Liberating the NHS: Legislative framework next steps and Executive summary
DH INFORMATION READER BOX Policy Estates HR / Workforce Commissioning Management IM & T Policy Planning / Finance Clinical Performance Social Care / Partnership Working Document Purpose Gateway Reference Policy 15454 Title Liberating the NHS: Legislative framework and next steps - Executive Summary Author Publication Date Target Audience Department of Health 27 Jan 2011 PCT CEs, NHS Trust CEs, SHA CEs, Care Trust CEs, Foundation Trust CEs, Medical Directors, Directors of PH, Directors of Nursing, Local Authority CEs, Directors of Adult SSs, PCT Chairs, NHS Trust Board Chairs, Special HA CEs, Directors of HR, Directors of Finance, Allied Health Professionals, GPs, Communications Leads, Emergency Care Leads, Directors of Children's SSs Circulation List #VALUE! Description This document is a summary of Liberating the NHS: Legislative framework and next steps, which provides further detail about the Government's NHS reform programme and explains how it has developed in light of the NHS White Paper consultation. Cross Ref Superseded Docs Action Required Timing Contact Details Equity and excellence: Liberating the NHS N/A N/A N/A NHS White Paper Team Department of Health Room 601 Richmond House 79 Whitehall SW1A 2NS 0 For Recipient's Use 1
LIBERATING THE NHS: LEGISLATIVE FRAMEWORK AND NEXT STEPS EXECUTIVE SUMMARY Introduction On 12 July 2010, the Government published a White Paper, Equity and excellence: Liberating the NHS, setting out our long-term vision for the NHS. The White Paper describes a coherent framework of reforms, designed to help deliver our objective of a health service that achieves outcomes amongst the best in the world, and consisting of three mutually-reinforcing parts: putting patients at the heart of the NHS focusing on improving outcomes empowering local organisations and professionals Liberating the NHS: Legislative framework and next steps is the Government s response to the consultation on the implementation of the White Paper and three further consultations: Commissioning for patients, Local democratic legitimacy in health and Regulating healthcare providers. It reaffirms the Government s commitment to the White Paper reforms, shows how we have developed them in the light of consultation, and describes in more detail how we will put them into practice. Consultation and engagement From July until October 2010, the Government consulted on how best to implement the White Paper reforms and undertook nationwide engagement with key partners. We received over 6,000 responses to the consultations from a range of individuals and organisations. We heard a mix of support, suggestions for improvement, and critical challenge. The consultation process has strengthened both the Government s belief that these reforms are necessary and our resolve to follow them through. Consultation responses have helped us to develop our proposals, and in many areas we have modified our approach. For example, we will: 2
allow a longer and more phased transition period for completing our reforms to providers; create a clearer, more phased approach to the introduction of GP commissioning through a programme of GP consortia pathfinders; significantly strengthen the role of health and wellbeing boards in local authorities, enhance joint working arrangements, and accelerate the introduction of health and wellbeing boards through a programme of early implementers; for the first time, create an explicit duty of cooperation for all arm slength bodies. Liberating the NHS: Legislative framework and next steps provides detail about how our proposals have changed in light of consultation. It reaffirms the Government s commitment to the values and principles of the NHS, and shows how our reforms will be based on a coherent framework underpinned by legislation and built on evidence, including piloting during the transition. The transition will be managed carefully to ensure that there is no let-up in the NHS s focus on quality and productivity. The Health and Social Care Bill The Government introduced a Health and Social Care Bill in Parliament in January 2011. The Bill sets out legislative changes to underpin the reforms and creates a clear and stable legal regime. It gives the NHS greater freedoms, improves transparency and helps to prevent political micromanagement. It also establishes the basic legal architecture of a new public health service, Public Health England, which is described in more detail in the public health White Paper, Healthy Lives, Healthy People. All of the legislative measures outlined in Liberating the NHS: Legislative framework and next steps and this Executive Summary are subject to Parliamentary approval. Putting patients and the public first The Government s vision is of a patient-centred NHS, where patients and their carers are in charge of making decisions about their health and wellbeing, with more information, choice and control over how their care is delivered, and a stronger voice through HealthWatch, a new consumer champion. 3
Choice and shared decision-making The White Paper explained that there should be no decision about me without me and that patients and carers should have more choice and control. Consultation responses showed that there was wide support for this, but that a significant culture shift and strong leadership would be needed to achieve it. The Government agrees, and will work with clinical and patient leaders to help them to develop an understanding of a new patient-clinician relationship. Choice and shared decision-making should be reflected in commissioning decisions and supported by flexible care pathways. The Bill includes duties on the NHS Commissioning Board and GP consortia to support greater involvement of and choice for patients and their carers. Respondents also raised concerns about the practicalities of choice and shared decision-making, and asked for more detail. The consultation paper, Greater choice and control, gives more information about the Government s proposals. Information and support Consultation respondents called for more information and support to help people particularly vulnerable people to make decisions and choices about their care. The Government agrees that having the right tools in place will be vital. We will bring about an information revolution and place the Health and Social Care Information Centre on firmer statutory footing, while building on other existing support tools, such as decision aids. Respondents also raised concerns about the practicalities of the information revolution and asked for more detail. The consultation paper, An Information Revolution, gives more information about the Government s proposals. HealthWatch The White Paper proposed to give patients and the public a stronger voice, evolving Local Involvement Networks (LINks) into local HealthWatch organisations, supported and led by HealthWatch England as an independent consumer champion within the Care Quality Commission (CQC). There was broad support for the creation of HealthWatch and for most of its proposed functions, provided it will have sufficient staff and resources. Most of the proposed functions are therefore included in the Bill and funded through local authorities, with local HealthWatch organisations able to employ their own staff. But we heard concerns about local HealthWatch organisations themselves providing NHS complaints advocacy services; therefore, we will give local authorities flexibility around whom they commission advocacy services from. 4
There were concerns about local HealthWatch s independence if funded by local authorities, and suggestions for alternative funding routes. However, the Government is committed to local HealthWatch playing a full part in their local communities, and we believe that this will be achieved through local authority funding. We will set out proposals for the governance of local HealthWatch in due course. Whilst some respondents expressed concern about our proposals for HealthWatch England to be a part of CQC, others were supportive. We will therefore establish HealthWatch England as a committee of CQC, with its own distinctive identity and role, supporting the independent exercise of its functions whilst giving it real influence and the ability to take advantage of CQC s infrastructure and expertise. The Government heard concerns about ensuring the quality of NHS complaints advocacy services during the transition, and has therefore introduced a phased approach to the transition, with responsibility for advocacy services transferring to local authorities later, in April 2013. NHS complaints The Government knows how important it is that people know how to make complaints about NHS services, and that feedback from complaints is used to improve services. The Health Service Ombudsman deals with NHS complaints that remain unresolved at local level, and the Bill enables the Ombudsman to share information more widely with the NHS and others, while respecting the privacy of the Ombudsman s casework. Improving healthcare outcomes The White Paper set out a vision of an NHS that achieves amongst the best outcomes in the world, by shifting the focus away from centrally-driven process targets that get in the way of patient care, towards improved outcomes, with the NHS held to account against a new NHS Outcomes Framework. Consultation responses supported our vision for a focus on outcomes and many agreed that we should move away from centrally-dictated process targets. On 20 December, the Government published its response to the consultation Transparency in outcomes a framework for the NHS setting out further detail about these reforms, and the first NHS Outcomes Framework, which sets out the outcomes and indicators that will be used to hold the NHS Commissioning Board to account for the outcomes it delivers from 2012/13. 5
Other means of improving outcomes Other measures will support the NHS Outcomes Framework in improving outcomes: the National Institute for Health and Clinical Excellence (NICE), established on a firmer statutory footing, will set out quality standards showing what quality care looks like, which the NHS Commissioning Board will use in its guidance to GP consortia; the tariff for NHS-funded services will incentivise quality improvement; and the Secretary of State, NHS Commissioning Board and GP consortia will be under a duty to act with a view to securing improvements in the quality of services. Research Many respondents welcomed the Government s commitment to research as a core NHS role. The increased funding for health research announced in the Spending Review gives us a strong platform to fulfil this ambition. We also aim to simplify the regulation of medical research. The Academy of Medical Sciences has recently reported the findings of its independent review of the regulation and governance of medical research. We welcome its findings and will carefully consider how to implement its recommendations. Commissioning for patients The White Paper set out the Government s plans to replace top-down control with clinically-led commissioning, devolving responsibility for commissioning to those who know their patients best. The Government remains committed to establishing GP consortia, supported by and accountable to the new NHS Commissioning Board. We asked consultation questions about implementing these plans. Responses covered a number of points, including relationships between those involved (such as GPs and patients), commissioning of specific services, the pace of change, and the capability of GP consortia to carry out commissioning. Although concerns were raised, there was considerable support shown for greater clinician input in the key decisions affecting care. GP consortia GP consortia will be statutory bodies, with a clear identity and responsibilities that are separate from those of their member practices. Respondents asked for clarity about these responsibilities, which are set out in the Bill. We will publish a separate document in due course, listing their main duties and powers. 6
Some respondents were concerned that commissioning could distract GPs and that GPs lack the specialist knowledge needed. We do not believe that this will be the case, as individual GPs or GP practices will not be required to take commissioning and financial decisions on their own and will be able to secure support from others. Multi-professional involvement will be important and the Bill provides a duty for consortia to obtain appropriate expert advice. There were a range of views about consortia s size and geographical focus. We heard several suggestions, and we agree with those who called for the freedom and flexibility to decide locally, according to what makes sense for the local community. We intend to give consortia flexibility to decide on their size, although they will need to satisfy the NHS Commissioning Board that they can properly carry out their functions, and the Board will be responsible for ensuring that consortia cover the whole of England and that all holders of primary medical contracts are part of a consortium. Many respondents discussed the governance arrangements for consortia, and we agree with those who said that transparency and clarity are key. Each consortium member will be represented by a nominated clinician and, with widespread support from respondents, each consortium will have an Accountable Officer to ensure it complies with financial duties, promotes service quality improvement and provides good value for money. The Bill also sets out minimum requirements for all consortia to include in a published constitution: the consortium s name and members, the geographic area that it covers (for the purposes of specific duties such as arranging emergency care), arrangements for discharging its statutory functions, procedures for decision-making and managing conflicts of interest, and arrangements for securing the effective participation of the consortium s members. Consortia must have robust governance arrangements, and the NHS Commissioning Board will be able to issue guidance on constitutions, drawing, for example, on the principles of good governance in public life. We also recognise that different governance arrangements will suit different consortia. We will not introduce prescriptive requirements, such as a statutory management board for each consortium or particular non-executive appointments. But all consortia will have a duty to involve patients and the public, and all consortia will be subject to requirements such as making their constitution and remuneration arrangements public and holding an open annual general meeting. We will not prescribe specific clinical governance models, although consortia will need to show how they will secure continuous improvements in quality of services. 7
NHS Commissioning Board The NHS Commissioning Board will hold consortia to account for the outcomes they achieve and for their financial performance, with the power to intervene only if consortia fail or are likely to fail to discharge their statutory functions. The NHS Commissioning Board will have a duty to ensure a comprehensive system of consortia is in place from April 2013. It will be responsible for considering applications from prospective consortia and authorising them where legal requirements are met. We heard many suggestions about what the Board should consider before granting authorisation, and we propose that the core matters the Board will need to be satisfied about are: having a satisfactory constitution; covering an appropriate area; all members being providers of primary medical services; and having appropriate arrangements so that it can discharge its functions. The Board will provide national leadership for driving up the quality of care, promoting patient and public involvement and choice, and reducing health inequalities. It will also allocate and account for financial resources for commissioning and support effective financial risk management, and the Bill enables it to facilitate risk sharing arrangements with consortia and issue consortia with guidance on financial risk management. Many respondents asked how the NHS Commissioning Board would manage effective relationships with a number of GP consortia. We will not pre-empt the Board s future decisions on this issue, but we recognise its importance and will ensure that the shadow Board can draw on consultation respondents suggestions. The Secretary of State will set a mandate for the NHS Commissioning Board, including the requirements and expectations for the NHS, and we intend the Board to publish a business plan setting out how it will meet these and its other duties and an annual report showing its progress. Fair, transparent and effective commissioning Respondents supported the proposal for systems to ensure fair and transparent decision-making, although with differing views as to how these should operate. We will ensure that there are clear statutory duties on commissioners in relation to procurement and require each consortium s constitution to set out arrangements for decision-making and managing potential conflicts of interest. 8
