Private patients are getting hundreds of thousands of pounds of treatment subsidised by the NHS each year, an HSJ investigation reveals.

HSJ has found that up to 30 per cent of patients who pay to receive private treatment in NHS hospitals are charged less than their care costs the trust.

Foundation trusts have been lobbying for restrictions on the amount of private work they can do to be lifted, claiming the income they can earn benefits NHS patients.

“We are not astute enough to make money out of this, but we should be”

HSJ examined the costs and charges for 4,142 private patients treated in 13 trusts in 2007-08. The trusts’ data shows 1,238 of those patients were charged less than the hospital’s average cost for providing the relevant type of treatment (see “Patients by numbers” box).

Eleven of the 13 trusts undercharged by a gross total of £122,303 - equivalent to £99 for each subsidised private patient and approximately £1.7m if replicated across all acute trusts.

Treatments charged below cost include major kidney and ear operations at South Tees Hospitals foundation trust, which were performed at discounts of up to 70 per cent. At South Warwickshire General Hospitals trust up to 63 private patients had private urodynamic testing to identify kidney disorders for less than half the cost.

Unison head of health Karen Jennings said HSJ’s investigation showed there had been “an amateurish stab at the market in the NHS, which means the public purse is subsidising private patients”.

A senior manager at one loss-making trust said it had not realised the scale of its losses until asked to show its costs by HSJ. “We are not commercially astute enough to make money out of this, but we should be. It has not risen to the top of the pile,” the manager said.

Like many of those treating patients at a loss, the trust does not actively seek private patients. It treats them because its consultants demand it, often because the patients have complexities that cannot be dealt with in local private hospitals.

One finance director said it was near impossible to bar clinicians from taking loss making patients. Patients pay surgeons and anaesthetists directly for their part in their care so the risk was they would “sneak the patient on the end of their theatre list, in which case the trust would get nothing”.

HSJ asked all 182 acute trusts for details of private patients and charges, matched with the average costs of their different treatments. Only 13 provided it. Many admitted they had no idea how much it cost them to treat private patients.

HSJ adjusted the cost data down by 15 per cent to account for consultants and anaesthetists being paid separately and not covered by the hospital’s charge. No adjustment was made to account for the extra costs of single rooms, VAT and higher levels of nursing and domestic staff for private patients.

The 13 trusts showed they made an overall profit when all 4,142 patients were considered. But 11 of 13 indicated they were providing individual treatments below cost. The average loss on those patients was 23 per cent and in half of those cases patients were charged less than the NHS national tariff price.

South Tees acknowledged the difference between its costs and private patient charges “would suggest that procedures are unprofitable” but said this was due to differences between what was included in the NHS cost data and what was covered by the private charges.

A South Warwickshire Hospitals trust spokeswoman said some of its urodynamics patients may have been treated as outpatients rather than day cases, in which case the costs would have been lower and those patients not loss making. It has since increased its prices for the procedure and continues to keep its charges under review, she said.

Country Durham and Darlington foundation trust said none of its procedures were “unprofitable as such”. Private treatments included cardiac catheterisation for 26 per cent less than the NHS tariff price. In a statement it said although the overheads for the specialty were not recovered through that price, the “direct costs” were.

A Department of Health spokesman said: “It is a long standing principle that NHS money should not be used to subsidise private patient care.”

See leader.

Patients by numbers

The 1,238 patients trusts lost money on

  • Average charge to patient: £749
  • Average cost to trust: £981*
  • Average NHS tariff price: £770*

The 2,904 patients trusts made money on

  • Average charge to patient: £2,555
  • Average cost to trust: £1,471*
  • Average NHS tariff price: £1,445*

30% of patients were charged less than the trust’s cost

15% of patients were charged less than the NHS tariff

4% of patients were charged less than the average cost across the NHS

*cost and NHS tariff prices have been adjusted to reflect lower clinical salary costs to NHS trusts for private patients

Best buys - for the private patient

South Tees Hospitals foundation

Major kidney operation

Cost to private patient: £1,160; cost to trust: £3,794; NHS tariff: £4,348

Arthroscopy

Cost to private patient: £1,186; cost to trust: £1,284; NHS tariff: £1,063

Winchester and Eastleigh Healthcare

Adult first attendance outpatient appointment

Cost to private patient: £39; cost to trust: £216; NHS tariff: £85

Upper genital tract procedure

Cost to private patient: £1,315; cost to trust: £1,637; NHS tariff: £2,389

South Warwickshire General Hospitals trust

Urodynamics

Cost to private patient: £183; cost to trust: £383; NHS tariff: £420

Country Durham and Darlington foundation

Cardiac catheterisation and angiography

Cost to private patient: £947; cost to trust: £961; NHS tariff: £1,271

Explainer

HSJ used the Freedom of Information Act to ask trusts to match the procedures and care they gave private patients to the codes in the NHS payment by results tariff.

These “healthcare resource group” codes are used to collect information on how much it costs each trust to perform each type of treatment. HSJ used these 2007-08 “reference costs” to see the rate of return trusts made on their private patients.

Some trusts reported problems establishing a true match, including that most private patient charges do not include the fee for consultants and anaesthetists, which are charged for separately. A 15 per cent adjustment was made for this. Other problems may arise if a trust’s private patients have a different mix and level of complexity from its NHS patients.

NHS cash subsidises private patient care