The Academies Financial Handbook is updated annually by the Department for Education and the Education and Skills Funding Agency; it contains a number of governance requirements for academy trusts.
The Care Act 2014 (the Act) is the single most important piece of law effecting social care in over 60 years and much of the Act, as well as related regulations, will come into force on 1 April 2015. It will have a significant impact on the sector; in very broad terms it:
- brings together in one place various other legislation, policy and legal decisions;
- modernises the language and concepts underlying the law in this area; and
- introduces a number of new responsibilities on commissioners and providers of care.
The New Regulatory Regime
A key focus for charitable care providers will be the new regulatory framework which is being introduced alongside the Act. The changes will apply to all registered providers of adult social care from 1 April 2015, will be administered by the Care Quality Commission (CQC) and include:
- a new set of 11 Fundamental Standards of safety and quality below which care should never fall;
- a statutory Duty of Candour which set outs the honest and open approach providers must adopt where something goes wrong with a service; and
- a Fit and Proper Person test for directors and others in positions of authority to make such individuals personally responsible for the care provided by an organisation in which they hold office.
These statutory duties will be implemented in conjunction with the new, tougher CQC inspection regime (based on Key Lines of Enquiry) and rating system (outstanding, good, requires improvement and inadequate). Charities providing care will need to act quickly to ensure their current systems stand up to scrutiny in light of these extensive regulatory reforms. Trustees are likely to be quick to note that some breaches of the fundamental standards are criminal offences and the risk of prosecution is significantly higher than under the previous regulatory regime.
With so much change on the agenda, it is a daunting time to be a trustee of a social care charity. As charities wrestle with the opportunities and challenges presented by the Care Act they will want to be sure the CQC would consider them “well led”. With regular media stories highlighting examples of poor quality care, trustees are increasingly seeking assurance that their organisation is not going to be the next big story and that they are playing an appropriate role in ensuring the delivery of high quality care. The finance team will also have an eye to the impact of the charity’s CQC rating on occupancy rates and the knock-on effect on the charity’s financial health.
So what should the board be doing?
Care providers vary significantly in their approach to involving boards in setting up systems to ensure the delivery of high quality care. Surprisingly, the quality of the service is rarely a routine element of board meetings with the scrutiny of the operational team often getting much less time than finance or business development. In our experience the following issues are likely to require consideration in any routine review of quality:
- Is quality of care overseen by a dedicated committee with appropriate and up to date terms and reference?
- Is there a plan, approved by the board for care quality across the organisation?
- How are concerns about care quality reported to the board? Is the information presented in a manner that is easily understood by the board (such as Key Performance Indicators or traffic light reports)?
- Does the board have the opportunity to meet key employees so that they can be appropriately challenged on the information given to the board? For example, if the board is given figures for complaints from service-users are they also able to challenge staff on the reasons for those complaints and how they were resolved?
- What systems are in place for internal auditing of the quality of care? Are outcomes and trends reported to the board and recommendations implemented?
- Does the board receive any external reassurance in the form of an independent opinion on the organisation’s arrangements for governing care quality?
- Are arrangements for involving service-users in the governance of the organisation effective? Many of the not-for-profit providers we work with have extensive arrangements for involving service-users and, where necessary, for supporting those service-users to ensure that they are able to contribute effectively.
- Larger providers with federal structures may need to review the relationship between member bodies to ensure care can be delivered at a consistent level of quality for a competitive cost, given the increasing need to deliver services across larger geographic areas (which may involve collaboration between members) and the impact of local failure on the organisation as a whole.
- Where the charity has a group structure, is the relationship between different members of the group structured to manage conflicts of interest?
- Funding restrictions inevitably impact on the quality of care. As funding constraints become ever more apparent, the board may want to consider alternative ways of monitoring the profitability of particular services and consider whether resources should be focused on more sustainable services. Quality comes at a cost and the damage done by bad publicity arising from a safeguarding event can easily outweigh the cost of not pursuing a contract.
- Charitable providers may be able to reduce costs and facilitate a move to more suitable premises by reviewing the use of property held as ‘permanent endowment’. The Charity Commission has recently encouraged charities to review their assets in this way to ensure that they are used effectively.
Charitable care providers should also ensure that the board of trustees are aware of the new regulatory approach taken by the Charity Commission, as well as the new CQC regime. The willingness of the Charity Commission to ‘show its teeth’ as a regulator has been demonstrated by the number of recent statutory inquiries it has opened. The Chief Executive of the Commission Paula Sussex recently said “the Charity Commission will be quicker to use its regulatory powers and less likely to allow charities the benefit of the doubt…” Even where other regulators are involved, the Commission has shown a willingness to get involved to assess whether the charity trustees fulfilled their duties. It has, for example, recently opened an inquiry into St Paul’s School to ‘investigate the charity trustees’ approach to safeguarding and handling of allegations of a sexual nature’.
The impact of a new CQC enforcement regime is already being felt and the pressure to be seen by CQC to be performing well is only going to increase.
Care providing charities continue to adapt to the changing environment by developing new skills and services, exploring commercial partnerships and engaging more closely with service commissioners. As they do so, their activities become more varied and often more complex. It is essential that standards of governance keep pace.
This article first appeared in the Charity Finance Yearbook 2015.
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