Regulating UK Social Care

How did the regulator respond to Southern Cross in 2011?

It was quite a fraught time. When the business collapsed, other providers stepped in and actually purchased the care homes. It was a whole variety of providers that did that, some of which, as I mentioned, are struggling with that still. But it taught the government a lesson, which was that when you’ve got a provider of scale in the market, it was very lucky at that time that there were operators that were willing to step in and actually buy the care homes. It might not happen with Four Seasons, for example.

The government reformed the regulator to become what is now known as the Care Quality Commission, or CQC, and also introduced a division of the CQC, which was called Market Oversight. What this particular division sought to do was to look at those operators that have a strategic role in the sector, which by definition for them at the time became the ten largest operators. What they did was they engaged in debate and discussion with each of those ten operators in terms of their financial performance on a quarterly basis.

At the time, I was employed as a finance director within Bupa, and I attended a number of these meetings on behalf of Bupa with the regulator. I effectively explained the performance, the trends, the plans of the business and the quality of care that’s provided by the business. CQC would then determine whether the business has any capability of failure. When it determines that a business has the potential for failure, what CQC can do is inform all local authorities with whom that provider has a trading relationship. It currently is doing that with Orchard Care Homes, where it’s advised local care homes that these businesses are potentially at risk of failure. Therefore, they should consider placing residents elsewhere. That’s the limit in terms of its oversight.

It has extended how it looks at the market. It doesn’t just look at the top 10 anymore. It looks at those businesses that are of strategic importance in a locality, but perhaps not nationally. For example, if there is a geographic concentration of supply, they will look at operators there. I think they currently have on their books something like 60 or 65 care home operators with whom they have a relationship and who they are monitoring at the moment. All they’re looking at are things like historical results, perhaps budgets from the business. But it’s based on historical results and there’s a duty of risk and budget to achieve.

If CQC was allowed to look through the windscreen, through its market oversight, it would actually be in a position where every transaction within the sector would need approval from CQC. In the same way that say the CMA looks at large transactions that affect the market from a national perspective, CQC could be put in a position where they look at transactions from a care quality perspective. It doesn’t have the authority from government to do that at the moment. Following the Southern Cross debacle, CQC was given more teeth that certainly timed at the regulation.

In your view, what’s the potential solution here?

I think the key solution here has to start with government and it has to start with engagement with all parties, but I think we have to look at health and social care as one, to start with. It’s all part of the same journey. And we have to look at outcomes. We have to build, in my view, a health and social care system that looks at outcomes, i.e. when an individual requires care and therefore enters the system, what is that care designed to do? What is the outcome for that individual? Whatever journey of care is then required for that individual, that is provided. Whether it’s provided by the state or it’s provided by the state with private sector involvement is another question, but I think it has to be both. But it has to start with outcomes.