Commissioning decisions should focus on improving the quality and outcomes of care for patients. Our proposal to develop a Commissioning Outcomes Framework attracted widespread and strong support and a number of suggestions about its content. It will be for the shadow NHS Commissioning Board to take forward the development of the Commissioning Outcomes Framework during 2011/12, with the support of NICE and engagement with professional and patient groups. The Department will also publish a discussion document in 2011 to seek detailed views on the framework s features. To further incentivise improved outcomes and financial performance, consortia will receive a quality premium based on the outcomes achieved for patients and their financial performance. Some of the outcomes from the Commissioning Outcomes Framework will inform the premium but not necessarily all, since some may not be suitable for translation into financial incentives. The Bill introduces the powers necessary for the quality premium, and we will discuss further with the British Medical Association and the wider profession on how to shape it. Commissioning responsibilities The NHS Commissioning Board will: commission primary care including GP, pharmacy, dental and ophthalmic services; ensure that primary care providers meet their contractual obligations; and hold national lists of practitioners registered and fit to provide primary care services. A number of respondents asked for a clearer role for GP consortia to improve the quality of general practice. The Government agrees and intends to place a duty on GP consortia to support the NHS Commissioning Board in driving quality improvement in primary medical care. The NHS Commissioning Board will commission national and regional specialised services. Respondents supported this but highlighted issues, including the need for the specialised services portfolio to be regularly reviewed. We agree, and, in line with this, the Bill provides for a flexible approach. The list of specialised services commissioned by the Board will evolve over time, and, by default, GP consortia will commission all other services. GP consortia will therefore commission some complex or low volume services, and respondents called for them to have support for this. Therefore, the Bill provides the necessary powers for consortia to work together and for the NHS Commissioning Board to commission some services on behalf of consortia, with the agreement of both parties. 9
We proposed that the NHS Commissioning Board would commission maternity services. We saw much response and criticism, and are persuaded that their special nature and circumstances mean that maternity services require a different approach. GP consortia will therefore commission maternity services, while the Board will have a role in promoting quality improvement and extending choice in maternity services. Freedom from political micro-management Most respondents fully supported our commitment to less political interference in the management of the NHS. Whilst the Secretary of State for Health will retain overall accountability for the NHS, the NHS Commissioning Board will be free from political micro-management and the Bill enshrines the principle of autonomy at the heart of the NHS. The Secretary of State s power to direct the Board will in the main be limited to setting a mandate for the Board, which sets out our requirements and expectations for the NHS and the Board s financial allocations over a likely three-year period. The Secretary of State will only be able to change the mandate or financial allocations annually, or mid-year in exceptional circumstances, following a general election or with the Board s agreement. The Secretary of State will be obliged to consult on the priorities in the mandate each year. The Secretary of State will be able to set legal requirements for commissioners through standing rules in a limited number of areas. But the Secretary of State will only exceptionally be able to intervene in relation to any individual commissioner the Bill makes clear that any requirements or objectives set by the Secretary of State must apply generically, except where the Secretary of State rules on a local authority appeal about a service reconfiguration (explained below) or to comply with EU law. Transition Respondents emphasised the importance of keeping up the focus on improving quality and productivity. We agree, and so our proposed approach to implementation a carefully staged transition recognises that the early development of GP consortia will be essential to continue the focus on quality and productivity in 2011/12 and 2012/13, before consortia formally take on their responsibilities. Many respondents discussed the pace of change and a number of GPs and other primary care professionals were eager to take on responsibility for commissioning. Many already have the capacity and skills to lead commissioning. We have therefore established a programme of GP consortia 10
pathfinders, which we introduced early in response to the overwhelming number of GPs who wanted to press ahead. Respondents called for the promotion of leadership development and help for emerging consortia with organisational development, and we fully recognise its importance. The Department will therefore provide support for leadership development through the National Leadership Council, while SHAs work with PCTs and with local professional leaders to ensure that emerging consortia can access organisation development support. We fully recognise the value of good management, but we want to avoid the unjustifiable increases in administration costs under the previous government. Many respondents agreed that it is right to set clear, separate control figures for administration spend by the NHS Commissioning Board and GP consortia, and the Bill provides for this. The NHS Commissioning Board will be established in shadow form as a Special Health Authority for 2011/12, becoming a full non-departmental public body from April 2012. A key question that many raised was what would happen to PCTs current deficits and surpluses, which will be an issue to address during the transition. The Department is working with SHAs, with the expectation any debt will be fully resolved by the end of 2012/13. Further detail is provided in the NHS Operating Framework for 2011/12. Local democratic legitimacy The successful pursuit of better health and wellbeing will only come from increased cooperation between the NHS and local authorities, and there was strong local authority support for our proposals to enhance their role in health. Health and wellbeing boards We proposed that health and wellbeing boards should be created to lead on the strategic coordination of commissioning across NHS, social care, related children s and public health services, and respondents were very supportive. The Bill therefore requires there to be a health and wellbeing board in every upper tier local authority and GP consortia to be represented on the board either by their own representative or by the representative of another consortium. One of the main purposes of the health and wellbeing board is to increase democratic legitimacy in health, so the Bill prescribes that there must be at least one local elected representative. The Bill provides for other core 11
