Monitor may fail to fulfil its new responsibilities as the economic regulator for health care unless the government providers greater clarity about its role, according to a new report from The King's Fund.
The Health and Social Care Bill gives Monitor - currently the regulator for NHS foundation trusts - wide-ranging new powers to act as the economic regulator for the health sector. Under the proposals, the agency will be responsible for setting prices for NHS-funded services, tackling anti-competitive behaviour and maintaining essential services if providers become financially unsustainable. This will see it increase in size to 500 staff and acquire a budget of £82 million a year.
However, according to The King’s Fund study, the large number of objectives which have been set for Monitor may cause confusion and risk diluting the focus of its work, while a lack of clarity about how it will work alongside other key health bodies, including the NHS Commissioning Board and the Care Quality Commission (CQC), risks creating tension and making disputes harder to resolve.
Moreover, the study warns, there is a risk that Monitor's independence will not be sufficient to protect it from ministerial interference, given political interference in decisions about reconfiguring services and provider failure.
The report examines, as Monitor takes on its new role, what can be learnt from the experience of regulators in other sectors such as telecoms and utilities. The government's proposals draw heavily on the regulatory framework developed in these sectors - perhaps, it says, stemming from Andrew Lansley's experience in the mid-1980s when he worked as a civil servant in Norman Tebbitt's office during the denationalisation of the public utilities.
There are advantages in having a sector-specific regulator for health care, says the study, but it also outlines a number of challenges which Monitor will need to overcome if it is to succeed. For example, it points to the difficulty of hiring sufficient staff with the skills and expertise needed, plus the technical challenge of setting prices for such a large number of services, often on the basis of only limited information.
The authors make a number of recommendations, in particular calling on the government to amend the Health and Social Care Bill to provide greater clarity about Monitor's objectives and how it will work with other key NHS bodies. Also, they say, given that the experience of other regulators indicates that objectives will need to change over time, a clear process is needed for managing this and protecting Monitor from political whim.
They also emphasise that Healthwatch - the new body formed to represent the views of patients in the health system - needs to be a powerful consumer champion for patients and taxpayers, and act as a counter-balance to provider interests.
Economic regulation is unlikely to deliver significant changes in the short term, and other key drivers such as commissioning and performance management will continue to play an important role for some time to come, the report concludes.
"Monitor has been set a formidable task with little precedent and supporting analysis, so the risks of failure are considerable," warns Anna Dixon, director of policy at The King's Fund and lead author of the study.
"Unless economic regulation is designed and executed well, it may end up imposing more costs than the benefits it delivers," she cautions, adding: "as the Health and Social Care Bill proceeds through the House of Lords, we hope that Ministers will look again at the lessons to be learned from other regulators and make the changes needed to enable Monitor to succeed in its new role."