Out-Law News 2 min. read

Private and independent providers of NHS-funded services will be regulated from April

Private sector and independent suppliers of NHS-funded services will be regulated for the first time from April, after Monitor announced that it would extend its provider licence regime.

The licence will require providers, including charities and hospices, to be led by "fit and proper persons" and to be registered with the Care Quality Commission. Providers will also be required to submit financial information to Monitor as part of the licensing process.

Monitor director Jason Dorsett said that the changes would allow the regulator to meet its "overriding duty" to protect patients, following the collapse of care home provider Southern Cross in 2011.

"The Southern Cross scandal brought home to people how much uncertainty about the financial future of the organisation had a negative impact on patients and their families," he said.

"Our overriding duty is to protect patients, so we are not going to sit back and wait for financial failures at providers to disrupt essential services. We will actively monitor providers of these services, looking for financial problems and acting quickly to ensure those services continue," he said.

According to a recent estimate by the Institute for Fiscal Studies and the Nuffield Trust, independent providers currently deliver around £8.5 billion on NHS-funded services.

Monitor already licenses NHS foundation trusts under its provider licence regime, and uses a published risk assessment framework to monitor financial and governance risks. It proposes to extend the financial parts of this framework to non-NHS providers of essential services, known as commissioner requested services (CRS), and is consulting on how best to do so until 6 February.

The consultation proposes using the same liquidity and capital servicing capacity measures of a provider's ability to meet its operational and financing cash demands as it currently applies to NHS foundation trusts. However, it plans to collect additional information from independent providers in order to "gain a comparable overview of drivers of risk" and to reflect the differences in governance between these providers and NHS foundation trusts.

Providers would be required to supply two forms of evidence that they meet the continuity of services requirements. This could include balance sheets, cash flow information, annual reports and accounts and details of planned transactions. They must demonstrate their liquidity, expressed in days of liquid assets, and demonstrate that they can meet their ongoing financing obligations including interest, debt and non-elective dividend payments.

As is the case for NHS foundation trusts, the frequency with which independent providers would be expected to supply financial information would vary depending on that provider's risk assessment profile. Suppliers would generally be expected to provide information quarterly or every six months, depending on the value of services supplied; but those considered to be a higher risk would be expected to do so monthly.

Independent providers of CRS will need to hold a licence from 1 April, and can apply for one now. From April, providers needing both a licence from Monitor and to register with the Care Quality Commission will be able to make a joint application to both bodies. The Care Quality Commission regulates quality of care.

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