Credit rating checks considered for NHS

Hospital regulator Monitor is consulting on plans for credit rating agencies to assess trusts’ financial strength, replacing the current assessment which considers clinical quality, it is reported.

Failing to achieve an investment grade rating would mean hospitals risk losing their licence to operate in the NHS.

The proposals would also impose borrowing limits on providers by credit agencies like Standard & Poor’s and Moody’s. Monitor would then oversee competition for patients.

But the Institute for Public Policy Research (IPPR) warned: “Ratings agencies do not have a health, let alone an NHS, perspective and are by definition interested solely in financial bottom lines.”

A Monitor spokesperson said: “In carrying out our sector regulator role, Monitor would license providers of NHS services inEnglandand exercise functions in three areas – regulating prices; enabling integrated care and preventing anti-competitive behaviour; and supporting service continuity.

“We are currently consulting on how to implement the government's planned legislation. We have published proposals on the conditions of the licensing regime to ensure all stakeholders have the opportunity to contribute to our thinking at an early stage.”

The IPPR’s associate director, Joe Farrington Douglas, said: “The consultation document implies that providers will have to pay one of the agencies in return for a rating. If so there is a conflict of interest with providers having an incentive to select the agency that gives them the lightest touch and best rating, perhaps allowing them to hide the risks of splitting operations from property, as happened in the broken Southern Cross model.”

But a Department of Health spokesperson said financial position would not be the sole consideration when assessing a hospital.

He added: “Monitor’s job is to ensure that hospitals have sound finances so that they can have a sustainable future. Good financial management will support not undermine good quality care for patients.”

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