Learning to walk

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 After the proposed reforms in the White Paper and resulting consultation papers, Thoreya Swage dissects what the changes will mean and how pharma will have to find its feet once again.

Amongst the papers out for comment on the next steps for the NHS were a couple of documents outlining the future of the Arm’s Length Bodies and how the Health Service would be regulated over the next few years.

Liberating the NHS: Regulating healthcare providers outlines the proposals for the further development of foundation trusts together with a wider role for Monitor. The underlying principle is the desire of the Government to free up providers to improve outcomes through regulatory licensing and clinically-led contracting, rather than via central or regional controls. The intention is to regulate foundation trusts in the same way as for other providers in the private sector, although the paper stresses that Trusts themselves will not be privatised. The ultimate aim will be for all NHS providers to become, or be part of, a foundation trust and, from 2013, Monitor will have the responsibility of regulating all providers of NHS services, regardless of their status. NHS Trusts providing healthcare will not be permitted to remain.

A new sense of freedom
The main purpose of the trusts will continue to be the provision of goods and services to the Health Service in England and any surplus or proceeds from the sale of assets to be reinvested in healthcare. Previously the level of private income permitted was capped causing much difficulty for some trusts. They encountered not being able to expand their services whilst others were restricted, particularly mental health trusts, to provide services not directly funded by the NHS, such as return to work schemes. Statutory controls on borrowing are also planned to be lifted within the new regulatory system.

In the new world trusts will be able to amend their own constitutions rather than seeking permission from Monitor. The constitution however has to be within the legal framework set by Government. It will be easier for foundation trusts to merge or to acquire another NHS organisation or to de-merge subject to the competition rules.

Currently all foundation trusts have a three-tier structure of members, governors and directors determined by specific statutory requirements with respect to the composition of a foundation trust’s membership, boards of governors and of directors. The consultation paper suggests that this could be improved to increase the influence of staff. In some instances this could be developed further with some trusts, specifically smaller community bodies, to be led solely by employees.

Accountability of the trusts to its governors will also be strengthened. For example, permitting the calling of a special general meeting in order to hear reports on executive pay or approve significant transactions. Furthermore, there is a proposal that the current arrangement, whereby if a foundation trust fails the taxpayer picks up the tab, will be changed to a system ensuring that financial investment and risk is managed as much as possible on a commercial basis.

Regulating and monitoring healthcare
In another consultation paper, Liberating the NHS: Report of the arm’s-length bodies review the Government is rationalising the numerous organisations that oversee improvements in healthcare. The proposal is to have just one regulator on quality, the Care Quality Commission (CQC), and one economic regulator in Monitor for all providers of NHS care. The document also proposes that there should be only one regulator for medicines and devices, the Medicines and Healthcare Products Regulatory Agency (MHRA), and one research regulator – a new body set to be established.

In its new guise Monitor will become the only economic regulator for the NHS and for social care in England. By promoting competition and regulation where necessary Monitor will undertake its key duty of protecting the interests of patients and the public in health and adult social care services. The plan is for anti-competitive behaviour by such bodies to be dealt with through regulation rather than via costly legal processes.

Monitor will scrutinise the equitable and safe access to health and social care services by patients and facilitate improvements in organisational efficiency. It will ensure value for money and promote investment and innovation within services. A major function will be helping commissioners maintain continuity of essential services. These have not yet been defined but it is thought to be services such as accident and emergency and maternity care.

The body will be responsible for setting the maximum prices for NHS funded services. The NHS Commissioning Board will determine the currencies – units of services, pathways, etc – whereas Monitor will devise the pricing methodology and price cap for such services.

The four core functions of Monitor will be the licensing of all providers of NHS care, price regulation of NHS care, promoting competition and supporting service continuity. In carrying out its multiple functions Monitor will need to take a view on possible conflicting situations.  Although the paper says that Monitor will be independent, it also states that the Chair and Chief Executive will be appointed by the Secretary of State.

Checks and balances will be in place to ensure that Monitor acts fairly. For example, there will be a requirement to consult with other bodies such as the NHS Commissioning Board and providers to conduct impact assessments of the costs and benefits of new regulation, and an appeal mechanism against certain licensing and pricing decisions.

The CQC will continue as the quality inspectorate for health and social care for NHS and privately funded services, perform reviews of adult social care and retain its responsibilities under the Mental Health Act.

The NHS Commissioning Board will take over the assessment of NHS commissioners. The commission will continue to register all providers who wish to provide regulated activities as defined under the Health and Social Care Act 2008 to provide assurance that the services meet essential levels of quality and safety. It will also carry out inspections in relation to the registration requirements and undertake enforcement action where required.

Monitor’s role is to regulate prices and license providers of NHS care. The licensing conditions include the requirement that organisations are fit and able to provide NHS services, details on the types of services provided and notification to a change of services. In certain circumstances specific requirements may be set, for example, a requirement to provide specific services to competitors to promote competition or pre-notify Monitor of plans to discontinue an essential service. Providers of other care, e.g. social care, will not be required to be licensed with Monitor, although they are required to be registered with the CQC. In the future it will be a requirement for organisations to have CQC registration prior to obtaining a licence from Monitor for NHS care.

NICE will continue to play a key part in providing advice on intervention, quality and health technologies for clinical services and public health. In addition to its extended role in developing Quality Standards to support the main pathways of care for the NHS Commissioning Board and GP consortia to use, it will also publish Quality Standards for adult social care. The paper however, makes no reference to NICE’s role in providing advice on whether new drugs should be made available to patients using NHS services. The Secretary of State has said that this would be left to the GP consortia to decide and the cost of the drug to be decided on a new ‘value-based pricing’ system.

Implications for pharma
The main message is that the statutory landscape is being prepared for smarter, more commercially minded healthcare organisations to deliver better care and improved outcomes. As always this means developing services that meet patients’ needs locally. The removal of NICE’s role in determining whether a new drug should be prescribed or not allows for that flexibility. However, it is not back to the hard sell to clinicians. Prices for new interventions will be based on not only clinical effectiveness but also reduction on the burden of carers, availability of alternative treatments and how innovative the company has been in producing the drug.

This new environment means that pharma will need to work with providers to demonstrate this innovation to commissioners through support and development of more streamlined pathways of care as determined by the Quality Standards published by NICE.

The establishment of community Foundation Trusts run by their staff together with the greater emphasis on management of chronic diseases provides an opening for pharma to influence the development of services for conditions such as asthma, COPD, coronary heart disease and stroke, and mental illnesses. It is much easier to develop services when talking directly to those that deliver the care.

The removal of the cap on the private income of Trusts means that these services will expand leading to a greater demand for drugs within that sector. Pharma needs to get close to its customer Foundation Trusts to find out which services are to be developed in order to have a say in such decisions.

Clearly, regulation and competition are the way forward and the challenge for the industry is to use its experience and expertise to support the new Foundation Trusts of the future.

Dr Thoreya Swage has several years’ experience in the NHS, both as a clinician (psychiatry) and as a senior manager, including Executive Director for a Health Authority, in various NHS organisations covering acute and primary care. She has expertise in commissioning health services, most recently working with the independent sector as part of the Independent Sector Treatment Programme at the DH. She is currently working for a number of NHS organisations, including DH agencies, to develop a more commercial approach to the commissioning of healthcare.