Inspecting Informing Improving
Annual report 2005/2006
Putting patients first: a better experience
of health and healthcare
Amendments to Healthcare Commission annual report 2005/2006
Page 21: The final paragraph should read as follows:
We have also been working with HM Inspectorate of Probation to carry out
inspections of youth offending teams. We have jointly inspected 33 youth offending
teams. Since the YOT inspection program began in September 2003, there has been
some improvement in the availability of healthcare services for children and young
people who offend. However, there is still much work to do. In particular, services
need to be made more accessible for those aged 16 and 17, who are in the age group
that are responsible for the majority of youth crime and the more serious crimes.
Page 22: The first paragraph should read as follows:
In July 2005, we published the second joint chief inspectors’ report into safeguarding
children and young people, which was a joint piece of work with the Commission for
Social Care Inspection, Ofsted and HM Inspectorate of Probation. Following the
publication of this report, we gave evidence in the House of Lords (in October 2005).
We also ensured that safeguarding children featured in the assessment of core
standards in the annual health check, and we have trained our regional staff in
safeguarding children.
Page 38: The sixth dot point on this page should read as follows:
• have been working with HM Inspectorate of Probation to carry out inspections of
youth offending teams
First published in July 2006
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ISBN: 0-10-294148-3
Healthcare Commission
Annual report 2005/2006
Putting patients first: a better experience of health and healthcare
Ordered by the House of Commons to be printed July 24th 2006.
Presented to Parliament by the Secretary of State and by the Comptroller and Auditor General
in pursuance of Section 128(2) and paragraph 10(4) of Schedule 6 of the Health and Social Care
(Community Health and Standards) Act 2003.
A copy of the report has also been provided to the Secretary of State for Wales and the Minister
for Health and Social Services, National Assembly for Wales, pursuant to section 128(3)
of the Health and Social Care (Community Health and Standards) Act 2003.
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2
Healthcare Commission Annual report 2005/2006
Healthcare Commission
Annual report 2005/2006
Contents
Foreword
4
About the Healthcare Commission
6
Our year in brief
10
Promoting a better experience of health and healthcare
12
Safeguarding the public
24
Providing authoritative, independent and relevant information
30
Taking the lead in coordinating and improving regulation
36
Focusing on inequalities, human rights and diversity
40
Building a world class regulatory body
44
Looking ahead
52
Our staffing and financial arrangements
54
Leading the Commission
55
Statement of corporate governance and accountability arrangements
57
Remuneration report
65
Annual accounts
69
The Certificate and Report of the Comptroller and Auditor General
to the Houses of Parliament
78
Healthcare Commission Annual report 2005/2006
3
Foreword
We are pleased to be able to report a successful
second year for the Healthcare Commission,
one in which we believe that we have made a
major contribution to encouraging improvement
in health and healthcare.
4
Healthcare Commission Annual report 2005/2006
In 2005/2006, we fulfilled our statutory responsibilities to Parliament and moved forward with our
commitment to place patients and the public at the centre of what we do.
Over the last year we have firmly established ourselves as a regulator that means business:
a regulator that does not hesitate to take action to protect patients and the public. We have also
earned a reputation as an organisation that listens, is independent and fair. Above all, we are seen
to be an organisation that is making a difference to health and healthcare in this country.
We have achieved this standing by delivering a challenging programme of work. We have introduced
the annual health check – our new system for assessing and encouraging improvements in the
performance of healthcare organisations in England. The annual health check assesses for the first
time whether general core standards (in areas such as safety and focus on patients) are being met
on behalf of patients across the NHS. The feedback that we have already received from the NHS is
most encouraging. At the same time, we have successfully delivered a challenging programme of
registering and inspecting providers of independent healthcare, under an entirely separate statutory
framework. And, we have undertaken a successful programme of consultation to seek views on our
proposals for developing the way in which we will work during 2006/2007.
At the same time, we have carried out several major investigations and published a wide range of
reports, including the State of Healthcare report and the findings of our reviews of cleanliness in
hospitals, obesity in children and the care of older people. A growing number of our reports were
produced jointly with our partners, including the Commission for Social Care Inspection and the
Audit Commission.
We now face the challenges of another year. Within the NHS, there will continue to be reforms,
with policies such as payment by results and choice for patients alongside major structural
change. Financial pressures on the NHS are also likely to grow and we can expect to see the
independent healthcare sector providing more services on behalf of the NHS. In this environment,
it will become increasingly important for us to align our approaches to regulating the NHS and the
independent sector, as through the exercise of choice more NHS patients are treated in the
independent sector.
As an organisation, the Healthcare Commission must continue to deliver our work efficiently,
offering value for money while operating within a constrained budget. And we must meet the
challenges and seize the opportunities that emerge from the government’s current review of
regulation in health and social care.
As always we will remain committed to promoting improvements in the quality of health and
healthcare.
Professor Sir Ian Kennedy
Anna Walker CB
Chair
Chief Executive
Healthcare Commission Annual report 2005/2006
5
About the
Healthcare Commission
The Healthcare Commission exists to promote
improvements in the quality of healthcare and
public health in England and Wales.
6
Healthcare Commission Annual report 2005/2006
In England, we are responsible for assessing and reporting on the performance of NHS
and independent healthcare organisations to ensure that they are providing a high standard
of care. We also encourage providers to continually improve their services and the way in which
they work.
In Wales, our role is more limited and relates mainly to working on national reviews that cover
both England and Wales, as well as our annual report on the state of healthcare. In this role, we
work closely with the Health Inspectorate Wales and the Care Standards Inspectorate Wales.
We are required to pay particular attention to:
Why we exist
Inspecting
To inspect the quality and value for money of healthcare and public health
Informing
To equip patients with the best possible information about the provision of healthcare
Improving
To promote improvements in healthcare and public health
How we work
We work closely with patients, carers, those who use and provide services, and with
the public to maintain our focus on improving their experiences of healthcare.
We promote the rights of all to opportunities to improve their health and to have
good healthcare.
Our approach to assessment is based on the best available evidence and aims to
encourage improvement.
We work in partnership to ensure targeted and proportionate approach to audit and
inspection.
We work locally to build relationships and intelligence about the quality of services.
We are independent and fair in our decision-making and report what we find without
fear or favour.
We are accountable for our actions and for what we achieve in relation to our costs.
Healthcare Commission Annual report 2005/2006
7
About the Healthcare Commission continued
About this report
One of our statutory responsibilities is to present an annual report to Parliament setting out how
we carried out our functions.
Our
Strategic plan 2005/2008 sets out what we aim to achieve, in the form of six strategic goals.
They are:
1. promoting a better experience of health and healthcare for patients and the public
2. safeguarding the public
3. providing authoritative, independent, relevant and accessible information
4. taking a lead in coordinating and improving the value for money of assessment of performance
and regulation
5. promoting action to reduce inequalities in people’s health and increasing respect for human
rights and diversity
6. creating an organisation delivering world class assessment and regulation
This report sets out the progress we have made in delivering these six strategic goals. It outlines
how we have carried out our functions in 2005/2006 and the changes and developments that have
taken place since our last annual report. It provides a monthly summary of our key activities and
achievements and contains our full financial accounts for 2005/2006.
More information about the activities covered in this report, as well as other elements of our work,
can be found on our website
www.healthcarecommission.org.uk.
8
Healthcare Commission Annual report 2005/2006
Healthcare Commission Annual report 2005/2006
9
Our year in brief
Some of our achievements over the last year
April 2005 – March 2006
April 2005
July 2005
• called on the Secretary of State to introduce special
• published NHS performance ratings under the old
measures to safeguard patients using
system (star ratings) for the last time
the maternity unit at Northwick Park Hospital
• launched an investigation at Stoke Mandeville Hospital
• published the findings of our last clinical
• published the findings from our investigation at
governance reviews
Northwick Park Hospital
• promoted the Healthcare Commission at the
• published guidance to the NHS on resolving complaints
Royal College of Nursing conference
better locally
• completed the pilot inspections of joint area reviews
• published the
State of healthcare 2005 report and held
with the Commission for Social Care Inspection,
a high profile event
Ofsted and the Audit Commission
• published findings from the safeguarding
children reviews
May 2005
• published our acute hospital portfolio report and
statistics on day surgery
• published the findings from our investigation at
• published the findings from our survey of patients
Bolton, Salford and Trafford Mental Health Trust
who had suffered a stroke
• held events for registered providers of independent
• published the findings from our review of NHS
healthcare
foundation trusts
• published the results of a clinical audit of violence in
• held 17 regional events to launch our new regional
mental health settings
structure and provide guidance on the annual
• attended guidance on the annual health check
health check
for providers, overview and scrutiny committees and
• published findings from the
Second joint chief inspectors’
patient and public engagement forums
report on arrangements to safeguard children in
• published our
Strategic plan 2005/2008
collaboration with a number of partner organisations
• signed the Welsh concordat
• attended the Primary Care 2005 conference
August 2005
June 2005
• launched our programme of improvement with the
start of three improvement reviews looking into
• Healthcare Commission’s regional structure
substance misuse, tobacco control, and services for
became operational
children in hospital
• published our acute hospital portfolio report and
• published our acute hospital portfolio report and
statistics on ward staffing
statistics on accident and emergency services
• launched our regional teams, at the NHS
Confederation conference
September 2005
• published a leaflet to help people wanting cosmetic
treatment to make informed and safe choices
• published the results of an audit of services for people
with diabetes
• held 18 events in conjunction with the Commission for
Patient and Public Involvement in Health to give patient
and public involvement forums guidance on how to play
their part in the annual health check
• attended the Labour Party Conference in Brighton and
the Liberal Democrat Party Conference in Blackpool.
• published the results from our survey of patients of
primary care trusts
10 Healthcare Commission Annual report 2005/2006
October 2005
January 2006
• launched an investigation at Cornwall Partnership
• launched an investigation at Oxford Radcliffe Hospitals
NHS Trust
NHS Trust
• appointed a team of experts to deliver our new
• published findings from an investigation and a review
responsibilities for the regulation of controlled drugs
into alleged bullying and harassment at Devon
• 100% trusts lodged their draft declaration as part of
Partnership NHS Trust and East Sussex Hospitals
the annual health check by the final date for
NHS Trust
submission
• published our revised race equality scheme
• held the Healthcare Commission staff conference
• held five events with providers of independent
• gave evidence in the House of Lords with CSCI
healthcare
in response to the second joint chief inspectors report
• publishing findings from our investigation at
on safeguarding children (July 2005)
Mid Cheshire Hospitals NHS Trust
• attended the Conservative Party Conference in
Blackpool. This included a meeting with the whole of
February 2006
the Conservative health team
• launched an investigation into services for people
November 2005
with learning disabilities at Sutton and Merton
Primary Care Trust
• hosted a seminar on the future of health and social
• issued a statement on the latest MRSA figures
care regulation
• published
Tackling child obesity – first steps, a joint
• launched a consultation on our Three year strategy
piece of work with the Audit Commission and
for adults with learning disabilities
National Audit Office
• carried out 120 visits and spot checks as part of our
assessment of how NHS organisations were meeting
March 2006
core standards
• launched the
Count me in census 2006, which
December 2005
includes learning disabilities for the first time
• published the results of our head and neck
• launched a consultation on our strategy for engaging
cancer audit
with patients and the public
• published
Living well in later life – a report on services
• launched a consultation on our proposals for
for older people
Regulatory fees for independent healthcare sector and
• published our findings of the care and treatment of
Aligning our assessment of the NHS and independent
Christopher Alder – a joint investigation with the
healthcare sectors
Independent Police Complaints Commission
• published interim findings on
Management and
• launched our consultation on
Developing the annual
surveillance of Clostridium difficile, working in
health check 2006/2007
partnership with the Health Protection Agency
• published our report,
Findings relating to the
• published our
Snapshot of hospital cleanliness in
independent healthcare sector in England 2004/2005
England report
• launched phase 2 of the Concordat with new
• published our findings from the first census of
signatories, a website and a scheduling tool
inpatients in mental health hospitals and facilities,
• held eight events with trusts and local partners to
working in partnership with the Mental Health Act
provide them with the latest information on the
Commission and the National Institute for Mental
annual health check
Health in England
• attended the National Institute of Health and Clinical
Excellence (NICE) conference and NHS Live
• published the first set of joint area reviews of services
for children
Healthcare Commission Annual report 2005/2006
11
Promoting a better experience
of health and healthcare
Our new system of assessing the performance of
NHS organisations was implemented last year and
our programme of improvement reviews is helping
to ensure that trusts continue to improve.
12 Healthcare Commission Annual report 2005/2006
The journey a patient takes through the healthcare system is not as straightforward as it once
was. Many more patients are receiving care and treatment from a combination of NHS and
providers of independent healthcare. Our work must ensure that standards are met, regardless
of who provides the service.
Our key activities in 2005/2006
Engaging patients and the public
Our vision for services in healthcare is shaped by the
needs and views of patients and the public. In December
2005, the Commission launched a consultation on our
national strategy for engaging patients and the public.
The strategy set out our proposals for putting what
“The Government has set itself
matters most to patients and the public at the heart of
the aim of a ‘patient-led NHS’.
our work.
But our health services still
have a long way to go before we
During 2005/2006, we also established a network of
can say that they are really
people (champions), based in the regions, to help deliver
putting patients first. Being an
this strategy. We trained our own staff on why it is
NHS patient is too often a
important to engage patients and public, as well as the
frustrating experience. Services
most effective ways to do it. We worked closely with
can seem fragmented and
patient and public involvement forums and overview and
seem to be designed more to
scrutiny committees, to help them understand and get
suit the needs of those
involved in the annual health check. We ran a series of
providing them than those
workshops, which brought together clinicians, patients
using them. People want better
and the public, to consider how best to develop the
access to services. They also
system in the future.
want to understand what
doctors tell them and to be
We have established two test sites, in the south west
treated, and spoken to, in a
and Bradford areas, to work with local patient-led and
caring manner. They need more
community based groups to develop and test local
comprehensive information
models for effectively engaging patients and the public.
about their health, appropriate
Working with the University of Central Lancashire, we
involvement in the decisions
have established our arrangements for reaching ‘seldom
about their care and advice on
heard’ groups.
how to look after themselves
when they leave hospital.”
These activities are having an impact on our work in
many ways. Feedback from events and forums are
Professor Sir Ian Kennedy
shaping the ongoing development of the annual health
Chair, Healthcare Commission
check – particularly our approach for 2006/2007.
Healthcare Commission Annual report 2005/2006
13
Promoting a better experience of health and healthcare continued
They are helping us to increase the involvement of public and patient engagement forums,
overview and scrutiny committees and the voluntary sector, in the annual health check as well as
our other improvement work. We are also using the feedback to develop new and more accessible
information products, particularly about the Healthcare Commission and the performance of local
healthcare organisations. And we are monitoring the effectiveness of all our engagement activity,
to help us to improve the way we engage with patients and the public in the future.
Assessing the performance of healthcare organisations
In July 2005, we awarded performance ratings to all NHS trusts in England, using the star ratings
system. It was the final time that we will rate performance using this system.
The ratings for the 2004/2005 financial year assessed performance in meeting targets that have
become progressively tougher each year. The ratings showed an overall improvement in the
performance of the NHS. There was a rise in the overall number of trusts with the maximum three
stars, up from 146 in 2003/2004 to 165. There was also a fall in the number of trusts with zero
stars, down from 35 to 24. However, almost a quarter of all the trusts failed to achieve financial
balance for the year.
From 2005/2006, we will assess performance using our new system – the annual health check.
The annual health check
On March 31st 2005, we launched our new system of assessment – the annual health check.
During 2005/2006, we focussed on embedding this new system.
The annual health check measures performance by reference to standards set by the Government
as well as targets. The standards describe the overall level of quality that healthcare organisations
are expected to meet across a range of areas. They are more broadly based than the targets
previously used in assessments, providing a richer picture of how healthcare organisations are
performing as well as the experiences of patients when they move between different healthcare
organisations.
The annual health check is designed to help us answer two questions:
• is the organisation getting the basics right?
• is it making and sustaining progress?
To answer these questions, our new system has several components that are assessed and
reported on separately. These components will be brought together to produce an annual rating of
performance for each trust (see figure 1).
14 Healthcare Commission Annual report 2005/2006
For some of the components, we are asking trusts to make a public declaration each year on
how well they consider they are meeting the core standards. We will then check the declarations
against a wide range of information we have gathered through surveillance, including the views of
patients and the public, and follow up where there are concerns.
Figure 1: The framework of assessment
Meeting core
Existing
Use of
Developmental
New national
Improvement
standards
targets
resources
standards
targets
reviews
Getting the basics right
Making and sustaining progress
Annual review and rating
Our aim is that assessment of performance – and the information that is provided by the process –
will promote improvements in healthcare in a range of ways. It will help people to make informed
decisions about their care, promote the sharing of information and provide organisations with
clearer expectations on standards of performance.
The draft declaration process
In October 2005, we asked trusts to make a draft declaration of how far they were meeting
core standards. This draft process provided an opportunity for us to develop a common
understanding with healthcare managers, clinicians and patients, of what constitutes
‘satisfactorily meeting’ the standards.
