NHSE consults on proposals to broaden oversight over independent providers of NHS services

Published 7 febrero 2023

In a consultation published on 25 January, NHS England (“NHSE”) proposes to oversee standards of quality governance for some licensed independent providers of NHS services (“IPs”). It also seeks views on a new policy for identifying IPs which are ‘hard to replace’ and should therefore be subject to detailed financial and quality oversight.

The aim is to ensure that key IPs are sustainable on both quality and financial grounds.  Where IPs are at risk of failing for these reasons, NHSE will have the ability to intervene by offering support, or potentially taking enforcement action, in order to safeguard the continuity of high quality services for NHS patients.

Background

A sub-section of IPs are regulated under NHSE’s continuity of services framework. These IPs have been opted into the framework by local commissioners who have designated them as providers of Commissioner Requested Services (“CRS”).

The framework comprises the continuity of services conditions of the NHS provider licence (“Licence”) and the risk assessment framework and reporting manual for independent sector providers of NHS services (“IPRAF”). The IPRAF sets out the monitoring and oversight regime, the aim of which is to identify and resolve financial governance issues which are serious enough to threaten the existence of the IP and disrupt the flow of essential services to NHS patients.

Since 2014, NHSE’s regulation of CRS providers has, for historical reasons, focused on financial risk. However as shown by the increasing level of quality-related concerns at some IPs, effective quality governance is also crucial to ensuring sustainable services for NHS patients. Poor quality risks CQC intervention (including suspension of services), de-stabilisation in the form of loss of staff or investment, or the voluntary closure of services by the IP itself.

NHSE is now consulting on changes to the IPRAF to capture:

• quality governance failings and quality stress factors; and
• a greater number of IPs which would be ‘hard to replace’ if they were to fail.

The proposals were trailed as part of the overall Licence update consultation in December 2022 where NHSE put forward the necessary technical changes to the drafting of the continuity of services conditions of the Licence.

Regulating for quality governance issues

NHSE proposes to take a risk based approach to its quality oversight and will look at factors such as:

• adverse CQC findings or activity
• commissioner concerns
• serious clinical incidents
• significant adverse media
• transactions, including the acquisition and disposal of sites providing care; and
• adverse findings in governance reviews

Using this information, a risk rating (high/medium/low) will be generated which will in turn drive the level of regulatory activity. In line with the current approach for the financial risk rating (the Continuity of Services Risk Rating or ‘CoSRR’), NHSE does not intend to publish the new rating.

The new policy is intended to complement CQC’s oversight of quality. Using CQC information and commissioner intelligence, NHSE will assess whether the standards of quality governance at an IP provide reasonable safeguards against closure of services either by the CQC or the IP itself. If that were to happen in an environment where there was no alternative provision, the services would be at risk of ceasing altogether leaving NHS patients stranded. NHSE will therefore aim to take preventative measures which, in the first instance, may involve enhanced information gathering, NHSE regional support, co-ordination with CQC interventions and contractual levers.

Hard to replace providers

In the same consultation, NHSE describes a new potential route into the continuity of services framework. The current regime, which relies on local commissioners opting in IPs by designating them as CRS providers, has resulted in inconsistent coverage across the country with some strategically important services not being captured.

Going forwards, in addition to local commissioners,  NHSE will be able to bring IPs into the framework by determining that they are ‘hard to replace’. Hard to replace providers will be identified by these factors:

1. previous and existing CRS designations by commissioners

2. reliance for delivery of significant amounts of activity

3. known fragilities such as staff shortages and adverse trends in CQC ratings

4. regional reliance on large IPs that are not designated as CRS

5. the likely market response to a provider failure, including the absence of potential acquirers.

What this means for IPs

The proposals mean that NHSE will be monitoring both financial and quality governance risks over an expanded number of IPs. It will be able to take informal and formal regulatory action based on amended Licence conditions. The consultation should be read with the Licence  and the Enforcement Guidance, both of which are being finalised following statutory consultation last year.

The changes will only impact a sub-section of IPs. The majority of IPs are not CRS providers and, going forward, only a selection will be deemed to be hard to replace. Those likely to be affected are probably already in contact with NHSE.

The IPRAF consultation is open until 22 February 2023.

For more information about the new proposals and NHSE’s regulation of IPs, contact: