Our lawyers have been engaged in supporting Health and Care providers with their relationships with regulators for many years. Over the last 20 years there has been a steady increase in the regularity and intensity of regulator intrusion into care provision businesses. Whilst those businesses face many of the same challenges and operational issues as other service providers, an important distinction is that care businesses cannot lawfully operate at all, without appropriate registration.
The requirement for registration, and, to maintain registration is a significant barrier to sector entry and a constant concern for the continued prosperity of the business. As a consequence protection of the ‘registration’ should be the prime focus for those responsible for managing and directing care provision.
The maintenance of registration, and, healthy relationships with the regulator are of prime importance to investors and executive directors and must be high on their priority list.
Registration, or, risk to registration continuously will have significant impact on other vital facets of the business. Anything which places maintenance of registration at risk must be regarded as high priority. Even regulatory concerns in services owned or managed by those who have significant interest in the service under consideration, will increasingly cast a shadow over other services even where the link may be seen as tenuous. Even if there is no direct threat to continuation of registration, peripheral issues may be seen to impact on viability: –
- Banking covenants breach
- Insurability (either at all or without excess premium)
- The potential disqualification of managers from holding directorships as a result of regulatory negative reporting.
- Loss of equity / shareholder value
- Unrelated regulatory criticism leading common stakeholders in distinct businesses to terminate or exclude an individual’s participation in those unrelated businesses
Such concerns will increasingly cause adverse social media comment (including relatively uncontrolled comment on review websites) and in the media where sensation always trumps careful factual analysis of accuracy.
Our work over the last 15 years has increasingly seen us having to advise on all such issues. What is common to all such concerns is an assault or prospective assault on the continuation of regulation in good standing, without which there will be, at the least, significant risk to maintenance of business value.
For these reasons, any advice action or published comment by regulators, commissioners, safeguarding team, or others should receive careful attention. It should never be a viable option to ignore criticism on the basis that it will blow over and vanish. With more and more providers, particularly specialist providers, becoming reliant on publically funded care referrals, the risk of being stigmatised and having referral relationships ceased or even reduced must be a very serious agenda item for any board of management. No court will ever order one person to do business with another.
Once a negative stigma becomes associated with any business but particularly a care business, it is very challenging to dispute that stigma. Adverse investor experiences will damage the sector as a whole, if the appetite to invest moves to lower risk sectors.
The Health and Social Care regulator (the Care Quality Commission, CQC) has an increasing arsenal of actions that can be taken. Criticism or even comment is not subject to any rational and transparent decision making review. In practice the regulator supports the inspector who is left to review criticism of themselves. The factors include:
- Inspection Reports (particularly beware the front loaded summaries)
- Service ratings
- Requirement Notices (without statutory basis)
- Warning Notices (in effect stigmatising as being in criminal breach of regulation)
- Conditions of registration (which can seriously impact value simply by being recorded on the certificate of registration)
- Formal enforcement action
- Proposal to cancel, suspend registration or impose conditions
- Formal decision to proceed with such a proposal
- Executive action to impose or remove conditions or to suspend with immediate effect (N.B a proposal to remove a location condition is a service cancellation by any other name).
Formal enforcement action is subject to appeal which is time consuming and costly. Now it is often said that a preferred course is not to challenge the process of negative criticism on the basis that this may appease rather than discourage the regulator. Appeasement is bad as a policy. It involves implicit acceptance of criticism or wrongdoing. An appeaser hopes only to defer catastrophe, accepting that catastrophe is inevitable. However the acceptance of wrong criticism leads to establishment of a growing history of non-compliance upon which the regulator will inevitably rely.
Unsurprisingly, the regulator encourages appeasement by providers as it feeds their policy of never being seen to be wrong.
Unaddressed small criticisms may grow into mighty goals of non-compliance obligations and lead to disaster. Any criticism should be carefully evaluated (and in short order):
- Is it correct?
- Is it fair or exaggerated?
- How can we prove falsehood or overstatement?
- What do we need to do to improve?
- How will we evidence improvements?
- Taking a broader view, what is the gravity of long term risk to the business arising from these allegation and how easily can this be mitigated
Only with these questions answered can a sensible and effective plan to manage the risk be established.
The privilege of being registered, with as little restriction as possible must be seen as a prime goal moving forward. The longer the service provider leaves addressing concerns in the correct way (whatever that is) the more intrusive the ‘crisis’ will become and the more likely it will impact on those other broader issues which underpin all these businesses.
Gain respect by measured and thoughtful reaction which does gain respect and build a foundation for the future; even if this means robust challenge!
Do not appease, as this will inevitably lead to you being eaten by the crocodile and your appeasement acknowledges that, as Winston Churchill observed almost 70 years ago.
Serious principles do not change.
If you would like help with, or advice on, how to deal with the CQC, and any action it is seeking to take against your business please contact our specialist team of solicitors on 0207 317 0340.