NHS regulator says credit rating agencies should rate NHS finances. REUTERS/Suzanne Plunkett

Experts have slammed proposals to bring in controversial credit rating agencies (CRA) to rate hospitals' finances.

Monitor, the new NHS regulator, wants the government to bring in CRAs to monitor the health service's finances by giving them "investment grades" to assess how capable individual hospitals are at treating patients.

The idea should be put in the government's Health Bill, going through parliament, says Monitor.

Critics have hit out at the idea and said that using credit rating agencies is not a guarantee of quality control.

CRAs, like Standard & Poor's and Moody's Investor Services, rubberstamped the dubious financial deals that led to the 2008 global economic meltdown by giving them AAA ratings.

"Government and regulators should be looking at how to embed responsibility and ethics in healthcare organisations, rather than importing the institutions and values that were implicated in the greatest market failure for 80 years," said Joe Farrington-Douglass, associate fellow at health policy thinktank the Institute of Public Policy Research (IPPR).

"One of the government's main arguments for reforms to the NHS is that they are necessary to meet the economic challenges which stem from the financial crash of 2008.

"But by directly drawing on the failed models and institutions of pre-2008 economics the reforms fail to learn from recent history."

Monitor argues in its proposal that CRA ratings for hospital finances "would incentivise licensees to manage their finances effectively and avoid financial distress".

Farrington-Douglass said CRAs were "by definition interested solely in financial bottom lines".

"They are not equipped to ask any questions about the ethics or compassion of healthcare providers or to review whether the central purpose of the health service - to deliver good quality health care to those in need - is being delivered," he said.

Shadow health secretary Andy Burnham said the proposals "will send a chill wind through the NHS".