All trusts made their draft declaration on time. We checked the declarations against other
sources of information, and carried out spot checks at almost 120 NHS trusts.
In the future, trusts will only make a declaration once each year – in May. Performance
ratings will be awarded in October 2006.
Healthcare Commission Annual report 2005/2006
15
Promoting a better experience of health and healthcare continued
The annual health check provides an important assurance that providers of healthcare in the NHS
are meeting a minimum standard of performance. In addition to providing this safeguard against
poor performance, we believe that we should promote improvement by stretching even trusts that
are performing at the highest standard.
In March 2006, we launched a consultation exercise, setting out our proposed approach to
measuring improvement in NHS organisations. This approach is based on the developmental
standards set by the Government, which are designed to drive up the quality of care that
patients receive.
In March, we also announced our plans to change the annual performance rating given to NHS
trusts as a result of the annual health check. Instead of summarising performance in a single
score, we will give trusts a rating in two parts: quality of care and use of resources. NHS trusts will
be given a score for each of these areas on a four-
point scale that ranges from ‘excellent’ to ‘weak’.
This new approach will enable us to provide
people with a clear picture on quality, while being
tough on issues of resources where necessary.
We have commissioned an independent evaluation
of the annual health check. Initial results are very
encouraging, and suggest that NHS trusts rate the
new system positively. In particular, trusts
“We have developed a completely new
way of assessing the performance of
reported that the annual health check gives them
healthcare organisations. This is an
greater ‘ownership’ of improvements in quality
important step in reassuring patients
and will improve the care of patients. Some trusts
and the public that general standards are
mentioned that the annual health check has
met across the NHS. This is a new way of
raised the priority of quality and governance within
working and the early signs have been
their trust, and in particular, how they are linked
encouraging. Every trust in the country
to performance.
made a declaration on time and we
attracted good contributions from
We intend to commission a second stage
representatives of patients and the public.
evaluation to assess whether the costs associated
with the annual health check have settled down
Experience shows that when organisations
have a problem you normally pick up the
and the benefits realised after a year in operation.
signs in several places, which is why it is
important to use different sources of
information. Working this way also means
we can be targeted and proportionate in
our inspection, going in only where
necessary.”
Anna Walker
Chief Executive, Healthcare Commission
16 Healthcare Commission Annual report 2005/2006
Our programme of improvement
We are committed to promoting improvement in health and the quality of healthcare, and have
developed a wide programme of work to achieve this. We have carried out a small number of
reviews, which will provide assessments of performance and outcomes that are more in-depth and
patient centred in a small number of priority areas. There are two types of review – improvement
reviews and the acute hospital portfolio.
Improvement reviews assess the progress made by healthcare organisations in ensuring
continuous improvement in a small number of areas of national priority. The reviews focus on
aspects of health, such as a particular service, group of the population or condition, concentrating
on areas. Each organisation assessed in an improvement review is given an assessment score that
feeds into their annual performance rating. In 2005/2006, we undertook three improvement
reviews: substance misuse, tobacco control and services for children in hospital. We also began
two additional reviews: heart failure and adults’ community mental health services.
Improvement reviews carried out in 2005/2006
Substance misuse
The improvement review into substance misuse was undertaken in partnership with the
National Treatment Agency (NTA). It focused on two related substance misuse themes:
provision of specialist community prescribing services, and planning and coordination of care.
Tobacco control
The improvement review into tobacco control was carried out to assess the contribution
primary care trusts make to reducing the prevalence of smoking in the local population and
to reduce exposure to second hand smoke. The improvement review is part of a wider piece
of work to improve the health of the public.
Services for children in hospital
The improvement review into services for children in hospital was carried out to assess
the quality of healthcare provided to children in hospital. It was based on elements of
the hospital standard in the National Service Framework for Children, Young People
and Maternity.
The Kennedy report into failings in the heart services for children at Bristol found that
children were inappropriately regarded as ‘mini adults’, many staff had not received child
specific training, services were disparate and unconnected and that none took overall
responsibility for children. These themes were taken up in this improvement review.
We will publish the results of these improvement reviews during 2006/2007. They will be
available on our website
www.healthcarecommission.org.uk.
Healthcare Commission Annual report 2005/2006
17
Promoting a better experience of health and healthcare continued
The acute hospital portfolio focuses on our responsibilities to monitor value for money in the NHS.
It consists of in-depth reviews covering the experience of patients, quality of care, clinical
effectiveness and overall efficiency. This year, we carried out three acute hospital portfolio reviews:
ward staffing, day surgery and accident and emergency, and published our results throughout the
summer. We also began reviews into the management of medicines, management of admissions
and diagnostic services. We will report on these in 2006/2007.
Inspecting and registering providers of independent healthcare
We are responsible for registering and carrying out annual inspections of independent healthcare
services in England. Registration confirms that a service is fit for its purpose. Our inspections
ensure that providers of services continue to comply with the relevant regulations and standards.
On March 31st 2006, there were 1,819 independent healthcare establishments registered with us.
During the year, we undertook inspections at 1,370 establishments. The difference in these
numbers is because establishments that were registered for the first time during 2005/2006 will
not be inspected until 2006/2007. This illustrates the continuing growth in registrations.
When we have concerns about the safety of patients and the public, we have the power to issue an
enforcement notice.
Following concerns about the treatment and welfare of adolescents with learning disabilities and
mental health problems at an independent sector hospital, we made an application to seek an
emergency order to close the unit. As a result, the unit was voluntarily closed.
Government policy now enables providers of independent healthcare to compete for contracts and
provide services on behalf of the NHS. By 2008, one in seven non-emergency NHS patients may be
treated in hospitals and clinics that are run by the independent sector. As a result, it is no longer
appropriate to regulate services in the independent sector by different standards from those used
in the NHS.
In December 2005, we launched a consultation on our proposals to modernise the way we
regulate independent healthcare, in particular how we could align this with our system of
assessment in the NHS. We also consulted on our proposed regulatory fees for the independent
sector, as we move towards full cost recovery by 2008.
Throughout January and February we held consultation events across the country. We received
89 responses to our consultation on alignment and 127 responses to our consultation on fees.
There was strong support for the principle of alignment and for deciding the frequency of
inspection according to risk, rather than a ‘one size fits all’ approach. As a result, towards the end
of 2005/2006 we worked with the Department of Health to revise regulations and finalised the
rules for triggering inspection visits. These came into effect on April 1st 2006.
18 Healthcare Commission Annual report 2005/2006
There was also strong support for the principles of our new scheme on fees, particularly the idea
of making the level of fee proportionate to the actual costs of the interventions required. However,
there was uncertainty over the calculation of charges per overnight beds. The final proposals that
we submitted to Ministers included phasing in some changes in shadow form only in 2006/2007.
Surveys of patients and NHS staff
Our national programme of surveys provides insights into the experiences of people who provide
and use NHS services. They help to inform our local assessments, visits and reviews, and continue
to be a key measure of our work.
Our annual survey of NHS staff is the world’s largest annual survey of the healthcare workforce.
It provides employers, policy makers and national regulators with information about the attitudes
and experiences of staff in the NHS. This information is used to assess the performance of NHS
organisations as employers, and to monitor the implementation of national policies designed to
improve the working lives of staff and provide better care for patients. In 2005/2006, all 570 NHS
trusts took part in the survey and responses were received from more than 209,000 employees.
As part of the annual health check, we will use the results of this survey in our assessment of the
performance of NHS organisations in relation to core standards.
In 2005/2006, we completed repeat surveys of people who use local health services, people who
use community mental health services, and emergency and elective hospital inpatients. We also
undertook a follow-up to the survey last year of people who have had a stroke. More than 225,000
people took part in these surveys. Detailed findings are available on our website
www.healthcarecommission.org.uk.
Our health
With an aging population and increasing financial deficits, action to prevent disease and reduce ill
health is a necessity. We have a role in ensuring that healthcare organisations develop and deliver
effective public health programmes, including preventing ill health, reducing inequalities in health
and protecting the population from infectious diseases.
The focus of our work in 2005/2006 has been to ensure that we are assessing the delivery of key
public health issues. These include tobacco control, childhood obesity, sexual health and
accidental injury in those aged under five.
Tobacco control is the single most important public health issue in the UK. We have undertaken an
improvement review to assess how well primary care trusts were managing and delivering tobacco
control programmes and helping people quit smoking. The results of this review will form part of
the overall performance ratings awarded in October 2006.
Healthcare Commission Annual report 2005/2006
19
Promoting a better experience of health and healthcare continued
Another major public health problem is the rise
in childhood obesity. In partnership with the
Audit Commission and the National Audit Office,
we produced
Tackling child obesity: first steps.
This study found that a lack of coordination and strong
evidence of what works at a national, regional and local
level jeopardises the achievement of important national
targets to reduce childhood obesity.
“The best services involve the
people they are there to serve.
We have also carried out a pilot study of sexual health
They must be responsive to their
services. The findings of this will contribute towards the
needs and assist hem to lead
drive for improvement in the collection of data and the
independent, fulfilling lives. The
delivery of sexual health services within the NHS. We also
evidence from this study is that
began work on a national study into preventing accidental
older people are not involved in
injury for children, especially those aged under five, which
the design of services and
will report later in 2006.
consequently services are not
tailored to their needs and
aspirations. It is vital to
Older people
understand and respond to the
specific needs of older people.”
The Healthcare Commission, the Commission for Social
Care Inspection and the Audit Commission have worked
David Behan
together to assess the progress of the NHS and local
Chief Inspector of the Commission for
Social Care Inspection
authorities in meeting the standards set out in the National
Service Framework (NSF) for Older People.
Our joint report
Living well in later life found that services have improved since the March 2001
publication of the national service framework. But this progress was not consistent across the
country and improvement in some areas had been slow. Some particular areas for concern were
the lack of joint vision, strategy and commissioning for older people across health and local
government, and the fact that older people are not involved systematically in planning and shaping
services. The report also found that dignity, respect and privacy on wards can be poor and that
there is a lack of attention to assistance with eating and drinking on hospital wards.
Living with long term conditions
There are an estimated 17 million people who live with one or more long term condition, including
heart disease, epilepsy, arthritis, diabetes and multiple sclerosis. Living with these conditions can
place enormous pressures on individuals and their carers. Providing care for those with long term
conditions accounts for a large volume of NHS resources, including as many as 80% of all GP
consultations and 60% of all hospital bed days.
For many individuals, there will be times when their condition deteriorates and they require
medical intervention. However, it is recognised that there is now an opportunity to provide more
20 Healthcare Commission Annual report 2005/2006
care in settings other than hospitals, and to provide more structured care, which seeks to prevent
admissions to hospital in an emergency. This has been reflected in the recent White paper
published by the Department of Health –
Our health our care our say.
This year we began to develop our work to contribute to promoting improvements in the care of
people with long term conditions. In recognition of the shift away from care in hospital, and towards
more routine and regular care in primary care settings for those with long term conditions, we
launched an improvement review of services for those with heart failure (see page 17). This review
examines how local health services are able to accurately and promptly diagnose heart failure,
and offer effective clinical care, which helps to prevent emergency admissions into hospital.
We also carried out a national review of chronic obstructive pulmonary disease (COPD), which
is due to publish in 2006/2007. This review examines patterns of care provision for those with
COPD and draws upon examples of where services have been developed to reduce emergency
admissions into hospital. We also began to develop an improvement review of diabetes, which will
assess the extent to which those with diabetes are supported to manage their own condition.
We have also run a series of focus groups, where we have met with individuals who have these
long term conditions to ask them where there is greatest scope for improvement in the healthcare
they receive and what aspects of their healthcare are most important to them. We have then used
this information to help us shape the development of our reviews.
Children
Over the last year, our work on safeguarding the welfare of children has developed and expanded.
We have been working closely with nine other inspectorates, including Ofsted, the Commission for
Social Care Inspection and the Audit Commission, on a programme of joint area reviews of services
for children. We provided inspection support to 31 reviews during the year. The programme will
continue to roll out across the 150 local authorities and we will remain involved in the management
and future development of the joint inspection programme.
Early findings from the reviews indicate that the inspections are generally valued by local
authorities and raise the profile of services for children within primary care trusts. They also show
that children and young people generally enjoy good health. They are also identifying innovative
joint agency models for health promotion and opportunities to expand joint working on issues such
as reducing teenage pregnancy.
We have also been working with Her Majesty’s probation service to carry out inspections of youth
offending teams. We have jointly published 60 reports. Since the YOT inspection program began in
September 2003, there has been some improvement in the availability of healthcare services for
children and young people who offend. However, there is still much work to do. In particular,
services need to be made more accessible for those aged 16 and 17, who are in the age group
that are responsible for the majority of youth crime and the more serious crimes.
Healthcare Commission Annual report 2005/2006
21
Promoting a better experience of health and healthcare continued
In February 2006, we published the second joint chief inspectors’ report into safeguarding children
and young people, which was a joint piece of work with the Commission for Social Care Inspection,
Ofsted and Her Majesty’s probation service. Following the publication of this report, we gave
evidence in the House of Lords. We also ensured that safeguarding children featured in the
assessment of core standards in the annual health check, and we have trained our regional staff
in safeguarding children.
Maternity services
Following the publication of standard 11 (maternity services) of the National Service Framework
for Children, Young People and Maternity Services, there have been a number of initiatives and
increased interest in provision of maternity care. As a result of three investigations into maternity
services in three years, we have developed a programme of work to identify those maternity units
in need of support or review. We are also building strong links with key organisations involved in
setting standards, monitoring and improving maternity services across England.
Mental health
Over the past year, we have undertaken several pieces of work on mental health. We published
our results of the first national census of ethnicity among inpatients in mental health hospitals
and facilities in England and Wales (see page 42). On March 31st, the census was repeated, and
extended to include 5000 people with learning disabilities.
We also
• piloted a joint review with the Commission for Social Care Inspection on community mental
health services
• provided policy guidance through project boards and working groups to the Department of
Health on key standards for services for mental health inpatients and the development of
measurable outcomes for people with mental health needs
• worked with other regulatory bodies through the Concordat (see page 37) to ensure that our
respective work programmes complement each other and do not duplicate
• gave evidence to the Disability Rights Commission inquiry into access to primary care services
by people with a mental health need or learning disability
22 Healthcare Commission Annual report 2005/2006
Our work in Wales
The responsibility for the local inspection of, and investigations into, the provision of healthcare by
NHS bodies in Wales rests with the Healthcare Inspectorate Wales. However, we do have certain
responsibilities, which cover England and Wales, relating mainly to national reviews and our
annual state of healthcare report.
We provide a significant programme of national clinical audits, and during 2005/2006 we funded
27 projects covering a wide range of different types of healthcare including cancer, coronary heart
disease, long term conditions, mental health and children and maternity services. The NHS in
Wales has participated in a large number of these audits and will continue to participate in the
programme of clinical audits.
We are also working closely with the Welsh Assembly Government, Healthcare Inspectorate Wales
and the Wales Audit Office and other bodies in Wales to share learning through our national work
in England. A public health workshop was held in Wales in November 2005 to discuss issues of
shared learning from the improvement review of tobacco control and the pilot improvement review
of sexual health. In addition, we have also shared learning arising from our investigations in
England, in particular in maternity services. As a result the Healthcare Inspectorate Wales will be
undertaking a thematic review of maternity services in Wales through 2006/2007.
In December 2005 we published our findings from the national census of inpatients in mental
health hospitals and facilities, which covered England and Wales (see page 42). We also met our
obligations under our Welsh Language Scheme, which sets out how we will implement the Welsh
Language Act.
In May 2005 the main external review bodies inspecting, regulating and auditing health and social
care in Wales published a Concordat (agreement). The Concordat will support the improvement
of services for patients, service users and their carers and to eliminate unnecessary burdens of
external review. The Healthcare Commission is a signatory and, during the year, we have been
working closely with the Healthcare Inspectorate and partners to implement the Concordat.
Healthcare Commission Annual report 2005/2006
23
Safeguarding the public
We have used our legislative powers to take
appropriate action to safeguard patients in the
NHS and independent healthcare sector. We are
delivering our independent system for reviewing
complaints about the NHS. And our reports on
cleanliness and the control of infections in
hospitals were key features of our programme
to safeguard the public.
24 Healthcare Commission Annual report 2005/2006
The annual health check is playing an important role in ensuring that healthcare services are safe
and that healthcare organisations are taking steps to minimise risk.
When things do go wrong, our role is two-fold: to assure the public that we can identify problems
and hold healthcare organisations to account, and to reduce further risks by ensuring that lessons
are learned by the wider healthcare service.
Our key activities in 2005/2006
Investigations and interventions
In 2005/2006, the investigations team received 85 referrals, which were reviewed and followed up
in a range of different ways. In some instances, we announced formal investigations. In others,
visits were made to trusts, some unannounced, to gather further information and a number of
specific recommendations were made to improve services – all of which are monitored to ensure
compliance.
During 2005/2006 we published the findings of five investigations, carried out one follow-up
investigation and began another five.
