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The NHS, private patients and two-tier health

The Health and Social Care Act 2012 opens the door for NHS hospitals to bring in a two-tier system.

There were some attempts to restrict the numbers of private patients that Foundation Trusts could treat, but, as I’ll explain below, these are largely ineffective.

Subsection (1) of section 164 of the Act adds some new subsections to the 2006 NHS Act.

The first of these new subsections (43(1)) says that the principle purpose of a Foundation Trust is to provide NHS services. It is quite amazing that the government thought that it was important to specify this. To the rest of us, it is quite clear that NHS hospitals exist to treat NHS patients: the clue is in the name.

The 2012 Act adds a new subsection to the 2006 Act (43(2A)) that says this:

“An NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes.”

This says that at least half (that is, 50%) of the FT income must be from NHS work.

Currently, the average private patient income for an FT is just over 1% (in 2010/11 FTs generated £252m income from private patients out of a total income of £26,867m).

There is a lot of confusion over this figure.

Some people report that there is an absolute cap of 5%. This is nonsense. The NHS Act 2006 (44(1)) says that the proportion of the total income of an FT from private work (including, but not exclusively from private patients) should not be greater that the proportion in 2003.

Later Acts said that mental health trusts could earn up to at least 1.5%. As a result, there was a range of caps applied to FTs (to find what it was for your local trust, go to the Monitor FT directory and look for the Schedule 4 document under terms of authorisation). The average cap was around 3%, but some were as high as 30%.

The new subsection 43(2A) puts an absolute private patient income cap on all trusts of 50%. This dwarfs the actual average private patient income of 1%. There may be one or two trusts that may get near to this new cap, but for the vast majority this cap is unobtainable, and so it is pointless.

Clause 164(3) of the 2012 Act adds a new subsection 43(3D) to the 2006 Act. This says that an FT can only increase the proportion of its total income generated from private patients by 5% or more proposes in a single year if a majority of FT governors agree.

This is does not say that a vote is needed to increase the amount of private patient income by 5% (eg £1m to £1.05m) since the 5% relates to the total income which is a far greater figure (for some trusts total income is over £1bn).

This is such a huge threshold that it will never occur.

To put it in perspective, a medium sized district general hospital will have an income of about £200m, so to trigger such a vote the FT would need to propose that it took on an extra £10m of private patient income, in a single year. The threshold was deliberately set far too high.

The final section to consider concerns the strategy document that every trust has to prepare to indicate its plans for the following year. The board of directors prepares this strategy document and they must "have regard to the views" of governors (27(3) of Schedule 7 of the 2006 Act.

Since it is only to “have regard” this means that directors can ignore the wishes of governors. This strategy document must mention any non-NHS (ie private) activities that are planned and the expected income from those activities (section 164(3) adds a new section 43(3B) to the 2006 Act).

Governors must decide whether these activities “interfere” with the trust's NHS work, and must inform the board of their decision. However, the Act does not say that directors have to act on governors' concerns.

The Health and Social Care Act 2012 has been written to increase the number of private patients in NHS hospitals. The few places in the Act where there are “safeguards” these have been written in such a way that they are ineffectual.

The clear intent of the government is to introduce a two-tier healthcare system where your ability to pay gives you preference.

Richard Blogger writes about the NHS and social policy at NHS Vault.

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