Don’t blame a ‘rotten NHS culture’ for the CQC cover-up

Published in The Guardian, Tuesday 25 June 2013

Market-led health reforms are leading to poor quality healthcare – and are giving managers incentives to hide failure

We now know that England’s healthcare regulator, the Care Quality Commission, tried to cover up an investigation into a hospital trust where babies were dying. This appalling tale has been spun to be about the “rotten culture” at the heart of the NHS. The true story of the Morecambe Bay cover-up, however – just like Mid Staffs, where hundreds of patients died – is one of market failure.

Two questions in particular have not been properly addressed. Why would the CQC be complicit in the cover-up of poor performance? And why was the University Hospitals of Morecambe Bay NHS foundation trust so desperate not to expose the failings at its Furness hospital? The answer to both questions lies with the new market system that brought the CQC into being, a system introduced by New Labour and implemented by the Tories.

In 2009 the CQC was just a month old when the first complaint about the trust landed on its desk. The NHS had never been regulated before. Previously under direct political control, and therefore publicly accountable, by 2009 the NHS was being moved to an arms-length, market-based system of inspection and enforcement. All direct public accountability was being stripped out.

In the new market-led NHS, the CQC is the quality regulator and Monitor the economic regulator. Monitor authorises NHS hospitals for the market, giving them foundation trust status – a halfway house to privatisation. Foundation trusts have powers to generate up to half their income privately, and can use half their beds and staff for that purpose. They can enter joint ventures with shareholders and corporations, and sell land and buildings and lease them back. In short, they have the power to redesign NHS services for the private sector, or franchise them to big business.

So, as with Mid Staffs, the goal of all hospital chief executives was to get foundation trust status. Performance was the key to getting this status, so Morecambe Bay, along with every other trust in the country, had a strong interest in covering up “serious untoward incidents“. For hospitals today, sharing such information is like signing your death warrant. And indeed, when the first reports of SUIs came through, Monitor suspended Morecambe Bay’s application for FT status. That was until CQC gave the green light.

According to Project Ambrose, the external report into the affair, the CQC was under-resourced for the enormous task of policing the myriad health services in the market place. Furthermore, it was obliged to register 378 NHS trusts by April 2010, all within a year of its own inception. Registration was a necessary part of market authorisation for foundation status given by Monitor.

The CQC might have given different information to Monitor, the report found, and Monitor might not have authorised Morecambe Bay if that information had been available. But that would have affected the timetable for FT status and the politicians wouldn’t have been happy: the Health and Social Care Act 2012 requires that most NHS hospitals be authorised as FTs by 2014 and NHS trusts phased out. A delay would have derailed plans for marketisation.

FT status is irreversible according to the law. Once a hospital is a foundation trust it can be closed if it fails to generate enough income, regardless of patient need – unless it has a private finance initiative scheme, in which case special measures are taken to protect it.

The government is embarked on a programme of hospital and service closure. It is using the failure regime for FTs to close down non-FT hospitals, such as the one in Lewisham. Services there are to be sacrificed to fund the South London Hospital Trust, which comprises three hospitals and six hungry PFI schemes. PFI currently consumes more than 16% of its income, compared to capital charges of 4% before PFI.

Today Morecambe Bay has a very large deficit of around £16m, and is in the process of making cuts. In March 2013, Monitor described it as one of the most “financially challenged” foundation trusts. It has no PFI, so its deficits will not be paid off with bailouts and subsidies, unlike the PFI hospital in neighbouring Cumbria.

The CQC is has a legal imperative to get the market up and running by developing the systems to register more than 22,000 health and social care providers. The real story of the CQC scandal is that market-led changes are creating deficits and poor quality of care, which managers must seek to conceal in order to survive. Central to the government’s NHS reforms is the concept of a well-regulated market. Behind the CQC controversy is an assumption that if a commercially run hospital is failing it has simply not been well enough regulated. But experience from the US shows that effective regulation of large healthcare corporations is impossible: we cannot afford it, or get the data necessary to carry it out. That is why the NHS had direct management in the first place.