In May 2005, we published the results of our investigation at Bolton, Salford and Trafford
Mental Health NHS Trust. The investigation resulted from allegations of errors in prescribing,
dispensing and administering controlled medication within the in-patient service at Kenyon House,
Manchester. The investigation found that Kenyon House relied on an out of date policy for handling
drugs, record books were often incomplete and illegible and the unit operated with low staffing
levels and a high use of bank and agency staff. We also made a range of recommendations
including that the trust take immediate action to ensure that the correct amounts of medication
are measured by a qualified nurse and checked by a trained witness and the amount of medication
left on the ward at the end of the day is correctly measured and recorded.
In 2005/2006, we published the results of our investigation at North West London Hospitals
NHS Trust following a number of adverse events in maternity services at Northwick Park Hospital.
Our concern increased following a further maternal death at the trust in April 2005 and special
measures, recommended by the Healthcare Commission, were put in place at the trust as a
matter of urgency. Special measures are designed to generate improvements where other
methods have failed, or are considered likely to do so.
In June 2004, a nurse was convicted of two separate charges of attempted murder of patients
at the Mid Cheshire Hospitals NHS Trust. In January 2006, we published the results of our
investigation into the trust’s systems and procedures at the time of the incidents and subsequently
to establish whether these were appropriate to protect the safety of patients. The investigation
found that poor leadership and management, staff shortages and a lack of learning from
complaints, resulted in the safety of patients being compromised.
Healthcare Commission Annual report 2005/2006
25
Safeguarding the public continued
In January 2006, we published the results of one investigation and one review into allegations
of bullying and harassment by trust staff at East Sussex Hospitals NHS Trust and Devon
Partnerships NHS Trust. These identified significant weaknesses in human resources policies,
procedures and advice, and the lack of a formal structure for dealing with complaints made
by staff.
As a result of all of our investigations we highlight a wide range of recommendations, both at
a national and local level, and work with the organisations involved to develop an action plan
detailing how they will meet these recommendations.
Care and treatment given to Christopher Alder
In December 2004 the Independent Police Complaints Commission (IPCC) requested the
Healthcare Commission’s assistance in investigating the circumstances leading up to the
death of Christopher Alder, who died in police custody on April 1st 1998. The IPCC asked us
to assess the healthcare provided to Mr Alder and the interface between the acute trust,
ambulance service and police.
In March 2006 we published our findings, alongside the full IPCC report. We found that while
staff tried to provide appropriate care, crucial information was not obtained or passed on
which would have helped make appropriate decisions about his care and treatment. We called
on the NHS and police to introduce new safeguards at a national level for handling patients in
accident and emergency units when the police are involved.
The full 400 page IPPC report, described the behaviour of the officers present at the time as
“disgraceful”. Nick Hardwick, Chairman of the IPCC, said: “I believe the failure of the police
officers concerned to assist Mr Alder effectively on the night he died were largely due to
assumptions they made about him based on negative racial stereotypes.”
We are continuing to work with all the parties involved in this investigation to drive forward
the improvements and recommendations outlined in the report.
26 Healthcare Commission Annual report 2005/2006
Management, prevention and surveillance of Clostridium Difficile
The Healthcare Commission and the Health Protection Agency jointly undertook a survey
into the management, prevention and surveillance of
Clostridium difficile – a healthcare
associated infection that can cause diarrhoea, which in severe cases, leads to more serious
conditions and occasionally death. The survey was a self-assessment by trusts.
The interim findings of the trust self-assessment survey were published in December 2005,
and revealed that over one third of trusts surveyed said they were not routinely following best
practice with regards to minimising the risk of this infection, and were unable to routinely
isolate these patients.
The survey was part of our investigation into Buckinghamshire Hospitals NHS Trust, following
earlier outbreaks at Stoke Mandeville Hospital, and provided an important national context.
The findings will also be incorporated into our future programme of work.
As a result of the report the chief medical officer, Professor Sir Liam Donaldson and chief
nursing officer Christine Beasley warned hospitals to review procedures for handling cases
following checks by the Healthcare Commission, the NHS inspectorate and the Health
Protection Agency, who said it was “deeply worrying” that hospitals were not following
guidance.
Dealing with complaints
The Healthcare Commission is responsible for dealing with complaints about the NHS in England
that cannot be resolved locally.
From August 2004 to end of March 2006, 13,412 requests for independent review were received
and 8,205 cases were resolved. In 2005/2006, the number of incoming cases (7577) and the
number of completed case (7374) was broadly similar. However, the Commission is also carrying
a backlog of cases that currently stands at 2,500 cases over six months old.
Who and what were the complaints about?
Of the complaints we received, 34% were in relation to acute trusts, 18% were complaints
about PCTs and 9% were related to mental health trusts. The key themes raised were poor
communication, the quality of how complaints are handled locally, clinical practice and the
experience patients have of the care they receive.
Healthcare Commission Annual report 2005/2006
27
Safeguarding the public continued
During the year we met with trusts who had a high level of referrals of complaints and issued a
protocol setting out our expectations for good handling of complaints. We have worked with the
Parliamentary and Health Service Ombudsman and a range of other interested parties to create a
new standard on managing complaints for the NHS that focuses on resolution rather than process.
Throughout the year we have increased budget and staffing levels, and processes have been
streamlined, in an attempt to increase the efficiency of the work and provide more timely
resolution. In 2004/2005, we allocated £3.1 million to this work and ended the year with a staff of 43.
In 2005/2006, we increased the budget to £7.9 million and ended the year with a staff of 95.
We will publish a full report on our handling of NHS complaints in the autumn. To fulfil our
function of ensuring that registered providers meet the applicable standards, we also deal with
complaints made to us in relation to the independent sector. As with the NHS, the complaint must
first have gone through the establishment’s own complaints process.
Complaints about independent healthcare providers
We have no statutory role in reviewing second stage complaints for independent healthcare
providers and have no powers to direct providers towards a particular remedy for a complainant.
Our approach in dealing with complaints about providers is to focus on ensuring they have
followed their own complaints policy fully. Where possible breaches of regulations are highlighted
by complaints we will follow this up, by inspection where necessary, to make sure improvements
are put in place. In 2005/2006, we received 464 complaints about independent providers, and we
investigated 327. The majority of complaints were related to the treatment and care of a patient.
Safety
Surveys consistently tell us that patients and the public are concerned that healthcare is not as
safe, and our hospitals not as clean, as they would expect.
In late 2004, the Chief Medical Officer asked us to carry out a review of cleanliness and control of
infection in hospitals in England. In response to this request, we decided to undertake a number of
related pieces of work including a longer term national study of healthcare associated infection.
In December 2005 we published the findings from our ‘snapshot’ inspection of cleanliness in
hospitals in England. We undertook unannounced visits at 98 hospitals and found that about a
third of hospitals visited had high standards. However, we found much lower standards in around
20% of establishments, with some NHS mental health hospitals scoring very poorly. For these
establishments, we requested significant improvement action to be undertaken.
Mental Health charity Mind called for an improvement in the “shocking condition” of mental health
hospitals in light of the report. “There must be a change of culture within mental health services
to raise standards of hospital cleanliness. Only then will service users’ basic dignity be ensured.”
28 Healthcare Commission Annual report 2005/2006
In early 2006 we piloted a major review of the prevention and control of healthcare associated
infection (including MRSA). This has been taken forward as a national study starting in April 2006,
with the objective of identifying how patients can be better protected from avoidable infections.
We also contributed to the development of the statutory code of practice on healthcare associated
infections and have started preparing for our new duties in relation to assuring compliance by
healthcare organisations.
Safe management of controlled drugs
In October 2005, we appointed a team to regulate the management of controlled drugs in England.
This was to deliver the new regulatory responsibility we were given following the recommendations
from the Fourth Shipman Inquiry Report.
The role of the team is to provide external assurance of both new and current arrangements for
the monitoring and inspection of controlled drugs in healthcare organisations.
The team has already established a national group of regulatory partners, which includes the
Commission for Social Care Inspection, Royal Pharmaceutical Society, Association of Chief Police
Officers, Home Office and the Department of Health. The group first met in October 2005 and is
meeting quarterly to analyse themes and trends in the management of controlled drugs.
We are also assessing information on controlled drugs in the annual self-declaration forms
obtained from NHS trusts, as well as continuing to monitor the management of controlled drugs
in the independent sector.
Our regulatory responsibility in this area is limited to England, however we have forged strong
links with partners in Scotland, Wales and Northern Ireland to ensure sharing of themes and
trends. Representatives from these countries are attending the national group meeting.
Healthcare Commission Annual report 2005/2006
29
Providing authoritative,
independent and relevant
information
As an information-driven regulator whose remit
covers both the public and private sectors, we are
uniquely placed to offer an authoritative view of the
quality and efficiency of healthcare organisations.
We collect, use and publish information for
healthcare organisations, other inspectorates,
patients and the public. We have begun an
ambitious programme to make our information
accessible, to enable it to be used in many ways.
30 Healthcare Commission Annual report 2005/2006
We aim to be an authoritative and trusted source of unbiased information on healthcare quality
that will enable people to make informed healthcare decisions and be used to drive improvement.
Our information strategy is helping us realise our vision of becoming a risk-based regulator. The
screening methods we devised have helped us analyse the information we collected for the annual
health check so that we can direct our inspection staff where they are most needed. Increasingly it
will allow us to respond promptly when things go wrong.
Over the year we have developed our information systems – notably our customer relationship
management information system that will allow us to integrate all the information we hold on
organisations or individuals – from complaints to inspection reports – so that we hold a single view
of each.
Our key activities in 2005/2006
Making information accessible and available
The Healthcare Commission holds, and has access to, vast amounts of information relating to
health, healthcare organisations, patients and the public. Our aim is to develop more effective
ways of compiling and sharing this information, so that we can provide a richer picture of
healthcare, support staff in their work in providing care, enable patients and the public to make
positive choices about healthcare, and promote improvement.
In December 2005, the Department of Health launched a new patient leaflet,
Choosing your
hospital, which explains how patients can choose where they are treated from a list of hospitals
and clinics in their local area. We worked closely with the Department of Health on this leaflet,
providing information about how each hospital performs against some of the Government’s main
targets. The indicators in the leaflet are the ones that we and the Department of Health felt
mattered most to patients, such as waiting times, cancelled operations, cleanliness and the
results of surveys of patients. The leaflet has been provided to patients through their GPs.
During 2005/2006, we worked with the Society of Cardiothoracic Surgeons of Great Britain and
Ireland to develop a website that provides information on outcomes of heart surgery. The site is
designed to help patients who need cardiac surgery to make informed decisions about their care
and treatment. It provides, for the first time, information about the rates of survival for different
types of heart surgery at different units across the UK. It also provides general information about
different operations, and tells people what to expect after an operation. The site was launched
in April 2006.
The British Heart Foundation said the website “should enable patients to make more informed
decisions.”
Healthcare Commission Annual report 2005/2006
31
Providing authoritative, independent and relevant information continued
We also continue to explore other ways in which we can make our information more accessible
to everyone with an interest in our work. This aim is also linked to our commitment to reduce
inequalities in health and healthcare. We provide all our information and reports in other formats
and languages on request. This includes Braille, audiotape, easy read and minority ethnic
languages. In 2005/2006, we revised our Welsh Language Scheme to ensure that we are
appropriately and effectively meeting the needs of people in Wales.
Publishing our findings
We share information in a variety of ways – in publications or reports, through the media, online or
by e-mail, or through our obligations under the Freedom of Information Act. Sometimes we use
just one channel of information. Often we employ a number of approaches, depending on the
audience that we are trying to reach.
Our website
Our website is the one of our most valuable means of providing up to date information about the
Commission and our work. Updated regularly, it contains a wide range of information about the
organisation and our work programme, access to all of our reports and publications, and links to
a number of other sites.
The number of visitors to our website has increased from 95,596 in March 2005 to 142,285 in
March 2006.
Our monthly electronic newsletter
Our monthly electronic newsletter (known as the e-bulletin) is another important tool that we use
to keep people informed about our work. It is aimed at those working in healthcare organisations,
and provides updates to subscribers about all aspects of our work. The number of people
subscribing to our monthly electronic newsletter has increased over the year – from 11,000 in
March 2005 to more than 15,000 in March 2006.
We have also launched new regional updates for NHS organisations, providing regular information
about our work in their area. And we are developing regular bulletins for other stakeholders –
such as a clinicians and MPs.
Our reports
Our findings are often published in national and local reports. In 2005/2006, many of our major
publications received widespread coverage by the media. Other publications, such as local reports
of inspections and action plans, were distributed directly to providers of healthcare and
communities to help drive improvements in local healthcare services.
Throughout the year, we published a range of national reports, covering topics as diverse as older
people, foundation trusts, mental health and ethnicity, and hospital cleanliness.
32 Healthcare Commission Annual report 2005/2006
Printed copies of our reports are available free of charge by calling our helpline on 0845 601 3012.
Electronic versions are available on our website.
State of Healthcare 2005
In July 2005 we published our second report on the state of healthcare in England and Wales. It
focused on the experience of patients.
The report asked three questions: do people receive effective healthcare services, do they have
enough control over the care that they receive and do some get a better deal from healthcare
services than others? While we strongly praised the improvements that had taken place in some
services, we also said that the NHS had a long way to go to achieve a ‘patient-led’ service.
Freedom of Information
The Freedom of Information Act 2000 came into Force on January 1st 2005, giving people the right
to request information held by public authorities (subject to some exemptions). The implications
for organisations like the Healthcare Commission were significant.
In carrying out our responsibilities under the Act, we aim to comply with two codes of practice –
one on handling requests and the other on managing records. Our policy, in common with many
other public authorities, is to provide information – however, we refuse requests that are over the
cost limit of £450. Instead, we focus on listening to what information patients and the public want,
and providing this in an accessible and meaningful way.
In 2005/2006, we received 352 statutory requests for information. Sixty seven per cent of these
were made under the Freedom of Information Act, 7% were subject access requests under the
Data Protection Act 1998, and 26% were requests involving a mixture of the two regimes.
For 43% of the requests we received, we disclosed the information in full. We partially disclosed
the information for 26% of requests. Where we didn’t disclose information, the most common
reasons were section 40: personal information, section 31: law enforcement and section 22:
information intended for future publication. The Freedom of Information Act sets out 23
exemptions to disclosing information. These range from national security to personal information.
There is also an upper limit of work which public authorities are obliged to do when responding to
a request.
Healthcare Commission Annual report 2005/2006
33
Providing authoritative, independent and relevant information continued
Figure 2: How we dealt with requests under the Freedom of Information Act
50
150
Disclosed in full
1
4
Partially disclosed
4
Entirely withheld
11
Applicant withdrew request
Transferred to another
public authority
42
Refused: appropriate limit
exceeded
Request was for
information not held
Open or pending
(as of April 7th 2006)
90
34 Healthcare Commission Annual report 2005/2006
Healthcare Commission Annual report 2005/2006
35
Taking the lead in coordinating
and improving regulation
We have taken major steps to work more closely
in partnership with other organisations and to
reduce the burden on healthcare providers.
36 Healthcare Commission Annual report 2005/2006
The Department of Health estimates that more than 50 bodies can inspect or audit the NHS
through requests for information. And many more make visits. The Healthcare Commission
is taking the lead in coordinating the activities of the different bodies in reviewing health and
healthcare services, and this underpins the way we work.
Our key activities in 2005/2006
The Concordat
The Concordat is a voluntary agreement between
Signatories to the Concordat
organisations that regulate, audit, inspect or
review elements of health and healthcare in
Full signatories
England. These organisations are working
Academy of Medical Royal Colleges
together to streamline their activities in order to
Audit Commission
support the improvement of healthcare services
Conference of Postgraduate Deans
for the public. Following on from the launch of the
Commission for Social Care
Concordat last year, we have continued to work
Inspection
with other bodies to implement and develop the
General Medical Council
principles of the agreement.
Health and Safety Executive
Healthcare Commission
In March 2006, we announced the addition of ten
Human Fertilisation and Embryology
new signatories to the Concordat and launched
Authority
a new website and web-based tool to allow
Mental Health Act Commission
inspectors to share information on their visiting
National Audit Office
schedules. The aim of the tool is to enable
NHS Counter Fraud and Security
inspection bodies to plan and coordinate activity
NHS Litigation Authority
and prevent unintended clashes of visits. It also
Postgraduate Medical Education
allows providers of healthcare to see when visits
and Training Board
are planned and to hold bodies that carry out
Skills for Health
inspection to account. The website is available at
www.concordat.org.uk. Our regional teams are
Associate signatories
also developing ways of working with other
NHS Confederation
regulators to maximise efficiency.
Council for Healthcare Regulatory
Excellence
We have also been working with organisations
Department of Health
signed up to the Concordat and Ofsted, HMI
Healthcare Inspectorate Wales
Probation plus some charities for children in
NHS Health and Social Care
drawing up a memorandum of understanding.
Information Centre
The Healthcare Commission’s children’s team
Quality Assurance Agency for Higher
also provided inspection support in Wales under
Education
our Concordat arrangements.
