This is the third in our series about the Care Act and this case is about what the Act itself says about this subject. Indeed the Government website says the following in the introductory pages to the consultation on the Regulations that will develop out of the Act: ‘The Act also allows for regulations to make provision for how providers should be financially assessed and the circumstances in which the CQC may be satisfied that they are likely to fail’… but… ‘we have decided not to exercise the power to make regulation on these issues’. This will be worrying for the sector because it seems that CQC will be left to interpret the Act as it sees fit without the constraint of Regulation and thus without the necessity for Department of Health consultation, only their own. So far we have not seen anything from CQC about this so there is little to go on at the moment other than speculation, which may not be a good thing at this stage. Instead we will run through what the Act says so the reader may draw their own conclusions about the market oversight regime.
There are 5 sections that appear under the heading of market oversight. Each refers to what the Regulations must or may do, notwithstanding that the decision seems to have been made not to develop any. However, the Act does make the point that duties imposed on CQC are to be treated as regulatory functions – maybe this is the get out clause for the Act and delegates regulatory responsibility to CQC. The 4 remaining Sections deal in a logical order with:
- Specifying the criteria for application of the market oversight regime and covers the responsibility to ensure that the provider is registered, the amount of social care provided, the geographical concentration of the registered provider’s business (presumably so the risk assessment on failure will be influenced by the concentration of provision), and the specialisation of care. The Act then allows quite extensive discretion to include or exclude providers from the oversight regime but requires those that are excluded because they already come under comparable oversight outside the Act, may still be required by CQC to share relevant information.
- In determining whether the criteria applies to a care provider the CQC must ensure that they qualify under the terms of the previous paragraph. This is something of a circular argument because the previous paragraph allows substantial discretion in this respect so we will have to wait and see what develops.
- In assessing the financial sustainability of care providers which, in CQC’s view qualify for this attention, they then have substantial powers to require the provider to develop a plan to mitigate or eliminate the risk of failure, appoint a professional to undertake an independent review of the business at the provider’s expense, and to gain CQC approval of any finalised plan. CQC may also consult with suitable experts on the methods of assessing financial sustainability of a provider.
- Finally, where CQC consider a provider is liable to fail they may consult with the appropriate local authority and must share all information pertaining to their assessment with them.
Certainly, it is right that the sector should be consulted by CQC about the extent, depth and methods they would plan to adopt in scrutinising provider financial sustainability and the extent to which they would apply their powers in a proportionate way. Any sanctions or penalties that may result should be equally proportionate to business size. Of course there is a view that where a business is failing or at risk of doing so, for CQC to apply financial penalties, could be counterproductive to recovery and disastrous for the provider. So, the underlying principle should be of open and candid dialogue between CQC, Local Authority and the provider.
I am reminded of the children’s song – Here we go round the Mulberry Bush!
For any assistance regarding profit and loss forecasts or cashflow projection please contact our Financial Modelling specialist, Rachel Lawrence on 01823 286096 or email firstname.lastname@example.org