PRESENTATION

Monitor’s current and future roles: a gap analysis

Patrick Fraher

Senior Policy Advisor

Carolyn May

Policy Advisor

Agenda

MONITOR’S CURRENT ROLE

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Introduction to Monitor

• Established in January 2004• Our functions and powers are set out in the National Health Service Act 2006

• We are independent of central government and directly accountable to Parliament

• We are a small organisation – circa 110 staff based in central London

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Monitor’s mission

‘To operate a transparent and effective regulatory framework that incentivises NHS foundation trusts to be professionally managed and financially strong and capable of delivering high quality services that respond to patients and commissioners.’

We are currently about promoting good governance (including quality) and dealing with failure

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Our core functions

There are currently three main strands to our work:

1. Assessment:

Determining whether a trust is ready to become an NHS foundation trust;

2. Compliance:

Ensuring that NHS foundation trusts comply with the conditions they signed up to – that they are well

governed and financially sound; and

3. Development:

Supporting NHS foundation trust development.

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Assessment

We receive and consider applications from NHS trustsseeking foundation status and look at three areas:

1. Is the trust well governed with the leadership in place to drive future strategy and improve patient care?

2. Is the trust financially viable with a sound business plan?

3. Is the trust legally constituted, with a membership that is representative of its local community?

If we are satisfied that certain criteria are met, we authorise the trustto operate as an NHS foundation trust.

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Regulating NHS foundation trusts

Once authorised, we regulate foundation trusts toensure they comply with their terms of authorisation

These are a set of detailed requirements covering how foundation trustsmust operate – in summary they include:

• the general requirement to operate effectively, efficiently and economically;

• requirements to meet healthcare targets and national standards; and • the requirement to cooperate with other NHS organisations.

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Regulating NHS foundation trusts

In more detail they include:

• the NHS foundation trust’s constitution;• details of the mandatory goods and services that the trust must

continue to provide to patients;• a list of the mandatory education and training services the trust

provides;• a limit on how much the trust can borrow;• the proportion of the total patient income which the trust can make

from private healthcare charges; and• a statement of the information the trust must provide to Monitor and

any other organisations.

Maintain, evolve and update regulatory regime / documentation

Recommend to Monitor’s Board the need for any formal regulatory action

Measure progress towards rectification of any failures (financial or otherwise)

Consider the effectiveness of governance and proposed action to rectify the position

Continually assess the risk of a foundation trust failing to meet their ToA

Ensure foundation trusts comply with their ToA

Managed by boards and answerable to their Boards of Governors

Accountable to Monitor via their ToA

Accountable to commissioners via contracts

Free to borrow commercially and retain surpluses

Independent of DH performance management requirements

Autonomous public benefit corporations not subject to Secretary of State direction

Role of Monitor’s compliance team is to:Foundation Trusts are:

Why do compliance?

The risk-based approach

1 Legality of constitution, representative membership, appropriate board roles, service performance, clinical quality/safety, effective risk & performance management, cooperation with NHS bodies & local authorities, provision of mandatory services

Financial: Ratings 1 and 2Governance: Red

Governance: Eight pillars 1(RAG)

Financial: Financial stability (1-5, 5 = low risk)

Risk ratings published quarterly (and for annual plan) and indicate the potential that an FT may be in significant breach of

Authorisation

Monitor assesses the risk of trusts breaching their ToA. Risk of failure to comply is currently split 2 ways:

Subsequent regulatory action at discretion of Monitor’s Board

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If Boards don’t deliver, we take action

Monitor’s intervention process

1. Discussion

2. Diagnosis

3. “Informal” intervention

4. Formal intervention

• stop services, etc

• require appointment of advisors

• change management or leadership

Monitor’s statutory powers

Under Section 52 of the National Health Service Act 2006, Monitor’s Board may require a trust, the directors or board of governors to do, or not to do, specified

things where:

OR

The trust is contravening or failing to comply with any term of its Authorisation

or any requirement imposed on it by Monitor, and this contravention/failure is

significant

The trust has contravened, or failed to comply with any term of its

Authorisation and is likely to do so again, and that this

contravention/failure is significant

Monitor has the power to remove (or suspend or disqualify) any or all directors or members of the board of governors and appoint interim directors or members of

the board of governors

Monitor can also require trusts to obtain a moratorium or make proposals for a voluntary arrangement with regard to the settlement of debts (Section 53)

MONITOR’S NEW ROLE

Proposed system architecture

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Secretary of State

NHS Commissioning

Board

GP consortia

Patients and public

Social enterprise

GPs NHS FTsPrivate

providers

MonitorCare Quality Commission

NICEInformation

Centre

Health-watch

England

Sets minimum quality standards

Agree tariff and pricing

Annual mandateAllocate

AuthoriseAssessAllocateGuide

Commission

ManageJointly license

Promote competition

Provide information

Enforce minimum standards

Register

Provide care

Direct

Direct

Commission specialist services

Provide information

Commission

Promote competition

Set topicsAdvise on standards

Elect governors Local authorities

Local Healthwatch

Support

Health & Wellbeing

BoardsFund

Must be consulted

Provide information

Provide information

Publish information

Must be consulted

SIMPLIFIED

Source: Health and Social Care Bill 2011

Elect

Support for complaints

Changes to Monitor’s current role

• Finance – PDC stewardship

•Finance – continuity of service

•Governance – safety net

• Maintain role until all FT sector

• Focus on explaining / supporting regulatory regime

• FT-specific led by the sector

Changes to Monitor’s current role

• Finance – PDC stewardship

•Finance – continuity of service

•Governance – safety net

• Maintain role until all FT sector

• Focus on explaining / supporting regulatory regime

• FT-specific led by the sector

Monitor and economic regulation

Licensing providers

Regulating prices

Promoting competition

Supporting service

continuity

Information collectionInformation collection

Monitor and economic regulation

Licensing providers

Regulating prices

Promoting competition

Supporting service

continuity

Monitor will license NHS providers •assessing financial viability, legality and governance arrangements.•joint licence overseen by both Monitor and CQC•Monitor can fine providers or suspend or revoke licences

Monitor will have responsibility for regulating prices for NHS services from April 2013

•from 2013/14, price-setting responsibility shared with NHS CB

•Monitor has primary responsibility for setting price levels.

Monitor’s responsible for ensuring that competition works in the interests of patients and taxpayers• concurrent powers with the Office of Fair Trading to apply competition law•ensure efficiency, innovation and quality where competition may not be appropriate, (e.g specialist care, or rural communities)

Mechanism to manage any provider failure, ensure security of healthcare services• Primary responsibility for continuity of services lies with NHSCB, commissioners• Monitor will play a role in ensuring continuity of certain key services

• Providers of essential services may be required to take part in risk-pooling arrangements

Timeline

April 2012 April 2013 April 2014 April 2015 April 2016April 2011

Monitor to assume role as economic regulator

Monitor to assess all remaining 120 FTs

Non FT status to cease to exist

Final applications for FT status by now

Monitor to retain its intervention powers for newly authorised FTs and subset of others

DH work-plan to be published to map out trajectory for non-foundation trusts

Provider Development Authority will encourage trusts towards FT status application

Monitor to undertake process of designating services

New regime for provider failure due to come into force

New banking function to take on role of protecting taxpayers’ interests in foundation trusts

Monitor has no powers to scrutinise / intervene in FT governance: registrar function only

Early 2011

Until 31st March 2014

By April 2014

31 Mar 2014

April 2012 – April 2016 (2 years post authorisation)

April 2012 for most trusts. By April 2016 for all trusts.