Healthcare Commission Annual report 2005/2006
37
Taking the lead in coordinating and improving regulation continued
Working in partnership
In 2005/2006, we collaborated with partner organisations on a series of joint reviews and national
studies. We:
• published a joint report on obesity in children with the National Audit Office and the Audit
Commission
• published a national report on services for older people with the Commission for Social Care
Inspection and the Audit Commission
• carried out an improvement review of substance misuse with the National Treatment Agency
and launched an improvement review of adult community mental health services with the
Commission for Social Care Inspection
• published our findings from the Count me in census in December 2005, which detailed the
results from a national census of ethnicity of inpatients in mental health hospitals and facilities
in England and Wales and launched the 2006 census in partnership with the Mental Health Act
Commission and the National Institute for Mental Health (in England)
• have been working closely with nine other inspectorates, including Ofsted, the Commission for
Social Care Inspection and the Audit Commission, on a programme of joint area reviews of
services for children
• have been working with Her Majesty’s probation service to carry out inspections of youth
offending teams
• are working with Monitor and the Audit Commission to use their information to provide a rating
for the use of resources element of the annual health check
The Healthcare Commission is working collaboratively on our national studies of health and social
care, to avoid duplication and provide a valuable and joined-up response on national priorities.
We published a report outlining our combined programme of national studies for 2006/2007 and
our approach for 2007/2008. It is proof of our commitment to work together to implement
coordinated and complementary programmes.
The Department of Health’s white paper,
Our health, our care, our say: A new direction for
community services, confirmed its intention to merge the Healthcare Commission and Commission
for Social Care Inspection as part of an ongoing wider review of regulation. To prepare for this, we
have begun a challenging programme to align our approaches. The Department of Health has also
confirmed that the Healthcare Commission and the Mental Health Act Commission will merge.
We already work closely with both the Commission for Social Care Inspection (CSCI) and the
Mental Health Act Commission, and will continue to do so throughout 2006/2007.
38 Healthcare Commission Annual report 2005/2006
In order to prepare for the merger a joint partnership board has been created by the three bodies.
It meets every month to discuss strategic issues affecting the three partner organisations. An
integrated performance assessment group has also been formed between the Commission for
Social Care Inspection and the Healthcare Commission, to manage projects that examine the
experience of users who receive a combination of health and social care services. This includes
groups such as older people, users of mental health services and those with learning disabilities.
Other activities include the development of common methods of review, approaches to joint
planning of work programmes and consideration as to how to develop methods to assess jointly
the commissioning of health and social care.
Healthcare Commission Annual report 2005/2006
39
Focusing on inequalities, human
rights and diversity
We have continued to ensure that the principles of
equality, diversity and human rights are embedded
in all our activities and the activities of those
organisations we inspect and regulate.
40 Healthcare Commission Annual report 2005/2006
There are still significant inequalities in the health sector. When the Healthcare Commission was
established, we said that we would work to make sure that every person receives healthcare
according to their needs, regardless of their circumstances and background.
Our key activities in 2005/2006
During 2005/2006 we set ourselves a challenging agenda to meet our commitments with respect
to equality, diversity and human rights. We appointed a dedicated senior post and a small team to
provide expertise and strategic direction to the Healthcare Commission on equality, diversity and
human rights. We began by publishing our revised Race equality scheme in November 2005.
The scheme outlines how we will promote race equality across all our activities. It incorporates a
detailed action plan based on our corporate priorities. Major activities in the plan are:
• undertaking a project to check trusts’ compliance under the Race Relations Amendment Act
2000 to inform core standards screening and establish a baseline to enable the development of
an improvement review
• leading on an improvement review on race equality in partnership with the Commission for
Racial Equality
• developing a race equality impact assessment system across the organisation, including
training for all senior staff
• establishing a Committee on Equality and Human Rights to monitor progress against the
actions in our race equality scheme action plan and wider equality work
We also began to ensure that all our work streams addressed equality, diversity and human rights.
For example, the inspection guides developed for our core standard based assessments included
specific reference to guidance relevant to equality, diversity and human rights, our survey of
patients for 2004/2005 included analysis by disability, our review of the National Service
Framework for Older People included diverse groups and focused on dignity and respect and our
accessible information project took into account different abilities, disability and the needs of
those people for whom English is not their first language.
We have also established relationships with the Disability Rights Commission and Equal
Opportunities Commission, and begun developing a memorandum of understanding with the
Commission for Racial Equality. This will enable them to feed their information into our process
for assessing core standards, which will enable us to become better at highlighting poorly
performing trusts in relation to discrimination.
Healthcare Commission Annual report 2005/2006
41
Focusing on inequalities, human rights and diversity continued
Count me in
In December 2005, we published the results of the first national census of ethnicity among
inpatients in mental health hospitals and facilities in England and Wales.
The census, which we carried out jointly with the Mental Health Act Commission and National
Institute for Mental Health (in England), has provided a baseline against which we can measure
changes in the provision of mental health services in the future. It is part of the Government’s
wider action plan aimed at improving services for people with mental health problems from black
and minority ethnic communities.
Key findings from the census show that Black African and Caribbean people are three times more
likely to be admitted to hospital and up to 44% more likely to be detained under the Mental Health
Act. They are also more likely to experience seclusion or physical restraint. We need to understand
the reasons for this and then act on them.
The census was repeated on March 31st 2006, but was extended to include an estimated 5,000
inpatients with learning disabilities and to collect information on sexual orientation.
Variations in the experiences of patients
In our race equality scheme, we made a commitment to monitor the experiences of black and
minority ethnic people using services in the NHS. The Department of Health’s
National Standards,
Local Action requires the experiences of black and minority ethnic groups to be monitored by
independently validated surveys. The Healthcare Commission conducts a number of national
surveys of the experiences of patients.
In October 2005, we published a report on variations in the experiences of patients, as reported in
the surveys we conducted during 2003/2004. The report echoed previous findings that black and
minority ethnic groups respond more negatively in some surveys. For example, in the primary care
trust survey, South Asian groups responded more negatively than white responders to access,
environment, relationship and information issues.
The variations we have collected from the experiences of patients from our 2004/2005 surveys is
due to be published later in 2006. It will focus on the effects of ethnicity and, for the first time,
disability on the experience of patients.
42 Healthcare Commission Annual report 2005/2006
Safeguarding the welfare of people with learning disabilities
We are committed to ensuring that the health and healthcare of people with learning disabilities
improves, that they have equal access and rights to health services and that the views of people
with learning disabilities are heard.
We have developed a strategy to address the inequalities faced by people with learning disabilities.
In November 2005, we published a draft strategy for consultation, and liaised with people with
learning disabilities, those who use services, families and carers. We published the strategy in
an easy-to-read format, on audio tape and on CD Rom. We received over 800 responses to the
consultation, most of which were positive about our approach. We are now incorporating
comments into the strategy, and the final version will be published in mid 2006.
In 2005, we commenced an investigation at Cornwall Partnership NHS Trust in response to serious
concerns about the care and treatment of people with learning disabilities and the urgent need to
bring about improvements in the quality of care provided to them. We began to plan a programme
of work as a result of the early findings from the investigation. A number of special measures have
been recommended after the investigation revealed widespread institutional abuse of people with
learning disabilities. The full report has now been published.
In March 2005 we announced that we would be carrying out another investigation into services for
people with learning disabilities, at Sutton and Merton Primary Care Trust.
Healthcare Commission Annual report 2005/2006
43
Building a world class
regulatory body
Over the year we have changed the way the
Healthcare Commission works, making it a
regionally-based organisation with strong links
to trusts and other healthcare organisations.
44 Healthcare Commission Annual report 2005/2006
We have continued to build a strong organisation, which is capable of delivering a challenging
and demanding programme of work, at a time of considerable internal and external change.
Our key activities in 2005/2006
During 2005/2006, the structure of the Healthcare Commission changed from being centrally
based in London to becoming a regionally-based organisation. This has enabled us to develop
local relationships with trusts and organisations. For the first time, it has also seen us using our
powers to assist providers of healthcare services outside of the United Kingdom for example on
the Isle of Man.
Working locally
We developed a new regional structure, consisting of four regions (north, central, south west, and
London and the south east) and offices in London, Nottingham, Bristol, Leeds, Manchester and
Solihull. This regional structure has allowed us to implement and consult widely about the annual
health check. It enables us to understand the local health economy (both NHS and independent),
develop relationships with providers and respond swiftly when there are issues of patient safety.
Trusts and providers benefit from a consistent named contact and a team that has considerable
local expertise.
Figure 3: Healthcare Commission staff by region
55
53
164
Central
London & South East
South East
North
30
South West
466
Healthcare Commission Annual report 2005/2006
45
Building a world class regulatory body continued
During 2005/2006, operational staff in the regions established processes and structures to improve
ways of working. We have developed a business plan, based on corporate objectives, which allows
detailed regional planning and prioritisation.
Figure 4: Healthcare Commission regional offices
North
Central
South west
London and
the south east
Investing in our staff
We have moved forward with our vision of learning and development, to ensure that our staff
continue to “be the best at what they do and aspire to be the best that they can be.” This has
included introducing a system of pay and performance for staff and announcing our commitment
to achieving Investors in People accreditation.
46 Healthcare Commission Annual report 2005/2006
We have focused on building leadership capability. A leadership development programme –
‘Leading Improvement’ – was designed to support our senior leadership team. The programme
included 360-degree feedback, which gave leaders an insight into how their individual behaviour
directly affects peers, direct reports and managers. Each senior leader received coaching to guide
them through the results of the questionnaire, and learning sets were established to ensure
continual development. An emerging leaders programme was piloted, with the aim of recognising
and developing high potential at all levels throughout the organisation.
A competency framework was introduced outlining core behaviours, skills, knowledge and
attitudes that lead to effective job performance at the Healthcare Commission. Linked to the
performance development review, the competencies have provided a constructive model for
staff to discuss how they have achieved their objectives and to help identify areas for personal
development. The competencies also underpin our extensive programme of training (for example,
presentation skills, project management, coaching skills) offered to support individuals in
meeting their objectives.
Staff engagement has also been a priority for investing in our people. A staff conference in October
provided a unique opportunity for all Commission staff to come together. Throughout the year,
we have provided opportunities for staff to have their opinions heard and we are committed to
responding to their concerns.
Figure 5a: Healthcare Commission staff by ethnic origin
33
115
White
Black and
Minority Ethnic
Unknown
620
Healthcare Commission Annual report 2005/2006
47
Building a world class regulatory body continued
Figure 5b: Healthcare Commission staff by gender
246
Male
Female
522
Figure 5c: Healthcare Commission staff by age
23
67
216
Under 25
206
25-34
35-44
45-54
55 and over
Unknown
254
48 Healthcare Commission Annual report 2005/2006
Race equality
Figure 5a shows the differences between the number of employees we have from white
backgrounds and those from black and minority ethnic backgrounds. We are developing a
comprehensive equality and diversity strategy. This will involve consultation across the
organisation and will be finalised by August 2006.
Action on diversity forms an integral part of our vision for the Healthcare Commission, not only in
helping us to reflect the society and communities of which we are a part, but also in improving the
Healthcare Commission’s ability to deliver, through valuing and making the best use of the
diversity of talent in our teams and organisation. In early 2006 we set up an action on diversity
group, chaired by our Head of Operational Development, who is a member of the executive team.
The purpose of this group is to:
• ensure support in the development and delivery of the equality and human rights internal
objectives
• ensure visible leadership commitment and accountability to diversity
• ensure that diversity is mainstreamed and on the agenda at all levels in every part of the
Commission in order to succeed
• ensure effective internal communication channels and facilitation of diversity through the staff
forum and support networks
• oversee and contribute to the development of the strategy, action plan and targets
We will issue our next human resources monitoring report by the end of August 2006. It will
compare 2004/2005 data with 2005/2006 where it is possible to do so, and will highlight any
changes or opportunities for data improvement.
Finance
Figure 6 shows the Healthcare Commission’s income and expenditure against each of our six
strategic goals.
The Healthcare Commission’s income is derived from fees from providers of independent
healthcare, recharges of staff and other costs and grant-in-aid from the Department of Health.
Our full annual accounts begin on page 69.
Healthcare Commission Annual report 2005/2006
49
Building a world class regulatory body continued
Figure 6: Healthcare Commission finance against our strategic goals
Activity
Gross Expenditure
Net
income
£000’s
£000’s
£000’s
Promote a better
Engaging patients and
(7,022)
36,838
29,816
experience of health
the public
and healthcare for
The annual health check
patients and public
Inspecting independent
providers
Surveys of patients
and NHS staff
Our work in Wales
Safeguard the public
Investigations and
(778)
9,251
8,473
interventions
Dealing with complaints
Safety
Safe management of
controlled drugs
Provide authoritative,
Making information
3,503
3,503
independent, relevant
available and accessible
and accessible
Freedom of Information
information
and Data Protection
Take a lead in
Concordat
(290)
2,592
2,302
coordinating and
Working in partnership
improving the impact
and value for money
of assessment and
regulation
Promote action to
Count me in census
832
832
reduce inequalities in
Variations analysis
peoples’ health and
Safeguarding people with
increase respect for
learning disabilities
human dignity
Create an organisation
Regional work
25,321
25,321
delivering world class
HR
assessment and
Staffing
regulation
Grant in aid
(70,332)
-
(70,332)
Total
(78,422)
78,337
85
50 Healthcare Commission Annual report 2005/2006
Healthcare Commission Annual report 2005/2006
51
Looking ahead
In our second year of operation we have achieved
what we set out to achieve and more, firmly
establishing ourselves as a regulator that is making
a difference to health and healthcare in this country.
In our third year, we will work towards achieving
three key objectives.
52 Healthcare Commission Annual report 2005/2006
Our
Corporate plan 2006/2007 sets out what we plan to do in our third year as the Healthcare
Commission. We are determined to make a real difference to the delivery of healthcare and to
promote continuous improvement for the benefit of patients and the public. To do this we will be
focusing our programme of work on three key areas:
• ensuring the basics are in place
• focusing on improvement
• making information more accessible
The climate that we will be working in will continue to be a challenging and ever changing one.
Next year will see us move further along the path of aligning our assessment of the independent
healthcare sector and the NHS. We will implement new schemes on the regulation of controlled
drugs, take responsibility for regulating certain cosmetic procedures in the independent
healthcare sector and monitor compliance with the hygiene code.
The current direction of reform in health and social care will affect us in different ways. There will
be a growing need for us to work with other assessment bodies, a greater focus on
commissioning, greater emphasis on assessment of practice in primary care and a more flexible,
less organisation-focused system of assessment. In addition we expect to build on our work in
assessing ‘pathways of care’.
We will continue to support the Government’s wider review of regulation. We will also continue to
work closely with the Commission for Social Care Inspection, preparing both organisations for the
proposed merger in 2008, undertaking joint projects and aligning services wherever possible.
Meanwhile, we remain strongly committed to the principles and priorities of the programme of
work outlined in our
Strategic plan 2005/2008 and the updated
Corporate plan 2006/2007, which will
be published in the summer. In this, we will seek to promote real improvements in the quality of
health and healthcare for the millions of people who rely on healthcare services.
Healthcare Commission Annual report 2005/2006
53
Our staffing and financial
arrangements
This section of the annual report
covers the following:
Leading the Commission
Statement of corporate governance
and accountability arrangements
Remuneration report
Annual accounts
54 Healthcare Commission Annual report 2005/2006
Leading the Commission
The Healthcare Commission’s Chair is Professor Sir Ian Kennedy. He leads the Healthcare
Commission’s commissioners. Anna Walker, Chief Executive of the Commission, leads a senior
management team of six.
Healthcare Commission executive team (as at March 31st 2006)
Sir Ian Kennedy
Chairman
Anna Walker
Chief Executive
Mick Linsell
Marcia Fry
Jamie Rentoul
Kate Lobley
Lorraine Foley
Stacey Adams
Head of
Head of
Head of
Acting Head of
Head of
Head of
Corporate
Operational
Strategy
Operations
Informatics
Communications
Services
Development
Responsibilities of the chair and commissioners
The chair and commissioners are appointed under the Health and Social Care (Community Health
and Standards) Act 2003 and have the overall function of establishing and maintaining the
strategic direction of the Commission.
The Commission’s management statement and standing orders require the Commission to agree
those matters that it does not delegate. The matters reserved for determination by the board of
the Healthcare Commission are:
• the Commission may decide on any matter it wishes in full session within its legal powers
• establishing and maintaining the strategic direction of the Commission and approval of the
corporate plan of the Commission
• approval annually of plans/budgets and any significant variances thereto in respect of the
application of available financial resources, capital and revenues and the annual report of the
Commission to be laid before Parliament
• receipt of a regular update on policies in place to ensure the effective management of the
Commission’s employees
• approval of and amendments to standing orders, which include the standing financial instructions
• approval of the strategy for risk management for the Commission
• receiving a report on declarations of interest made by commissioners
Healthcare Commission Annual report 2005/2006
55
Figure 7: Commissioners for the Healthcare Commission
Name
Professor Sir Ian Kennedy (Chair)
Khurshid Alam1
Dr Sarah Blackburn2
Jennifer Dixon
Michael Hake1,2
Sharon Hopkins
Professor Bruce Keogh KBE
Nick Partridge OBE2
Professor Kamlesh Patel OBE (until January 2006)
Professor Shirley Pearce (Joint Deputy Chair)
John Scampion1,2
Professor Iqbal Singh2
Paul Streets OBE (Joint Deputy Chair)1
Stephen Thornton CBE1,2
1. Member of remuneration committee at March 31st 2006
2. Member of audit committee at March 31st 2006
More information about our commissioners is available on the Healthcare Commission website
www.healthcarecommission.org.uk.
