So now we have it! The Health and Social Care Bill has at last been published – and whilst it largely reflects the White Paper and the response to the consultations, there are some important shifts in emphasis.

There are no changes to the core architecture set out in the earlier papers: 

  • Commissioning will be transferred to GP commissioning consortia and the National Commissioning Board from 2013, and PCTs will be abolished
  • SHAs will be abolished
  • Providers will get some freedoms but the NHS trust model will be abolished from 2014 so all providers will be Foundation Trusts or from the independent sector
  • Public health goes to the local authorities subject to a degree of central supervision
  • The Secretary of State loses powers of direction over the NHS (but see below)
  • Monitor will lose its supervisory role over FTs but gain a new role as economic regulator with powers and duties to ensure continuity of supply of services
  • The Secretary of State’s role becomes focused on public health 
  • The duty of quality becomes strengthened.

However, as with any substantial piece of legislation – about the same size as the NHS Act 2006 – there is a lot hidden in the detail. We will be producing a series of detailed analyses of the different themes in the Bill and, more importantly, identifying what is not in the Bill.

By way of some headlines:

Abolition of central control?

Although the Secretary of State gives up the power to direct health service bodies, the new system is very much a rules-based system and the Secretary of State makes the rules. For example, the Secretary of State has the power to make regulations requiring the Commissioning Board or consortia to make treatments or services available, how decisions are to be made, and what must be provided for in contracts. The latter point suggests that we may see contracts regulations for secondary care that mimic the current arrangements for primary care where the GMS and PMS contracts regulations impose quite a tight hold over the form and content of the contracts.

What does disappear is the power to tell individual providers that unless they do something or desist from it, a direction or requirement will be imposed on them. There are of course also default powers for the Secretary of State to step in the event of failure by the Commissioning Board; in turn the Commissioning Board has powers to intervene where a commissioning consortium is failing or has failed or where it is satisfied that there is a significant risk that it will do so. The inclusion of future risk is perhaps evidence of Treasury concern over the financial management of consortia.

Public involvement – no decision about me without me

Despite the rhetoric over recent months, there are some significant shifts in the extent of public accountability and control over the decisions in the NHS. The absence of any public or non executive role in the consortia has remained a gap, but two important changes appear to try to limit the role of patients and public in the health service change.

Firstly, according to the consultation response, the powers of Overview and Scrutiny Committees to refer changes to the Secretary of State is to be limited to only those services designated by the consortia for the purpose of ensuring continuity of service through the exercise of Monitor’s new powers (see below).

Perhaps more puzzling is the subtle shift in language over the duty of public involvement. Rather than just making the  GP consortia subject to s.242 of the 2006 Act, the Bill imposes a freestanding duty in similar terms, but subject to the threshold that the proposals would have ‘a significant impact’ on the services delivered to individuals or the range of services. What is more puzzling is that the providers are left under s.242 without the threshold. It is unclear how this fits with the NHS Constitution, which of course the commissioning consortia must have regard to.

An open market?

The changes in the role of Monitor are significant although they will be phased over a period of time as it will retain its current role of approving (or not) FT applications until 2014, and its supervisory role through the accountability framework for up to two years beyond that for some FTs.

Monitor’s new role as economic regulator will be an interesting exercise in balancing between the promotion of competition and duties to ensure continuity of services where these have been designated by Monitor on the application of the relevant commissioner, and indeed more widely having regard to the need for access to services more generally in its price setting function. Monitor will become a parallel enforcer of much of competition law including Articles 101 and 102 of the European Treaty, at least as regards providers. The relationship between commissioners and European law is left vague in the Bill, with a power to make regulations controlling this and requiring best practice, and a power for Monitor to investigate complaints. The consultation response indicated that this would be a reserve power, but it seems unlikely that it will remain so for long, and even if it does the expectation is that the courts will fill the gap and require best practice where tenders are carried out, and potentially to require tendering. Long term friendly relationships between commissioners and providers are unlikely to survive in the new regime.

Monitor will also have a licensing role for all NHS providers, through which standard or special conditions will apply. These are likely to include obligations to pay fees, and to contribute to the fund for special administration of providers of designated services. There will be obligations in respect of the supply of information to Monitor and to notify the OFT if a merger is proposed.

The key messages from this are that the health sector is expected to become fully subject to competition law, and the scope for competition both between existing providers and with new entrants into the market will substantially increase. The theory is that this will improve the quality of services and make them more efficient; it may also in the short term increase transactional costs and create instability in the system. Any willing provider models may also undermine competition unless there is clear separation between referrers into the service and the providers.

Provider changes

The well flagged changes to the FT regime of the removal of controls on borrowing and private income duly appear in the Bill and will be largely welcomed by the FT movement; what may be more of a challenge is the change to the regime of supervision. Whilst CQC remains in place as the regulator on quality, in place of Monitor, FTs will be supervised only by their governors. The Government has recognised the need for support for governors in relation to this, and has provided for a duty on the FT to ensure that the governors have the relevant skills and knowledge. Monitor is given the power to set up an advisory panel to consider on the application of a majority of the governors whether the FT is acting in breach of its constitution or an obligation under the 2006 Act as amended.

This, in part at least, answers the point about how governors are to be funded to carry out the type of review and in consideration of concerns about the Trust currently carried out by Monitor. However it remains to be seen how far the committee in fact merely carries on the role of monitor but with an advisory rather than decision making character, or whether in fact it takes a narrow view of its remit. The FTs will be required to pay Monitor fees in respect of this – again is this a level playing field as there is no equivalent for non FTs who may be competing for the same work?

Directors’ positions are changed little – merely the addition of an explicit duty to act so as to maximise the benefits to members and the public. The omission of any reference to patients is striking, as is the focus on the individual organisation. This is in contrast to the duty of cooperation on all NHS bodies in s.72 of the 2006 Act which remains. Whether this is consistent with a level playing field for all providers remains to be seen.

The seemingly unending saga of the insolvency regime for FTs is given a new proposed solution, with broadly speaking the imposition of normal insolvency law and the removal of the option of de-authorisation. This creates risks for organisations of failure which will be a challenge and also for directors who potentially face greater risks through the sanctions available in insolvency against directors including potentially money claims for wrongful trading.

Health and Wellbeing Boards

In addition to the responsibilities for public health, local authorities will now be required to establish Health and Wellbeing Boards which will have responsibility for encouraging integration of health and social care commissioning, and to encourage s.75 arrangements. Indeed the health and wellbeing strategy which the Board will be responsible for developing on behalf of the authority and the relevant commissioners has to consider explicitly whether s.75 may improve the way in which services are delivered.

The role of the Health and Wellbeing Board in carrying out functions of the local authority and the commissioning consortia is a bit odd in governance terms. If this means, in effect, delegation without accountability, it is difficult to see that it will have buy in, particularly from the consortia who have limited representation on the Board. Equally the funding arrangements for the Board are unclear, and although expressly constituted as a committee of the local authority (which with potentially only one elected member is a little unusual) it is difficult to see that the local authorities in their present financial shape will want to invest heavily in this.

There are many other areas in the Bill which invite comment and we will be covering these in coming weeks, as the Bill makes its way through Parliament.

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