Regulators under scrutiny

Regulatory bodies have been under fire lately, perhaps prompting some schadenfreude among some whose organisations have been downgraded. Joe Roberts argues that the regulators have a tough but vital job and that public-purpose organisation leaders should cultivate good working relationships with them

Regulatory agencies have been in the news for all the wrong reasons lately. Some have been the subject not just of adverse media headlines, but of official reviews that have been unsparing in their criticism.

This is particularly true in healthcare. In July, the interim report of an independent review of the Care Quality Commission – the regulator of health and social care in England – found that it had lost ‘professional credibility’ and that its operational performance was unsatisfactory in terms of completing enough inspections and reporting its findings promptly.

Dr Penny Dash’s report also drew attention to shortcomings in CQC’s information systems including the provider portal, and to a lack of transparency in how ratings were awarded. The new Secretary of State for Health, Wes Streeting, has been quoted as saying that CQC’s ratings should be ‘taken with a pinch of salt’.

Also in healthcare, the Nursing and Midwifery Council was condemned by another independent review for a poor workplace culture and a huge backlog of complaints which meant that individual nurses’ cases frequently took several years to resolve.

Cross-sector issues

Regulators operating in other industries and public services have faced similar criticism. Last year, the House of Commons Industry and Regulators Committee told Ofwat and the Environment Agency that they needed to do much more to hold water companies to account for environmental pollution. It also criticised Ofwat for not ensuring that the companies invest enough into vital infrastructure.

The same committee also considered the work of the Office for Students in the higher education field. The committee chairman, Lord Hollick, said that the OfS had failed to earn the trust and respect of universities and students and was perceived as lacking political independence. The OfS, according to the committee, had also dedicated insufficient time and attention to the perilous financial position of the university sector and its implications for students and staff.

GGI primarily works with public-purpose clients in the public, voluntary and independent sectors who provide essential services for the benefit of the community. Naturally and rightly, given the work they do, these organisations are closely regulated by various agencies. Our work frequently involves supporting them to prepare for inspections or accreditations, or to make the improvements that regulators have mandated after an inspection has taken place.

In our own experience of the NHS, we have found echoes of Dr Dash’s findings. Some NHS clients have not had experienced any form of CQC inspection for several years. Of those who have, some have waited many months for their report to arrive. This delays the improvement process – the sooner the provider knows the regulator’s recommendations, the sooner it can start to implement them. Sometimes ratings or judgements are difficult to reconcile with other sources of information about the provider concerned and some providers have robustly challenged aspects of CQC’s findings. It is especially hard to predict an organisation’s rating before an inspection, or for it to self-assess its own compliance with the standards.

Risk-based activity

It is fair to say that few people look forward to an inspection even at the best of times. Being placed under the microscope is rarely comfortable. An inspection generates a huge workload within the organisation being inspected before, during and after the visit. Leaders in organisations which have been downgraded by regulators can be forgiven a degree of schadenfreude when they see the regulator getting a hard time. They may feel tempted to say “we told you so”.

We must, however, recognise that regulators have a difficult job and that the context in which work in the 2020s is especially difficult. The purpose of regulation in healthcare is to ensure that fundamental legal and professional standards of safe care are met; the CQC was never intended to be an improvement agency disseminating best practice and innovation.

Regulation is therefore a risk-based activity. No inspector can visit every single ward or clinic in a hospital or be on site all the time, so they need to focus their efforts on areas where it is most likely that fundamental standards are being breached and the risk to patients is more severe.

The NHS works in an environment where what was once unacceptable – such as corridor care and waiting more than 12 hours to be admitted from an emergency department – is increasingly normalised. When red lights are flashing all over the dashboard, it is hard to know which one needs to be checked out first and which risk is the greatest.

There are also a number of practical difficulties facing the CQC and other public service regulators. Most incorporate an element of peer review into their methodology. An example would be CQC’s specialist advisers. These are senior clinicians or managers with day jobs in healthcare who join CQC inspection teams for short periods to provide practical expertise about specific aspects of healthcare. Many trusts may no longer release senior colleagues to participate in this work because their own services are under such pressure.

Regulators also rely on statistical benchmarking data to flag up issues of concern which they must investigate, but in the public sector this data is not always available or might not be accurate or meaningful for a variety of reasons. The tendency to merge NHS trusts into ever-larger organisations in pursuit of economies of scale also complicates the task of regulating them. It is harder to get to know and to rate a multi-site trust of 15,000+ staff than a single local hospital.

Last line of defence

Amid the CQC’s well-publicised difficulties, there have been siren calls for its abolition, or at least questions about whether it needs to exist in its current form. The idea may be superficially appealing to hard-pressed healthcare leaders but it comes with risk. Regulators have a vital role in ensuring that organisations provide safe, effective services in line with laws and regulations. They are the last line of defence, after organisations’ own quality and assurance processes and their own boards.

The dangers of de-regulation can be clearly seen in local government. In 2013 the Audit Commission, which oversaw councils’ finances and governance, was abolished by the coalition government. Over the last decade several major local authorities have got into grave financial difficulties, partly due to the impact of austerity imposed from the centre, but also due to their own ill-advised commercial investments and a lack of grip and control. In the absence of a national watchdog, the alarm was not raised, and action was not taken to deal with a slowly developing but entirely foreseeable crisis, until it was too late.

However, regulators may well need to change how they work in some cases. Also, organisations which are regulated need to change how they interact with the regulator.

Regulators need to show consistency, objectivity and transparency. There is an argument to be had, worthy of a separate article, about whether one-word judgements such as ‘good’ or ‘inadequate’ are meaningful and can ever capture the complexity of a large public sector organisation. But ‘good’ in one organisation should look similar to ‘good’ in another. There should be clear, published guidance, which includes worked examples, about what good or outstanding look like and how they differ from average or poor-quality service. This is not to say that regulators’ priorities, and the yardstick they use to assess against those priorities, cannot change. As new issues arise in a sector, regulators will rightly change their focus – for example, there is more emphasis on equality, diversity and inclusion nowadays, which reflects the importance of this issue in wider society. When changing focus, they need to be explicit about what their new or adjusted priorities are.

Building relationships

Last but not least, they need to enter into dialogue with those they regulate and listen to what they have to say. Rightly or wrongly, some public sector leaders see their regulators as inflexible, unreasonable or inhabiting an ivory tower far removed from those struggling to deliver and manage public services on a day-to-day basis. For regulators, changing this perception means going out of their way to demonstrate sound judgement that takes into account the context in which those who they regulate are working – a context that is far from an ideal world.

Organisations that are regulated should also change their own approach. To start with, boards need to accept the limitations of the assurance that a regulator can provide. A good analogy is to think of an MOT test or car service – the test tells you that your vehicle is roadworthy at the time when it is done, but it does not necessarily prevent you from finding yourself stranded at the side of a motorway six months later with the dashboard lit up like a Christmas tree. It also doesn’t tell you whether the vehicle is functioning at peak performance, just whether it works or not.

Boards should be very wary of building all their internal control and quality assurance processes around regulatory requirements, because this is a way to achieve compliance, rather than excellence and continuous improvement. They must also recognise that no regulator or inspector can ever be a substitute for proper systems of performance management and assurance within the organisation itself. It is the duty of management and the board to make sure these are in place.

Finally, organisations do need to ensure that they are familiar with the regulatory standards that apply to them, keeping abreast of any changes in guidance or legislation, and that they gather and review evidence which indicates whether those standards are being met.

Reading recent inspection reports from other organisations provides a good insight into regulators’ thinking. We are always surprised how few organisations do this as a matter of routine. Executive management should always be proactive in cultivating good, open working relationships with the regulator.

Find out how GGI can help you work with your regulator, whichever sector you work in.