Register of interests
The Commission maintains a register of interest for commissioners and members of the executive
team. Where any decisions are taken which could give rise to a conflict of interest, the chair of the
meeting ensures at the outset that disclosure is made and the committee member withdraws for
the duration of any discussion of the relevant item. The register is available to members of the
public for inspection at Finsbury Tower and may be accessed through the Commission’s website.
56 Healthcare Commission Annual report 2005/2006
Statement of corporate governance and accountability
arrangements
The Healthcare Commission is committed to achieving high standards of corporate governance,
and applies the provisions of the July 2003 Combined Code (the Code) where relevant and
proportionate to the Healthcare Commission’s role as a regulator and its status as a non
departmental public body.
This statement describes how, during the period 2005/2006, the Healthcare Commission has
applied the relevant provisions of the Code. In addition to the Code, the Healthcare Commission is
subject to a number of other accountability mechanisms.
The chief executive is the accounting officer for the Healthcare Commission, responsible and
accountable for the management of the Healthcare Commission’s funds and assets.
The Secretary of State for Health is answerable to Parliament for the policies and performance of
the Commission. The Healthcare Commission has a formal agreement with the Department of
Health about working arrangements, known as the management statement. Part 2 of the
management statement comprises a financial memorandum specifying the terms on which the
Healthcare Commission receives and spends its funds.
The Healthcare Commission meets the minister for an annual performance review and the chair
and chief executive have regular meetings with ministers, senior policy officials of the Department
and the branch responsible for the relationship with the Department of Health as sponsor of the
Healthcare Commission.
The Commission aims to transact as much of its business as possible in public. Meetings of the
Commission are held in public and include a session during which members of the public and
press can put questions to commissioners and members of the executive team. When there is
business of a confidential nature to be transacted, publicity on which would be prejudicial to the
public interest, the latter part of the meeting is held in private.
Several meetings of the Commission each year are held at locations other than London. The
schedule of forthcoming meetings of the Commission is published on the Commission’s website,
together with agendas and papers for meetings.
The Commission is committed to public consultation on its work programme and key strategies.
The Commission
The role of the Commission is to:
• exercise the Healthcare Commission’s statutory functions and duties
• make strategic decisions affecting the future operating and resourcing of the Healthcare
Commission
• oversee the discharge by the executive management of day-to-day business
• set appropriate policies to manage risks to operations and the achievement of strategic objectives
• seek regular assurance that the system of internal control is effective in managing risks in the
manner it has approved
Healthcare Commission Annual report 2005/2006
57
Membership of the Commission
Arrangements for the membership of the Commission are set out in legislation and regulations.
In addition to the chair, the Commission has fourteen other commissioners. The chair and the
majority of the commissioners must be lay members, in other words they must not be a
healthcare professional or the holder of a paid appointment or office with an NHS body.
One of the commissioners makes the interests of Wales his or her special care.
All commissioners including the chair are appointed by the NHS Appointments Commission.
In relation to the Commissioner making the interests of Wales his or her special care, the NHS
Appointments Commission appoints in consultation with the National Assembly of Wales. In relation
to other commissioners, it appoints in consultation with the Secretary of State for Health.
Commissioners are appointed for a term of not longer than five years.
Professor Sir Ian Kennedy was appointed to be Chair of the Healthcare Commission with effect
from February 1st 2004. His term of office ends on January 31st 2008.
During the year 2005/2006 the term of office of three commissioners came to an end. Michael Hake
and Nick Partridge were reappointed for a further three year term and Professor Kamlesh Patel
did not seek reappointment. During 2005/2006 Dr Sharon Hopkins held the appointment as the
Commissioner making the interests of Wales her special care. There was one vacancy throughout
the year. A recruitment exercise was not successful in finding a suitable candidate. Information on
the term of office of each commissioner is given below.
Figure 8: Commissioners and terms of office 2005/2006
Name
Period of appointment
Khurshid Alam
February 1st 2004 – January 31st 2007
Dr Sarah Blackburn
February 1st 2004 – January 31st 2008
Jennifer Dixon
February 26th 2004 – January 31st 2008
Reappointed March 1st 2005
Michael Hake
February 1st 2004 – January 31st 2009
Reappointed 1st February 2006
Sharon Hopkins
February 1st 2004 – January 31st 2008
Professor Sir Ian Kennedy (Chair)
February 1st 2004 – January 31st 2008
Professor Bruce Keogh KBE
February 1st 2004 – January 31st 2007
Nick Partridge OBE
February 1st 2004 – January 31st 2009
Reappointed 1st February 2006
Professor Kamlesh Patel OBE
February 1st 2004 – January 31st 2006
Did not seek reappointment
Professor Shirley Pearce
February 1st 2004 – January 31st 2008
(Joint Deputy Chair)
John Scampion CBE
February 1st 2004 – January 31st 2007
Professor Iqbal Singh
February 1st 2004 – January 31st 2008
Paul Streets OBE (Joint Deputy Chair)
February 1st 2004 – January 31st 2008
Stephen Thornton CBE
February 1st 2004 – January 31st 2007
58 Healthcare Commission Annual report 2005/2006
The working of the Commission and its committee structure
The standing orders of the Commission set out the rules by which the Commission operates.
They include the Code of Practice for members of the Commission and the standing financial
instructions.
The Commission has adopted a schedule of matters reserved to it for collective decision. It has
also formally agreed arrangements for the discharge of its functions and the terms of reference of
Committees of the Commission, which are reviewed from time to time. Copies of these documents
are available on the website of the Healthcare Commission.
In 2005/2006 the Commission had the following committees:
• Audit committee
• Remuneration committee
• Nomination committee
• Committee on the use of confidential personal information
• Investigations committee
• Advisory group on clinical strategy
• Complaints (quality assurance) committee
Meetings and attendance
During 2005/2006 the Commission met formally in public on seven occasions. On one other
occasion it held a meeting in private and during the year also held two separate informal
discussions of strategy.
Figure 9 shows the attendance of members at Commission and committee meetings during the
year, with attendance shown as a proportion of the numbers of meetings individual commissioners
were eligible to attend.
The chair meets the two deputy chairs between meetings of the Commission. Other commissioners
are informed in order that they may raise matters either via the secretary or via the deputy chairs.
Healthcare Commission Annual report 2005/2006
59
Figure 9: Membership and attendance at meetings of the Commission
and Committees 2005/2006
e)
anc
sion
ee
ormation
ee
sur
ee
sonal Inf
ee
er
sion
ation Committ
ee on the Use of
ee
egy meetings of the
tigations Committ
at
es
Meetings of the Commis
Str
Commis
Audit Committ
Remuner
Nomination Committ
Committ
Confidential P
Inv
Complaints (Quality As
Committ
Professor Sir Ian Kennedy
8/8
2/2
3/3
Khurshid Alam
5/8
2/2
3/3
2/2
1/3
Dr Sarah Blackburn
6/8
2/2
6/6
7/9
2/3
Dr Jennifer Dixon
5/8
2/2
Michael Hake
8/8
2/2
4/5
3/3
3/3
9/9
3/3
Dr Sharon Hopkins
6/8
1/2
1/2
2/3
Professor Sir Bruce Keogh
6/8
1/2
Nick Partridge
7/8
2/2
6/6
5/9
2/3
Professor Kamlesh Patel
2.5/6
1/2
1/3
Professor Shirley Pearce
5/8
0/2
2/2
John Scampion
6.5/8
2/2
5/6
2/3
8/9
3/3
Professor Iqbal Singh
5/8
2/2
0/1
2/2
3/9
1/3
Paul Streets
7/8
2/2
3/3
2/3
Stephen Thornton
6/8
2/2
3/6
2/3
1/2
Note: Bold typeface indicates that the Commissioner was the Chair of the Committee.
Independent of commissioners and declarations of interest
The chair had no other significant commitments during the year.
The Commission is satisfied that the commissioners are independent of Healthcare Commission
management and free from any business or other relationship which could materially interfere
with the exercise of their independent judgement, notwithstanding in some instances a regulatory
connection between the Healthcare Commission and the commissioners who are employed by
organisations regulated by the Healthcare Commission. The Commission recognises that conflicts
of interest can arise for all commissioners, and has arrangements in place to handle any conflicts
that might arise in the consideration of Commission business.
Declarations of interests of commissioners are available on the website of the Healthcare
Commission.
60 Healthcare Commission Annual report 2005/2006
Effectiveness of the Commission
The Chair conducted individual appraisals with all commissioners during the course of winter
2005/2006. The Commission instituted in early 2005 a review of its effectiveness, led by an external
consultant. The review reported in May 2005. A programme of action was undertaken to introduce
changes to the schedule of meetings of the Commission, the structure of agendas and
arrangements for ensuring the timeliness of papers.
Committees of the Commission
All committee members are appointed by the Commission. Membership and attendance at
meetings of Committees are shown in figure 9. During the year, one new committee was
established. In November 2005 the Commission agreed to establish the equality and human rights
committee but this did not meet during the year. The complaints (quality assurance) committee
met for the first time in August 2005.
Audit committee
The key functions of the audit committee are to advise the Commission on the adequacy and
effective operation of its systems of internal controls and hence the quality of financial and other
reporting of the Healthcare Commission.
The audit committee carries out its work by reviewing and challenging the assurances which are
available to the accounting officer, the way in which these assurances are developed, and the
management priorities and approaches on which the assurances are premised.
Specifically, the audit committee provides advice by:
• review and oversight of the preparation of annual accounts for the approval of the Commission
• review of the Healthcare Commission’s systems of internal control and risk management
• monitoring of the effectiveness of the internal audit function and of the relationship with and
between internal and external auditors
The Chair of the Audit Committee since February 6th 2004 has been Dr Sarah Blackburn.
The chief executive, head of finance, head of corporate services, external auditors and internal
auditors are invited to attend all meetings. At each meeting during 2005/2006 the Committee had
private meetings with the external auditors and the internal auditors without management
present. In addition, the Committee met in private with the senior executives only.
The audit committee met on six occasions during 2005/2006 and made regular reports to the
Commission on its activities.
Financial statements
The audit committee formally approved the Healthcare Commission’s accounts for 2005/2006.
It considered reports on the Commission’s funding and budget, and monitored month-by-month
expenditure against budget.
Internal control and risk management systems
The audit committee commented and advised on the statement of internal control, which was
signed by the chief executive, and approved the standing financial instructions.
Healthcare Commission Annual report 2005/2006
61
Risks related to key aspects of the Commission’s activities, such as the intelligent information
management system (IIMS) were explored and continue to be monitored.
External audit
The external auditor of the Healthcare Commission is the Comptroller and Auditor General.
During the year the audit committee received reports on the interim and final audits from the
external auditor and sought assurance from the executive that issues raised would be handled in
an appropriate and timely way.
The head of external audit has the right of direct access to the chair of the committee.
The committee ensures that the Commission’s financial statements comply with best accounting
practice and relevant accounting standards, Department of Health and HM Treasury regulations
and requirements, and reviews the consistency of accounting policies both on a year-to-year basis
and across the organisation.
The Commission’s external auditors did not provide additional services to the Healthcare
Commission during 2005/2006.
Internal audit
The Committee recommends to the Commission the appointment of the head of the internal audit
function or the appointment of suitably qualified contractors. During 2005/2006 South Coast Audit
delivered this function at the Healthcare Commission, following its success in a competitive
tendering exercise the previous year.
The Committee considers and approves the terms of reference and remit of the internal audit
function, and agrees the planned programme of audits and any additions to the programme.
In 2005/2006, the focus for internal audit work was the areas of principal risk agreed with senior
management.
The Committee ensures that internal audit has the necessary access to information to enable it
to fulfil its mandate. The head of internal audit has the right of direct access to the chair of the
committee.
The Commission’s internal auditors did not provide additional services to the Healthcare
Commission during 2005/2006.
Remuneration committee
The remuneration committee has responsibility for the effectiveness, integrity and compliance of
the reward protocols and practices of the Commission. A key accountability is the annual review of
the remuneration of the chief executive and executive (second tier) team employed directly by the
Commission.
The committee is chaired by Professor Sir Ian Kennedy.
The chief executive and head of corporate services attend meetings, except when matters relating
to their own reward are being considered. The committee is advised by a member of the human
resources team, and as appropriate, by independent external remuneration advisors.
62 Healthcare Commission Annual report 2005/2006
In 2005/2006 the services of Towers Perrin were retained to advise on the benchmarking of
salaries against the market and the introduction of performance related pay for all employees.
The chief executive and four members of the second tier executive team are employed by the
Commission on continuous employment contracts with a contractual right to receive notice within
the guidelines of best corporate governance. A fifth member of the second tier of executives is
seconded to the Commission from a government department.
Committee on the use of confidential personal information
The Health and Social Care (Community Health and Standards) Act 2003 provides the Healthcare
Commission with the power to require information, including confidential personal information,
from both NHS and independent healthcare providers, when it is necessary or expedient for the
proper exercise of the functions of the Commission. The Act requires the Healthcare Commission
to prepare and publish a code of practice in relation to confidential personal information. The code
of practice was produced and approved by the Commission following a public consultation
exercise. It was published in January 2005.
The Commission established a committee of commissioners to oversee the operation of the code of
practice. The Committee was established at a meeting of the Commission on November 25th 2004.
During 2005/2006, the committee met on three occasions.
The chair of the committee on the use of confidential personal information is Paul Streets.
Members of the committee include the Caldicott Guardian from the Commission. In February
2006, the Commission approved the appointment of an independent member to the committee.
The independent member is not a commissioner nor an employee of the Healthcare Commission.
The committee has approved frameworks for delegated decision-making on the obtaining,
handling, use and disclosure of confidential personal information. These frameworks allow certain
staff to make decisions in specified circumstances. All other decisions must be referred to the
committee.
Further information on the committee, its activities and the code of practice can be found on the
Commission’s website.
Nomination committee
The nomination committee was established at a meeting of the Commission on January 27th 2005.
The chair of the nomination committee is Professor Shirley Pearce. During 2005/2006 the
nomination committee met on two occasions.
The nomination committee provides a clear and transparent process for assisting in the
appointment and re-appointment of commissioners and for evaluating the range of skills and
experience of commissioners. The committee also considers proposals for succession planning
for the Commission and makes recommendations on arrangements for membership of standing
committees.
Investigations committee
The chair of the investigations committee is John Scampion.
During 2005/2006 the investigations committee met on nine occasions.
The investigations committee provides strategic advice and makes decisions in relation to
investigations into potential failures in NHS services in England and in certain cross-border
special health authorities. The committee ensures that appropriate policies and procedures are
in place and oversees the guiding principles for investigations, including the criteria adopted for
Healthcare Commission Annual report 2005/2006
63
deciding whether an investigation is required, recommending any changes to the Commission.
The committee approves cases for investigation by the Healthcare Commission and approves the
terms of reference. The committee may recommend other forms of review where a formal
investigation is not considered appropriate.
During 2005/2006 the committee has, after consulting the chair, approved the reporting of
significant failings within two NHS trusts to the Secretary of State for Health. One of the reported
significant failings was accompanied by a recommendation for special measures. The committee
also monitored the implementation of action plans put in place as a result of its recommendations.
Complaints (quality assurance) committee
It was agreed by the Commission in February 2005 to establish a committee to monitor the quality
of decisions taken in the ‘second (independent) stage’ review process for complaints against the
NHS. The membership of the committee is comprised of the membership of the investigations
committee, and is chaired by the chair of the investigations committee. The head of complaints,
the senior complaints and policy manager and the Healthcare Commission’s legal advisor also
attend. The committee also reviews, on behalf of the Commission, the management and
performance of the complaints function.
During 2005/2006 the complaints (quality assurance) committee met on three occasions.
Annual reporting
The Healthcare Commission is required to report on the following:
• the way in which it has exercised its functions during the year
• the provision of healthcare by or for NHS bodies
• what it has found in the course of exercising its functions during the year in relation to persons
for whom it is the registration authority under the Care Standards Act 2000
The annual report is laid before Parliament and sent to the Secretary of State for Health and the
Welsh Assembly Parliament. The accounts of the Healthcare Commission are audited by the
Comptroller and Auditor General and copies are sent to the Secretary of State for Health.