31 Mar 2012

April 2014

April 2012 – April 2013

DH responsible for failure regime to April 2013

TBC

GOVERNORS: CURRENT AND FUTURE ROLE

Governors: the statutory responsibilities

And various non-statutory roles

• Representing the interests of the members and partner organisations in the local health economy

• Holding the board of directors collectively to account for the performance of the trust

• Feeding back information about the trust to constituencies and stakeholder organisations who appointed them

• Other roles such as working with LINks, working with hospital volunteers, giving talks to members and other stakeholders, developing and reviewing the membership strategy and holding constituency meetings

Governors – future role

The Health and Social Care Bill will:

• Make explicit the duty of governors to hold the board of directors to account, through the Chair and Non-Executive Directors

• Give governors power to require some or all of the executive directors to attend a meeting

• Extend to FT directors the duties imposed under company law, e.g. The requirement to promote the success of the organisation

• Require FTs to hold an annual general meeting for its members: to discuss annual report, accounts and executive pay

• FT governors will need to agree any merger, acquisition, separation or other change that the FT’s constitution defines as significant

FTs to be responsible for supporting governors to fulfil their role

Recent significant breaches have displayed a number of common governance failures…

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Strategic awareness

Organisational accountability

Shaping culture

Issues evidenced at trusts in significant breach

Board performance

Significant failure to deliver plan without credible mitigating factors

Leadership failure underpinning material breach of authorisation

Failure to properly assess quality risk of financial initiatives

Inability to identify material risks to compliance with authorisation

Poor quality plans, or plans lacking credibility

Board lacks the requisite skills, competencies and experience and has not acted to address this

Insufficient challenge at board level

Failure to act proactively to address material breaches of authorisation

Failure to maintain appropriate assurance processes

Seen at….

Source: regulatory letters to FTs in significant breach

Failure to maintain appropriate financial controls 1

1 3 5

1 4

1 3 6 7 9 10

1 3 6 7 9

2

5 7 8 9

10

7 8 9

5

4 6 9

1 2 3 4 5

6 7 8 9 10

RNHRD Mid Staffs HWPH Colchester Gloucester

Basildon Dudley Wigan Milton Keynes Poole

Key:

How aware are Governors of their prospective change in role?

%

Fully aware 50.5%

Slightly aware 32.9%

Not really aware 10.4%

Not at all aware 5.3%

Not sure 0.9%

And how ready to take on additionalresponsibility?

%

Yes fully prepared 63.6%

Not sure 21.1%

Not at all prepared 3.0%

Would want further training 11.2%

Don’t know 1.0%

CASE STUDIES

BRIDGING THE GAP

How are we going to bridge the gap?

Ideas from the room..

How are we going to bridge the gap?

Working with your Boards:

Putting in place what works for you

May be very different from another trust

Communication is key

Training providers:

As provided by the trust – statutory duty

FTN, FTGA

Possible national coordination, but unclear at this point

National guidance:

From DH, regulators

Other:

Networking with other FTN governors

Networking with school governors, LINks etc

APPENDIX

Reporting I: annual submissions

Plans should cover the next three years and will be the basis of monitoring in-year performance

Monitor will use plan information to generate trusts’ annual risk ratings and borrowing limits

Regulatory documents (1)

Mandatory

Compliance FrameworkMonitor consults and updates this annually

NHS Foundation Trust Annual Reporting

Manual

Prudential Borrowing Code(PBC)

Additional Guidance

Applying for a Merger Involving an NHS Foundation Trust:

Guide for Applicants

Audit Code for NHS Foundation Trusts

Variation of the Terms of Authorisation: Guidance for

NHS Foundation Trusts

NHS Foundation Trust Accounting Officer

Memorandum

Guidance for NHS Foundation Trusts on Co-operating with

NPfIT

Regulatory documents (2)

Best practice advice:

Risk Evaluation for Investment

Decisions

Managing Operating

Cashflow in NHS

Foundation Trusts

NHS Foundation

Trust Code of Governance

NHS Transactions

Manual

Information on Service

Line Reporting and Service Line Management

NHS Foundation Trust Model

Core Constitution