FINANCE: NHS South West has overruled commissioners who were restricting use of the “any qualified provider” policy to avoid the risk of paying for work carried out by private providers.

Commissioners are concerned that private firms are using AQP to bid for work already covered by fixed volume contracts with independent sector treatment centres.

UK Specialist Hospitals runs five facilities in the South West and holds a six-year ISTC contract ending in 2015 worth more than £240m. At least six primary care trusts in the region had intended to restrict the number of further providers allowed to compete for the orthopaedic and other work covered by the contract. But they have been overruled by the strategic health authority, which insisted AQP must apply, HSJ has learned.

A source close to the process said: “Commissioners are not anti the market but there are contradictions when you have not dealt with the legacy [of the ISTC contracts]. Other providers see this [the AQP policy] as their big opportunity and they go out and market to GPs.”

Two of the PCTs overruled by NHS South West have already admitted they had restricted AQP due to their ISTC contract. NHS Wiltshire and NHS Bath and North East Somerset were referred to the Cooperation and Competition Panel by private provider Circle for breaching competition rules. The PCT said the UKSH deal tied its hands.

The panel’s response is due in June. An interim report in February said there was evidence that “nearly half of all PCTs” used block contracts or activity caps to restrict choice and had potentially broken the principles and rules of cooperation and competition, introduced in 2007.

The South West dispute could in future fall under Monitor’s remit as economic regulator.

The DH said: “The Health Bill puts safeguards in place to ensure the waste seen under previous contracts doesn’t happen again.”