Disclosure of information to the auditors
So far as I am aware:
• there is no relevant audit information of which the entity’s auditors are unaware
• I have taken all the steps that I ought to have taken to make myself aware of any relevant audit
information and to establish that the entity’s auditors are aware of that information
64 Healthcare Commission Annual report 2005/2006
Remuneration report
Recruitment policy
All vacancies are advertised internally and externally in the press and on the Commissions
e-recruitment website, which allows application forms and equal opportunities monitoring forms
to be submitted electronically.
Commitment to diversity and equality
The Healthcare Commission aims to become an exemplary organisation that promotes diversity
and values difference. A key part of its overall strategy is to create an open and honest working
environment, promoting diversity and encouraging all employees to reach their full potential.
The Healthcare Commission believes that equality of opportunity and freedom from unfair
discrimination are fundamental human rights.
The Healthcare Commission’s long term aim is that the composition of its workforce should reflect
that of the communities it serves.
Equal opportunities monitoring
The Healthcare Commission is committed to equal opportunities. Our policy is to appoint the best
candidate for any post irrespective of gender, ethnic or national origin, race, disability, religion,
sexual orientation, marital status, age or HIV status. To find out if our policies are working we
require details about those who apply to join the Healthcare Commission as part of the application
form. The information given is confidential and enables us to ensure that there is no unfair
discrimination or adverse impact on any group at any stage. Equal Opportunities monitoring data
is separated from application forms on receipt and is not be seen by those involved in the selection
process. The data is used for statistical purposes only and is not reproduced in a way that enables
individuals to be identified. However, for successful applicants, the information provided is stored
on manual and/or computerised files.
Data Protection Act
The Healthcare Commission holds and processes all data in compliance with the Data Protection
Act 1998. The (recruitment) information provided is “sensitive personal data” and requires explicit
consent before the Healthcare Commission can process it. Application forms of unsuccessful
candidates are destroyed/deleted six months after the closing date for the job.
Chief executive
The Chief Executive, Anna Walker, was appointed on a permanent contract on February 1st 2004,
after an internal and external recruitment process. Termination of the contract is by notice of six
months on either side.
The Remuneration Committee determines both increases in pensionable salary determined by
reference to a relevant market, and a performance bonus paid on the basis of performance against
agreed objectives in the range 0 – 15% of the base salary as at March 31st in the performance year.
Membership of the remuneration committee is disclosed on page 62 of the
annual report.
Healthcare Commission Annual report 2005/2006
65
Chief executive remuneration
Chief executive remuneration
Remuneration for year to
Remuneration for year to
31/03/06
31/03/05
£
£
Chief executive
183,370
170,513
Chief executive pension entitlements at March 31st 2006
The chief executive is an ordinary member of the principal civil service pension scheme.
* Accrued benefits
Cash equivalent transfer values (CETV)
Increase in year
Benefits at March 31st 2006
CETV at
CETV at
Real increase in
March 31st
March 31st
CETV
Lump sum
Pension
Lump sum
Pension
2006
2005
£’000 £’000
£’000 £’000 £’000
£’000 £’000
7.5-10 2.5-5.0
182.5-185 60-62.5
1,290
988
60
* Accrued benefits are presented in bands.
Pension benefits at March 31st 2006 may include amounts transferred from previous employments.
Chairman
Professor Sir Ian Kennedy was chair designate on the vesting date of January 8th 2004 and was
appointed by the Secretary of State for Health as chair of the Commission from February 1st 2004
for a period of four years to January 31st 2008. The Chair is paid a salary in line with that of a
High Court Judge.
Chairman’s remuneration
In addition, the chairman was re-imbursed with the cost of travelling to Commission meetings.
These re-imbursements totalled £ 2,743 during 2005/2006 (£4,200 2004/2005). The Healthcare
Commission meets the resulting tax liability under a PAYE settlement agreement. The Chairman
has foregone eligibility to join the Commission pension scheme.
Chairman’s remuneration
Remuneration for year to
Remuneration for
31/03/06
year to 31/03/05
£
£
Chairman
155,404
150,842
66 Healthcare Commission Annual report 2005/2006
Commissioners
Commissioners are appointed for terms of three years following a selection process held by the
Appointments Commission. Remuneration is determined by the Department of Health on the
basis of a two to three day per month commitment.
Commissioner’s remuneration
Commissioner’s remuneration
Remuneration for year to
Remuneration for
31/03/06
year to 31/03/05
£
£
Khurshid Alam
5,855
5,696
Dr Sarah Blackburn
5,855
5,696
Jennifer Dixon
5,855
5,684
Michael Hake
5,673
5,696
Sharon Hopkins
5,855
5,696
Professor Bruce Keogh KBE
5,855
5,696
Nick Partridge OBE
5,855
5,696
Professor Kamlesh Patel OBE
4,879
5,696
Professor Shirley Pearce (Joint Deputy Chair)
5,855
5,696
John Scampion CBE
5,855
5,696
Professor Iqbal Singh
5,855
5,696
Paul Streets OBE (Joint Deputy Chair)
5,855
5,696
Stephen Thornton CBE
5,855
5,696
Commissioners are not eligible to join the Commission Pension Scheme.
In addition, commissioners are re-imbursed with the cost of travelling to Commission meetings.
These re-imbursements totalled £2,373 during 2005/2006 (£7,890 2004/2005). The Healthcare
Commission meets the resulting tax liability under a PAYE settlement agreement.
Executive managers
Treasury guidance (DAO3/00) requires the Commission to provide information on the salary and
pension rights of named individuals who are ‘the most senior managers’ of the Commission.
The term ‘senior manager’ has been taken to mean members of the executive team.
All executive team members were appointed after an internal and external recruitment process
and (excluding J Rentoul) are permanent and full time employees of the Commission. They have
contracts of employment with the Commission requiring that they give and are entitled to receive
six months notice of termination. In the event of early termination contractual entitlements apply.
The remuneration committee determines performance bonus. Membership of the remuneration
committee is disclosed on page 62 of the
annual report.
Healthcare Commission Annual report 2005/2006
67
Executive team remuneration
Executive team remuneration
Remuneration for year to
Remuneration for
31/03/06
year to 31/03/05
£
£
Stacey Adams
91,200
91,722
Lorraine Foley
130,680
122,000
Marcia Fry
132,500
130,000
Simon Gillespie*
156,301
51,805
Mick Linsell
110,450
104,000
* Appointed October 4th 2004, resigned February 8th 2006. Remuneration includes all payments due to the end of his contract.
A permanent appointment to replace S Gillespie had not been made at March 31st 2006.
In addition, Jamie Rentoul provided services as an executive team member whilst employed by the
Department of Health. Salary costs of £145,529 (including pension and employers costs) were
recharged to the Commission by the Department of Health (£71,218 2004/2005).
Executive team pension entitlements at March 31st 2006
Executive team pension entitlements at March 31st 2006
* Accrued benefits
Cash equivalent transfer values (CETV)
Increase in year
Benefits at March 31st 2006
CETV at
CETV at Real increase
March
March
in CETV
Lump sum
Pension
Lump sum
Pension
31st 2006
31st 2005
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Stacey Adams
0-2.5
0-2.5
17.5-20
5-7.5
97
75
20
Lorraine Foley
0-2.5
0-2.5
7.5-10
2.5-5
38
20
18
Marcia Fry
0-2.5
0-2.5
145-147.5
47.5-50
982
780
4
Simon Gillespie**
-
0-2.5
-
7.5-10
136
78
29
Mick Linsell
0-2.5
0-2.5
7.5-10
2.5-5
53
28
24
*Accrued benefits are presented in bands
** Resigned February 8th 2006
Pension benefits at March 31st 2006 may include amounts transferred from previous employments.
Anna Walker CB
Chief Executive
Date: June 30th 2006
68 Healthcare Commission Annual report 2005/2006
Annual accounts
Form of accounts
These accounts have been prepared in the form directed by the Secretary of State for Health, in
accordance with paragraph 10 of Schedule 6 of the Health and Social Care (Community Health and
Standards) Act 2003. These accounts cover the year to March 31st 2006.
Financial results
The financial accounts to March 31st 2006 are the Commission’s second full set of annual accounts
and have been prepared on the basis that the Commission is a going concern.
The Commission’s financial performance for the year is identified within the income and
expenditure account. The Commission’s total income for the year was £78.4m. Expenditure
totalled £78.3m on operational activities and £2.6m on acquiring fixed assets. Income equivalent
to the fixed asset expenditure has been transferred to Government Grant Reserve for release,
as the assets are written off, to the income and expenditure account. The surplus for the year
was £85,000, which has been added to reserves.
Fixed assets
The Commission’s fixed assets at April 1st 2005 comprised refurbishment costs to leased land and
buildings, office furniture and equipment and computer hardware and software, as reduced by
depreciation calculated to release the asset costs to the income and expenditure over their useful
working lives. Asset costs are revalued under modified historic cost accounting.
During the year to March 31st 2006, the Commission acquired assets with a value of £2.6m. These
assets include refurbishment costs at Finsbury Tower and the Commission’s regional offices and
the purchase of office equipment and information technology infrastructure and software.
Research and development
There was no expenditure on research and development during the year.
Charitable payments
No charitable donations were made during the year.
Implementation of the Euro
The Commission has identified the potential impact of the United Kingdom changing currency to
the Euro. The relevant key systems have been identified and an action plan has been drawn up.
Payment of creditors
The Commission’s policy is to pay creditors in accordance with contractual conditions or, where
no contractual conditions exist, within 30 days of receipt of goods and services or the presentation
of a valid invoice, whichever is the later. This complies with the Better Payment Practice Code.
No interest was paid during the year under the Late Payment of Commercial Debts (Interest)
Act 1998.
In 2005/2006, the Commission paid 87% (91%) of invoices, based on volume, and 87% (87%) of
invoices, based on value, within 30 days. These calculations are based on the date of the invoice
and will therefore understate the Commission’s performance as payments are delayed while
confirmation is obtained of satisfactory supply of goods and services.
Healthcare Commission Annual report 2005/2006
69
Auditor appointment
The Comptroller and Auditor General is the appointed auditor of the Commission under the
provision of the 2003 Act, Schedule 6, paragraph 10 (4).
The audit fee for the year was £60,000. (£79,200 2004/2005). The Comptroller and Auditor General
did not undertake any non-audit work during the year.
Post balance sheet events
As a non-departmental public body, the Healthcare Commission is classed as an arms length
body. In October 2003, the Secretary of State for Health announced his intention to review the
Department of Health’s ‘arms length bodies’. On May 20th 2004, the Secretary of State for Health
outlined the first stage of this review. There are 42 separate arms length bodies that employ
22,000 staff, with a combined budget of £2.5bn. The Secretary of State for Health announced that,
by 2007/2008, there would be a 50% reduction in the number of arms length bodies reducing total
expenditure by £0.5bn and staff posts by 25%.
The Chancellor of the Exchequer announced in March 2005 that the Secretary of State for Health
had agreed in principle to come forward with plans to merge the Commission for Social Care
Inspection (CSCI) and the Healthcare Commission into a single body by 2008. This reflects the
increasing joint working between health and adult social care services and is part of a wider
review of regulation in health and social care. Subsequent discussions with the Department of
Health have confirmed this timetable and the Healthcare Commission is meeting regularly with
CSCI to ensure an orderly transition. No further information regarding this merger was available
at the date of signing these financial statements and no financial implications from the merger
have been anticipated in these financial statements
There have been no significant events since March 31st 2006 that would have a material effect on
these financial statements.
Anna Walker CB
Chief Executive
Date: June 30th 2006
70 Healthcare Commission Annual report 2005/2006
Statement of accounting officer’s responsibilities
Under paragraph 10 schedule 6 of the Health and Social Care (Community Health and Standards)
Act 2003, the Commission is required to prepare annual statements in respect of each financial
year in such form as the Secretary of State for Health may determine. The accounts are prepared
on an accruals basis, and must show a true and fair view of the Commission’s state of affairs at
the year end and of its income and expenditure, total recognised gains and losses and cash flow
for the financial year.
In preparing these accounts, the Commission has:
• observed the accounts direction issued by the Secretary of State for Health, including the
relevant accounting and disclosure requirements and applied suitable accounting policies on a
consistent basis
• made judgements and estimates on a reasonable basis
• stated whether applicable accounting standards have been followed and disclosed and
explained any material departures in the financial statements
• prepared the financial statements on a going concern basis
The Accounting Officer for the Department of Health has designated me as the Accounting Officer
for the Commission. My responsibilities as Accounting Officer, including responsibility for the
propriety and regularity of public finances and for the keeping of proper records, are set out in the
Non-Departmental Public Accounting Officer Memorandum issued by HM Treasury and published
in Government Accounting.
Anna Walker CB
Chief Executive
Healthcare Commission
Healthcare Commission Annual report 2005/2006
71
Statement on internal control
1. Scope of responsibility
As accounting officer, I have personal responsibility for maintaining a sound system of internal
control, in accordance with the responsibilities assigned to me in government accounting. The
system of internal control supports the achievement of the Commission’s policies, aims and
objectives, while safeguarding the public funds and assets for which I am personally responsible.
The Commission subscribes to the seven principles of conduct underpinning public life as sent out
by Lord Nolan.
The Commission recognises its responsibilities to ensure that there are robust arrangements for
managing risk and that a formal scheme for identifying, managing and reporting on risk is in place.
There is a funding agreement between the Commission and the Department of Health. The
Commission consults extensively when planning its activities, including consultation with
ministers and includes the risks associated with different courses of action in that consultation.
The Commission also monitors progress against both the activities and risks.
During 2005/2006, I have reviewed documents I considered relevant, including internal audit
reports and papers presented to the audit committee and management information produced
during that period and I have discussed the state of internal controls with the external and internal
auditors, members of the Commission and independent consultants.
2. The purpose of the system of internal control
The system of internal control is designed to manage risk to a reasonable level, rather than to
eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide
reasonable and not absolute assurance of effectiveness. The Commission’s system of internal
control is being developed to identify and prioritise the risks to the achievement of its policies, aims
and objectives, to evaluate the likelihood of those risks being realised (and their impact should they
be realised) and to manage them efficiently, effectively and economically. The system of internal
control has been in place in the Healthcare Commission for the year to March 31st 2006 and up to
the date of approval of the annual report and accounts and it accords with Treasury guidance.
3. Capacity to handle risk
The Commission has established an overarching governance framework to support delivery of its
policies, aims and objectives. Risk management is integrated into all levels of this framework, as
illustrated in the table below:
Stage
Purpose
Approach to risk
Strategic planning
Identify appropriate strategic goals and
Scenario planning of possible events
objectives
and outcomes
Budget setting
Allocation of resources to support objectives
Identification of contingencies
Operational planning
Identification of activities to be undertaken to
Development of risk register and
promote objectives
business continuity plans
In-year monitoring
Undertaking of performance and financial
Early identification of adverse trends
monitoring using balanced scorecard and
in performance or financial control
budgetary control statements
Risk assessment
With support from internal audit, monitoring
Reiterative approach to ensure rigour
of actions identified through in-year monitoring in risk management processes
as essential to mitigate risk
72 Healthcare Commission Annual report 2005/2006
The Commission’s processes are being designed and developed to:
• establish a policy framework approved by commissioners and the executive team, within which
strategic risks are identified, managed and kept under review
• embed the management of risk and compliance by making it part of the day to day
management processes. Although the executive team collectively own the risks, each strategic
risk is also allocated to an appropriate member of the executive team to ensure that the
management of risk is an integral part of overall management arrangements
• ensure that named managers manage each risk and actively review and report on that risk
• adopt a consistent approach throughout the organisation
• encourage staff to identify and manage risk positively in support of delivering the objectives of
the Commission
• keep the system of risk management under regular review to ensure it is best matched to the
organisation and effectively embedded
4. The risk and control framework
Consistent with the recognition of risk at a strategic level, the Commission has developed a risk
register to monitor where risks may arise and how they are mitigated. In the register, risks are
identified at an operational level and consolidated to identify themes arising across the
organisation. The executive team and the Commission review the risk register for completeness.
The audit committee reviews the application of the risk management processes.
Management of risk is not seen as the preserve of any one part of the organisation. While the
commissioners and chief executive are ultimately responsible for any events which either may not
have been foreseen or which were not properly managed, all members of the organisation must
see themselves as responsible for anticipating and managing risk effectively.
The Commission has continued to review and strengthen its framework for control during the year.
We have adopted the Treasury’s framework for assessing the management of risk in public bodies.
The principal features and key controls now include:
• a formal system of governance comprising of standing orders and standing financial instructions
which support and regulate how the Commission conducts its business. This includes a schedule
of delegation showing which functions are retained for determination by the commissioners and
which are delegated to the chief executive
• an organisational structure that supports clear lines of communication and accountability
• business strategies that are approved by the Commission and are subject to consultation with
stakeholders of the Commission
• clear processes, so that the risks that are identified fit into an overall structure for risk
management
• the introduction of management and reporting of key indicators of performance against a
balanced scorecard
Healthcare Commission Annual report 2005/2006
73
5. Review of effectiveness
As accounting officer, I have responsibility for reviewing the effectiveness of the system of
internal control. The audit committee advise me on the implications of the result of my review
of the effectiveness of the system of internal control and comment on the plans to address
weaknesses and ensure continuous improvement of the systems. My review of the effectiveness
of the system of internal control is informed by the work of members of the executive team within
the Commission who have responsibility for the development and maintenance of the internal
control framework, the internal auditors, comments made by the external auditors in his
management letter and other reports and work commissioned from other external review agencies.
