PRESENTATION

1. PRESENTATION Patrick Fraher Senior Policy Advisor Carolyn May Policy Advisor Monitor’s current and future roles: a gap analysis

2. Agenda

3. MONITOR’S CURRENT ROLE

4. 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

5. 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

6. Our core functions There are currently three main strands to our work: • Assessment: Determining whether a trust is ready to become an NHS foundation trust; • 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.

7. Assessment • We receive and consider applications from NHS trusts • seeking foundation status and look at three areas: • Is the trust well governed with the leadership in place to drive future strategy and improve patient care? • Is the trust financially viable with a sound business plan? • 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 trust • to operate as an NHS foundation trust.

8. Regulating NHS foundation trusts Once authorised, we regulate foundation trusts to ensure they comply with their terms of authorisation These are a set of detailed requirements covering how foundation trusts must 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.

9. 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.

10. Why do compliance? Foundation Trusts are: Role of Monitor’s compliance team is to: Autonomous public benefit corporations not subject to Secretary of State direction Ensure foundation trusts comply with their ToA Independent of DH performance management requirements Continually assess the risk of a foundation trust failing to meet their ToA Free to borrow commercially and retain surpluses Consider the effectiveness of governance and proposed action to rectify the position Accountable to commissioners via contracts Measure progress towards rectification of any failures (financial or otherwise) Accountable to Monitor via their ToA Recommend to Monitor’s Board the need for any formal regulatory action Maintain, evolve and update regulatory regime / documentation Managed by boards and answerable to their Boards of Governors

11. The risk-based approach Monitor assesses the risk of trusts breaching their ToA. Risk of failure to comply is currently split 2 ways: 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 Financial: Ratings 1 and 2 Governance: Red Subsequent regulatory action at discretion of Monitor’s Board 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

12. If Boards don’t deliver, we take action • Monitor’s intervention process • Discussion • Diagnosis • “Informal” intervention • Formal intervention • stop services, etc • require appointment of advisors • change management or leadership

13. 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: 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 OR 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)

14. MONITOR’S NEW ROLE

15. Proposed system architecture SIMPLIFIED Patients and public Support for complaints Elect Publish information Health & Wellbeing Boards Local authorities Elect governors Provide care Register Must be consulted Private providers Social enterprise GPs NHS FTs Fund Local Healthwatch Commission specialist services Commission Enforce minimum standards Commission Promote competition Jointly license Provide information Manage Must be consulted Support GP consortia Provide information Information Centre NICE Monitor Care Quality Commission Health-watch England Authorise Assess Allocate Guide Promote competition NHS Commissioning Board Set topics Direct Advise on standards Agree tariff and pricing Direct Provide information Annual mandate Allocate Secretary of State Provide information Sets minimum quality standards Source: Health and Social Care Bill 2011

16. Changes to Monitor’s current role • Maintain role until all FT sector • Finance – PDC stewardship • Finance – continuity of service • Governance – safety net • Focus on explaining / supporting regulatory regime • FT-specific led by the sector

17. Changes to Monitor’s current role • Maintain role until all FT sector • Finance – PDC stewardship • Finance – continuity of service • Governance – safety net • Focus on explaining / supporting regulatory regime • FT-specific led by the sector

18. Monitor and economic regulation Licensing providers Regulating prices Promoting competition Supporting service continuity Information collection

19. Monitor and economic regulation Licensing providers • 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. Regulating prices Promoting competition • 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) Supporting service continuity • 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

20. Timeline April 2011 April 2012 April 2013 April 2014 April 2015 April 2016 DH work-plan to be published to map out trajectory for non-foundation trusts Early 2011 Provider Development Authority will encourage trusts towards FT status application Until 31st March 2014 Monitor to assess all remaining 120 FTs By April 2014 Final applications for FT status by now 31 Mar 2014 Monitor to retain its intervention powers for newly authorised FTs and subset of others April 2012 – April 2016 (2 years post authorisation) Monitor has no powers to scrutinise / intervene in FT governance: registrar function only April 2012 for most trusts. By April 2016 for all trusts. Monitor to assume role as economic regulator 31 Mar 2012 Non FT status to cease to exist April 2014 New regime for provider failure due to come into force DH responsible for failure regime to April 2013 Monitor to undertake process of designating services April 2012 – April 2013 New banking function to take on role of protecting taxpayers’ interests in foundation trusts TBC

21. GOVERNORS: CURRENT AND FUTURE ROLE

22. Governors: the statutory responsibilities

23. 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

24. 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

25. Recent significant breaches have displayed a number of common governance failures… Issues evidenced at trusts in significant breach Seen at…. Strategic awareness 9 7 8 4 5 1 Inability to identify material risks to compliance with authorisation Poor quality plans, or plans lacking credibility 9 10 1 3 6 7 9 Organisational accountability 1 3 6 7 Significant failure to deliver plan without credible mitigating factors 9 8 7 Failure to maintain appropriate assurance processes 1 Failure to maintain appropriate financial controls 2 Shaping culture Leadership failure underpinning material breach of authorisation Failure to properly assess quality risk of financial initiatives 10 Board performance 1 3 5 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 5 4 9 6 1 2 3 4 5 Key: RNHRD Mid Staffs HWPH Colchester Gloucester 6 7 8 9 10 Basildon Dudley Wigan Milton Keynes Poole Source: regulatory letters to FTs in significant breach

26. How aware are Governors of their prospective change in role?

27. And how ready to take on additionalresponsibility?

28. CASE STUDIES

29. BRIDGING THE GAP

30. How are we going to bridge the gap? • Ideas from the room..

31. 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

32. APPENDIX

33. 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

34. Regulatory documents (1) Mandatory Compliance Framework Monitor 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

35. Regulatory documents (2) Best practice advice: Managing Operating Cashflow in NHS Foundation Trusts NHS Foundation Trust Code of Governance NHS Transactions Manual NHS Foundation Trust Model Core Constitution Risk Evaluation for Investment Decisions Information on Service Line Reporting and Service Line Management