Monitor has ruled that income from foundation trusts’ joint ventures and associate ventures will count towards their private patient income cap.

However, the regulator has also recommended that the government changes the legislation on the cap on the proportion of income foundations can earn from private patients.

Monitor consulted on how it applied the cap following a legal challenge by Unison. A majority of respondents said the current rules should be retained but Monitor said its board accepted a “more restrictive” regime was needed.

Executive chair Bill Moyes said in a statement: “Having given careful consideration to all the consultation responses, our board recognises the arguments for treating joint venture and associate arrangements in the same way as subsidiaries to the trust and therefore considers that income derived from these should be brought in under the cap.”

In addition to announcing the change in interpretation Monitor has written to the Department of Health about the “real and diverse problems and disincentives [that] arose in connection with this restriction being set by reference to private patient income levels some six years ago”.

Monitor board minutes in November state: “Whilst the department was not giving a commitment to introduce legislation to amend the private patient income cap, it was giving serious consideration to the issues raised in that letter.

“The department also stated that it keeps the policy under review and would continue to discuss with stakeholders the potential to improve the fitness for purpose of the cap.”

Foundation Trust Network disappointed
The Foundation Trust Network said it was disappointed with Monitor’s decision and called for the government to “review the legal framework” on private income.

Director Sue Slipman said: “The private patients cap was intended to put limits on foundation trusts to ensure that they remain recognisably public service providers. No one disagrees with this objective but the rules that govern it are increasingly inequitable, unworkable and need review.

“The situation is patchy, with different trusts having different levels of private work allowed. Mental health is not allowed to do any private work and consequently some of the best service providers in England are barred from supporting the government’s own welfare agenda. This does not seem sensible and is clearly inequitable.

“This decision will put further pressure on the government’s policy of allowing top-up payments for drugs which have not been approved by [the National Institute for Health and Clinical Excellence], as those patients will be considered part of a foundation trust’s overall allowance for private work.”