Providers running health and social care services deemed “essential” will have their borrowings capped and will not be able to use the assets involved in those services as security in loans.

HSJ understands the new controls for so-called “additionally regulated services” are being discussed as part of Department of Health plans to turn the foundation trust regulator Monitor into the single economic regulator for all health and social care providers.

The controls will apply equally to both NHS and private providers, but look set to have the biggest impact on NHS providers because they are the predominant providers of services likely to be deemed essential.

At present the exact nature of an essential service has not been defined. However, in healthcare it is expected to focus on services such as accident and emergency and maternity.

To be caught by the definition services need to be both crucial and hard to replace, so services where a number of providers operate in a given area may not be subject to the controls.

However, there are concerns that in practice it will be hard to disentangle an essential from a non-essential service, which could mean foundation trusts find controls are placed over swathes of their businesses.

The controls are designed to ensure assets involved in delivering essential services are not put at risk should a provider be forced into liquidation.

Officials plan three separate restrictions: a requirement for providers to protectively ringfence the part of their businesses involved in delivering essential services; a stipulated liquidity ratio or credit rating providers will need to maintain in relation to the ringfenced business; and a ban on using the assets involved in delivering the service as security in any loans.

Sources close to the discussions acknowledged the restrictions would almost inevitably raise the cost of borrowing for those caught by the controls and would likely lead to calls for such providers to be compensated.

The developing regime also introduces the prospect of Monitor placing borrowing controls on private businesses. Although at present very few private companies are thought to be providing NHS services which could be caught by the controls, HSJ has been told social care providers could be one such group.

That could include care home operators in rural areas where alternative services are not easily available. A spokesman for the Care Quality Commission confirmed discussions were taking place but would not comment further.