The process that the Commission has maintained to ensure internal control during the year
includes both the management of risk and other sources of assurance, including internal audit.
The Commission’s internal audit function has regular access to myself, the executive team and
the chair of the audit committee and is invited to every meeting of the audit committee.
The respective responsibilities are set out below.
Audit committee
The audit committee met six times in 2005/2006. Its terms of reference are:
• to oversee production of the Commission’s annual accounts and to recommend them to the
Commission for approval
• to scrutinise and review:
- the Commission’s financial and accounting policies, practices and processes, including
information and communication technology
- the internal control systems including internal audit, in particular to appoint the internal
auditors, approve their work plan and review their reports and the responses of management.
The committee receives the annual report from the internal auditor summarising the work
done in the period, including a review of ongoing work implementing recommendations
from audit
- the Commission’s assessment and management of risk. It considers issues of risk in the
course of its meetings, but formally reviews the significant risks that have been identified
twice a year
- the results of the external audit by the Comptroller and Auditor General including their
management letter and the response by management
- any aspect of the work of the organisation and to report as appropriate
The membership of the Audit Committee at March 31st 2006 was:
Dr Sarah Blackburn (Chair)
Michael Hake
John Scampion
Stephen Thornton
Nick Partridge was also a member until February 2006. There is currently one vacancy being
recruited from among the commissioners under the remit of the Commission’s nominations
committee.
74 Healthcare Commission Annual report 2005/2006
The executive team
This team has responsibility for overseeing risk management within the Commission. The culture
of risk management within the Commission is determined at a strategic level. The executive team
reviews all significant risks that have been identified and ensures that they have been fairly stated.
It also satisfies itself that the less significant risks are being actively managed by relevant
managers, with the appropriate controls in place and that these controls are working effectively.
In my regular meetings with individuals of the executive team, I seek assurance from them that
they are taking individual and corporate responsibility for the management of risk in their
respective areas of work.
Internal audit reports are addressed to the appropriate member of the executive team and
significant issues are brought to the team’s attention.
Internal and external audit
The Commission has an internal audit service provided by South Coast Audit. The relevant
manager reports to the audit committee and accounting officer regularly to standards defined in
the Government Internal Audit Standards. Those reports include the internal auditor’s independent
opinion on the adequacy and effectiveness of the Commission’s system of internal control together
with the recommendations for improvement. The Commission also encourages and endorses
liaison between internal and external audit to achieve a more effective audit, based on a clear
understanding of respective roles and requirements.
The external auditor, the Comptroller and Auditor General is appointed under the 2003 Act and
the National Audit Office regularly comments on governance.
Both internal and external audit are invited to all Audit Committee meetings. In recognition that
the Commission works in an increasingly complex environment, we have increased the number of
internal audit days within the annual audit plan in successive years.
Internal audit opinion
Our internal auditors expressed an opinion in June 2006 based on work undertaken during the year
to March 31st 2006. Their overall opinion was that a satisfactory level of assurance could be given,
as there is some risk that objectives may not be fully achieved. Slight improvements are required
to enhance the adequacy and/or effectiveness of risk management, control and governance.
In reaching this opinion, they have considered the work undertaken during the year and have
confirmed that whilst there were no significant breakdowns in internal control highlighted, a
number of weaknesses were identified. The following factors outlined below were taken into
particular consideration.
There are several developments that were still required to refine risk management and enhance
the risk maturity of the organisation. These include consideration of having in place a risk
management strategy that succinctly defines how risks will be managed and detailing how risks
will be identified, evaluated etc to facilitate a consistent approach organisation wide.
A detailed review of the purchase order processing system was undertaken during the year,
following concerns from management as to the adequacy of the control environment. This
identified an ongoing risk of potential breaches of EU regulations, particularly in relation to
consultancy contracts by repeated renewal.
Healthcare Commission Annual report 2005/2006
75
Based on the work done, they were satisfied that the processes for drawing down funding from the
Department of Health were robust, adequate and effective. However, an issue did arise regarding
the confirmation of overall grant-in-aid funding during the year, which highlighted the need for
clarity and evidence.
While investigations and complaints are followed up, they noted that the Commission currently
does not have in place a structured mechanism/system to identify trends and learning from
outcomes of investigations and complaints and action is in hand to deal with all of these issues
fully and disseminating these to the NHS. This is fundamental to the achievement of the
Commission’s objective of safeguarding the public.
A review of the customer relationship management system, using the OGC3 methodology,
concluded that this project was at Amber at this point in the OGC gateway cycle, and the
procurement of the Seibel product was appropriate to support the Commission’s business needs.
The customer relationship management system is, in our opinion, a significant IM&T support
system for the Commission who are committed to a fully effective implementation so that the full
benefits of the system can be realised across the Commission.
Other review agencies
To support the development and improvement of the Commission’s system for identifying the costs
of its independent sector healthcare work, KPMG were retained to review current arrangements
and recommend an approach. This work was completed during 2005/2006 and the recommended
approach was utilised in the fee consultation paper issued in December 2005.
In June 2005 the Inland Revenue commenced reviewing the Commission’s compliance with
Inland Revenue regulations regarding payments to self-employed contractors since April 1st 2004.
The review was substantially completed by March 31st 2006 with the Inland Revenue satisfied on
the arrangements in place to ensure full compliance. A small number of PAYE and NIC under
payments identified during the review are being recovered from the contractors concerned under
the terms of their contractual arrangements with the Commission.
In order to assess the adequacy of the Commission’s financial systems, a review was
commissioned in 2004/2005 from PriceWaterhouseCoopers. The audit committee and the
executive team considered the report and a plan was developed to achieve the recommended
improvements to the system, primarily to allow the provision of additional financial information
during 2005/2006. Further improvements in the financial information systems will be achieved
in 2006/2007.
Grant Thornton LLP are engaged to provide ongoing support to the development of risk recording
and management across the Commission.
Future developments
The Commission has taken steps to ensure that the essential elements of effective control and
risk management are in place. The systems have been developed and reviewed during 2005/2006
and while the controls and risk management in place have, in my view, been adequate, further
improvements are required to support the Commission as it delivers the full range of its functions.
Our aim is to establish a position as a ‘risk enabled’ organisation over the course of 2006/2007.
We will continue to work towards improving the quality and coverage of our management
information, both financial and non-financial, to further embed the management of risk at all
levels, to link our corporate and individual objectives more closely and develop a fuller
understanding of how we undertake our activities and how the associated costs arise. We will also
work increasingly closely with CSCI to ensure that our systems are as aligned as possible in
preparation for our anticipated merger in 2008.
76 Healthcare Commission Annual report 2005/2006
6. Significant internal control problems
No significant internal control problems have been identified in the accounting year.
Signed by:
Anna Walker CB
Chief Executive
Date: June 30th 2006
Healthcare Commission Annual report 2005/2006
77
The Certificate and Report of the Comptroller and Auditor General to the
Houses of Parliament
I certify that I have audited the financial statements of the Commission for Healthcare Audit and
Inspection for the year ended March 31st 2006 under the Health and Social Care (Community
Health and Standards) Act 2003. These comprise the Income and Expenditure Account, the
Balance Sheet, the Cashflow Statement and Statement of Total Recognised Gains and Losses
and the related notes. These financial statements have been prepared under the accounting
policies set out within them.
Respective responsibilities of the Commission, chief executive and auditor
The Commission and chief executive are responsible for preparing the annual report, the
Remuneration Report and the financial statements in accordance with the Health and Social Care
(Community Health and Standards) Act 2003 and directions made there under by the Secretary
of State for Health with the consent of Treasury, and for ensuring the regularity of financial
transactions. These responsibilities are set out in the statement of the Commission and chief
executive’s responsibilities.
My responsibility is to audit the financial statements in accordance with relevant legal and
regulatory requirements, and with International Standards on Auditing (UK and Ireland).
I report to you my opinion as to whether the financial statements give a true and fair view and
whether the financial statements and the part of the Remuneration Report to be audited have
been properly prepared in accordance with the Health and Social Care (Community Health and
Standards) Act 2003 and directions made there under by the Secretary of State for Health with the
consent of Treasury. I also report whether in all material respects the expenditure and income have
been applied to the purposes intended by Parliament and the financial transactions conform to the
authorities, which govern them. I also report to you if, in my opinion, the
Annual Report is not
consistent with the financial statements, if the Commission has not kept proper accounting records,
if I have not received all the information and explanations I require for my audit, or if information
specified by relevant authorities regarding remuneration and other transactions is not disclosed.
I review whether the statement on pages 72-77 reflects the Commission’s compliance with HM
Treasury’s guidance on the Statement on Internal Control, and I report if it does not. I am not
required to consider whether the accounting officer’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness of Commission’s corporate governance
78 Healthcare Commission Annual report 2005/2006
considered necessary in order to provide me with sufficient evidence to give reasonable assurance
that the financial statements and the part of the remuneration report to be audited are free from
material misstatement, whether caused by fraud or error and that in all material respects the
expenditure and income have been applied to the purposes intended by Parliament and the
financial transactions conform to the authorities which govern them. In forming my opinion I also
evaluated the overall adequacy of the presentation of information in the financial statements and
the part of the remuneration report to be audited.
Opinion
In my opinion:
• the financial statements give a true and fair view, in accordance with the Health and Social Care
(Community Health and Standards) Act 2003 and directions made thereunder by the Secretary
of State for Health with the consent of Treasury, of the state of Commission’s affairs as at
March 31st 2006 and of its surplus total recognised gains and losses and cashflows for the year
then ended
• the financial statements and the part of the Remuneration Report to be audited have been
properly prepared in accordance with the Health and Social Care (Community Health and
Standards) Act 2003 and directions made thereunder by the Secretary of State for Health with
the consent of Treasury and
• in all material respects the expenditure and income have been applied to the purposes
intended by Parliament and the financial transactions conform to the authorities, which
govern them
I have no observations to make on these financial statements.
John Bourn
National Audit Office
Comptroller and Auditor General
157 – 197 Buckingham Palace Road
Date: July 12th 2006
Victoria
London SW1W 9SP
The maintenance and integrity of the Commission's website is the responsibility of the
Accounting Officer; the work carried out by the auditors does not involve consideration
of these matters and accordingly the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were initially presented
on the website.
Healthcare Commission Annual report 2005/2006
79
Financial statements and notes
Income and expenditure account year to March 31st 2006
Year to
Year to
NOTE
31/03/06
31/03/05
£’000
£’000
£’000
£’000
Gross income
Government grant-in-aid
2
68,851
56,443
Fee income
3
7,384
4,676
Other income
3
706
396
Transfers from Government grant reserve
11
1,481
1,168
78,422
62,683
Expenditure
Staff costs
4
44,815
31,308
Other operating costs
5
32,064
30,652
Depreciation
6
1,394
903
Notional capital charges
1e
64
78,337
48
62,911
Operating surplus/(deficit) for the year
85
(228)
Write back of capital charges
1e
64
48
Retained surplus/(deficit) for the financial year
149
(180)
Retained surplus brought forward
884
1,064
Retained surplus carried forward for the financial year
1,033
884
Statement of total recognised gains and losses
Year to 31/03/06
Year to 31/03/05
NOTE
£’000s
£’000s
Retained surplus/(deficit) for the financial year
149
(180)
Unrealised gains on fixed asset indexation
6
45
101
Total recognised gains and losses for the financial year
194
(79)
The notes on pages 83 to 95 form part of these accounts
80 Healthcare Commission Annual report 2005/2006
Balance sheet
Year to
Year to
NOTE
31/03/06
31/03/05
£’000
£’000
£’000
£’000
Fixed assets
Tangible assets
6
4,913
4,752
Intangible assets
6
1,467
483
6,380
5,235
Current assets
Debtors: falling due within one year
7a
3,278
2,425
Cash at bank and in hand
8
5,034
4,837
8,312
7,262
Creditors
Amounts falling due within one year
9
(7,237)
(5,678)
Net current assets
1,075
1,584
Total assets less current liabilities
7,455
6,819
Debtors: falling due after one year
7b
208
-
Provision
10
(250)
(700)
Total net assets
7,413
6,119
Financed by:
Income and expenditure account
11
1,033
884
Government grant reserve
11
6,380
5,235
Capital and reserves
7,413
6,119
The notes on pages 83 to 95 form part of these accounts
Signed by:
Anna Walker
Accounting officer
Date: June 30th 2006
Healthcare Commission Annual report 2005/2006
81
Cash flow statement
Year to 31/03/06
Year to 31/03/05
NOTE
£’000s
£’000s
Net cash inflow from operating activities
12
197
528
Capital expenditure
Payments to acquire fixed assets
6
(2,581)
(1,591)
Net cash outflow before financing
(2,384)
(1,063)
Financing
Government grant reserve
2
2,581
1,591
Increase in cash at bank and in hand
8
197
528
The notes on pages 83 to 95 form part of these accounts
82 Healthcare Commission Annual report 2005/2006
Notes to the accounts
1. Accounting policies
a) Accounting convention
These accounts have been prepared under the modified historic cost convention modified to
include the revaluation of fixed assets.
Without limiting the information given, the accounts have been prepared in accordance with the
Accounts Direction issued by the Secretary of State for Health with the approval of HM Treasury.
The accounts comply with applicable accounting standards.
b) Income
Income is made up of grant-in-aid received from the Department of Health to fund both the
operating and capital costs of the Commission, statutory fees from the registration of private and
voluntary healthcare providers and other income arising mainly from secondments of Commission
staff and recoveries of costs from other public bodies.
Grant-in-aid relating to the purchase of capital assets is credited to the Government grant reserve.
A proportion is released to the income and expenditure account to match depreciation charged on
those assets.
Registration and inspection fees are payable on application and then annually in accordance with
fee rates prescribed by the Secretary of State for Health. Application fees are recognised on
completion of initial checks and acceptance of the application. Annual fee rates are set at levels
that try to minimise cross subsidy between categories of registered bodies and invoiced on the
registration renewal date and recognised in full on invoice. Annual fees are non-refundable on
de-registration during a year.
c) Fixed assets
Fixed assets are shown in the balance sheet at cost less accumulated depreciation. Assets are
revalued annually using the Office of National Statistics current price index.
Fixed assets, other than computer software, are capitalised as a tangible asset as follows:
• equipment with an individual value of £5,000 or more
• grouped assets which are interdependent with a total value of £5,000 or more, and a minimum
expected life as set out in paragraph d(i) below
• building and refurbishment costs valued at £5,000 or more
Purchased computer software is capitalised as an intangible asset where expenditure of £5,000 or
more is incurred. Project management costs have not been capitalised.
Healthcare Commission Annual report 2005/2006
83
d) (i) Depreciation
Depreciation is provided on fixed assets held at the year end on a straight line basis, at rates
calculated to write off the cost, less any residual value, over their estimated useful lives as follows:
• office refurbishment – 15 years
• office furniture – 10 years
• office equipment – five years
• computer equipment – three to four years
• computer software – three to four years
Depreciation is charged on a monthly basis commencing from the month following the date on
which an asset is acquired.
(ii) Indexation
RPI Indexation has been applied to building assets and for all other assets from the Office for
National Statistics publication Price index numbers for current cost accounting (MM17).
e) Notional costs
A notional cost of capital has been calculated in accordance with HM Treasury requirements at
a rate of 3.5% on the average value of capital employed. The cost in 2005/2006 was £64,000
(£48,000 2004/2005).
f) Pension costs
The Commission provides two pension schemes for staff:
(i) NHS Pension Scheme
The NHS Pension Scheme is an unfunded multi-employer defined benefit scheme that covers NHS
employers, general practices and other bodies, allowed under the direction of the Secretary of
State for Health, in England and Wales. As a consequence it is not possible for the Commission to
identify its share of the underlying scheme liabilities. Therefore the scheme is accounted for as a
defined contribution scheme and the cost of the scheme is equal to the contributions payable to
the scheme for the accounting period.
In accordance with the requirements to produce a full actuarial valuation every four years, the
Government Actuary Department has been commissioned to produce a valuation as at March 31st
2003. However, the results of this valuation are not yet available. The notional surplus of the
scheme at March 31st 1999 was £1.1 billion, as per the last scheme valuation by the Government
Actuary Department when the conclusion of the valuation was that the scheme continued to
operate on a sound financial basis. It was recommended that employers’ contributions be
increased to 14% of pensionable pay with effect from April 1st 2003. Subsequent to the 1999
valuation, the Government Actuary Department compared the scheme’s contribution income and
actuarially assessed growth in scheme liabilities and interest charges. This assessment has
declared a net deficiency of £6.2m at March 31st 2004 as detailed in the scheme accounts which
can be viewed on the NHS Pensions Agency website at
www.nhspa.gov.uk. Copies can also be
obtained from The Stationery Office.
