Frontier Economics hosted a roundtable discussion at the recent Nuffield Trust Health Policy Summit to discuss the development of economic regulation.
We drew some (only some – yes, health care is different) inspiration from the experience of other regulators. The early days of Postcomm – the postal regulator overseeing a government-owned Royal Mail – provided some lessons.
Postcomm reached for the standard regulatory toolkit but found itself foiled by a publicly owned Royal Mail who accumulated losses year on year. Sound familiar? In the end the regulator was abolished, a fate Monitor is keen to avoid.
So the discussion turned to what Monitor could do in order to provide the stable regulatory platform from which the needed productivity gains, service change can be delivered within tight financial constraints.
One of the hardest jobs for a regulator of publicly owned providers is to be a catalyst for improvement. It was noted that helping to share ideas and best practice (such as its “Closing the Gap” publication) could be an important function. However, if Monitor is to avoid providers reaching around its back to supplement budgets rather than improve performance it may have to turn itself into more of a “people’s champion”.
Monitor will have taken a significant step forward if there is widespread agreement about its purpose and it is trusted to carry that out
Successfully becoming the people’s champion despite having to make hard decisions about financial and related matters of providers could serve it well. It was pointed out that NICE appears to be successfully balancing the very difficult decisions it needs to make about access to drugs on the NHS with being seen as looking after our interests.
Despite Monitor’s significant efforts, there continues to be confusion over its new role and how it relates to those of other new bodies, particularly NHS England. Monitor’s challenge over the next 18 months, it was suggested, is to establish clarity of purpose that engenders the trust of stakeholders in the sector.
Other regulators have suffered when overlapping and unclear responsibilities have led to a loss of confidence. The rail industry in its early days was a prime example that, again, led to changes to the institutional structure of regulation. Monitor will have taken a significant step forward if there is widespread agreement about its purpose and it is trusted to carry that out.
But how can a trusted Monitor deliver the platform for change? Those at the session focused on the need for greater alignment between the various levers in Monitor’s control (pricing, competition policy, licensing and the guidance it provides) and the objectives for the sector.
Monitor suffers from a tremendous disadvantage in that the system it inherited is particularly poorly aligned and there are risks of significant winners and losers from change. Monitor’s future (and just maybe that of the NHS as we know it) depends on managing the transition from what it inherited, to what it should be. If it manages that it will be the people’s champion.
Matthew Bell is Director at Frontier Economics. Please note that the views expressed in guest blogs on the Nuffield Trust website are the authors’ own.
Bell M (2014) ‘How to make Monitor the ‘people’s champion’’. Nuffield Trust comment, 24 March 2014. https://www.nuffieldtrust.org.uk/news-item/how-to-make-monitor-the-people-s-champion