Both NHS trusts and foundation trusts which are the neighbours of failing providers could be ordered to reconfigure services under a proposed law change.
Ministers have tabled a series of amendments to the Care Bill currently passing through Parliament which are intended to make the failure regime “fit for purpose”.
It is hoped this will prevent a repeat of the row in south London earlier this year which culminated in the government losing a judicial review. A judge ruled it was unlawful for the health secretary to order that some services at Lewisham Hospital Trust were downgraded to ensure the sustainability of the failing South London Healthcare Trust.
In a letter to Lords colleagues explaining the amendments, health minister Lord Howe said the changes were seeking to “put beyond doubt” that trust special administrators had the power to make recommendations that impact on neighbouring NHS providers.
The amendments also stipulate that the health secretary, or Monitor in the case of foundation trusts, can take decisions that affect providers other than the one to which the special administrator was appointed.
Lord Howe said the experience of the failure regime at South London Healthcare and Mid Staffordshire Foundation Trust had made it “clear that changes and clarifications need to be made to ensure that it is fit for purpose”.
He stressed the amendment relating to the powers over neighbouring NHS providers did “not constitute a change in policy, is not retrospective and is intended only to remove any uncertainty for the future”.
The amendments follow a joint plea from the NHS Confederation and the Foundation Trust Network for clarity on the failure regime.
The government’s appeal against the Lewisham decision is due to be heard on 28 and 29 October.
Other amendments seek to clarify the rules around public consultation on the special administrator’s recommendations and extend the consultation period from 30 to 40 days. The time available for the administrator to produce their recommendations will also be extended from 45 to 65 days.
A further amendment makes it compulsory for the administrator to seek commissioner agreement to their plans for foundation trusts. It is currently only a requirement for the administrator to seek commissioner agreement for trusts.
King’s Fund acting director of policy Candace Imison told HSJ the amendments appeared to be seeking to remove two of former health secretary Andrew Lansley’s “four tests” which a reconfiguration proposal must meet to get the go ahead.
She said: “Effectively what it does is enable service reconfiguration without public consultation and commissioner agreement.
“If you look at what happened in South London and the obstacles that were presented to challenge the decision, every single one of those obstacles has been removed.”
She said the amendments left it unclear exactly what level of commissioner support would be required for a reconfiguration to go ahead.
“In the original legislation there was a specific statement that the failure regime should not be a back door route to reconfiguration but these amendments suggest the temptation might be to use it in that way.”