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Is treating private patients a financial boomerang for the NHS?

When the Health and Social Care Act was passed in 2012, the treatment of private patients was expected to become a significant source of income for NHS hospital Trusts. A new report from the Centre for Health and the Public Interest (CHPI) finds that not only has this not materialised for most Trusts, in some cases it may have had the opposite effect among further negative repercussions. 


‘NHS treatment of private patients: the impact on NHS finances and NHS patient care finds that while there has not been significant growth in private patient activity or income within the NHS in the intervening period, the continuing squeeze on NHS funding could lead to such practice becoming more commonplace, with a potential to impact on the availability of care for NHS patients.


The report also calls into question the financial gain to the NHS from treating private patients. Although total income generated from this practice has increased since 2012, some Trusts have made a loss overall and some have been forced to write-off bad debt where they have not been paid for treatment provided. Others admit to a lack of understanding of the cost of providing treatment through failure to measure or record such costs, which in some cases means the price paid by the private patient does not cover the cost to the hospital.


The report - based on official sources, Freedom of Information requests to all 153 acute hospital trusts, and interviews with hospital staff - reveals that:


* There has only been a small increase in the total income generated by the NHS from treating private patients since 2012 - from £511m in 2012/13 to £596m in 2015/16. However, a lack of clear accounting of costs makes it impossible to tell how much, if any net revenue has been derived from this activity.


* Nine hospital Trusts made a loss on the treatment of private patients in some or all of the years from 2010/11 to 2015/16. Overall four of these nine hospitals made significant losses between 2010 and 2016, with one making a loss of £18 million over the six-year period.


* NHS hospitals treating private patients have also failed to receive payment for some of the services that they have provided. The total value of bad debts written off for all private patients treated at NHS Foundation Trust hospitals was £1.77m in 2014/15 and £1.81m in 2015/16.


* The NHS has set aside 1,142 beds for private patients, while a further 150 NHS beds are estimated to be occupied by private patients at any one time. This means approximately 1% of the NHS’s roughly 131,000 beds are set aside for, or used by, private patients at any one time. While small, the number of NHS beds not available for NHS patients should be seen in the context of total NHS bed numbers, which have fallen significantly over the last 30 years and with bed occupancy rates peaking at 95% or higher during winter, the loss of capacity for treating NHS-funded patients is potentially significant.


* NHS hospital Trusts differ widely in the way they set the prices that they charge private patients. Some hospitals have no agreed procedure for setting prices, while others negotiate prices with private insurance companies. This leads to wide variations in the prices charged private patients and big differences between these prices and the national tariff paid by NHS commissioners for NHS patients.


* Ten private patient units - mainly based in London NHS hospitals - account for nearly 60% of the £596m generated by the NHS from the treatment of private patients. For four of these hospitals, private patient income makes up more than 10% of their income.


* Most of the 114 Trusts that provided information reported earning some income from treating private patients, but 73 of these were unable to report their expenditure in doing so, in most cases due to not measuring or not recording it.


The report concludes that increasing the provision of private healthcare within the NHS may pose risks to the use of NHS funds and the care of NHS patients. It says that the NHS Code of Practice for Private Patients, which requires that “provision of services for private patients should not prejudice the interests of NHS patients or disrupt NHS services,” appears to be compromised in practice in various ways. For example, the practice of “clerking”, which involves junior doctors taking notes on private patients who are admitted without adequate notes, takes time away from attending to NHS patients. The report also raises concerns over queue jumping and number of beds.


Procedures for acceptance, treatment and charging of private patients are not standardised. “To ensure adherence to the values of the NHS, including equity of access and quality of care, and to ensure financial sustainability, NHS hospital Trusts should be required to measure, record and report the costs of, and income from, the treatment of private patients.”


Click here to download the report.