Background
The private patient income cap was set out as part of the legislation to establish NHS foundation trusts, in the Health and Social Care Act 2003 and was restated in the National Health Service Act 2006. The private patient income cap applies only to NHS foundation trusts, and it means that foundation trusts cannot exceed the proportion of the total income that it derived from private charges in what is referred to as the base year, which is 2002-3 (the year before the first foundation trusts were authorised).
Over the past year the Foundation Trust Network has engaged with Government, parliamentarians, regulators and FT members to lobby to bring about changes to the cap. We used the health bill (now the Health Act 2009) to raise some key issues about the impact of the private patient income cap:
- That it does not allow for a level playing field in the NHS. It is grossly uneven between NHS trusts and foundation trusts as well as between foundation trusts themselves. Some FTS have a cap of 30%, some a cap of 5% and mental health foundation trusts have a cap of zero.
- The cap means that NHS foundation trusts are precluded from supporting and delivering Government's own policies: (1) Well-being agenda: mental health foundation trusts are unable to undertake any privately funded activity. This means that, for example, they are precluded from contracting with private insurance companies to deliver services for employees they cover, or delivering return to work activity. (2) The Government's policy to 'top up' NHS services is unworkable in foundation trusts - NHS patients will not be free to choose foundation trusts to 'top up' their treatment if the payment for this service takes the foundation trust over its private patient income cap limit. This denies them continuity of care.
- The private patient income cap is making it far harder for some leading NHS providers to become foundation trusts.
Changes for mental health foundation trusts
Following Foundation Trust Network lobbying the Government brought forward changes to the health bill that gave mental health foundation trusts a private patient income cap of 1.5%. The Health Act gained Royal Assent at the end of 2009 and this provision came into force in mid January 2010.
Department of Health review of the private patient income cap
Also in response to debates in both Houses of Parliament on FTN sponsored amendments, the Government gave its commitment to bring forward a review of the private patient income cap. It announced its call for evidence in November 2009 and the FTN responded. The key points from our response are:
Needs for reform
- The cap was intended to manage the perceived risk that FTs would fundamentally change their nature as NHS organisations, expanding their private activity at the expense of NHS patients. Six years on this clearly has not happened and the 1.5% for mental health foundation trusts is clear recognition from the Government that reform is needed.
- Reform is also urgent - given the challenging economic climate foundation trusts need to be freed up as far as possible to maximise income to benefit NHS patients.
- Moreover the recent judicial review judgement will also severely restrict activities across the NHS, undermining the terms of the review that relate to the capacity of the NHS to respond to changing circumstances and to seek innovation and partnership working with other sectors.
Three possible reforms of the cap
- The FTN believes that there are three possible routes for reform, none which stands alone. A series of tests and principles will be needed to maintain confidence that a foundation trust is not fundamentally changing its nature as an NHS organisation.
- Changing the definition of the cap - foundation trusts believe the cap should only relate to goods and services directly provided to its own patients. (This would require primary legislation).
Referring to all activity as private patient activity is confusing. Few FTs want to be able to treat more private patients per se, apart from those offering strictly limited treatments in highly specialised areas. Most want to be able to innovate in services to NHS patients by working alone or in joint ventures with commercial partners. Being able to differentiate between levels of direct private patient activity and other types of commercial activity is critical.
- Tests or indicators - the second approach is to establish a set of tests or indicators as to whether or not a foundation trust is changing its nature and purpose.
- Transparent public reporting - the third approach would be to look at how any funds raised are used and develop rules so that there is transparent public reporting against them.