Exclusive framework agreements between commissioners and providers have been dealt a major blow by an NHS cooperation and competition panel judgement.

The panel has ruled that a specialised commissioning group’s use of the arrangement was likely “to result in material costs to patients and taxpayers” and therefore broke the rules.

Private firm Hanover brought the complaint because its new secure mental health hospital in Widnes, Cheshire, has been all but empty due to the firm being excluded from providing to the region’s NHS.

Competition panel officials ruled that the North West specialised commissioning group’s use of a four year exclusive framework agreement to purchase secure mental health services breached regulations.

The framework agreement committed the specialised commissioning group to a contract with a limited number of providers.

The panel judged that such a contract meant the commissioners were unable to take advantage of any services that may become available from providers not admitted to the framework, even if those services represented better value for patients and taxpayers.

A spokesman for the panel told HSJ this ruling could have significant repercussions for commissioners, as he believed it was not the only agreement of this kind.

“A lot of commissioners, and indeed providers, will look at this and say: ‘Hang on isn’t this the kind of deal that we have here?’” he said.

Panel director Andrew Taylor said: “The panel found that the use of such an agreement by [the North West specialised commissioning group] detrimentally affects the commissioner’s ability to react appropriately to changes in the market - for example, changes in the quality of services, new entry or innovation - and also deters entry by new providers in the future.”

A spokeswoman for the North West specialised commissioning group said it was studying the judgement before making further comment.

The panel has proposed a range of remedies for the group to apply to correct the situation. These range from holding an immediate competitive tender for the services to retraining commissioning staff.

The remedies are open for consultation at www.ccpanel.org.uk. After the consultation, the panel will make recommendations to the secretary of state, who will then decide whether to compel the specialised commissioning group to act.