Exclusive: Taxpayers cash could be used to fill hole created by fall in NHS private work

Trusts face losing hundreds of millions of pounds this year through non-NHS sources (including private patient income). As a result, NHS England and Improvement told HSJ it will step in to support trusts facing a “material reduction” in revenue. 

The most recently available data (from 2018-19) shows private patient income for the English NHS totalled around £659m. 

As trusts have enforced infection control policies, limited their bed space and received fewer referrals, private patient income is understood to have shrunk significantly between March and October.

Research income, which earned the NHS £1.4bn in 2018-19, is also at risk. Earlier this year UK Research & Development suggested that, without intervention, the NHS could lose £500m from commercial research because of covid-19.

In July, NHSE/I told systems to recover non-NHS income to 2019-20 totals “as quickly as possible” with system funding envelopes for the remainder of the year also tied to this expectation.

NHSE&I issued a further statement to HSJ, saying: “We are passporting through to trusts the extra funding government has provided.

“While taxpayers are not underwriting private patient income per se, NHSE/I regional teams will work with the minority of trusts unable to mitigate the consequences of a material reduction in their non-NHS income.”

Leaders speaking in confidence have told HSJ said they would struggle to recoup non-NHS income streams, despite expectations from the centre they should do so.

One finance executive at a major London trust told HSJ: “I think we will do well to recover half (of what we earned last year) and even that would be optimistic given that we’re in October now, we’ve certainly not made any dents in terms of private patient income… it will be a struggle to see any significant changes in what we think we’re going to deliver. There will be a valuable financial gap.”

Another finance director at another major London trust told HSJ: “I can’t say exactly if I’m being honest (about our chances of recovery) but to leap back to 100 per cent of where we were and catch up on what we’ve missed year-to-date seems very unlikely.”

The Royal Marsden Foundation Trust earned £121m in private patient income in 2018-19 while 2018-19 Oxford University Hospitals FT made £58.5m in research.

The amount trusts earn from private patient income and research income varies. The 10 trusts that earned the most from private patient income in 2018-19 accounted for more than 60 per cent of the £659m raised nationally. Sixty-five trusts declared no private patient income that year.

This is slightly different for research with a larger proportion of trusts declaring research income and the top 10 trusts accounting for only 34 per cent of the £1.4bn earnt nationally.

Under the Health and Social Care Act 2012, trusts were permitted to earn up to 50 per cent of their income from private patient care after a cap, limiting foundation trusts from earning anything beyond what they made as of 2006, was lifted. 

The NHS and other organisations were accused before then of both subsidising the cost of private care and fiddling cap limits by funnelling income through charities. 

Sally Gainsbury, senior policy analyst at the Nuffield Trust, said “It’s clear that private patient care should not be subsidised with taxpayers’ funds. The tricky thing for NHSE/I is that it, and its predecessor organisations – have overseen and sponsored NHS providers becoming increasingly reliant on private patient income as a revenue stream.”

According to national costing data, of the £659m earned from private patients in 2018-19, around £477m was spent on the costs associated with that care, meaning around £180m was made in “profit”.

Ms Gainsbury added: “As NHS providers use that surplus to fund their wider NHS activities, the loss of it this year will create a hole which there is a clear case for NHSI/E to fill, at least in the short-term.

“The difficult issue however is around the fixed costs associated with private patient units which providers will also need to cover – things like the cost of administration, marketing and premium “hotel-style” facilities.

“If NHSI/E provide support to cover those fixed costs, it may want to find ways of recouping that if there’s a significant increase in private patient activity next year, which sadly there might be. I say sadly because clearly the ability of some patients to avoid growing waiting times by paying for care while others cannot is a source of inequality.”