Assessing the financial viability of care providers

February 12, 2018

The Care Quality Commission (CQC) has introduced new guidance on assessing the financial viability of care providers applying for registration.

From today, 12th February 2018, the CQC says that it is introducing a more consistent and proportionate way of assessing the financial viability of care providers applying for registration – although this only applies to some providers.

This follows extensive engagement with its stakeholders, including providers. CQC will now seek assurance in the form of a statement letter from a financial specialist. This could be an accountancy, bank or financial services firm.

This is new registration guidance; the assessment of the applicants’ financial viability (under Regulation 13 of the CQC (Registration) Regulations 2009) takes place at the point of registration application.

CQC says that it has introduced this new streamlined method of assessing compliance with Regulation 13 because providers applying for registration told them that they were not always clear about what they needed to provide to demonstrate their compliance with Regulation 13, and that this had led to delays in registration applications.

The new approach will apply to new providers submitting a new registration application. Existing care providers applying to remove or vary a condition, add a location or add a regulated activity are not generally required to submit a statement. However, it may also apply to some existing providers seeking to make changes to their registration (for instance, for increases in scale or when CQC has intelligence that suggests a provider does not have the financial standing to provide the services set out in their Statement of Purpose).

NHS Trusts and local authorities are exempt from the requirement (as set out in Regulation 13 of CQC Registration Regulations 2009). Adult social care providers currently in the Market Oversight Scheme will not be required to provide a letter; this is because the financial sustainability of these providers is monitored by CQC's Market Oversight colleagues.

CQC says that evidence of an NHS contract provides sufficient assurance and it will not require the following providers to submit a statement letter:

  • NHS GP practices.
  • NHS dentists.
  • NHS 111, out of hours and urgent care services.
  • Non-NHS organisations with NHS contracts.

The guidance for providers is available on the registration pages of CQC's website.

CQC has also produced a template of the statement letter. It recommends that applicants use this template as it clearly explains to the financial specialist what is being requested and why, under the regulations.

Applicants do not have to use the template, but it will help to make sure that the information required is included. In exceptional cases, CQC has said that it will consider other third party evidence such as a guarantee from an investor or shareholder. The application cannot be approved until assurance has been received.

Assessing the financial viability of care providers is an important part of CQC's registration assessment. It believes that this new approach is more consistent and proportionate. If CQC has any particular concerns about financial viability it may ask for further evidence during its  assessment.

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