Only a “very small” number of NHS services provided by private firms face the toughest regulatory controls, sector leaders have insisted following the publication of new Monitor guidance.

Under government health reforms, clinical commissioning groups must designate the local services they believe would need protection should the provider go bust.

Providers of these “commissioner requested services” cannot change the way the services are provided without Monitor approval. They must also pay into a “risk pool” to fund the costs of running insolvent providers’ services, and face restrictions on asset disposals.

However, the 2012 Health Act requires commissioners to “have regard to” Monitor guidance when deciding which services to single out for regulatory protection.

The 92-page draft guidance, published on Thursday, suggests three central questions for commissioners to consider:

  • Are there alternative providers of a similar service, either nearby or “as far away as commissioners are willing to send patients”?
  • Would those alternative providers have the capacity and capabilities to deal with the increased demand “if a provider left the market”?
  • Could new alternatives “enter the market over a reasonable time period”?

NHS Partners Network director David Worskett, who represents private providers of NHS services, said it was a “very good document”.

“Looking at the exemptions regime and the sort of guidance in the CRS document,” he told HSJ, “the number of independent sector provider services caught by the CRS regime is likely to be very small.”

Of independent sector treatment centres and private hospitals providing NHS services under Choose and Book, he said: “It’s much more likely that they won’t be caught than that they will.”

He added: “I’m not sure to what extent that applies across the community service providers’ field, but actually I thought they were relatively unlikely to be caught as well.”

Private NHS providers have pushed hard to avoid being caught by the CRS regime. Among other reasons, this was because CRS providers that became insolvent would face a special form of administration designed to ensure the continuity of their services.

Trade body the Independent Mental Health Services Alliance warned Monitor earlier this year: “The proposal to have a special form of administration for healthcare, which puts patients ahead of creditors, whilst laudable, will make it impossible for independent sector providers to borrow – the banks will not agree to becoming unsecured or to becoming a lower class of creditor.”

Monitor interim chief executive David Bennett has previously suggested secure mental health was the “most likely area” for privately-run NHS services to be commissioner requested.

However, the Monitor guidance provides a case study where a private provider of secure mental healthcare would be able to “make the case to their commissioners not to consider opting-in or protecting the service”.

It suggests the market for low and medium secure mental health services is regional – meaning alternative providers could come from anywhere in the same English region.

Of the 61-bed service in the case study, it says: “Regionally, there are at least eight NHS and independent sector providers, representing capacity in excess of 1,255 beds. Based only on this regional view of the market, the provider in question accounts for less than 5 per cent of the market.”

Philip Sugarman, chief executive of St Andrew’s Healthcare, a charitable provider of NHS mental healthcare, said in response to the guidance: “We anticipate that the majority of generic mental health services won’t be designated.”

However, he remained concerned that “niche and highly specialist services such as ours may well be”.

If St Andrew’s had to contribute to a risk pool that included private operators, Professor Sugarman continued, “we may be forced to use charitable funds to bail out risky private equity backed ventures”. “Not only do I believe that this is an inappropriate use of charitable resources, but it may also contravene charity law,” he added.

Monitor’s consultation on the proposed guidance runs until 8 November.