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Evaluating whether regulation works

We regulate many areas of public and commercial life, but does it work? Kieran Walshe asks the question.

Most people will have heard of OFSTED (which inspects schools and other settings where children and young people are cared for), and the Care Quality Commission (which inspects hospitals, general practices, care homes and other health and care providers). 

But we also regulate restaurants, solicitors, financial services, security firms, and factories, as well as many public services like prisons, the police, housing associations, and more. So do all these regulators contribute to improving schools, hospitals and so on – or do they just add costs and bureaucracy for the organisations they oversee?

Our research on the Care Quality Commission (CQC) has been trying to answer that question. Over the last five years the CQC has undertaken the largest ever, most intensive and costliest programme of inspections and ratings in health and social care in England. An army of inspection teams has visited every hospital, nursing home, general practice and other care providers in the country.  

There is no doubt that regulation by CQC has been a force for good, driving improvement especially among poorly performing providers of health and care.  But it has also had some adverse effects, and has been a significant added cost to the health and care system. We think there are some useful lessons from our research not just for CQC but for other regulators.

Lesson one

Regulation affects organisations’ performance in lots of ways. It is not just about inspection reports and enforcement actions, though that is where we often focus most attention. 

Organisations respond to regulatory standards long before an inspection even takes place, and savvy leaders learn from the inspection reports and experiences of other organisations, and try to build regulatory standards into their own improvement programmes.  Regulators need to make maximum use of those other pathways to impact – which may mean them inspecting less, but actually achieving more.

Lesson two

How organisations respond to the regulator depends on their “improvement capability” – either their internal capacity to do improvement, or the external support for improvement they can access.

We think this matters a lot. For example, we found that large NHS hospitals often had both internal and external capacity to call on.  But for smaller organisations like general practices and care homes, it was less clear where that capacity could come from.

We think that is a problem and may help explain why some organisations seem “stuck” and unable to improve.

Lesson three

The relationship between the regulator and the organisations it oversees matters a great deal. If there is a constructive, professional relationship of mutual credibility, respect and trust, it is much more likely that improvements can be made – often through informal advice and interaction rather than through written reports or enforcement actions.

But poor relationships, adversarial attitudes, and unreasonable behaviours on either side can be quite toxic. We think regulators’ staff need to be real experts in the sectors they oversee, and to have great interpersonal skills and be able to build those relationships successfully. It's a tough job to do well.

Lesson four

We think people sometimes have quite unrealistic expectations of regulators like CQC. The responsibility for the quality of care sits with provider organisations and the people running them. CQC cannot prevent every serious quality failure in a nursing home or hospital somewhere in England. 

But regulators like CQC can be a powerful and constructive force for improvement – using their independence and the rigour of their methods to shine a light on problems and failings which might otherwise be brushed under the carpet.

And finally…

One final point. Regulators need to do more to evaluate how regulation works, and be willing to share those findings openly, and to change systems of regulation when the evidence shows they could be more efficient or effective. It should not just be left up to researchers like us to try and answer the questions about whether regulation works.

The full report from Alliance MBS and The King's Fund can be found at:

Blog posts give the views of the author, and are not necessarily those of Alliance Manchester Business School and The University of Manchester.

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