Reforming the reforms

Comment and detail on the amendments to the Health Bill. Following the Future Forum report and the Government’s response we now have the amendments being proposed to the Health & Social Care Bill when it goes back into committee in the House of Commons. Obviously these are by no means the final word on the legislation, as it has yet to go through the House of Lords, but politically this represents the Coalition’s compromise with the critics who have challenged the Bill.

01/07/2011

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David Owens

Partner

Comment and detail on the amendments to the Health Bill

Following the Future Forum report and the Government’s response we now have the amendments being proposed to the Health & Social Care Bill when it goes back into committee in the House of Commons. Obviously these are by no means the final word on the legislation, as it has yet to go through the House of Lords, but politically this represents the Coalition’s compromise with the critics who have challenged the Bill.

It is also important to remember that not all of the Government’s response will feature in the Bill, as not all of it is necessarily aimed at legislative provisions; however, there are a number of areas where the choice between primary and secondary legislation and guidance seems odd. What then are they saying?

Secretary of State duties

Because of the concerns raised that the effect of the Bill was to put too much distance between the Secretary of State and the NHS, this has been rowed back to retain a duty on the Secretary of State to use his functions so as to secure that services are provided in accordance with the 2006 Act. Conversely the central powers to reflect the Secretary of State’s interest also grow.

Mandate

One aspect where the Bill does not seem to entirely reflect the Government command paper response is over the mandate. Rather than explicitly providing for a mandate covering several years the amendments do not change the duty to prepare an annual mandate, but merely give the power to include matters in relation to subsequent years. It does not appear that there is any practical constraint on these being changed in subsequent mandates before they become live.

Commissioning groups

There are a number of changes in relation to the commissioning system:

  • Provision relating to unregistered patients and requirements for commissioning groups to provide emergency services are made explicit rather than being left to subsequent regulations.
  • Additional duties to promote integration where this would benefit service users, and to promote innovation are included, although this runs the risk of recreating a compliance regime similar to world class commissioning with a series of vague duties on which commissioning groups are judged by the Commissioning Board.  Both the Commissioning Board and the commissioning groups will also have to promote the NHS Constitution and promote the involvement of the public in decisions about healthcare.  Whilst there is provision for guidance it is unclear how this will sit alongside the obligation to involve and consult - itself expanded to cover all potential impact on healthcare not just significant impacts.
  • The amendments also give explicit requirements for a governing body for commissioning groups and give the Secretary of State the power to make regulations concerning this.  The amendments do not themselves require the nurse and secondary care clinician posts, nor indeed public representation.  Whilst this may be practical as subsequent changes can be made much more easily in regulations rather than needing to amend the Act, but this may be controversial.
  • The relationship with the Health and Wellbeing Boards also runs the risk of becoming more bureaucratic. In an attempt to make the HWB more powerful there are proposals that require the commissioning groups to send the HWB a draft of its annual plan, and take into account comments and to keep sending back drafts every time it changes the draft.
  • The requirements in relation to obtaining relevant advice have been strengthened, although as anticipated the clinical senates are not explicitly mentioned.  It is unclear whether, since the senates and clinical networks are going to be hosted by the board whether their advice is to be regarded as guidance under clause 14V - although if so the CQC must be consulted about it.
  • Constitutions will need to be published – although it is difficult to see the basis on which a freedom of information request could have been declined.
  • Also in terms of public accountability there will be a requirement for the governing bodies of commissioning groups to meet in public, except where the consortium considers that it would not be in the public interest. Similarly there is provision requiring the Board meetings of Foundation Trusts to meet in public - except for special reasons. Quite why the simple course of applying the 1960 Act with its additional obligations of publicising meetings and providing information is not being taken is unclear, particularly since that approach was taken for the National Commissioning Board.

Competition

Monitor’s duty to promote competition in the exercise of its functions has gone but the overall impact of the changes is rather less than might have been expected from the Government’s response.  It is replaced by duties to exercise functions with a view to preventing anti-competitive behaviour – which is defined as behaviour which would or would be likely to prevent, restrict or distort competition.  Further Monitor will still acquire a jurisdiction under the Enterprise Act alongside the OFT, which carries with it the implication that the Government does not accept arguments that the provision of health services in this country sits outside the remit of competition law.  Competition has not entirely gone away.

On the procurement side there is no ostensible change, and it remains to be seen how the secondary legislation empowered by the Bill makes provision for when commissioners must go out to procurement.  Once they do, it will be increasingly difficult not to have an open and transparent competition.

One apparently significant change is to explicitly bar Monitor from using the licensing regime to require providers to make facilities available to other providers.  However, if a complaint were to be made that a provider was seeking to prevent an effective tendering process it is at least possible that this might be regarded as an abuse of a dominant position in the specific market, bringing Monitor back into the issue.

Tariff pricing

The changes to tariff are quite interesting with provisions to try to prevent private deals to move away from tariff – Monitor will have powers to force the parties to revert to the position under tariff - and also give the power to fix how non tariff prices are to be settled.  Whilst the objective may be to prevent price competition and cherry picking, the implication is potentially more severe for financially challenged health economies where arrangements have been made to move away from tariff to help manage the financial risk of either purchaser or provider.  A national system for calculating non tariff prices also runs the risk of turning into a version of ‘cost plus’ reducing the incentives to improve efficiency.

There is also provision requiring monitor to have regard to differences in costs incurred in providing services to people of different descriptions and differences between providers and between providers in the range of services they provide.

Cherry picking and private sector growth

The only legislative constraint on so called cherry picking is a new clause requiring providers to be open and transparent about  the eligibility criteria they have and the way they apply them, but the point about differential tariff pricing may be the intended means of dealing with this in that although it is perfectly possible under the new regime for the provider to say we only do procedures x and y, and have criteria that make it clear that they will not treat patients with complexities, the impact may be felt in the tariff.

There are also provisions affecting all commissioners who may not use their powers for the purpose of changing the proportion of provision from the private or public sector.  But then that may never be the purpose, just an unintended consequence.

It may be worth pointing out that a number of significant areas of the Bill are not changing – most of the provisions concerning designation of services, licensing, mental health and most of the provisions relating to Foundation Trusts including the insolvency provisions..

Overall the changes do seek to answer some of the concerns raised, but the architecture of the reforms is unaffected, and the legislative changes now proposed will in themselves create some problems and uncertainty as they bed down.  It is also the case that how they are implemented at all levels will now be more important than the drafting – there is space for this to be either a significant change or a damp squib – whatever you are looking for.

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