members the director of adult social services, the director of children s services, the director of public health, and local HealthWatch but beyond this, local authorities will be able to decide who to invite to sit on the board. Role of health and wellbeing boards Respondents stressed the importance of collaboration and integrated working. Health and wellbeing boards will bring together key sector representatives to produce the joint strategic needs assessment (JSNA) an analysis of local current and future health and wellbeing needs. In light of the consultation responses, and to further our ambition for health and wellbeing boards to become deep and productive partnerships that collaborate to address commissioning challenges, the Bill also requires boards to develop a new high-level joint health and wellbeing strategy (JHWS). It is envisaged that the JHWS will summarise how a community s health and wellbeing needs will be addressed, spanning the NHS, social care, public health and potentially wider factors that affect health, such as housing or leisure. The Bill places explicit duties on NHS and local authority commissioners to have regard to the JSNA and JHWS when exercising relevant commissioning functions. Local authorities will be able to delegate additional local authority functions to health and wellbeing boards, in whatever way they think appropriate. For example, they may wish to use health and wellbeing boards to consider wider factors that affect health. We have heard a number of concerns about our proposal that health and wellbeing boards would also undertake the functions of the overview and scrutiny committee, and the Department accepts that the original proposal was flawed. Instead, local authorities will have the flexibility to discharge the scrutiny powers in the way they deem most appropriate, and scrutiny powers will be extended: for the first time, local authorities will be able to exercise certain scrutiny powers in relation to all providers of NHS-funded care. Making use of flexibilities Some respondents were concerned about the future of existing flexibilities, such as pooled budget arrangements. In many cases, we would expect GP consortia to continue with pooled budget arrangements that have been working well, and the Bill provides for existing arrangements that have not been addressed as part of the transition to continue. Health and wellbeing boards, in drawing up the JHWS, will be under a legal obligation to consider how to make best use of the flexibilities at their disposal, and the NHS Commissioning Board will be under a duty to promote the use of flexibilities by consortia. 12
Service reconfiguration Local authorities will also have an important role in scrutinising service reconfiguration. As described below, some services will be subject to additional regulation to support their continuity, and local authorities will need to be consulted on which services are designated for these purposes. The Bill maintains the existing regulation-making powers and amends them to reflect the new NHS system, so that local authorities will be able to refer decisions about significant changes to these designated services to the NHS Commissioning Board and, in some cases to the Secretary of State for Health. Transition We recognise that culture change will be essential to the new arrangements, and that early progress is needed in some areas to strengthen partnership arrangements. We agree with respondents who called for shadow arrangements to support early learning and development. The Department will therefore write to local authorities inviting them to become early implementers. One of the issues for early implementers to consider will be how local HealthWatch should be involved in scrutiny by local authorities. Shadow health and wellbeing boards will be created in every upper-tier authority from April 2012, with statutory functions from April 2013. Regulating healthcare providers To achieve healthcare outcomes that are amongst the best in the world, we need providers who are free to innovate, be more responsive to patients, and focus on driving sustainable improvements in quality and efficiency. In future, where controls are needed on providers, these will largely take effect through regulatory licensing and clinically-led commissioning rather than central or regional management. Based on the ethos of social enterprise, we will support all NHS trusts to become foundation trusts (FTs). FTs will not be privatised; their core function will remain providing services to the NHS. We received mixed views on our proposals for competition and provider freedoms. Some objected on principle to the idea of a more competitive environment for providers, others saw the potential benefits of competition and emphasised the need for strong regulation. 13
