The government is drawing up a revised failure regime to avoid the advance labelling of which hospital and care services could hypothetically go bust and be closed down.

The Department of Health announced last week it would amend the Health Bill in response to concern “about the practicality of our current proposals for an up-front system of designating services for additional regulation”.

Under the original proposals, commissioners would have had to “designate” which services were essential and therefore protected from closure.

HSJ understands the new plans would shift responsibility to “sector regulator” Monitor to decide which services should be protected if and when a provider faced failure.

A senior source said it was also expected the plans would give more power to the health secretary to direct Monitor in how it deals with failing trusts. It would constitute a more “ad hoc response to failure”.

Conventional insolvency – under which lenders could theoretically have claimed trusts’ assets and closed services – will be applied more “narrowly” than in original DH plans.

Sources said the plans would give ministers more leeway, (case by case), to “bail out” providers whose potential failure alarmed the public.

Meanwhile, new regulations will be introduced to the NHS Commissioning Board’s powers to intervene or dissolve failing clinical commissioning groups.

The government’s health reform command paper states that to “avoid micromanagement” the board “would always need to demonstrate reasonable grounds before intervening”.  It recognises there may be circumstances where the board “might need to vary a group’s membership or geographic area to ensure all GP practices are members of commissioning groups and that there is comprehensive geographic coverage”.

“In exceptional circumstances, the board might also need to dissolve a commissioning group in the event of significant failure… In both cases there will be regulations, approved by Parliament, to ensure that there are fair and transparent procedures used.”

The government plans to involve GPs and other stakeholders in developing the regulations.