Private Services in Foundation Trusts

Executive Summary

This report is the result of the study of the private facilities in NHS Foundation Trusts.

At the end of every financial year every Foundation Trust must present to Parliament the Annual Report and Accounts for the year and the Forward Plan outlining their financial and clinical strategy for the subsequent three years. These reports are deposited with Monitor, the Foundation Trust regulator. This report is based on the Forward Plans and Annual Reports of the 144 Foundation Trusts that existed in June 2012.

Every year Monitor provides a summary of the financial  performance of Foundation Trusts taken from the Annual Reports and key values are given in Table 1. This table also includes the total number of public members of Foundation Trusts. Public membership is usually voluntary and an individual may be a member of several trusts, so the value of 1.3m public FT members does not necessarily represent 1.3m individuals.

Table 1

Key Figure Data
Aggregated Income £35,789m
Comprehensive Surplus £745m
Operating Surplus £1,213m
Average EBITDA 6.2%
Private Patient Income £304m
Number of Non-unique Public Members 1,330,318

Most Foundation Trusts have some private patient income and a summary for the financial year 2011/12 is given in Table 2. The private patient income may be charges to patients for healthcare, or the profit from a subsidiary company. Forward Plans for Foundation Trusts show that 58 trusts (40% of the total) have said that they will take action to increase their private patient income in the subsequent three years. Almost a third of Foundation Trusts already have a dedicated private patient unit (PPU) where patients are accommodated (and in some cases, treated) separately to NHS patients and in Forward Plans twelve trusts say that they intend to create a private patient unit (an increase of 28%).

Table 2

Key Figure Value
Number of Foundation Trusts with private patient income 133
Median private patient income £426,000
Maximum private patient income £51,144,000
Mean proportion of private patient income to total income 2%
Range of proportions 0% to 30.7%
Trusts with an established private patient unit 43
Trusts intending to create a private patient unit 12

Government policy is that NHS services will be offered through Any Qualified Provider. Under AQP commissioners must tender services to any provider that meets the commissioner’s quality specifications and agrees to provide the service at no more than the national tariff for the service (if one is specified). The Operating Framework for 2012/13 [1] says that from April 2012 commissioners must identify at least three services that will be commissioned through AQP [2]. Almost one third of trusts (43) are concerned that they will lose services when they are commissioned through AQP but a similar number (40) regard AQP as an opportunity to increase the services they provide. There is some overlap between the two groups where trusts expect to lose local services but hope to deliver services outside their catchment area.

Charity income is concentrated at just a few Foundation Trusts, indeed, fifty trusts report in their Annual Accounts that their charity income is either zero or the contribution was so small that it was consolidated into the ‘other income’ figure. The median charity income reported was £83k. Sixteen (11%) of the 144 trusts had charity income over £1m and 60% of all charity income went to just five trusts. One trust, The Royal Marsden, reported charity income of £31.8m, almost 28% of the total charity income reported in Annual Accounts of all Foundation Trusts. The Royal Marsden also had the largest private patient income, both in cash terms and as a proportion of its income: £51.1m (22.6% of its total patient income of £226m).

Most Foundation Trusts list the income from private patients in their Annual Accounts, however, a few FTs have a subsidiary or a joint venture that has the private patient business and the trust lists the profit from this company as its private patient income. Some trusts have a charity that owns the subsidiary and the charity “donates” the subsidiary profit to the trust. One example is Great Ormond Street Hospital which had to create a charity because its private patient income was so large that it could not become a Foundation Trust due to the section 44 private patient income cap. (A rule that was abolished in October 2012 under the Health and Social Care Act.)

All foundation trusts claim that private patient income benefits NHS patients; however, there is little evidence to support this claim. Other than the few trusts that have subsidiaries and report their profits, it is not possible to determine whether the majority of trusts make a profit from private patients. Several trusts say that they have decided to create a private patient unit because of demands from consultants to offer them facilities for their private practice.

It is apparent that private patients benefit more from being treated by an NHS trust than the trust benefiting from the private patient. All foundation trusts give private patients access to NHS facilities and expertise, and many trusts advertise this as their main attraction to private patients. An example of this is The Christie which has recently been chosen one of two sites in the UK to receive a share of £250m to provide a Proton Beam Therapy Unit. If the two PBTUs are run at full capacity they will be able to treat the estimated demand for the treatment from the NHS (England and the devolved nations) without any spare capacity. However, The Christie are currently building a private patient unit with the declared intent of treating private patients in their publicly funded PBTU.

The Forward Plans were written before the Health and Social Care Act was passed, but it was clear to trusts that the Act would pass with most of the sections on private patient income intact. Consequently, it is reasonable to conclude that Foundation Trust plans to increase private patient income was due to the Health and Social Care Act.

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[1] www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_131360
[2] www.supply2health.nhs.uk/AQPResourceCentre/AQPMap/AQPMap.aspx

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