscapes.