Proposed changes by the CQC to its Market Oversight function will create panic and “perpetuate business failure”, a care leader has warned.
Market Oversight was established in April 2015 in the wake of the Southern Cross collapse to ensure the regulator can assist local authorities with their responsibility to provide continuity of care if services were likely to fail.
The authority covers large care home providers that local authorities would find it difficult to replace should they fail, which includes approximately 30% of the adult social care market in England.
Market Oversight covers residential care providers with a bed capacity of at least 2,000, or between 1,000 and less than 2,000 beds, with at least one bed in 16 or more local authority areas, or between a total of 1,000 and less than 2,000 beds, where capacity in at least three local authority areas is more than 10% of the total capacity of these areas.
The new proposals, which were put out for a consultation that closed on 19 October, include notifying local authorities and other bodies such as the Department of Health and Social Care in the event there is a ‘real possibility’ of business failure. The new proposals would also result in notifying the provider’s banks and other stakeholders.
Nythan Smith, solicitor at Ridouts, explains: “The key proposed change in terminology in the Market Oversight guidance relates to notification by CQC to local authorities. It moves from ‘early warning of likely business failure’ to a new lower threshold of an ‘advance warning of the real possibility of provider failure’.
“This may lead to an increase in notifications being made which could result in increased scrutiny and local authorities taking action sooner, including the withdrawal of business. The lower threshold may lead to destabilising providers that might otherwise not have appeared on the radar. This could lead to more providers exiting the market.”
With 37 care homes serving up to 3,000 residents, Advinia Health Care is among the providers under the CQC’s Market Oversight supervision.
While acknowledging the important monitoring role Market Oversight provides, Advinia chair, Dr Sanjeev Kanoria, told CHP the proposals were “draconian”, would have “panic creating effects” and risk “perpetuating business failure”.
Dr Kanoria added: “Local authorities will get nervous and stop putting their residents in the homes and their cashflow will completely dry up so they can’t meet their supplier or payroll commitments.
“So even if there is a 25% likelihood of business failure, Market Oversight can notify all the stakeholders, including the local authorities and the banks, without permission or having any kind of independent objective discussion.
“They required our permission previously, which at least allowed the providers to know what MO was intending, but they now want to do away with this. That will have a major impact on how businesses operate and the chances of them failing as a result of these actions will be disastrous.”
The Advinia chief argued that rather than using notification as a “punishing tool”, the CQC should give providers the “opportunity and time to implement an action plan as soon as they are breaching a sensible industry based objective threshold”, as happens in the banking sector.
“The system needs to function objectively rather than on the basis of probability,” Dr Kanoria argued.
“It should be on the basis of proper evidence. If an organisation has a chance of falling into stress it must have an opportunity to rectify it within proper timeframes with a proper action plan to implement, with the watchdog monitoring implementation. That is the right way that a watchdog can save large organisations so a Southern Cross disaster does not happen again.”
Dr Kanoria said Advinia had given the CQC notice that it would pursue judicial review if the proposals were taken further.
He said Advinia was a “stable organisation” with one of the highest pre-COVID occupancy rates of 92% and was still ahead of the industry average with occupancy at 82%. The care leader said Advinia had successfully incorporated 22 Bupa care homes into its portfolio since their acquisition in February 2018.
Echoing Dr Kanoria’s concerns, Professor Martin Green OBE, CEO of Care England, told CHP that the CQC’s proposals risked “real and unintended consequences” and could “hasten or even cause provider failure”. Martin said the changes could also have a “negative impact on provider relations with CQC colleagues”.
A CQC spokesperson said: “We have consulted with providers on proposed changes to our Market Oversight scheme. We are now considering responses to the consultation which closed on 19th October and we will be publishing our updated guidance in the new year.”