Provider freedoms There was widespread support for retaining the strengths of the current FT governance model, which the Bill does whilst at the same time making changes to clarify responsibilities and make FT directors and governors more directly accountable for their decisions and for the FT s performance. Respondents also supported our proposal for FTs to be able to change their constitution without Monitor s consent, although some called for a degree of scrutiny to remain. FTs will therefore need governors approval for any changes, and members will have powers to overturn changes that affect governors roles. FTs will also have flexibility to merge, acquire another FT or NHS trust, or demerge without Monitor s approval, so that they can respond quickly to the needs and choices of patients. Many respondents called for oversight of significant organisational changes, which governors will provide alongside the controls that also apply to other providers. Respondents stressed the need to protect taxpayers interests in FTs, and the Government will introduce clearer mechanisms to safeguard these without artificially constraining FTs freedom. Management of the Department s investment stake in FTs will be undertaken through an operationally independent banking function, which will also be responsible for managing new public lending to FTs. We believe the regulator and lenders will be sufficient to ensure prudent borrowing and will proceed with abolishing statutory borrowing limits for FTs. The proposal to remove the cap on the income FTs can earn from private patients provoked strong views. We have decided to use the Bill to remove the cap, which is both arbitrary and unfair in its effects. However, we agree that FTs should produce separate accounts for their NHS and private services. The FT pipeline Our ambition is to create the largest, most vibrant social enterprise sector in the world. Many consultation responses endorsed our plans for all NHS trusts to become, or be part of, an FT within three years, but highlighted that this would be challenging especially for a minority of NHS trusts with clinical or financial problems. We are taking a stronger, more testing and more transparent approach to managing the pipeline of trusts moving towards FT status, and will publish a work programme in early 2011 to map the work required to meet the 2014 deadline. This programme will describe options for providing local or national intervention and support, including turnaround 14
teams to support efficiency programmes, mentoring support to build board capability and capacity, and options such as mergers, acquisitions and franchising. It will focus on trusts that face the greatest challenges early on. We will also establish a transitional Provider Development Authority to provide dedicated expertise and specialist turnaround support for trusts seeking to achieve FT status. The final date for passing applications to be a stand-alone FT to Monitor following Secretary of State approval will be 31 March 2013, and the Provider Development Authority will be wound up on 31 March 2014. Remaining as an NHS trust beyond 2014 will not be possible NHS trust legislation will be repealed in 2014. Transitional intervention powers As economic regulator, Monitor will need to treat all providers of NHS services equally. Therefore, where possible, Monitor s existing powers to intervene in how FTs are run will be removed by 2012. In response to respondents concerns, we have decided that Monitor will temporarily retain intervention powers for new FTs authorised after April 2012 and for a defined subset of existing FTs, for two years after their authorisation date or until March 2014, whichever is later. Beyond this, FTs will be responsible for themselves. Recognising respondents concerns about possible conflict of interests between Monitor s FT and economic regulator functions, the Bill requires Monitor to manage any such conflicts for example, by setting up a ringfenced committee to manage its FT functions separately. A new framework of regulation We aim to create a fair, stable and transparent framework of regulation, consistent across all types of provider. Welcomed by respondents, we will strengthen CQC in its role of regulating providers against essential levels of safety and quality. All providers who are currently required to be registered by CQC will continue to need to be registered, and registration will be extended to primary care providers during 2011 and 2012. To allow CQC to focus its resources on this core role, it will no longer be responsible for assessing NHS commissioners or carrying out periodic reviews of NHS providers. Monitor will become an economic regulator, under an overarching duty to protect the interests of patients and service users by promoting competition where appropriate and through regulation where necessary. Monitor will have three main functions: promoting competition, setting or regulating prices, and supporting the continuity of essential services, all underpinned by a power to license providers of NHS-funded care. 15
Licensing The Bill creates a licensing system covering all providers of NHS-funded services, with an exemption regime set out in secondary legislation for providers that do not require regulation of prices, sectorspecific competition powers and continuity of service provisions. Respondents broadly supported the proposal that Monitor would have a range of levers to enforce licence conditions, and enforcement powers are set out in the Bill, including the power to order a provider to remedy a breach of licence conditions or pay a fine. Monitor will have a duty to consult when developing the first set of standard licence conditions, and will also have to consult with providers if it wishes to alter their licence conditions. Providers will be able to agree or object to the proposed changes, and, in some instances Monitor will be able to refer the matter to the Competition Commission for a decision. Following broad support from respondents, we will continue with our plans for Monitor to be able to levy fees on providers to cover licensing costs. Competition Whilst some respondents expressed concerns about competition, others supported it. We continue to see competition as an important means of driving up quality, responsiveness and efficiency. Monitor will be under a duty to promote competition where appropriate, supported by powers to investigate anti-competitive behaviour initially for healthcare and then later adult social care. Monitor will also