The Commission is directed by the Secretary of State for Health to charge employers’ pension
costs contributions to operating expenses as and when they become due. On advice from the
Government Actuary Department the contribution may be varied from time to time to reflect
changes in the scheme’s liabilities.
84 Healthcare Commission Annual report 2005/2006
The total employer contribution payable in 2005/2006 was 14%. Employees pay contributions of
6% of their pensionable pay. For 2005/2006, employers’ contributions of £2.7m were payable to
the scheme.
(ii) Principal civil service pension scheme
The principal civil service pension scheme is an unfunded multi-employer defined benefit scheme.
Consequently, the Commission is unable to identify its share of the underlying assets and liabilities.
A quadrennial review of the accruing superannuation liability charges at March 31st 2003 can be
found on the Principal Civil Service Pension Scheme website (
www.civilservice-pensions.gov.uk).
Although the scheme is unfunded, employer contributions are set at the level of contributions that
would be paid by private sector employers to pension schemes for their employees. For 2005/2006,
employers’ contributions of £ 0.6m were payable to the principal civil service pension scheme at
four rates in the range 16.2-24.6% of pensionable pay, based on salary bands. Rates will increase
for 2006/2007 within a range 17.1 – 25.5%.
g) Leases
Rentals payable under operating leases are charged to the income and expenditure account on a
straight line basis.
h) Value added tax (VAT)
The Commission registered for value added tax (VAT) from January 3rd 2006 when its vatable
turnover from cost recharges exceeded the registration threshold. Income is reported exclusive of
output VAT where applicable. All expenditure reported in these statements includes VAT other than
when the VAT was directly related to output VAT and reclaimable. VAT is not charged on any of the
Commission’s independent healthcare fees and charges.
2. Government grant
Government grant
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Department of Health resource account
68,388
55,300
Department of Health – assets transferred
-
34
Grant transferred to HSCIC*
2,844
2,700
Grant designated to Neonatal and Intensive care
200
-
TOTAL grant-in-aid
71,432
58,034
Grant-in-aid transferred to Government grant reserve
2,581
1,591
Income reported in income and expenditure account
68,851
56,443
* Funding for the service level agreement with the HSCIC was paid directly by the Department of Health to the HSCIC.
Healthcare Commission Annual report 2005/2006
85
3. Non-grant-in-aid income
Non-grant-in-aid income
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Registration and inspection fees and charges to the
7,384
4,676
independent sector
Fees and charges made to the independent sector are in line with fee scales prescribed by the
Secretary of State for Health under the Care Standards Act 2000. The fee levels were increased
by 50% from April 1st 2005.
As detailed in Note 1 b) annual registration fees are invoiced on the anniversary of the registration
and recognised in full in the accounting year invoiced. Fee income recognised in these accounts but
relating to 2006/2007 registration periods was estimated at £2.5m at March 31st 2006 (£1.7m 2005).
Other income
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Recharge of staff
317
362
Grants to commission research
359
-
Other income – speakers’ fees etc
30
34
706
396
4. Employee information
a) Staff costs
Employee information: Staff costs
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Wages and salaries (including commissioners)
24,521
22,389
Secondments, temporary and interim staff
14,760
4,595
*Employers’ national insurance
2,430
1,808
*Employers’ pension costs
3,237
2,154
Staff costs recharged
317
362
Pension provision released
(450)
TOTAL
44,815
31,308
* National insurance and pension costs relate to directly employed staff only and any lay reviewers included on the
Commission’s payroll. Figures are not available for seconded staff paid through their ‘substantive’ employer’s payroll.
86 Healthcare Commission Annual report 2005/2006
b) Average number of employees during year
Average number of employees during year
The average number of wholetime equivalent employees, including secondee and agency staff for the year ended
March 31st 2006 by category of employment was:
Year to 31/03/06
Year to 31/03/05
WTE
WTE
Managerial
7
7
Support staff
620
507
Secondments, temporary and interim staff
153
95
TOTAL
780
609
c) Pension benefits
The principal pension scheme for staff who transferred from the Commission for Health
Improvement and the National Care Standards Commission and for staff recruited directly by
the Commission is the NHS pension scheme. Staff who transferred to the Commission from the
Department of Health and the Audit Commission at April 1st 2004 are eligible to join the principal
civil service pension scheme. New staff are also eligible to remain within the principal civil service
pension scheme if they are already members.
(i) NHS pension scheme
The scheme is a ‘final salary’ unfunded multi-employer defined benefit scheme. Annual pensions
are normally based on 1/80th of the best of the last three years pensionable pay for each year of
service. A lump sum, normally equivalent to three years’ pension, is payable on retirement. Annual
increases are applied to pension payments at rates defined by the Pensions (Increase) Act 1971,
and are based on changes in retail prices in the twelve months ending September 30th in the
previous calendar year. On death, a pension of 50% of the member’s pension is normally payable
to the surviving spouse.
Early payment of a pension, with enhancement, is available to members of the scheme who are
permanently incapable of fulfilling their duties effectively through illness or infirmity. A death
gratuity of twice final year’s pensionable pay for death in service, and up to five times their annual
pension for death after retirement is payable.
The scheme provides the opportunity to members to increase their benefits through money
purchase additional voluntary contributions provided by an approved panel of life companies.
Under the arrangement the employee can make contributions to enhance their pension benefits.
The benefits payable relate directly to the value of the investments made.
Additional pension liabilities arising from early retirements are not funded by the scheme, except
where the retirement is due to ill health. For early retirements not funded by the scheme, the full
amount of the liability for the additional costs is charged to the income and expenditure account at
the time the Commission commits itself to the retirement, regardless of the method of payment.
Contributing membership during 2005/2006 was 643, (2004/2005 507). Total employer contributions
payable in 2005/2006 were £2.7m, (£1.9m 2004/2005).
Further details about the NHS pension scheme arrangements can be found at the website
www.nhspa.gov.uk.
Healthcare Commission Annual report 2005/2006
87
(ii) Principal civil service pension scheme
From October 1st 2002, civil servants and others approved by the Cabinet Office, including certain
designated staff of the Healthcare Commission, may be in one of three statutory based ‘final
salary’ unfunded multi-employer defined benefit schemes (classic, premium, and classic plus).
The schemes are unfunded, with the cost of benefits met by monies voted by Parliament each
year. Entrants after October 1st 2002 may choose to join a ‘money purchase’ stakeholder
arrangement with a significant employer contribution (partnership pension account). Pensions
payable under classic, premium, and classic plus are increased annually in line with changes in
the Retail Prices Index. Employee contributions are set at the rate of 1.5% of pensionable earnings
for classic and 3.5% for premium and classic plus.
Contributing membership during 2005/2006 was 65 (45). Total employer contributions payable in
2005/2006 were £0.6m, (£0.3m 2004/2005).
Benefits in classic accrue at the rate of 1/80th of pensionable salary for each year of service.
In addition, a lump sum equivalent to three years’ pension is payable on retirement. For premium,
benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike
classic, there is no automatic lump sum (but members may give up (commute) some of their
pension to provide a lump sum). Classic plus is essentially a variation of premium, but with
benefits in respect of service before October 1st 2002 calculated broadly as per classic.
The partnership pension account is a stakeholder pension arrangement. The employer makes a
basic contribution of between 3% and 12.5% (depending on the age of the member) into a
stakeholder pension product chosen by the employee. The employee does not have to contribute
but where they do make contributions, the employer will match these up to a limit of 3% of
pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a
further 0.8% of pensionable salary to cover the cost of centrally provided risk benefit cover (death
in service and ill health retirement). Further details about the civil service pension arrangements
can be found at the website
www.civilservice-pensions.gov.uk.
88 Healthcare Commission Annual report 2005/2006
5. Other operating costs
Other operating costs
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Other operating costs include:
Communication costs
2,483
2,600
Consultancy, prof fees, etc
15,648
16,569
*External audit
60
79
IT costs
1,112
632
**Losses and special payments
45
27
Premises costs and facilities costs
2,520
1,570
Recruitment and training
2,355
2,971
Travel and subsistence
3,030
2,612
Operating leases
3,423
2,249
Other costs
1,301
1,078
Impairment of fixed assets
65
186
Losses on disposal of fixed assets
22
79
32,064
30,652
* The audit fee represents the cost for the audit of the financial statements carried out by the Comptroller and
Auditor General. This amount does not include fees in respect of non-audit work and no such work was undertaken.
**Losses and special payments:
Losses in the year ending March 31st 2006 amounted to £45,000. (£27,000 2004//2005), comprised of:
Cash losses
3
4
Bad debts written off
37
8
Special payment on termination of employment
-
15
Fruitless payments
5
-
Healthcare Commission Annual report 2005/2006
89
6. Fixed assets
Fixed assets
Total
Total
Office
Office
Office
Computer
Intangible
tangible
fixed
refurbishment
furniture
equipment
hardware
assets
assets
assets
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Cost or valuation
Balance 01/04/05
4,148
869
558
2,242
7,817
901
8,718
Additions in year
65
75
142
855
1,137
1,444
2,581
Disposals in year
(142)
(142)
(46)
(188)
Indexation
55
7
4
(71)
(5)
(34)
(39)
Balance at 31/03/06
4,268
951
704
2,884
8,807
2,265
11,072
Depreciation
Balance 01/04/05
1,087
411
334
1,233
3,065
418
3,483
Depreciation in year
269
100
78
526
973
421
1,394
Disposals in year
(138)
(138)
(28)
(166)
Indexation
16
3
2
(27)
(6)
(13)
(19)
Balance at 31/03/06
1,372
514
414
1,594
3,894
798
4,692
Net Book Value
At 31/03/06
2,896
437
290
1,290
4,913
1,467
6,380
At 31/03/05
3,061
458
224
1,009
4,752
483
5,235
90 Healthcare Commission Annual report 2005/2006
7. Debtors
Debtors
As at 31/03/06
As at 31/03/05
£’000s
£’000s
a) Amounts falling due within one year:
Trade debtors
795
751
Advances – staff loans
121
86
Prepayments and accrued income
1,996
1,504
Other debtors
366
84
Total
3,278
2,425
Staff loans are for season tickets, bicycle purchase and gym membership. No member of staff received loans in
excess of £5,000.
Intra-government balances:
Balances with central Government bodies
632
40
Balances with NHS trusts
74
95
Balances with public corporations
153
53
Balances with bodies external to Government
2,419
2,237
Total
3,278
2,425
b) Amounts falling due after one year:
Prepayments and accrued income
208
-
All balances with bodies external to Government
8. Analysis of cash and bank balances and changes during the year
Analysis of cash and bank balances and changes during the year
As at 01/04/05
Cashflow
As at 31/03/05
£’000s
£’000s
£’000s
Paymaster general
4,828
202
5,030
Other banks
5
(5)
-
Cash balances
4
-
4
Total
4,837
197
5,034
Healthcare Commission Annual report 2005/2006
91
9. Creditors
Creditors
As at 31/03/06
As at 31/03/05
£’000s
£’000s
Amounts falling due within one year
Trade creditors
1,429
1,086
Taxation and national insurance
884
645
Accruals and deferred income
4,481
3,619
Other creditors
443
328
Total
7,237
5,678
Intra-government balances:
Balances with central Government bodies
1,186
1,481
Balances with NHS trusts
378
457
Balances with public corporations
908
555
Balances with bodies external to Government
4,765
3,185
Total
7,237
5,678
10. Provision
Provision
As at 31/03/06
As at 31/03/05
£’000s
£’000s
Pension fund deficit
250
700
An actuarial shortfall on pension entitlements arose from the transfer of staff from National Care Standards
Commission at April 1st 2004. The pension shortfall is considered to be part of the set up costs of the Commission
and at the time of the transfer of staff on April 1st 2004 the estimated liability was assessed at £700,000.
The actual liability will not be known until conclusion of the actuarial review at which point the timing of payments
to meet the shortfall will be determined.
At March 31st 2006 the estimated liability assessment was reduced by the actuary to £250,000. The reduction in the
provision has been credited to staff costs as shown in Note 4 a).
92 Healthcare Commission Annual report 2005/2006
11. Reserves
Reserves
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
i) Income and expenditure account
Balance at 01/04/05
884
1,064
Surplus (deficit) for the year
149
(180)
Balance at 31/03/06
1,033
884
ii) Government grant reserve
Balance at start of period
5,235
4,711
Transfer Capital Grant
2,581
1,591
Indexation of fixed assets
45
101
Downward valuation of IT equipment, software
(65)
(186)
and refurbishment charged to the I & E account
Depreciation charged to the I & E account
(1,394)
(903)
Loss on Disposals charged to I & E account
(22)
(79)
Balance at March 31st 2006
6,380
5,235
12. Reconciliation of operating surplus to net cash inflow from operating activities
Reconciliation of operating surplus to net cash inflow from operating activities
Year to 31/03/06
Year to 31/03/05
£’000s
£’000s
Retained surplus/(deficit)
85
(228)
Depreciation
1,394
903
Cost of capital
64
48
Downward revaluation of fixed assets
65
186
Loss on disposal of fixed assets
22
79
Transfer from Government grant reserve
(1,481)
(1,168)
(Increase) in debtors
(1,061)
(1,336)
Increase in creditors
1,559
2,044
Reduction in provisions
(450)
-
TOTAL
197
528
Healthcare Commission Annual report 2005/2006
93
13. Operating leases
Operating leases
Commitments under operating leases to pay rentals during the year following these accounts are given in the table
below, analysed according to the period in which the lease expires.
As at 31/03/06
As at 31/03/05
£’000s
£’000s
Land and buildings
One year
1,025
429
Two-five years
875
608
Over five years
1,754
1,744
TOTAL
3,654
2,781
Other leases
One year
5
88
Two-five years
7
73
Over five years
-
-
TOTAL
12
161
14. Capital commitments
The Commission had the following capital commitments at the balance sheet date:
As at 31/03/06
As at 31/03/05
£’000s
£’000s
Expenditure contracted but not provided
Nil
Nil
Expenditure authorised but not contracted
Nil
67
In addition, a major development by the Commission relates to the creation of an intelligent
information management system (IIMS). This development will include a material IT development
project that is subject to the gateway process and has been subject to the Gateway review. The
project has been agreed by the Commission and subject to agreement with the Department of
Health, funding will be through grant-in-aid in the year expenditure is incurred, with appropriate
capitalisation of elements of the project. Total project capital costs are estimated at £12m of which
£3.2m had been expended by March 31st 2006.
94 Healthcare Commission Annual report 2005/2006
15. Contingent liabilities
There are no contingent liabilities at March 31st 2006 (Nil 2005).
16. Related party transactions
All commissioners and senior staff formally declare potential conflicts of interest each year and also
during any decision making process in which a conflict arises. The individual then takes no further
part in the decision-making. None of the members of the Commission or senior staff or other
related parties have undertaken any material transactions with the Commission during the year.
The Healthcare Commission is a non-departmental public body sponsored by the Department of
Health. The Department of Health is regarded as a related party. During the year the Commission
has made a number of material transactions with the Department of Health and other entities for
which the Department of Health is regarded as the parent department. In addition the Commission
has had a small number of transactions with other Government departments and other central
government bodies. Balances at March 31st 2006 are shown in notes 7 and 9.
Staff costs (Note 4) include the reimbursement of employment costs for staff seconded to the
Healthcare Commission from the Department of Health, Audit Commission and other Government
departments. Other material transactions were:
Grant-in-aid transfer £2.8m (Note 2)
Some of the clinical audit costs were incurred under a service level agreement between the
Commission and the Health and Social Care Information Centre and paid directly by the
Department of Health to the HSCIC (£2.7m 2004/2005). This agreement ended on March 31st 2006.
Audit Commission delegated work £497,000.
The Commission has delegated certain work relating to economy, efficiency and effectiveness to
the Audit Commission under section 57 (6) of the 2003 Act. In respect of this work, the
Commission transferred £497,000 of its funding to the Audit Commission (£417,000 2004/2005).
Costs are included within Other operating costs (Note 5).
None of the Commission members or Executive Team or other related parties has undertaken any
material transactions with the Commission during the year.
17. Financial instruments
As permitted by FRS13, this disclosure excludes short term debtors and creditors.
The Healthcare Commission has no borrowings and relies primarily on departmental grants for
its cash requirements and is therefore not exposed to any risk of liquidity. It also has no material
deposits, and all material assets and liabilities are denominated in sterling, so it is not exposed to
interest rate or currency risk.
Healthcare Commission Annual report 2005/2006
95
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Document Outline
- Contents
- Foreword
- About the Healthcare Commission
- Our year in brief
- Promoting a better experience of health and healthcare
- Safeguarding the public
- Providing authoritative, independent and relevant information
- Taking the lead in coordinating and improving regulation
- Focusing on inequalities, human rights and diversity
- Building a world class regulatory body
- Looking ahead
- Our staffing and financial arrangements
- Leading the Commission
- Statement of corporate governance and accountability arrangements
- Remuneration report
- Annual accounts
- The Certificate and Report of the Comptroller and Auditor General to the Houses of Parliament
