Foundation trusts earned up to £70m more income from private patients last year than their accounts show, a confidential report for the regulator Monitor suggests.

Monitor commissioned the report in the wake of a judicial review launched by Unison. The union had challenged the legality of the regulator’s interpretation of the statutory cap on the proportion of income foundation trusts can earn from private patients.

The analysis, by consultancy KPMG, was based on a survey of foundation trusts by Monitor. They were asked to detail all the income that stemmed from providing care and ancillary services to private patients and to show how that was reported in their accounts.

The report, obtained by HSJ under the Freedom of Information Act, reveals 40 foundation trusts - nearly two thirds of those that earned private income in 2007-08 - provided a usable response to the questionnaire. In total the 40 reported£100m of income from private patients in 2007-08 - less than the combined cap of£149m under Monitor’s current definition.

But the KPMG report said up to£70m more could be viewed as private income under the widest possible definition. It said if they had reported all income earned through the provision of services to private patients as “private patient income”, 24 of the 40 foundation trusts could have breached their cap.

This widest definition would include income from services to private providers and services such as catering to private patients.

If the£70m additional income the 40 trusts reported in 2007-08 was replicated by all foundations earning private income, the total would rise from£165m to£281m. That would include money recouped from private insurers for treating road accident victims and earned from treating patients from the European economic area. If that was excluded, the extent of under-reporting by the 40 trusts would shrink from£70m to£30m. But 19 foundations could still breach their cap, KPMG said.

KPMG says breachers could include Central and North West London and Oxfordshire and Buckinghamshire mental health foundation trusts, which are prohibited from earning income from private patients as they had no such earnings in 2002-03, on which the cap is based. Tameside Hospital and Mid Cheshire Hospitals foundation trusts could exceed their caps by 89 and 78 per cent respectively.

Unison head of health Karen Jennings said: “This is at least as bad as we feared. Foundations can do this because they have been given the scope to by Monitor.”

In a letter to HSJ, Monitor head of legal services Kate Moore states that the figures cannot be taken to represent the extent to which foundations would breach the cap. “To establish this figure it would also be necessary to recalculate the 2002-03 base year on the basis of the new definition [of private patient income]”.

Foundation trust prive patient earnings

 Sample of 40 2007-08 unaudited accountsAll foundations 2007-08 unaudited accounts
Private patient income under current definition£100m£165m
Private income if all services to private patients and providers included, but European patients and road accidents excluded£130m£215m
Private income at widest definition£170m£281m
Source: KPMG/Monitor