be able to set licence conditions to protect choice and competition, which most respondents supported, wherever it can demonstrate that there is a need for regulation to protect competition. Addressing respondents concerns about the risk that commissioners might act in a way that undermines choice and competition, the Bill ensures that commissioners are subject to prohibitions of anti-competitive behaviour, and includes a power for the Secretary of State to issue regulations governing commissioners procurement activities, to ensure they protect choice and competition. Monitor will have powers to act in respect of a breach of these rules. The Office of Fair Trading (OFT) and the Competition Commission will be responsible for investigating mergers in health and social care services to protect patient choice. The Secretary of State will continue to decide whether to permit NHS trusts to complete mergers, until all remaining NHS trusts have become FTs; for any mergers that are not subject to OFT or Competition Commission controls, the Secretary of State will be able to seek advice from Monitor on any potential impact on competition. 16
Monitor will be able to refer problematic markets where competition may not be functioning effectively to the Competition Commission for investigation. The Bill also requires the Competition Commission to carry out a review of the development of competition and regulation in public healthcare services every seven years the first being no later than 2019 and its report should include recommendations for future development. Price-setting and regulation Many supported Monitor s role in pricesetting and highlighted that this must be fair and transparent. The NHS Commissioning Board will be responsible for developing the pricing structure for NHS services, working closely with Monitor and after consultation with interested parties; while Monitor will be responsible for designing a pricing methodology and setting price levels following consultation and with agreement from the Board. Monitor must have regard to the overall financial envelope within which the NHS must operate, and prices must balance quality, efficiency and affordability. GP commissioners and providers will be able to object to the pricing methodology, and, if there are enough objections, Monitor will need to respond or refer the matter to the Competition Commission for a decision. Service continuity Respondents gave strong support to proposals for additional regulation in respect of certain designated services: those whose loss would materially harm patients because commissioners would not be able to make alternative arrangements in time. Decisions about which services to designate for additional regulation will be taken by local commissioners in co-operation with providers, after engagement with health and wellbeing boards, other local stakeholders and the public, and with guidance and support from Monitor. Monitor will have a broad set of powers to ensure the continuity of these designated healthcare services, including powers to trigger a special administration regime for providers that fail. The regime will be run by a court-appointed administrator, with oversight from Monitor, and without the ability for political interference. The Bill also gives Monitor broad powers to implement a risk pool, to provide finance to support the continuity of designated services. Whilst Monitor and CQC will be independent, the Bill places them under a duty to co-operate and, in particular, to work together to minimise bureaucracy and create a single integrated process of licensing and registration for providers. To ensure regulation is not over-burdensome, the Bill requires Monitor to ensure that its regulatory activities are transparent, proportionate, consistent, and targeted only at cases where action is needed. 17
Effective implementation and a managed transition The Government gave careful consideration to a number of suggestions around the pace of change. We are proposing a phased transition over the next four years, through a carefully designed and managed process, to allow enthusiasts to start early, with time for planning, testing and learning. There must be clear accountability during the transitional period, and capacity and capability need to be sustained so that the NHS can continue to meet the quality and productivity challenge. Many respondents were concerned about the scale of the financial challenge facing the NHS. Although the Spending Review set out a generous settlement for healthcare, the NHS still needs to deliver up to 20 billion in efficiencies over the next four years. The Government s reforms are designed to improve quality and productivity and will help to ensure affordability and strengthen financial control. Significant savings will be made by removing duplication and inefficiency aims that were supported by most respondents. TRANSITION PHASED OVER FOUR CALENDER YEARS 2010/11 Finalising the design of the new system, with refinement following closure of the outstanding consultations, and preparing for pathfinders and early implementers to test the new arrangements and key issues. 2011/12 Sharing learning from pathfinders and early implementers and preparing for the new system, including drawing up plans for GP consortia and health and wellbeing boards and implementing shadow national arrangements for the new organisations. 2012/13 A full dry run of the new system, with the NHS Commissioning Board, economic regulator and Public Health England established, SHAs abolished, health and wellbeing boards and local HealthWatch in place, remaining NHS trusts overseen by Provider Development Authority. Authorisation of GP consortia will begin. 2013/14 The first full year of the new system, including GP consortia and health and wellbeing boards, Monitor s licensing regime fully operational, and local authorities commissioning NHS complaints advocacy. All NHS trusts will have FT status, and PCTs will be abolished. 18