NHS contracts with private providers could fall foul of EU competition rules if they allow excessive profits, a briefing paper from the NHS Confederation warns.

The NHS pension scheme and the minimum income guarantee paid to GP practices could also be subject to legal challenge if viewed as state aid in the form of preferential rates or subsidies to private companies.

EU competition law does not apply to non-profit public bodies but the confederation warns growing private sector involvement in the NHS could open up areas where the law may apply.

Elisabetta Zanon, director of the NHS European Office, which is hosted by the confederation, told HSJ: “As the NHS develops the way it delivers healthcare to incorporate patient choice and a wider role for independent healthcare providers and enterprises, the extent to which NHS activity could be challenged under EU competition law becomes less clear.”

She said it would “be important to monitor developments” and that the European office was planning risk assessments, for example of independent sector treatment centre contracts, to see whether any arrangements were challengeable.

Current EU case law has established that organisations that fulfil a purely social function, which are not profit making and are based on the principle of “solidarity” are not subject to competition rules.

But there are concerns trusts such as the Royal Marsden foundation and Great Ormond Street Hospital for Children, with substantial income from private patients, might not be exempt.

HSJ has reported that up to 30 per cent of patients treated privately in NHS hospitals were charged less than the hospital’s actual costs, raising concerns the patients were being subsidised.

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